view entire presentation from the medicaid reform symposium
TRANSCRIPT
Medicaid Reform
SymposiumWhat is the Right Prescription for
Floridians?
Sponsored By:Suncoast Region Healthy Start Coalitions
The Children’s Board of Hillsborough CountyTampa Bay Health Care Collaborative
American Heart Association
Opening RemarksLuanne
Panacek, Ph.D.Executive Director
The Children’s Board of Hillsborough County
WelcomeSandra L. Murman
Florida State Representative
4
Florida Medicaid:
A Case for Modernization
Thomas W. ArnoldDeputy Secretary for Medicaid
November 23, 2004
Medicaid Structure
Federal Medicaid laws mandate certain benefits for certain populationsMedicaid programs vary considerably from state to state, and within states over timeState Medicaid programs vary 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
Medicaid does not cover all low income individualsIndividuals not covered are often working adults without children – in fact, the number of uninsured children nationally is at the lowest level since measuring beganMedicaid serves the most vulnerable; in Florida: – 27% of children– 44% of pregnant women– 66% of nursing home days– 885,000 adults - parents,
aged and disabled– 52% of people with AIDS
*Coverage for infants up to 185% FPL is required in order for states to receive Title XXI funding. 2
250%
225%
222%
200%
Infants MediKids
175%
185% Pregnant Women
185%
175%
150% 150% 150%
135%
QI-1
125%
120%
SLMB
100%
100% QMB 88%
Meds A/D KidCare Medicaid
75%
75% SSI
25% 24%
0%
Medicare Premium Payment Medicaid Benefits
Breast & Cervical Cancer
TreatmentPregnant Women
Infants up to Age 1
Children Ages 1 thru 4
Children Age 5
Children Age 6 to
18 Age 18Age 19 thru
20
Single & Childless Couples
Adults
Low Income Families
Aged, Blind and Disabled Children and Parents Children OnlyWomen
133%
100%
Medicare
(w ith exceptions)
Healthy Kids
Home and Community Based Services, Nursing
Home, Hospice Breast and Cervical Cancer
Treatment
Florida KidCare
Family SizeMonthly Income
1 $7762 $1,0413 $1,3064 $1,5715 $1,8366 $2,1017 $2,3668 $2,631
Each Additional $265
2004 Federal PovertyGuidelines
Mandatory Medicaid coverage for low-income families using 1996 AFDC income standard (entitlement).
Mandatory Medicaid coverage (entitlement).
Optional Medicaid coverage (entitlement).
Federal Medicare coverage (entitlement).
Optional child insurance coverage (non-entitlement).
Optional Medically Needy income spend down level (entitlement).
Medicaid Eligibility - A
Complex System of Coverages
Growth in Medicaid Average Monthly Caseload
Source: Medicaid Services Eligibility Subsystem Reports. * October 8, 2004, Medicaid Caseload Estimating Conference.
Mandatory Medicaid Services
Advanced Registered Nurse Practitioner Services
Early & Periodic Screening, Diagnosis and Treatment of Children (EPSDT)/Child Health Check-Up
Family Planning
Home Health Care
Hospital Inpatient
Hospital Outpatient
Independent Lab
Nursing Facility
Physician Services
Portable X-ray Services
Rural Health
Transportation
Mandatory40.67% of $12.7
Billion
Florida Medicaid Optional Services*
Adult Health ScreeningAmbulatory Surgical CentersAssistive CareBirth Center ServicesChildren’s Dental ServicesChildren’s Hearing ServicesChildren’s Vision ServicesChiropractic ServicesCommunity Mental HealthCounty Health Department Clinic ServicesDialysis Facility ServicesDurable Medical EquipmentEarly Intervention ServicesEmergency Dental for AdultsHealthy Start ServicesHome and Community-Based ServicesHospice CareIntermediate Care Facilities/ Developmentally Disabled
Intermediate Nursing Home CareOccupational Therapy Optometric ServicesOrthodontia for Children Personal Care Services Physical TherapyPhysician Assistant ServicesPodiatry Services Prescribed DrugsPrimary Care Case Management (MediPass)
Optional59.33% of $12.7
Billion
Private Duty Nursing
Registered Nurse First Assistant Services
Respiratory Therapy
School-Based Services
Speech Therapy
State Mental Hospital Services
Subacute Inpatient Psychiatric Program for Children
Targeted Case Management
*States are required to provide any medically necessary care required by child eligibles.
Medicaid Budget - How it is Spent FY 2003-04
* Adults and children refers to non-disabled adults and children.
