Presentation to the Actuaries Club of the Southwest Texas Medicaid Overview and Reform David Palmer, Chief Actuary June 8, 2007 1
HHS Organization Governor Health & Human Services Council Health and Human Services Commission Albert Hawkins, Executive Commissioner HHS Rate Setting Children s Health Insurance Program (CHIP) Vendor Drug Program Temporary Assistance for Needy Families (TANF) Medicaid Family Violence Services Nutritional Services HHS Ombudsman Eligibility Determination Interagency Initiatives Consolidated Support Services HHS Program Policy Immigration and Refugee Affairs Brian Flood, Inspector General Office of Inspector General Aging & Disability Services Council State Health Services Council Family & Protective Services Council Assistive & Rehabilitative Services Council Department of Aging and Disability Services Adelaide Horn, Commissioner Department of State Health Services David L. Lakey, M.D., Commissioner Department of Family and Protective Services Carey Cockerell, Commissioner Department of Assistive and Rehabilitative Services Terry Murphy, Commissioner Community Based Services and Supports Institutional Services Long Term Care Provider Regulation Health Services Mental Health Services State Hospitals Community Services Alcohol & Drug Abuse Services Regulatory Health Programs Child Protective Services Adult Protective Services Child Care Regulatory Services Prevention and Early Intervention Services Vocational Rehabilitation Services Blind Services Early Childhood Intervention Services Disability Determination Services 2
HHSC Programs Key Programs Overview Temporary Assistance for Needy Families (TANF) - Provides time-limited cash assistance to needy dependent children and the parents or relatives with whom they are living. Food Stamps - An entitlement program that provides a monthly benefit to qualified applicants. Medicaid - Provides guaranteed medical coverage to eligible needy persons. Children s Health Insurance Program (CHIP) - Provides medical coverage to eligible children up to age 19, who are not already insured. 3
HHS System Method of Finance HHS System Method of Financing Base and Exceptional Request State Fiscal Years 2008 & 2009 $58.0 Billion All Funds Total Medicaid Related $43.3 Billion 74.5% Balance of HHS Funding $14.8 Billion 25.5% 4
HHS System Method of Finance HHS System Method of Financing Base and Exceptional Request State Fiscal Years 2008 & 2009 $58.0 Billion All Funds Federal & Other $35.7 Billion 61.4% General Revenue Related 22.4 Billion 38.6% 5
Medicaid Overview Medicaid is a jointly funded state-federal program that provides medical coverage to eligible needy persons. The federal government pays around 60% of Medicaid service expenditures Federal laws and regulations: Require coverage of certain populations and services; and Provide flexibility for states to cover additional populations and services. Medicaid is an entitlement program, meaning: Guaranteed coverage for eligible services to eligible persons. Open-ended funding based on the actual costs to provide eligible services to eligible persons. 6
Medicaid Eligibility Medicaid serves: Low-income families Children Pregnant women Elderly People with disabilities Texas Medicaid does not serve: Non-disabled, childless adults 7
Medicaid Eligibility Medicaid eligibility is financial and categorical: Low income alone does not constitute eligibility for Medicaid Eligibility factors include: Family income; Age; Other factors such as being pregnant or disabled or receiving TANF, and Assets such as bank accounts and automobile values 8
Texas Medicaid Percent of Poverty Income Levels The federal government requires that people who meet certain criteria be eligible for Medicaid. These are mandatory Medicaid eligibles and all state Medicaid programs must include these mandatory populations. The federal government also allows states to provide services to additional individuals and still receive the federal share of funding for services provided to them. These are optional Medicaid eligibles. Texas Medicaid Income Eligibility Levels for Selected Categories, November 2004 250% 200% 150% 100% 50% 0% 185% 133% Pregnant Women and Infants 133% Children Ages 1-5 Mandatory 100% Children Ages 6-18 14% Parent w / TA NF Children Optional 74% SSI, Aged and Disabled 220% 74% 21% Long Term Care Medically Needy * In SFY 2005, for TANF parents w ith children, eligibility is determined based on an adjusted gross income no higher than $188 a month for a family of 3, w hich translates into 14% of poverty. For medically needy pregnant w omen and children, the maximum monthly adjusted gross income limit is $275. *Medically Needy is defined as a pregnant w oman, or child w hose family income exceeds the program income limits. The family must deplete their excess income w ith unpaid medical bills. 9
