Medicaid Reform and the Road Ahead. MACMHB June 1, 2017

Transcription

1 Medicaid Reform and the Road Ahead MACMHB June 1,

2 TOPICS FOR TODAY The current debate around Medicaid reform Implications for complex populations The roles of health plans and providers The concept of integration 2

3 The Medicaid Reform Debate 3

4 PRELUDE The current policy environment is chaotic, but it is possible to look beyond the noise to see where things are likely to go There are few new ideas in the mix; the question will be whether the recent redistribution of political power will push any of these older ideas over the finish line At a high level, it is useful to think of the coming debate as ultimately pertaining to two fundamental issues: first, the federal budget commitment to health care financing and second, the federal policy commitment to expanded coverage In broad historical terms, 2017 will likely be viewed as a pivotal moment where the nation s direction on these two issues will get settled for the foreseeable future 4

5 TWO SEPARATE ISSUES In the current debate, we can distinguish two conceptually separate subjects: resolution of the ACA/Medicaid expansion and reform of the core Medicaid program Although these two subjects are getting mixed together in the public dialogue, the underlying issues are different and the motivations of those who want to address each subject are different The question of the ACA/Medicaid expansion is the continuation of a 50-year debate around welfare policy and the level and type of assistance that should be provided to low-income Americans The question of Medicaid reform is a federal budget issue; it was there long before the ACA and it hasn t gone away But the enactment of the ACA brought both issues to a boil which has persisted for seven years 5

6 TWO SEPARATE ISSUES The debate around the level and type of assistance that should be provided to low-income Americans goes back to the 1960s; the current controversy about Medicaid expansion has been simmering since 1997, when Medicaid was formally delinked from TANF Although the delinking of Medicaid and TANF occurred 20 years ago, it is not a settled issue; many on the political right have never embraced this idea and have sought to reverse it, at least in concept For the political right, the ACA made the issue all the more urgent: it pushed the entitlement up the income scale and aimed it at non-disabled, childless adults, i.e., it did exactly what the political right feared 6

7 TWO SEPARATE ISSUES Political leaders focused on restraining the federal budget, who tend to be mainly but not exclusively on the political right, have long recognized that Medicare, Medicaid and Social Security are the key issues 70% of federal spending (about $2.7T) is mandatory rather than discretionary and most is in these three programs These leaders believe that it is essential to gain some form of control over this spending; that is what premium support in Medicare and block grants in Medicaid are really all about Medicaid is the smallest of the three (at about $350B per year), but it is still big and has always been the easiest political target Now the ACA adds fuel to the fire at the rate of $50B per year (along with another $50B for the exchange) Once again, the ACA did exactly what the political right opposed: it expanded a piece of the federal budget over which the Congress has no control 7

8 ON THE MEDICAID EXPANSION AS SOCIAL POLICY The experience over the past several years has reaffirmed some things that we already knew: Clear continued political support for coverage for medically fragile... Children People with disabilities Aged Weaker political support for coverage of Able-bodied adults Higher income levels 8

9 ON MEDICAID AS A FEDERAL BUDGET ISSUE The Republican Congress and the new administration will clearly make a run at creating a mechanism for gaining some degree of control over federal Medicaid spending There are many ways to accomplish this, but the key feature will be to have a way to set year-to-year increases There have been many previous efforts like this but they have all failed; success this year is not assured 9

10 ON MEDICAID AS A FEDERAL BUDGET ISSUE The politics here are less partisan and more along other spectra: expansion states vs non-expansion states; high-cost states vs low-cost states; fast-growing states vs slow-growing states; states with broad coverage policies vs states with narrower policies Medicaid is the largest single source of federal financial assistance to the states; anything done here will reverberate in state budgets Any mechanism will have to be seen as equitable by the states; today federal support in state Medicaid programs varies widely These negotiations are extremely difficult and will take months, if not years; they may fail completely 10

