Department of Health and Human Services ICD-10 Transition & Financial Update

Transcription

1 Joint Legislative Oversight Committee on Medicaid and NC Health Choice Feb. 9, 2016 Department of Health and Human Services ICD-10 Transition & Financial Update

2 Agenda ICD-10 update Medicaid financial update Brief historical review SFY16 year-to-date results versus last year SFY16 year-to-date results versus authorized budget Budget Watch List 2

3 ICD-10 Update 3

4 ICD-10 Update International Classification of Diseases 10 th edition ICD-9 ICD-10 DIAGNOSIS CODES 11,436 77,985 PROCEDURE CODES 2,805 82,453 4

5 ICD-10 Project Achieved Timeline Provider communication and outreach activities Awareness & Assessment Policy & Code Remediation System Remediation & Testing Interface Testing State UAT Provider Testing Provider/ State Training Post go-live support COMPLETED Go-live on Oct. 1, 2015 Transitioned to Operations DHHS applications are ICD-10 compliant and processing ICD-10 claims effective Oct. 1, 2015, without exceptions. 5

6 ICD-10 Implementation Key Outcomes ICD-10 successfully implemented and transitioned to operations with no significant issues. No Hardship payments made for ICD-10 No Payment variance identified or reported by the providers Average paid per claim for ICD-10 is consistent with ICD-9 Minimal defects encountered Negligible increase in ICD-10 call volume from providers In January 2016, ~90% of claims processed were ICD-10 6

7 ICD-10 Implementation Costs Approved & Expended 7

8 ICD-10 Critical Success Factors Providers across NC were ready for the change Medical associations across NC were very engaged in communicating with and supporting their membership Weekly communications to all NC providers Fiscal agent, CSRA (formerly CSC), continuously tested solution up to go live on October 1, 2015 Call Center was adequately staffed Departments across DHHS actively participated in testing ICD-10 solution 8

9 Questions 9

10 Medicaid Financial Update 10

11 Executive Summary The Medicaid program is $181 million under budget as of December. This favorable budget variance expanded from last month and is largely driven by three factors: Lower service consumption by our beneficiaries compared to last fiscal year Enrollment was flat through the first half of the year and remains below budget Lower costs driven by changes in population profile, clinical policy and legislation Year-to-date activity suggests that Medicaid will finish the year under budget. DMA is currently working on an SFY16 year-end estimate and SFY17 full-year budget. 11

12 Medicaid comprises about three-fourths of DHHS appropriations N.C. Medicaid Program: Health insurance program for people with disabilities, seniors, low-income families and their children. Medicaid serves over 1.8 million individuals. N.C. Health Choice Program: This program provides health care coverage to approximately 78,000 children ages 6 through 18 whose family income exceeds Medicaid financial eligibility criteria but is 133% to 211% of the federal poverty level. DHHS - Medical Assistance - Special Fund: This budget entity is a holding fund primarily for recoveries dealing with third-party liabilities, insurance settlements and costs settlements. Healthcare Expenditures Revenues = State Appropriations Three-year Review Source: Actuals from historical BD-701 files 12

13 Three-year Review Over last 3 years, use of state appropriations for Medicaid has increased less than relative increase in average enrollment Through December 2015, this trend continued and is reflected in decreased use of appropriations on a per member per month basis Activity through remainder of the year will likely drive PMPM higher, but DMA expects this to remain below historic averages Sources: Actuals from historical BD-701 files; enrollment from average of DMA point-in-time counts from DMA BIO; average enrollment reflects the transition of approximately 70k children from Health Choice to Medicaid starting 1/1/14 13

14 Enrollment: A Historical Perspective Despite significant growth over five preceding years, enrollment growth in SFY16 continues to run below budget and recent historical averages Average enrollment reflects the transition of approximately 70k children from Health Choice to Medicaid starting 1/1/14 4.5% CAGR for SFY11-15 before transition of children from Health Choice Sources: Enrollment from average of DMA point-in-time counts from DMA BIO through beginning of January

15 Year-to-date Comparison to Prior Year Through December fiscal year-to-date, Medicaid s use of appropriations was $50M or 2.8% less than this time last year Cumulative dollar amount of variance is same as last month, and primary drivers for variance are listed on following slide Sources: Actuals for SFY16 from 12/31/15 BD-701, SFY15 from historical BD-701 file; enrollment from average of DMA point-in-time counts from DMA BIO 15

