1. A High Performance Medicaid System for Disabled Beneficiaries Medicaid Reform II – A ‘Do-Over’ Bob Sharpe, CEO Florida Council February 28, 2008

2. 2 Medicaid Reform Goals - 2005  Ensure consumer education and choice  Provide access to medically necessary services  Coordinate preventative, acute, and long-term care  Reduce unnecessary service utilization  Improve health care processes  Achieve better health outcomes  Improve enrollee satisfaction  Enhance the predictability of costs and expenditures  Evaluate the feasibility of the statewide implementation of capitated managed care networks as a replacement for the Medicaid fee-for-service and MediPass systems REDUCE MEDICAID EXPENDITURES (IT’S THE BUDGET, STUPID)

3. 3 State Estimates of Total Medicaid Spending, With and Without Waiver Total 5-year reduction in spending: $4.58 billion Source: Georgetown Center for Children and Families analysis of Tables 4 and 5 from Florida Medicaid Reform Section 1115 Waiver Application, August 31, 2005. With Waiver Without Waiver

4. 4 Estimates of Annual Medicaid Cost per SSI Beneficiary, With & Without Waiver Source: Georgetown Center for Children and Families analysis of Tables 4 and 5 from Florida Medicaid Reform Section 1115 Waiver Application, August 31, 2005.

5. 5 The Difference a Few Years Makes “The single biggest change and the boldest reform that any state has embarked on for the Medicaid program.” Governor Jeb Bush, 2005 “Prior to further expansion, develop benchmarks for resolution of issues encountered to date in the areas of plan and systems readiness, timely claims processing, implementation of the consolidated complaint tracking system, and receipt and evaluation of valid encounter data…. Further expansion of Medicaid Reform should be delayed until such time as those improvement benchmarks are met and encounter data sufficient to conduct at least preliminary assessments of cost effectiveness is available.” AHCA Inspector General, 2007

6. 6 Medicaid IG Medicaid Reform Report  Implemented too quickly  Inadequate agency staffing to handle reform  Lack of performance, quality and cost data  Lack of encounter data  Internal communication/information sharing hampered by lack of access to key documents  Deficient evaluative processes with regard to timely access to care and quality indicators  Pre-reform issues, such as limited access to specialists, continue to be a concern  Accuracy of information available to choice counselors compromised by high error rates in provider network reports  Preferred drug lists and specific drug coverages not accessible on line or through customer service for most plans  The SPMI population and those with complex medical conditions face unique and serious challenges in adapting to managed care

7. Comments on Medicaid Reform “Florida Medicaid Reform Under Siege ” - National Center for Policy Analysis (2/08) State Admits Goofs But Seeks Dismissal of Medicaid Lawsuit – Florida Health News (2/08) “Florida’s Medicaid Reform Has Flaws ” – Florida Times-Union (2/08) “ Lawmakers Hear Earful on Health Care” – Naples Daily News (2/08) “Medicaid Suit Gains Status as a Class Action ” – Florida Times-Union (2/08) “Medicaid Project – A Flawed Experiment ” – Miami Herald (1/08) “Florida Medicaid Beneficiaries Sue Health Care Agency Over Misleading Materials Promoting Pilot Program” – Medical News Today (1/08) Lawsuit Challenges Florida’s Medicaid Reform Plan – St. Augustine Record (1/08) “Our View: No Silver Bullet ” – Florida Today (1/08) “ State Not Ready to Begin Medicaid Reform” - St. Petersburg Times (12/07) “Medicaid Pilot Projects Get Bad Internal Review ” – St. Petersburg Times (10/07)

