Medicaid and CHIP New and Upcoming Developments

1. Medicaid and CHIPNew and Upcoming Developments Kimberly Davis Medicaid and CHIP Division August 13, 2010

2. Presentation Overview • Overview of Medicaid eligibility, enrollment, and budget. • Legislation from 81st Texas Legislature that impacts clients. • Updates on Texas’ managed care initiatives. • Federal legislation impacting Texas’ Medicaid and CHIP programs.

3. Overview Medicaid • What is Medicaid? • Medicaid is a jointly funded state-federal health-care program, established in Texas in 1967. • Medicaid is an entitlement program, which means the federal government does not, and a state cannot, limit the number of eligible people who can enroll, and Medicaid must pay for any services covered under the program. • Serves primarily low-income families, non-disabled children, related caretakers of dependent children, pregnant women, the elderly, and people with disabilities. • Covers acute health care (physician, inpatient, outpatient, pharmacy, lab, and X-ray services), and long-term services and supports for aged and disabled clients.

4. Overview CHIP • What is the Children’s Health Insurance Program (CHIP)? • CHIP is jointly funded state-federal health insurance program for children, established in Texas in 1998. • Provides health insurance to low-income, uninsured children in families with incomes too high to qualify for Medicaid. • Texas operates a separate CHIP program that requires all benefits to be approved by the U.S. Secretary of Health and Human Services. • Benefit package includes a basic set of health-care benefits that are cost effective and focuses on primary health-care needs.

5. Medicaid Eligibility

6. Medicaid Eligibility

7. Medicaid Enrollment

8. Medicaid Enrollment • January 2009: • 14 percent (1 in 7) of Texans received Medicaid. • Fiscal year 2009 caseloads: • 3 million individuals received Medicaid. • 534,000 children received CHIP. • Medicaid enrollment is projected to continue to increase.

9. Medicaid Enrollment

10. Medicaid Enrollment

11. Medicaid Spending

12. Medicaid Spending • Total Medicaid spending in 2009: • Estimated $24.6 billion (all funds). • Includes Disproportionate Share Hospital (DSH), Upper Payment Limit payments, and administration. • Medicaid spending increasing in both federal and Texas budgets. • In 2008-2009 biennium, Health and Human Services was approximately 26.7 percent of the total state budget (excludes DSH). • Like Medicaid enrollment, Medicaid spending is projected to continue to increase.

13. Medicaid Spending

14. 81st Session Legislation Impacting Clients

15. 81st Session Legislation Impacting Clients • Medicaid Buy-In Program for Disabled Children – SB 187 • Allows families whose income does not exceed 300% of FPL to buy-in to the Medicaid Program for their child with a disability. • Benefits will be the same state plan services as other Medicaid children. • Projected implementation is January 2011. • Appropriation for Medicaid Services for Qualified Alien Children • CHIPRA allows states to cover Qualified Aliens in Medicaid and CHIP with federal matching funds.

16. 81st Session Legislation Impacting Clients • Obesity prevention pilot for Medicaid or CHIP enrollees – SB 870 • Creates a pilot in at least one area of the state. • Pilot is jointly conducted by HHSC and DSHS for children enrolled in Medicaid in the Travis Service Area. • Pilot goals include: • Decrease rate of obesity in Medicaid children; • Improve nutritional choices; • Increase physical activity; and • Decrease long-term costs to Medicaid incurred as a result of obesity.

17. 81st Session Legislation Impacting Clients • Electronic health information exchange (HIE) – HB 1218 • Directed HHSC to develop an electronic HIE system HHSC will implement the HIE system, known as Medicaid Eligibility and Health Information services (MEHIS) in 3 phases. • Phase 1 – will replace paper Medicaid ID forms with magnetic strip cards, implement rudimentary EHR, and evaluate options for e-prescribing in 2010. • Phase 2 – will provide EHR for CHIP clients, integrate state lab data in the EHR, improve data gathering capabilities and system enhancements. • Phase 3 – will develop and integrate evidence-based benchmarking for providers and expands HIE system to include other data exchange partners.

18. 81st Session Legislation Impacting Clients • Medicaid Substance Abuse Services – 2010-11 General Appropriations Act, S.B. 1 • Directs HHSC to implement a substance abuse benefit for adults in Medicaid. • The benefits are subject to approval by the Center for Medicare and Medicaid Services (CMS) and will be implemented in two phase. • Phase I - will included a outpatient benefit and is anticipated to be available in September 2010. • Phase II - will included the addition of residential detoxification and treatment services and are anticipated to be available in January 1, 2011.

19. 81st Session Legislation Impacting Clients • Health Home Pilot Project –strategic medical initiatives under Frew v. Suehs corrective action order • $20 million for pilot health home models for primary care practices serving Medicaid children (through age 20). • Pilot projects will be used determine which model(s) may be appropriate for state-wide implementation. • HHSC may select up to 8 different types of pilot health home models to be operational for 24 months. • Projects must focus on: (1) patient access; (2) quality improvement; (3) patient/family centeredness; (4) population approach to care; (5) coordinated and clinically managed care; and (6) team-based comprehensive care.

