Medicaid s Future National PACE Association Spring Policy Forum MaryBeth Musumeci March 20, 2017
Figure 2 The basic foundations of Medicaid are related to the entitlement and the federal-state partnership. Entitlement Federal Sets core requirements on eligibility and benefits Eligible Individuals are entitled to a defined set of benefits States are entitled to federal matching funds Partnership State Flexibility to administer the program within federal guidelines
Figure 3 Medicaid plays a central role in our health care system. Health Insurance Coverage For 1 in 5 Americans Assistance to 10 million Medicare Beneficiaries > 50% Long-Term Care Financing MEDICAID Support for Health Care System and Safety-Net State Capacity to Address Health Challenges
Figure 4 Seniors and people with disabilities account for 24% of Medicaid enrollment but 63% of spending, FY 2011. 24% People with Disabilities 15% Seniors 9% Adults 27% People with Disabilities 42% 63% Seniors 21% Children 48% Adults 15% Children 21% Enrollees Total = 68.0 Million Expenditures Total = $397.6 Billion NOTE: People with disabilities include children and nonelderly adults. SOURCE: KFF/Urban Institute estimates based on data from FY 2011 MSIS and CMS-64. MSIS FY 2010 data were used for FL, KS, ME, MD, MT, NM, NJ, OK, TX, and UT, but adjusted to 2011 CMS-64.
Figure 5 Most expansion states had no HCBS waiver waiting list or a decrease from 2014 to 2015, while most non-expansion states had a waiting list increase. Expansion States Non-Expansion States No waiting list, 1 state Increase in waiting list, 10 states No waiting list, 11 states Decrease in waiting list, 7 states Decrease in waiting list, 9 states Increase in waiting list, 13 states Total = 30 states Total = 21 states NOTES: Includes 1915 (c) waivers. LA and MT expanded Medicaid in 2016 and are counted as non-expansion states for 2014 and 2015. Two expansion states and one non-expansion state separately report 2015 HCBS waiting lists for 1115 waivers these data were not collected for 2014. SOURCE: Kaiser Family Foundation, Medicaid Home and Community-Based Services Programs: 2013 Data Update (Oct. 2016); Kaiser Family Foundation, Medicaid Home and Community-Based Services Programs: 2012 Data Update (Oct. 2015).
Figure 6 Proposals to convert Medicaid to a per capita cap or block grant could reduce federal spending by limiting growth to a pre-set amount and increase state flexibility in determining eligibility and benefits. Current law: Reflects increases in health care costs, changes in enrollment, and state policy choices Current law Federal Spending Block grant: Does not account for changes in enrollment or changes in health care costs Per capita cap: Does not account for changes in health care costs Federal Cap Year
Figure 7 What details do you need to know to understand the proposals? What happens with the ACA Medicaid expansion? What are the federal savings targets? What is the base year for a block grant or per capita cap? What are state matching requirements? What new flexibility would states be given to administer their programs? SOURCE: Kaiser Family Foundation, 5 Key Questions: Medicaid Block Grants and Per Capita Caps (2017), http://kff.org/medicaid/issue-brief/5-key-questions-medicaid-block-grants-per-capita-caps/.
