State Policy Update

1. State Policy Update MNACHC Annual Conference October 12, 2006 Jonathan Watson Associate Director/Public Policy Director

2. Goals/Objectives • Trends in the health care market-place for safety-net providers. • Review 2006 Minnesota legislative session. • Impact of Election 2006. • Preview 2007 Minnesota legislative session. • Current policy developments • QCare • Deficit Reduction Act implementation

3. CURRENT HEALTH CARE TRENDS IN MINNESOTA Part One

4. Trends#1 – Loss of Group Coverage Chart 1: MN Insurance Coverage, 2001 to 2004 • Number of Minnesotans with group-sponsored coverage dropped 8% or roughly 172,000 people from 2001 to 2004.

5. Trends#1 – Loss of Group Coverage Chart 2: MN Change in Group Insurance Coverage, 2002 to 2004, By Race/Ethnicity • Latinos realized the greatest drop in group health care coverage – nearly a 40% drop. • All ethnicities realized a decline group coverage from 2002 to 2004.

6. Trends#2 – Growth in Health Care Premiums Chart 3: MN Change in Health Care Premiums vs. Weekly Wages & Inflation, 2001-2005 • Since 2001, health care premiums have increased 3 times the increase in the average weekly wage in Minnesota and almost 4 times the inflation rate in MN.

7. Trends#3 – Increased Out of Pocket Costs For Enrollees Chart 4: Enrollee vs. Plan Share of Cost, 2001-2004 • From 2001 to 2005, the average out of pocket cost for health plan enrollees increased 65% -- from $297 to $489. • Enrollees are “picking up” a greater share of their health care costs.

8. Trends#4 – Increasing Uninsured Chart 5 – MN Percent Uninsured, 1997-2004 • While still one of the lowest in the US, MN’s uninsured rate increased nearly 30% -- or by 96,000 Minnesotans --since 2001.

9. Trends#5 – Increasing Uninsured at CHCs Chart 6 – MNACHC Uninsured, 1999-2005 • The number of uninsured at Minnesota’s CHCs has increased 45% from 2001 to 2005.

10. Trends#5- Increasing Uninsured at CHCs Chart 7 – MNACHC Insurance Status, 2003-2005 • Since 2003, the Medicare and uninsured populations are the two fastest growing segments of CHCs patient base. • Medicare grew by 12% or 700 patients, while the uninsured grew by 8% or 9,700 patients. Uninsured Medicare MA/MNCare Private

11. Trends#6- Declining MNCare Enrollment Chart 8 – MNCare Enrollment, 7/05 – 8/06 • MinnesotaCare enrollment has decreased 15.1% over the past 14 months.

12. Trends#7- Increasing GAMC Enrollment Chart 9 – GAMC Enrollment, 7/06 – 8/06 • Despite previous projections forecasting a 13% decline in 2006, GAMC enrollment is up 7.6%

13. Trend Summary • Loss of group coverage – 8% drop since 2001, lower-income residents & Latino population realize greatest loss. • Rising uninsured – overall 30% increase since 2001, lower income & Latinos realize significant increases. • Health care premiums - outpacing inflation by a factor of 3 and wages by a factor of 4. • Increasing out-of-pocket costs for enrollees – 65% increase since 2001. • CHC growth in uninsured and Medicare populations – 8% and 12% growth respectively since 2003. • Recent (14 month) growth in GAMC – 8% increase despite earlier projections; decline in MNCare - 16%

14. Other Trends • Pay-for-Performance/Quality • Payments, reporting requirements, adjusting for case mix, patient “dumping” • Consumer-Driven Health Care • HSAs, health care “report-cards,” patient shopping • Digital Health • E-health care, electronic medical record, online appointments/records, cost of systems • Retail Clinics • Convenience • Workforce • Rural health, underserved, dental providers

15. CHC Statistics Minnesota CHCs serve… • 1 out of every 7 uninsured Minnesotan • 1 out of every 11 Medicaid enrollees • 1 out of every 10 Minnesotan below poverty • 1 out of every 7 “non-white” Minnesotan • 2 out of every 5 “non white” resident of Mpls/St. Paul • 1 out of every 7 Latinos • nearly 1 out of every 2 Latinos in Mpls./St. Paul

