The Michigan Update. Medicaid Managed Care Enrollment Activity. March Print This Issue. In This Issue

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1 The Michigan Update March 2013 Print This Issue In This Issue Medicaid Managed Care Enrollment Activity CSHCS Children in Medicaid HMOs Duals in Medicaid HMOs MIChild Adult Benefits Waiver HIP Michigan Enrollments Suspended Access to Health Care in Michigan Medicaid Expansion under ACA A Federal Health Insurance Exchange for Michigan Blue Cross Blue Shield of Michigan Reform Michigan Receives SIM Award Medicaid Managed Care Enrollment Activity As of March 1, 2013, there were 1,236,527 Medicaid beneficiaries enrolled in 13 Medicaid Health Plans (HMOs), a decrease of 1,337 since February 1, The number of Medicaid beneficiaries eligible for managed care enrollment also decreased in March - there were 1,302,103 eligible beneficiaries, down from 1,303,574 in February. The number of Medicaid beneficiaries dually eligible for Medicare (duals) enrolled in Medicaid HMOs to receive their Medicaid benefits continues to grow - there were 35,089 duals enrolled in March, up from 34,701 in February, an increase of 388. The number of Medicaid children dually eligible for the Children's Special Health Care Services (CSHCS) program enrolled in Medicaid HMOs also continues to grow - there were 13,707 CSHCS/Medicaid children enrolled in March, up from 13,067 in February. The number of Medicaid-only HMO enrollees continues to decline. The sum of the increases in the number of enrollees dually eligible for Medicare and the enrollees dually eligible for CSHCS - 1,028 - combined with the reported decrease in total managed care enrollment - 1,337 - reflects a one-month loss in Medicaid-only HMO enrollment of 2,365 between February and March. As the enrollment reports (.pdf) (.xls) reflect, every county in the state is served by at least one Medicaid Health Plan. Auto-assignment of beneficiaries into the HMOs is now in place in every county of the state and there are at least two HMOs serving every county in the Lower Peninsula. Beneficiaries in all 15 counties in the Upper Peninsula are auto-assigned through federal "Rural Exception" authority to the one HMO serving the counties, Upper Peninsula

2 Modifications to HIPAA Rules Autism Health Equity in Michigan Toolkit New Chief Medical Executive for Michigan Standard Prescription Form Conscientious Objector Bill Medicaid Hospital Reimbursement Reform Initiative Sequestration May Mean State Employee Layoffs New Veterans Agency in Michigan Medicaid Policies Quick Links About Us Expertise Services Contact Us Phone: Locations: Atlanta, Georgia Austin, Texas Bay Area, California Boston, Massachusetts Chicago, Illinois Denver, Colorado Harrisburg, Pennsylvania Health Plan. CSHCS Children in Medicaid HMOs In previous editions of The Michigan Update, most recently in September 2012, we reported on the Department of Community Health's (DCH) plan to enroll children (and a few adults) receiving services from both the Children's Special Health Care Services (CSHCS) program and the Medicaid program in Medicaid Health Plans (HMOs). Enrollment began in October 2012, was phased in gradually over the last few months and is essentially complete in March As of March 1, 2013, there were 13,707 CSHCS/Medicaid beneficiaries enrolled in the Medicaid HMOs to receive their Medicaid benefits, up from 13,067 in February. Of this total, 4,360 children were auto-assigned to an HMO and 9,347 - the vast majority - voluntarily enrolled. All Medicaid HMOs except Pro Care Health Plan have CSHCS/Medicaid enrollees although the numbers vary across plans. As the table below reflects, Meridian Health Plan of Michigan has the most CSHCS/Medicaid enrollees receiving their Medicaid services from an HMO, 28.2 percent of the total. United Healthcare Community Plan has 15.5 percent of the total; Molina Healthcare of Michigan has 15 percent; McLaren Health Plan has 10.8 percent; and the other eight plans share the remaining 30.5 percent. March 2013 CSHCS/Medicaid Enrollment Medicaid Health Plan Voluntary Auto- Enrollees Assigned Enrollees Total Enrollees Blue Cross Complete of MI CoventryCares of MI HealthPlus Partners McLaren Health Plan 1, ,486 Meridian Health Plan of MI 2,520 1,344 3,864 Midwest Health Plan ,047 Molina Healthcare of MI 1, ,053 PHP Mid-MI Family Care Priority Health Govt. Programs Pro Care Health Plan Total Health Care UnitedHealthcare Comm. Plan 1, ,127 Upper Peninsula Health Plan Total 9,347 4,360 13,707 With input from DCH, we have created a special

