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1
State Policy Update
MNACHC Annual ConferenceOctober 12, 2006
Jonathan WatsonAssociate Director/Public Policy
Director
21. Trends in the health care market-place for
safety-net providers.2. Review 2006 Minnesota legislative session.3. Impact of Election 2006.4. Preview 2007 Minnesota legislative session.5. Current policy developments
• QCare• Deficit Reduction Act implementation
Goals/Objectives
3
CURRENT HEALTHCURRENT HEALTH
CARE TRENDS IN CARE TRENDS IN
MINNESOTAMINNESOTAPart One
4
Uninsured, 5.7% Uninsured, 7.4%
Individual, 4.7%Individual, 4.6%
Group, 68.4%
Group, 62.9%
Public, 25.1%
Public, 21.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2001 2004
Trends#1 – Loss of Group
Coverage
• Number of Minnesotans with group-sponsored coverage dropped 8% or roughly 172,000 people from 2001 to 2004.
Chart 1: MN Insurance Coverage, 2001 to 2004
5
Trends#1 – Loss of Group
Coverage
• Latinos realized the greatest drop in group health care coverage – nearly a 40% drop.
• All ethnicities realized a decline group coverage from 2002 to 2004.
Chart 2: MN Change in Group Insurance Coverage, 2002 to 2004,
By Race/Ethnicity69.9%
47.9%41.5%
68.6%
58.4%65.5%
35.5%
58.7%
40.5%41.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
White AfricanAmerican
Amer.Indian
AsianAmerican
Latino
2002 2004
6
12.2%
9.8%9.0%
11.2%
4.5%
2.3%2.9% 3.4%
1.6%2.4%
3.4%
4.7%
3.1%2.3%
1.0%0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2001 2002 2003 2004 2005
Premiums Inflation Avg. Weekly Wage
• Since 2001, health care premiums have increased 3 times the increase in the average weekly wage in Minnesota and almost 4 times the inflation rate in MN.
Trends#2 – Growth in Health
Care PremiumsChart 3: MN Change in Health Care
Premiums vs. Weekly Wages & Inflation, 2001-2005
7
88.2% 88.3% 88.1% 87.5% 86.9%
11.8% 11.7% 11.9% 12.5% 13.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005
Health Plan Cost Enrollee Cost
Trends#3 – Increased Out of
Pocket Costs For Enrollees
• From 2001 to 2005, the average out of pocket cost for health plan enrollees increased 65% -- from $297 to $489.
• Enrollees are “picking up” a greater share of their health care costs.
Chart 4: Enrollee vs. Plan Share of Cost, 2001-2004
8
5.9% 5.6% 5.4% 5.6% 5.7%6.2%
6.7%7.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
1997 1998 1999 2000 2001 2002 2003 2004
Uninsured
• While still one of the lowest in the US, MN’s uninsured rate increased nearly 30% -- or by 96,000 Minnesotans --since 2001.
Trends#4 – Increasing
UninsuredChart 5 – MN Percent Uninsured,
1997-2004
9
33,163 34,623 36,385
42,378 43,14548,396
52,774
0
10,000
20,000
30,000
40,000
50,000
60,000
1999 2000 2001 2002 2003 2004 2005
Uninsured at CHCs
• The number of uninsured at Minnesota’s CHCs has increased 45% from 2001 to 2005.
Trends#5 – Increasing
Uninsured at CHCsChart 6 – MNACHC Uninsured, 1999-
2005
10
Trends#5- Increasing Uninsured
at CHCs
37% 41% 42%
17%17%19%
35%39% 37%
6% 5% 6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2003 2004 2005
% o
f MNACHCPa
tien
ts
• Since 2003, the Medicare and uninsured populations are the two fastest growing segments of CHCs patient base.
• Medicare grew by 12% or 700 patients, while the uninsured grew by 8% or 9,700 patients.
Chart 7 – MNACHC Insurance Status, 2003-2005
Uninsured
Medicare
MA/MNCare
Private
11
138,809
117,793
115,000
125,000
135,000
J ul-
05
Aug-
05
Sep-
05
Oct-
05
Nov-
05
Dec-
05
Jan-
06
Feb-
06
Mar-
06
Apr-
06
May-
06
Jun-
06
Jul-
06
Aug-
06
Trends#6- Declining MNCare
Enrollment
• MinnesotaCare enrollment has decreased 15.1% over the past 14 months.
Chart 8 – MNCare Enrollment, 7/05 – 8/06
12
Trends#7- Increasing GAMC
Enrollment
41,448
38,533
35,000
40,000
45,000
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
• Despite previous projections forecasting a 13% decline in 2006, GAMC enrollment is up 7.6%
Chart 9 – GAMC Enrollment, 7/06 – 8/06
131. Loss of group coverage – 8% drop since 2001,
lower-income residents & Latino population realize greatest loss.