Figure 8 Medicaid Per Capita Cap Provisions in House American Health Care Act Bill A federal Medicaid allotment will be available for each state to draw down based on its traditional FMAP beginning in FY 2020 Federal allotment = the product of the state s per capita allotment for major beneficiary categories (aged, blind and disabled, children, expansion adults, and other adults) multiplied by the number of enrollees in each group Excludes those receiving CHIP, partial benefit enrollees and those receiving IHS or breast and cervical cancer services Per capita allotments for each group will be determined by each state s average Medicaid spending using 2016 as the base year, grown by medical CPI CBO projects that average annual per enrollee Medicaid spending will grow at a faster rate (4.4%) than medical CPI (3.7%) from 2017-2026 States with expenditures exceeding FY target will have payments for next FY reduced by excess Some federal payments, including DSH, administrative costs, Medicare cost-sharing, and safety net provider payment adjustments in non-expansion states, excluded from the total allotment CBO estimates $880 billion reduction in federal Medicaid funds from 2017-2026 (25% reduction compared to current law) and 14 million fewer Medicaid enrollees by 2026 (17% reduction compared to current law)
Figure 9 Other Medicaid financing changes in House American Health Care Act Repeal ACA Medicaid DSH Cuts for FY 2020-2025 Also exempts non-expansion states from FY 2018 and 2019 DSH cuts Increases federal spending by $31 billion over 10 years per CBO Provides $10 billion from CY 2018-2022 for non-expansion state provider payment increases Increases federal spending by $8 billion over 10 years per CBO
Figure 10 What happens with the ACA s Medicaid expansion? The American Health Care Act repeals enhanced federal funding for the ACA s Medicaid expansion: States could maintain the expansion but would be reimbursed at the traditional match rate for any new enrollees after 12/31/19 States would retain the enhanced match rate only for enrollees as of 12/31/19 who do not subsequently lose eligibility for > 1 month The Congressional Budget Office projects that under the AHCA: No additional states will adopt the expansion, and some states that have expanded will end the expansion The enhanced match would apply to less than 5% of expansion enrollees by the end of 2024 By 2026, there will be 5 million fewer Medicaid expansion enrollees on an average annual basis compared to current law Only 30% of people eligible for expansion coverage will live in an expansion state by 2026, compared to 50% today, and 80% by 2026, under current law
Figure 11 What are the federal savings targets? CBO Estimates for the American Health Care Act for Medicaid Dollars in Billions (Total 2017-2026 = $880 billion) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 $(3) $(18) $(26) $(68) $(94) $(111) $(124) $(135) $(146) $(155) SOURCE: CBO Estimate of the American Health Care Act, March 13, 2017.
Figure 12 What is the base year? Per enrollee spending by enrollment group 2011 $33,808 (NY) $32,199 (WY) $11,091 (MA) US US US $4,010 (NV) $6,928 (NM) $5,214 (VT) US US $1,656 (WI) $2,056 (IA) Total Children Adults Individuals with Disabilities $10,142 (AL) $10,518 (NC) Aged NOTE: Spending per capita was calculated only for Medicaid enrollees with unrestricted benefits or those enrolled in an alternative package of benchmark equivalent coverage. Outliers are included in the figure, but not marked as outliers. SOURCE: KFF and Urban Institute estimates based on data from FY 2011 MSIS and CMS-64 reports.
Figure 13 What are state matching requirements? AK WA OR NV CA ID UT AZ HI MT WY CO NM ND SD NE KS OK TX MN IA MO AR LA WI IL MS IN MI TN AL KY OH WV GA FFY 2017 FMAP PA SC VA NC FL VT NY ME NH MA RI CT NJ DE MD DC 50 percent (13 states) 50.1-59.9 percent (14 states) 60.0-66.9 percent (12 states) 67.0-74.6 percent (12 states, including DC) NOTE: FMAP percentages are rounded to the nearest tenth of a percentage point. These rates are in effect Oct. 1, 2016-Sept. 30, 2017. These FMAPs reflect the state s regular FMAP; they do not reflect the FMAP for newly eligibles in states that adopted the ACA Medicaid expansion. SOURCE: 80 Fed. Reg. 73779-73782 (Nov. 25, 2015), available at https://www.gpo.gov/fdsys/pkg/fr-2015-11-25/pdf/2015-30050.pdf.
Figure 14 What new flexibility would be given to states? Eligibility: All states have expanded eligibility for children; 32 states implemented the ACA expansion to adults, and many states have expanded eligibility for pregnant women, seniors, and people with disabilities. However, eligibility varies across groups and states. Federal government sets minimum standards, but states have flexibility in many areas: Benefits: All states offer optional benefits, such as prescription drugs, dental, therapies, rehabilitative services, and long-term care services in the community, but how many and which optional benefits are offered vary across states as do the limits on covered benefits. Premiums and cost sharing: Most states charge cost sharing for certain Medicaid enrollees within established limits. A limited number of states charge premiums (mostly through Section 1115 waivers). Delivery system and provider payment: States choose which type of delivery system to use and how to pay providers; many are testing payment models to improve care coordination and outcomes. Waivers: Beyond flexibility in the law, a number of states are using waivers to address various priorities and emerging issues. SOURCE: Kaiser Family Foundation, Current Flexibility in Medicaid: An Overview of Federal Standards and State Options (Jan. 2017), http://kff.org/medicaid/issue-brief/current-flexibility-in-medicaid-an-overview-of-federal-standards-and-state-options/.