Texas Medicaid Caseload by Eligibility Group Medicaid Caseload by Eligibility Group, September 1977 - December 2006 Pregnant Women and non-tanf, non-disabled Children TANF Group Aged, Disabled and Blind 3,000,000 Federal Welfare Reform January 2002 -- Medicaid Simplification / 6 months eligibility for Children Ages 1-18 2,500,000 2,000,000 July 1991 -- Children ages 6-18 added to caseload Recipient Months 1,500,000 1,000,000 500,000 0 September 1979 - TANF Adults and Sep-77 Sep-78 Sep-79 November 1984 -- Children ages 0-5 and Pregnant Women added to caseload Sep-80 Sep-81 Sep-82 Sep-83 Sep-84 Sep-85 Sep-86 Sep-87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 TANF Group Pregnant Women and Children 0-18 Aged, Blind, and Disabled Sep-93 Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 September 2003 -- TANF -Full Family Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 10 Sep-06
Acute and Long Term Services and Supports The acute care program: refers to the provision of health care for episodic health care needs. This includes care provided by physicians, hospitals, labs and medical supplies. The long term services and supports program: refers to services provided to persons who are elderly and those with a disability who need long term assistance and supports to remain as independent as possible. Many of the services provided assist persons with activities of daily living, such as eating, dressing and mobility. 11
Acute Care 52.7% Texas Medicaid Spending by Major Function, FY 2005 Long-Term Services & Supports 31.6% Dental 4.0% Prescription Drugs 15.7% Acute Care* Other 13.2% Physician & Professional 20.5% Hospital 62.3% *Includes UPL and DSH payments to the hospitals totaling $903 million and $1,487 million, respectively. 12
Medicaid Delivery Models Fee for Service (Traditional Medicaid) Managed Care: Managed Care Models in Texas: Health Maintenance Organizations (HMO) Primary Care Case Management (PCCM) Managed Care Programs in Texas: STAR (State of Texas Access Reform) Acute Care HMO STAR+PLUS Acute & Long-Term Services and Support HMO for Aged, Blind and Disabled Clients PCCM Self-funded managed care model that provides a medical home for Medicaid clients through primary care providers NorthSTAR Behavioral Health Care HMO ICM Dallas and Tarrant Pilot planned for implementation July 1, 2007 Almost 70% of the Texas Medicaid population will be enrolled in managed care (HMO+PCCM) in Fiscal Year 2008 compared to 40% in 2003. 13
Medicaid Beneficiaries and Expenditures - FY 2006 In 2006, 2,792,566 people received full Medicaid benefits on average each month. 100% 90% 80% 70% 60% Non-Disabled Children 67% Non-Disabled Children 28% Other Adults 9% 50% 40% Aged, Blind, Disabled 60% 30% 20% 10% Other Adults 8% Aged, Blind, Disabled 22% Non-Full Medicaid Beneficiaries 3% 0% Caseload Expenditures Source: Estimated 2006 Medicaid Expenditures, CMS/ PPS Systems Notes: Aged, Blind, and Disabled includes clients under 21; Total Expenditures includes all Acute and Long-Term Care expenditures, including Vendor Drugs and Case Management. Expenditures and caseload for non-full Medicaid beneficiaries are not included. 14
Physician Hospital Drugs Long Term Care Fee-For-Service (FFS) Rate Methods 15
FFS Claims Payments Contract with Texas Medicaid Health Partnership (TMHP) Providers submit claims to TMHP Weekly payments to provider Produces reports of expenditures Maintains query system for eligibility, paid claims and HMO encounters $135 million annual contract 16
Managed Care Rate Method Use plan experience data Trend to plan year Consider capitated expenses such as for behavioral health Adjust for programmatic issues including benefit or provider reimbursement changes Allowance for net reinsurance cost Administrative cost consideration including State mandated taxes Risk Margin 17
Medicaid Reform About half of all Texans are either uninsured (24.4%) or on a public program such as Medicaid. Most uninsured acute-care spending occurs at the hospital where care is most expensive and creates a burden of uncompensated care that must be covered by local taxes or higher rates for the insured. Redirect Disproportionate Share (DSH) funds into a Health Opportunities Pool (HOP) Use the HOP funds to purchase insurance for the uninsured Develop a small business initiative to share the expense of health insurance with the employer, the employee and the State. Overall goal is to reduce the number of uninsured, reduce the burden of uncompensated care at the hospital and increase primary care to create healthier citizens who access care at lower cost providers. 18
Children s Health Insurance Program (CHIP) Must first demonstrate ineligibility for Medicaid Covers children under age 19 Up to 200% of federal poverty level (FPL) Asset levels and automobile values are at higher levels than Medicaid Not an entitlement program Special programs for children of immigrants, school employees and State employees Perinatal program covers unborn children 19
Children s Health Insurance Program (CHIP) Over 300,000 children enrolled Co-payments and enrollment fees apply to some clients 90-day waiting period for some clients Eligibility recently modified by House Bill 109 of the 80 th Legislative Session Annual costs expected to exceed $1 billion per year Federal government contributes about 72% of the cost Amount of federal funds available for CHIP is limited 20