11 FEDERAL FINANCIAL LIMITATION Traditional Block Grant: The fixed amount would be based on historical federal spending for each state; would not vary with costs or caseload Low cost states are locked in; would receive less than high cost states, indefinitely into the future Per Capita Cap (a block grant variation, with fixed amount per enrollee): Per capita cap proposals set a fixed amount per enrollee, which might vary by eligibility category, e.g., children, adults, aged and disabled The per capita cap allows federal funding to increase and decrease with changes in enrollment, such as increases that occur in an economic downturn 11

12 FEDERAL FINANCIAL LIMITATION Proposals for a federal financial limitation involve many critical variables: Universal statutory formula vs state-by-state negotiation at CMS Could be limited to certain groups, such as expansion populations Federal minimum standards, e.g., maintenance of effort TANF block grant had state spending maintenance of effort and defined work requirements Algorithm for starting point and growth rate House Budget Committee Medicaid proposal for FY 2017 was scored to reduce federal spending by $1 Trillion over 10 years, a 25% reduction By the 10th year (2026), federal Medicaid dollars to states would be 33% ($169 Billion) below CBO projection under current law, reductions increasing thereafter The recently released Trump budget contains vastly greater cuts that are difficult to understand and quantify 12

13 HOUSE BUDGET PROPOSAL,

14 IMPLICATIONS OF A FEDERAL FINANCIAL LIMITATION States would be compelled to redesign program to achieve significant new savings The more efficient and well-managed a program is now, the harder to cut It is unlikely that a state could innovate enough to avoid needing to add state general fund support or scaling back the program by: Cutting payments to providers and MCOs, perhaps less than actuarially sound rates Offering a less comprehensive benefit package Reducing eligibility, adding work requirements Incorporating cost sharing, incentives for personal responsibility 14

15 AN ERA OF EXPANDED STATE FLEXIBILITY Most proposals to limit the federal financial obligation are accompanied by proposals to give states greater flexibility. This should be understood as a consolation prize to compensate for the added pressure of operating with fewer resources Irrespective of the fate of reform proposals, the new administration has committed to giving states greater control of Medicaid Federal government will be more receptive to state innovations in delivery system and payment reforms States requesting waivers will benefit from broader federal interpretation of what can be approved 15

16 AN ERA OF EXPANDED STATE FLEXIBILITY Stronger personal responsibility policies, particularly for beneficiaries above 50% of FPL, might become possible with new waivers: Higher co-payments or other cost sharing Premiums like those used in Michigan, Arkansas, with stronger penalties for non-payment HSA-like arrangements, e.g., Power Accounts pioneered in Indiana Work requirements, e.g., such as those requested by AR, AZ, IN, KY, MT, NH, PA, UT Most states have a stake in what happens - CMS lists 68 waivers as approved or pending Could create a model waiver template, e.g., to allow states to test block grant funding States could get automatic approval for a waiver previously approved in another state 16

17 AN ERA OF EXPANDED STATE FLEXIBILITY, 1332 WAIVERS Provides broad and unprecedented opportunities for states to establish alternatives to the health reform design created by the ACA Some analysts read 1332 as facilitating state initiatives to combine financing from Medicaid, exchanges, and potentially, even Medicare, into entirely new program structures For example, states can combine a section 1332 waiver with waivers under other existing authorities so that their health reform plan can touch the entire health care system private coverage, Medicaid, CHIP and even Medicare 17

18 MY BEST GUESS A mechanism to control federal Medicaid spending will emerge, but will have limited impact overall in the short run The mechanism will have differential impact on the states; some could see windfalls, few will be significantly worse off Funds currently available for Medicaid expansion will continue to be available to the states, but states will be able to define the nature and structure of the expansion States will gain some influence over program features that have been outside of their control: eligibility, benefits, state-wideness, provider and MCO payment rates, etc. Special financing will begin to disappear The reform package will take months to take shape 18