13.38%
16.72%
53.30%
16.60%
30.87%
40.88%
17.65%
10.60%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Enrollees Expenditures
FY 2004
Adults*
Children*
Blind & Disabled
Elderly 65+
Projected FY 2004-05 Medicaid Expenditures by Appropriation Category
Source: FY 2004-2005 GAA
Other:• Special Payments to
Hospitals• Supplemental Medical
Insurance• Hospital Outpatient
Services• Disproportionate
Share Hospital Payments
• Hospice Services• Intermediate Care
Facility/DD• Home Health Services• Therapeutic Services
for Children
Top 6 Categories for Over 65FY 2003-04
Other14.89%
Hospice2.99%
Hospital Inpatient Services
2.58%
Prepaid Health Plan
3.73%
Long-Term Care6.45%
Prescribed Medicine19.01%
Nursing Homes50.35%
Estimated Medicaid Spending FY 2004-05
ServiceEstimated Annual
SpendingPercent of
Total Spending
Prescribed Medicine/Drugs $ 2,644,054,895 17.98%
Nursing Home Care $ 2,314,153,880 15.73%
Hospital Inpatient Services $ 1,762,289,358 11.98%
Prepaid Health Plans/HMO $ 1,622,434,059 11.03%
Home & Community Based Services $ 769,697,270 5.23%
Physician Services $ 754,478,058 5.13%
Special Payments to Hospitals $ 577,333,410 3.92%
Supplemental Medical Insurance $ 539,444,228 3.67%
Hospital Outpatient Services $ 533,443,612 3.63%
Disproportionate Share Hospital Payments $ 310,917,998 2.11%
Hospice Services $ 219,702,401 1.49%
Intermediate Care Facility/DD $ 194,819,297 1.32%
Home Health Services $ 162,861,286 1.11%
Therapeutic Services for Children $ 159,329,606 1.08%
Other $ 2,144,318,352 14.58%
Total $14,709,277,810 100.00%
Source: FY 2004-2005 GAA
General Revenue History by Service
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
$1,000,000,000
FY96-97 FY97-98 FY98-99 FY99-00 FY00-01 FY01-02 FY02-03 FY03-04 FY04-05
Hospital Inpatient Hospital Outpatient Prepaid Health Plans/HMO
Home and Community Based Services Prescribed Medicine Drugs Nursing Home Care
Physician Services
Growth in Medicaid as Percent of State Budget GR and With Match
Source: Medicaid Services' Budget Forecasting System Reports* Surplus/Deficit Report, Medicaid Budget Forecasting System, October 2003. ** FY 2004-05 General Appropriations Act adjusted for vetoes.
4.9
%
5.4
%
5.6
%
5.4
% 7.1
%
8.0
%
9.1
% 11.3
% 13.4
%
13.3
%
14.1
%
14.0
%
13.8
%
13.3
%
12.4
%
12.3
%
11.5
%
12.3
%
13.3
%
14.6
% 16.7
%
6.9
%
7.0
%
7.3
%
8.2
%
9.2
% 10.8
%
11.4
% 13.8
%
15.3
%
15.0
%
15.3
%
15.7
%
15.8
%
15.3
%
15.3
%
16.0
%
17.5
%
21.2
%
22.7
%
23.4
%
25.3
%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1984-8
5
1985-8
6
1986-8
7
1987-8
8
1988-8
9
1989-9
0
1990-9
1
1991-9
2
1992-9
3
1993-9
4
1994-9
5
1995-9
6
1996-9
7
1997-9
8
1998-9
9
1999-0
0
2000-0
1
2001-0
2
2002-0
3*
2003-0
4*
2004-0
5**
Fiscal Year
GR with Federal Match
Florida Medicaid – Recent Efforts to Control Growth
in Costs
Prescription Drug Cost Controls
Service Authorization
Utilization Review
Institutional Rate Reductions
Increased Use of Capitation
Nursing Home Diversion/Transition
A Summary of Florida Medicaid Anti-Fraud and Abuse Measures –
Medicaid Program Integrity The Nation’s Model 1996-2004
New Provider ApplicationNew Provider AgreementPeriodic Provider Re-EnrollmentFinancial/Criminal Background ScreeningFingerprinting ProvidersProvider CredentialingNew Provider Licensure RequirementsSurety BondsProvider Site VisitsAdditional FMMIS EditsNew Sanction ToolsNew Prior Authorization RequirementsNew Utilization Review ProgramsProvider AuditsProvider/Beneficiary Utilization TrendsPayment SuspensionsBeneficiary Lock In
PRO/Peer Review ProgramsCounterfeit-Proof Prescription PadsDecision Support Systems/Data WarehousesFraud and Abuse Detection ContractorExpanded Managed Care Contracting/Risk ContractingNursing Home Payment Edits – Eligibility/Level of CareAdditional Service LimitsIntraagency Medicaid Fraud and Abuse Committee (FACT)Additional Investigators/Attorneys/MonitorsPerformance Measurement SystemOverpayment Recoupment Tracking SystemClaims Payment Accuracy Rate StudyEligibility Error Rate Study
Prescribed Drug Cost Control Program – 1999-2004
Monthly Four Brand Prescription Drug LimitPreferred Drug ListSupplemental Drug Manufacturer Rebatesand Value-Added AgreementsP&T CommitteeDrug Prior AuthorizationTherapeutic Consultation ProgramIntensified Benefit Management ProgramTherapeutic Academic Intervention Program (Detailing)Drug Therapy LimitsIngredient Cost Adjustments34-Day Supply LimitEarly Refill LimitsHMO Capitation Rate AdjustmentsFDA Drug Use GuidelinesCounterfeit-Proof Prescription PadsState MACs
Diabetic Supply Contract – Competitive BiddingDiabetic Product/Mail Order Pharmacy – Competitive BiddingBeneficiary Pharmacy Lock-InDiverted Pharmaceutical Pilot Project (STAMP)HIV/AIDS and Mental Health Patient Drug Management Project (2002-03)Drug Data Management/Analysis Contractor – Data Warehouse (2002-03)Hemophilia Revenue Enhancement Program (2002-03)Wireless Handheld Clinical Pharmacology Drug Information Database (2002-03)Home Delivery Pharmaceutical Services Pilot Project (2002-03)J-Code RebatesIngredient Cost Reductions to PharmaciesPrescription Drug Coinsurance (2004)
1970 - 1983 Fee-for-Service
1984 - 1997
Managed Acute CareHMOs – Since 1984MediPass (PCCM) – Since 1991
1997 -2003Provider Service Network - Since 2000Disease ManagementLong Term Care ManagementOther Alternative Plans - Since 2001
The Evolution of Reform Within Florida’s Medicaid System
The Florida Medicaid Managed Care System
2004 - Present
