View Entire Presentation from the Medicaid Reform Symposium

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

[email protected]

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