20. Managed Care Initiatives

21. Managed Care Initiatives • Elimination of Integrated Care Model in Dallas/Fort Worth • Operations ended on May 31, 2010. • STAR+PLUS Expansion • The STAR+PLUS program is expanding into the Tarrant and Dallas Medicaid Service Areas. • Projected implementation February 1, 2011.

22. Managed Care Initiatives • CHIP Rural Service Area MCO Procurement • Awards to Superior and Molina health plans. • Both health plans will use Texas True Choice network. • RSA has been expanded to include the Webb Service Area in CHIP. • Effective September 1, 2010.

23. Federal Legislation

24. Federal Legislation • American Recovery and Reinvestment Act (ARRA) • Prohibits states from implementing more restrictive Medicaid eligibility standards, methodologies, or procedures than those in effect on July 1, 2008. • Establishes grant and loan programs for states and health entities. • Provides incentive payments for meaningful use of electronic health (medical) records by qualifying Medicaid providers.

25. ARRA cont’d • Medicaid Electronic Health Record (EHR) Incentive Program • Incentives payments are for meaningful use of certified EHRs by qualifying Medicaid providers. • The provider is responsible for payment of EHR costs and certifying meaningful use of the HER. • Authorizes a 100% federal match for incentive payments to providers. • Texas goal to begin provider enrollment is January 2011. • Authorizes a 90% federal match for state’s administrative costs to establish process for incentive payments. • Eligible professionals must choose if they will receive the incentive payment as a Medicaid or Medicare provider. • Hospitals can receive both the Medicaid and Medicare incentive payment.

26. ARRA cont’d • Medicaid Electronic Health Record (EHR) Incentive Program • Payment is an incentive for using certified EHRs in a meaningful way. • Not a reimbursement and not intended to penalize early adopters. • First year payment can be received in 2011 through 2016. • Final payment can be received up to 2021. • Incentive payments do not need to be for consecutive years. • Eligible professionals must meet certain criteria: • Eligible provider type; • Medicaid patient volume thresholds; and • Meaningful use of certified EHRs for at least 50% of patient encounters during the reporting period.

27. ARRA cont’d Medicaid Electronic Health Record (EHR) Incentive Program

28. Federal Legislation • CHIP Reauthorization Act of 2009 (CHIPRA) • Reauthorized federal CHIP funding from 2009 - 2013. • Reduces time-frame for states to use unspent federal allotment from three years to two years for 2009 and beyond. • CHIP programs must comply with Mental Health Parity. • Mandates dental services in CHIP. • Allows for federally matched coverage of qualified alien children in Medicaid and CHIP by removing the 5-year bar. • Requires citizenship verification. • Applies Medicaid managed care safeguards and standards. • Prospective payment system for FQHCs and RHCs in CHIP.

29. CHIPRA cont’d • Prospective payment system (PPS) for FQHCs and RHCs in CHIP • CHIPRA requires states to apply the Medicaid PPS for federally qualified heatlh centers (FQHCs) and rural health clinics (RHCs) to CHIP. • In CHIP FQHCs and RHCs receive full encounter rates for dates of services rendered to CHIP members on or after October 1, 2009.

30. Federal Legislation • Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) • Requires group health plans that offer behavioral health benefits (mental health and substance abuse) to provide those services at parity with medical/surgical services. • Parity requirements apply to financial requirements (e.g., co-payments), treatment limitations (e.g., number of visits), and out-of-network coverage. • MHPAEA does not impact traditional Medicaid fee-for-service; however the requirements apply to Medicaid managed care and state CHIP programs.

31. Federal Health Care Reform: The Affordable Care Act

32. The Affordable Care Act • The Patient Protection and Affordable Care Act (PPACA), was enacted on March 23, 2010. • The Health Care and Education Reconciliation Act of 2010 (HCERA) was enacted on March 30, 2010. • Together, these two pieces of legislation are called the Affordable Care Act (ACA). • The Affordable Care Act will make significant changes to the health care market.

33. The Affordable Care Act • The Health Insurance Exchange • Must be operational by January 2014. • Failure to establish Exchange will result in HHS establishing an Exchange within any non-participating state. • State must be able to demonstrate by January 1, 2013, that it will have Exchange operational by January 1, 2014. • Must be administered by governmental agency or non-profit organization.

34. The Affordable Care Act • The Health Insurance Exchange • Provides one-stop insurance shopping for individuals and small businesses. • All plans sold in the Exchange must be certified by TDI as meeting minimum federal benefit standards. • Exchange must provide a seamless application and enrollment process for individuals who qualify for subsidies, requiring coordination with HHSC for Medicaid and CHIP inclusion. • Federal funding: HHS will distribute implementation grants to states within one year after date of enactment of legislation.

35. The Affordable Care Act • Expansion of Health Insurance Coverage, Individual Mandate • Effective January 2014. • Individuals (US citizens and legal residents) required to obtain qualifying coverage that meets federal standards. • Can be an individual or group health plan. • Exemptions for individuals meeting any of the following: • Earnings fall below tax filing threshold (currently $12,050 for individual and $18,700 for couple), religious objections, members of Indian tribes, or not covered by insurance for less than three months. • Subsidies for families/individuals up to 400% of federal poverty level (approx $43,000 individual, $88,000 family of 4) to apply towards premium costs.