3 Indianapolis, Indiana Lansing, Michigan New York, New York Olympia, Washington Sacramento, California Southern California Tallahassee, Florida Washington, DC enrollment report, as a one-time snapshot, to reflect CSHCS/Medicaid managed care enrollment by county and Medicaid HMO. Note that, not surprisingly, more than 51 percent of the CSHCS/Medicaid managed care enrollees reside in the state's five most populous counties: Genesee, Kent, Macomb, Oakland and Wayne. Over 25 percent of the enrollees reside in Wayne County, which is not a surprising fact since about the same percentage of the entire Medicaid population resides in the county. DCH advises that about 3,500 CSHCS/Medicaid beneficiaries are exempted from enrollment in the Medicaid HMOs because they have other insurance coverage through commercial HMOs. (This exemption from Medicaid HMO enrollment also applies to Medicaid-only beneficiaries.) There are about 1,600 CSHCS/Medicaid beneficiaries for whom an enrollment decision has yet to be made and there are a handful of CSHCS/Medicaid beneficiaries with Medicare eligibility as well who chose not to enroll in a Medicaid HMO. Duals in Medicaid HMOs As of March 1, 2013, there were 35,089 Medicaid beneficiaries dually eligible for Medicare (duals) enrolled in Medicaid HMOs to receive their Medicaid services, an increase of 388 since February. The number of duals enrolled through auto-assignment as of March 1, 2013 was 16,196, and the number of duals enrolled on a voluntary basis was 18,893. All Medicaid HMOs have duals enrolled although the numbers vary dramatically across plans. MIChild According to MAXIMUS, the DCH contractor for MIChild enrollment, there were 37,546 children enrolled in the MIChild program as of March 1, This is an increase of 56 since February 1, As the enrollment report (.pdf) (.xls) for March shows, enrollment is dispersed between 10 plans, with more than 75 percent of the children enrolled with Blue Cross Blue Shield of Michigan (BCBSM). MIChild-enrolled children

4 receive their dental care through contracted dental plans. Of the three available plans, more than 95 percent of the children are enrolled with either BCBSM (48.3 percent) or Delta Dental Plan (46.8 percent). Adult Benefits Waiver (ABW) As of the middle of March 2013, DCH reports there were 26,015 ABW beneficiaries enrolled in the program, a decrease of 806 since the middle of February and the lowest enrollment since the beginning of the program in January There are 28 County Health Plans (CHPs) serving ABW beneficiaries in 73 of Michigan's 83 counties. As of March 1, 2013, the combined ABW enrollment in the 28 CHPs was 23,679, a decrease of 744 since February. On February 15, 2013, DCH announced an open enrollment period for the ABW program during the month of April. This will be the first open enrollment period since November For more information, contact Eileen Ellis, Managing Principal, at (517) HIP Michigan Enrollments Suspended The Patient Protection and Affordable Care Act (ACA - the federal health care reform law) created the Pre-Existing Condition Insurance Plan (PCIP) to provide health coverage for individuals who are otherwise unable to purchase insurance due to pre-existing conditions. On February 15, 2013, the US Department of Health and Human Services (HHS) announced suspension of enrollment in the PCIP effective March 2, The enrollment suspension was ordered by HHS to assure continued adequate funding for the health needs of current enrollees. Michigan's PCIP plan is known as HIP Michigan (Health Insurance Program of Michigan) and is administered by Physicians Health Plan. While new enrollment in HIP Michigan was suspended, current enrollees will continue to have coverage and applications filed before March 2nd will be processed.

