1. Introduction to the Medicaid Program in Texas
December 2011

2. Medicaid Overview Program Administration How is Medicaid Funded?
Who Does Medicaid Serve?
What Services Does Medicaid Provide?
Who Provides Medicaid Services?
Delivery Models

3. What is Medicaid?
Medicaid is a jointly funded state-federal program that provides medical coverage to eligible needy persons.
Medicaid is an entitlement program, which means that the federal government does not, and a state cannot, limit the number of eligible people who can enroll.
Federal laws and regulations:
Require coverage of certain populations and services; and
Provide flexibility for states to cover additional populations and services.

4. Acute and Long-Term Care
Acute Care
Physician, inpatient, outpatient, pharmacy, behavioral health, lab and X-ray services.
Refers to health care for children and pregnant women for episodic health care needs.
Long-Term Services and Supports (Long-Term Care)
Care for people with long-term care needs, chronic health conditions that need ongoing medical care, and often social support. This includes home and community-based care, as well as in facilities such as nursing homes and can include care for behavioral health conditions.
Acute Care vs. Long-Term Care – Distinction is based on the:
Cognitive and medical condition of patient;
Need for assistance with activities of daily living;
Degree to which a disability is chronic;
Nature of services provided; and
Setting in which services are provided.

5. Medicaid Clients How many people receive Medicaid?
In June 2011, 3.3 million people received Medicaid. Of those:
Over 2.3 million are children
Over 700,000 are Aged, Blind, and Disabled
If you ever see ABD in an or report, it refers to the Aged, Blind and Disabled population.

6. Medicaid Clients and Spending0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Caseload
Cost
Figure 1.2: Texas Medicaid Beneficiaries and Expenditures
State Fiscal Year 2009
Non -
Disabled
Children
61%
32%
Disabled Adults 9%
Aged & Disability
Related
58%

7. Texas Medicaid and the State Budget
How much is spent on Medicaid?
Total SFY budgeted for Medicaid:
$44.9B from all fund sources
$18.8B from General Revenue, GR-Dedicated, and Tobacco Settlement Receipts
Medicaid amounts represent:
75 percent of all appropriations for HHS

8. Joint State and Federal Program
Both the federal and state governments have a role in overseeing and funding the Medicaid program.
At the federal level, Medicaid is administered by the Centers for Medicare and Medicaid Services (CMS) within the U. S. Department of Health and Human Services.
Federal Medicaid regulations require each state to designate a single state agency responsible for the Medicaid program. HHSC has been the single state agency since Duties include establishing Medicaid policy, administering the Medicaid State Plan (or agreement) with the federal government, and more.
Each state has a Medicaid State Plan that constitutes that state’s agreement with the federal government on:
Who will receive Medicaid services – all mandatory and any optional eligibles
What services will be provided– all mandatory and any optional services
How the program will be administered
Financial Administration of the program
Other program requirements
A State Plan Amendment is a request from the state to change the benefits offered or the way benefits are offered across the board in a program covered by the State Plan.
State Plan Amendment (SPA):
Required to change existing optional coverage or other components of the program.
Must be submitted to and approved by CMS to ensure that federal matching funds will be provided to the program.
Common SPAs include Physcian Fee Schedules, Rate Increases, and changes to benefits in particular programs.

9. Medicaid Eligibility Medicaid serves:
Low-income families
Children
Related caretakers of dependent children
Pregnant women
Elderly
People with disabilities
Texas Medicaid does not currently serve:
Non-disabled, childless adults

10. Income and Federal Poverty Levels
Financial eligibility for Medicaid and many other social programs is based on a family’s income level compared to the Federal Poverty Level (FPL).
The FPL is intended to identify the minimum amount of income a family would need to meet certain, very basic, family needs.
FPLs indicate annual income levels by family size and are updated each year by the US Department of Health and Human Services.

