The KanCare Transition Kansas Association of Counties Annual Conference November 13, 2012

1. The KanCare TransitionKansas Association of CountiesAnnual ConferenceNovember 13, 2012 Martie Ross Pershing Yoakley & Associates, PC

2. What Is Medicaid? • Federal-state program to provide care for vulnerable populations • State determines program structure within specified standards • Approved State Plan • Shared cost • $2.8B total; $1.1B SGF(KS FMAP = 56.5%) • 18% of SGF • 2nd largest state expenditure

3. What Is Medicaid? • ≈ 300,000 Kansans covered • Children, pregnant women, adults with children ≤ 30% FPL ($5600/year for family of four) • 2/3 of beneficiaries, but only 25% of cost • Primarily in managed care (capitated payment to private insurance company) • Elderly and persons with physical/mental disability • 1/3 of beneficiaries, but more than 75% of cost • Medicaid pays almost 50% of long-term care costs for elderly • Primarily in fee-for-service (state pays providers directly)

4. KanCare • Governor Brownback’s plan for reforming Kansas Medicaid program • Announced in Nov. 2011; effective on Jan. 1, 2013 • Achieve $853 million ($368M SGF)over five years

5. Savings • Does not reduce eligibility • Does not reduce covered services • Does not reduce provider payments • Savings achieved through outcomes-focused, person-centered care coordination model

7. Four Pillars of Health Reform Focus on wellness and prevention Focus on quality of care Promote clinical integration Promote community-based solutions

8. Big Picture – Track 1 • Contract with 3 MCOs to run Medicaid program for per-member fixed rate • Move (nearly) all Medicaid beneficiaries to managed care • Establish safety net care pools • Large public teaching hospital; border city children’s hospitals; uncompensated care; CAHs • Develop Medicaid off-ramps (pilot projects)

9. Big Picture – Track 2 • Global waiver • Per capita block grant with performance standards (quality measures) • “Ready to move forward as early as 2015”

10. Role of MCOs • State’s contract with MCO impose standards of performance and oversight • MCOs create provider networks to deliver services to their members • MCOs’ provider contracts establish terms of service delivery and payment

11. MCO Selection and Network Development • State has contracted with three for-profit, national health insurance companies • Sunflower State Health Plan (Centene) • AmeriGroup (to be acquired by WellPoint) • United HealthCare • State-approved standard provider agreement and provider manuals (and any future changes) • MCOs to have provider networks in place by 11/01/12

12. MCO Selection and Network Development • Beneficiaries to receive auto-enrollment notice from State in November • Equal distribution? • Beneficiary may change MCO within first 45 days, annually thereafter • Federal waiver • MCOs assume administrative duties on 01/01/13 (non-medical services for developmentally disabled delayed to 01/01/14)

13. Provider Network Requirements • Must provide statewide coverage for all services • Must include sufficient number of providers to meet specified access to care requirements • Must include PCPs, pharmacies, and hospitals located in every county in which members reside • Must offer contract to all FQHCs, RHCs, and CAHs • Must make “every effort” to permit member to continue with current provider

14. Provider Network Requirements • Hospital • Usual and customary transport time (≤ 30 in urban areas) • Emergency Care • Immediate at the nearest available facility regardless of network or MCO contract • PCP • 30 miles/minutes (rural), 20 miles/30 minutes (urban); patient load ≤ 2500 for physician or ≤ 1500 for mid-level; ≤ 3 weeks for regular appointments, 48 hours for urgent; wait times ≤ 45 minutes

15. MCOs and LHDs • MCOs to make “reasonable effort” to subcontract with providers receiving Title V or Title X funding • Maternal & child health; family planning; STDs, TB; WIC • MCOs to coordinate with LHDs “to ensure prevention and limit the spread of” STDs/TB • Contracts with LHDs must include language “regarding the coordination of care and reporting of” STDs and TB • MCOs “expected to subcontract or coordinate” with LHDs regarding WIC program (referrals and information sharing)

16. Provider Network Management • Must credential network providers per NCQA guidelines • Must maintain State-approved provider manual • Must maintain compliance program • Must satisfy timely claims processing requirements • Must maintain utilization management program • Establish prior authorization procedures • No PA for “emergency services” • Establish and disseminate written review standards

17. Network Provider Payments • State-published fee schedule sets minimum rates for network providers • Initial fee schedule = current Medicaid FFS rates • Primary care add-on payments (?) • MCO may pay less than minimum if opportunity for incentive payments (e.g., quality scores) • Alternative payment arrangements only if proposed by network provider and approved by State

