Better Health, Better Care, and Cost Savings Through Improvement

Greg Moodygreg.moody@governor.ohio.gov

The Center for Community SolutionsMarch 24, 2011

Medicaid is Ohio’s Largest Health Payer

• Provides health coverage for low-income children, parents, seniors, and people with disabilities

• Covers 2.2 million Ohioans (1 in 5) including 2 in 5 births1

• Spends $18+ billion annually all agencies, all funds (SFY 2011) 1

• Accounts for 4.0% of Ohio’s total economy and is growing2

• Funds are federal (63.69%) and state (36.31%)3

SOURCES: (1) Ohio Department of Job and Family Services, (2) SFY 2011 estimate based on $18.0 billion in Medicaid spending per ODJFS and $498 billion Ohio gross domestic product per the State of Ohio Office of Budget and Management, and (3) Federal Register Vol. 76 No. 22 page 5811.

Source: Ohio Colleges of Medicine Government Resource Center, “Quantifying the Impact of the Recent Recession on Ohioans: preliminary findings from the 2010 Ohio Family Health Survey” (February 16, 2011)

Ohioans Covered by Employer-Sponsored Health Insurance, Medicaid, or Uninsured

2009 2010 2011-10%

0%

10%

20%

30%

40%

50%

60%

70%

66.3% 63.9%57.4%

15.0% 17.0% 18.8%

8.5% 9.8% 11.4%

Employer-Sponsored Insurance

MedicaidUninsured

0%

100%

200%

300%

400%

500%

Children PregnantWomen

Parents ChildlessAdults

DisabledWorkers

Disabled Elderly

Federal Health Care Reform:Government Coverage Expansions

Medicaid Expansion

Medicaid Expansion

Fede

ral P

over

ty Le

vel

Medicaid Expansion

Health Benefit Exchange

Medicaid

Private Insurance

Source: X

138%

400%$89,400 for a family of 4

$30,843 for a family of 4

Ohio’s Health System Performance

Health Outcomes – 42nd overall1

– 42nd in preventing infant mortality (only 8 states have higher mortality)– 37th in preventing childhood obesity– 44th in breast cancer deaths and 38th in colorectal cancer deaths

Prevention, Primary Care, and Care Coordination1

– 37th in preventing avoidable deaths before age 75– 44th in avoiding Medicare hospital admissions for preventable conditions– 40th in avoiding Medicare hospital readmissions

Affordability of Health Services2

– 37th most affordable (Ohio spends more per person than all but 13 states)– 38th most affordable for hospital care and 45th for nursing homes– 44th most affordable Medicaid for seniors

Sources: (1) Commonwealth Fund 2009 State Scorecard on Health System Performance, (2) Kaiser Family Foundation State Health Facts (updated March 2011)

A few high-cost cases account for most Medicaid spending

Enrollment Spending0%

20%

40%

60%

80%

100%

96%

49%

1%

23%

28%4% of the Medicaid

population consumes 51% of total spending

1% of the Medicaid population consumes 23% of total Medicaid spending

3%

Source: Ohio Department of Job and Family Services; SFY 2010 for all Medicaid populations and all medical (not administrative) costs

Fragmentation vs. Coordination

Multiple separate providers

Provider-centered care Reimbursement rewards volume

Lack of comparison data

Outdated information technology No accountability

Institutional bias Separate government systems

Complicated categorical eligibility

Rapid cost growth

Accountable medical home

Patient-centered care Reimbursement rewards value

Price and quality transparency

Electronic information exchange Performance measures

Continuum of care Medicare/Medicaid/Exchanges

Streamlined income eligibility

Sustainable growth over time

SOURCE: Adapted from Melanie Bella, State Innovative Programs for Dual Eligibles, NASMD (November 2009)

Source: The New Yorker (Jan 24, 2011).

