A High Performance Medicaid System

for Disabled Beneficiaries

Medicaid Reform II – A ‘Do-Over’

Bob Sharpe, CEOFlorida Council

February 28, 2008

2

Medicaid Reform Goals - 2005

Ensure consumer education and choice Provide access to medically necessary services Coordinate preventative, acute, and long-term care Reduce unnecessary service utilization Improve health care processes Achieve better health outcomes Improve enrollee satisfaction Enhance the predictability of costs and expenditures Evaluate the feasibility of the statewide

implementation of capitated managed care networks as a replacement for the Medicaid fee-for-service and MediPass systems

REDUCE MEDICAID EXPENDITURES

(IT’S THE BUDGET, STUPID)

3

State Estimates of Total Medicaid Spending, With and Without Waiver

$8

$9

$10

$11

$12

$13

$14

2006-07 2007-08 2008-09 2009-10 2010-11

Bil

lio

ns

Total 5-year reduction in spending: $4.58 billion

Source: Georgetown Center for Children and Families analysis of Tables 4 and 5 from Florida Medicaid Reform Section 1115 Waiver Application, August 31, 2005.

With Waiver

Without Waiver

4

Estimates of Annual Medicaid Cost per SSI Beneficiary, With & Without

Waiver

$11,328

$12,324

$15,924

$14,604

$13,416

$14,796

$13,800

$12,876

$12,024

$11,232

2006-07 2007-08 2008-09 2009-10 2010-11

Without Waiver With Waiver

Source: Georgetown Center for Children and Families analysis of Tables 4 and 5 from Florida Medicaid Reform Section 1115 Waiver Application, August 31, 2005.

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The Difference a Few Years Makes

“The single biggest change and the boldest reform that any state has embarked on for the Medicaid program.”

Governor Jeb Bush, 2005

“Prior to further expansion, develop benchmarks for resolution of issues encountered to date in the areas of plan and systems readiness, timely claims processing, implementation of the consolidated complaint tracking system, and receipt and evaluation of valid encounter data…. Further expansion of Medicaid Reform should

be delayed until such time as those improvement benchmarks are met and encounter data sufficient to

conduct at least preliminary assessments of cost effectiveness is available.”

AHCA Inspector General, 2007

6

Medicaid IG Medicaid Reform Report

Implemented too quickly Inadequate agency staffing to handle reform Lack of performance, quality and cost data Lack of encounter data Internal communication/information sharing hampered

by lack of access to key documents Deficient evaluative processes with regard to timely

access to care and quality indicators Pre-reform issues, such as limited access to

specialists, continue to be a concern Accuracy of information available to choice counselors

compromised by high error rates in provider network reports

Preferred drug lists and specific drug coverages not accessible on line or through customer service for most plans

The SPMI population and those with complex medical conditions face unique and serious challenges in adapting to managed care

Comments on Medicaid Reform“Florida Medicaid Reform Under Siege” - National Center for Policy

Analysis (2/08)State Admits Goofs But Seeks Dismissal of Medicaid Lawsuit – Florida

Health News (2/08)“Florida’s Medicaid Reform Has Flaws” – Florida Times-Union (2/08)“Lawmakers Hear Earful on Health Care” – Naples Daily News (2/08)“Medicaid Suit Gains Status as a Class Action” – Florida Times-Union

(2/08)“Medicaid Project – A Flawed Experiment” – Miami Herald (1/08)“Florida Medicaid Beneficiaries Sue Health Care Agency Over Misleading

Materials Promoting Pilot Program” – Medical News Today (1/08)Lawsuit Challenges Florida’s Medicaid Reform Plan – St. Augustine Record

(1/08)“Our View: No Silver Bullet” – Florida Today (1/08)“State Not Ready to Begin Medicaid Reform” - St. Petersburg Times

(12/07)“Medicaid Pilot Projects Get Bad Internal Review” – St. Petersburg Times

(10/07)

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Comments on Medicaid ReformAccess to Care Made Difficult for Children – South Florida Sun-

Sentinel (8/07)

