Session 1.02Improving Access to and Quality of Medicaid for Pennsylvanians

Presented by:Stefani Pashman

Pennsylvania Department of Public Welfare

Medicaid Congress

June 5, 2008

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Agenda

I. Background on Pennsylvania State Medical Assistance (Medicaid) Program

II. Pennsylvania Medical Assistance Priorities

III. Cost Containment Efforts Lead to Improved Access

IV. Initiatives Focused on Quality and Value

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I. Background on Pennsylvania State Medical Assistance (Medicaid) Program

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Medical Assistance in Pennsylvania: At a Glance

Serves 1.9 million low-income individuals • 2/3 in mandatory managed care (based on geography) with

behavioral health carve out

• 1/3 in AccessPlus primary care case management program for physical health, behavioral health carve out

Generous optional benefit package

Diverse geography with significant urban and rural populations

Conservative legislature creates budget challenges

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Medical Assistance Makes Up 19% of Commonwealth Budget

Higher Education

7%

Debt Service3%

Other DPW Human Service

Programs

17%

Medical Assistance State Share

19%

Pre K-12 Education

34%

All Other

14%

Corrections

6%

FY 07-08

6

FY 07-08 Medical Assistance Budget

(by Service Program)

Other

$1.3 Billion Behavioral Health Services $2.9

billion

Physical Health Services $6.6

billion

Long Term Living $3.8 billion

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Ongoing Budget Challenges We Face…

Loss of federal funding

Eligibility growth

Increase in elderly & disabled

Uncertain national economic outlook

Growth in national health care costs

Federal Government Continues to Cut State Funding in 2007-08

2007-08 Federal Changes 2002-03 through 2006-07

2007-08 Additional

Impact

Reductions in Program Funding ($ 57.7) ($ 17.9)

Unfunded/Under-funded Mandates ($335.5) ($525.4)

Federal “Clawback” ($338.5)

Other Losses/Revenue Reductions ($1,295.0) ($174.4)

Total ($2,026.7) ($717.7)

In 2007-08, Pennsylvania will have to absorb an additional $717.7 million in additional federal cuts

(Dollars in millions)

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Medical Assistance Eligibility Trend

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

*Projected

Average Monthly Enrollment

+10

.5% +

7.0% +4.

3% +4.

9%

-0.2

%

-3.6

%

-8.2

%

-1.7

% +2.

8% +4.

5%

+4.

8%

+7.

8%

+3.

9% +3.

4%

Source: DPW Budget Office

-2.9

%

+1.

4%

+4.

9%

11

10

PA Medical Assistance Growth Areas are Elderly and Disabled

Eligibility Category Dec-06 Dec-07 % Change

Chronically Ill Adults 99,897 101,127 1.23

Elderly/Healthy Horizons 257,063 264,661 2.95

Disabled 383,769 396,503 3.31

Adults/Parents 292,925 293,464 .18

Children 837,910 837,642 (.03)

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Seniors and Persons with Disabilities use more Medical Assistance resources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%102,168

5%

Chronically Ill Adults

$1,090,9698%

266,93914%

Elderly $4,219,22032%

395,39120%

$4,420,85733%

Disabled261,534

13%

$995,0737%

943,73848%

$2,649,88320%

Adults

Children

CostsPersons

FY 07-08 Estimated

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II. Pennsylvania Medical Assistance Priorities

Despite Budget Climate, Governor Committed to Core Principles Since 2005

CORE PRINCIPLE #2

Children will not experience any reduction in services

CORE PRINCIPLE #1

No one currently receiving services will lose eligibility

CORE PRINCIPLE #3

Pennsylvania will provide coverage for the growing number of vulnerable individuals and families that need

our assistance

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What has PA done to address funding challenges?

• Focus on quality and value

• Cut administrative spending

• Work smarter

• Build on existing cost containment initiatives

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III. Cost Containment Efforts Lead to Improved Access

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Governor Rendell has Reduced Statewide Administrative Spending

Dol

lars

in m

illi

ons

$1,953$1,914

$1,500

$2,000

2002-03 Actual 2007-08 Budget

State Administrative Spending

$40 million lower despite

5 years of inflation

and costincreases

Despite inflationary increases in health benefit costs, fuel costs and numerous other costs, administrative spending is still 2 percent lower in 2007-08 than in 2002-03

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Medicaid Program has Similarly Reigned in Administrative

Spending

Over the last four years, achieved $374.2 million in savings

Planning to save over $150 million next year

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Changes Made to FFS Pharmacy Program in Last 3 Years

• Established Pharmacy Division

• Implemented Payment Rate Changes

• Implemented Dynamic Pricing

• Established Preferred Drug List (PDL)

• Introduced Quantity Limits

• Implemented Clinical Prior Authorizations

FFS Pharmacy Non-Dual Eligible PMPM Trends(Federal and Supplemental Rebates are not excluded)

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

Paid Quarter

Spe

nd P

MP

M

Pharmacy PMPM

Linear (Pharmacy PMPM)

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Cost Containment Also Improved Program Operations

• Maximizing Recoveries and Minimizing Payments in Error• $140.7 million in Third Party Liability (TPL) cost recoveries in

2007• $24.9 million in recoveries for fraudulent and erroneous

payments in 2007

• Negotiating Better Contracts $29.1 million in negotiated contract savings in 2007

• $42.2 million in negotiated savings over the life of these contracts

• Reorganized Mental Health and Substance Abuse operations to improve integration and significantly reduced administrative expenses

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Under ACCESS Plus We Now Have a Managed FFS Program

AccessPlus takes managed care concepts and applies them to the fee-for-service program, in rural areas.

