Medicaid: Structure, Financing and Challenges

1. Medicaid: Structure, Financing and Challenges Lynne Perrin Network Manager, Community Health Partners May 16, 2014

2. Who are we- the Short VersionCommunity Care of North Carolina Community Health Partners – Serving Gaston and Lincoln Counties

3. Community Care of North Carolina • A statewide organization that is under contract with the North Carolina Department of Health and Human Services/Division of Medical Assistance to manage the Medicaid population • A network of primary care medical homes/ practices supported by nurse care managers and pharmacists to keep Medicaid costs down and quality of care up

4. Managing Care of Medicaid Recipients • Recipients are enrolled in Carolina Access II at the Department of Social Services • Recipients select a Carolina Access II primary care/medical home provider • Claims data/utilization data helps identify recipients with chronic illnesses and other health conditions that need professional intervention and management

5. Managing the Medicaid Costs • Primary care approval for specialty care • Disease management (asthma, diabetes, COPD) • Medication management and use of lower cost drugs, identification of med errors • Transitional care program to prevent hospital readmissions – we are in the hospitals • Patient education and intervention to prevent further health problems • Behavioral health coordination • And other evidence-based initiatives

6. Topics for Today • Medicaid overview and benefits • Service utilization, history, trends and expenditures • Medicaid and long-term care financing • Controlling costs • Medicaid managed care and Community Care of NC

7. Medicaid – Overview and Benefits

8. Medicaid – What is it? • Medicaid is a health insurance program for certain low-income individuals • Medicaid is jointly financed by the states and federal government • It is an entitlement program – if one is eligible, one gets the benefits

9. State Medicaid Agency • The NC Division of Medical Assistance within the NC Department of Health and Human Services is the designated state agency that works with the federal Centers for Medicare and Medicaid (CMS) to: • Establish eligibility standards • Determine benefits and services • Set payment rates to service providers

10. Community Care of North Carolina Contract

11. NC Division of Medical Assistance (DMA) 73,000 providers

12. Medicaid • Authorized by Title XIX of the Social Security Act of 1965 • Each state administers its own Medicaid program “If you have seen one Medicaid program, you have seen one Medicaid program” • All states agreed to participate in Medicaid by 1982 • The federal Centers for Medicare and Medicaid (CMS) monitors the states and the federal requirements

13. Mandatory Services • Hospital services • EPSDT: Early and Periodic Screening, Diagnostic, and Treatment Services • Nursing Facility Services • Home health services • Physician services, Rural health clinic services, Federally qualified health center services • Laboratory and X-ray services • Family planning services, Nurse Midwife services • Pediatric and Family Nurse Practitioner services • Transportation to medical care • Tobacco cessation counseling for pregnant women

14. Optional Services • Prescription Drugs • Clinic services • Physical therapy, Occupational therapy, Speech, hearing services • Respiratory care services • Podiatry services • Hospice • Case management • Optometry services • Dental Services • Prosthetics • Eyeglasses • Chiropractic services • Private duty nursing services • Personal Care • Durable Medical Equipment

15. Waiver Programs/Services(Long-Term Care) CAP/DA – Community Alternatives Program for Disabled Adults CAP/C – Community Alternatives Program for Children (medically fragile) CAP/MR/DD for the Developmentally Disabled

16. NC Medicaid – A Snapshot • Medicaid recipients – 1.5+ million people in NC • Total NC Population is 9.8 million (1 in every 6 ½ people are on Medicaid) • Total Medicaid Expenditures - $13.6 Billion • Total State Requirements - $3.46 Billion • Federal Medical Assistance Participation Rate (FMAP) for 2014 is 63% • State Share is 26% • Other share is 11% (ex. drug rebates) • Over 73,000 providers bill Medicaid for services

17. Mostly a Fee for Service Delivery System • Medicaid pays the providers a fee for service (FFS) based on rates set by the Division of Medical Assistance • Note: The LME/MCO’s get a per member per month payment and then they pay their providers according to a contractual arrangement • Note: Program for All – Inclusive Care for the Elderly – pmpm per enrollee from Medicaid and Medicare (managed care)

18. Service Utilization, History of Spending and Trends

19. Expenditures • The Medicaid funds go for: • Hospitals – $1.9 Billion • Disproportionate Share (DSH) Payments to Hospitals ($450M) • Physicians – $1.2 Billion • Nursing Facilities – $ 1.1 Billion • Drugs – $1.2 Billion • Other Claims - $5.7 Billion • Other provider payments - $1.6 Billion 92% of the Medicaid funds go for paying claims from health care providers.