“Report Slams Medicaid Pilot Program” – St. Petersburg Times (7/07)

“Uncertain Access to Needed Drugs: Florida’s Medicaid Reform Creates Challenges for Patients – Georgetown University (7/07)

Medicaid Reform Pilot Program Not Working as Expected – South Florida Business Journal (6/07)

“Medicaid Reform Effort Hurting Those It’s Supposed to Help – Ocala Star-Banner 95/07)

“Governor Crist: Reform Medicaid Reform – AIDS Healthcare Foundation (6/07)

Critics of Florida’s Medicaid Reform Plan Say It’s Tough on Patients: State Says Mounting Complaints are Being Resolved – South Florida Sun-Sentinel (2/07)

Florida Medicaid Reform Pilot Poses Challenge to MH Agencies: Information Hard to Come By to Guide Client Choice – Mental Health Weekly (9/06)

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The Trajectory of Medicaid ReformLevel of

Su

pp

ort

High

Low 2005 2008

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Medicaid Reform vs. Managed Care

Managed Care = Medicaid Reform

Medicaid Reform = Accelerated Managed Care Implementation

Everything Else Was/Is Incidental

Medicaid Reform in 5 Counties

HMOs/Managed Care in 35 Counties

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The Initial Discountingof the Medicaid Benefit

Pre-WaiverSpendin

gWaiver Per Capita Cap

$

12

The Further Discountingof the Medicaid Benefit

FFS

9% MC Discount

HMO G & A

UM Discount

Mental Health Provider Revenues Down as Much as 50%

13

The Discounting CalculationAn Example

$100 FFS PMPMx .91% AHCA HMO Contractual Discount $91x .70-.80 Avg. Plan Admin./Profit

Discount$63-$72x .10-.20 UM Effect$57-$65 - $51-$58

Direct Care Spending Reducedby as Much as One-Half

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The Essential Questions1. What’s the issue - Medicaid reform or managed care?2. What effect is managed care having on consumers? What about

providers?3. Is the basic issue control of service use and costs vs. needs of

beneficiaries?4. Do consumer benefits change under reform/managed care? How do

health plans pay providers?5. What do you make of all the health plans participating in reform

counties? Do they offer fundamental differences in plan choice?6. What are the effects of risk corridors and risk adjustment of

capitation rates? When will it be fully implemented? Does AHCA have the ability to prepare them?

7. What additional changes will HMOs make/are they seeking?8. Are plans competent to serve disabled individuals?9. What are the short-term and long-term implications of

reform/managed care?10. How should the disability community respond?11. Is this a consumer or provider story? Both?12. What redesign options are there to protect consumers and

providers?

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‘A Poor Prognosis’ – Ten Disturbing Symptoms of Florida Medicaid

Reform/Managed Care

1. HMO Dominance/Control; Managed Care = HMO2. Benefit Limits3. Care/Administrative Hassles4. Provider Revenues/Market Share Loss5. Cost Shifts6. Continuation of/Reversion to Medical

Model/Limits on Use of/Availability of Specialists/Loss of Practitioners

7. The Vision Vacuum8. Silo Thinking9. Freeze on Enhancements/Loss of Federal Funds10. Blinders to Safety Net Providers

Current Issues - Medicaid

Medicaid Reform – Delay or Go Ahead?

Consumer Harm Medicaid Benefit

Design – Medical Model Loss of Certain

Services, Coverages, and Programs

Program Enhancement Freeze – Loss of Federal Funds

Cost Shifts Damage to Safety Net Loss of Infrastructure Loss of Real Plan

Choices

Lack of Specialty Plans for Disabled Individuals

Lack of Evaluations HMO Demands – The

AHCA/HMO Partnership?