Figure 15 Medicaid Eligibility and Enrollment Changes in House American Health Care Act Bill Codifies that ACA expansion to adults up to 138% FPL is state option Eliminates option to cover expansion adults above 133% FPL as of 1/1/20 Changes minimum federal income eligibility for children ages 6-19 from 133% FPL back to 100% FPL Removes hospital presumptive eligibility provisions and presumptive eligibility for expansion adults as of 1/1/20 Requires eligibility renewals every 6 months for expansion adults, as of 10/1/17 Requires states to consider lottery winnings and other lump sums over a period of months in determining Medicaid financial ineligibility as of 1/1/20* Eliminates 3 month retroactive coverage as of 10/1/17* Eliminates reasonable opportunity period for citizenship/immigration status verification, effective 6 months after enactment* Requires states to limit home equity exclusion to federal minimum, effective 6 months after enactment* * options together would decrease federal spending by $7 billion from 2017-2026 per CBO
Figure 16 Medicaid Benefit Changes in House American Health Care Act Bill Repeals essential health benefits requirement for those in alternative benefit plans, including the expansion group, as of 1/1/20 Repeals 6% enhanced FMAP for Community First Choice attendant care services as of 1/1/20 $12 billion reduction in federal spending over 10 years per CBO Prohibits federal Medicaid funding for Planned Parenthood for 1 year after enactment
Figure 17 The impact of a block grant or per capita cap will depend on funding levels, but reducing federal Medicaid funds could: Shift costs and risks to states, beneficiaries, and providers if states restrict eligibility, benefits, and provider payments Most coverage pathways related to old age or disability are optional Most community-based long-term care services are optional Lock in historic spending patterns Would not account for aging of population/share of enrollment comprised of oldest seniors expected to increase over time with resulting increase in costs Even greater impact in the 32 states that expanded Medicaid due to expansion funding repeal Limit states ability to respond to rising health care costs, increases in enrollment due to a recession, a public health emergency such as the opioid epidemic, HIV, Zika, etc., or new medical advances
Figure 18 States with Section 1115 Medicaid demonstration waivers in place, February 2017 Landscape of Current Section 1115 Medicaid Waivers 16 15 12 12 7 Delivery System Reform Waivers Medicaid Expansion Managed Long-Term Services and Supports Behavioral Health Other Targeted Waivers
Figure 19 Key Section 1115 Waiver Questions to Watch ACA Expansion Waiver Questions: Will the Trump Administration approve waiver provisions that have been authorized in other states in advance of completed waiver evaluations? Will waiver provisions, not authorized to date, be approved, such as those that limit coverage or access, use ACA Medicaid funds for a partial coverage expansion, impose a work requirement as condition of eligibility, impose a lock-out for failure to pay monthly payments for enrollees below 100% FPL, or set a time limit for coverage? Broader Waiver Questions: Will requirements for transparency, public input and budget neutrality be maintained? What other types of waivers will the HHS Secretary deem to assist in furthering the objectives of the [Medicaid] program? Will the Trump Administration identify and invite state waiver applications for certain types of waivers to further their policy priorities? Will CMS authorize joint Section 1115/Section 1332 waivers allowing Medicaid funds to subsidize Marketplace initiatives?
Figure 20 Provisions related to Section 1115 waivers in March 14, 2017 HHS letter to governors Reasonable public input processes and transparency guidelines Fast track approval of waiver extensions Improve consistency of incorporating specific waivers and approaches already approved in another state Approve waiver provisions related to work Approve provisions that align Medicaid and private insurance for expansion adults: Alternative benefit plan designs and cost-sharing models, including health savings account-like features for individuals at all income levels Facilitated enrollment in affordable employer-sponsored insurance Reasonable enforceable premiums with appropriate protections for high-risk populations Initiatives that promote families being on the same plan Waivers of non-emergency transportation Expanded options for copayments for non-emergency ER use Waivers of presumptive eligibility and retroactive coverage
Figure 21 Other administrative changes identified in March 14, 2017 HHS letter to governors Changes to make SPA approval process more transparent, efficient and less burdensome Full review of Medicaid managed care regulations to prioritize beneficiary outcomes and state priorities Additional time for states to comply with home and community-based settings rule and greater state involvement in assessing compliance of specific settings Additional opportunities for states to provide full continuum of care and more streamlined approach for Section 1115 demonstrations relating to substance use disorder treatment
Figure 22 Looking Ahead American Health Care Act s progress through Congress Waiver approvals and other administrative policy changes Changes to core federal Medicaid requirements in future legislation?