11. Selected HHS-Relevant Percent of Poverty Income Levels for 2011
The amounts corresponding to 100% of poverty are based on the U.S. Department of HHS
poverty income guidelines for 2011.
Based on Annual Income
Family Size
100% 1
10,890 2
14,710 3
18,530 4
22,350 5
26,170 6
29,990 7
33,810 8
37,630
At 100% of poverty, for families larger than 8, add $3,820 for each additional person.
SOURCE:  Federal Register, Vol. 76, No. 13, January 20, 2011, pp

12. Medicare and Medicaid
Medicare is a federally funded and administered program.
Medicaid is a jointly (Federal & State) funded program, administered by states.
It is important to note that Medicaid, not Medicare, pays for most long-term care services and supports.
Medicare only covers 100 days of nursing home care per “spell of illness” and beneficiary must be progressing toward rehabilitation goals.
Medicaid covers long-term institutional services and supports and covers the cost of nursing home care for dually-eligible clients not paid by Medicare.
Medicaid also covers community-based long-term care services and supports, not covered in Medicare.
Persons under 65 who receive monthly SSI must wait 2 years before becoming eligible for Medicare. During this period, Medicaid is the primary payor for their health care.
Reference 2-year waiting period fact sheet

13. Mandatory Services
Federal law requires that all state Medicaid programs pay for certain services and reimburse certain provider types. The following must be covered by Medicaid:
Early Periodic Screening, Diagnosis and Treatment (EPSDT) also known as Texas Health Steps for children under age 21 (includes treatment of any conditions identified as medically necessary)
Check-up includes: medical history, complete physical exam, assessment of nutritional, developmental and behavioral needs, lab tests, immunizations, health education, vision and hearing screening, referrals to other providers as needed.
Federally Qualified Health Centers
Home health care
Inpatient and outpatient hospital

14. Mandatory Services Mandatory Services (Continued):
Family planning/genetics
Lab and X-ray
Nursing facility care
Pregnancy-related services
Rural Health Clinics
Physicians
Certified Nurse Midwife
Certified Pediatric and Family Nurse Practitioner

15. Optional Services
The state may choose to provide some, all, or no optional services specified under federal law. Optional services provided in Texas include services such as:
Prescription drugs
Physical therapy
Occupational therapy
Targeted Case Management
Some rehabilitation services
Certified Registered Nurse Anesthesiologists
Eyeglasses/contact lenses
Hearing aids
Services provided by podiatrists
Certain mental health provider types

16. Pharmacy Services
The HHSC Vendor Drug Program performs most pharmacy services functions, including policy and program oversight, formulary management, and pharmacy customer services.
Texas contracts with private companies for pharmacy claims processing, prior authorization services, and administration of the drug rebate program.
The state contracts with pharmacies to provide Medicaid clients with pharmacy benefits.
Over 4,200 licensed Texas pharmacies are under contract.
Beginning March 2012, the managed care organizations will be responsible for providing pharmacy benefits to their members

17. Medicaid Providers and Requirements
Medicaid providers include:
Health professionals - doctors, nurses, physical therapists, dentists, psychologists, etc.
Health facilities - hospitals, nursing homes, institutions and homes for persons with mental retardation, clinics, community health centers.
Providers of other critical services like pharmaceuticals or drugs, medical supplies and equipment, medical transportation.
Medicaid providers must be enrolled as a Medicaid provider through the Texas Medicaid & Healthcare Partnership (TMHP)

18. Medicaid Delivery Models
Fee for Service (Traditional Medicaid)
Managed Care:
Managed Care Models in Texas:
Managed Care Organizations (MCOs)
Primary Care Case Management (PCCM)
Managed Care Programs in Texas:
STAR (State of Texas Access Reform) – Acute Care MCO
STAR+PLUS – Acute & Long-Term Services and Supports MCO
PCCM - Managed care model that provides a medical home for Medicaid clients through primary care providers
NorthSTAR – Behavioral Health Care MCO
STAR Health – Comprehensive managed care program for children in Foster Care

19. Fee-for-Service Medicaid
Fee-for-Service Medicaid is the traditional Medicaid program.
A Fee-for-Service Medicaid client is defined as either of the following:
(1) a client who is not enrolled in a managed care plan, such as a health maintenance organization; or
(2) a client who is enrolled in a managed care plan, but the service that is needed is covered by Medicaid, not by the plan.
Eligible clients may receive services from any eligible Medicaid provider

20. Provider Reimbursement: Claims Payment
Payment and processes vary by delivery model
HMO Model:
HMOs are paid a capitated rate by HHSC.
Providers are paid reimbursement rates established by the HMO via a contractual arrangement.
Bills for services, called “claims,” are sent to the HMO for payment.
Fee-for-Service and PCCM Models:
HHSC is responsible for establishing Fee-for-Service (Traditional Medicaid) and PCCM reimbursement methodologies.
Providers are paid Medicaid reimbursement rates for providing eligible Medicaid services to eligible clients.
Primary Care Providers in PCCM receive an additional monthly case management fee for each client.
Bills for services, called “claims,” must be sent to the state for payment.

