Navigator Premium Clients
Health & Human Services
PREPARED FOR
Vertical Report
May 2016
© 2016 e.Republic
Introduction Vertical Spend
State and Local HHS Spend
Budget Trends
Top HHS IT Budgets in the States
HHS is second only to education for public expenditure. Growth is
forecasted to continue.
According to the National Association of State Budget Officers (NASBO) the
total state HHS market in 2016 is forecasted to be $609B, approximately
one-third of state budgets.
The Center for Digital Government estimates that in 2016 the IT spend in
HHS will be $25.9B.
This represents around 25% of the total state and local government IT
spend.
Vertical Spend in HHS
© 2016 e.Republic
SOURCE: National Association of State Budget Officers, “State Expenditure Report (Fiscal 2013-2015 Data),” http://www.nasbo.org/publications-data/state-expenditure-report
State and local HHS spending is
expected to grow by 5.2% in 2016,
6.5% in 2017 and an additional 5.7%
in 2018.
Total state and local HHS spending
levels are projected to rise from $589B
in 2016 to an estimated $662B in
2018.
© 2016 e.Republic
State and Local HHS Spend
Spending increases are projected to reach a peak in 2017.
SOURCE: Center for Medicare and Medicaid Services, 2015, https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountsprojected.html
4.5%
5.2%
6.5%
5.7%
2015 2016 2017 2018
Rate of Spending Growth
Health, rather than human services, comprises most of state spending.
31 states enacted increases in spending for Medicaid, for a net total increase
of $9.2B.
K12 education will be the only vertical to surpass health in growth, seeing
net increases of $14.7B.
Public assistance (humans services) increases for FY2016 are forecasted to
be just $0.02B.
Medicaid and education combined will comprise the majority of state general
fund spending.
FY 2016 State Budget Trends
© 2016 e.Republic
SOURCE: National Association of State Budget Officers, Fall 2015, “Fiscal Survey of States,” http://www.nasbo.org/publications-data/state-expenditure-report
Top State HHS Agency IT Budgets
© 2016 e.Republic
State State Agency Estimated IT Budget 2015
California Department of Health Care Services $3,108,205,835
New York Department of Health $2,028,785,192
Pennsylvania Department of Human Services $1,384,342,436
Texas Health and Human Services Commission $1,186,558,332
Illinois Department of Healthcare and Family Services $964,046,344
Florida Agency for Health Care Administration $930,369,743
Ohio Department of Medicaid $900,895,210
North Carolina Department of Health and Human Services $736,158,200
New Jersey Department of Human Services $614,786,250
Massachusetts Office of Health and Human Services $608,255,603
SOURCE: Navigator
© 2016 e.Republic
Budgets and Caseloads
Human services in state budgets
Human services caseload
The ACA and its effect on state health budgets
The healthcare caseload
27.4%19.3%
10.3%
7.7%
3.1%1.3%
30.9%
Medicaid
K12
Higher Ed
Transportation
Corrections
Public
Assistance
Medicaid was the largest single expenditure in state budgets last year.
The National Association of
State Budget Officers
(NASBO) calculates total
state spending (all verticals)
at $1.9 trillion for FY 2015.
NASBO uses the states’
enacted budgets to determine
spending in key verticals.
FY 2015 Expenditures by Vertical
© 2016 e.Republic
SOURCE: National Association of State Budget Officers, “State Expenditure Report Summary (Fiscal 2013-2015 Data),” http://www.nasbo.org/publications-data/state-expenditure-report
The most recent numbers show a decline in overall spending.
States spent $24.7B on human services in FY 2015.
This was a 7.3% drop from FY 2014.
54.8% of funds come from the federal government, the rest from state
budgets.
FY 2016 budgets are projected to be $24.72B.
Technology solutions are needed to help agencies find more cost-
effective ways to provide services and administer programs.