5 Access to Health Care in Michigan On March 18, 2013, the Center for Healthcare Research and Transformation at the University of Michigan released the results of a survey and study comparing how individuals with different types of health care coverage in Michigan are faring in terms of access to primary care and specialty physicians, including their ease in making appointments with the physicians. The report, Access to Health Care in Michigan, notes that Michigan Medicaid beneficiaries said they had an easier time accessing physician appointments in 2012 than in Their reported level of ease was comparable to employersponsored coverage. The report also notes that uninsured respondents to the survey indicated a higher rate of using hospital emergency departments for care than those with other forms of coverage and that many respondents indicated an increased use of public or community clinics as their primary locations of care over private physician offices. Medicaid Expansion under ACA As reported in previous editions of The Michigan Update, Governor Rick Snyder has endorsed a Medicaid expansion in Michigan, available through ACA - the federal health care reform law. The expansion would extend Medicaid coverage to most non-elderly adults with income below 138 percent of the federal poverty level beginning on January 1, Enrollment is project to average as many as 330,000 in 2014 and about 450,000 within two years. The proposal is being considered in conjunction with the DCH appropriation for fiscal year and hit a major obstacle in the House of Representatives' appropriations subcommittee in mid-march. Language and funding related to the expansion was omitted from House Bill 4213 before the bill was approved by the subcommittee and sent to the full House Appropriations Committee. Representative Matt Lori, the subcommittee chair, said additional information and education is needed on the full implications of the proposal before action is taken on the bill after the spring recess. The Senate has similarly delayed action on Senate Bill 198, its DCH appropriation bill until after the recess. As the implications of the decision on Medicaid expansion in Michigan are considered, HMA has developed estimates

6 of the number of uninsured in Michigan in 2010 with incomes at various percentages of the poverty level. This data is available by county in an Excel file. The first tab has the estimates for the uninsured by income level, the second tab has total non-elderly population with incomes below 400 percent of the federal poverty level by county, and the third tab displays the same data by the sixteen rating areas for the Health Insurance Exchange (which are defined in the bulletin referenced in the next article. A Federal Health Insurance Exchange for Michigan A federal Health Insurance Exchange will likely be implemented for Michigan because the Senate adjourned for their two-week spring recess on March 21, 2013 without voting on a bill to allow development of a statefederal partnership Exchange. In previous editions of The Michigan Update we have reported on deliberations over establishment of a Health Insurance Exchange for Michigan, required by ACA and through which individuals and small employers may find health insurance coverage beginning in Governor Rick Snyder supported a state-run Exchange but did not have legislative support for it. He ultimately informed the federal government that Michigan would opt for a state/federal partnership Exchange. In January 2013, Michigan received a $30.7 million grant from the federal government to support planning and implementation of the state-federal partnership Exchange. The grant would support the state's efforts to design Navigator and In- Person Assister programs, establish information technology interfaces and design the health plan management functions of the state's Exchange. Expenditure of these funds required approval of the Michigan legislature but that did not occur. While the House of Representatives, which refused to approve expenditure of an earlier $10 million grant, approved appropriation of the new grant funds, the Senate did not, in part due to pressure from conservative organizations opposed to federal health reform. Because approval to spend the federal grant funds did not occur, the state will also need to find the approximately $8.3 million required for the information technology to host the Exchange. On a related note, new Department of Insurance and Financial Services (DIFS) Director R. Kevin Clinton issued a