“The critical flaw in our health care system … is that it was never designed for the kind of patients who incur the highest costs. Medicine’s primary mechanism of service is the doctor visit and the emergency room visit. It’s like arriving at a major construction project with nothing but a screwdriver and a crane.”

Source: American Hospital Association Annual Survey (March 2010) and population data from Annual Population Estimates, US Census Bureau: http://www.census.gov/popest/states/NST-ann-est.html.

Medical Hot Spot:Emergency Department Utilization: Ohio vs. US

1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

100

200

300

400

500

600

365 366 372 382 382 383 387 396 401 404436 452 450 449 468 472 488 509 516 523United States Ohio

Hospital Emergency Room Visits per 1,000 Population

29%

Source: Ohio Department of Job and Family Services for SFY 2010. Note that medical costs include those incurred by MCPs and paid by FFS, excluding institutionalized consumers and their costs. Consumers may have been in both FFS and MC delivery systems within SFY 2010. This analysis includes consumers costs in both systems.

Medicaid Hot Spot:Medicaid Enrollees Who Get Care Primarily from Hospitals*

Non-Institutionalized Medicaid Population

Enrollment SpendingAverage

CostNumber % Amount %

Children 29,552 1.3% $510 million 5% $17,300

Adults 12,530 0.5% $841 million 8% $67,100

Total 42,082 1.8% $1.35 billion 13% $32,100

* Indicating a lack of primary care and/or care coordination

Medicaid Hot Spot:Hospital Admissions for People with Severe Mental Illness

Avoidable hospitalizations per 1000 persons for ambulatory care sensitive conditions (avoidable with proper treatment)

Source: Ohio Colleges of Medicine Government Resource Center and Health Management Associates, Ohio Medicaid Claims Analysis (February 2011)

Diabetes COPD Congestive Heart Failure

Asthma0

1

2

3

4

5

6

7

8

3.53 3.693.24

2.33

7.01 6.75

4.184.86

Non-SMISevere Mental Illness (SMI)

Source: Office of Health Transformation Consolidated Medicaid Budget, All Funds, All Agencies; actual SFY 2008-2010 and estimated SFY 2011-2013; “All Other” includes Federal Funds and Non-General Revenue Funds (non-GRF)

Ohio Medicaid Spending Trend9 percent average annual growth, 2008-2011

2008 2009 2010 2011 2012 2013$0

$5

$10

$15

$20

$25

$4.4 $4.0$3.0 $3.8

$5.3 $5.7

$9.1$11.2 $12.9

$14.3$14.0

$15.1

State General Revenue Fund All Other

$15.2+12%

$13.5

$15.8+4%

$18.0+14%

$19.3+7%

$20.8+8%

Billion

+ 42.8%

The current Ohio HHS Medicaid organization

Governor

Medicaid Single State Agency

HealthAgingADASMHDD

Medicaid as a % of Agency Budget

JFS Medicaid

73%Dev Disabilities

91%Mental Health

61%Alcohol and Drug

28%Aging

83%Health

3%

Agency Medicaid as a % of Total Ohio Medicaid

84% ($13.3 billion)

8% ($1.3 billion)

4% ($590 million)

0.3% ($63 million)

3% ($534 million)

0.1% ($17 million)

56 CombinedCounty Boards

130 County Offices

88 County Boards

12 Area Agencies on

Aging

JFS

Source: Legislative Service Commission, “Total Medicaid Spending by Agency” (State Fiscal Year 2010).

130 Local Health

Departments

John R. Kasich,

Governor

Dr. Ted Wymyslo

(Health)

Bonnie Kantor (Aging)

OrmanHall

(ODADAS)

Tracy Plouck (ODMH)

John Martin (DODD)

Leadership Team

• Elise Spriggs, Government Affairs• Eric Poklar, Communications• Monica Juenger, Stakeholder Relations

Policy Teams

Consultant Team

“OHT shall contract with state and/or private agencies for services in order to facilitate the implementation and operation of the OHT’s responsibilities.”

