Medicaid 101 Jul y 8, 2013

1. Interim Committee on Medicaid Transformation and Reform Medicaid 101Jul y 8, 2013 Presented by Senate Staff: Adriane Crouse Marga Hoelscher Adam Koenigsfeld

2. Presentation Highlights • Background and Overview • Missouri Medicaid • Services and Service Delivery Systems • Provider Reimbursement Levels • Financing and Budget • Hospital Reimbursement • Provider Tax • ACA and Federal Health Reform • Transformation Considerations

3. Background and Overview

4. What is Medicaid? • Nation’s largest public health program for low-income Americans • Medicaid is NOT Medicare • Two separate programs with different federal rules and regulations • Different eligibility focus • Children • Pregnant Women • Majority of Spending goes to Elderly and Disabled • Long-Term Services and Supports • Nursing Homes • Home and Community -based Services

5. What is Medicaid? • Medicaid is Considered an Entitlement • Anyone meeting income and eligibility requirements can enroll • Jointly Financed by State and Federal governments • Federal law requires states offer a basic set of benefits • Federal law requires certain groups of people to be covered • Medicaid programs differ greatly from state to state

6. Federal and State Agreements • Medicaid State Plan • Agreement between federal government and each state • Documents specifics regarding each state’s program • Covers specifics like: services, eligibility, provider reimbursement and cost sharing • Waivers • Necessary to innovate • Very difficult process • Medicaid Partnership Plan • Specific to Missouri • Documents Provider Tax Requirements • Requires Missouri to submit Additional Documentation

7. Missouri Medicaid

8. Missouri Caseload as of May, 2013 • 532,100Children • 27,240 Pregnant Women • 77,289 Low Income Parents • 161,491 Persons with Disabilities • 75,346 Low Income Elderly *Additional 59,512 women receive limited services under Breast and Cervical program. Total 873,466

10. In Missouri: • DSS is Single State Agency • Designation required in federal law • Agency responsible for administering Medicaid State Plan • MO HealthNet is state’s Medicaid agency • Medicaid services also administered by • Department of Mental Health • Department of Health and Senior Services • Department of Elementary and Secondary Education

13. TOTAL MEDICAID ALL AGENCIES

14. State Agencies & Medicaid

15. Quick Facts • Medicaid Management Information System - state mechanized claims processing and information retrieval systems • 99.8 million claims processed in FY 12 • Payments in excess of $8 billion • Average claim processing time is less than a day • Over 99% of claims submitted electronically • Over 41,000 providers of 68 different types • System applies 1000s of edits

16. Quick Facts Pharmacy is an Optional Service available to all participants • 315,000 average monthly pharmacy users • 13.2 million claims • $1.16 billion budgeted for FY 14 • Is carved out of managed care contracts Nursing Facilities is a Mandatory service for Medicaid programs • 23,387 average monthly users in FY 12 • 8.3 million days provided • Average per diem rate in FY 12 was $138.37 • Over 60% of occupied beds are paid by Medicaid

17. Provider Rates • 208.152 RSMo requires an annual parity study • Overall rate for SFY 2013 is 57% of Medicare

18. Clinical Management Examples • Inpatient Pre-certification • Pharmacy • Clinical Edits • Early Refill, • Dose Optimization • Optical • DME Prior Authorizations • Psychology Prior Authorizations • Imaging Prior Authorizations • HCBS Assessments and Prior Authorizations • Psychology Prior Authorizations • Imaging Prior Authorizations • HCBS Assessments and Prior Authorizations

19. Eligibility

20. Source: Department of Social Services

21. 2013 ANNUAL INCOME RATESPercent of Federal Poverty Level

23. MO HealthNet Enrollees and Expenditures In SFY-2012, seniors and persons with disabilities comprised more than 27% of enrollees, however, they accounted for nearly 66% of MO HealthNet expenditures. *Data reflects Department of Social Services, Table 23, Medical Statistics excluding Women’s Health Services Persons with Disabilities include Permanently and Totally Disabled; Aid to the Blind; Blind Pension; Specified Low-Income Medicare Beneficiary; and, Ticket to Work Health Assurance Program (TWHAP) Seniors include Old Age Assistance; Qualified Medicare Beneficiary (QMB) and, Specified Low-Income Medicare Beneficiaries (SLMB) Pregnant Women & Custodial Parents include MO HealthNet for Families-Adult; Refugee; Women with Breast or Cervical Cancer; Independent Foster Care Children Ages 18-21; MO HealthNet for Pregnant Women (Poverty and Income); and, Presumptive Eligibility (Pregnant Women) Children includes MO HealthNet for Children; SCHIP (including no cost and premium enrollees); MO HealthNet for Families-Child; Foster Care; Child Welfare Services; Title XIX-Homeless, Dependent, Neglected (HDN); DYS-General Revenue; Children in a Vendor Institution; Missouri Children with Developmental Disabilities (MOCDD); Presumptive Eligibility for Children; and, Voluntary Placements

