The State of Medicaid Managed Care in an Era of Federal Reform: Current Trends and Issues

1. The State of Medicaid Managed Carein an Era of Federal Reform:Current Trends and Issues Steve AragónChief Counsel | Texas Health & Human Services Commission Payors, Plans, and Managed Care Practice Group Annual Luncheon

2. Prologue: January 2011 • $15B Budget • Deficit

3. Texas Medicaid Today • Over $30 billion (federal and state funds) during SFY 2011 • Medicaid pays for more than 1/2 of all Texas births • 15% of all personal healthcare spending in Texas • Provides assistance for 2/3 of Texans in nursing homes • Insurance for 3.8 million low income, aged, and disabled Texans each month • 1 out of 4 Texas children covered • Billions in non patient-specific, supplemental federal funds to help care for indigent, uninsured Texans

4. FY 2011: Approx. $23B, all funds

8. The Next Wave

9. Legislative Response • $15.2 billion budget cuts • Rainy Day Fund intact • No new taxes

10. HB 1 Mandates • Expand and improve Medicaid managed care • Implement quality based payment systems • Streamline and maximize federal funding • Encourage personal responsibility • Prevent fraud and abuse • Establish healthcare collaboratives

11. Texas Medicaid 1115 Transformation Waiver • Expands Medicaid managed care statewide • Authorizes Regional Healthcare Partnerships • Establishes Quality-based Payment Systems • Uses savings to increase reimbursement for uncompensated care • Incentives for delivery system improvements • Protects hospital supplemental payments (i.e., UPL)

12. Hospital Finance Components • Establishes 2 funding pools • Uncompensated Care (UC) Pool • Delivery System Reform Incentive Payment (DSRIP) Pool • Expands categories of Uncompensated Care • E.g., physician costs • Enables local governments to cover more uncompensated care costs • Removes Charge Caps

13. Waiver Timeline Regional Boundaries Public Hearing Adopted RHP Rules Effective Date 8/24/12 5/17/12 DSRIP menus sent ot CMS Final DSRIP Menus, Regions, Protocols submitted to CMS 6/1/12 8/31/12 Proposed RHP Rules published in Texas Register Final RHP Plans submitted to CMS RHP Plans submitted to HHSC 9/1/12 6/22/12 10/31/12 ' 12 May 2012 Jun Jul Aug Sep Oct ' 12 Final RHPs/Anchors Announced 5/28/12 5/31/12 RHP Rules Public Comment Period 6/22/12 7/23/12 RHP Plan Review/Revision Period 9/1/12 10/31/12 Detailed information available at http://www.hhsc.state.tx.us/1115-waiver.shtml

14. Medicaid Managed Care Timeline HB 7: Medicaid Managed Care Pilot Authorized HB 2913, SB 1163-1165: Managed Care Client & Provider Protections 9/1/91 Travis County Pilot implemented 9/1/97 8/1/93 PCCM Expanded to 197 Counties Tri-County Pilot SB 2896: Moratorium on Managed Care Expansion 9/1/05 12/1/93 9/1/99 Medicaid Managed Care Plan for Foster Children NorthSTAR BH Pilot Launches 4/1/08 11/1/99 SB 10: Statewide Restructuring of Medicaid Managed Care Expansion begins Moratorium Lifted 9/1/11 9/1/95 9/1/01 Managed Care Expands to South Texas 3/1/12 1991 Sep 1991 Apr 1994 Nov 1996 Jun 1999 Jan 2002 Aug 2004 Mar 2007 Oct 2009 2012 Made with Office Timeline 2010 www.officetimeline.com

15. Managed Care Service Delivery Models • STAR (State of Texas Access Reform) • Capitated, Health Maintenance Organization (HMO) model for non-disabled pregnant women and children. • STAR+PLUS • Provides acute care services. • Capitated HMO model for disabled Medicaid clients and dual eligibles (Medicaid and Medicare). • Provides acute and long-term services and supports (LTSS).

16. Managed Care Service Delivery Models • STAR Health • Capitated HMO model for foster care children. • Provides acute care services with emphasis on behavioral health and medication management. • Primary Care Case Management (PCCM) • Non-capitated service delivery model. • Includes non-disabled pregnant women, children, and disabled adults. • Acute care services only.

17. Medicaid STAR Program: Geographic Distribution (prior to 03/01/2011)

18. Medicaid STAR Program • The STAR Program provides acute care services for pregnant women, Temporary Assistance to Needy Families (TANF) recipients and low-income children and families. • STAR operates under the authority of a federal 1915(b) waiver. • Risk-based, capitated managed care. • Each STAR member is enrolled in a health maintenance organization (HMO) and has a primary care provider (PCP). PCP is chosen by member or assigned by state or HMO.

19. Medicaid STAR+PLUSProgram • STAR+PLUS structured as an integrated delivery system (both • acute and LTSS) for disabled and chronically ill Medicaid • recipients: • Risk-based, capitated managed care. • Most aged and disabled adults who are not in institutions are required to participate. • Includes dual eligible (Medicaid and Medicare) recipients (slightly more than half of STAR+PLUS members).

20. Medicaid STAR+PLUS Program • STAR+PLUS is based on a combined 1915(b) and 1915(c) waiver: • Implemented as a pilot in Harris County Service Area in 1998. • 2007 - Expanded to the full Harris County Service Area, and to Bexar, Nueces, and Travis Services Area in February 2007. • 2011 – Expanded to Dallas and Tarrant Service Area. • Goal: achieve a seamless continuum of care by integrating acute and long-term services and supports in a managed care environment. • Promotes delivery of home and community-based services: Health maintenance organizations (HMOs) are responsible for coordinating acute and LTSS through the use of a service coordinator.

21. Medicaid STAR+PLUS Program • Service coordinator is responsible for: • Formulating an individualized plan covering acute and LTSS. • Overseeing smooth transition from acute care to LTSS. • Making home visits and assessing members’ needs: • Authorize community LTSS. • Arrange acute care services. • STAR+PLUS Medicaid Only members are assigned or choose a primary care provider. • Service Coordinators are required to assist with Medicare physician and service coordination.

22. Medicaid STAR+PLUS Program: Current Geographic Distribution

23. Medicaid Managed CareInitiatives Expand Existing STAR and STAR+PLUS Service Delivery Areas to Contiguous Counties. Expand STAR and STAR+PLUS to South Texas. Convert PCCM Areas to the STAR Program model. Create a Dental Managed Care Model for Medicaid. Include In-patient Hospital Services in STAR+PLUS.

24. 2011 Managed Care Expansion:Geographic Distribution STAR & STAR+PLUS Managed Care Expansion Service Areas

25. Proposed Medicaid Managed Care Initiatives

26. Proposed Medicaid Managed Care Initiatives

27. Proposed Medicaid Managed Care Initiatives

28. Managed Care vs. FFS

29. Steve Aragón Chief Counsel | Health & Human Services Commission Tel. 512.424.6578 | Email: steve.aragon@hhsc.state.tx.us