Disease Prevention/Self-ManagementIntegrated Care Management/Care CoordinationProvider Network LimitsNew Risk Sharing ArrangementsOutcomes Management/Improved Clinical Decision MakingQuality AssuranceMarket Forces/Purchasing Strategies/ Performance-Based
Contracting
Managed Care EnrollmentFlorida Medicaid
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
MediPass 1,004 98,989 80,704 171,714 234,357 667,312 515,322 455,177 520,256 613,894 637,342 672,096 711,206 732,176
HMO 100,371 203,891 306,642 395,175 416,408 396,075 385,157 406,898 431,714 484,525 556,385 658,317 675,705 737,401
Oct-91 Oct-92 Oct-93 Oct-94 Oct-95 Oct-96 Oct-97 Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04
MediPass
HMO
Source: Agency for Health Care Administration - October 2003
In some respects, this illustrates some of the problemmanaging the current program. Dual burden of managing a FFS system while also monitoring an HMO system
State Reform Initiatives
Most states experienced pressure in FY 2004 and found their Medicaid budget was growing faster than state revenue in part due to:– Rising caseloads (5.2% nationally)
– Rising medical costs.
States are moving to waivers which include features such as:– enrollment caps;
– reduced benefits;
– increased premiums or cost sharing.
Source: Kaiser Commission on Medicaid and the Uninsured, Report dated October 2004
State Reform Initiatives (continued)
For 2005, states generally proposed the following remedies:
# of States
Response
47 Freeze or reduce provider payments
43 Increase pharmacy cost controls
14 Implement changes to restrict eligibility
28 Expand or implement disease management programs
17 Focus on long-term care
14 Expand managed care
9 Reduce or restrict benefits
9 Increase co-payments
3 Increase premiums for optional groups
Source: Kaiser Commission on Medicaid and the Uninsured, Report dated October 2004
Principles of Medicaid Reform
Principles:– Predictability in Growth– Accountability– Appropriately serving the population for which the
program was created
Evaluation Criteria:– Will it result in savings, while stabilizing expenditure
increases at a rate in keeping with revenue growth?– Does it give consumers incentives to reduce utilization/
change behavior/purchase services wisely?– Does it give providers incentives to reduce costs/
reduce utilization and provide effective care?– Does it promote innovation in service delivery
systems?
Medicaid Reform Potential Strategies
Benefits Care Management Fraud & Abuse Service Delivery Systems Financial Methodologies Enrollment
Medicaid Modernization EffortThe Process
The Agency has established reform teams in eight topical areas, centering the discussion on the following areas of Medicaid:
– Long Term Care
– Children’s Health Services
– Developmental Disabilities
– Pharmacy Services
– Disease Management
– Financiering Methodologies
– Eligibility Services
– Behavioral Health
Medicaid Modernization EffortThe Process
(continued)
The Agency established a series of Medicaid Stakeholder Meetings, seeking input for reform of the program from providers, beneficiaries, and advocates
– April 23, 2004 – Tallahassee: Introduction to Reform
– June 11, 2004 – Tallahassee: Children’s Health and Long Term Care
– July 1, 2004 – Miami: Pharmacy and Disease Management
– August 5, 2004 – Orlando: Developmental Disabilities
The Agency has also received input from major stakeholders, industry experts and experts on the Medicaid program
Broad Input from Numerous Sources
Agency reform teams
Stakeholder meetings
Experts in the field
The Agency has researched what other states are doing to reform state Medicaid programs, including:
– Oregon
– Tennessee
– Mississippi
The Agency continues to review and discuss the merits of the concepts put forth to date.
Focusing the Modernization Efforts
The Agency held a series of day-long workshops – Format:
• A moderator with knowledge of the Medicaid program facilitated meaningful discussion.
• Panelists were charged with evaluating potential options available to the state, identifying barriers to implementation, and proposing solutions.
• There was an opportunity for the public to comment or submit written comments in response to information that was posted on the internet prior to the meetings.
– Pharmacy Workshop - October 5, 2004– Managed Care Workshop - November 4, 2004
Pharmacy Workshop – Options Under Consideration
Population Options– Vary Pharmacy Benefit Levels Among Different Population Groups– Preserving Prescription Drug Services for the Medically Needy– Include/Exclude Supplemental Benefits for Dual Eligible Population
Service Options– Formulary Revisions– Establishment of Caps– Development of Comprehensive Pharmacy Management Program
Financing Options– Opt Out of Federal Rebate Program– Change in Ingredient Cost Reimbursement Methodology– Change in Recipient Cost Sharing Structure
Managed Care Workshop – Options Under Consideration
Delivery Options– Fully Capitated Programs (Full Risk)– Alternative Programs (Limited Risk)– Buy-in Programs
Coverage / Benefit Options– Tailor Benefits to Meet Needs of Different Populations – Inclusion of Comprehensive Services Under Full Capitation– Consumer Directed Model
Financing Options– Rate Setting in Fully Capitated Programs– Cost Sharing Models– Consumer Accounts
Where We Go From Here
Solving the puzzle – Putting all input together in a cohesive package that best serves Florida Medicaid beneficiaries and providers.