2. Rising uninsured – overall 30% increase since 2001, lower income & Latinos realize significant increases.
3. Health care premiums - outpacing inflation by a factor of 3 and wages by a factor of 4.
4. Increasing out-of-pocket costs for enrollees – 65% increase since 2001.
5. CHC growth in uninsured and Medicare populations – 8% and 12% growth respectively since 2003.
6. Recent (14 month) growth in GAMC – 8% increase despite earlier projections; decline in MNCare - 16%
Trend Summary
141. Pay-for-Performance/Quality
• Payments, reporting requirements, adjusting for case mix, patient “dumping”
2. Consumer-Driven Health Care• HSAs, health care “report-cards,” patient shopping
3. Digital Health• E-health care, electronic medical record, online appointments/records,
cost of systems
4. Retail Clinics• Convenience
5. Workforce• Rural health, underserved, dental providers
Other Trends
15 Minnesota CHCs serve…– 1 out of every 7 uninsured Minnesotan – 1 out of every 11 Medicaid enrollees
– 1 out of every 10 Minnesotan below poverty
– 1 out of every 7 “non-white” Minnesotan • 2 out of every 5 “non white” resident of Mpls/St. Paul
– 1 out of every 7 Latinos • nearly 1 out of every 2 Latinos in Mpls./St. Paul
CHC Statistics
16
2006 LEGISLATIVE2006 LEGISLATIVE
REVIEWREVIEWPart Two
17
2006 Legislative Review
• Highlights– State budget surplus FY2006-07 = $88 million
• Higher corporate tax revenue• Health impact “fee” deemed legal• $57 million less spending
– $19.2 million less in health and human services
– Traditionally a “bonding year” – yet “policy” items considered in light of surplus
– Stadiums for Minnesota Twins and U of MN football• $800 million
– Bonding for biosciences at U of MN, Northstar commuter rail, state universities and colleges
• $1 billion
– New Funds for incarcerating and treating sex offenders
18
2006 Legislative Review
HOUSE
Consumer-Driven Reforms
HSAs, Cost Containment,
Combat Fraud
SENATE
“Undoing” P
revious
Cuts to M
HCP,
Universal Health
Care
GOVERNOR
Mental HealthInitiative, DRA
Implementation
19
2006 Legislative Review
• HEALTH CARE-RELATED– $9 million for mental health services (Governor requested
$50 million)
– MNCare dental copayments eliminated for parents and adults with children below 175% FPL
– $5 million for pandemic flu response
– Pay-for-performance for diabetics on Medicaid
– Community health center study• DHS study the adequacy of CHCs and community clinics in state• Use of grants to expand the number of clinics• Increase use of physician assistants, nurse practitioners, medical
residents and other allied health professionals to expand access
20
2006 Legislative Review
What Didn’t Pass in 2006…what to expect in 2007?
1. Expansion of MNCare for adults without children up to 200% of FPL ($15.5M over the 2006-09 period)• Currently at 175% of FPL.
2. Restoring family planning grants ($3.8M)3. TB treatment/case management for
immigrants ($500,000)4. Eliminating scheduled 8% increase in
MNCare premiums ($4.3M)5. Reinstate MNCare outreach grants ($1.7M)
21
2006 Legislative Review
What Didn’t Pass in 2006…what to expect in 2007?
7. Allowing small employers to “buy-into” MNCare ($4.6M)
8. Increase MNCare inpatient hospitalization cap to $20,000 ($7.6M)• Currently at $10,000
9. Permit MNCare coverage for undocumented children ($1.4M)
10.Constitutional amendment for universal health coverage
11.“De-privatize” MHCP – eliminate PMAP, all Fee-For-Service
12.“Wal-Mart/Fair Share” legislation13.Fraud provisions
22
2006 2006
ELECTIONSELECTIONSPart Three
23
1 30 7 2 26 1
DFL Unopposed DFL Incumbent DFL OpenR Open R Incumbent R Unopposed
DFL 38
Repub.29
2006 Minnesota ElectionSenate
DFL=38 R=29TOTAL = 67
Key Retirements
• Senator Lourey (DFL) – Chair of Health & Family Security Committee
• Senator Kiscaden (DFL) – member of HFS Committee
24
1 53 12 11 57
DFL Unopposed DFL Incumbent DFL OpenR Open R Incumbent R Unopposed
Repub. 68
DFL 66
2006 Minnesota Election
House
DFL=66 R=68TOTAL = 134
Key Retirements
• Rep. Bradley (R) – Chair of Health Policy & Finance
25
2006 Minnesota Elections
• Key Developments– If House changes to DFL…
• New committee chairs• One or two committees?