Loss of Specialists and Workforce

Isolation of AHCA from Other Agencies

Lack of Encounter Data Federal Cutbacks Reduced Funding for

Mental Health Care and Other Benefits for Disabled Beneficiaries

The Slippery SlopeThe Effects of Medicaid Managed Care

and Medicaid Reform on CMHAs

Maintenance of MH Benefits No

HMO Limits on Benefits Yes

Increase in Hassle Factor Yes

Increased Provider Administrative Costs Yes

Provider Revenue Declines Yes

Increase in DCF/Provider/County Subsidies of Medicaid Beneficiaries

Yes

Complete, Accurate HMO Encounter Data Before 2008-09 or Later

No

HMOs Attempt to Eliminate 80% Medical Loss Ratio

Yes

HMOs Attempt to Restrict Competition/Market Entry of New Types of Plans

Yes

HMOs Seek Substantial Rate Increases Yes

Poorer Access to Care Yes

The Effect of Medicaid Reform on Mentally Ill Individuals and Community Mental Health

Agencies

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Medicaid Budget – How It Is Spent

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Enrollees Expenditures

14.94%

27.47%

18.76%

41.69%

52.11%

19.03%

14.19%

11.81%

Elderly 65+

Blind & Disabled

Children

Adults

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Medicaid – Principal Payer of Publicly Financed CMH Services

Adult CMH 60% Medicaid

Children CMH 80% Medicaid

CMH System Reliant on Medicaid

AHCA Sets the Policies

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Unmet Needs

58% Percentage of statewide unmet need for SPMI adults

82% Percentage of statewide unmet need for SED children

85% Percentage of statewide unmet need for children with SA disorders

93% Percentage of statewide unmet need for adults with SA disorders

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Mental Illness Prevalence Rates/Rankings

1st U.S ranking of mental illness among all disabilities for individuals aged 15-44

26% Number of Americans with a diagnosable mental illness

43% Percentage of Americans with a lifetime incidence of a mental and/or substance use disorder

48th Florida rank in per capita spending on mental health care

37th Florida rank in Medicaid per capita spending for enrolled disabled beneficiaries

47th Florida rank – Medicaid per capita spending for enrolled children

43rd Florida rank in Medicaid per capita spending for enrolled adults

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The Effects of HMO Contracting

HMOs

Providers/Consumers

Communities

$

$

Medicaid Community Mental Health Funds

$

Shareholders

The Medicaid Managed Care EffectErosion of MH Provider Funding

Funding

LevelThe Effect of Discounting and UM

Base $

Ending $

Time

$

$

100% FFS 50% FFS

2005 2007

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The Funding DilemmaOutflow > Inflow

MH/SA SystemNew $ Lost $$$

Medicaid Reform- Managed Care Effects/Lost Medicaid $/Effects of Inflation/Population

Growth/Lost Local $> Than Limited New Investments

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Medicaid Managed Mental Health CareHMO/PSN Issues

Loss of essential services Disruption of continuity

of care Frequent denials of

needed services Lack of plan

understanding of SPMI/SED populations

Failure to meet prompt pay requirements

Multiple prior authorization forms/procedures

Excessive paperwork requirements

Frequent plan audits of providers

Decline in provider productivity

Increased provider administrative costs

Different staff credentialing protocols/requirements

Required service termination dates for severely and persistently mentally ill

Poor plan communications

Sharp drop in beneficiary referrals

Sharp drop in community mental health agency Medicaid revenues

Medicaid Reform II

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The Medicaid Reform Vision• Prevention/Wellness• Disease/Chronic Care Management• Customized Benefit Packages for Different Beneficiary

Populations• Collaborative, Integrated Care• Coordination with other Systems of Care• Reasonable Provider Reimbursement Rates• Real Differences in Plan Choices• High Standard for Plan Accountability• Timely, Accessible Care• Robust Provider Network• Plan Reinvestment in Community• Profit/Administrative Limits – Direct $ to Care• Use of Best Practices/Treatment Protocols• Meaningful Plan Report Cards• Public Transparency• Care Based on Achieving Treatment/Care Outcomes• High Standard for Quality of Care

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A Transformed System Checklist

Nationally Recognized Consumer/Provider

Friendly Innovative Improved Performance and

Outcomes Community-Based 24/7 Accessible System Evidenced Based Practices No Paper Barriers to Care Model IT