– Policy and Rule Changes
– State Statutory Changes
– Federal Waiver/SPA
– Proposed Federal Statutory/Rule Changes
http://www.fdhc.state.fl.us/Medicaid/medicaid_reform/index.shtml
Medicaid Reform
SymposiumWhat is the Right Prescription for
Floridians?
Sponsored By:Suncoast Region Healthy Start Coalitions
The Children’s Board of Hillsborough CountyTampa Bay Health Care Collaborative
American Heart Association
Medicaid Reform: What Could it Mean for Florida’s
Health Care System?Joan Alker
Senior Researcher Georgetown Health Policy Institute
Medicaid Reform SymposiumTampa, FL
November 23, 2004
What role does Medicaid play in Florida?
Important safety net especially in times of recession Covers 2.2 million Floridians US: 51 million people
Major source of prenatal care Covers 43% of all births US: One-third of all births
Provides long term care services to seniors and persons with disabilities Pays for 66% of all nursing home days
Pays Medicare cost-sharing for low-income seniors
Percentage of Low-income Children in the US Without Health Insurance Has Fallen About
One-Third Due to SCHIP and Medicaid
0
5
10
15
20
25
1997 1998 1999 2000 2001 2002 2003
% C
hild
ren
Un
de
r 1
8 U
nin
su
red
Source: Analysis of CDC’s National Health Interview Survey, Mar 2004
Children below 200% of poverty
Children above 200% of poverty
23%
15%
6%
5%
Source of Health Care Coverage for Low-Income Children, 2002-2003
24.5% 26.1%
4.8% 3.4%
44.2%48.2%
25.7%20.6%
1.6%0.9%
Florida US
Uninsured
Other
Medicaid
Individual
Employer
Low-income equates to family income below 200% of the federal poverty line. In 2003, the poverty line was $15,260 for a family of three. Other includes private non-group and other public insurance (mostly Medicare and military-related). Medicaid includes SCHIP.Source: Urban Institute analysis of March 2003 and 2004 CPS data for the Kaiser Commission on Medicaid and the Uninsured Health Insurance Coverage in America: 2003 Data Update, forthcoming.
Source of Health Care Coverage for Low-Income Nonelderly Adults, 2002-2003
26.3% 29.1%
8.9% 7.6%
14.2%18.5%
45.1%40.1%
4.7%
5.5%
Florida US
Uninsured
Other
Medicaid
Individual
Employer
Low-income equates to family income below 200% of the federal poverty line. In 2003, the poverty line was $15,260 for a family of three. Other includes private non-group and other public insurance (mostly Medicare and military-related). Medicaid includes SCHIP.Source: Urban Institute analysis of March 2003 and 2004 CPS data for the Kaiser Commission on Medicaid and the Uninsured Health Insurance Coverage in America: 2003 Data Update, forthcoming.
106,733107,257
108,565109,552
110,356
112,410
113,784 113,897
115,903116,703
118,145 118,229 118,150
Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04
Note: Caseload data may vary from official federal caseload data due to federal reporting protocols, and does not does not include SSI beneficiaries who have eligibility for Medicaid determined by the Social Security Administration.
Source: Florida Dept. of Children and Families Economic Self Sufficiency Caseload Data. http://www.dcf.state.fl.us/ess/reports/
Medicaid Enrollment in Hillsborough County Over the Past Year
(excluding SSI beneficiaries)
10.7%
3.7%
Hillsborough County Florida
Medicaid Enrollment in Hillsborough County Has Increased at a Faster Rate
than Florida Over the Past Year
Note: Caseload data may vary from official federal caseload data due to federal reporting protocols, and does not does not include SSI beneficiaries who have eligibility for Medicaid determined by the Social Security Administration.
Source: Florida Dept. of Children and Families Economic Self Sufficiency Caseload Data. http://www.dcf.state.fl.us/ess/reports/
Growth is from October 2003 to October 2004
“Mandatory" Groups “Optional” Groups• Children under age 6 ≤ 133% FPL
• Children age 6 and older ≤ 100% FPL
• Children in foster care
• Pregnant women ≤ 133% FPL
• Parents with incomes below state-
established minimums (median = 60% FPL)
• Children, elderly and disabled SSI
beneficiaries (incomes ≤ 74% FPL)
• Low-income Medicare beneficiaries
• Children and parents above minimum
requirements
• Pregnant women 133% FPL
• Disabled and elderly people 74% FPL,
including those in nursing homes
• Disabled and elderly people served under
Home and Community Based waivers
• Women with breast and cervical cancer
• Certain disabled people who are employed
and buy into coverage
• Persons with high medical costs “Medically
Needy”
How does Medicaid Eligibility Work?