• Over 290,000 recipients enrolled in ACCESS Plus

• Medical home established for both children and adults

• Significant improvement in clinical quality for recipient with chronic disease

• Over 34,000 recipients involved in disease management (DM) managed by contractor

• 50% of Disease management recipients in the highest severity of illness (level 3) improved to a level 1 or 2

• Complex case management unit is actively involved with over 550 recipients per month

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New Initiatives to Improve Access to Medical

AssistancePrescription drug coverage

• Today 43,000 low income adults qualify for MA but are not eligible for prescription drug benefits

• New initiative would fill that gap in conjunction with the implementation of Cover All Pennsylvanians

Selected fee increases • Skilled nursing care and home health services• Dental and primary care providers

Goal is to ensure access for children and families

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IV. Initiatives Focused on Quality and Value

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Quality and Value Drive Budget Initiatives

Focusing on Credentialing Implemented

Family Planning Waiver

Implementing Predictive Modeling

QUALITY

&

VALUE

ER Diversion

Implemented Preventable

Serious Adverse Events Policy

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Quality and Value Drive Budget Initiatives

Updating Specialty

Pharmacy

Adopting TelemedicineAddressing

Disparities

Address Childhood

Obesity and Weight

ManagementQUALITY

&

VALUE

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Pay for Performance incentives leads to better health outcomes

Managed Care Organizations can earn

up to a 2.5% performance bonus (up from 0.5% two

years ago) based on specific measures

Hospitals 1) Can apply for competitive

grants for quality improvement projects

2) Access additional funds based on quality efforts

ACCESS Plus providers are eligible for similar

incentive payments

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Rebalancing the Long-Term Living System Enhances Efficiency and

QualityGOAL: 50/50 split between home & community based and institutional care

WHY? Better quality, better efficiency, consistent with consumer preference

HOW?• Established cross-department office• Expanding Adult day care to help seniors stay at home longer while giving their

families the support they need • Tenant based rental assistance pilot broadened to include 10 more counties• Funding for services for 1,170 additional persons with disabilities and 2,100

additional older persons • Building the systems to license, certify and inspect Assisted Living residences

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Take-Aways

• Having a mandate from the Governor helps stabilize the Medicaid program

• Cost containment initiatives pay off, but are labor-intensive to operationalize (there’s no more “low hanging fruit”)

• Investments in quality and pay for performance are long-run

• Each year only gets more difficult

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Stefani Pashman, Special Assistant to the Secretary

Pennsylvania Department of Public Welfare

Email: spashman@state.pa.us

Questions?

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Appendix

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PA Medicaid Optional ServicesBenefits for Adults Over 21 Years*

• Ambulatory Surgical Center• Case Management (Targeted)• Dental**, including orthodontics• Home and Community-Based Waiver• Inpatient Hospital and Nursing Facility Service

for 65+ in an Institution for Mental Disease (IMD)

• Intermediate Care Facilities/Other Related Conditions (ICF/ORC)

• Medical Supplies and Equipment**• Pharmacy**• Prosthetic Devices**• Rehab Services• TB Related• Therapy (Occupational, Physical and Speech

for Adults Limited to Those Provided by Hospital, Outpatient Clinic or Home Health Provider)

• Birthing Center Services• Chiropractic• Drug & Alcohol Outpatient Clinic• Hospice• Intermediate Care Facilities for Persons with

Mental Retardation (ICF/MR)• Independent Medical Clinic/Surgical Center• Optometry• Primary Care Case Management (PCCM)

Services• Podiatrist• Psychiatric Clinic• Renal Dialysis• Transportation

*These Normally Optional Services are Redefined as Mandatory when Medically Necessary for Eligibles Under Age 21

**Adults eligible under the Medically Needy Only (MNO) category are not eligible for these services with some exceptions.

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Hospital P4P

• Hospital Quality Incentive• Incentives funded through incremental increase in DSH

and Med Ed payments for DSH qualifying hospitals

• Rate of payment increases for DSH hospitals tied to performance measures focused on:

• Re-admission rates for chronic disease

• Clinical indicators

• Commitment to EMR, pharmacy error reduction and quality reporting

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Hospital P4P

• Hospital Quality Grant Program

• $2.2 million (total) set aside in FY07-08

• Provide grants up to $100,000 to acute care DSH hospitals who have made investments in the following:

• Pharmacy error reduction• Single medical record• Programs that have a positive impact on the hospitals

treatment and management of asthma, diabetes, CHF or COPD• Programs that assist hospitals to improve LVF and community

acquired pneumonia quality results

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Other New P4P

• ACCESS Plus P4P• Expand physician P4P to encourage physicians to actively engage in care

management programs

• HealthChoices Provider P4P• Implement P4P program to incentivize providers. All monies will go directly

to the provider for activities which improve quality of care

• Increased MCO Contract Incentive Payments• Opportunity to earn up to 2.5% of capitation rate in incentive payments• Contract incentives focus on improving health status of members, not

utilization controls, e.g. :• Controlling high blood pressure• Improving prenatal care in 1st trimester• Improving adolescent well-care visit rates

http://www.dpw.state.pa.us