Session 75OF, Medicaid Hot Topics. Moderator/Presenter: Sabrina H. Gibson, FSA, MAAA. Presenters: Zachary C. Aters, ASA, MAAA

Transcription

1 Session 75OF, Medicaid Hot Topics Moderator/Presenter: Sabrina H. Gibson, FSA, MAAA Presenters: Zachary C. Aters, ASA, MAAA Sabrina H. Gibson, FSA, MAAA Mary K. Hegemann, FSA, MAAA Chris Priest Michelle L. Raleigh, ASA, FCA, MAAA SOA Antitrust Disclaimer SOA Presentation Disclaimer

2 2018 SOA Health Meeting Medicaid Hot Topics Session 75 Tuesday, 6/26/2018, 11:00 am - 12:15 pm Sabrina Gibson, FSA, MAAA, Moderator Christopher Priest Mary Hegemann, FSA, MAAA Michelle Raleigh, ASA, MAAA Zachary Aters, ASA, MAAA

3 Planned Topics Work Requirements and Other New 1115 Waiver Topics Integration of Pass-Throughs into Risk Rates Mega Rule Implementation Changes Medicaid Expansion Member Durational Costs Social Determinants Paper Other Medicaid Hot Topics 2

4 Polling We will use polling during this session. To participate in the polls, please navigate your smart phone to: and select our session: Session 75 - Medicaid Hot Topics 3

5 Panel Bios 4

6 Sabrina Gibson, FSA, MAAA Vice President and Chief Medicaid Actuary for WellCare Health Plans. Health care for 20+ years. Medicaid for 12 years - mostly with a health plan but also as a consulting actuary. Experience with 26 Medicaid and CHIP programs in 16 states. Active member of the American Academy of Actuaries Medicaid workgroup and on the committee that developed the Actuarial Standard of Practice on Medicaid Managed Care Rate Setting ASOP 49. Active with the Medicaid SOA committee as a presenter of current Medicaid topics at SOA meetings and webinars.

7 Mary Hegemann, FSA, MAAA Principal at Wakely Consulting Group Health care actuary for 20+ years, mostly in consulting Medicaid experience includes consulting for Medicaid-focused MCO, association of Medicaid managed care plans, and certify Medicaid capitation rates Also consult for Medicare Advantage plans (especially dual-snps), ACA commercial lines of business, and non-profit organizations providing health care for homeless and indigent populations

8 Michelle Raleigh, ASA, MAAA Vice President of Actuarial Services at Centene Lead team of actuaries dedicated to Medicaid programs 25 Medicaid health plans across the United States Focused career on Medicaid 8 years with health plans 17 years in consulting Co-authored the ASOP 49 on Medicaid Managed Care Rate Development Participate in various workgroups, co-author papers, and event speaker

9 Zachary Aters, ASA, MAAA Senior Actuary for Optumas Consulting Health care for 19 years, including Commercial, Medicare, and Medicaid Medicaid focused for 11 years Consulting Recent programs include Oregon, Colorado, Iowa, Nebraska, and Kansas Active member of SOA, regularly presenting at SOA meetings

10 Christopher Priest Vice President, Medicaid Solutions at Centene 25 Medicaid Health Plans across the United States Prior to coming to Centene was Michigan Medicaid Director and was elected to represent all Midwest Medicaid Directors on the board of the National Association of Medicaid Directors (NAMD) Secured multiple 1115 waivers and made reforms to the program in Michigan. Experience working for Governors of both political parties, working in Medicaid agencies in two states (e.g. IN and MI) and representing States in Washington DC.