Florida’s Optional Medicaid Beneficiaries
Infants 185-200% FPL Pregnant Women 151-185% FPL Medically Needy or “Spend Down” <24% FPL Seniors and People with Disabilities 74-88% FPL Silver Saver Program <200% FPL Breast and Cervical Cancer Treatment <200% FPL Family Planning Waiver Services
Mandatory Services Optional Services
• Physician, nurse practitioner and nurse midwife services• Laboratory and x-ray services• Inpatient and outpatient hospital services• Screening and treatment services for children (EPSDT)• Family planning services• Federally-qualified health center (FQHC) and rural health clinic (RHC) services
• Prescribed drugs• Medical care or remedial care furnished by licensed practitioners under state law• Diagnostic, screening, preventive, and rehabilitative services• Clinic services• Dental services, dentures• Physical therapy and related services• Prosthetic devices• Eyeglasses• TB-related services• Primary care case management services• Other specified medical and remedial care
Source: Kaiser Commission on Medicaid and the Uninsured, “The Medicaid Resource Book”, July 2002
What Does Medicaid Cover?Acute Care
Long-term Care
• Nursing facility services for people 21 years of age or older
• Home health care services (for people entitled to nursing facility care)
• Intermediate care facility for people with mental retardation (ICF/MR) services• Inpatient and nursing facility services for people 65 or over in an institution for mental diseases (IMD)• Inpatient psychiatric hospital services for children• Home health care services• Case Management services• Respiratory care services for ventilator-dependent individuals• Personal care services• Private duty nursing services• Hospice care• Services furnished under a “PACE” program• Home and community-based (HCBS) services (under budget neutrality waiver)
10.5%21.2%
20.3%
48.0%
52.2%
15.2%
17.0%9.0%
6.6%
Enrollees Expenditures
Unknown
Adults
Children
Blind/Disabled
Elderly
Elderly and People with Disabilities Account for More Than Two-Thirds of
Florida’s Medicaid Expenditures
Source: Georgetown Health Policy Institute analysis based on CMS MSIS 2001 data for 48 states plus the District of Columbia. Excludes Hawaii and Washington, which have not submitted data to CMS. Excludes spending on Medicaid Family Planning waivers.
Medicaid Fills Medicare’s GapsOver Two-Fifths of Medicaid Benefit Spending is for Services
for Medicare BeneficiariesThis Grows Over Time with the Baby Boomers’ Retirement
Spending onMedicare
Beneficiaries42%
Spending onAll Other
Beneficiaries58%
Source: Kaiser Commission on Medicaid and the Uninsured. “Dual Eligibles”: Medicaid’s Role in Filling Medicare’s Gaps” March 2004
Medicaid is a major component of a state’s health care system
Accounts for 16% of the nation’s health care expenditures
Single largest source of federal financing to states FL estimates it will receive $8.1 billion in federal Medicaid
funds in FY 2005
Provides key financial support to safety net health centers, hospitals and other providers
Economic engine in many communities – for every dollar the state spends, it draws down $1.44 in federal funds
Key Features of Medicaid Financing
Jointly financed by states and federal government
Federal funds paid to states as a “match” on state spending FL’s regular Medicaid match rate is 59%
Federal funding for Medicaid available on an open-ended, as-needed basis Federal funds for SCHIP (Healthy Kids/KidCare) are capped
although state receives higher matching rate FL’s SCHIP match rate is 71%
Federal and State Share of Florida’s Medicaid Expenditures
* Note: For FY 2003-2004, Florida, like all states, received a temporary FMAP increase of 2.95% as part of the “Jobs and Growth Tax Relief Reconciliation Act of 2003.” This enhanced matching rate expired on July 1, 2004. Source: Medicaid expenditure data received from AHCA Bureau of Program Analysis, June 2004.
Total Expenditures (in billions)$14.0
$8.30
$4.32
$5.66
$8.10$6.74$5.90$5.13
$3.77
$4.69
$4.91
FY 2000-01 FY 2001-02 FY 2002-03 FY 2003-04 * FY 2004-05
StateShare
FederalShare
$8.9
$10.2
$11.4
$13.0
(42.3%)
(57.7%)
(41.0%)
(59.0%) (62.3%)
(37.7%)
(59.5%)
(40.5%)
(42.3%)
(57.8%)
Medicaid costs are growing, but the growth rate has slowed down
Medicaid spending rose nationally by 8% in 2004; projected to fall to 4% in 2005 FL Medicaid expenditures rose on average 13.8% over last
four years (FY99-00 to FY03-04) but state projects growth will decline to 7.3% from FY03-04 to FY04-05
Growth in spending is attributable to increase in health care costs and rise in enrollment partially due to the recession
States have been facing severe budget pressures. Medicaid costs were growing while revenues were shrinking. Revenues are starting to come back.
Underlying Cost Pressures in Medicaid
Long Term Rising costs of “dual eligibles,” elderly and disabled enrolled in
Medicare and Medicaid. Medicare effectively shifted costs to Medicaid
Rising medical costs that affect all health sectors, particularly rising prescription drug costs. (But there are signs that the health cost cycle may have peaked for now.)
Short Term Weak economy and falling private insurance leads to enrollment
increases, particularly children and parents
Private Insurance Premium Increases vs. Florida’s Medicaid Expenditures
Note: Florida data represents Medicaid expenditures for July 1-June 30 th of that fiscal year. 2004-05 data is based on General Appropriations.Source: Georgetown Health Policy Institute analysis based on Kaiser HRET 2004 Annual Survey, Florida Social Services Estimating Conference Medicaid Caseload data, 2/6/04; Medicaid expenditure data from AHCA Bureau of Program Analysis, June 2004.