21. Provider Enrollment
The Claims Administrator for Texas Medicaid is the Texas Medicaid and Healthcare Partnership (TMHP)
TMHP, a coalition of contractors headed by ACS, carries out the fee-for-service and Primary Care Case Management claims payment.
TMHP:
Assists providers in enrolling in the Texas Medicaid Program.
Educates providers on changing Medicaid policies, reimbursement rates and provider requirements.

22. Federal Medical Assistance Percentage (FMAP)
The portion of total Medicaid costs paid by the federal government is known as the Federal Medical Assistance Percentage (FMAP).
Texas FMAP for FFY 2011: 60.56
Of each dollar spent on Medicaid services in Texas, the federal government pays approximately 61 cents.
Based on average state per capita income compared to the U.S. average
Small changes in the FMAP could result in significant loss or gain of federal funds.

23. Resources http://hhsc.state.tx.us
“Pink book” --

24. Introduction to the Children’s Health Insurance Program (CHIP)
December 2011

25. CHIP: Federal Legislative History
CHIP was created by the federal Balanced Budget Act of 1997, under a new Title XXI of the Social Security Act. It allowed each state to offer health insurance for certain children who are not already insured.
Texas CHIP was implemented in two phases:
Phase I began in 1998 as a Medicaid expansion for children 15 – 18 in families below 100 percent FPL.
Phase II was enacted by the Texas Legislature in 1999 as a separate health insurance program; enrollment began in April 2000.
Current caseload for December 2011: 562,550 children
SCHIP offered states three options when designing a program. States can either:
• Use SCHIP funds to expand Medicaid eligibility to children who were previously ineligible for the program;
• Design a separate children's health insurance program; or,
• Combine both the Medicaid and separate program options.
Texas originally opted to expand Medicaid eligibility using SCHIP funds. In July 1998, Texas implemented Phase I of SCHIP, providing Medicaid to children ages 15 to 18 under 100 percent of the federal poverty level (FPL). Phase I of SCHIP was created to operate from July 1998 through September The program was phased out as Medicaid expanded to cover those children.
Enacting legislation for Phase II of SCHIP, a separate children’s health insurance program, was passed by the 76th Legislature (1999). This program is referred to simply as the Children’s Health Insurance Program (CHIP). Texas began enrolling children in the new program in the first half of 2000.

26. Overview: What is CHIP?
CHIP is a joint state-federal program that provides medical coverage to eligible children up to age 19, who are not already insured.
Federal law and regulations require each state to:
Set eligibility guidelines, service levels, and delivery systems; and
Operate a state plan listing these elements.

27. What is CHIP? CHIP is NOT an entitlement program, meaning:
The state can determine age and income eligibility;
The state can cap enrollment; and
The state can limit service benefits as approved by the U.S. Secretary of Health and Human Services.
Total federal financial participation is limited to block grant amounts allocated to each state.
CHIP is not an entitlement program for eligible individuals.
Entitlement programs guarantee enrollment services to anyone who is eligible, regardless of the cost.
As a result, entitlement programs may exceed their appropriated amount of funding and require budget writers to find additional funds to pay the balance, highlighting the often unpredictable cost of the program.
Medicaid is an entitlement program, but CHIP is not. In CHIP, states have the right to control spending by capping enrollment and capping spending when funds run out.
CHIP has absolute budget certainty. Whatever our Appropriations Committee allocates for CHIP is the most that the state will spend.