19 LONG TERM FINANCIAL EQUATION FOR THE PUBLIC PROGRAMS Everything under discussion will operate to constrain federal financing in Medicaid and Medicare; no one is talking about expanding federal spending In Medicaid, the clear direction is to shift risk from the federal government to the states; this will lead states to shift risk to health plans, who will shift risk to providers In Medicare, the direction is similar: create a structure that tilts towards MA and in which health plans push risk to providers This seems to imply: For health plans, greater top line growth but tighter margins For providers, greater pressure on rates and expanded assumption of risk 19

20 Summary There will be less money for Medicaid States will need to: spend less money, regardless of how well-managed and efficient they currently are carve in more populations, especially MI, I/DD, LTSS MCOs will need to: spend less to manage increasingly complex populations do it better 20

21 Implications for Complex Populations 21

22 SPENDING FOR COMPLEX POPULATIONS For our purposes today, we think of complex populations as including LTC users, SMI and DD These populations account for 20% of beneficiaries but 70% of spending In an era of constrained Medicaid resources, the impact will fall disproportionately on these populations and the providers who serve them 22

23 SPENDING FOR COMPLEX POPULATIONS At a high level, Medicaid spending looks like this: Total spending is $550B Managed care spending is $250B Of the remaining $300B, $200B is associated with non-acute services for complex populations, mostly FFS at this time The remaining $100B covers a wide range of miscellaneous purposes, not appropriate for MCOs The states are aggressively pushing the FFS spending for complex populations into MCOs; federal Medicaid financing reform will accelerate this trend 23

24 SPENDING FOR COMPLEX POPULATIONS States are pushing complex populations into managed care for three reasons: Management of state budgets Improved Outcomes Accountability Constrained resources will not deter states from demanding higher levels of performance from their managed care programs 24

25 Behavioral Health Series: Limited Benefit Prepaid Health Plans for Behavioral Health (BHOs) As of July 1,2016 No Prepaid Health Plans PHPs do not cover BH DC PHPs cover inpatient and outpatient MH and SUD services PHPs cover only outpatient MH and SUD services PHPs cover only inpatient and outpatient MH Source: The Kaiser Family Foundation, The National Association of Medicaid Directors, Implementing Coverage and Payment Initiatives Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2016 and October 2016; HMA 25

26 States with Limited-Benefit Prepaid Health Plans (PHP) for Behavioral Health (BHOs) As of July 1,

27 Medicaid Managed Care for People with Intellectual/Developmental Disabilities As of February 2017 IDD specific Duals Demo DC No capitated managed care in State I/DD carved out of managed care entirely I/DD managed acute care only I/DD managed acute care, limited LTSS I/DD managed acute and LTSS care Note: Enrollees in VA s Dual Demonstration, Commonwealth Coordinated Care, are expected to be transitioned to the state s new MLTSS program starting in See footnotes for: AZ, FL, HI, NJ, NY, NC, OK, PA, TN, TX, VT, WA. 27

28 Medicaid Managed Care for People with Intellectual/Developmental Disabilities As of February

29 Medicaid Managed Long-term Supports and Services (MLTSS) Status As of April 2017 Active MLTSS Program as of 2016 Intends to Implement by 2017 Intends to Implement MLTSS by 2018 Active capitated Duals Demo (MLTSS for duals in demo) States to Watch for Potential MLTSS Activity Note: Though ID is largely a FFS Medicaid state, it offers a Medicare Medicaid Coordinated Plan for duals that includes MLTSS 29

30 Medicaid Managed Long-term Supports and Services (MLTSS) Status As of April 2017 Note: Enrollees in VA s Dual Demonstration, Commonwealth Coordinated Care, are expected to be transitioned to the state s new MLTSS program starting in

