Presentation Overview Key Texas Medicaid Numbers Fiscal Year 2015 - - PowerPoint PPT Presentation

Presentation to the Senate Finance Workgroup

• n Healthcare Costs

Health and Human Services Commission Charles Smith, Executive Commissioner February 3, 2017

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Presentation Overview



Key Texas Medicaid Numbers – Fiscal Year 2015



Texas Medicaid Annual Budget Expenditures



Percent of Medicaid Expenditures in Texas State Budget



Vendor Drug Expenditures



Vendor Drug Expenditures Total Growth Trends



Medicaid Cost Drivers



Other Cost Drivers



Historical Methods for Containing Costs



Reduction in Potentially Preventable Events for 2013-2015



HEDIS Measures for 2013-2014



Texas Medicaid Caseload by Group



Texas Medicaid Beneficiaries and Expenditures



Current Medicaid/CHIP Eligibility Levels, March 2014



Texas’ Long-term Services and Supports Waiver Programs



Impact of ACA on Medicaid Caseloads



Policy Impacts of ACA: Costs and Savings



Key HHS System Cost Containment Initiatives



Cost Containment – Preferred Drug List



Formulary, PDL and Prior Authorization Carve-in to Medicaid MCOs



Optional Benefits and Services

 $38 billion: Medicaid spending, including supplemental

healthcare payments

 $3.7 billion: Medicaid prescription drug expenditures  $2.7 billion: Medicaid payments to nursing homes  78 percent: Texas Medicaid clients under age 21  52 percent: Births covered by Medicaid  45 percent: Children covered by Medicaid or CHIP

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Key Texas Medicaid Numbers Fiscal Year 2015

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Texas Medicaid Annual Budget Expenditures

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Percent of Medicaid Expenditures in Texas State Budget (in billions)

State Year Medicaid Budget, All Funds* Total State Budget, All Funds** Annual Percentage

2000 $ 10,000 $49,453 20.22% 2001 $10,952 $52,440 20.88% 2002 $12,678 $56,621 22.39% 2003 $14,593 $59,058 24.71% 2004 $14,585 $61,507 23.71% 2005 $15,561 $65,204 23.87% 2006 $16,534 $69,961 23.63% 2007 $17,275 $75,099 23.00% 2008 $19,053 $82,150 23.19% 2009 $20,798 $ 89,981 23.11% 2010 $22,821 $92,056 24.79% 2011 $24,816 $95,461 26.00% 2012 $25,438 $92,914 27.38% 2013 $25,614 $ 97,840 26.18% 2014 $ 27,121 $100,652 27.11% 2015 $29,403 $102,648 28.64%

* Excludes Disproportionate Share Hospital (DSH), Upper Payment Limit (UPL), Uncompensated Care (UC) and DSRIP funds ** Medicaid is FFY, State Budget reflects the state fiscal year, beginning a month prior (September)

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Vendor Drug Expenditures

500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 4,000,000,000 VENDOR DRUG EXPENDITURES STATE FISCAL YEAR

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Vendor Drug Expenditure Total Growth Trends Fiscal Year 2000-2016

• 25.00%
• 20.00%
• 15.00%
• 10.00%
• 5.00%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% VENDOR DRUG EXPENDITURES FY 01 FY 02 FY 03 FY 04 FY 05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY 16 STATE FISCAL YEAR Total Drug Cost Growth Trend

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Medicaid Cost Drivers

Medicaid cost is typically categorized into one (or more) of four “buckets”

 Eligibility

 Type (case mix) and number (magnitude)

 Benefits

 Services provided

 Utilization

 How many and what type of service  Appropriateness of service

 Payments, Revenues and Cost Sharing

 Rates and payments

 Caseload – Volume or number of individuals served in each

category

 Case Mix – Mix or type of clients in the caseload

 Cost Per Client – A function of:

 Utilization – Number of services a client receives  Type of services a client receives

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Medicaid Cost Drivers

Medicaid cost is determined by the caseload and cost per client

 External factors impacting Medicaid costs include:

 Changes to federal or state law or policy  Population growth and changing demographics  Economy  Natural disasters and epidemics  Consumer expectations and awareness

 Costs can be impacted by:

 Payer type  Evolutionary and revolutionary advances in medicine  Payment rates and policies  Changes in clinical practice standards

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Other Cost Drivers

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Historical Methods for Containing Costs

Multi-pronged approach to improved quality and appropriate utilization

 Targeted MCO Oversight and Performance Improvement

Expectations

 Hospital Quality Based Payment Program

 Reduced preventable readmissions rate by 31 percent from 2013-2015

 Delivery System Reform Incentive Payment Program (DSRIP) –

Statewide Outcome Examples

 Outpatient visits increased from 872 per 1,000 member months to 894 per 1,000 member months from 2013-2015  Increase in 7 day follow-up after hospitalization for mental illness from 34 percent to 39 percent from 2013-2014

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Reductions in Potentially Preventable Events for 2013-2014

(per 1,000 member months)

• 14%
• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% Potentially Preventable Admissions Potentially Preventable Readmissions

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HEDIS Measures for 2013-2014

80 65 89 59 83 44 30 79 69 90 65 87 42 30 10 20 30 40 50 60 70 80 90 100 STAR STAR STAR STAR STAR+PLUS STAR+PLUS STAR+PLUS Well-Child Visits Adolescent Well- Care Visits Prenatal Care Postpartum Care Diabetes Care - HBA1C Control Antidepressant Medication Management (Acute Phase) Antidepressant Medication Management (Continuation Phase) 2013 Rate 2014 Rate

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Texas Medicaid Caseload by Group

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Texas Medicaid Beneficiaries and Expenditures

Effective January 1, 2014, ACA required states to adjust income limits for pregnant women, children, parents, and caretakers to account for Modified Adjusted Gross Income (MAGI) changes (i.e. the elimination of most income disregards). *In FY 2014, the monthly income limit for a one-parent household is $230 and the monthly income limit for a two-parent household is $251. **For Medically Needy pregnant women and children, the maximum monthly income limit in FY 2014 is $275 for a family of three, which is the equivalent of approximately 17 percent of FPL. CHIP is currently governed by a maintenance of effort (MOE) requirement through FY 2019, stemming from the American Reinvestment and Recovery Act (ARRA), which limits changes to program eligibility.

Current Medicaid/CHIP Eligibility Levels, March 2014

(As a Percent of FPL)

250% 133% 144% 133% 15% 17% 74% 74% 198% 222% 202% 201% 201% 0% 50% 100% 150% 200%

Pregnant Women and Infants Children Ages Children Ages Parents and 1-5 6-18 Caretaker Relatives* Medically Needy** SSI for Aged and Disabled Long Term Care

Percent of Federal Poverty Level (FPL) CHIP Optional Mandatory

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Texas’ Long-term Services and Supports Waiver Programs

STAR+PLUS Home and Community Based Services Medically Dependent Children Community Living Assistance and Support Services Deaf Blind with Multiple Disabilities Home and Community Services Texas Home Living

Financial Eligibility Monthly income within 300% of SSI monthly income limit ($2,163) Monthly income within 300% of SSI monthly income limit ($2,163) Monthly income within 300% of SSI monthly income limit ($2,163) Monthly income within 300% of SSI monthly income limit ($2,163) Monthly income within 300% of SSI monthly income limit ($2,163) 100% SSI ($721 per month) Medical Assistance Only (MAO) Consideration of parental income for eligibility of a minor No No No No No Yes Individual annual maximum cost 202% of the institutional average Resource Utilization Group (RUG) value 50% of the institutional average RUG value as of 8/31/2010 $114,736.07 $114,736.07 $167,468 for LON 1 (intermittent); LON 5 (limited); and LON 8 (extensive) $168,615 for LON 6 (pervasive) $305,877 for LON 9 (pervasive plus) $17,000 Waives off Nursing Facility Nursing Facility ICF/IID ICF/IID ICF/IID ICF/IID

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Impact of ACA on Medicaid Caseloads

(March 2016 Estimates)

ACA-Related Caseload to Medicaid FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 12-Month Recertification

7,349 96,806 97,040 97,928 99,387 101,838

MAGI Changes/ Eligible, Newly Enrolled

45,796 113,007 116,151 119,298 121,838 124,438

Foster Care to Age 26

562 1,722 1,816 1,846 1,875 1,904

CHIP to Medicaid (not “New” clients)

46,890 228,002 247,261 253,927 260,773 267,803

Total

100,598 439,536 462,269 472,999 483,873 495,984

Note: All FY 2014 numbers are average monthly Recipient Months (annualized) These changes are now assumed to be in Medicaid caseload. As such, distribution of “type” of addition to the caseload is estimated for the step-ups due to MAGI changes, 12-month recertification and newly enrolled clients. Underlying caseload trends are assumed as a basis for the estimates.