Human Services in State Budgets
© 2016 e.Republic
SOURCE: National Association of State Budget Officers, “State Expenditure Report (Fiscal 2013-2015 Data),” http://www.nasbo.org/publications-data/state-expenditure-report
Millions of Americans are served through human services programs.
Human services programs include Head Start, support for foster children,
child support enforcement, food assistance for seniors, veterans services, etc.
Examples of the volume of service provided by two of the largest programs
include:
In January 2016 alone, more than 44.7 million Americans, or 14.5% of the
population, participated in the Supplemental Nutrition Assistance
Program (SNAP).
For FY 2015, Temporary Assistance for Needy Families (TANF) averaged
over 3.08 million recipients every month.
Human Services Caseload
© 2016 e.Republic
SOURCE: USDA Food and Nutrition Service, 4/8/16, “Supplemental Nutrition Assistance Program: Number of Persons Participating,” http://www.fns.usda.gov/sites/default/files/pd/29SNAPcurrPP.pdf; Office of Family
Assistance, 1/13/16, “TANF: Average Monthly Number of Recipients,” https://www.acf.hhs.gov/sites/default/files/ofa/2015_recipient_tan.pdf
© 2016 e.Republic
The ACA and State BudgetsThe changes brought by the Affordable Care Act (ACA) of 2010 dramatically increased budget allocations to healthcare.
2016 is the third year for health exchange sign-ups under the ACA.
Medicaid expansions under the ACA are causing large spending increases at
the state and federal levels, including in IT.
States continue to implement or upgrade their Medicaid Management
Information Systems (MMIS).
Historically median implementation costs are reported to be around $50
million per state.
Spending increases will slow as the ACA implementation ends.SOURCE: National Association of State Budget Officers, “Summary: NASBO State Expenditure Report,” http://www.nasbo.org/sites/default/files/Summary_State%20Expenditure%20Report.pdf; Center for Digital Government MMIS
Systems Watch 2016
Healthcare Caseload
© 2016 e.Republic
Medicaid and the Children’s Health Insurance Program (CHIP) alone provide
coverage for approximately 70 million low-income Americans.
An estimated 12.7 million people are forecasted to sign up or automatically
re-enroll through the ACA-created state and federal health care
marketplaces during the 2016 open enrollment period.
42% (4.9 million) of these are expected to be new consumers.
SOURCE: National Conference of State Legislatures, “Medicaid and CHIP,” http://www.ncsl.org/research/health/medicaid-and-chip.aspx; U.S. Department of Health & Human Services, 3/1//16, “Nationwide the Health Insurance
Marketplaces signed up 4.9 million new people during the third Open Enrollment period,” http://www.hhs.gov/about/news/2016/03/11/nationwide-health-insurance-marketplaces-signed-49-million-new-people-during-third-
open-enrollment.html
31 states have enacted Medicaid expansions under the ACA, allowing large enrollment increases.
Total Medicaid spending for FY 2015
is estimated at $512.3B.
This was an increase in 2015 of 15.1%
over FY 2014. State funds increased
by an estimated 4.8%, while federal
funds increased by 22.5% over 2014.
Medicaid is estimated to represent
54.3% of all federal funds to the
states in FY2015.
Budget allocations have grown over the past
three years.
Medicaid Expansion and State Spending
© 2016 e.Republic
SOURCE: National Association of State Budget Officers, “NASBO State Expenditure Report,” http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report%20%28Fiscal%202013-2015%29S.pdf
4.4% 4.8%
13.5%
22.5%
9.5%
15.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
FY 2014 FY 2015 (Estimated)
Medicaid Spending Growth by Funding Source
State funds Federal funds Total spending growth
© 2016 e.Republic
Challenges in HHS Technology-specific challenges include:
Complicated business processes
Uneven electronic health record (EHR) adoption
Cyberattacks
46%
37%
12%
2%
2%
1%
Strongly Agree
Somewhat Agree
Neither Agree nor Disagree
Somewhat Disagree
Strongly Disagree
Do Not Know
83% of HHS professionals
surveyed in 2015 by the
Center for Digital
Government agree this is
a challenge
Challenge: Complicated Business Processes
© 2016 e.Republic
SOURCE: Center for Digital Government Health & Human Services Special Report Survey, 2015
“Complicated paperwork and processes make it difficult for people in need to get help in human services programs.”
