Medicaid Reform 2011 Florida Association of Counties Legislative Webinar January 28, 2011

Overview Information Provided –What is Medicaid? –How are counties involved in Medicaid? –What will Medicaid Reform look like?

What is Medicaid? Authority and Federal Requirements Authorized under Title XIX of the Social Security Act (1965) Funded jointly by the Federal government and the States (Counties pay a portion of the State’s share) Administered by the States Entitlement Program State cannot limit eligibility Information provided by the Agency for Health Care Administration

Authority and Federal Requirements (Cont) Federal Medicaid regulations mandate certain benefits for certain populations Mandatory eligibility groups and services must be covered Medicaid programs vary considerably from state to state because of differences in: –Optional service coverages –Limits on mandatory and optional services –Optional eligibility groups –Income and asset limits on eligibility –Provider reimbursement levels Information provided by the Agency for Health Care Administration

Authority and Federal Requirements (Cont) States must submit a Medicaid State Plan to the federal Centers for Medicare and Medicaid Services (CMS) Services must be available statewide in the same amount, duration and scope State has to adhere to its State Plan: –This means that CMS will only provide federal match for services rendered to covered individuals in accordance with the State Plan –Services approved under the State Plan are eligible for the Federal Medical Assistance Percentage rate or FMAP rate Information provided by the Agency for Health Care Administration

Who Is Eligible? Medicaid eligibility is determined by: –Categorical groups (pregnant women; families and children; and aged, blind, and disabled individuals) –Income –Assets –Citizenship –Residency –Cooperation with Child Support Enforcement (when one or both parents are absent from the home). –Medical need for institutional services, such as persons in nursing facilities. –Level of medical bills (for Medically Needy) Information provided by the Agency for Health Care Administration

Who Is Eligible? (Cont) Mandatory Eligibility Groups If a state chooses to participate in the Federal Medicaid program, certain groups must be covered Major groups that are mandatory for coverage under a state’s Medicaid program include: Low income families with children (TANF) Supplemental Security Income (SSI) recipients Certain people on Medicare Information provided by the Agency for Health Care Administration

Florida Medicaid Expenditures $20.2 billion estimated spending in Fiscal Year Federal-state matching program –64.83% federal, 35.17% state. Florida will spend approximately $6,802 per eligible individual in Fiscal Year % of all Medicaid expenditures cover hospitals, nursing homes, Intermediate Care Facilities for the Developmentally Disabled (ICF/DD’s); Low Income Pool and Disproportionate Share Payments. 10% of all Medicaid expenditures cover drugs. Fifth largest nationwide in Medicaid expenditures.

How are counties involved in Medicaid? Share of Costs (Section , F.S) –Nursing Homes –Inpatient Hospital Days Voluntary Contributions Local Match Programs

County Share of Cost Background –In 1972, legislation was passed requiring counties to reimburse the state for certain Medicaid services A percentage of inpatient hospital costs in excess of 12 days and up to 45 days Nursing home costs capped at $55 per patient per month –In 2001, the Legislature increased the counties’ share for inpatient hospital services adding days 11 and 12

Recent Developments The state is prohibited from increasing the county share of cost while they are receiving federal stimulus dollars. –Prohibition runs through January 2011 The President signed legislation extending the enhanced FMAP through June 2011 and thereby extending the prohibition. A provision in the federal health care reform bill prohibits the state from increasing the share of cost for counties for newly eligible Medicaid recipients in 2014.

Why Reform? Cost FY 1999/2000, total expenditures for Florida Medicaid: –$7.42 billion (17.8% of the total state budget). FY 2009/2010, total estimated expenditures for Florida Medicaid: –$18.81 billion (28.3% of the total state budget). If the growth rates continue, by FY Medicaid expenditures are estimated to be: –$28.0 billion (33.4% of the total state budget). *Following Information provided by Florida House of Representatives Staff

Why Reform? System Failures Inefficient service delivery: –Needed services may not be available or accessible. Uneven quality of services: –Lack of systemic quality protection or incentives for continuing improvements. Overutilization: –Lack of coordinated care results in hospitalizations that should have been preventable (and often times inappropriate) use of emergency care. Rising cost of care: –Medicaid costs continue to rise despite many containment efforts. Fraud and abuse: –“Pay and chase” fraud fighting is ineffective; –Prevention efforts produce a modest impact in fee-for-service. Low rates for fee-for-service providers: –Fees for many physician services have not increased in 20 years.