18. Out-of-Network Providers • MCO must provide member access to OON provider if “appropriate services” not available from network providers • State will consider OON provider appeals regarding whether service is medically necessity, is an emergency, or is an appropriate screening

19. Out-of-Network Provider Payments • Hospitals and nursing facilities entitled to 3 reasonable offers; OON paid 90 percent of FFS rates • Other providers not afforded same protection • OON services negotiated on single-case arrangements • OON providers cannot balance bill beneficiaries

20. Person-Centered Coordinated Care • Demonstrated care coordination capabilities • Use of HIT/HIE • Track preventive care services for each member • Address misuse of ERs • Program to reduce hospital readmissions • Initial health risk assessment • Done by “appropriate health care professionals” • Specified elements • Information shared among providers and with the State • Annual physical exams and/or health education

21. Person-Centered Coordinated Care • Health literacy • Value-added services • Advanced directives • Care management for high-risk, high-service utilizers, and other high-cost Members • Case management, disease management, discharge and transition planning

22. Health Homes • ACA appropriates additional monies to states to establish Medicaid “health homes” • Similar to medical home, but greater emphasis on community and social services resources • MCO requirements • Members with diabetes and/or mental illness assigned to health homes by 01/01/14 • Members with other chronic diseases assigned to health homes by 01/01/15

23. Home and Community-Based Services • Kansas is No. 6 in percentage of seniors living in nursing homes • KanCare forces transition away from institutional care and toward services provided in individuals’ homes and communities • Outcome measures will include lessening reliance on institutional care

24. Pay for Performance: P4P • RFP lists operational measures for Contract Year 1; initial quality measures for Years 2 and 3 • State withholds 3 to 5% percent of total payments until operational/quality thresholds are met • Quality thresholds increase each year to encourage continuous quality improvement • RFP “encourages the adoption of innovative, evidence-based provider payment mechanisms that incorporate performance and quality initiatives”

25. The Kentucky Experience • Transition began in November 2011 • Similar fixed-rate MCO contracts • Between 11/11 and 02/12, State paid MCOs $708 million, MCOs paid out $420 million • Patient and provider complaints

26. Auditor’s Recommendations • Agreed-upon metrics for measuring and reporting timeliness of payments • Monitoring and corrective action plans • Use of automated systems • Well-defined appeals process • Consideration of relevant information prior to denying claims

27. LHD Opportunities • Specific LHD programs identified in RFP • Beneficiary enrollment facilitation • Specific services (e.g., immunizations) • Care coordination services • Initial health risk assessments (EPSDT) • Primary care • Partnerships with local providers

28. Medicaid Expansion • Starting in 2014, state that expands Medicaid eligibility to 133% FPL will receive higher FMAP for newly eligible • 100% in 2014-16; 95% in 2017; 94% in 2018; 93% in 2019; 90% in 2020+ • Administrative costs still 50/50 • Coverage must be at least as good as the minimum essential health benefits available through Exchanges

29. SCOTUS ACA Decision Majority No. 2 (Justices Roberts, Ginsburg, Breyer, Sotomayor, and Kagan): Congress has authority under Taxing and Spending Clause to impose penalty on persons without health insurance coverage. Majority No. 1 (Justices Roberts, Scalia, Kenney, Thomas, and Alito): Congress lacks authority under Commerce Clause to impose individual mandate.

30. SCOTUS ACA Decision Majority No. 2 Entire ACA does not fall due to unconstitutionality of Medicaid expansion penalty. Majority No. 1 (+ Justices Breyer and Kagan): Congress lacks authority to withhold all Medicaid funding for state that does not expand Medicaid coverage.

31. Medicaid Expansion“No, Thanks” • 365,000 uninsured in Kansas (13.3%) • 141,000 eligible under Medicaid expansion • 38,000 between 100-133% FPL eligible for exchange subsidies • 103,000 left out if Kansas opts out

32. Medicaid ExpansionImpact on Hospitals • Less-than-expected decline in uncompensated care • Reductions in disproportionate share payments • Medicaid DSH reduced 50% by 2019 • HHS has not yet published methodology • Medicare DSH reduced 75% in 2014 (with some amount returned based on documented uncompensated care)

33. Martie RossPershing Yoakley & Associates mross@pyapc.com (913) 232-5145