A multiplicity of HHS agencies with large caseloads and staffing shortages are hindered by complicated business processes.
Complicated business processes that present a barrier to client renewal have
been shown to raise administrative costs by as much as $80 per case.
An opportunity exists for automated workflows and content management
solutions to help HHS agencies work more efficiently.
Example: the Los Angeles County Department of Public Social Services
suite of apps allows clients to upload documents for their caseworkers to
review, thereby avoiding expensive office visits.
Complicated Business Processes
© 2016 e.Republic
SOURCE: Center on Budget and Policy Priorities, 2/5/16, “Opportunities for States to Coordinate Medicaid and SNAP Renewals,” http://www.cbpp.org/research/health/opportunities-for-states-to-coordinate-medicaid-and-snap-
renewals; Governing, 4/15, “New Apps May Make Giving and Getting Government Aid Easier,” http://www.governing.com/columns/tech-talk/gov-human-services-apps.html
Electronic Health Records (EHRs) have been incentivized by the federal government since 2009, but adoption is not complete.
The Federal Health Information Technology for Economic and Clinical Health
Act (HITECH) of 2009 pays incentives for demonstrated meaningful use of a
certified EHR system.
Reduced Medicare reimbursement rates for providers who have not
adopted qualified EHRs went into effect in 2015.
1/5 of providers still have not adopted certified EHRs. Factors are reported to
include: expense of adoption, lack of broadband access, security concerns and
usability.
Challenge: Uneven EHR Adoption
© 2016 e.Republic
SOURCE: Office of the National Coordinator for Health Information Technology, 2015, “Update to Congress on the Adoption of Health IT,” http://dashboard.healthit.gov/report-to-congress/2015-update-adoption-health-information-
technology-executive-summary.php
Uneven EHR Adoption
© 2016 e.Republic
SOURCE: HealthIT.gov, data from CMS EHR Incentive Program data, 2015 and SK&A Office-based Provider Database, 2013. Numbers apply to ambulatory medical doctors and doctors of osteopathy only
Percentage of all office-based physicians that have demonstrated meaningful use through Medicare as of December 2015
The increasing use of EHRs, data sharing, and mobile technologies creates data security challenges.
A survey of state CIOs by the National Association for State CIOs (NASCIO)
found security and risk management to be their top priority for 2016.
The Federal Health Insurance Portability and Accountability Act (HIPAA)
privacy laws require protection of personal health information, reinforced
with fines in the millions of dollars.
Challenge: Data Security Threats
© 2016 e.Republic
SOURCE: National Association of State CIOs, 11/10/15, “State CIO Top Ten Policy and Technology Priorities for 2016,” http://www.nascio.org/TopTen/ArtMID/659/ArticleID/295/State-CIO-Top-Ten-Policy-and-Technology-
Priorities-for-2016
Health information breach incidences have risen sharply in the past two years, affecting millions of Americans.
According to the US
Department of Health
and Human Services, in
2015 approximately
113 million individuals
were affected by private
health information
(PHI) breaches.
Cybersecurity in Healthcare
© 2016 e.Republic
SOURCE: U.S Department of Health and Human Services, 2/16, “Breaches of Unsecured Protected Health Information,” http://dashboard.healthit.gov/quickstats/pages/breaches-protected-health-information.php
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
2012 2013 2014 2015
Number of PHI Breaches
Number of Incidents
39%
7%
7%
6%
4%
2%
35%
Percentage of Incidents of Data Breaches by Industry
Health Services
Business Services
Educational Services
Insurance Carriers
Hotels & Other Lodging
Social Services
All Other
Cyberattacks on HHS data are increasing in frequency and with expensive consequences.