4.80%
8.3%
11.0%
12.7%
13.9%
11.8% 11.9%
13.8%
7.3%
1.7%
5.0%
10.5%
0.9%
11.2%
14.8%14.6%
5.07%
7.2%
2.2%
3.64%
1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05
NationalPrivateInsurancePremiums
FloridaMedicaidExpenditures
Florida Per-CapitaMedicaidExpenditures
88.2%
51.4%58.2%
23.7%
87.6%
61.8%
11.8%
48.6%41.8%
76.3%
12.4%
38.2%
00-01 (from99-00)
01-02 (from00-01)
02-03 (from01-02)
03-04 (from02-03)
04-05 (from03-04)
Five YearAverage
Expenditure Growth Due to Per-Capita Expenditures
Expenditure Growth Due to Enrollment Increases
Source: Georgetown Health Policy Institute analysis based on Florida Social Services Estimating Conference Medicaid Caseload data, 2/6/04; Medicaid expenditure data from AHCA Bureau of Program Analysis, June 2004.
Sources of Florida’s Medicaid Expenditure Growth
Part 2
Federal Medicaid Reform: What Could it Mean for Florida?
What has been happening at the federal level?
Federal FY04 Bush budget contained proposal to cap Medicaid funding in exchange for lots of flexibility to cut benefits, raise cost-sharing, restrict enrollment etc.
Proposal was not endorsed by majority of NGA Task Force and Members of Congress had reservations Gov Bush served on this Task Force and supported the
proposal It appeared that the policy was being pursued through the
waiver process – CT, NH, FL??, CA??
Are other states considering global caps?
CT – (Ex) Governor had proposed/Legislature passed 12-month prohibition NH – Governor was negotiating cap with Sec. Thompson. Legislature
passed the following statutory language: “The department of health and human services shall not amend nor seek to
amend, nor gain nor seek to gain approval of waivers to, the state Medicaid plan in any way that results at any time in the consolidation of federal grants or allotments, caps on the federal portion of Medicaid spending, reductions in the federal share of Medicaid spending, or increases in the state share of Medicaid spending, without the prior approval of the fiscal committee of the general court.”
NH Governor lost election; future of waiver uncertain CA – Governor was developing a mega-waiver; state announced 8/2 that
waiver would be delayed until January budget in response to concerns FL - ???
TennCare Reform/Waiver Includes Some Troubling Concepts
State is requesting “pre-approval” from the federal government to make any necessary changes to comply with budget pressures
State budget cap of 26% of state general revenues Very restrictive definition of medical necessity
“Least costly alternative … that is adequate for the medical condition of the enrollee… an alternative course may be no treatment at all..”
What does the recent election mean for Medicaid?
In light of the election results it appears the emphasis on significant change to Medicaid’s financing system will shift from the waiver process to a debate in Congress about capping the program
A proposal to cap federal Medicaid funding is likely to appear in the President’s FY06 budget or arise during the Congressional budget process
Why do we think so?
In an interview with Congress Daily prior to the election, CMS administrator Mark McClellan said the administration wants to reauthorize the SCHIP program next year rather than when it expires in 2007 as part of an overall examination of Medicaid.
The Administration’s FY04 budget proposal talked about making Medicaid more like SCHIP.
SCHIP funding is capped.
What role will Florida play?
“Buoyed by his brother’s performance in Florida on Election Day, Gov Jeb Bush is vowing to .. produce two politically potent years in the lame-duck phase of his final term His agenda includes … with President Bush’s assistance, restructuring Medicaid in a way he hopes will become a model for the nation.”
Source: Tallahassee Democrat Monday, November 8, 2004
What is the President’s vision of Medicaid reform?
Key Features of the President’s Proposal
Capped federal payments to states on at least “optional” federal funding Payments front loaded to provide fiscal relief, but
reductions in later years to make proposal “budget neutral” over 10 years
This time around unlikely to have any additional funds but will achieve budget savings
No required state matching payments; “maintenance of effort” system instead
Broad new flexibility over program rules
Potential Changes to the Medicaid Program Through the Federal Budget Process
Entitlement caps leading to automatic, deep cuts in virtually every program except Social Security. Voted on by House earlier this year, expected to be revisited next
year in both the House and Senate. Sounds benign – part of “reforming the budget process” – but actually very harmful.
House version would have reduced funding for entitlement programs by $1.8 trillion over 10 years; federal Medicaid funding would have been cut almost $400 billion
“Reconciliation” process, in which Congress sets a multi-year deficit target and moves legislation on a fast track to make cuts in entitlement programs to meet that target
Tax policy changes More tax cuts mean fewer resources available to fund health programs. Additional tax policy changes being made related to health care (health savings accounts)
Capped Federal Payments
Based on 2002 spending, adjusted forward using
10-year growth projections
Funding no longer based on actual changes in enrollment
Funding no longer based on actual changes in health care costs, utilization, new technology
President’s plan would allow significant flexibility for “optional” beneficiaries
and servicesWhat could this mean?: Optional services could be provided for some people but not
others Some services could be covered in some parts of the state
but not others Closed formularies for drugs: high cost drugs could be
excluded even if needed Higher cost sharing for beneficiaries; no limits for some
groups Services, like inpatient hospital care, could be dropped Potential loss of federal nursing home quality standards,
managed care protections, etc.