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12 In what area do you work? 4% 0% 28% 32% Medicaid - MCO Medicaid - Consulting Medicaid State Employee Health Not Medicaid Other 36%

13 Work Requirements and Other New 1115 Waiver Topics 12

14 Work Requirements - Intro Per Kaiser Family Foundation as of 4/9/18: CMS has approved 1115 waivers in 3 states (KY, AR, and IN) that include work requirements 7 other states have submitted proposals to CMS (AZ, KS, ME, MS, NH, UT, and WI) These waivers require work as a condition of eligibility Beneficiaries need to verify their participation in approved activities (e.g., employment, job search, job training programs) for a certain number of hours per week Certain populations commonly exempted Administration complexities 13

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16 60% 50% 40% What is the #1 reason that nonelderly non-ssi adult members are not working? 41% 50% 30% 20% 10% 3% 6% 0% Caregivers Attending School Illness or Disability Other

17 Work Requirements - Intro Per Kaiser Family Foundation (KFF), this new requirement may only impact 7% of the relevant population 16

18 Work Requirements - Intro Majority of public believes the main reason for imposing these work requirements is to reduce spending 3 17

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20 80% 70% What kind of impact do you think the work requirements will have on the Medicaid population? 71% 60% 50% 40% 41% 30% 20% 15% 15% 10% 3% 0% Membership will drop Healthier members disenroll Members will develop skills that will move them out of poverty Members will become more engaged in their healthcare No Impact

21 Indiana s Healthy Indiana Plan (HIP) HIP 1115 Waiver (2008) Goal: test consumer-driven model to low-income beneficiaries Population: Caretakers of TANF kids and Childless adults up to 150% FPL POWER Account: Savings Account pays for first $1,500 claims (jointly funded by state and member) Member Premiums (contributions to POWER account) Limited rollovers help fund future year premiums Non-payment of premium lead to disenrollment 20

22 Indiana s HIP Program, cont. HIP Waiver (2015) Changes: All adults up to 138% FPL (including former TANF) POWER account increased to $2,500 Introduced Basic/Plus Program distinction (see flowchart) No: Basic (copays) Yes: HIP State Plan Paying premium? Yes: Plus (additional benefits) No: Lose Coverage Caretaker? No: Under 100% FPL? No: HIP Regular Paying Premium? Yes: HIP Basic (copays) Yes: HIP Plus (additional benefits) 21

23 Indiana s HIP Program, cont. HIP Waiver (2017) Changes: Work Requirement (next page) SUD Treatment expansion (ASAM criteria, using IMDs) Changes in Open Enrollment Tobacco Surcharge (50% increase in premium) Tiered Premium Structure More former TANF members (including pregnant) moving into HIP 22

24 Indiana s HIP Program, cont. Work Requirements All HIP eligible members, not otherwise meeting an Exemption, will be required to: 1. Work average 20 hours per week over 8 months during the calendar year; or 2. Be enrolled in full-time or part-time Education; or 3. Participate in 1 of 16 activities defined by the state (e.g. Job Training, Volunteer work, MCE Employment Initiatives, etc.) for 20 hours per week for 8 of 12 months. Compliance: members assessed at the end of each calendar year to determine if they met requirements. Approaching as a social determinant of health Phased in approach no expected eligibility changes until January 2020 when a look back at 2019 activity occurs. 23

25 Indiana s HIP Program, cont. Work Requirements Indiana Work Status and Reason for Not Working Among Non-SSI Nonelderly Medicaid Adults Estimated to be 96k members to be subject to the requirements Not Working Due to School Attendance 4% Not Working Not Working Due to Not Working due to Working >= 20 hours a week* 38% Not Working Due to Homelessness, Recent Incarceration or SUD Treatment 4% * Includes 25% of members covered by SNAP and TANF and therefore already subject to the work requirements of those programs 24

26 Indiana s HIP 2.0 Program, cont. Member Engagement Basic Plus All Enrollment mix 33% 67% 100% Member Income less than 100% FPL (and therefore would maintain eligibility without paying premium) 100% 86% Member Satisfaction Basic Plus All Satisfaction with program 71% 86% 80% Willing to pay more to participate 90% 80% Would re-enroll again 93% Members asked providers about the cost of care 1 in 4 Clinical Outcomes Basic Plus Primary Care Visits 16% 31% Preventive Care Visits 45% 64% Drug Adherence 67% 84% Missed Appointments 23% 18% ER Utilization per Thousand 1,