In 2015, 39% of all data
breaches were in healthcare,
the largest percentage
across studied sectors.
Healthcare data breaches
are on the rise, with the cost
to the U.S. healthcare
system at an estimated $6B
a year.
Cybersecurity in Healthcare
© 2016 e.Republic
SOURCE: Symantec, 4/12/16, “Internet Security Threat Report, vol. 21,” https://www.symantec.com/content/dam/symantec/docs/reports/istr-21-2016-en.pdf; Ponemon Institute, 5/27/15, “Cost of Data Breaches Rising
Globally, Says 2015 Cost of a data Breach Study,” https://securityintelligence.com/cost-of-a-data-breach-2015/
0
50,000,000
100,000,000
150,000,000
200,000,000
Social Services
44.5% of total
(1st place)
Insurance Carriers
23.4% of total
Personal Services
9.4% of total
Administration of
Human Resources
5% of total
Health Services
1% of total
(10th place)
Number of Identities Stolen by Selected Subsectors
Social Services as a subsector saw few data breach incidents compared to healthcare, but saw the largest number of identities exposed.
Research shows that
social services agencies
had the largest number
of identities stolen in
2015.
44% of all identities
stolen were from
social services.
Human Services Cybersecurity is Also Challenged
© 2016 e.Republic
SOURCE: Symantec, 4/12/16, “Internet Security Threat Report, vol. 21,” https://www.symantec.com/content/dam/symantec/docs/reports/istr-21-2016-en.pdf
© 2016 e.Republic
Technology Needs in HHS Mobile technologies and capabilities
Collaboration and platform integration
Data analytics
Telemedicine
A survey conducted by CDG in 2016 asked respondents working in state and local government human services what technologies should be more fully utilized in their agencies to improve operations or delivery of care.
IT Opportunities in Human Services
Q: Which of the following technologies do you believe should be more commonly or fully utilized in human services agencies to improve either internal operations or delivery of care? Select all that apply. © 2016 e.Republic
SOURCE: Center for Digital Government Health & Human Services Special Report Survey, 2016, N=165
25%
38%
46%
52%
53%
Telemedicine/treatment or consultation
Remote reporting/data entry
Predictive data analytics
Integrated data platforms
Mobile technologies such as smart phones or tablets
© 2016 e.Republic
Smartphone and other mobile health technologies are gaining increased acceptance and legitimacy in the health professions.
In 2014, 18% of Americans surveyed by the Office for National Coordinator
for Health Information Technology reported communicating with their health
care provider through text message.
The U.S. Food and Drug Administration has announced that they will allow
physicians to prescribe health-related apps as part of a course of treatment.
Health industry interest in these apps is in part due to the high cost of non-
adherence to drug regimes, which costs the U.S. health care system $110-
$289B annually.
Client-Facing Mobile Health Technology
SOURCE: HealthIT.gov, 2014, “Trends in Individuals Use of Health IT,” http://dashboard.healthit.gov/quickstats/pages/FIG-Individuals-Health-IT-Use.php ; Annals of Internal Medicine, 12/4/12, “Interventions to Improve Adherence
to Self-administered Medications for Chronic Diseases in the U.S.,” http://annals.org/article.aspx?articleid=1357338#r3-6
Traditionally siloed systems create inefficiencies.
Research conducted by CDG October 2015 – February 2016 interviewing
heads of state HHS agencies has indicated that inter-agency data sharing is
problematic for many due to policy, processes, and technology.
The Missouri Department of Health and Senior Services has begun a data-
sharing project with Missouri’s departments of Mental Health and Social
Services.
Under this data sharing initiative, hospital use is down 20% by Medicaid
users, and emergency room visits fell by 12%. State leaders estimate that
the initiative will save Missouri $8 million annually.
