State Medicaid programs have recently been considering
implementing a requirement that a single preferred drug list (PDL) be used
across their fee-for-service (FFS) and managed care programs. States have
considered a single PDL for multiple reasons, such as providing smooth
continuity of care transitions for members who move between managed care plans,
reducing confusion and potential administrative complexities for physicians who
currently have Medicaid patients subject to different PDLs, and the potential
to maximize federal and supplemental drug rebate dollars paid to the state.
Constructing a single PDL involves designating which drugs
are preferred and non-preferred in each drug therapeutic class. Along with
constructing a single PDL, a state will need to make policy and operational
decisions so that a single PDL is administered consistently across its FFS and
managed care programs. Policy considerations may include transitions, grandfathering,
utilization management, and excluded therapeutic classes.
States will also need to estimate how much in federal and supplemental drug rebates they will receive under a single PDL relative to current conditions as well as how managed care capitation rates paid to health plans will need to change due to the single PDL.
In this paper, Milliman consultants Jill Herbold and Melanie Kuester discuss these decision points and considerations for states evaluating a single PDL requirement.
In September 2019, the State of Tennessee, Division of
Tenncare, released a draft version of Amendment 42 to its Section 1115
Demonstration Waiver, “Tenncare II Demonstration.” With the exception of
pharmacy and certain waiver services, the vast majority of Tennessee’s Medicaid
program services are funded under this Section 1115 Demonstration Waiver
authority. Amendment 42 makes Tennessee the first state to take concrete steps
to engage the Centers for Medicare and Medicaid Services in a proposed block
grant funding methodology.
A block grant funding arrangement is attractive from a
federal financing perspective because it establishes an authorized level of
spending, creating an incentive for states to better control costs. States
could also find this structure attractive because it includes a savings
component if efficient management of the program produces costs below the
authorized spending levels.
This paper by Milliman’s Jeremy Cunningham and Mat DeLillo discusses the risks and considerations of changing Medicaid’s funding formula to a general block grant structure.
The latest Medicaid managed care financial results report by Milliman consultants Jeremy Palmer, Chris Pettit, and Ian McCulla summarizes the calendar year 2018 experience for selected metrics of organizations reporting Medicaid experience under the Title XIX Medicaid line of business on the National Association of Insurance Commissioners annual statement. The primary purpose of this report is to provide reference and benchmarking information for certain key financial metrics used in the day-to-day analysis of Medicaid managed care organization financial performance.
For more perspective from the authors, watch the webinar entitled “Medicaid Managed Care Financials: Evaluating Recent MCO Performance and Trends Using Annual Statements.”
There are a variety of reasons why alternative payment models (APMs) can be more difficult to implement and manage in Medicaid, compared to the commercial or Medicare markets. Understanding these nuances and building strategies to address them is critical to the success of Medicaid APMs. An upcoming Milliman webinar hosted by Anders Larson, Rebecca Johnson, and Zach Hunt will focus on the challenges Medicaid payers face when attempting to establish APMs with providers. The webinar is based on their coauthored paper “Seven key challenges for Medicaid states considering alternative payment models.”
Title: Seven key challenges for Medicaid states considering alternative payment models
Date: Wednesday, February 27, 2019
Time: 2:00 p.m. EST
To register, click here.
While the use of alternative payment models (APMs) in the Medicare and commercial markets is prevalent, the use of APMs in the Medicaid market is low. There are several reasons why these models are more difficult to implement in Medicaid. Understanding the nuances of Medicaid APMs and building strategies to address them is critical to their success.
In this paper, Milliman’s Anders Larson, Rebecca Johnson, and Zach Hunt discuss seven key challenges that Medicaid payers face when trying to establish APMs with providers. The paper specifically focuses on shared savings/risk contracts based on total cost of care (TCOC) models. The following excerpt provides some perspective.
One challenge with any total cost of care model is that providers inherently take on some level of insurance risk due to random claims fluctuation that can influence results. This is true in the Medicare ACO models, which is why CMS uses a minimum savings rate (MSR) that varies by population size to limit its payments for “false positives.” This is likely to be more pronounced in Medicaid because of challenges with attribution, beneficiaries moving in and out of Medicaid, and a higher prevalence of zero-dollar claimants.
Managing Medicaid in Puerto Rico after Hurricane Maria was part of Jose Carlo’s job, but it was also personal for the Milliman consultant because he was born and raised on the island. This episode of Critical Point focuses on how Jose and his colleagues worked with the Puerto Rico Health Insurance Administration in the wake of the devastating hurricanes last year.
To listen to this episode of Critical Point, click here.