Medicaid – context for change

1. Medicaid – context for change Mike Cheek Vice President, Medicaid and Long Term Care Policy

2. Executive Summary • Fiscal Pressures are Driving the Dialogue • States are Restructuring Financing, Delivery Systems and Government to Slow Cost Growth • Centers for Medicare and Medicaid Services has a Wide Array of Activities Underway and Planned that will Impact Long Term Care Providers • On the Horizon are Congressional Concepts Aimed at Slowing Cost Growth • Considerations for Long Term Care Professionals focus on Rapidly Changing Medicaid Landscape and Opportunities Related to Coordinating Services for People Eligible for Medicare and Medicaid (duals)

3. Fiscal Pressure Fiscal Pressures are Driving the Dialogue

4. Medicaid is the Largest Single Share of Federal Funds to States Source: National Association of State Budget Officers, 2009 State Expenditure Report, December 2010

5. Costs are Driving the Medicaid Reform Dialogue Affordable Care Act Expands Eligibility Federal Stimulus Funds End Federal Stimulus Funds Begin Source: Centers for Medicare and Medicaid Services Office of the Actuary – National Health Expenditure Projections 2010 – 2020

6. State Restructuring States are Restructuring Financing, Delivery Systems and Government to Slow Cost Growth

7. States Budgeted for Little Medicaid Growth Total Medicaid Spending Growth, FY 1996 – FY 2012 Economic Downturn and End of Enhanced FMAP (2008 – 2012) Welfare Reform, Managed Care Part D Source: KCMU Analysis of CMS Form 64 Data; KCMU survey of Medicaid officials conducted by Health Management Associates, 2011

8. Common State Savings Strategies • Provider reimbursement • Eligibility and enrollment process • Copays and premiums • Benefits • LTC and HCBS • Prescription drug utilization and cost control initiatives • Managed Care • Program Integrity • Health Information Technology • Duals Integration Efforts

9. Affordable Care Act Efforts are Mixed Number of States Source: Cheek, M., et. al., On the Verge: The Transformation of Long-Term Services and Supports. AARP Public Policy Institute (February 2012)

10. Managed LTC is a Systems Used in Lieu of Fee For Service • Capitated MMLTC • Medicaid agency and contractors enter into agreement under which contractor accepts risk of providing defined Medicaid LTC services • Alternative types of MMLTC capitation packages: • Medicaid-covered LTC services only • All Medicaid-covered acute and LTC services • All Medicare and Medicaid-covered services(additional plan contract with CMS required for Medicare portion StateMedicaidAgency ManagedCareContractor Providers Capitated Payment NegotiatedPayments(FFS, Per Diem, etc.)

11. By 2014, Approximately 23 States Likely will be Operating MMLTC Programs MMLTC Discussion or Planned Implementation Current MMLTC Program – Regional or Statewide Source: Cheek, M., et. al., On the Verge: The Transformation of Long-Term Services and Supports. AARP Public Policy Institute (February 2012); Personal Interviews with AHCA/NCAL State Executives

12. State Government is Downsizing Percent of States Percentage of State Staff Eligible for Retirement by Percent of Total FTE Source: Cheek, M., et. al., State of the States Survey 2011 – State Aging and Disability Agencies in Times of Change. National Association of States United for Aging and Disabilities

13. Centers for Medicare and Medicaid Services (CMS) CMS has a Wide Array of Activities Underway and Planned that will Impact Long Term Care Providers

14. CMS Disabled and Elderly Health Programs Group Expanded its Purview

15. Duals are a Significant area of Focus because of Costs and Acuity Source: Kaiser Family Foundation, The Role of Medicare for People Dually Eligible for Medicare and Medicaid (January 2011)

16. New CMS Divisions AHCA Staff and Members Actively Been Working with These Offices • Center for Medicare and Medicaid Innovation • Health Care Innovation Challenge funding • Innovation advisors program • Medicare-Medicaid Coordination Office • State Demonstrations to Integrate Care for Dual Eligible Individuals • Medicare Data for Dual Eligibles for States • Initiative to Align the Medicare and Medicaid Programs • Financial Models to Support State Efforts to Integrate Care for Medicare-Medicaid Enrollees • Reducing Preventable Hospitalizations Among Nursing Facility Residents • Integrated Care Resource Center Available to All States

17. In Terms of ACA Options, States are Most Heavily Focused on Duals Demo Design Letter of Intent – Both Models Capitation MFFS* * Managed Fee-for-Service (MFFS) Both a Demo Design and Letter of Intent

18. Other Core CMS Activity Themes • Medicaid Program Integrity • Reshaping Medicaid Managed Care • Health Information Technology • New Medicaid Data Systems • Preparing for 2014 • Home and Community-Based Services Expansion using Affordable Care Act and other options

19. Congress On the Horizon are Congressional Concepts Aimed at Slowing Cost Growth

20. Block Grants Have Re-Emerged • Currently, states draw down federal Medicaid dollars on a quarterly basis based on expenditures • Under a Block Grant, states would receive some form of a fixed dollar amount and would be required to manage to that dollar amount

21. Incremental Change may Occur First • New state Medicaid program authorities to coordinate financing and services for people eligible for both Medicare and Medicaid • Increased Medicaid program integrity efforts • Further trimming of state capacity to draw down additional federal dollars • Provider Taxes • Intergovernmental Transfers • Enhancement of state flexibility

22. Implications

23. At the End of the Day, Owner/Operators Should Consider … • Partnering with other segments of the health care sector on efforts to better coordinate services to people who are eligible for Medicare and Medicaid • Highlighting the value of CCNC as a viable option to Managed Long Term Care • Exploring opportunities to tap any new health information technology funding the state may leverage • Monitoring Medicaid cost containment activity • Program integrity • Specialized Medicaid authority to make changes not normally allowable • Monitoring continued emphasis on Home and Community-Based Services