Missouri Medicaid Update: MO HealthNet and Insure Missouri October 24, 2007 Missouri Association for Social Welfare (MASW) Annual Conference Joel Ferber, Managing Attorney, Health and Welfare Unit Legal Services of Eastern Missouri

Senate Bill 577 Implements the Governor’s plan to reform Missouri’s Medicaid program. Outgrowth of 2005 Legislation (SB 539). SB 539 created the Medicaid Reform Commission and set a sunset date for the Missouri Medicaid Program (June 2008). SB 577 is the culmination of a 2-year process of hearings, meetings, discussions, reports, and recommendations. For a detailed analysis, see Joel Ferber and James Frost, MO HealthNet and SB 577: A Preliminary Analysis of Revisions to the Missouri Medicaid Program, July 27, 2007 (available at: www.mocatholic.org/2007%20AA/MOHealthNet.pdf.)

SB 577: Medicaid becomes “MO HealthNet” Changes the name of the Missouri Medicaid program to “MO HealthNet.” Renames the Division of Medical Services the “MO HealthNet Division.” Removes the Medicaid Sunset date and eliminates the Medicaid Reform Commission. All existing regulations remain intact unless withdrawn by the MO HealthNet Division.

SB 577: Health Care Homes “Health Care Home” is required but is not defined – left to implementation by the Department of Social Services. “Health Risk Assessments” required. “Plan of Care” required for each participant – must include health status goals “achievable through healthy lifestyles” (not clear who creates a plan of care – treating physician, case manager, social worker, etc.?). “Health Advocate” proposal (from the Senate bill) not included. Health services not contingent on healthy lifestyles (Senate bill).

American Academy of Pediatrics (AAP) Definition A “medical home” provides comprehensive, continuous, accessible, coordinated, and family-centered primary care that enables the patient to obtain access to all necessary specialty services and treatment.

SB 577: Restorations/Expansions of Coverage Ticket to Work Health Insurance Program (expected to cover 3240 people, 1930 new eligibles). Sheltered Workshop Disregard. This is a disregard of all earned income of individuals certified as eligible for sheltered workshop employment. (estimated to affect 1604 individuals, who are mostly receiving coverage on a spenddown basis). Children’s Health Insurance “affordability” changes (could restore coverage to about 10,000 children if fully implemented). Children Aging out of Foster Care up to age 21 (covers 970 children). “Uninsured Women’s Health” Program Expansion (could provide family planning services, including STD testing, to nearly 82,000 uninsured women) (not yet implemented). Medicaid extension of 60 days for women participating in drug court (subject to federal approval).

SB 577: Some Key Points about TTWHA Participants must have incomes at or below 250% of federal poverty level; earnings up to 300% of federal poverty level are disregarded. Must meet SSI definition of disability or have a “medically improved” disability. Participants must have earnings. Social Security and Medicare taxes must be withheld from earnings. Participants must also meet a net income test: the net income test is the regular Medical Assistance eligiblity limit ($724 for an individual, $970 for a couple). See Family Support Division IM # 77 (August 28, 2007)

Key points about TTWHA (continued) The net income test allows a number of exclusions and deductions from income, including (1) a disregard of all earned income of the disabled worker, and ½ of earned income of the non-disabled spouse, (2) standard deduction for impairment–related expenses equal to ½ of disabled workers’ earnings, (3) all SSI benefits and 1st $50 of SSDI benefits, (4) health insurance premiums, (5) $75 deduction for dental and optical insurance purchased by the worker. Asset limit is same as regular Medical Assistance for PTD; Some exclusions from resources, e.g., up to $5000 in medical savings or independent livings accounts. Graduated premiums if over 100% of the federal poverty level. See Family Support Division IM # 77 (August 28, 2007)

Sheltered Workshop Disregard Disregards all earned income of persons certified as eligible for sheltered workshop employment. Disregards all earned income – not just income earned at a sheltered workshop. This includes individuals certified as eligible but no longer working for sheltered workshops. See Family Support Division, IM # 69 (July 26, 2007).

SB 577: Key points about SCHIP Affordability Test Affordability Amounts Revised: If a family has access to affordable, employer-sponsored or private health insurance at the following amounts, the children are not eligible for SCHIP: 151 to 185% of poverty: $64 ($209) 186% to 225% of poverty: $106 ($255) 226% to 300% of poverty: $161 ($375) Revising affordability amounts is estimated to affect 6,349 children. (old affordability amount in parentheses) See Family Support Division, IM # 71, August 1, 2007).