16. 2006 LEGISLATIVE REVIEW Part Two

17. 2006 Legislative Review • Highlights • State budget surplus FY2006-07 = $88 million • Higher corporate tax revenue • Health impact “fee” deemed legal • $57 million less spending • $19.2 million less in health and human services • Traditionally a “bonding year” – yet “policy” items considered in light of surplus • Stadiums for Minnesota Twins and U of MN football • $800 million • Bonding for biosciences at U of MN, Northstar commuter rail, state universities and colleges • $1 billion • New Funds for incarcerating and treating sex offenders

18. 2006 Legislative Review HOUSE Consumer-Driven Reforms HSAs, Cost Containment, Combat Fraud SENATE “Undoing” Previous Cuts to MHCP, Universal Health Care GOVERNOR Mental Health Initiative, DRA Implementation

19. 2006 Legislative Review • HEALTH CARE-RELATED • $9 million for mental health services (Governor requested $50 million) • MNCare dental copayments eliminated for parents and adults with children below 175% FPL • $5 million for pandemic flu response • Pay-for-performance for diabetics on Medicaid • Community health center study • DHS study the adequacy of CHCs and community clinics in state • Use of grants to expand the number of clinics • Increase use of physician assistants, nurse practitioners, medical residents and other allied health professionals to expand access

20. 2006 Legislative Review What Didn’t Pass in 2006…what to expect in 2007? • Expansion of MNCare for adults without children up to 200% of FPL ($15.5M over the 2006-09 period) • Currently at 175% of FPL. • Restoring family planning grants ($3.8M) • TB treatment/case management for immigrants ($500,000) • Eliminating scheduled 8% increase in MNCare premiums ($4.3M) • Reinstate MNCare outreach grants ($1.7M)

21. 2006 Legislative Review What Didn’t Pass in 2006…what to expect in 2007? • Allowing small employers to “buy-into” MNCare ($4.6M) • Increase MNCare inpatient hospitalization cap to $20,000 ($7.6M) • Currently at $10,000 • Permit MNCare coverage for undocumented children ($1.4M) • Constitutional amendment for universal health coverage • “De-privatize” MHCP – eliminate PMAP, all Fee-For-Service • “Wal-Mart/Fair Share” legislation • Fraud provisions

22. 2006 ELECTIONS Part Three

23. 2006 Minnesota ElectionSenate • Key Retirements • Senator Lourey (DFL) – Chair of Health & Family Security Committee • Senator Kiscaden (DFL) – member of HFS Committee TOTAL = 67 DFL=38 R=29

24. 2006 Minnesota ElectionHouse • Key Retirements • Rep. Bradley (R) – Chair of Health Policy & Finance TOTAL = 134 DFL=66 R=68

25. 2006 Minnesota Elections • Key Developments • If House changes to DFL… • New committee chairs • One or two committees? • If House remains Republican controlled • Rep. Fran Bradley retired in 2006 • Assuming Senate remains DFL… • New Health & Family Security Chair (Lourey ran for Governor) • Berglin remain as chair of Health/Human Services Finance • Governor’s Race • New state agency commissioners

26. 2006 Minnesota Elections • Motor Vehicle Sales Tax (MVST) Referendum • Currently 54% of the MVST revenue is used for transportation purposes with 46% contributed to the general fund. • If approved, 100% of MVST for transportation (roads, public transit) • Impact on the projected $1.1 billion surplus for the next biennium (FY08-09): • Reduce surplus to $918 million or by $172 million/16% • February forecast accuracy and economic conditions Dollars in millions

27. 2007 LEGISLATIVE PREVIEW Part Four

28. 2007 Legislative Preview Chart 10 – The Biennial Budget Process, FY2008-2009

29. 2007 Legislative Preview Chart 11 – Change in State Spending, By Program Area, 2003-2009 (FY2007-2009 Projected)

30. 2007 Legislative Preview Chart 12 – State Spending as Percent of Total, By Program Area 2009 2003

31. 2007 Legislative Preview • Health Care Access Fund • 2% Provider tax Chart 13: HCAF Surplus, 2003-07, 2008-2009 Projected Dollars in thousands