28. CHIP Eligibility CHIP serves:
Uninsured children under age 19
CHIP Perinatal serves unborn children meeting eligibility requirements
Gross income up to 200% Federal Poverty Level (FPL)
U.S. citizens or legal permanent residents
Not eligible for Medicaid
Families with net incomes above 150% FPL must meet assets criteria:
Assets below $10,000
One vehicle is exempt up to $18,000; additional vehicles are exempt up to $7,500
Eligibility is determined for a 12-month period; income verification at 6th month for families at 185% FPL and above
CHIP Perinatal eligibility is determined for a 12-month period
CHIP serves:
To qualify for CHIP, a child must be under age 19, a Texas resident and a U.S. citizen or legal permanent resident.
The citizenship or immigration status of the parents does not affect the children's eligibility and is not reported on the application form.
An eligible child must live in a household with federal poverty income limits (FPL) at or below 200% and not be otherwise eligible for Children's Medicaid
Any adult who lives with an uninsured child and provides care for that child can apply.
A family's size, income and assets determine whether the children qualify for CHIP.
If the family has a net income above 185% FPL, they must meet assets test.
Finally, eligibility is determined for a 12-month period. If the family has a net income above 185% FPL, they have a six-month income verification.
Facing a budget shortfall in 2003, the 78th Legislature passed major reforms to the Children’s Health Insurance Program.
In the 80th Legislature, those major reforms were reversed with House Bill 109 by Rep. Sylvester Turner, including:
Figuring eligibility on net income, rather than gross income to disregard certain expenses;
Removing a 90-day waiting period for coverage designed to prevent “crowd out;”
Increasing the liquid assets allowable to be eligible from $5,000 to $10,000 per household;
Along with the exempt value of vehicles;
And granting coverage for 12 months, rather than 6.
In the bill eventually sent to the Governor, the Senate amended the period of eligibility to require an electronic check on families with the highest incomes at the six-month mark. Starting last month, families with incomes above the 185 FPL had their six-month review to see if the family’s income had changed.
HB 109 also required outreach to increase awareness of CHIP, which included radio ads in both English and Spanish. The campaign also includes messages on buses, ads in publications that serve primarily African-American and Hispanic communities; ads for Spanish language TV, and brochures in English, Spanish, and Vietnamese. HHSC has also contracted with 28 community-based organizations to provide application assistance and conduct grassroots outreach efforts about CHIP or other HHSC programs.

29. Cost Sharing: Enrollment Fees
CHIP annual enrollment fee:
$0 for families with net income less than 150% FPL
$35 for families between % FPL
$50 for families between % FPL
Families are required to pay the enrollment fee upon enrollment or renewal of CHIP
There are two types of cost share obligations: enrollment fees and co-payments. Most CHIP eligible families are subject to cost share obligations.
The CHIP annual enrollment fee varies based on the net income of the family. There is no annual fee for families less than or equal to 150% of the FPL.
For families between 151 to 185% of the FPL, the annual fee is $35.
For families between 186% to 200% FPL, the annual enrollment fee is $50.
Eligible children cannot enroll and receive covered benefits before receipt of the enrollment fee. Families must pay the enrollment fee at renewal before continuing coverage.

30. Cost Sharing: Current Co-payments
Families enrolled in CHIP are responsible for co-payments
for certain plan benefits
At or below 100% FPL
101% to
150% FPL
151% to 185% FPL
186% to 200% FPL
Preventative Health Care and Shots
Office Visit
Non-Emergency Room Use
Generic Prescription
Name-brand Prescription
Inpatient Hospital Care
Outpatient Hospital Care $0 $3
$10 $5
$25 $7
$50
$20
$100

31. Cost Sharing: Co-payments effective March 1, 2012
Families enrolled in CHIP are responsible for co-payments for certain plan benefits
At or below 100% FPL
101% to
150% FPL
151% to 185% FPL
186% to 200% FPL
Preventative Health Care and Shots
Office Visit
Non-Emergency Room Use
Generic Prescription
Name-brand Prescription
Inpatient Hospital Care
Outpatient Hospital Care
COST SHARING LIMIT ALL INCOME GROUPS IS 5% OF FAMILY INCOME, PER ENROLLMENT PERIOD) $0 $3
$15 $5
$35
$20
$75
$10
$25
$125
The other type of cost sharing obligation that most families are required to pay are co-payments, which again will vary on the families’ incomes.
Something to note is that families have a cost-sharing cap which is the maximum amount of out-of-pocket expenses a family is required to pay during the enrollment segment.
When a family reaches their cost sharing cap during the enrollment segment, the family is not required to make co-payments for the remainder of the enrollment segment.
Families with gross income at or below 150% FPL has a cost-sharing cap during the 12-month coverage period of 1.25% of its annual gross income.
Families with gross income greater than 150% FPL has a cost-sharing cap during the 12-month coverage period of 2.25% of its annual gross income.
On cost sharing all together, CHIP perinatal recipients are not subject to cost share obligations. CHIP perinatal recipients do not pay enrollment fees or copayments.