27 Kentucky Program Demonstration Goals Strengthen engagement in personal health care and provide incentives for responsible decision making Requiring premiums will motivate beneficiaries to use health services more efficiently Incentives to engage in healthy behaviors will result in better health outcomes, lower overall costs, and improved socioeconomic conditions Community engagement requirements will help beneficiaries obtain employment, transition to commercial health insurance, and achieve improved health outcomes 26

28 Kentucky Program Medicaid Populations Not Included in Kentucky HEALTH Medicaid Populations Included in Kentucky HEALTH SSI Adults NO CHANGE Dual Eligibles NO CHANGE Traditional Medicaid Parents and Caregivers Premiums or copays No change in benefits (Retain vision, dental, transportation) Community engagement required, unless primary caretaker of dependent Medicaid Expansion Adults Premiums or copays Alternative Benefit Plan Vision and dental available through My Rewards Account Community engagement required, unless primary caretaker SSI Children NO CHANGE Foster Care Children NO CHANGE Pregnant Women & Children (Traditional Medicaid and KCHIP) No premiums No change in benefits Community engagement initiative not applicable Medically Frail Adults and Former Foster Children up to Age 26 No mandatory premiums or copayments No change in benefits Community engagement initiative not applicable 27

29 Monthly entry of hours worked Grace periods Seasonal workers Re-entry if payment of past-due premiums within 6 months Different options for <100% FPL and >100% Re-entry at 6 months with clean slate 6-month lockout at redetermination

30 Rate Setting Considerations Morbidity Premium Premium versus Copay (risk adjustment) Work Requirement Short duration (runon-the-bank and pent-up demand) Phase-in Timing Medically Frail: enrollment, minimum length of enrollment RCT: closed block Community engagement: phasein by geographic area Premium payments: delays and lockout periods Other Fun Considerations Randomized Control Trial Outside payers Risk mitigation strategies 29

31 Medically Frail Per regulations expanded in 2013, the medically frail program criteria must include, at a minimum 1 : Disabling mental disorders Chronic substance abuse disorders Serious and complex medical conditions Physical, intellectual, or developmental disability that impairs one of more activities of daily living (ADLs) Disability determination (Social Security or state plan) Supplemental Security Income (SSI) program participants, disabled, and foster children CFR (f) 2 SSI program participants and Foster Care Children are excluded from Kentucky Health 30

32 Medically Frail Identification Process The member enrolls in the MCO and is assigned a COA of MAGI Adult or Parent and Caregiver MCO runs membership and claims data through the MCO tool The member completes the Welcome to Medicaid HRA MCO tool scores member using diagnosis codes and other qualifying claims criteria; returns Medically Frail status HRA returned; MCO reviews; identifies member as potentially Medically Frail; schedules appointment with provider At Enrollment Provider completes clinician attestation; returns to the MCO; MCO scores the attestation based on points system Through MCO Tool MCO tool identifies member as automatic MF MCO tool identifies member as possible MF MCO schedules appointment with provider Provider completes clinician attestation; returns to the MCO; MCO scores the attestation based on points system Total points less than threshold = not eligible for MF Total points more than threshold = eligible for MF Total points less than threshold = not eligible for MF Total points more than threshold = eligible for MF Member remains in current COA status Member enrolled in Medically Frail program; sent letter providing option to opt-out MCO submits result to DMS; member enrolled in MF program Member remains in current COA status Member enrolled in Medically Frail program

33 Medically Frail MCO Tool Objectives Meet CMS guidelines for defining Medically Frail Accurately identify Medically Frail members Simple to understand Minimize gaming by any stakeholder Inputs Member eligibility file Encounter claims data (medical and Rx) SQL Code Free Editable Outputs Automatically qualifying members Possibly qualifying members Follow-up clinician assessment required

