Medicaid Pilots at One Year: How is the new Medicaid marketplace faring?

1. Medicaid Pilots at One Year: How is the new Medicaid marketplace faring? Joan Alker, M.Phil, Senior Researcher Jack Hoadley, Ph.D., Research Professor Georgetown Health Policy Institute December 6, 2007

2. Our study methods for this brief • Analysis of AHCA’s plan enrollment data • Analysis of AHCA beneficiary materials showing benefit offerings of HMOs serving Broward and Duval Counties • Ongoing interviews with stakeholders.

3. Who is affected by the Medicaid pilots? • Total enrollment as of November 2007: 183,494 • Baker enrollment: 924 • Broward enrollment: 108,841 • Clay enrollment: 3,398 • Duval enrollment: 68,797 • Nassau enrollment: 1,534 • 84% are children and parents • 15% are people with disabilities receiving SSI but not Medicare Source: “Medicaid Reform Enrollment Report by County, As of November 2007.” http://www.fdhc.state.fl.us/MCHQ/Managed_Health_Care/MHMO/med_data.shtml

4. Broward County plan enrollment, September 2007 PSNs HMOs Source: September 2007 Florida Medicaid Reform Enrollment Report, AHCA

5. Duval County plan enrollment, September 2007 PSNs HMOs Source: September 2007 Florida Medicaid Reform Enrollment Report, AHCA

6. Do different groups of Medicaid beneficiaries pick different types of Medicaid plans?

7. Provider Service Networks (PSNs) • Operated by a health care provider or group of providers • Deliver a substantial portion of services to enrollees through these providers.

8. PSNs versus HMOs PSNs: • First 3 years: option of not taking financial risk • Thus paid by state based on actual costs • May not vary benefit offerings if not at risk HMOs: • Paid on per-enrollee basis • Profit if expenses are less than projected • Lose money if expenses are higher

9. Enrollment in PSNs and HMOs by county and enrollment group, September 2007 Families and Children People with Disabilities Source: September 2007 Florida Medicaid Reform Enrollment Report, AHCA

10. Consequences for persons with disabilities • Beneficiaries with disabilities apparently seek PSNs more often because: • Close relationships with certain providers • No added limits on plan benefits • As a result, • Potentially sheltered from benefit reductions or gaps in drug lists • Possibly easier time getting referrals to specialists • Questions in future when PSNs go at risk

11. How have plan benefit offerings changed in year two?

12. Modifying benefits is a key element of the waiver • Unprecedented nationwide • Only HMOs are currently modifying benefits; PSNs can change copays and extra services • Different benefits have different levels of flexibility.

13. Analysis of year two plans Overall, new offerings by plans are less generous than in the first year – with lower limits on specific benefits, higher copayments, and fewer extra services.

14. Benefits are decreasing Note: Counts indicate the number of benefit packages where changes occurred out of the total of 28 different packages across two counties (Broward and Duval) and across the two beneficiary populations (persons with disabilities and parents). Source: Georgetown Health Policy Institute Analysis of AHCA Benefit Comparison Charts for Broward and Duval Counties.

15. Copayments are going up Note: Counts indicate the number of benefit packages where changes occurred out of the total of 28 different packages across two counties (Broward and Duval) and across the two beneficiary populations (persons with disabilities and parents). Only categories where changes occurred are listed. Source: Georgetown Health Policy Institute Analysis of AHCA Benefit Comparison Charts for Broward and Duval Counties.

16. What impact is Florida’s waiver having on Medicaid spending?

17. Federal funding: implications of the waiver • Medicaid is a federal/state matching program. Florida’s match rate is 57%. • Feds require that no more federal $$ are spent under Section 1115 waivers than would have been spent without the waiver • This is enforced through a per capita or per person cap – 8 percent growth rate. • GAO study forthcoming • Budget neutrality enforced/waiver renegotiated at the end of the five year period

18. Annual percentage changes in per capita Medicaid expenditures, Florida and U.S. 12% 5.3% -2.4% -5.0% Source: Georgetown Health Policy Institute analysis of CBO March Medicaid Baselines 2002-2007; and Florida Social Services Estimating Conference Medicaid Caseload Data (10/19/2007) and Medicaid Expenditure Data (7/31/2007). Note: National Medicaid expenditures do not include DSH, other payments to providers, or vaccines for children.

19. Medicaid enrollment has decreased Percentage Change in Medicaid Enrollment, July 2006-July 2007. Florida Broward Duval Source: Number of Medicaid Eligbles by Program Group by County, 7/2006 and 7/2007. http://www.fdhc.state.fl.us/Medicaid/about/eligibles_archive.shtml.

20. Florida’s program is relatively underfunded Medicaid Spending as a Percentage of Health Care Spending Source: Exhibit 2, Martin A, et al. 2007. Health Spending by State of Residence, 1991-2004. Health Affairs 26(6): w651-663.

21. Budget neutrality agreement is statewide • The scope of the budget neutrality agreement depends on the scope of the waiver agreement • Budget neutrality agreement is statewide despite the pilots only operating in a few counties

22. Most waiver spending is outside the pilot counties Source: Georgetown Health Policy Institute analysis of data from AHCA’s Florida Medicaid Reform Quarterly Progress Report, 4/1/07-6/30/07

23. Key questions to ask • State is reporting that spending for the two groups in the waiver (i.e. SSI and families) statewide is 86% of what it would have been without the waiver. • 92% for SSI group and 80% for families • Pilot spending is only 5% of total spending so what accounts for this lower level of spending? Where are cost savings being achieved?

24. Key questions to ask • What are the administrative costs associated with the implementation of the pilots? • Smaller features of waiver have had very high administrative costs and limited success • Opt-out has had just a handful of enrollees leading to very high admin costs – over $9,000 a year per person • Enhanced benefits – $1.1 million in administrative costs with low redemption rate of benefit by beneficiaries - $260,691 as of September 2007.

25. Administrative expenses in Medicaid are lower than private health insurance Admin. Costs as Percent of Total Expenditures (U.S. 2003) Private Health Insurance Medicaid Source: Smith, et al. 2005. “Health Spending Growth Slows in 2003.” Health Affairs 24(1):185-194.

26. Conclusion: data not yet available on savings • How does per-person spending for same groups compare in pilot counties and elsewhere? • Do these calculations include administrative costs? • If HMOs are saving money, how much are they spending on care? • Do safeguards exist for fraud and abuse?

27. Additional information This presentation, the accompanying brief, and other HPI materials on Florida’s Medicaid reform can be downloaded at: http://hpi.georgetown.edu/floridamedicaid/index.html This webcast will be archived and posted at the website above within twenty-four hours. All briefs in this series can be found on the Jessie Ball duPont Fund website under the topic “Health Care”: http://www.dupontfund.org/research/index.asp#topic In case of technical issues, please contact: Jen Thompson: jwt24@georgetown.edu