Interoperability and Collaboration
© 2016 e.Republic
SOURCE: Center for Digital Government Health & Human Services Special Report Survey, 2016, N=165; Government Technology, 9/29/14, “Missouri Shares Data with Healthy Results,” http://www.govtech.com/health/Missouri-
Shares-Data-with-Healthy-Results.html
A survey conducted by CDG in 2016 asked government HHS employees where data analytics has the most potential to positively impact patient or client care.
Benefits of Data Analytics
Q: Where do you believe data analytics has the most potential to positively impact patient/client care? Select up to three. © 2016 e.Republic
SOURCE: Center for Digital Government Health and Human Services Special Report Survey, 2016, N=233.
25%
25%
30%
31%
42%
43%
Prioritizing needs for budget allocations
Tracking distribution and rates of incidents in the population served
Helping administration forecast and anticipate service demands
Streamlining business processes
Supporting the development of evidence-based performance metrics
Evaluating treatment success rates and identifying best practices
The Federal Office of Rural Health Policy is offering $6 million in grants in
2016 to establish telemedicine networks in rural areas.
The President’s Council of Advisers on Science and Technology recently
recommended telemedicine usage, citing cases of providers expanding both
their caseload size and geographical reach while improving client outcomes.
Unequal Parity Laws present a challenge for implementing telemedicine.
Parity laws require that insurance payments for telemedicine be at an
equal rate to other treatment forms
Telemedicine
© 2016 e.Republic
SOURCE: Center for Digital Government Health and Human Services Special Report Survey, 2016; President’s Council of Advisors on Science and Technology, 3/16, “Independence, Technology, and Connection in Older Age,”
https://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST/pcast_independence_tech__aging_report_final_0.pdf;
Telemedicine is currently seeing increased investment due to the perceived potential for expanding care and improving client outcomes.
No Parity Legislative Activity
Telemedicine Parity Law
Proposed Parity Law
Partial Parity Law
Telemedicine RegulationsA significant challenge for telemedicine deployment in both health and human services lies in the patchwork of regulations across states.
© 2016 e.Republic
SOURCE: American Telemedicine Association, “State Telemedicine Gaps Analysis,” http://www.americantelemed.org/policy/state-policy-resource-center#.VyEJafkrJph
© 2016 e.Republic
Key Takeaways Opportunities in HHS
External Pressures
Technological Solutions
The high cost of healthcare and human services delivery is pushing demand for IT solutions that promise administrative and cost efficiencies.
Opportunities in HHS
© 2016 e.Republic
The federal push for technological advancement in HHS, combined with a
growing and aging population, will result in opportunities across the vertical.
HITECH and other federal funding for EHR adoption and MMIS
improvements will continue at least through 2021.
Multiple grant programs exist to expand healthcare access using new
technologies.
Despite these opportunities, budgets continue to be tight, spurring agencies
to seek technological solutions.
© 2016 e.Republic
Several factors are raising operational costs in HHS and increasing demand for services.
Pressures that increase demand for services include:
Medicaid expansions under the ACA
An aging population
Calls for improved mental health services
The opioid abuse crisis
Pressures that increase costs for providers and agencies include:
Agency workforce shortages, cyberattacks, and updating legacy systems
to harness new technologies.
External Pressures on HHS Agencies
The many external pressures on HHS providers drives up demand for technological solutions that help contain costs while improving outcomes.
Sought-after technological solutions to these critical issues include:
Data sharing solutions
Integrated systems
Data analytics
Mobility for caseworkers
Improved automated processes
Telemedicine
Technological Solutions for HHS
© 2016 e.Republic
Thank you!
© 2016 e.Republic
The Center for Digital Government is a division of e.Republic, the nation’s only media and
research company focused exclusively on state and local government and education.
www.erepublic.com / www.centerdigitalgov.com
Seeking additional marketing intelligence? Ask about our other products & services such as:
• Surveys & Interviews
• Navigator Subscription (online state/local govt. opportunities and market intelligence portal)
• Market Playbooks & Certification Courses
• State/Local Government and Education Sales Training