20. 4 Drivers of Medicaid Spending • Eligibility - Who is covered • Benefits - What services are covered • Fees – How much is paid for services • Utilization – How many services are used by the covered individuals

21. A Small Portion of Beneficiaries Are Responsible for a Disproportionate Share of Costs

22. Budget Shortfall From: NC General Assembly – Fiscal Research Division

23. Rate of Spending for NC Medicaid Claims is Low • Nationally, NC leads the country in controlling the growth in Medicaid claims spending. • Total Medicaid claims spending in NC has seen only a modest rate of growth (2.3%) since FY 2008 – lower than the 4.5% annual growth rate in enrollment. • Since 2008, Medicaid is serving more people at a lower cost per person. • But, more can be done to improve outcomes and quality while keeping costs low.

24. Increases in NC Medicaid Claims Spending Have Grown at a Lower Rate Than Other States States employing 3rd party commercial managed care plans for Medicaid (Medicaid MCOs); * MS began implementing an MCO model in 2012.

26. Comparison of Yearly Growth in Medicaid Budget from 2007 National Association of State Budget Officers (NASBO) North Carolina Virginia Medicaid State Budget State Budget Medicaid Arizona Florida Medicaid Medicaid State Budget State Budget

27. Question • If North Carolina’s Medicaid growth rate is lower than other states, then why has NC had a Medicaid shortfall for the past few years?

28. Forecasting Medicaid Enrollment, Utilization and Federal Revenues Total Spend $12.6 Billion Federal Medicaid $ 8.0 Billion State Appropriations 3.2 Billion Other 1.4 Billion BUDGE T 11% Other 63% Federal Medicaid 26% Approp’s Total Spend $12.6 Billion Federal Medicaid $ 7.7 Billion State Appropriations 3.6 Billion Other 1.3 Billion AC T UA L 61% Federal Medicaid 29% Approp’s 10% Other IMPACT:$400 Million

29. 4 Drivers of Medicaid Spending • Eligibility - Who is covered • Benefits - What services are covered • Fees – How much is paid for services • Utilization – How many services are used by the covered individuals CCNC’s contract with DMA restrains our influence on only 45% of the Medicaid costs

30. More about CCNC

31. CCNCInfluences Some, BUT NOT ALL, Medicaid Services for Individuals Enrolled in CCNC CCNC and its care teams have minimal influence over utilization of these services: CCNC nursing homes & other LTC settings personal care services primary care hospitals & emergency departments diagnostic testing referrals to specialists behavioral health care medications medical equipment Less than 45% of total Medicaid claims spending

32. More about CCNC CCNC Provides NC with: Key Tenets of CCNC: • Statewide medical home and care management system in place to address quality, utilization and cost, managed through 14 local networks, 1,800 practices & 6,000+ providers • A private sector Medicaid management solution that improves access and quality of care • Medicaid savings that are achieved in partnership with – rather than in opposition to – doctors, hospitals and other providers. • 100 percent of all Medicaid savings remain in state • Recognition as a national award-winning, best-practice model • Public-private partnership • Community-based, physician-led medical homes that coordinate care across fragmented health systems • CCNC is a true clinical partnership • Ensures patients receive optimal care and avoid unnecessary hospitalizations • Participating providers are expected to improve care and have ownership of the improvement process

33. CCNC Networks • 90% of all Primary Care Practices in the State • 6,000 Primary Care Providers and 1800 practices • 1.3 million enrolled patients • Gaston and Lincoln – • 58 Primary Care Practices • 41,000 patients (9500 Aged and Disabled) • Statewide coverage • Presence in every hospital in the state

34. Local Networks • Support to the Primary Care Practices • Health Team • Nurse Care Managers • Medical Director • Pharmacists and Pharmacy Assistants • Behavioral Health Coordinators • Consulting physicians – Psychiatrist and OB Champion • Patient Care Coordinators (arrange appointments and track down patients) • Informatics Center – health data and patient targeting capacity