36. The Affordable Care Act • Expansion of Health Insurance Coverage, Individual Mandate • Penalties for non-compliance: • 2014 - $95/person • 2015 - $325/person • 2016 - $695/person • Alternative: 2.5 % of income above tax filing threshold (whichever is greater) • Enforcement: individuals required to file with IRS must include IRS form to verify qualifying coverage. Individuals exempt from filing taxes also exempt from insurance requirement.

37. The Affordable Care Act • Medicaid Expansion and Caseload Impact • Expands Medicaid eligibility to individuals under age 65 with incomes up to 133% of the Federal Poverty Limit (FPL). • Income deduction allowance of five percentage points creates effective eligibility level of 138% FPL. • New client populations in Texas include: • Parents and caretakers 14%- 133%. • Childless adults up to 133% FPL. • Emergency Medicaid in Expansion Populations. • Foster-care through age 25. • Texas will experience caseload growth both from newly eligible individuals and those individuals who are currently eligible but not enrolled. • With an individual mandate, enrollment of current eligibles is projected to increase.

38. The Affordable Care Act • Medicaid Expansion and Caseload Impact • Changes Medicaid income eligibility requirements. • Requires use of modified gross income and prohibits assets test and most income deductions. • Requires that states maintain existing eligibility until the state’s exchange is fully operational. • Optional populations covered above 133% FPL may be moved to the Exchange upon implementation in 2014. • Children’s Medicaid and CHIP eligibility levels must be maintained until 2019.

39. The Affordable Care Act Current & Future Medicaid/CHIP Eligibility Levels CHIP 200% FPL CHIP 200% FPL CHIP 200% FPL CHIP 200% FPL 133% Current Medicaid 185% FPL Current Medicaid 185% FPL Current Medicaid 185% FPL Current Medicaid 220% FPL Current Medicaid 133% FPL NEW Medicaid 133% FPL NEW Medicaid 133% FPL NEW Medicaid 133% FPL NEW Medicaid 133% FPL Current Medicaid 100% FPL Current Medicaid 74% FPL 14% FPL

40. The Affordable Care Act

41. The Affordable Care Act

42. The Affordable Care Act • Medicaid Rate Increases • States are required to increase Medicaid rates to 100% of Medicare rates in 2013 and 2014 for certain services provided by primary care providers (PCPs). • The incremental rate costs for 2013 and 2014 are 100% federally funded. • Children’s Health Insurance Program (CHIP) Rates • Historically CHIP and Medicaid provider rates have been aligned. • State will need to decide whether to provide the same increase for CHIP rates as for Medicaid. • Any increase in CHIP provider rates will be at the CHIP FFP for all years. • CHIP FFP increases by 23 points from 2016 to 2019.

43. The Affordable Care Act • When to Implement Medicaid Expansion • States may opt to expand Medicaid coverage to 133% FPL on or after April 1, 2010 without a waiver at regular Federal Financial Participation (FFP). • Expansion is mandatory in 2014. • Medicaid Expansion Benchmark Benefit Plan • States are required to create a Secretary-approved benchmark benefit package for newly eligible Medicaid groups by January 2014. • This could result in different benefit packages for existing and expansion Medicaid populations. • Potential differences in current Texas Medicaid benefits and a benchmark plan include: • Prescription Drug Limit • In-Patient Hospitalization Limits • Mental Health Benefits

44. The Affordable Care Act • New Medicaid and/or CHIP Benefits • Requires Medicaid coverage for freestanding birthing centers. • Requires Medicaid coverage of tobacco cessation counseling and pharmacotherapy for pregnant women. • Requires Medicaid and CHIP to allow a child to elect hospice care without waiving their rights to treatment services for the child’s terminal illness.

45. The Affordable Care Act • Medicaid Pharmacy Program Changes • Federal Rebate Percentages for Outpatient Drugs: Increases the minimum Medicaid federal rebate amount for drug products. • Rebates for Medicaid MCO Drugs: Allows states to collect Medicaid rebates for drugs dispensed through managed care organizations (MCOs).

46. The Affordable Care Act • Impact to Texas Healthcare Delivery Systems • Many of the state’s indigent care and charity statutes may need to be restructured. • Core functions of the Department of State Health Services and the populations it serves will likely be altered. • Public hospitals will have less uncompensated care. • The role of city and county health departments may need to be redefined. • Unknown impact to Local Mental Health Authorities.

47. The Affordable Care Act • Impact to Texas Workforce Planning • Demand for primary care providers and specialists will increase as more Texans are insured. • State will need to examine this increased demand as it relates to the supply of healthcare providers. • Strategies for meeting increased demand will need to be explored. • Telemedicine • Additional use of ancillary service providers

48. The Affordable Care Act: Texas Uninsured Demographics Current

49. The Affordable Care Act: Texas Uninsured Demographics Post-Implementation

50. Questions?