32. 2007 Legislative Preview • Key Issues • Election results • Control of Senate, House and Governorship • State economic growth – budget surplus vs. deficit • July revenue forecast 3% ($447 million) higher than Feb. forecast • Economy expected to slow in 2nd half of 2006 • 2007 Session is a “Budget” year • “Piggybacking proposals” – insurance for children in their 20s • Fraud provisions/improper Medicaid payments (both participants and providers) • “Fair Share” proposals on large companies (Wal-Mart legislation) • Universal health care/constitutional amendment • Mental health and primary care

33. 2007 Legislative Preview • Key Issues (continued) • Deficit Reduction Act implementation • Increased copayments for MA enrollees • Medicaid benefit changes • Expanding programs vs. consumer driven approaches to health care “reform” • Massachusetts model • Expanding existing programs • Subsidize lower-income premiums • Health Connector • CHC Issues • Results of CHC study • HCAF surplus • Key Dates: • November 6, 2006 - Election Day • October Economic Forecast • January 3, 2007 - Legislature convenes • January/February - Governor’s budget to Legislature

34. CURRENT DEVELOPMENTS • QCare • DRA Implementation Part Five

35. Current Policy QCare • QCare • Announced by Governor Pawlenty on July 31, 2006 • Shift from reimbursing on “cost” to “quality” • “The right care at the right price” • Initially will focus on four areas of care where much of Minnesota’s health care dollars are spent. • Diabetes • Hospital stays • Preventative care for adults and children • Cardiac care • If standards were met, state projects $153 million in savings for the entire health care system in Minnesota

36. Current Policy QCare • QCare

37. Current Policy QCare • QCare

38. Current PolicyQCare • QCare • Applied to the MN Health Care Programs (MHCPs): No new line item/money • “Reward” will be from program savings • DHS amend PMAP contracts this fall to incorporate QCare philosophy • 2007 SESSION – MONITOR ANY DEVELOPMENTS THAT THREATEN/MODIFY CHC PAYMENTS

39. Current PolicyDeficit Reduction Act • Provisions that could affect CHCs: • Citizenship documentation • Increased beneficiary cost-sharing amounts • State false claims and compliance programs

40. Current PolicyCitizenship Verification • Citizenship Verification • Effective August 1, 2006: • All Medicaid enrollees must prove: • IDENTITY, AND • CITIZENSHIP • Both current enrollees and new applicants • Tiered levels of acceptable documents to prove identity and citizenship • DHS 2006 Bulletin - #06-21-09 • Impact on CHC patients

41. Current PolicyCitizen Verification

42. Current PolicyCitizen Verification • Citizen Verification • Once citizenship is proven, it does not have to be documented again, unless later evidence raises questions • Rules require that individuals be given a “reasonable opportunity” to submit documentation • Minnesota = six months • Current eligible will maintain MA eligibility • New applicants not eligible (no interim benefits)

43. Current PolicyIncrease Cost Sharing • Previous law limited to $3 and no denial of care for failure to pay co-payment • DRA: Copay = up to 10% for persons with incomes between 100-150%; 20% for person with incomes above 150% FPL • Health Centers may experience: • Lower revenue • Decrease in Medicaid patients • Legislative Session 2007 A typical CHC encounters costs $140. Under DRA provisions, Medicaid copayments could increase…

44. Current PolicyFraud • Any entity that receives more than $5 million in Medicaid payments annually, must: • Establish written policies for employees and contractors regarding: • Federal and State False Claims Act • Whistleblower protections • Role of such laws in preventing fraud, waste, and abuse in Federal health care programs • Include in employee handbooks, a discussion of • Federal and State False Claims Act • Rights of employees to be protected as whistleblowers • Entity’s procedures for detecting and preventing fraud, abuse and waste. • States are permitted to retain 10% any recoveries provided their guideline/law is at least as stringent as federal law.

45. MNACHC Day on the Hill January 2006 CHC Staff, Patients Board Members Visit www.mnachc.org for more information

46. Jonathan Watson 612.253.4715, ext 11 jonathan.watson@mnachc.org Contact Information Visit www.mnachc.org