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Policy Impacts of ACA: Costs and Savings

Policies Impacting Costs Policies Impacting Savings ACA-Related Caseload Additions to Medicaid* Balancing Incentives Program

Caseload increases by more than 400,000 average monthly recipient months by fiscal year 2015 Enhanced federal matching assistance percentage for community- based Long-Term Services and Supports through September 2015

Primary Care Physician Rate Increases Community First Choice

Reimbursement for Primary Care Physicians at parity with Medicare, with states held harmless for rates in effect as of July

• 2009. Effective January 2013 - December 2014

Enhanced federal matching assistance percentage for clients who meet CFC eligibility criteria

Health Insurance Issuers Tax Super-Enhanced FMAP

Annual excise tax based on the total capitation of certain managed care plans 23 point increase to the enhanced federal matching percentage, beginning October 2015 through September 2019

Community First Choice State Employees' Insurance Match

Costs for adding habilitation services as a Stae Plan service, which enabled Medicaid eligibles who were not enrolled in an IDD waiver to receive this service Moved State Employees' children to the Children's Health Insurance Program at federal match

Balancing Incentive Program

Invested General Revenue realized from enhanced match by spending funds on infrastructure initiatives which increased or expanded access to non-institutional LTSS.

*Caseload increases include:

• - Foster Care to 26
• -12 Month Recertification
• - Currently Eligible not Enrolled
• - Hospital Presumptive Eligibility

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Key HHS System Cost Containment Initiatives Fiscal Years 2018-19 Estimated Savings FY 18-19

General Revenue All Funds Adjust the Medicaid managed care risk margin $45.9 $117.9 Modify the profit sharing percentages defined for the established Medicaid managed care experience rebate $14.0 $36.0 Reflect anesthesia services rate reductions initiated in FY 2017 $17.5* $40.1 Reflect acute care imaging rate reductions initiated in FY 2017 $19.5* $44.6 Reduce habilitation service rates in Texas Home Living and Home and Community Services $24.2* $64.1 Reduce printing and distribution of Medicaid ID cards $1.5 $3.0 Managed care organizations Allowed to Control the formulary, preferred drug list, and prior authorization requirements $35.6 $85.3 Total (includes initiatives already in base*) $158.2 $391.0

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Cost Containment Preferred Drug List (PDL)

 HHSC’s Vendor Drug Program currently retains control of the

prescription drug formulary, PDL, and prior authorization (PA) process requirements for the Medicaid programs

 Managed care organizations (MCOs) participating in the

Medicaid managed care programs must follow the protocols developed by HHSC

 This initiative would allow the MCOs to develop their own

protocols and control the drug formulary, PDL and PA requirements

FY 2018 FY 2019

General Revenue All Funds General Revenue All Funds $0 $0 $35.6 million $85.3 million

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Formulary, PDL and Prior Authorization Carve-in to Medicaid MCOs



This initiative results in a savings to HHSC of $35.6 million in General Revenue, and $85.3 million in All Funds in fiscal year 2019. Because HHSC does not receive premium tax revenue, this savings does not consider the cost impact of premium tax revenue to the state.



This initiative results in a savings to the state of $19.2 million General Revenue in fiscal year

• 2019. Premium tax revenue to the state will decrease under this initiative.



This estimate includes the impact of both the reduction in MCO premiums and the reduction in rebate revenue to HHSC which partially finances the drug costs.

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Optional Benefits and Services

In addition to the mandatory Medicaid services the federal government requires of states, Texas provides a number of

• ptional benefits and services

 Considerations:

 Optional benefits and services that lead to cost savings  Optional benefits and services where amount, duration, and scope could be modified  Optional benefits and services that can be eliminated