34 Medically Frail Clinician Attestation Clinician categorizes a member s conditions Accompanying instructions help clinicians list the member s conditions Clinicians also document non-claims information Severity of mental health conditions Activities of daily living (ADLs) impairments MCO applies the scoring algorithm, which includes scoring for different levels of severity, to determine each member s eligibility

35 KY Flow Chart The following page contains a flow chart of how the non-disabled adult members obtain or lose coverage in Kentucky under the new waiver. Red highlighted boxes are concerns about potentials for risk. 34

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38 Integrating Pass-Throughs in Risk Rates 37

39 Illinois Current: State pays MCOs a monthly lump sum and MCOs wire the lump sum to the Illinois Hospital Association Future (7/1/18?): Legislated not yet approved by CMS $3B of pass-throughs added to a $9B program = $12B Add a portion to the hospital fee schedules 18% for 1 st 2 years, 36% in next 2 years, then??? Remainder is an access payment Funded through a hospital tax No requirement in MCO/State contract to make access payment MCO and hospitals must agree to it 38

40 Illinois This is where the process can break down State pays MCO the capitation rate Capitation Rates include an identified PMPM in each rate cell for the access payment. Hospitals pay the Hospital Tax MCO calculates amount of access payment and pays the Illinois Hospital Association Hospitals do not pay the tax until they receive the funds from the MCOs. Illinois Hospital Association distributes funds to the Hospitals MCO has contracts with the IHA and each Hospital allows for the payment of the access payment. 39

41 Missouri Technically not a pass-through: Increases hospital payments to UPL level Payment structure is approved by CMS 23% increase to the risk rates Paid to hospitals as a PMPM amount Each hospital receives a portion The hospitals portion is pre-determined based on a prior year s utilization Funded as any other Medicaid amount Requirement in MCO/State contract to make payment 40

42 Missouri State pays MCO the capitation rate Capitation Rates include an identified PMPM in each rate cell for the payment. Missouri Hospital Association distributes funds to the Hospitals that not are paid individually MCO calculates amount of payment and pays the Hospital or the Missouri Hospital Association MCO has an agreement with the MHA allows for the payment. 41

43 Nebraska The University of Nebraska Medical Center (UNMC) providers are reimbursed at commercial fee levels. Since the MCOs contract at levels more commensurate with Medicaid reimbursement, a supplemental payment is required to be paid to UNMC by each MCO to make these providers whole. The State includes this supplemental payment as part of the capitation rates, which is then paid by the MCOs to UNMC. 42

44 Nebraska State pays MCO the capitation rate Capitation Rates include an identified PMPM in each rate cell for the payment. UNMC Providers receive payment from MCO MCO calculates amount of payment and pays UNMC Providers 43

45 Nebraska Methodology Identify claims and services attributed to UNMC providers. UNMC fee schedules are used to calculate the difference between the UNMC fee schedule and the UNMC reimbursement inherent in the data. Difference is amount added into the rate development. Per CMS regulations, pass-through payments cannot increase in magnitude from the 7/5/16 value. To maintain consistency with this regulation, the UNMC fee schedule was reduced so the pass-through payment would remain smaller than the 7/5/16 value and the amount built into the previous rate cycle (7/1/17 12/31/17). 44

46 Michigan Directed Payments For fiscal year 2018, Michigan made changes to their Hospital Rate Adjustment (HRA) that ensure compliance with the Medicaid managed care regulations by converting this pass-through into a directed payment. Major changes include: Payments will be directly tied to actual hospital claims, not cost reports. MI Medicaid will review hospital claims submitted by health plans and provide the supplemental HRA payments to hospitals on a quarterly basis. The distribution of HRA payments has been weighted more towards outpatient claims, which will provide rural hospitals, who tend to provide more outpatient services, a greater share of HRA revenue. Hospitals have agreed to be taxed more to provide an additional $190.0 million through this new arrangement. These adjustments to the HRA were approved in October by the federal government. The new HRA structure has been implemented for fiscal year