35. CCNC-Enrolled Members Have Lower and Declining Potentially Preventable Inpatient & ER Costs • The CCNC-Enrolled population has lower and declininginpatient costs while the Unenrolled population has higher and increasingcosts. Unenrolled $36.10 $34.49 $32.22 $31.22 PMPM $32.57 CCNC-Enrolled $8.60 $8.42 $8.36 $7.52

36. HEDIS Quality Benchmarks: Comparing CCNC to National Medicaid MCO HEDIS = Health Effectiveness Data and Information Set >10,000 more North Carolinians with good diabetes control CCNC 2012 Nat’l Medicaid MCO Mean 2011 >11,000 more North Carolinians with good BP control Higher is better for these measures

37. 2 Pilot Projects that Reduce Medicaid Expenditures

38. ED Pilot Project • Focusing on “Frequent Flyers” to the ED • ED visits for non-urgent reasons • 178 Patients had 2882 visits (non-urgent) to the ED within a 12-month period (June 2012-July 2013) – average of 16 visits per patient • Using an average cost of $350per visit times 2882 visits = $1,008,700 cost to Medicaid

39. ED Pilot • Starting with the top Frequent Flyers – average ED visits to the ED 36 times per patient • CHP Nurse Care Manager with Behavioral Health experience performs intensive interventions with the targeted patients • Early Pilot Results: ED utilization for the targeted patients reduced by 30%

40. Early Results of ED Pilot

41. ED Pilot: Medicaid Cost Savings • Potential for savings to the State • Assume .43%of the enrolled CCNC Population are frequent flyers (178 patients in Gaston and Lincoln Counties is .43% of the CCNC enrolled population of 41,000 patients) • That would tell us that 5590 Medicaid and CCNC enrollees are heavy users of the ED for non-urgent reasons (over 16 visits per year) • Using the $350 as a low per visit cost to Medicaid, these 5590 patients are costing $31,304,000 per year in ED expenditures THAT COULD BE AVOIDED • A 30% reduction would mean a reduction in ED expenditures by $9,391,200 per year. The net savings would be in the range of $7.3 million per year.

42. Potential Savings to NC

43. Medical Necessity ReviewsPilot • Medicaid pays for medically necessary services including personal care services and high-cost durable medical equipment (power wheelchairs) • Service providers and patients make request for services • The physicians/practitioners sign a form documenting the medical need for the service • Lack of knowledge of the Medicaid criteria; home situation of the patients • Once medical attestation form is signed – patients have right to appeal

44. Medical Necessity Reviews Pilot • For the pilot program, the Medical Necessity Review Nurse gets the referral form before the doctor signs for the service • The MNR Nurse conducts a home visit to determine if the patient has a medical need for the service; determines if a lower-cost service can be an alternative to more costly services; determines if patient has other service needs • Makes a recommendation to the doctor/practitioner about meeting the medical criteria

45. Medical Necessity Reviews Pilot • Medicaid criteria for PCS established by Medicaid clinical policy • 86% of the 313 referrals for PCS- patients did not meet the Medicaid criteria for the service PCS is not a house-cleaning service

46. Medical Necessity Reviews Pilot • Cost of an hour of PCS is $13.88 • If Personal Care Services are delivered three days per week for three hours per day for one year, Medicaid costs would be $6500 for one patient • 300 patients would cost Medicaid about $2 million per year – average length of stay in the service is 4 years • 2008 data: there were 51,000 patients on PCS at a total cost of $318 million • A 15% reduction in the program statewide would reap a savings of • $47 million annually

47. Medical Necessity Reviews • A pilot project with 4 networks – not statewide • PCS – many need the service but there is too much room for abuse • DMA has implemented several measures to control the program but more needs to be done • Change in Medicaid policies and processes are fraught with complications – delays in state and federal approvals--policy changes take time to go through a process

48. Upcoming State Discussions on Medicaid Reform • NC DHHS recommends moving Medicaid to three program structures: • Physical Health – Accountable Care Organizations • Mental Health and Substance Abuse- LME/MCO’s • Long Term Care – new structure not yet determined • Decisions will be made by the NC Legislature • Uncertain timeline