Stakeholder Partners

Prioritize stakeholder communication

Michael Colbert

(JFS)

John McCarthy (Medicaid)

Greg Moody, Director

“All Cabinet Agencies, Boards and Commissions shall comply with requests or directives issued by OHT, subject to supervision of their respective directors.”

Source: Ohio Governor John R. Kasich, Executive Order 2011-02K (January 13, 2011)

Plan for the long-term efficient administration of the Ohio Medicaid Program and act to improve overall health system performance. In the next six months:

1. Advance the Administration’s Medicaid modernization and cost-containment priorities in the operating budget;

2. Initiate and guide insurance market exchange planning;

3. Engage private sector partners to set clear expectations for overall health system performance; and

4. Recommend a permanent Ohio health and human services organizational structure and oversee transition.

Source: Ohio Governor John R. Kasich, Executive Order 2011-02K (January 13, 2011)

Executive Order

The Vision for Better Care Coordination• Create a person-centered care management approach – not a

provider, program, or payer approach• Services are integrated for all physical, behavioral, long-term

care, and social needs• Services are provided in the setting of choice• Easy to navigate for consumers and providers• Transition seamlessly among settings as needs change• Link payment to person-centered performance outcomes

Source: Ohio Department of Job and Family Services. Institutionalized consumers excluded. Based on SFY 2010 total medical cost either by ODJFS or Medicaid managed care plans. Top managed conditions = Diabetes, CAD, CHF, Hypertension, COPD, Asthma, Obesity, Migraine, HIV, BH, & Sub. Abuse.

Medicaid Hot Spot:Enrollment Spending by Top Managed Chronic Conditions

Enrollment (2

.3 milli

on)

Spending (

$10.3 billion)

0%

20%

40%

60%

80%

100%

66%30%

23%

31%

11%39%

Consumers with TWO OR MORE of the top managed

chronic conditions

Consumers with ONE of the top

managed chronic conditions

Consumers without one of the

top managed chronic conditions

Ohio Health Transformation Priorities• Improve Care Coordination • Integrate Behavioral and Physical Health• Rebalance Long-Term Care• Modernize Reimbursement

www.healthtransformation.ohio.gov

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

5,000

10,000

15,000

20,000

25,000

30,000

2,637 2,683 2,8074,495

5,550 5,601 5,663

2,143 2,106 2,064 2,023 2,012 2,004 1,992

Waivers (Home and Community-based Care)DC (Developmental Center)

Num

ber of Individuals

GRF = $335M

A Case Study in Transformation:Ohio Department of Developmental Disabilities

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

5,000

10,000

15,000

20,000

25,000

30,000

2,637 2,683 2,8074,495

5,550 5,601 5,6637,081

9,14510,744

12,902

15,76316,35918,128

20,753

23,64724,528

2,143 2,106 2,064 2,023 2,012 2,004 1,992 1,942 1,854 1,778 1,663 1,605 1,603 1,517 1,423 1,335 1,251

Waivers (Home and Community-based Care)DC (Developmental Center)

Num

ber of Individuals

GRF = $335M

GRF = $331M

A Case Study in Transformation:Ohio Department of Developmental Disabilities

Source: Ohio Department of Job and Family Services. Includes claims incurred from July 2009 through June 2010 and paid through October 2010; cost differences between institutional and waiver/community alternatives do not necessarily represent program savings because population groups being compared may differ in health care needs.

Ohio Medicaid Spending per Member per Month by Setting

Managed CareFee-for-Service

Other in Fee-for-ServiceOther in Managed Care

PASSPORTAssisted Living

ChoicesTransitions Aging

Home CareNursing Facility

Level OneTransitions

Individual OptionsPrivate Intermediate Care Facility

State Developmental Center

0 2000 4000 6000 8000 10000 12000 14000

Institutional Services Waiver Services All Other Medicaid

People with developmental disabilities

People with other disabilities or over age 65

Other children and parents

$1,695$1,356

$530

$298$254

$4,463

$1,869$2,058

$4,067$4,584

$8,473$5,568

$4,819$1,418

$12,937

Source: Ohio Department of Job and Family Services; based on average monthly recipients for SFYs 2006-2010.