47 Michigan Directed Payments, cont. Plans submit inpatient and outpatient encounters to State on quarterly basis State analyzes encounters and makes gross adjustment to health plans based on prescribed methodology in preprint State directs plans to pay specific amount to specific hospital based on those encounters Plans make payments to hospitals based on state direction Rinse and Repeat every quarter 46

48 CMS Process to Approve CMS will need to approve the new payment methodology, but the approval process can be quite different depending on a state s approach. For example. Fee Schedule Change State obtains authority to increase fee schedule/change current payment (if necessary); State prepares state plan amendment utilizing existing state process (e.g. tribal notice). State Plan Amendment changes proposed to CMS followed by CMS approval. New fee schedule taken into account during rate setting; MCO Contract changes, if necessary. Directed Payment State obtains authority to change payment (if necessary); state submits preprint to CMS central office (payment must be tied to utilization or value, and must advanced state s managed care quality strategy) Review and approval by CMS (OACT and CMCS Quality teams) questions back and forth between State and CMS prior to approval. Formal letter notifies the state of approval process New methodology is factored into rate setting going forward; MCO contract changes, if necessary 47

49 Pass-Through Considerations Moving to the hospital fee-schedule creates variable income for hospitals Being embedded in risk rates means it is subject to: Withholds Risk adjustment FFS programs are not constrained by the megarule 48

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51 Will the mega-rule requirements kill the hospital tax passthroughs? 11% Yes No 89%

52 Mega Rule Impacts to Rate Setting 51

53 Selected Mega Rule Provisions by Effective Date Already in effect July 1, 2017 July 1, 2018 May 2019 July 1, 2019 MH parity LTSS contract requirements Actuarial soundness IMD exclusion New OP Rx rules Additional rate dev. requirements Pass through payments MLR standards New state oversight regs. Certify by rate cell +/- 1.5% rate adj. w/o re-certifying Network adequacy standards Provider screen / re-enroll Quality ratings system (a la Medicare STARS program) CMS rate review for 85% MLR floor Full schedule

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55 70% More oversight enhances the process of rate development and results in more accurate capitation rates. 65% 60% 50% 40% 35% 30% 20% 10% 0% Agree Disagree

56 Transparency Mega Rule introduced a new level of review with respect to Medicaid capitation rate submissions/approval Similar to Medicare rate review process Substantiation is required for all actuarial assumptions This level of review has facilitated more transparency between Optumas/MCOs/State/CMS(OACT), resulting in a more rigorous/collaborative process Discuss examples of transparency 55

57 Minimum Loss Ratio (MLR) States must monitor MLR on a regular basis Actuaries are expected to consider historical MLRs when developing capitation rates Numerator: The numerator of an MCO s MLR for a MLR reporting year is the sum of the MCO s incurred claims, expenditures for activities that improve health care quality, and fraud reduction Denominator: The denominator of an MCO s MLR for a MLR reporting year must equal the adjusted premium revenue. The adjusted premium revenue is the MCO s premium minus the MCO s Federal, State, and local taxes and licensing and regulatory fees States are not required to implement rebates along with MLR 56

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59 70% The Mega Rule requires MCO specific rates to be actuarially sound. 64% 60% 50% 40% 36% 30% 20% 10% 0% Agree Disagree

60 Misconceptions Actuarial Sound Rate Requirement Misconception: Mega Rule requires actuary to develop actuarial sound rates for each participating MCO commensurate with MCOs business model (Plan Specific Rates) Intent: Mega Rule requires actuary to develop actuarial sound rates for the program that are shown to be: Reasonable and attainable Encourage access to care 59

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62 54% 53% The Mega Rule allows states to adjust actuarially sound rates by 1.5% or less at their own discretion. 53% 52% 51% 50% 49% 48% 47% 47% 46% Agree Disagree