SB 577: 2 Other Potentially Helpful SCHIP Changes Health Insurance that does not cover a child’s pre-existing condition is not “affordable” health insurance (would restore coverage to 2353 children). If a child has exceeded the annual limits of coverage, then that child is not considered “insured” and the health insurance is not considered “affordable” (would restore coverage to 1,367 children). ** These changes have not been implemented.

SB 577: Additional revision Affecting Children Authorizes, but does not require, another change that could be helpful to children: SB 577 allows the Department to provide regular Medicaid coverage to children at or below 150% of Poverty. SCHIP and Medicaid State plan amendments filed with CMS (recently approved). Could restore coverage to 3450 children because this group would no longer be subject to the SCHIP requirement that they be uninsured for six months before being covered. $250,000 net worth test does not apply to this group. Enables these children to receive non-emergency medical transportation and prior quarter coverage. Implemented October 2, 2007 (Family Support Division IM# 99).

SB 577: Uninsured Women’s Health Services Expansion Expands the existing program to include uninsured women with incomes under 185% of the federal poverty level if their assets do not exceed $250,000. The current program provides one year of coverage for women who lose eligibility for MPW after 60-days post-partum period. Makes these women eligible for family planning services, including testing and treatment for STDs. Some women in this program may become eligible for full MO HealthNet coverage under the Breast and Cervical Cancer Treatment (BCCT) program if cancer is detected through the Uninsured Women’s Health program (administrative change could broaden the scope of the BCCT program as well). Requires a waiver from the federal government. This is not being implemented.

SB 577: Changes to Medicaid Services Durable Medical Equipment Coverage (also a $19.7 million appropriation for these services – state and federal). Hospice Care (restores coverage in statute, has been already covered through appropriations and by regulation since 2005). Dental and Optical Services subject to appropriations – these services were not currently funded beyond what is already covered.

SB 577: Helpful Changes for Elderly and Disabled Beneficiaries Social Security COLAs are disregarded until the federal poverty level is adjusted each year. Spenddown “premium” payments will be reduced if participant incurs a subsequent out-of-pocket medical expense after paying the monthly premium (not implemented yet).

SB 577: Co-Payments Amends state law reducing provider payments by the amount of co-payments; Mandates that co-payments are in addition to provider payments – effectively increases provider reimbursement – undoes 2005 legislative change. No changes in the amount of co-payments but any increases would be subject to federal limitations, and could limit access to necessary health services. No new co-payments for non-emergency use of ERs (but managed care companies must monitor non-emergency use of ERs).

SB 577: Premium Offset Pilot Program Would make “standardized private health insurance coverage available to qualified individuals.” Subject to appropriations, provides authority to request federal waivers. 2 counties – one rural one urban. Could be a waiting list, no “wrap-around” coverage. Possible individual option to purchase (“Absent employer participation, a qualified employee and/or qualified employee and spouse may directly enroll”). Broad appropriations language in HB 11 as well -- $13.2 million (state and federal) appropriated for premium offset or other such programs (This is part of the funding for the first year of “Insure Missouri”) . Subject to approval by Oversight Committee. Premium Assistance programs generally have low participation. Probably on the backburner with “Insure Missouri.”

Some Questions about “Premium Offset” Program Who qualifies? What are the standards for the benefits package? Will it be available to children as well as adults? Any limits on cost-sharing? Any minimum employer contribution or maximum employee contribution? What will be the state share of the premium? How will employee share be calculated? To what size employers (e.g., small businesses, employers with 50 or fewer employees)? Financing arrangements for Section 1115 waivers?

SB 577: Health Improvement Plans (HIPs) All participants must be assigned to one type of health improvement plan (risk-based managed care plan, administrative services organization, coordinated fee-for-service model). The three types of plans are not defined in the bill. Development of new plans are subject to approval by new Oversight Committee. Development of plans and enrollment of participants shall begin by July 1, 2008, and be completed by July 1, 2011. Aged, Blind and Disabled are not required to enroll in risk-based managed care (but could voluntarily enroll, could be required to enroll in ASOs, should not be assigned to risk-based plans).

Health Improvement Plans (continued) Protections for managed care plans in existing MC+ counties (i.e., those counties will still have managed care). Most key details (including consumer protections) not included in SB 577, left for implementation – Must be a public process for development of HIPs. Plans must meet quality targets, non-emergency rooms is identified as a quality target. Many other quality targets will need to be addressed (waiting times, access, etc.). Financial Penalties for failure to meet “quality targets”. HIPs must provide health care home, health risk assessment, plan of care. State must conduct independent survey of “health and wellness” outcomes of MO HealthNet recipients (by July 1, 2008).