Ohio Medicaid Residents of Institutions Compared to Recipients of Home and Community Based Waivers

2006 2007 2008 2009 201040,000

45,000

50,000

55,000

60,000

65,000

70,000

60,12858,609 57,597 56,891 56,503

46,965

52,745

56,011

59,979

65,907

Home and Community Based (Aging, JFS, and DD waiver recipients)

Facility-Based(NF, ICF/DD, Developmental Center residents)

Source: 2004 Health Expenditure Data, Health Expenditures by State of Residence, Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, released September 2007; available at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/res-us.pdf

Medical Hot Spot:Per Capita Health Spending: Ohio vs. US

Measurement US Ohio Percentage Difference

Affordability Rank (Out of 50 States)

Total Health Spending $5,283 $5,725 + 8% 37

Hospital Care $1,931 $2,166 + 12% 38

Physician and Clinical Services $1,341 $1,337 - 0.3% 27

Nursing Home Care $392 $596 + 52% 45

Home Health Care $145 $133 - 8.3% 35

Source: 2007 The Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on data from Medicaid Statistical Information System (MSIS) and CMS-64 reports from the Centers for Medicare and Medicaid Services (CMS), 2010.

Medicaid Hot Spot:Per Enrollee Medicaid Spending: Ohio vs. US

Measurement US Ohio Percentage Difference

Affordability Rank (Out of 50 States)

All Enrollees $5,163 $5,781 + 12.0% 36

Children $2,135 $1,672 - 21.7% 7

Adults $2,541 $2,844 + 13.5% 18

Elderly $12,499 $18,087 + 44.7% 44

Disabled $14,481 $15,674 + 8.2% 33

Ross7.8%

Athens6.6%

Miami9.6% Belmont

10.0%

Preble9.5%

Fulton9.2%

Hancock9.9%

Monroe8.5%

Shelby8.0%

Warren9.8%

Holmes8.0%

Morgan7.2%

Madison7.0%

Fayette9.2%

Pickaway7.2%

Geauga6.6%

Harrison9.2%

Scioto12.3%

Union11.9%

Pike12.0%

Meigs11.7%

Portage10.8%

Fairfield12.3%

Highland10.5%

Muskingum10.4%

Summit10.4%

Washington10.5%

Ashland11.9%

Jackson10.5%

Clermont11.7%

Delaware11.2%

Columbiana12.0%

Montgomery11.5%

Lake11.8%

Licking15.7%

Wood14.6%

Stark14.5%

Adams13.6%

Huron14.6%

Lorain13.6%

Gallia13.7%

Butler15.1%

Trumbull14.5%

Logan12.5%

Seneca14.4%

Franklin12.6%

Mercer15.9%

Allen15.6%

Carroll13.8%

Marion13.0%

Medina16.1%

Richland13.5%

Greene13.4%

Lucas15.4%

Hocking13.3%

Lawrence13.5%

Hamilton12.7%

Wyandot14.5%

Cuyahoga14.1%

Crawford14.7%

Mahoning14.8%

Sandusky14.0%

Darke18.5%

Knox21.2%

Wayne16.6%

Brown20.0%

Hardin21.3%

Ashtabula21.0%

Perry17.8%

Noble22.3%

Clark16.5%

Putnam21.2%

Clinton19.4%

Morrow21.1%

Guernsey20.4%

Coshocton17.2%

Tuscarawas16.3%

Defiance19.4%

Auglaize18.6%

Van Wert17.8%

Erie16.4%

Jefferson17.1%

Henry23.2%

Vinton25.4%

Williams25.6%

Paulding29.4%

Champaign31.8%

Ottawa35.1%

Nursing Facility SurplusPercentage of total bed days vacant

6.6% - 10.4%

10.5% - 12.5%

12.6% - 16.3%

16.4% - 23.0%

23.1% - 35.1%

Unused Nursing Home CapacityIn 70 counties more than 10% of beds are empty

Rebalance Long Term CareEnable seniors and people with disabilities to live with dignity in the settings they prefer