8. 8 Comments on Medicaid Reform Access to Care Made Difficult for Children – South Florida Sun- Sentinel (8/07) “ Report Slams Medicaid Pilot Program” – St. Petersburg Times (7/07) “Uncertain Access to Needed Drugs: Florida’s Medicaid Reform Creates Challenges for Patients – Georgetown University (7/07) Medicaid Reform Pilot Program Not Working as Expected – South Florida Business Journal (6/07) “Medicaid Reform Effort Hurting Those It’s Supposed to Help – Ocala Star-Banner 95/07) “Governor Crist: Reform Medicaid Reform – AIDS Healthcare Foundation (6/07) Critics of Florida’s Medicaid Reform Plan Say It’s Tough on Patients: State Says Mounting Complaints are Being Resolved – South Florida Sun-Sentinel (2/07) Florida Medicaid Reform Pilot Poses Challenge to MH Agencies : Information Hard to Come By to Guide Client Choice – Mental Health Weekly (9/06)

9. 9 The Trajectory of Medicaid Reform Level of Support High Low 20052008

10. 10 Medicaid Reform vs. Managed Care Managed Care = Medicaid Reform Medicaid Reform = Accelerated Managed Care Implementation Everything Else Was/Is Incidental Medicaid Reform in 5 Counties HMOs/Managed Care in 35 Counties

11. 11 The Initial Discounting of the Medicaid Benefit Pre- Waiver Spending Waiver Per Capita Cap $

12. 12 The Further Discounting of the Medicaid Benefit FFS 9% MC Discount HMO G & A UM Discount Mental Health Provider Revenues Down as Much as 50%

13. 13 The Discounting Calculation An Example $100 FFS PMPM x.91%AHCA HMO Contractual Discount $91 x.70-.80Avg. Plan Admin./Profit Discount $63-$72 x.10-.20UM Effect $57-$65 - $51-$58 Direct Care Spending Reduced by as Much as One-Half

14. 14 The Essential Questions 1.What’s the issue - Medicaid reform or managed care? 2.What effect is managed care having on consumers? What about providers? 3.Is the basic issue control of service use and costs vs. needs of beneficiaries? 4.Do consumer benefits change under reform/managed care? How do health plans pay providers? 5.What do you make of all the health plans participating in reform counties? Do they offer fundamental differences in plan choice? 6.What are the effects of risk corridors and risk adjustment of capitation rates? When will it be fully implemented? Does AHCA have the ability to prepare them? 7.What additional changes will HMOs make/are they seeking? 8.Are plans competent to serve disabled individuals? 9.What are the short-term and long-term implications of reform/managed care? 10.How should the disability community respond? 11.Is this a consumer or provider story? Both? 12.What redesign options are there to protect consumers and providers?

15. 15 ‘A Poor Prognosis’ – Ten Disturbing Symptoms of Florida Medicaid Reform/Managed Care 1.HMO Dominance/Control; Managed Care = HMO 2.Benefit Limits 3.Care/Administrative Hassles 4.Provider Revenues/Market Share Loss 5.Cost Shifts 6.Continuation of/Reversion to Medical Model/Limits on Use of/Availability of Specialists/Loss of Practitioners 7.The Vision Vacuum 8.Silo Thinking 9.Freeze on Enhancements/Loss of Federal Funds 10.Blinders to Safety Net Providers

16. Current Issues - Medicaid  Medicaid Reform – Delay or Go Ahead?  Consumer Harm  Medicaid Benefit Design – Medical Model  Loss of Certain Services, Coverages, and Programs  Program Enhancement Freeze – Loss of Federal Funds  Cost Shifts  Damage to Safety Net  Loss of Infrastructure  Loss of Real Plan Choices  Lack of Specialty Plans for Disabled Individuals  Lack of Evaluations  HMO Demands – The AHCA/HMO Partnership?  Loss of Specialists and Workforce  Isolation of AHCA from Other Agencies  Lack of Encounter Data  Federal Cutbacks  Reduced Funding for Mental Health Care and Other Benefits for Disabled Beneficiaries