Steps are already being taken to implement “Health Improvement Plans” administratively State is expanding Managed Care geographically for the current MC+ populations to 21 new counties. State is implementing the “Chronic Care Improvement Program” for elderly and disabled population (could be considered an “ASO”). Other ASO models likely to be considered (wide open). Other health improvement plans (long-term care, Medicare beneficiaries)?

Concerns with Managed Care for People with Disabilities The disabled have greater health needs and need a wide array of specialists. Not proven that risk-based managed care can effectively serve this population. Many high-cost services are “carved out” of current MC+ program for healthier recipients. Concerns about “dual eligibles” (receive most health care, including prescription drugs, through Medicare).

Some unanswered questions related to elderly and disabled beneficiaries and managed care (1) Will the plans have adequate networks of specialists to serve individuals with chronic and disabling conditions? (2) Will the plans have to ensure that network providers’ facilities are accessible to people with disabilities? (4) What kind of consumer protections will be in place: appeal rights, grievances systems, prohibitions against discrimination and disenrollment based on disability, choice of plans and providers, waiting times and accessibility standards (e.g., geographic accessibility), access to “Ombudsman” services, exemptions from plan assignment, time periods for choosing a provider, consumer education regarding the selection of a plan and/or primary care provider as well as grievance processes? (5) Under what circumstances will individuals be “auto-assigned” to plans? (6) Will the State impose mandatory savings targets on managed care plans, and if so, will managed care plans be able to meet those targets without underserving people with disabilities? (7) Which services, if any, will be “carved out” from managed care?

SB 577: Provider Reimbursement Beginning January 1, 2008, and annually thereafter, the MO HealthNet Division is required to report the status of provider reimbursement rates in comparison with Medicare reimbursement rates and average dental reimbursement rates in Missouri (§ 208.152.1(23)). The MO HealthNet Division must provide a four-year plan to achieve parity with Medicare reimbursement rates and “third-party payer average dental reimbursement rates” to the General Assembly by July 1, 2008. The Division also must include these amounts in its budget requests to the Governor (Not required to increase the rates but it is mandatory that the Division ask for appropriations in these amounts). Legislature appropriated $66.1 million (state and federal) to increase reimbursement to 55% of Medicare rates this year.

SB 577: Pay-for-Performance Subject to appropriation. Performance measures not defined. New “Professional Payment Services Committee” to develop pay-for-performance measures (9 of the 18 members are physicians). Required for all three types of HIPs. $2.9 million was appropriated to develop P-4-P in Chronic Care Improvement Program.

Some other components of SB 577 State False Claims Act to address provider fraud. Long-term care partnership program. Subcommittee for “Comprehensive Point-of Entry” (within the Oversight Committee). Limits use of Personal Services contracts to avoid transfers of assets penalties. Authorizes Telehealth Services (exchange of medical information electronically to improve health status of a patient). Changes to rules on Medicaid waivers. Changes to rules on exclusion of annuities as countable assets. Implements DRA rule limiting the availability of nursing home coverage to participants with $500,000 or less of equity in their home. Creates Health Care Technology Fund. Protects Access to Psychotropic Medications Quarterly reports on prevalence of Medicaid-funded health coverage among employees (codifies existing Executive order and policy). MO HealthNet Oversight Committee, Joint Committee on MO HealthNet.

Some Issues that are not addressed Does not address most of the 2005 eligibility cuts, particularly low-income parents (some exceptions mentioned earlier, SCHIP changes, TTW program, DME restored). Does not take significant steps to address the larger problem of the uninsured (But see “Insure Missouri” Plan). Does not restore the cuts in services, with exception of DME and Hospice services. Opens the door to restoring dental and optical (subject to appropriations). Discrepancies between blind and non-blind remain intact with regard to coverage of services.

Summary: SB 577 and MO HealthNet Changes the name of program and removes the “sunset.” Modest, but very helpful, changes to eligibility and services. Establishes “Health Care Home” Concept and Requires “Health Improvement Plans.” Many of the details are left to the Oversight Committee and the Department of Social Services (advocacy is important).

Other Issues Federal SCHIP reauthorization could have an impact -- e.g., if there is more funding and new options to reach eligible but uninsured Missouri children. Problem of Uninsured Remains: Recent Census data shows there are about 772,000 uninsured people in Missouri, an increase in uninsured by 103,500 from 2005 to 2006 – three times the national rate of increase. There are 127,000 uninsured children in Missouri. Many states are implementing or considering comprehensive approaches to dealing with the uninsured (Massachusetts, CA). Insure Missouri: Governor Blunt’s new initiative to cover approximately 190,000 uninsured Missourians.