63 Misconceptions 1.5% rate adjustment without rate certification Misconception: States have the autonomy to adjust actuarially sound rates up or down by 1.5% Intent: (Mitigate administrative burden) Medicaid programs are constantly changing due to policy changes, changes in economy, or changes within the provider community. These changes may result in rates not aligning with risk of the program. States may adjust actuarial sound rates within the 1.5% variance without submitting an actuarial certification, but still must submit substantiation surrounding the cause of the rate adjustment to CMS/OACT 62

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65 100% 90% An 85% MLR requirement implies a non-medical load of 15% must be used within the rate development. 89% 80% 70% 60% 50% 40% 30% 20% 10% 0% 11% Agree Disagree

66 Misconceptions 85% MLR requirement Misconception: States must align non-medical load assumptions with MLR requirement of 85%, implying a 15% NML. Intent: Rates should be set such that there is not high probability of projection error resulting in MLRs that are unpredictable. MLR calculation is more complex than just taking traditional medical expenditures and dividing by revenue 65

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68 100% 90% The certifying actuary can use less than 3-years of historical base data to develop capitation rates. 94% 80% 70% 60% 50% 40% 30% 20% 10% 0% Agree 6% Disagree

69 Misconceptions Encounter Data Misconception: States must use three years of historical data as base data to develop capitation rates Intent: Ideally, three years of data is used as base data, however, there are unique situations that do not allow the actuary to comply. In these cases, the actuary should include substantiation related to the unique situation. 68

70 Medicaid Expansion Member Durational Costs 69

71 Medicaid Expansion Member Durational Results Avalere published a paper in January 2018 Analysis of how enrollment, utilization, and cost patterns for newly eligible Medicaid Expansion enrollees change over time and whether spending patterns differed for earlier versus later expansion enrollees Used experience from three MCOs Paper located here: /Avalere%20Medicaid%20Expansion%20Analysis.pdf 70

72 Enrollment Composition by Age Group Over Time, First Half 2014 Enrollment Group 71

73 Average Per Member Per Month Costs for Medicaid Expansion Beneficiaries Who Enrolled in 2014, by Length of Enrollment 72

74 Percentage of Healthcare Costs by Type over Time, First Half 2014 Enrollment Group 73

75 Study Conclusions Across plans and states, the expansion population experienced high disenrollment rates substantial churn in this population. Even after adjusting for age and gender, claims costs increased steadily over time, suggesting that expansion enrollees have complex and/or chronic conditions. For some enrollment cohorts, average claims costs decreased modestly in the second half of the first year of enrollment, suggesting some initial pent-up demand for services, though claims costs increased steadily from that point forward. Across enrollment groups, per member per month spending on prescription drugs increased with enrollment duration. Among enrollees who remained enrolled the longest, inpatient claims initially made up the largest share of claims costs, but were surpassed by prescription drug claims by month 8 of enrollment, on average. 74

76 Social Determinants 75

77 Social Determinants of Health per Healthy People

78 Social Determinants & Rate Development The Commonwealth Fund s report Enabling Sustainable Investment in Social Interventions: A Review of Medicaid Managed Care Rate-Setting Tools was issued in January Summary of a literature review and interviews with state officials, health plan leaders, actuarial experts, and other stakeholders Discussed ways rates could be developed so MCOs are incentivized, required and/or have the resources to address social issues 6 strategies states can employ to support MCOs in addressing social issues 77

79 Social Determinants & Rate Development, cont. Modify state plan to include social benefits Explore flexibility of 1115 waivers Require value-based payment and other delivery system reforms Include incentives and/or withholds to drive coverage Explore whether social benefits can count as quality improvement initiatives Reflect/reward plans with higher rates to prevent premium slide 78

80 Other Quick Topics 79

81 Recommended Resources Medically Frail -. Medicaid Expansion Study - /-/Avalere%20Medicaid%20Expansion%20Analysis.pdf Social Determinants -