Impact of Medicaid MCO Claims on Forecasts and Accruals

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1 Impact of Medicaid MCO Claims on Forecasts and Accruals 19 th Annual CBI Medicaid and Government Pricing Congress Tuesday, May 9, 2017 Partha Chatterjee Managing Partner (973) Romit Kamdar Partner

2 Intros Partha Chatterjee >15 years in GP and Managed Markets Expertise in Gross-to-Net and Contract Forecasting Focus on GP diagnostics, general advisory, compliance programs Currently supporting VA OIG Audit for FSS Compliance for manufacturer Romit Kamdar >12 years in GP and Managed Markets Expertise in Gross-to-Net and Contract Forecasting Currently supporting manufacturers in GP organization design, methodology development, 340B monitoring, and FSS solicitations 2

3 Millions Managed Medicaid Basics 80 Trend in Medicaid and Medicaid Managed Care 90.0% Initiated in 1982 w/arizona the pioneer % 70.0% 60.0% Premise that commercial market more cost effective via capitation agreements with commercial insurers % 40.0% 30.0% 20.0% Significant growth in 90s In 1998, 12.6 million (41%) of Medicaid beneficiaries received Medicaid through capitation managed care plans Total Medicaid Enrollees Total Medicaid Enrollment in Any Type of Managed Care 10.0% 0.0% As of 2013, 45.9 million (73.5%) of Medicaid beneficiaries received Medicaid through managed care (MCOs, PIHPs, PAHPs, PCCMs) 1 Percent of all Medicaid enrollees in any type of Managed Care 1 Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) 3

4 Managed Medicaid Basics 2013 vs State Exposure and Growth of Managed Medicaid WV WA VA TX SD RI PA OK NY NM NH ND MT MO MI MD LA KS IL IA GA DE CO AZ AL -150% -100% -50% 0% 50% 100% 150% 200% % Change in Medicaid Managed Care Plans Percent of all Medicaid enrollees in any type of Managed Care States have discretion on whether to pursue to FFS Managed Medicaid Generally, all States are pursuing Managed Medicaid LA ~ 80% CA ~ 68% NY ~75% FL ~ 76% Recent trends seem to point towards # of plans with States favoring some plans over others Level of Control becoming more concentrated to select plans Source: CMS.gov Medicaid Managed Care Enrollment 2013 and

5 Key Influencers in Forecasting for Managed Medicaid Rebate Liabilities Plan Enrollment Absence of Data Commercial Landscape Benefit Designs Regulatory Changes Reimbursement Variations 5

6 In many cases, Managed Medicaid Plans are actively pursuing enrollment of more eligible Patients. Amerigroup Advantage Plus Capital District Physicians Health Plan Comprehensive Care Management Guildnet/Medicaid Advantage HIP HIP UFT Managed Health Inc/Medicaid Advantage MetroPlus Special Needs Neighborhood Health Providers SCHC Total Care Senior Whole Health VNA HomeCare Options WellCare Advantage Plus MVP Health Plan NYS Catholic Health Plan/Medicaid Advantage VNS Choice Special Needs AmeriGroup Community Connections PACE CNY Univera Community Health Eddy Senior Care Independent Care Systems HealthFirst Independent Health/Hudson Valley & WNY Touchstone/Prestige/Medicaid Advantage Total Senior Care Senior Health Partners United HealthCare WellCare/Medicaid Advantage United HealthCare/Medicaid Advantage Independent Living for Seniors Fidelis Care at Home Health Advantage/Elant Choice Aetna Better Health AgeWell New York HealthNow 600% 500% 400% % Change in Total Enrollment (2013 vs. 2014) Between 2013/14, 8 plans have enrollment > 100% HIP of NY ~ 240% Aetna Better Health ~ 150% VNS Choice/Medicaid Advantage ~2000% growth 300% 200% 100% About 40% of plans have seen in lives ( of lives to other plans) Enrollment and Concentration in select Plans 0% -100% -200% Forecasting at the Individual Plan level to enable Plan Analytics for other Stakeholders (e.g., NAMs/RAMs, Market Research, etc.) Source: CMS.gov Medicaid Managed Care Enrollment 2013 and

7 The 3Q 2017 deadline for compliance for MCO Medicaid Rebate billing by Date of Service is approaching, with many states already complying with Release 100. n n States yet to comply may invoice long after date of service (up to 1 yr at times) Illustrated in this example: Q2 Date of Service (DoS) gets Q4 URA when billed on Payment Date State earns rebate due to price increases and CPI Would be Q2 URA if based on DoS Many states have already complied with Release 100 With the Medicaid MCO s capitated rate program, a dispense not considered Medicaid rebate eligible until Payer makes payment With FFS, rebate eligibility occurs at time of service Expect PQAs for claims yet to be billed for past quarter Dates of Service for states yet to comply Consider assessing spread in quarterly volume of DOS vs. Payments for claims of states yet to comply -> Potential impact to forecast/accruals 7