– If House remains Republican controlled• Rep. Fran Bradley retired in 2006
– Assuming Senate remains DFL…• New Health & Family Security Chair (Lourey ran for
Governor)• Berglin remain as chair of Health/Human Services
Finance
– Governor’s Race• New state agency commissioners
26
2006 Minnesota Elections
• Motor Vehicle Sales Tax (MVST) Referendum– Currently 54% of the MVST revenue is used for
transportation purposes with 46% contributed to the general fund.
– If approved, 100% of MVST for transportation (roads, public transit)
– Impact on the projected $1.1 billion surplus for the next biennium (FY08-09):
• Reduce surplus to $918 million or by $172 million/16%• February forecast accuracy and economic conditions
FY2008 FY2009 TOTAL
Revenue $16,341 $16,974
$33,315
Spending 15,967 16,257 32,224
Difference 374 717 1,090
MVST (56) (116) (172)
Balance 318 601 918Dollars in millions
27
2007 LEGISLATIVE2007 LEGISLATIVE
PREVIEWPREVIEWPart Four
28
Odd-Year Session
(January 2007)FY2007 & FY2008
Budgets
July 2007Fiscal Year 2008
Begins
Even-Year Session
January 2008“Bonding” Session“Tweak” FY2009
Budget
July 2008Fiscal Year 2009
Begins
2007 Legislative Preview
Chart 10 – The Biennial Budget Process, FY2008-2009
29
2007 Legislative Preview
11.5%
4.8%
2.9% 2.7% 2.5%
0.9% 0.6% 0.2% -2.1%-0.1%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
DebtService
HHS PublicSafety
K-12 TOTAL HigherEd.
StateGovt.
Env. &Agr.
Prop.Tax Aid
Transp.
Chart 11 – Change in State Spending, By Program Area, 2003-2009 (FY2007-2009 Projected)
30
2007 Legislative Preview
Chart 12 – State Spending as Percent of Total, By Program Area
Prop. Tax, 7%
Higher Ed, 6%
Safety, 4%
Govt., 2%
Debt, 2%
K-12, 27%
Other, 3%
Transp., 12%
Env. & Ag., 6%
HHS, 35%
Prop. Tax, 6%
Higher Ed, 5%
Safety, 4%
Govt., 2%
Debt, 2%
K-12, 27%
Other, 1%
Transp., 9%
Env. & Ag., 5%
HHS, 40%
2003 2009
31
2007 Legislative Preview
• Health Care Access Fund– 2% Provider tax
$176,994
$136,774
$53,938
$116,270
$167,404
$124,809$116,469
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
2003 2004 2005 2006 2007 2008 2009
Revenue Spending Difference
FY06
$531,871 $415,601 $116,270
FY07
$635,463 $518,994 $116,469
06-07
$1,167,337
$934,595 $232,739
FY08
$670,843 $546,034 $124,809
FY09
$715,283 $547,879 $167,404
08-09
$1,385,766
$1,093,913
$292,213Dollars in thousands
Chart 13: HCAF Surplus, 2003-07,
2008-2009 Projected
32
2007 Legislative Preview
• Key Issues– Election results
• Control of Senate, House and Governorship– State economic growth – budget surplus vs.
deficit• July revenue forecast 3% ($447 million) higher than Feb.
forecast• Economy expected to slow in 2nd half of 2006
– 2007 Session is a “Budget” year • “Piggybacking proposals” – insurance for children in their
20s• Fraud provisions/improper Medicaid payments (both
participants and providers)• “Fair Share” proposals on large companies (Wal-Mart
legislation)• Universal health care/constitutional amendment• Mental health and primary care
33
2007 Legislative Preview
• Key Issues (continued)– Deficit Reduction Act implementation
• Increased copayments for MA enrollees• Medicaid benefit changes
– Expanding programs vs. consumer driven approaches to health care “reform”
• Massachusetts model– Expanding existing programs– Subsidize lower-income premiums– Health Connector
– CHC Issues• Results of CHC study• HCAF surplus
– Key Dates:• November 6, 2006 - Election Day• October Economic Forecast• January 3, 2007 - Legislature convenes• January/February - Governor’s budget to Legislature
34
CURRENT DEVELOPMENTSCURRENT DEVELOPMENTS• QCareQCare
• DRA DRA
ImplementationImplementation
Part Five
35
Current Policy QCare
• QCare– Announced by Governor Pawlenty on July 31, 2006
• Shift from reimbursing on “cost” to “quality”• “The right care at the right price”
– Initially will focus on four areas of care where much of Minnesota’s health care dollars are spent.
