Emerging Trends in Medicaid: An Update on State DRA Activity

1. Emerging Trends in Medicaid: An Update on State DRA Activity Molly O’Malley, MPP Senior Policy Analyst for New York AIDS Coalition mini-conference September 10, 2007

2. Medicaid Today Health Insurance Coverage 27 million children and 14 million adults in low-income families; 8 million persons with disabilities Assistance to Medicare Beneficiaries 7.5 million aged and disabled — 19% of Medicare beneficiaries Long-Term Care Assistance Nearly 1 million nursing home residents; 41% of long-term care services MEDICAID Support for Health Care System and Safety-net 18% of national spending on health care State Capacity for Health Coverage 45% of federal funds to states

3. Medicaid Serves a Diverse Population Percent with Medicaid: Families Aged & Disabled Note: “Poor” defined as <100% of federal poverty level, which was $19,971 for a family of four in 2005. SOURCE: Estimates by Kaiser Commission on Medicaid and the Uninsured and Urban Institute; birth data from MCH Update, National Governors Association.

4. Medicaid Payments Per Enrolleeby Acute and Long-Term Care, 2004 $12,364 $10,759 Long-Term Care Acute Care $1,942 $1,474 SOURCE: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on FY 2004 MSIS data.

5. Medicaid Long-Term Care Users Account for 7 Percent of Enrollees But Over Half of Spending Enrollees Expenditures 48% 93% 19% 52% 33% 4% 3% Total = 51.4 million Total = $228.2 billion Note: Data include spending on acute and long-term care services by users. Source: KCMU and Urban Institute estimates based on MSIS 2002.

6. Medicaid Expenditures by Service, 2005 DSH Payments 5.6% Home Health and Personal Care 13.3% Inpatient 13.9% Mental Health 1.5% Physician/ Lab/ X-ray 3.8% ICF/MR 4.1% Outpatient/Clinic 7.0% Long-Term Care 34.2% Acute Care 60.2% Nursing Facilities 15.2% Drugs 10.0% Other Acute 6.4% Payments to Medicare 2.8% Payments to MCOs 16.3% Total = $305.3 billion SOURCE: Urban Institute estimates based on data from CMS (Form 64), prepared for the Kaiser Commission on Medicaid and the Uninsured.

7. Growth in Medicaid Long-Term Care Expenditures, 1991-2005 In Billions: $95 $89 $84 $82 Home & community-based care $75 37% 36% 33% 31% Institutional care 29% $52 21% $34 71% 69% 67% 64% 63% 14% 79% 86% Note: Home and community-based care includes home health, personal care services and home and community-based service waivers. SOURCE: Burwell et al. 2006, CMS-64 data.

8. Medicaid 1915(c) HCBS Waiver Waiting Lists, by Enrollment Group, 2002-2005 260,916 6% 206,427 192,447 1% 180,347 41% 3% 1% 53% 43% 51% 53% 53% 47% 45% Others includes waivers that serve children, persons with HIV/AIDS, mental health needs, and with traumatic brain and spinal cord injuries. SOURCE: UCSF analysis of UCSF Waiver Policy Survey for the Kaiser Commission on Medicaid and the Uninsured, 2002-2005.

9. Federal Spending on HIV/AIDS Care by Program, FY 2007 Total Spending = $13.2 billion SOURCE: OMB and DHHS Office of the Budget, February 2007.

10. Distribution of Medicaid Spending Reductions in the Deficit Reduction Act Other Prescription Drug Payment Long-Term Care Benefits and Cost Sharing 5 Year Savings = $11.5 Billion 10 Year Savings = $43.2 Billion Note: “Other” provisions in the conference report include targeted case management, third-party recovery, provider taxes, and requiring evidence of citizenship SOURCE: CBO, January 27, 2006