24. Services and Service Delivery

25. Services Mandatory Optional Prescription Drugs Eyeglasses, Prosthetic Devices Case Management Services for Specific Conditions • Physician, Nurse Practitioner, and Nurse Midwife Services • Hospital Services–Inpatient and Outpatient • Laboratory and Radiology Services • Family Planning Services and Supplies • Nonemergency Medical Transportation (NEMT) • Federally-qualified Health Centers and Rural Health Clinics • Comprehensive Access to Services for Children (EPSDT)

26. Service Delivery Fee for Service Managed Care Children and Parents inside Managed Care Counties $1.18 Billion budgeted for FY 12 • Seniors • Persons with Disabilities • Children and Parents outside Managed Care Counties Managed Care Plans are at Risk for Costs of Services State at Risk for Service Costs

28. Costs and Financing

29. Jointly Financed • FMAP—Federal Medical Assistance Percentage • Regular FMAP: Generally based on per capita income • Statutory floor of 50% • Missouri’s regular match rate is 62% • Enhanced FMAPs • CHIP is 73% • Promotion of Other Federal Priorities • 100% FMAP for Electronic Health Records (EHR) • 90% MMIS/Technology • 75% Program Integrity • Administrative Match generally 50%

31. Provider Taxes • Defined in federal statute • Must be broad-based and uniform • Providers cannot be “held harmless” from the tax • Safe harbor rate of 6% of net patient revenue • Nearly all states have at least one provider tax • Most popular: • Nursing home • Hospital • ICF-ID

32. Provider Taxes Key in Missouri • Missouri has long standing history of provider taxes • Missouri relies heavily on provider taxes to fund the Medicaid program • Provider taxes fund state match for billions in payments • Transformation recommendations must consider impact on provider taxes

33. Hospital Reimbursement

34. Hospital Reimbursement • Complicated Methodology • Per Diem • Based on 1995 Costs Trended to 2001 • Medicaid Add-On Payments • Makes up Difference Between old Costs and Today’s Cost • Paid for both Fee for Service and Managed Care Days • Upper Payment Level (UPL) • Disproportionate Share Hospital (DSH) • Outpatient • Provider Tax funds about ½ of State Share of Payments

35. FY 12 Inpatient and Outpatient Units of Service by Large Eligibility Groups

36. Disproportionate Share Payments (DSH) • DSH Payments are for Uncompensated Care • Subject to Federal Allotment Cap; and • Subject to Hospital Specific Costs • Federal Allotment Reduction under ACA • 5% for first three years • 15% for next year • 50% thereafter • Missouri’s FY 2013 DSH payments: • $511 million hospitals • $207 million DMH hospitals

37. Disproportionate Share Payments (DSH) • DSH Reductions written in the Federal Bill • Secretary Determines Cut Formula based on: • Percentage of uninsured, • State’s use of DSH funds, and • State’s current DSH level • Federal Rule with Formula Issued in May

38. Why Increasing Medicaid Eligibility is Important to Missouri Hospitals? • DSH Reductions Will Happen • Both Medicare and Medicaid • Many hospitals at Hospital Specific DSH Caps • Unrelated to ACA • Medicare DSH cuts Comparable to Medicaid • Other Medicare Payments Impacted • Trend • Sequestration

39. ACA and Federal Health Reform

40. Allows Increase of Eligibility • Under 65 with incomes up to 138% of the FPL • Significant Eligibility Change for Missouri • Now: Parents up to 19% of the Federal Poverty Level (FPL) • No non-custodial adults unless seniors or disabled • Allows Medically Frail • 100% federally funded for first three fiscal years (FY14-FY16). • State share phases up to 10%: - January 2017 – 5% (half year for FY 2017); - January 2018 – 6%; - January 2019 – 7%; and - January 2020 – 10%

41. MEDICAID PROJECTIONS NUMBER OF PEOPLE 307,542 292,061 276,579 268,039 259,499 Source: Budget & Planning

42. Transformation Considerations

43. Transformation Considerations • Access • Quality • Sustainable Financing • Service Delivery • Personal Responsibility • Provider Reimbursement Levels • Eligibility Levels • Appropriateness of Current Levels • Organization Structure to Support Transformation