Prepare to be Part of the Conversation: The Fundamentals of Medicaid Block Grants and Per Capita Caps. January 26, 2017

Transcription

1 National Associationof State Directors ofdevelopmental Disabilities Services Prepare to be Part of the Conversation: The Fundamentals of Medicaid Block Grants and Per Capita Caps January 26, 2017

2 If the world were perfect, it wouldn't be - Yogi Berra 2

3 Background and Objective Medicaid Reform and the discussion of block grants and per capita caps isn t new but has heightened in the last few years With the new Administration and Congress, and ongoing concerns about increasing federal expenditures, variation of former proposals and new proposals are likely to be brought forward As an association, is providing information about Medicaid block grants and per capita caps, without any specific proposal in mind, to assist member state agencies to be strong partners in conversations This presentation seeks to identify key considerations for State I/DD Agencies 3

4 One Quick Clarification. ACA Repeal Medicaid Reform While any effort to repeal the Affordable Care Act will have large implications for Medicaid (especially in states that expanded under the ACA), it is not in and of itself comprehensive Medicaid Reform. But early indications from the Trump Administration are indicating they may link or embed significant Medicaid changes in the ACA legislation. But of course, the devil is in the details of any legislation, so it is imperative that we understand the guts of any proposal 4

5 Medicaid Block Grants Block Grant An overall limit on federal Medicaid spending and an overall cap by state Example: State A 700,000 enrollees $500 million Medicaid Cap Example: State A 500,000 enrollees $500 million Medicaid Cap Example: State A 250,000 enrollees $500 million Medicaid Cap Size of the pie will typically stay the same (with inflationary increasestbd) 5

6 Block Grants Block grants would set a national cap on federal Medicaid funding and an aggregate cap for each state Block-grant proposals vary on how the fixed amount would be determined, but typically a national Medicaid spending amount would be set each year, and a formula would be used to determine each state s share of that allotment Current block grant discussions have not landed on specific formulas and have focused on individual state spending levels in the most recent year (s), with adjustments possible 6

7 Per Capita Cap Per Capita Cap A per capita cap is a per-enrollee limit on Medicaid expenditures by state. Example: State B 700,000 enrollees $1000 Per Person Cap $700 million Medicaid Cap Example: State B 500,000 enrollees $1000 Per Person Cap $500 million Medicaid Cap Example: State B 250,000 enrollees $1000 Per Person Cap $250 million Medicaid Cap Size of the pie grows or shrinks with enrollment but per person caps generally remain static 7

8 What is a Per Capita Cap? Under a Medicaid per capita cap, the federal government would set a limit on how much to reimburse states per enrollee. The amount of the per capita cap discussed often varies by enrollee group. For example, a higher cap might be set for the elderly and a lower cap for children. 8

9 Block Grant vs. a Per Capita Cap The key difference between a block grant and a per capita cap is that federal funding provided through a block grant would generally not change in response to program enrollment, whereas federal funding provided through a per capita cap would increase or decrease in accordance with changes in Medicaid enrollment levels (the number of people enrolled in the program in the state) 9

10 Important to keep in mind: As the purpose of proposed reforms include cost containment and/or bending the cost curve Many analysts indicate full savings will only be achieved if the caps (per beneficiary costs) or fixed amounts (block grant overall costs) are set below projected costs. Will state flexibilities be enough? What should we watch for and questions should be asked? 10

11 Key Considerations: Block Grant How will the base and future year funding levels in block grants would be established (consideration for health/make up of state Medicaid population, growth rates/indexing strategies)? What data would be used to set the levels? What are requirements for coverage (eligibility groups and services)? 11

12 Key Considerations: Block Grant, Continued What are the potential intended or unintended incentives? What is the strategy/triggers for rebasing, if any? Will there be any catastrophic coverage considerations (i.e., natural disasters, economic downturns, pandemics, etc.)? 12

13 Key Considerations: Per Capita Caps How will the base and future year per-capita-caps be established? Will caps vary by eligibility groups or more discrete populations (e.g., persons with I/DD and individuals over age 65, 75, 80)? What data would be used to set the levels? What are requirements for coverage (eligibility groups and services)? 13