11. Key Medicaid Changes in the DRA • Citizenship documentation • New requirement for current and new beneficiaries to document proof of citizenship • Previously: states established citizenship or satisfactory immigration status (47 states allowed applicants to self-declare citizenship status) • Benefits • Allows “benchmark” or “Secretary-approved” coverage for some groups • Previously: states provided “mandatory” benefits and could choose to provide “optional” benefits (e.g., prescription drugs) • Premiums & Cost Sharing • Allows higher or new cost sharing/premiums; state option to make co-pays enforceable • Previously: nominal cost sharing allowed; premiums generally prohibited • Comparability and Statewideness • Allows variation in benefits and cost sharing across groups and geographic areas • Previously: states generally were required to have uniform benefits and cost sharing across groups and areas of the state • Long-term Care • Broader eligibility options for children with disabilities, tighter eligibility for Medicaid nursing home care, new state options to promote community-based care

12. States Using DRA Benefit Flexibility • West Virginia: “Secretary-approved coverage” and “member agreement” • Parents required to sign and comply with a “member agreement” to access certain benefits for themselves and their children (including mental health services, diabetes care, and drugs beyond a four-drug limit) • Providers monitor their patients’ compliance and report to the state • Kentucky: Creates 4 Targeted Benefits Plans and Increases Cost Sharing • Global Choices (default), Family Choices (most kids), Optimum Choices (MRDD), Comprehensive Choices (Nursing Home Care) • New cost sharing requirements and service limits • Disease management, Get Healthy Benefit Accounts, and premium assistance • Expanded access to community based long-term care services • Idaho: 3 Targeted Benefit Plans Promote Responsibility and Prevention • Targeted benefits for children / working adults, individuals with disabilities and elderly • Emphasis on long-term savings through prevention and responsible use of health care • Kansas: Personal Assistance Services for Ticket To Work Beneficiaries • Virginia: Disease Management • Asthma, congestive heart failure, coronary artery disease and/or diabetes

13. States Using New DRA Long-Term Care Options • Family Opportunity Act • The DRA created new option for states to extend Medicaid “buy-in” coverage to children with disabilities with family income up to 300% of poverty; no institutional level of care requirement or budget neutrality requirement • Few states have taken up this option (IA, ND) • HCBS Option • New state option creates opportunity to provide HCBS waiver services under a state plan to seniors and people with disabilities up to 150% FPL, without needing to apply for a waiver • Iowa is the first state to add HCBS services to Medicaid state plan, effective 1/1/07 • Cash and Counseling Option • New state option creates opportunity for states to provide for self-direction of personal assistance services (using the Cash and Counseling individual budget model) without needing to request a waiver • Alabama is first state to add self-directed personal assistance services (PAS) to Medicaid state plan, effective August 1, 2007 • Money Follows the Person Demonstration • Provides enhanced FMAP (75-90%) for an individual’s costs for 12 months from the date of institutional discharge • 31 states awarded grants totaling $1.4 billion as of May 2007 to transition individuals from institutions to the community

14. State Tax Revenue and Medicaid Spending Growth, 1997-2006 NOTE: State Tax Revenue data is adjusted for inflation and legislative changes.Preliminary estimate for 2006. SOURCE: KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates and KCMU / HMA Survey for 2006 Medicaid Growth Estimates; Analysis by the Rockefeller Institute of Government for State Tax Revenue.

15. Implemented FY 2006 Adopted FY 2007 Provider Payments Eligibility Benefits Long Term Care NOTE: Past survey results indicate not all adopted actions are implemented. SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2006. State Policy Actions Implemented in FY 2006and Adopted for FY 2007 States with Expansions / Enhancements 5 9 10 15 17 18 43 States with Program Restrictions 46

16. Medicaid Long-Term Care Expansions, Implemented in FY 2006 and Adopted for FY 2007 SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2006.

17. Future Outlook • Medicaid will continue to play a critical role for low-income people with HIV/AIDS and fill in gaps in the private market • On-going Medicaid pressures expected to persist due to growing health care costs, declines in employer coverage, and increasing aged and disabled • States still evaluating options in the DRA • Many states discussing expanding health coverage • Medicaid is a base on which states build coverage expansions • A primary focus is children • Federal policy, including SCHIP reauthorization, has implications for current programs and state reform efforts