7 bulletin on March 18, 2013 (Bulletin INS) providing guidance pertaining to the new Exchange. Staff at DIFS have indicated they are hopeful the federal government will allow Michigan to retain the plan management portion of the Federal Exchange. In the January 2013 edition of The Michigan Update we reported on Governor Snyder's issuance of an Executive Order moving the Office of Financial and Insurance Regulation (OFIR) out of the Department of Licensing and Regulatory Affairs (LARA) and establishing it as a separate department. Blue Cross Blue Shield of Michigan Reform In previous editions of The Michigan Update we have reported on Governor Rick Snyder's proposal in September 2012 to reform how Blue Cross Blue Shield of Michigan (BCBSM) is structured and regulated in the state. The Legislature approved bills in late 2012, but the Governor vetoed them because of language added late in the process related to coverage of abortion services. Legislation was re-introduced (Senate Bills 61 and 62) in mid-january 2013, without the language that had prompted the Governor's previous veto. The bills were passed by the legislature and forwarded to the Governor for signature in early March. He signed the bills into law on March 18, One provision in the enacted legislation has resulted in the dismissal of a federal antitrust lawsuit filed against BCBSM in That provision, as well as an order issued by the Michigan Insurance Commissioner (see the February 2013 edition of The Michigan Update), prohibit health insurers from using "most favored nation" clauses in contracts with providers. The use of such clauses was the basis of the 2010 complaint filed jointly by the US Department of Justice and Aetna Inc. Michigan Receives SIM Award On February 21, 2013 HHS Secretary Sebelius announced the first recipients of State Innovation Model (SIM) awards, made possible by ACA. Twenty-five states, including Michigan, received awards. The HHS Innovation

8 Center created the SIM initiative for states that are prepared for or committed to planning, designing, testing and supporting evaluation of new payment and service delivery models in the context of larger health system transformation. Michigan will receive up to $1,653,705 to develop its State Health Care Innovation Plan over the coming six months. The DCH design process will focus on transforming service delivery and payment models in four foundational areas: patient/family-centered health homes; coordination and accountability of the Medical Neighborhood; a care bridge to behavioral health and long-term care; and integration between and among health care and community resources, including the Pathways Community Hub model. Modifications to HIPAA Rules Significant changes to Health Insurance Portability and Accountability Act (HIPAA) rules became effective on March 26, The rules have important impacts on both Covered Entities and their Business Associates as they share and use Protected Health Information (PHI). The rules lower the standard for notification of a breach of PHI. Previously breach notification requirements were triggered if a risk assessment determined the use or disclosure of the PHI in question "poses a significant risk of financial, reputational, or other harm to the individual." Under the new rules, an improper use or disclosure of PHI is presumed to be a breach unless the Covered Entity or Business Associate "demonstrates that there is a low probability that the protected health information has been compromised" through a risk assessment of multiple factors identified in the new rules. The new rules broaden the definition of Business Associate such that HIPAA now applies to a whole new group of entities that will all need to be compliant by September 23, These entities include persons or entities that provide data transmission services of PHI to a Covered Entity, any subcontractor of a Business Associate that handles PHI and any entity that maintains PHI on behalf of a Covered Entity. The rules also apply certain HIPAA privacy, security and enforcement regulations directly to Business Associates and make them subject to all criminal and civil penalties under HIPAA, which were increased significantly through

9 passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act. Importantly, if a Business Associate violates a provision of a Business Associate Agreement, that contractual violation is now a HIPAA violation. The new rules say that Business Associates must comply with HIPAA's "minimum necessary" standard as well and only use, disclose, or request PHI from another entity to the extent necessary to accomplish the intended purpose of the use, disclosure, or request. An organization's Business Associate Agreements may need to be amended or updated to comply with provisions in the new rules. Covered Entities must also revise their Notice of Privacy Practices to include language specified by the rules. The rules expand individual rights. A Covered Entity must abide by an individual's request to restrict disclosure of PHI and must provide PHI to an individual in an electronic form if requested. The rules do however provide more flexibility on disclosure of PHI for deceased individuals. Lastly, the rules set new limits on how information can be used and disclosed for marketing and fundraising purposes, prohibit the sale of health information without permission and tighten rules about how individuals can opt out of receiving future fundraising materials. Autism On March 18, 2013, DCH Director James Haveman and the Michigan Autism Council released the Michigan Autism Spectrum Disorders (ASD) State Plan. The Plan was created by development and advisory committees comprised of 51 individuals including parents, adults with disorders on the autism spectrum, educators, agency and organization professionals, health care providers, university faculty, state government personnel, and grant project staff. The goal of the plan is to guide future planning, decision making and resource allocation to meet the needs of individuals and families in Michigan living with ASD. A copy of the plan and other related information is available on the state's Autism web site.