How would Congress determine how much money a state gets?
The mother of all formula fights!! SCHIP funding formula has not worked well Formula would likely include two components
Base amount Inflator/Trend factor
Differences of a few percentage points can have dramatic impacts
A Section 1115 waiver for Florida with a global cap would likely have a similar formula
What would the President’s proposal or a global cap waiver mean for Florida?
Risk #1
The Majority (and Possibly All) of Florida’s Spending Would Fall Under the Cap
Most Spending in Medicaid is “Optional” (US, 1998)
Mandatory Expenditures For Mandatory Groups
35%
Optional Services forMandatory
Groups21%
Optional Expenditures
65%
Source: Urban Institute estimate prepared for the Kaiser Commission on Medicaid and the Uninsured, based on data from federal fiscal year 1998 HCFA2082 and HCFA-64 reports, 2001.
Note: Expenditures do not include disproportionate share hospital (DSH) payments, administrative costs, or accounting adjustments.
All Services forOptional Groups
44%
Florida Medicaid Services for All Eligibles, FY 2003-3004
All Services for Optional Groups
10.5%
Optional Services for Mandatory Groups
52.3%
Mandatory Expenditures for
Mandatory Groups37.2%
Optional Expenditures
62.8%
Source: Medicaid expenditure data from AHCA Bureau of Program Analysis, June 2004.
Risk #2
It is very hard to predict the rate of growth in health care spending
105
130
155
1999 2000 2001 2002 2003
CBO 1998 Projections
Actual Expenditures
Congressional Budget Office (CBO)Federal Medicaid Spending Projections
for Fiscal Year 2003
Variance in actual 2003 expenditures vs. projections is $19.7 billion or 12.3% of all 2003 federal payments.
Source: Congressional Budget Office Medicaid Baselines, 1998-2004.
(billions of dollars)
Risk #3
The block grant would change the fiscal incentives that encourage Florida to maintain investments in coverage or make other improvements such as increasing provider reimbursement
Current Law
Federal dollars lost if FL reduces Medicaid spending by $125 million, at Medicaid and SCHIP match rates
FederalDollars
Lost(millions)
$199
Match Rate
StateFunds
Withdrawn(millions)
59% $125
Proposal
FederalDollars
Lost(millions)
$0
State Funds
Withdrawn (millions)
$125
Federal dollars lost if FL reduces Medicaid spending by $125 million (assuming state meets “MOE”)
Matching System Creates Incentives to Maintain State Investment
$21471% $125
Potential Loss of State Spending
Note: Lower estimate shows the difference between MOE and state spending projections under current law assuming program expenditures grow at 8.15% (CBO 2004 Medicaid baseline growth for the years 2004-2013). Higher estimate shows the difference between MOE and state spending projections under current law assuming program expenditures grow at 10.81% (FL’s Medicaid expenditure growth rate from 1998-2002). MOE growth is based on 2003-04 state expenditures as reported by AHCA, adjusted by the Medical CPI projected by HHS.
$787 $1,258
$3,697
$6,657
$17,580
$30,273
$0
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
$32,000
LowerEstimate
HigherEstimate
2006 2013 10-year loss(2004-2013)
2006 2013 10-year loss(2004-2013)
(millions of dollars)
Risk #4
Florida’s historically low spending will be locked into its base
$3,578
$1,040
$1,873
$8,411
$7,177
$4,092
$1,312
$1,998
$10,426$10,910
Total Children Adults Disabled Elderly
Florida US
Florida’s Medicaid Expenditures Per Beneficiary, By Category, 2001
(36)
(45)(37)
(39)
(44)Note: National Rank in parenthesis
Source: Georgetown Health Policy Institute analysis based on CMS MSIS 2001 data for 48 states plus the District of Columbia. Excludes Hawaii and Washington, which have not submitted data to CMS. Excludes spending on Medicaid Family Planning waivers.
Risk #5
Will the growth rate under a block grant or a waiver be able to accommodate Florida’s needs?
2.26%
0.27%
Florida US
Note: Low-Income refers to income less than 200% of the federal poverty level ($30,040/year for a family of three in 2002).Source: Georgetown University Health Policy Institute analysis based on March 1993-2003 Current Population Surveys.
Florida’s Growth in Low-Income Elderly Exceeds that of the US
(1992-2002)
3.1%
1.2%
Florida US
Source: Georgetown University Health Policy Institute analysis based on Social Security Administration Annual Reports, 1996-2003.
Florida’s Growth in Blind and Disabled SSI Beneficiaries Exceeds that of the
US (1996-2003)
Who will pay if federal funding is capped?
Health care needs will still exist Costs get shifted to
Hospitals and other providers Low-income families themselves
Additional premiums/cost-sharing leads to declines in enrollment/loss of access to needed services
Purchasers of private insurance Other areas of state’s budget
Additional pressures on Florida’s health care system
High rate of uninsured persons already – no new federal funding would be available to address this
Large number of immigrants who are ineligible for federal Medicaid funding
Florida is currently one of two states in the country with closed enrollment for its Healthy Kids/KidCare program
21.2%
17.5%
Florida US
Uninsurance Rate for Nonelderly Persons, 2002-2003
Florida ranks #6 in the country in Uninsurance Rate for the Non-elderly
Source: Urban Institute analysis of March 2003 and 2004 CPS data for the Kaiser Commission on Medicaid and the Uninsured Health Insurance Coverage in America: 2003 Data Update, forthcoming.