31 Medicaid Acute Managed Care for People with Serious Mental Illness (PWSMI) As of July 1,2016 Carved in always includes inpatient and outpatient mental health (MH) and substance use disorder (SUD) services PWSMI Excluded from MC No MCOs Variable MC Enrollment for PWSMI Specialty Outpatient MH MCO Coverage Varies DC Variable MC Enrollment for PWSMI Specialty Outpatient MH Always Carved Out Variable MC Enrollment for PWSMI Specialty Outpatient MH Always Carved In MCO Enrollment Always Mandatory for PWSMI Specialty Outpatient MH Always Carved Out MCO Enrollment Always Mandatory for PWSMI Specialty Outpatient MH Always Carved In Note: Variable MC enrollment = Individuals with SMI are not excluded from MC and not uniformly mandatory enrollees. They are either voluntary enrollees or state enrollment policies vary by geography or some other factor. Specialty outpatient mental health refers to services utilized by adults with Serious Mental Illness (SMI) and/or youth with serious emotional disturbance (SED) commonly provided by specialty providers such as community mental health centers. Source: The Kaiser Family Foundation, The National Association of Medicaid Directors, Implementing Coverage and Payment Initiatives Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2016 and October

32 For states with acute care managed care, how are specialty BH and SUD services covered? As of July 1,2016 Source: The Kaiser Family Foundation, The National Association of Medicaid Directors, Implementing Coverage and Payment Initiatives Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2016 and October

33 The Roles of Health Plans and Providers 33

34 WHAT HEALTH PLANS MUST DO In this environment, it will not be enough to cut provider payment levels or to scrutinize utilization more carefully Instead, the health plan-provider relationship is likely to revolve around the sharing of risk and the emergence of new payment models In this setting, the role of payment policy within the health plan is to more explicitly stimulate delivery system performance: we pay for what we want to see happen and we decline to pay for that which we wish to avoid Understanding the relationship between payment (or non-payment) and the performance of the delivery system is the central issue for the modern health plan 34

35 WHAT PROVIDERS MUST DO As the party on the other end of the health plan contract, the provider will be expected to be open to new payment approaches and the assumption of risk and to execute delivery system change in response to payment system incentives and disincentives More specifically, providers will be expected to fit themselves into a broader framework for care that reflects the idea of integration In practical terms, that means: Operating under clinical guidelines that reflect the comprehensive responsibilities of the health plan Operating within integrated clinical teams with a shared chain of accountability back to the health plan Operating on a common technology platform supplied by the health plan 35

36 The Concept of Integration 36

37 STATE FOCUS ON INTEGRATION The states are quickly moving to promote integration of BH and medical services Here are three current examples: IL WA AZ 37

38 INTEGRATION IN IL Illinois is today in the midst of a managed care reprocurement As part of the reprocurement, and in connection with a pending 1115 waiver, there is a full carve-in of all services for SMI In the resulting system, an enrollee will receive all services through his or her health plan, which must build the appropriate network The plan must also have the appropriate infrastructure for integration The bidders include the usual competitors: Molina, Centene, Aetna, WellCare, CountyCare (Cook Co), BCBS, Cigna, Humana, Meridian Services for DD will not be part of the initial contract, but can be rolled in with 6 months notice to the plans In the scoring, BH integration is potentially decisive (see following page) 38

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40 INTEGRATION IN AZ Arizona will launch an integrated MCO procurement in October 2017 As part of the procurement, most BH services will eventually be carved-in In the resulting system, an enrollee will receive all services through his or her health plan, which must build the appropriate network The bidders will include MercyCare (Aetna), HealthNet (Centene), United, Care First (WellCare), HealthChoice, and University Family Care (Banner) RBHAs (Regional Behavioral Health Authority) can also bid if they meet all integrated care requirements of the RFP, including the provision of medical services 40

41 INTEGRATION IN WA WA is in the midst of a 5-year transition from a county-based, carvedout BH system to a MCO-based system Two of ten regions have made the shift, with the second procurement awards issued last week to Molina, Centene, and Amerigroup (Anthem); United and CHPW (a local non-profit) did not survive The magnitude of the reengineering is great, with conventional health plans transforming into Fully-Integrated Managed Care (FIMC) organizations The FIMC receives all the funding and is responsible for all services 41

42 INTEGRATION AS UNDERSTOOD BY A HEALTH PLAN To understand what a health plan means by integration, here are excerpts from successful proposals to Iowa in 2015 from United, WellCare and AmeriHealth Caritas 42

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