17. The Slippery Slope The Effects of Medicaid Managed Care and Medicaid Reform on CMHAs Maintenance of MH BenefitsNo HMO Limits on BenefitsYes Increase in Hassle FactorYes Increased Provider Administrative CostsYes Provider Revenue DeclinesYes Increase in DCF/Provider/County Subsidies of Medicaid Beneficiaries Yes Complete, Accurate HMO Encounter Data Before 2008- 09 or Later No HMOs Attempt to Eliminate 80% Medical Loss RatioYes HMOs Attempt to Restrict Competition/Market Entry of New Types of Plans Yes HMOs Seek Substantial Rate IncreasesYes Poorer Access to CareYes

18. The Effect of Medicaid Reform on Mentally Ill Individuals and Community Mental Health Agencies

19. 19 Medicaid Budget – How It Is Spent 14.94% 27.47% 18.76% 41.69% 52.11% 19.03% 14.19% 11.81% Elderly 65+ Blind & Disabled Children Adults

20. 20 Medicaid – Principal Payer of Publicly Financed CMH Services Adult CMH 60% Medicaid Children CMH80% Medicaid CMH System Reliant on Medicaid AHCA Sets the Policies

21. 21 Unmet Needs 58%Percentage of statewide unmet need for SPMI adults 82%Percentage of statewide unmet need for SED children 85%Percentage of statewide unmet need for children with SA disorders 93%Percentage of statewide unmet need for adults with SA disorders

22. 22 Mental Illness Prevalence Rates/Rankings 1 st U.S ranking of mental illness among all disabilities for individuals aged 15-44 26%Number of Americans with a diagnosable mental illness 43%Percentage of Americans with a lifetime incidence of a mental and/or substance use disorder 48thFlorida rank in per capita spending on mental health care 37thFlorida rank in Medicaid per capita spending for enrolled disabled beneficiaries 47thFlorida rank – Medicaid per capita spending for enrolled children 43rdFlorida rank in Medicaid per capita spending for enrolled adults

23. 23 The Effects of HMO Contracting HMOs Providers/Consumers Communities $ $ Medicaid Community Mental Health Funds $ Shareholders

24. The Medicaid Managed Care Effect Erosion of MH Provider Funding Funding Level The Effect of Discounting and UM Base $ Ending $ Time $ $ 100% FFS50% FFS 20052007

25. 25 The Funding Dilemma Outflow > Inflow MH/SA System New $ Lost $$$ Medicaid Reform- Managed Care Effects/Lost Medicaid $/Effects of Inflation/Population Growth/Lost Local $ > Than Limited New Investments

26. 26 Medicaid Managed Mental Health Care HMO/PSN Issues  Loss of essential services  Disruption of continuity of care  Frequent denials of needed services  Lack of plan understanding of SPMI/SED populations  Failure to meet prompt pay requirements  Multiple prior authorization forms/procedures  Excessive paperwork requirements  Frequent plan audits of providers  Decline in provider productivity  Increased provider administrative costs  Different staff credentialing protocols/requirements  Required service termination dates for severely and persistently mentally ill  Poor plan communications  Sharp drop in beneficiary referrals  Sharp drop in community mental health agency Medicaid revenues

27. Medicaid Reform II

28. 28 The Medicaid Reform Vision Prevention/Wellness Disease/Chronic Care Management Customized Benefit Packages for Different Beneficiary Populations Collaborative, Integrated Care Coordination with other Systems of Care Reasonable Provider Reimbursement Rates Real Differences in Plan Choices High Standard for Plan Accountability Timely, Accessible Care Robust Provider Network Plan Reinvestment in Community Profit/Administrative Limits – Direct $ to Care Use of Best Practices/Treatment Protocols Meaningful Plan Report Cards Public Transparency Care Based on Achieving Treatment/Care Outcomes High Standard for Quality of Care

