Section 1115 of the Social Security Act gives the Secretary of the U.S. Department of Health and Human Services authority to approve experimental, pilot, or demonstration projects that promote the objectives of Medicaid and the Children’s Health Insurance Program (CHIP). Both Michigan and Indiana opted to use a Section 1115 demonstration waiver to implement their respective programs. While both programs were implemented to provide coverage to parents and childless adults with incomes up to 133% of the federal poverty level (FPL) under a Section 1115 waiver, the programs were implemented using different characteristics. Milliman consultants Christopher Pettit and Rob Damler provide perspective in this article.
Milliman today announced new research into the administrative costs associated with Medicaid managed care plans. These plans have become increasingly popular, which is due to the Medicaid expansion provisions of the Patient Protection and Affordable Care Act (ACA) and the continued growth of the managed care delivery system within Medicaid. This information is especially valuable now, with the release of the proposed 2016 Centers for Medicare and Medicaid Services (CMS) capitation rate-setting guidance and the CMS proposed rule for Medicaid managed care. These CMS regulations require greater documentation of Medicaid managed care administrative costs, and may be useful as plans look to establish benchmarks.
We are excited about the addition of the administrative cost report to the annual financial analysis of Medicaid risk-based managed care reporting. This is an area of intense focus for the industry as we look to meet increased expectations of transparency in capitation rate-setting and face regulatory reporting of medical loss ratios.
Among other findings, the analysis demonstrates that Medicaid managed care administrative costs are primarily driven by expenditures for human capital and non-income-based taxes and fees.
The administrative cost report complements Milliman’s annual analysis of Medicaid managed care financial results, which is now in its seventh year. The administrative cost report will be updated annually.
To see the administrative cost report, click here. To view the annual financial analysis, click here.
Approximately one in 68 children has been identified with autism spectrum disorder (ASD). In July 2014, the Centers for Medicare and Medicaid Services (CMS) issued a letter to state Medicaid directors advising that treatment for ASD should be considered covered under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit. Historically, treatment of ASD has been confined to Medicaid waivers. The main emphasis of CMS’s guidance encourages each individual state to submit a state plan amendment, detailing how it will provide ASD treatment services. From a fiscal and rate-setting perspective, there are numerous challenges with the CMS guidance on ASD treatment. Milliman’s Matthew DeLillo, Paul Houchens, and Jeremy Cunningham provide some considerations for states developing an autism spectrum disorder treatment delivery system in this Medicaid briefing paper.
In his recent Wall Street Journal editorial (subscription required), Indiana Gov. Mike Pence cited Milliman studies pertaining to the Healthy Indiana Plan (HIP). HIP is the state’s Medicaid expansion program designed to cover individuals who are uninsured with incomes up to 200% of the federal poverty level (FPL). Here is an excerpt from Gov. Pence’s editorial:
The Healthy Indiana Plan (HIP) now provides health-savings accounts, or HSAs, to nearly 40,000 people and empowers them as health-care consumers. According to a Milliman analysis of HIP and traditional Medicaid claims, 7% fewer HIP members used the emergency room in 2012 compared to traditional Medicaid enrollees.
Another Milliman study showed that 60% of HIP enrollees in 2012 obtained preventive-care services such as annual physicals and flu shots—a rate similar to that of the general commercial marketplace. HIP enrollees choose generic drugs at a much higher rate than people covered by other private insurance plans.
When HIP was first implemented, Milliman’s Rob Damler analyzed patterns of care and pent-up demand in the newly enrolled population; for more on this analysis, reference this 2009 paper. For more Milliman perspective on the Healthy Indiana Plan, click here.
Alternative Benefit Plan (ABP) regulations have created the ability for states to offer benefit plans tailored to the needs of a particular population, such as the Medicaid expansion population. These regulations require exemption for vulnerable populations, including one new exempt population: the “medically frail.” This population includes foster care children and those who meet Social Security disability criteria, but also includes anyone with a serious and complex medical condition or a disabling mental or chronic substance use disorder.
States are seeking a methodology to help them identify the medically frail, one that would be both accurate and administratively efficient. This paper describes a methodology that has been used successfully for identifying a similar population in the Healthy Indiana Plan, a Medicaid expansion program initially authorized in 2008 under 1115 waiver authority.
Expanding state Medicaid eligibility under the Patient Protection and Affordable Care Act (ACA) will introduce new populations of parents and childless adults to state Medicaid roles. These populations will have a significant impact on the demographic profiles of states that are expanding their Medicaid programs.
In his article “Medicaid expansion under the Affordable Care Act,” Rob Damler highlights various issues that states will encounter related to the enrollment of these new populations in Medicaid. Here is an excerpt from the article:
• Eligibility Changes: Under the ACA, many of the current Medicaid-eligible populations will have different eligibility rules regarding income and assets. Income will be converted to a Modified Adjusted Gross Income (MAGI) standard for all states. Medicaid eligibility for the children, parent and childless adult populations will no longer have an asset test. In addition, the Medicaid program will receive referrals from the health insurance exchanges. All of these eligibility changes may create enrollment delays as individuals are navigating the new eligibility rules.
• Presumptive Eligibility: Many current Medicaid programs provide presumptive eligibility for pregnant women. Presumptive eligibility provides immediate coverage based on the individual meeting certain criteria. Under the ACA, presumptive eligibility is expanded beyond the pregnant women population. Hospitals may provide presumptive eligibility for individuals who meet certain eligibility criteria. The expansion of the presumptive eligibility provision may increase the average health care costs for the Medicaid populations since individuals will be receiving eligibility at the point of care.
• Pent-up Demand for Services: Individuals who are currently uninsured may have pent-up demand for health care services. In 2008, the state of Indiana implemented a Medicaid expansion program: the Healthy Indiana Plan. The Healthy Indiana Plan provided expanded Medicaid eligibility for parents and childless adults through an 1115 waiver. During the first year of the program, it was observed that individuals incurred overall health care costs 20 percent greater during the first three months of enrollment in the program, with hospital inpatient and outpatient services 20 to 40 percent higher. Pharmacy expenditures tended not to be greater during the earlier months of enrollment; however, the pharmacy expenditures increased after six months of enrollment.
• Access to Providers: On a national basis, the average physician reimbursement rate under the Medicaid program is approximately 60 percent of the Medicare reimbursement rate. Physician reimbursement varies significantly on a state-by-state basis. The ACA provides for increased physician reimbursement to qualifying primary care physicians for evaluation and management services during calendar years 2013 and 2014. While this provides for short-term enhanced funding to primary care physicians, the long-term funding issue remains for physicians under Medicaid. The newly eligible population may encounter issues related to physician access, especially as the newly eligible population ramps up into the system and more people seek care.
To read Damler’s report on the implementation of Indiana’s Medicaid expansion program, click here.
This article was originally published in Health Watch, October 2013 by the Society of Actuaries.