8 New York state s 2018 budget may lead to additional Supplemental Rebates, as the state looks to control Medicaid spending by controlling spending growth. Medicaid Spending Growth Target 17/ 18: 10 yr avg of medical CPI + 5% - $55M Rx savings 18/ 19: 10 yr avg of medical CPI + 4% - $85M Rx savings Base to which rates applied is unclear Supplementals if drug price > growth target If no agreement on suppl., possible restrictions (i.e. PA s; MCO formulary removal; waiver of MCO requirement to cover certain drugs (e.g. neurologics/antiretrovirals/hematologics/etc with multiple options) Generic supplementals if price increase > 75% of MAC Review of Drug Pricing, Patient Benefit, and MCO Rates Potential Supplemental Rebates and Restrictions Wait and see -> Clarity needed Model supplemental impact esp. if URA not close to AMP Monitor NY MAC list during price actions 8

9 While appearing to be discrete events, changes in Commercial Landscape may have an impact on Managed Medicaid (e.g., What if Plans exit the Exchanges? Where will the patients go?) Of the 335 QHP issuers offering Exchange in 2016, 137 (~41%) offer Medicaid MCOs in the same state. 1 Many Insurers publicly are exiting HIX ( financial loss, etc.) Absence of private plans may lead to insured patients uninsured Many of these patients may be eligible for Managed Medicaid Shift of Patients from HIX to Managed Medicaid Potential Patient Shift from HIX Exchanges to Managed Medicaid plans Consider modeling Managed Medicaid and QHP overlap to understand potential exposure 1 9

10 While Managed Medicaid Benefit Designs should closely resemble FFS coverage, there are some differences which can lead to changes in utilization. IMS noted for the Antipsychotic class, an increase in Generic utilization once shifting to Managed Medicaid 1 Common UM tools employed by Plans can volume Managed Medicaid Benefit Designs can vary and impact volume predictions Applying different assumptions to different Brands (assuming different TAs) 1 IMS Institute for Healthcare Informatics, Shift from Fee-for-Service to Managed Medicaid: What is the Impact on Patient Care?, April

11 While CLD continues to be a challenge in Medicaid Rebate Invoices, there also appears to be an absence of data, particularly in States that operate a Prospective Payment System. 1 Illustration applies to 340B and non-340b entities 2 Non-Prospective Payment System Model 340B Entity submits Mgd. Medicaid claim for PBM/MCO reimbursement with UD modifier to identify 340B utilization 340B Entity Eligible 340B Patient treated by 340B Entity 3 2A 340B Entity submits FFS claim from reimbursement w/ud modifier Submits claim data to state 4 without modifier? (effective 7/17 claim data to be submitted on Date of Service vs. Paid Date) State Medicaid Under the PPS system, Entities receive payment on a per encounter basis Particularly prevalent in CA Discussions with several 340B Entities yield that drug utilization is not reported (i.e., my billing people don t see it ) Limited visibility to Managed Medicaid Utilization under the PPS 2B Prospective Payment System Model 340B Entity does not report dispensed product for reimbursement (i.e., prospective payment system capitation based on encounter basis)? State submits FFS and Managed Medicaid Claims for Medicaid Drug Rebate Manufacturer 5 Consider buffering accrual (at least for CA) Discuss PPS model in discussion with Customers 11

12 The reimbursement gap of Medicaid FFS vs. MCO has widened since 2013, suggesting products and MCO plan PDL s should be watched for continued shift. 29% 46% Reimbursement/Unit: FFS 31% MCO 12% In 15: MCO is 65% of Scripts but 78% of Enrollees Outliers exist with some Specialty Drugs (e.g. FFS had lower avg. reimbursements of some higher cost specialty drugs vs. MCO, but MCO much more favorable with gen meds) Top MCO states (CA, TX, FL, NY) have ~8-20% FFS enrollees 53% MCO 68% MCO Monitoring average reimbursement rates for the TA in MCO vs. FFS can help forecast impact if/when lives shift. Contract Ops. and Acct. Mgrs stay aware of MCO coverage, esp. for states where plans can managed their own PDL 12

13 It s not yet worth modeling legislative changes to Medicaid, but what stands out in current AHCA bill passed by the House? Ceasing Medicaid Expansion Removing the individual mandate Medicaid funding changes (e.g. capped rates) Changes to pre-existing condition coverage Changes to Premium subsidies State waivers for Essential Health Benefits 13