10 Health Equity in Michigan Toolkit The DCH Health Disparities Reduction and Minority Health Section recently released a toolkit designed to engage communities around common health issues that link individual and community wellbeing. Called Health Equity in Michigan: A Toolkit for Action, it explores how education, food access, stress, discrimination, and access to health care are linked to the health and overall wellbeing of communities. The toolkit includes factsheets, videos and other materials for organizations and individuals interested in leading community discussions. The materials are available on the DCH web site. New Chief Medical Executive for Michigan On March 18, 2013, DCH Director James Haveman announced the appointment of Matthew M. Davis, M.D., M.A.P.P., as Michigan's Chief Medical Executive effective immediately. In this role Dr. Davis will provide professional medical leadership, expertise, and coordination in addressing public health issues, workforce issues, and health policy development to DCH. Dr. Davis is Associate Professor of Pediatrics and Associate Professor of Internal Medicine at the University of Michigan Medical School, and Associate Professor of Public Policy at the Gerald R. Ford School of Public Policy, University of Michigan in Ann Arbor. For more than 12 years he has focused his research on three major areas of health policy: vaccines and vaccine financing, regulation and financing of governmentsponsored health programs, and characterization of public attitudes and opinions about health and health policy. He will continue on the faculty at the University of Michigan while also serving in his new role. Standard Prescription Form Legislation has been passed in both the Michigan Senate and House of Representatives that would require development of a standardized form for prescribers to use in obtaining prior authorization of prescription drugs from insurers, including managed care organizations. Senate Bills 178 and 179 were passed by the Senate and House Bills 4274 and 4275 were passed by the House in mid-

11 March. The legislation passed by each chamber is similar but not identical, so variances will need to be resolved before final passage and transmission to Governor Rick Snyder for signature. The focus of each pair of bills is to address the fact that there are about 150 different versions of prior authorization forms, of varying length and complexity, in use by insurers in Michigan. Once passed into law, the state's Department of Financial and Insurance Services (formerly the Office of Financial and Insurance Regulation) will be tasked with forming a workgroup to develop the common form for use by no later than July Members of the workgroup would represent insurance companies, prescribers, pharmacists, hospitals, DCH and other stakeholders. Conscientious Objector Bill A bill (Senate Bill 136) that would allow health care providers, professionals and facilities with religious objections to offering certain services the ability to refrain from offering them cleared the Senate Health Policy Committee on March 21, 2013, with the vote along party lines. After the bill was introduced in late January, the Committee had held two meetings during which testimony was provided by representatives from both sides of the issue. The bill has been referred to the full Senate for action and, if passed, will then need to be addressed by the House of Representatives. Medicaid Hospital Reimbursement Reform Initiative DCH has announced a process to evaluate potential Medicaid hospital reimbursement reforms, given that Medicaid expansion (if adopted) would substantially increase federal funding while dramatically reducing uncompensated care. (The department's announcement, in an L-letter to providers is referenced in the Medicaid Policies article below.) DCH has established a Hospital Reimbursement Technical Workgroup with representatives from the state, hospitals and the Michigan Health and Hospital Association, as well as other stakeholders to review the current system and

12 make recommendations for changes. The five guiding principles for this initiative are greater predictability, reduced volatility, efficiency, cost-effectiveness, and simplicity. The workgroup is expected to focus its attention in the following areas: Inpatient hospital reimbursement system that uses a statewide rate with appropriate adjustments Outlier reimbursement modification Inpatient capital reimbursement Outpatient prospective payment system "Pool payments" to hospitals The DCH announcement includes a projected schedule for the work surrounding the initiative. DCH staff will host workgroup meetings from March through May 2013 and model the impacts of workgroup reimbursement options between April and June By June 2013, the workgroup is expected to make recommendations to a Hospital Reimbursement Steering Committee that will review and act upon the recommendations. Between June 2013 and the end of the year, DCH staff will develop policies, ensure systems changes are made and seek federal approval of the desired changes. Sequestration May Mean State Employee Layoffs The Michigan Office of the State Employer sent notices to state departments and agencies as well as employee unions in March to notify them that federal sequestration cuts could mean layoffs on or after April 8, The letters were sent to provide the required 30 day's notice. State officials indicated that federal funding cuts could equal $150 million but it is as yet unclear where funding cuts might occur. New Veterans Agency in Michigan In January 2013, Governor Rick Snyder issued an Executive Order (2013-2) creating the Michigan Veterans Affairs Agency within the Department of Military and Veterans Affairs. The agency was created to address structural inadequacies in the state's delivery of services to its more than 650,000 military veterans and to help