16 Year-to-date Comparison to Prior Year Variance in appropriations versus last year is driven primarily by: Decreases in use of appropriations Timing of certain cost settlements versus last year (-$52M) One-time payment received for certification of NCTracks claims system (-$16M) Increased cash on hand for unpaid obligations (-$14M) Partially offset by increases in use of appropriations Higher payout for federal share of drug rebates at start of this year versus last (+$24M) Timing and type of consolidated supplemental hospital payments (+$8M) -$50M Sources: Actuals for SFY16 from 11/30/15 BD-701, SFY15 from historical BD-701 file 16

17 Year-to-date Comparison to Authorized Budget Through December fiscal year-to-date, Medicaid s use of appropriations was $181M or 9.3% less than budget. 1 The equivalent amount last month was $139M, so the trend is favorable. However, preliminary indications are that we should not expect to see the same level of increase in January. 1 After factoring as-of-yet unpaid carryforwards (revenue recognized, but corresponding anticipated expense not yet recognized) Sources: Actuals from 12/31/15 BD-701, Enrollment from average of DMA point-in-time counts from DMA BIO 17

18 Year-to-date Comparison to Authorized Budget Favorable variance in use of appropriations versus budget is driven primarily by: Decreases in use of appropriations Fee-for-service and capitation payments (-131M) Program integrity and third party liability collections higher than anticipated (-50M) Increased cash on hand related to unpaid obligations (-$24M) Partially offset by increases/expected increases in use of appropriations Payback of unearned receipts (+27M) and expected payments for unpaid obligations (+45M) -$181M Sources: Actuals from 11/30/15 BD-701 for Fund 1310 & Fund 1331 Expenditures, Authorized Budget from 12/15/15 BD

19 A Closer Look at Medicaid Claims Versus Budget When ranked by cumulative absolute dollar variance from budget year-to-date: Better than expected drug rebate rates have widened spread between budget and actuals for Pharmacy Services With enrollment moving toward budget, favorable variance for LME/MCO/PIHPs decreased enough for it to drop off list; Community Alternatives Program (CAP) for Disabled Adults replaced that category on list An increase that had been anticipated in rates/expenditures for Buy-in/Dual Eligible programs narrowed budget to actuals spread causing it to fall significantly in rank. Sources: 12/31/15 BD-701 Fund 1310 & Fund 1331 Expenditures; enrollment is average of DMA point-in-time enrollment 19

20 A Closer Look at Medicaid Claims Versus Budget When ranked by cumulative expenditure amount for SFY16 year-to-date: As expected, there was not much change in rankings from last month Large quarterly rebate received in December allowed Pharmacy Services to drop beneath Physician Services in terms of cumulative expenses this year Sources: 12/31/15 BD-701 Fund 1310 & Fund 1331 Expenditures; enrollment is average of DMA point-in-time enrollment 20

21 A Closer Look at Medicaid Claims Versus Budget As enrollment increases and moves in a direction back toward budget, the variance to budget becomes more attributable to other factors. Utilization and pharmaceutical count/price mix are becoming more prominent drivers of the variance, and the dollar amounts of the variance attributable to these factors have increased since last month. -$457M Source: Actuals and Budget from 12/31/15 BD-701 Fund 1310 & Fund 1331 Expenditures; DMA Finance Analysis 21

22 Budget Risks In last month s presentation to the JLOC, DMA indicated that the following items had potential to erode some current favorability to budget over course of current fiscal year and into SFY17: Enrollment growth overall Enrollment growth in high-needs categories State s Medicare obligations Branded drug price spending Status of these items is presented on following slides along with some estimates on financial impact of those items not already discussed in this presentation 22

23 Medicaid Enrollment versus Budget After a decline at the beginning of SFY16, enrollment activity has trended upward over the past several months Sources: Actuals from DMA point-in-time enrollment counts from DMA BIO; Forecasted enrollment from DMA/SAS. 23

24 Medicaid Aged, Blind & Disabled Enrollment Enrollment for this high-cost eligibility group is trending above budget Estimated impact to the state thus far this year is approximately $10M in appropriations Sources: Actuals from DMA point-in-time enrollment counts from DMA BIO; Forecasted enrollment from DMA/SAS, DMA Finance analysis 24

25 Medicare Part A, Part B and Part D Projected use of state appropriations will increase more than normal due to atypical Part D and Part B cost increases, as well as a normal Part A premium increase. Impact listed below is for remainder of SFY16 (third and fourth quarter of this fiscal year). Sources: Estimates based on DMA Finance analysis based on actual invoice history 25

26 Medicaid Branded Drug Price Net price for branded drugs decreased in first quarter of fiscal year, but increased in second quarter. Sources: Historical gross price data from Advantage Suite/data warehouse; historical drug rebates are from the GC3 reports from outside vendors, which are forwarded from pharmacy staff; projected drug rebates are the average rebate over the last four quarters of available data 26