Principles of Transformation Continuous quality improvement: –Accountability through appropriate reporting and measurement; –Transparency of performance metrics and data; –Consequences for performance. Efficient service delivery: –More coordinated care; –Better network development and oversight. Predictable spending levels: –Increased use of pre-paid financing systems; –Cost containment through care coordination and incentives for system improvement; –Smarter purchasing practices. Patient centered care systems: –Encourage responsiveness to unique patient needs; –Require plans to communicate better with consumers; –Incentives for healthy behaviors enabling patients to purchase additional services; –Flexibility allowing patients to purchase private insurance and other health care services.

Overview of HB 7223/7225 House Medicaid proposal consisted of 2 bills: –HB 7223 creates numerous new sections of law in Chapter 409 phased in over 5 years –HB 7225 makes date-specific, conforming changes to current law Medicaid is established as a statewide integrated managed care program for all covered services. All Medicaid recipients are enrolled in managed care unless specifically exempt; exempted recipients include: –Persons eligible for only limited services (family planning and breast and cervical cancer patients) –Persons eligible for only emergency coverage

Overview of HB 7223/7225 Qualified managed care plans include: –Provider Service Networks (PSN) –Exclusive Provider Organizations –Health Maintenance Organizations –Health Insurers Plans may target special populations, but no carve-outs—all services must be covered. A limited number of plans will be selected for each region Medicaid payment rates are negotiated as part of the procurement process, but based on historic spending and adjusted for clinical risk

Overview of HB 7223/7225 Additional Provisions –5-year contracts with no renewals –Requirement to pay for non-contracted emergency services –Requirement to meet network adequacy standards and transparency on network participation –Continuous improvement process –Required activities to prevent fraud and abuse –Grievance resolution process by plans and by AHCA –Penalties for early withdrawal –Requirements for enrollment, choice counseling, etc. –Encounter data analysis by AHCA

Additional Provisions Children’s Medical Services is a qualified plan and exempt from competitive procurement Medical loss ratios –Pay backs for less than 85% spending –Loss of assignments and payback for less than 75% spending –DD plans must spend 92% of Medicaid premium Must cover all current mandatory and optional services, but may customize Plans must include some providers and may eliminate providers for failure to meet transparent quality standards

Regions Regions: six large geographic areas: Networks gain higher enrollment levels and economies of scale; Areas are consistent with medical trade areas, while grouping rural and urban counties to ensure statewide coverage.

Proposed Timeline Year 1: Waiver modifications Year 2: Begin LTC plan procurement Year 3: Complete LTC procurement and begin enrollment; begin medical care procurement Year 4: Complete medical care procurement and begin enrollment; begin procurement of DD plans Year 5: Complete procurement of DD plans and begin enrollment

Impacts: County Government Financial: –In FY 09-10, counties spent $210.2 million to help the state fund the Medicaid program. –In FY 11-12, the forecast is that counties will be obligated to spend $338.9 million to meet the same obligations. These obligations are based on hospitalizations and nursing home utilization—two of the areas likely to be most affected by managed care. Services: –Counties have had to fill in service gaps in many ways when Medicaid is insufficient to meet people’s needs. –When access and quality of services improve, county residents will benefit.

Notes… Issues FAC has brought before the House –Calculating County Share of Cost –Intergovernmental Transfers (IGTs) It is unclear what the Senate will be proposing –Super Waiver? AHCA is still working with CMS on extending the current 1115 Demonstration Waiver Impacts of Federal Health Care Refrom

Questions?? Contact: Heather Wildermuth Senior Legislative Advocate, HHS (850)