13 veterans recognize and access the benefits and services for which they are eligible. The new agency officially launched on March 20, 2013 with Jeff Barnes appointed by the Governor as its first director. Mr. Barnes, a veteran himself, had been serving on the Governor's staff as deputy director of strategy and oversight of the public safety areas of government. Medicaid Policies DCH has issued six final policies and four proposed policies that merit mention. The policies are available for review on DCH's website. MSA notifies Vision providers of changes in policy related to the evaluation for and fitting of contact lenses. MSA advises All Providers of updates to the Medicaid Provider Manual effective April 1, The bulletin also advises providers of DCH's progress in ICD-10 coding implementation and offers a ListServ option for program communications. MSA notifies Practitioners, Prepaid Inpatient Health Plans, Medicaid Health Plans, Clinics and Others of Early and Periodic Screening, Diagnosis and Treatment (EPSDT) Guidelines for children in foster care. MSA informs All Providers of changes to the Beneficiary Monitoring Program to ensure beneficiaries are not overusing and/or misusing Medicaid services and are educated about appropriate utilization. MSA clarifies for Medicaid Health Plans and Hospitals their responsibilities concerning patient post-stabilization authorization determinations after stabilization and prior to any treatment. MSA notifies Practitioners, Clinics, Medicaid Health Plans, MIChild Health Plans, Tribal Health Centers and Prepaid Inpatient Health Plans of new policy related to developmental screening, coverage and processes for the treatment of children affected with Autism Spectrum Disorder. Implementation is contingent upon federal approval of the state's policy. A proposed policy (1305-NF) has been issued that

14 would prohibit enrollment of new Nursing Facility providers, approval of change of ownership requests or bed change requests if the provider has a real estate lease with a duration of less than 12 months. In addition, the policy would prohibit Nursing Facility providers from including property tax and interest expenses associated with certain leases as allowable costs on their cost report. Comments are due to DCH by April 12, A proposed policy (1309-NF) has been issued that would clarify the supporting documentation required for Nursing Facility plant cost certification. Comments are due to DCH by April 12, A proposed policy (1307-NF) has been issued that would remind Nursing Facility providers that they must comply with applicable provisions in the Medicare Principles of Reimbursement, including the provisions associated with allowance of interest expenses related to working capital borrowings. Comments are due to DCH by April 18, A proposed policy (1301-HH) has been issued that would notify Home Health Agencies, Physicians and Other Medical Practitioners that a physician certifying eligibility for initial home health services must provide documentation of a face-to-face encounter with the Medicaid beneficiary. Comments are due to DCH by April 24, DCH has also released two L-letters of potential interest, which are available for review on the same web site. L advises Hospitals of a new Medicaid Hospital Reimbursement Initiative and the formation of a Technical Workgroup with representatives from the state, hospitals and the Michigan Health and Hospital Association, as well as other stakeholders to review the current reimbursement system and make recommendations for changes. L advises providers in the Adult Home Help program that effective March 1, 2013 union dues will no longer be deducted from their paychecks. The letter also advises that the Provider Registry for Adult Home Help workers will henceforth be operated by DCH.

15 Health Management Associates is an independent national research and consulting firm specializing in complex health care program and policy issues. Founded in 1985, in Lansing, Michigan, Health Management Associates provides leadership, experience, and technical expertise to local, state, and federal governmental agencies, regional and national foundations, investors, multi-state health system organizations and single site health care providers, as well as employers and other purchasers in the public and private sectors.