• Diabetes• Hospital stays• Preventative care for adults and children• Cardiac care
– If standards were met, state projects $153 million in savings for the entire health care system in Minnesota
36• QCare
MEASURE BASELINE 2010 QCARE GOAL
DIABETES
• A1c blood sugar < 7.0%• LDL < 100 mg/dl• Blood Pressure <
130/80• Daily aspirin use over
40 years old• No tobacco use
6% 80%
HOSPITAL STAYS
• Heart Attack Care 91.6% 100%
• Heart Failure Care 84.7% 100%
• Pneumonia Care 67.7% 100%
• Leapfrog Reporting 42.0% 100.0%
• Adverse Events 105 events/year 50 event/year
Current Policy QCare
37• QCare
MEASURE BASELINE 2010 QCARE GOAL
CARDIOVASCULAR
• LDL < 100 mg/dl• Blood Pressure <140/90• Daily aspirin use • No tobacco use
38% 90%
PREVENTIVE CARE
• Child Immunizations 68%
90%
• Adolescent Immunizations
39%
• Well Child Visits 59%
• Breast Cancer Screening
74%
• Cervical Cancer Screening
78%
• Chlamydia Screening Women
32%
Current Policy QCare
38
Current PolicyQCare
• QCare– Applied to the MN Health Care Programs
(MHCPs): No new line item/money• “Reward” will be from program savings
– DHS amend PMAP contracts this fall to incorporate QCare philosophy
– 2007 SESSION – MONITOR ANY DEVELOPMENTS THAT THREATEN/MODIFY CHC PAYMENTS
39
Current PolicyDeficit Reduction Act
• Provisions that could affect CHCs:
– Citizenship documentation
– Increased beneficiary cost-sharing amounts
– State false claims and compliance programs
40
Current PolicyCitizenship Verification
• Citizenship Verification– Effective August 1, 2006:
• All Medicaid enrollees must prove:
1. IDENTITY, AND2. CITIZENSHIP
• Both current enrollees and new applicants• Tiered levels of acceptable documents to
prove identity and citizenship• DHS 2006 Bulletin - #06-21-09• Impact on CHC patients
41
Current PolicyCitizen Verification
Programs Required to Document Citizenship and Identity
Programs NOT Required to Document Citizenship and Identity
1. MNCare for families with children (including pregnant women)
2. MA for: families with children (including pregnant women); people 65 and older; and people with disabilities.
3. MA for women with breast or cervical cancer.
4. MA enrollees in an Institution for Mental Disease (IMD)
5. MA for Employed persons with disabilities
6. MA Long Term Care and home and community-based waivers
7. TEFRA8. MN Family Planning
Program
1. Medicare enrollees applying for/enrolled in:
a. Medicaidb. Qualified Medicare
Beneficiaries (QMBs)c. Service Limited Medicare
Benef. (SLMBs)d. Qualified Individuals (Q-1s)e. Qualified Working Disabled
(QWD)2. General Assistance Medical
Care (GAMC)3. MNCare for adults without
children4. HIV/AIDS Program5. Non-citizens enrolled in Emergency
MA, state-funded MA or victims of torture
42
Current PolicyCitizen Verification
• Citizen Verification– Once citizenship is proven, it does not
have to be documented again, unless later evidence raises questions
– Rules require that individuals be given a “reasonable opportunity” to submit documentation• Minnesota = six months• Current eligible will maintain MA eligibility• New applicants not eligible (no interim
benefits)
43
Current PolicyIncrease Cost Sharing
• Previous law limited to $3 and no denial of care for failure to pay co-payment– DRA: Copay = up to
10% for persons with incomes between 100-150%; 20% for person with incomes above 150% FPL
• Health Centers may experience:– Lower revenue– Decrease in Medicaid
patients
• Legislative Session 2007
$3.00
$14.00
$28.00
$0
$5
$10
$15
$20
$25
$30
Current Co-pay PotentialCopay 100-
150%
PotentialCopay 150%+
A typical CHC encounters costs $140. Under DRA provisions, Medicaid copayments could increase…
44
Current PolicyFraud
• Any entity that receives more than $5 million in Medicaid payments annually, must:– Establish written policies for employees and
contractors regarding:• Federal and State False Claims Act• Whistleblower protections• Role of such laws in preventing fraud, waste, and abuse
in Federal health care programs– Include in employee handbooks, a discussion of
• Federal and State False Claims Act• Rights of employees to be protected as whistleblowers• Entity’s procedures for detecting and preventing fraud,
abuse and waste.– States are permitted to retain 10% any recoveries provided
their guideline/law is at least as stringent as federal law.
45
MNACHC Day on the HillJanuary 2006
CHC Staff, Patients Board Members
Visit www.mnachc.org for more information