RECOMMENDATIONS:• Create a Single Point of Care Coordination• Consolidate and Streamline Waiver Programs• Reward Person-Centered Outcomes in Nursing Homes• Expect Greater Efficiency from NF and Waiver Providers• Decrease payments to “hold” empty beds• Reduce the nursing home franchise fee• Saves $427 million all funds over the biennium

Research suggests that person-centered care is associated with improved

organizational performance including higher resident and staff satisfaction,

better workforce performance and higher occupancy rates.

Source: 2010 Annual Quality Report, Alliance for Quality Nursing Home Care and American Health Care Association

Ohio Health Transformation Priorities• Improve Care Coordination • Integrate Behavioral and Physical Health• Rebalance Long-Term Care• Modernize Reimbursement

www.healthtransformation.ohio.gov

Balance the BudgetContain Medicaid program costs in the short term and ensure financial stability over time

RESULTS:• A sustainable system• $1.4 billion in net savings over the biennium• Align priorities for consumers (better health outcomes) and

taxpayers (better value)• Challenge the system to improve performance (better care

and cost savings through improvement)

Source: Ohio Department of Job and Family Services and the Governors Office of Health Transformation. Managed care expenditures are distributed to providers according to information from Milliman. Hospitals include inpatient and outpatient expenditures as well as HCAP Home and community services include waivers as well as home health and private duty nursing.

Total Ohio Medicaid Expenditures, SFY 2010

Hospital; 28%

Nursing Facility; 17%

Intermediate Care Facilities for the De-velopmentally Disabled and Develop-

mental Centers; 5%

Home and Community Services; 14%

Physicians; 8%

Drugs, 9%

Managed Care Admin-istration; 3%

Medicare Buy In and Part D; 3%

Other; 12%

Source: Office of Health Transformation (March 15, 2011)

Medicaid Budget:Savings and Investments

Provide Accountable Care for ChildrenPromote Health HomesImplement Federal Reform MandatesCreate a Single Point of CoordinationIntegrate Behavioral/Physical Health BenefitsElevate Behavioral Health Financing to the StateCreate a Unified Long Term Care SystemLink Nursing Home Payments to QualityReduce Admin for Federal Agencies on AgingNursing and Home Health Payment ReformAlign Programs for People with DDReduce PASSPORT rates and service utilizationReform Managed Care Plan PaymentsManage Behavioral Health Service UtilizationReform Nursing Facility PaymentsModernize Hospital Payments

-$500 -$400 -$300 -$200 -$100 $0 $100$87$47$35$0$0$0$0$0

-$24-$35

-$62-$137

-$159-$243

-$427-$478

in millions

Source: Office of Health Transformation (March 15, 2011)

Medicaid Budget:Impact on Rates by Provider

Physician

ICF-DD

Managed Care Plans

Inpatient Hospital PMPM

Aide Services per 4 hours

PASSPORT Provider Rates

Nursing Services per 4 hours

Outpatient Hospital PMPM

Nursing Facilities

-8% -6% -4% -2% 0% 2% 4% 6% 8%

8.8%0.6%

-1.0%

-1.8%

-2.5%

-3.0%

-4.9%

-6.7%

-7.3%

Estimated change in rate

What this budget does NOT do• Does not cut eligibility• Does not cut optional services, including dental• Does not make arbitrary across-the-board cuts• Does not resort to smoke and mirrors• Does not count hypothetical savings

Thank you.

Greg Moody, DirectorGovernor's Office of Health Transformation

77 South High Street, 30th Floor Columbus, Ohio 43215

Phone: 614-752-2784

Email: greg.moody@governor.ohio.gov