Concluding thoughts on Medicaid reform
Some questions to consider
Federalizing costs for dual-eligibles – reform outside of Medicaid What will the impact of the Medicare prescription drug
benefit be? Will Florida see budget relief? What kind of prescription drug coverage will be
available? Does the law need amending?
Who should pay for long term care? What can we do about rising health care costs and the
growing number of uninsured in our health care system generally?
Some questions to consider, cont.
Are there ways we can save money and improve efficiency in Medicaid without undermining the guarantee of coverage? Increase prescription drug rebate Improve coordination and disease management programs
Impact onLocal Communities
Kathy CastorCounty Commissioner
Hillsborough County, Florida
Penny Wise, Pound Penny Wise, Pound FoolishFoolish
Why Cuts to Medicaid hurt Why Cuts to Medicaid hurt Florida’s economy Florida’s economy
Priya SampathPolicy AssociateHUMAN SERVICES COALITIONMedicaid Reform Symposium, Tampa11/23/04
Medicaid – the Economic Medicaid – the Economic EngineEngine
FinancingFinancing Federal dollars in Florida’s budgetFederal dollars in Florida’s budget The Economic Impact of “Federal” The Economic Impact of “Federal”
Medicaid SpendingMedicaid Spending Research results Research results
Financing MedicaidFinancing Medicaid
Open-ended Federal-state partnership Open-ended Federal-state partnership Federal Financial Participation (FFP) for Federal Financial Participation (FFP) for
SERVICESSERVICES FMAP = F (P, I), US vs StateFMAP = F (P, I), US vs State Highest: 83% (MS – 77%), Lowest: 50% Highest: 83% (MS – 77%), Lowest: 50%
(CA, CO, CT)(CA, CO, CT) Florida : ~ 60%; State $1.00, Feds $ 1.60Florida : ~ 60%; State $1.00, Feds $ 1.60 Admin cap 50%Admin cap 50%
Federal $$ into FloridaFederal $$ into Florida
25 - 30% of Fl state budget 25 - 30% of Fl state budget represents Federal money.represents Federal money.
Medicaid - Largest source of federal Medicaid - Largest source of federal fundsfunds
Medicaid Budget - $ 13 billion, =>Medicaid Budget - $ 13 billion, => ~ $8 billion is Federal $$ ~ $8 billion is Federal $$ Its money from Its money from outsideoutside the state the state Has a MULTIPLIER EFFECTHas a MULTIPLIER EFFECT
MethodologyMethodology
IMPLAN SoftwareIMPLAN Software Input-output analysisInput-output analysis Transactions between different Transactions between different
sectors determines “multiplier effect” sectors determines “multiplier effect” Used AHCA dataUsed AHCA data County-level analysis, 13 countiesCounty-level analysis, 13 counties
MULTIPLIER EFFECTMULTIPLIER EFFECT
Direct ImpactDirect Impact
Indirect ImpactIndirect Impact
Induced ImpactInduced Impact
Jobs & income in medical Jobs & income in medical sector sector (nurse’s salary)(nurse’s salary)
Spending by businesses Spending by businesses (medical equipment)(medical equipment)
Jobs & income supported Jobs & income supported by employee spending by employee spending (car dealerships)(car dealerships)
Medicaid – The Economic Medicaid – The Economic EngineEngine
2002 2002 Medicaid budget – $8.8 BillionMedicaid budget – $8.8 Billion Of which, Federal $$ - (56%) $4.8 Billion Of which, Federal $$ - (56%) $4.8 Billion Jobs Created: 120,950Jobs Created: 120,950 Incomes supported: $4.3 Billion Incomes supported: $4.3 Billion Business activity generated: $8.7 Billion Business activity generated: $8.7 Billion Every federal dollar - $2.7 generatedEvery federal dollar - $2.7 generated Effects were consistent across countiesEffects were consistent across counties
Cuts – Penny wise, Pound Cuts – Penny wise, Pound FoolishFoolish
Cuts cost jobs, income and activityCuts cost jobs, income and activity 2003 - cuts to the Medicaid program2003 - cuts to the Medicaid program Affected $ 50 million in state $$, $72 Affected $ 50 million in state $$, $72
million in Federal $$ million in Federal $$ 1,732 jobs1,732 jobs $155 million in economic activity $155 million in economic activity $92 million in wages$92 million in wages
ConclusionConclusion
The health sector is among the The health sector is among the fastest growing, Medicaid significant fastest growing, Medicaid significant playerplayer
Effects not limited to the medical Effects not limited to the medical sector, not limited to beneficiariessector, not limited to beneficiaries
It is a cost – but has significant It is a cost – but has significant economic benefits that Fl cannot economic benefits that Fl cannot ignore. ignore.
Sponsored By:
Suncoast Region Healthy Start
Coalitions
The Children’s Board of
Hillsborough County
Tampa Bay Health Care
Collaborative
American Heart Association