MEDICAID – CONTEXT FOR CHANGE

Mike Cheek

Vice President, Medicaid and Long Term Care Policy

Executive Summary

Fiscal Pressures are Driving the Dialogue States are Restructuring Financing, Delivery

Systems and Government to Slow Cost Growth Centers for Medicare and Medicaid Services

has a Wide Array of Activities Underway and Planned that will Impact Long Term Care Providers

On the Horizon are Congressional Concepts Aimed at Slowing Cost Growth

Considerations for Long Term Care Professionals focus on Rapidly Changing Medicaid Landscape and Opportunities Related to Coordinating Services for People Eligible for Medicare and Medicaid (duals)

Fiscal Pressures are Driving the Dialogue

Fiscal Pressure

Medicaid is the Largest Single Share of Federal Funds to States

Source: National Association of State Budget Officers, 2009 State Expenditure Report, December 2010

Costs are Driving the Medicaid Reform Dialogue

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

State Medicaid

Federal Medicaid

Source: Centers for Medicare and Medicaid Services Office of the Actuary – National Health Expenditure Projections 2010 – 2020

Federal Stimulus Funds Begin

Federal Stimulus Funds End

Affordable Care Act Expands Eligibility

States are Restructuring Financing, Delivery Systems and Government to Slow Cost Growth

State Restructuring

States Budgeted for Little Medicaid Growth

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

4.1%3.4%

4.7%

6.8%

8.7%

10.4%

12.7%

8.5%7.7%

6.4%

1.3%

3.8%

5.8%

7.6%6.6%

7.3%

2.2%

Economic Downturn (2000-2003)

Welfare Reform, Managed Care

Part D

Economic Downturn and End of Enhanced FMAP (2008 – 2012)

Total Medicaid Spending Growth, FY 1996 – FY 2012

Source: KCMU Analysis of CMS Form 64 Data; KCMU survey of Medicaid officials conducted by Health Management Associates, 2011

Common State Savings Strategies

Provider reimbursement Eligibility and enrollment process Copays and premiums Benefits LTC and HCBS Prescription drug utilization and cost control

initiatives Managed Care Program Integrity Health Information Technology Duals Integration Efforts

Affordable Care Act Efforts are Mixed

010203040

Definitely Plan Not to PursueUnder ConsiderationDon't KnowDefinitely Plan to Implement

Source: Cheek, M., et. al., On the Verge: The Transformation of Long-Term Services and Supports. AARP Public Policy Institute (February 2012)

Num

ber

of

Sta

tes

Managed LTC is a Systems Used in Lieu of Fee For Service

Capitated MMLTC Medicaid agency and contractors enter into agreement

under which contractor accepts risk of providing defined Medicaid LTC services

Alternative types of MMLTC capitation packages: Medicaid-covered LTC services only All Medicaid-covered acute and LTC services All Medicare and Medicaid-covered services

(additional plan contract with CMS required for Medicare portion

ManagedCareContractor

ManagedCareContractorCapitated

Payment

StateMedicaidAgency

StateMedicaidAgency

ProvidersProviders

NegotiatedPayments(FFS, Per Diem, etc.)

By 2014, Approximately 23 States Likely will be Operating MMLTC Programs

Source: Cheek, M., et. al., On the Verge: The Transformation of Long-Term Services and Supports. AARP Public Policy Institute (February 2012); Personal Interviews with AHCA/NCAL State Executives

MMLTC Discussion or Planned Implementation

Current MMLTC Program – Regional or Statewide

State Government is Downsizing

Less Than 5%

Between 6% and

10%

Between 11% and

15%

Between 16% and

25%

More than 25%

0

5

10

15

20

25

30

35

20092011

Perc

en

t of

Sta

tes

Percentage of State Staff Eligible for Retirement by Percent of Total FTESource: Cheek, M., et. al., State of the States Survey 2011 – State Aging and Disability

Agencies in Times of Change. National Association of States United for Aging and Disabilities

CMS has a Wide Array of Activities Underway and Planned that will Impact Long Term Care Providers

Centers for Medicare and Medicaid Services (CMS)

CMS Disabled and Elderly Health Programs Group Expanded its Purview

Duals are a Significant area of Focus because of Costs and Acuity

0%

40%

80%

120%

79% 64% 85%61%

21% 36% 15%39%

DualsNon-Duals

Source: Kaiser Family Foundation, The Role of Medicare for People Dually Eligible for Medicare and Medicaid (January 2011)

New CMS Divisions

Center for Medicare and Medicaid Innovation Health Care Innovation Challenge funding Innovation advisors program

Medicare-Medicaid Coordination Office State Demonstrations to Integrate Care for Dual Eligible

Individuals Medicare Data for Dual Eligibles for States Initiative to Align the Medicare and Medicaid Programs Financial Models to Support State Efforts to Integrate Care

for Medicare-Medicaid Enrollees Reducing Preventable Hospitalizations Among Nursing

Facility Residents Integrated Care Resource Center Available to All States

AHCA Staff and Members Actively Been Working with These Offices

In Terms of ACA Options, States are Most Heavily Focused on Duals

Letter of Intent – Both Models

Demo Design

Capitation

MFFS** Managed Fee-for-Service (MFFS)

Both a Demo Design and Letter of Intent

Other Core CMS Activity Themes

Medicaid Program Integrity Reshaping Medicaid Managed Care Health Information Technology New Medicaid Data Systems Preparing for 2014 Home and Community-Based Services

Expansion using Affordable Care Act and other options

On the Horizon are Congressional Concepts Aimed at Slowing Cost Growth

Congress

Block Grants Have Re-Emerged Currently, states draw down federal

Medicaid dollars on a quarterly basis based on expenditures

Under a Block Grant, states would receive some form of a fixed dollar amount and would be required to manage to that dollar amount

Incremental Change may Occur First

New state Medicaid program authorities to coordinate financing and services for people eligible for both Medicare and Medicaid

Increased Medicaid program integrity efforts Further trimming of state capacity to draw

down additional federal dollars Provider Taxes Intergovernmental Transfers

Enhancement of state flexibility

Implications

At the End of the Day, Owner/Operators Should Consider …

Partnering with other segments of the health care sector on efforts to better coordinate services to people who are eligible for Medicare and Medicaid

Highlighting the value of CCNC as a viable option to Managed Long Term Care

Exploring opportunities to tap any new health information technology funding the state may leverage

Monitoring Medicaid cost containment activity Program integrity Specialized Medicaid authority to make changes not

normally allowable Monitoring continued emphasis on Home and

Community-Based Services