32. Current CHIP Benefits
Inpatient Hospital Services, including Inpatient Rehabilitation Hospital
Outpatient Hospital and Ambulatory Health Care Services
Lab and X-ray for inpatient, outpatient and ambulatory health care
Physician/Physician Extender Professional Services (surgical and medical), including services such as immunizations and well-baby and well-child examinations
Emergency Services
Prescription Drugs
1. With an eye toward preventive care, CHIP currently provides the following benefits.

33. Current CHIP Benefits Physical/Speech/Occupational Therapy Home Health
Transplants
Durable Medical Equipment (DME)
Dental Services
Hospice Care Services
Skilled Nursing Facilities
Vision Benefits (eye exams and eyeglasses)
Chiropractic Services
Tobacco Cessation
Behavioral health and substance abuse services
Now I’d like to share some background on how CHIP benefits have changed over time.
78th (2003) Legislative Changes: In addition to several eligibility related changes (the handout), several benefits were eliminated or reduced to accommodate the significant budget deficit facing the state at that time. Benefits eliminated included:
-- Elimination of CHIP dental and vision benefits (glasses and exams), hospice; skilled nursing facilities; tobacco cessation; chiropractic services.
-- Mental health coverage reduced to about half of the coverage provided in 2003;
FYI…Across-the-board 2.5% rate cuts for CHIP medical providers; and Outreach and marketing were reduced by more than half.
The 79th Legislature 2005, restored the underlined items above, effective 9/1/05 -- Dental was delayed and restored on April 1, Items in bold were also restored in 2006.
FYI…none of the CHIP restoration bills filed in 2005 ever had a public hearing. All restorations were accomplished through the budget bil.

34. CHIP Perinatal Benefits
CHIP Perinatal provides a limited, basic prenatal care benefit package that includes:
Up to 20 prenatal and 2 postpartem visits
First 28 weeks of pregnancy ― one visit every four weeks
28 to 36 weeks of pregnancy ― one visit every two to three weeks
36 weeks to delivery ― one visit per week
Additional prenatal visits allowed if medically necessary
Pharmacy, prenatal vitamins, limited laboratory testing, assessments, planning services, education and counseling
Prescription drug coverage based on the current CHIP formulary
Hospital facility charges and professional services charges related to the delivery
No cost-sharing requirements
Perinatal began accepting applications on Jan. 2, 2007

35. CHIP Delivery Models CHIP Service Delivery Models include:
Managed Care Organization (MCO): A type of health care plan that arranges for or provides benefits to covered clients
The state pays the CHIP MCOs on a capitation basis: a set dollar amount PMPM to cover the health care costs of clients.
Client selects an MCO and a Primary Care Provider (PCP)
PCP authorizes services within the network
Providers are paid reimbursement rates established by the MCO
EPO: A health plan that arranges for or provides benefits to covered persons through a network of exclusive providers
Limited to services provided to client in network, except for emergencies
Dental Maintenance Organization (DMO) for dental services
Maximus is responsible for the enrollment process for CHIP clients. Once determined eligible, families receive an enrollment packet and are asked to select a health plan and PCP (if in an HMO area).
If a health plan or PCP is not selected, the client is defaulted into a plan and assigned a PCP (there is a formula for rotating the default plan so one is not favored over another).
Superior is currently the sole Exclusive Provider Organization.

36. Federal Match Rate
As in Medicaid, the federal government pays a percentage of CHIP program costs.
The federal government pays a higher percentage for CHIP than for Medicaid.
In 2011, the federal government pays 72.39% of CHIP medical care expenditures; compared to 60.56% of Medicaid medical care expenditures.
Of every dollar spent on CHIP medical costs, $0.72 is paid for by the federal government.

37. Resources