Practices/Encounter Data Transparency

(Quality/Price) Regular Evaluations and

Measurement Comprehensive, Modern

Benefit Individual-Centered Values-Driven Reinvestment of Savings

Preventive and Holistic-Based

Increased Choice Disability Competent Plans Improved Quality of Care

and Life Coordination of All Services

That Support Individual Well-Being

Address Health Care Continuum

Precise Targeting of and Special Programs for Individuals with Chronic Disease

Clear, Frequent Communication

Incentives to Drive Program Goals

Engagement and Empowerment of Consumers and Providers

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The Mental Health Benefit Issue

The Florida Medicaid mental health benefit - a medical model of care

Limited use and delineation of the CMS-recognized psychosocial rehabilitation service

Limited funding of consumer supports – supported housing, supported employment, supported education and other community living supports

Limited funding of consumer recovery-based services (clubhouse, drop in centers, peer supports)

Lack of direction to HMOs/MCOs in requiring and promoting rehabilitative/recovery based services

Lack of disease management/health management approach to care for those with psychiatric disabilities

31

Redefining Medical Necessity as Medical/Psychosocial Necessity

“Medical Necessity” not defined in Title XIX or Medicaid regulations.

States have the discretion to define it at the state level and the definition varies from state to state.

Other states have defined “medical necessity” to include psychological aspects of a multi-dimensional disorder.

Medical necessity is a payment concept that should be linked to quality of care and the objectives of recovery and resiliency.

32

The Recovery Difference

Blends Medical and Social Models of Care

Provides Recovery-Based Planning and Treatment

Offers a Broad Service Menu Customized to Meet Individual Needs

Promotes Cost-Effective Care

Provides for a Value Driven Benefit Package

Promotes Product/Service Innovation

Promotes Clinical Excellence Ensures Consumer-Friendly and Consumer-Centered Care

Establishes a Health/Recovery Coaching Approach to Care

Promotes Community Inclusion

Establishes an Outcome Driven Approach to Care

Promotes the Use of Evidenced Based Practices

33

A Different Managed Care Approach‘Medicaid Plus’

• Population Management• Disease/Health Management• Integrated, Collaborative, Holistic Care• Care Coordination• Delivery System Redesign• Electronic Health Records• State of the Art IT/Decision Support Enhancements• Goals for Optimal Health• Health Teams/Coaches• Decision Support Tools• Self-Management Support• Proactive Care Team• Wellness/Prevention• Behavior Change Support Programs• Social Advancement

34

The Medicaid Specialty PSN Advantage

A Managed Care Plan forPeople with Disabilities

Reinvestment of Savings

Disability Competent Plan

Integrated Care

Enhanced Care

Improved Consumer Outcomes

Redirect Resources to Community Care

and Recovery

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Support for a Specialty PSN Alignment with Medicaid Reform Florida-Based Organization Provider-Based Organization Community-Affiliated/Based Plan/Strong Community Ties Protection of Community Safety Net Use of Expert System of Care Improved Patterns of Care Long-Standing Consumer-Provider Bond Success of Medicare SNP Launch No Cost Shifts Reinvestment of Savings Improved Coordination of Care Across Systems of Care Elevate Priority of High-Risk Beneficiary Care Use of an Integrated, Collaborative Care Model Long-standing Relationships with Counties/State

36

The Special Needs PlanA Commitment to…

Integration, Coordination, Collaboration

Improved Management of Mental Illness and Co-Morbid Conditions

Disability Competent Plan

Intensive Care Management/Health Management

Early Intervention A Comprehensive and

Individualized Benefit Package

Improved Access to Community-Based Services and Supports

Enhanced Quality Management and Accountability

Best Practices Improved Support for Families/Caregivers

Reinvestment of Savings A New Consumer- and

Provider-Friendly Managed Care Model

Acting as a Primary Link to the Disability Community

Improved Consumer Outcomes

Protection of Community Safety Net

One-Stop Service Model System of Care Service Innovations A Community Affiliated

Plan

37

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Thinking Outside the Box

Medicaid Reform II