Washington Medicaid Study

1. Washington Medicaid Study Proposed Final Report Joint Legislative Audit & Review Committee January 7, 2004 Deborah Frazier and Eric Thomas

2. Study Goals • JLARC added study to its workplan at the October 2002 meeting • Initiated to better understand this driver of 30% of state appropriations • Chose to look at Medicaid comprehensively • Relation to national perspective • Understand how Medicaid is managed

3. DSHS Administers Medicaid 40% 60% $12 billion 2003-05 Washington Medicaid Expenditures Report page 2

4. Medicaid Drives DSHS 100% 98% $7.1b 96% $2.2b 90% 91% $1.2b 82% $1.0b 80% 76% $12.0b 70% 60% 50% 40% 24% $56m 18% $167m 18% $42m 30% 9% $182m 20% 6% $13 m 10% 0% DSHS Med. Aging Dev. Mental Sub. Children’s Juv. Econ. Admin. Asst. Dis. Health Abuse Rehab Svcs. Report page 11

5. Washington Medicaid: Findings and Recommendations • Management Structure • Data • Forecasts and Managing Costs • DSHS and OFM Concur or Partially Concur with Recommendations Report pages: 47-51

6. Key Findings: Management Structure • DSHS is managing a large, complex health system with a decentralized management structure • Structure poses challenges • No single point of accountability for the Medicaid program • Non-compliance with federal reporting requirements for the total Medicaid program • No regular review of management functions or program as a whole • Cabinet meetings and other cross-organization meetings Report page: 47

7. Recommendation: Management Structure • DSHS should create a mechanism for management review • Report by April 2004 • DSHS and OFM both partially concur • Misreading of recommendation • Management review does not require change in management structure • Review does require assuring the effective and efficient operation of the entire program Report page: 47, 55-65

8. Key Findings: Data Systems • Multiple, aging data systems do not support a comprehensive approach to Legislative policy making or DSHS management of Washington Medicaid • An example of data problems is a required federal report that is 12 quarters in arrears • We have a chance, today, to address data issues: MMIS reprocurement Report pages: 49-51

9. Recommendations: Data Systems • DSHS should become current on federal reporting • Report by April 2004 • New MMIS should integrate data to support comprehensive Legislative policy making and DSHS management • Report by February 2004 Report pages: 49-51

10. Key Findings: Forecasting and Managing Costs • Rates for the home and community based programs are not consistent • Both managed by the Aging and Disability Services Administration • More structure and consistency to Aging’s rates • Review to determine if DD could use Aging’s rate methods Report pages: 48-49, 67-81

11. Recommendation: Forecasting and Managing Costs • DSHS report its progress ensuring consistent rates to the Legislature • Report by June 2004 Report pages: 48-49, 67-81

12. Key Findings: Forecasts and Managing Costs • $5 billion of expenditures not rigorously scrutinized • Includes nursing home care, home and community based services for the elderly and disabled, and community care for mental health • Not all Medicaid programs are formally forecast Report pages: 47-50

13. Recommendation: Forecasting and Managing Costs (cont’d) • The Legislature should consider engaging a consultant to: • Examine $5 billion in biennial expenditures to evaluate cost containment efforts and identify other cost containment opportunities • Examine the program elements and data sources to assess the best techniques for forecasting future caseloads • Initial report due by November 2004 • Final report due April 2005 Report pages: 47-50

14. Conclusions • JLARC’s decision to examine Washington Medicaid as one program yielded new insight into 30% of state appropriations • Perspective - comparison to national program • Comprehensive picture of DSHS management • Community services rates inventory • Follow up in coming months