14 Key Considerations: Per Capita Caps, Continued What are the potential intended or unintended consequences? What is the strategy/triggers for rebasing, if any? What policies/practices will enable movement between per capita caps (PCC) rate cells? Will there be any catastrophic coverage considerations (i.e., natural disasters, economic downturns, pandemics, etc.)? 14

15 What happens to Medicaid Rules in a Block Grant or Per Capita Allotment? Medicaid currently has a significant array of both operational and payment rules that govern operations (e.g., Sections 1902 and 1903) In addition, Medicaid has minimum requirements for who and what states must cover (e.g. Section 1905(a)). b States have to cover certain mandatory eligibility groups and benefits States have the option of covering additional populations, such as children with incomes above the minimum levels, and also can cover optional benefits Within a block grant or per capita cap proposal, states would be afforded flexibilityaround some or all of these requirements. The extent and impact of any modifications to Medicaid rules will have to be carefully considered. 15

16 Important Elements to Understand In Any Proposal -What is the proposed method of establishing limits or per-person caps? (and what data is used to support it?) -How administrative and key infrastructure costs factor into calculation? Will there be modifications for i.t. and other infrastructure changes needed to administer the program, initially and ongoing i.e. new regulations? -Will there be MOE requirements or will there be more flexibility for states to change eligibility groups or benefits packages? What comprises MOE calculations? -For per-capita caps, what are the requirements for individuals to move among different cell groups? -What are quality requirements, if any? Reporting requirements? 16

17 To ask and consider Block Grants- Setting the base as advantageously for the state and the people it serves is essential; potentially unforgiving Has the DD and Medicaid agency reviewed all allowable Medicaid costs (including administrative/it) and ensured that these dollars are included? What is the level of knowledge/familiarity of key stakeholders? (state fiscal legislative body, state agency, Medicaid agency, advocates) What data are available- work with state budget office on costs and cost projections on demographics- age of people being served, NCI data on aging caregivers, demographics on types of disabilities and services/supports needed? 17

18 The More You Know- Getting Information, Educated and Prepared Obtain as much specific information the following data points and related trends in your state: Costs (the past five years and projections) Demographics (including age, race, and other factors impacting support needs such as aging caregivers, transition to adulthood, etc.) Current and future support needs of people served I/DD waiting list Pharmacy costs, acute and ltss costs Information that will assist in making a case to have a separate cell or identifier for I/DD funds in a budget to track 18

19 The More You Know- Continued In a per capita cap, have DD budget staff become familiar with member months in budget projections and trajectories All should factor in on your state s analysis and modeling of any Medicaid reform implications It will be important to be able to articulate the many interdependencies within your system and Medicaid 19

20 Some Potential Risks in Block Grants or Per Capita Caps: Inadequate ceilings established, either in aggregate or on a perperson basis Indexing strategies that do not reflect actual expected inflationary patterns Inadequate triggers/opportunities to rebase the caps (either aggregate or per-person) Lack of adequate infrastructure support included in the proposals (including information technology, state staff, quality and health and welfare needs) 20

21 Setting the base is Difficult Each state s capped amount could be based largely on its current spending. This may have implications for: States that have historically relatively narrow Medicaid programs and/or relatively low provider reimbursement rates High performers might be at a disadvantage because they are already efficient, highly community-based, low cost, rebalanced 21

22 Setting the base is Difficult, Continued Are states that have not innovated as much going to get a higher base to start- will it sustain? Will there be unhealthy/healthy competition within and across states? What considerations have been given to beneficiary mix? What are our collective ideas to avoid a formula fight between our states and across populations within states? 22

23 Next Steps Most important next step is to prepare to engage in the discussion Identify the table and get a seat (I/DD systems are significant proportion of every state s Medicaid expenditures) Know your data Know your trends Prepare to analyze proposals for intended and unintended consequences Legislative proposals can move quickly so prepping now is key There will be robust conversations at the state level regarding any federal proposal, staying tuned will be important 23

24 A Few Resources of Interest Medicaid: Key Policy and Data Considerations for Designing a Per Capita Cap on Federal Funding-GAO NAMD Proposals_FINAL-1.pdf Overview of Medicaid Per Capita Cap Proposals- The Henry J. Kaiser Foundation National Council on Disabilities: A Medicaid Block Grant Program: Implications for People with Disabilities Note: This is not an exhaustive list 24

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