29. 29 A Transformed System Checklist  Nationally Recognized  Consumer/Provider Friendly  Innovative  Improved Performance and Outcomes  Community-Based  24/7 Accessible System  Evidenced Based Practices  No Paper Barriers to Care  Model IT Practices/Encounter Data  Transparency (Quality/Price)  Regular Evaluations and Measurement  Comprehensive, Modern Benefit  Individual-Centered  Values-Driven  Reinvestment of Savings  Preventive and Holistic-Based  Increased Choice  Disability Competent Plans  Improved Quality of Care and Life  Coordination of All Services That Support Individual Well- Being  Address Health Care Continuum  Precise Targeting of and Special Programs for Individuals with Chronic Disease  Clear, Frequent Communication  Incentives to Drive Program Goals  Engagement and Empowerment of Consumers and Providers

30. 30 The Mental Health Benefit Issue  The Florida Medicaid mental health benefit - a medical model of care  Limited use and delineation of the CMS- recognized psychosocial rehabilitation service  Limited funding of consumer supports – supported housing, supported employment, supported education and other community living supports  Limited funding of consumer recovery-based services (clubhouse, drop in centers, peer supports)  Lack of direction to HMOs/MCOs in requiring and promoting rehabilitative/recovery based services  Lack of disease management/health management approach to care for those with psychiatric disabilities

31. 31 Redefining Medical Necessity as Medical/Psychosocial Necessity  “Medical Necessity” not defined in Title XIX or Medicaid regulations.  States have the discretion to define it at the state level and the definition varies from state to state.  Other states have defined “medical necessity” to include psychological aspects of a multi- dimensional disorder.  Medical necessity is a payment concept that should be linked to quality of care and the objectives of recovery and resiliency.

32. 32 The Recovery Difference  Blends Medical and Social Models of Care  Provides Recovery-Based Planning and Treatment  Offers a Broad Service Menu Customized to Meet Individual Needs  Promotes Cost-Effective Care  Provides for a Value Driven Benefit Package  Promotes Product/Service Innovation  Promotes Clinical Excellence Ensures Consumer-Friendly and Consumer-Centered Care  Establishes a Health/Recovery Coaching Approach to Care  Promotes Community Inclusion  Establishes an Outcome Driven Approach to Care  Promotes the Use of Evidenced Based Practices

33. 33 A Different Managed Care Approach ‘Medicaid Plus’ Population Management Disease/Health Management Integrated, Collaborative, Holistic Care Care Coordination Delivery System Redesign Electronic Health Records State of the Art IT/Decision Support Enhancements Goals for Optimal Health Health Teams/Coaches Decision Support Tools Self-Management Support Proactive Care Team Wellness/Prevention Behavior Change Support Programs Social Advancement

34. 34 The Medicaid Specialty PSN Advantage A Managed Care Plan for People with Disabilities Reinvestment of Savings Disability Competent Plan Integrated Care Enhanced Care Improved Consumer Outcomes Redirect Resources to Community Care and Recovery

35. 35 Support for a Specialty PSN  Alignment with Medicaid Reform  Florida-Based Organization  Provider-Based Organization  Community-Affiliated/Based Plan/Strong Community Ties  Protection of Community Safety Net  Use of Expert System of Care  Improved Patterns of Care  Long-Standing Consumer-Provider Bond  Success of Medicare SNP Launch  No Cost Shifts  Reinvestment of Savings  Improved Coordination of Care Across Systems of Care  Elevate Priority of High-Risk Beneficiary Care  Use of an Integrated, Collaborative Care Model  Long-standing Relationships with Counties/State

36. 36 The Special Needs Plan A Commitment to…  Integration, Coordination, Collaboration  Improved Management of Mental Illness and Co- Morbid Conditions  Disability Competent Plan  Intensive Care Management/Health Management  Early Intervention  A Comprehensive and Individualized Benefit Package  Improved Access to Community-Based Services and Supports  Enhanced Quality Management and Accountability  Best Practices Improved Support for Families/Caregivers  Reinvestment of Savings  A New Consumer- and Provider-Friendly Managed Care Model  Acting as a Primary Link to the Disability Community  Improved Consumer Outcomes  Protection of Community Safety Net  One-Stop Service  Model System of Care  Service Innovations  A Community Affiliated Plan

37. 37

38. 38 Thinking Outside the Box Medicaid Reform II