“Insure Missouri” Initiative On September 18th, the Governor announced a new health care insurance program for low-income individuals and parents: has 3 stages. The first stage would cover working parents and caregivers with children up to 100 percent of the federal poverty level (February 2008) (estimated to cover over 54,500 parents). The second stage could cover working parents and other working adults up to 185 percent of the federal poverty level (July 2008) – depends on legislative action. (estimated to cover up to 48,836 in FY 2009, would increase over time). The third stage will help small businesses provide coverage (to be developed). (Fall 2008) – reinsurance or premium assistance. About 190,000 uninsured Missourians would be covered by 2012 if the program is fully implemented. For a detailed analysis, see Joel Ferber, Insure Missouri: Early Observations, October 11, 2007 (available at http://www.masw.org/programs/attachments/Insure%20MO.pdf). See also www.InsureMissouri.org

Some Questions: What is the benefits package? What about the financing? (GR, DSH, Provider taxes, cost-sharing, federal matching funds – relies heavily on the hospital provider tax) Will there be Legislative Support for the program. Who will bid? Managed Care plans? Other insurers? Will there a be a fee-for-service option (What about rural counties)? What about Waivers and Budget Neutrality? What about cost-sharing (e.g., for families above the poverty level). What is the application process (internet-based application, other methods)? How will “small business” component work? (e.g., reinsurance or premium assistance? Will there be enrollment caps, waiting lists? (e.g., in phase 2).

Insure Missouri: What Services will be Covered? PHASE 1. prescription drugs; emergency services; physician services; Inpatient/outpatient hospital services; diagnostic services; home health services; durable medical equipment; inpatient/outpatient mental health services; family planning Some other MO HealthNet services. not maternity care or non-emergency medical transportation; dental, vision, hearing aids, HCB services

Cost-sharing Decisions around premiums affect participation and whether projected enrollment will be achieved -- studies show negative impact of premiums on participation. No premiums in Phase I but nominal co-payments ($.50 to $3.00). Phases 2 and 3 not clear.

Waiver issues Waivers are needed for proposals that vary federal Medicaid requirements (e.g., coverage of childless adults or limiting enrollment)? Waivers are not needed to expand coverage to parents. Waivers require Budget Neutrality --- affects financing and the state budget. CMS could influence program design. These details should be made public.

The Process Department of Social Services must develop waivers and state plan amendments (SPAs). Centers for Medicare and Medicaid Services (CMS) must approve SPAs and Waivers. Missouri General Assembly must continue to appropriate funds for the initiative. Eligible individuals and small employers must be identified and enrolled.

Who is not covered? Elderly and disabled (income standard remains at 85% of poverty). Some low-income parents, including some working parents (e.g., parents with unearned income that makes them ineligible). Does not restore kids’ coverage but parent coverage expansion is likely to increase enrollment of children already eligible for Mo HealthNet.

Why does health insurance matter? Having health insurance improves access to health care and health outcomes. The uninsured receive less preventative care, are diagnosed at more advanced disease states and, once diagnosed, tend to receive less therapeutic care (drugs and surgical interventions) than people who have health insurance. A wide range of studies show that (like other health insurance) Medicaid and SCHIP improve access to health care and health outcomes. Other problems: Uncompensated care, Cost-shifting, Medical Debt, Economic Impact, etc.

Additional Resources on the Implementation of MO HealthNet IM # 63 (July 2, 2007) (overview of SB 577 changes), available at: http://www.dss.mo.gov/fsd/iman/memos/memos_07/im63_07.html IM # 67 (August 24, 2007) (Julia M court case and SCHIP), available at: http://www.dss.mo.gov/fsd/iman/memos/memos_07/im67_07.html IM # 69 (July 26, 2007) (disregarding earned income of individuals eligible for sheltered workshop employment) IM # 71 (August 1, 2007) (changes to SCHIP affordability standards), available at: http://www.dss.mo.gov/fsd/iman/memos/memos_07/im63_07.html IM # 77 (August 28, 2007) (new Ticket-to-Work program), available at: http://www.dss.mo.gov/fsd/iman/memos/memos_07/im77_07.html IM # 83 (August 28, 2007) (explaining change of Medicaid program name to MO HealthNet), available at: http://www.dss.mo.gov/fsd/iman/memos/memos_07/im83_07.html IM # 99 (October 2, 2007 (implementing SCHIP changes for children up to 150% of poverty), available at: http://www.dss.mo.gov/fsd/iman/memos/memos_07/im99_07.html. IM # 97 (regarding expansion of MC+ managed care) MO HealthNet Program Changes SFY 2008, available at: http://www.dss.mo.gov/mhd/providers/pages/progchg08.htm\