GHDP 142-23: Medicaid - A Primer

Question 1

Introduction

Answer 1

1. Established in 1962 (same legislation that established Medicare)
2. Originally a medical assistance supplement for people receiving cash welfare assistance
   - Expanded over time by Congress and states to address widening gaps in private health insurance
3. Covers more than 62 million Americans (more than Medicare or any single private insurer)
4. More than 60% of people in nursing home are covered
5. Major source of health care financing - funds 1/6 of total national spending on personal health care
6. Under ACA, Medicaid eligibility expands to reach millions more poor Americans - mostly uninsured adults
7. Establishes a pathway for coverage for most low-income people and foundation for broader public-private healthcare system
8. A number of states challenged the constitutionality of certain provisions of ACA, including Medicaid expansion
   - Upheld in 2012 ruling; Though it limited the enforceability of Medicaid expansion (effectively making it a state option)

Question 2

What is Medicaid?

1. Main public health insurance for low-income people
   - Typically lack access to private insurance and have extensive needs for care
2. Dominant source of long-term care (LTC) coverage in US
3. Financed through a federal-state partnership
   - Each state designs and operates own progeam within broad federal guidelines

Answer 2

1. What is Medicaid
   a. Public financed health and LTC coverage for low-income people

b. Provides assistance to all individuals who meet criteria - no enrollment freezes and waiting lists for benefits

c. Expanded over the years to reach more uninsured and low-income Americans

d. Covers low-income population, including pregnant women, children and some parents, children and adults with physical and mental health conditions and disabilities, and poor elderly and disabled Medicare beneficiaries

e. ACA provides an expansion of eligibility
- Expanded to adults under age 65 with income at or below 138% of federal poverty level (FPL) with full funding for this group for the first three years and at least 90% thereafter

2. What is Medicaid’s role in our healthcare system?
   a. Fills the large gap in our health insurance system

b. Provides healthcare for millions of children and parents in low-income families without access to private insurance

c. Covers people with chronic conditions and disabilities

d. Covers low-income Medicare beneficiaries (“dual-eligibles”)

e. Provides a coverage safety net during economic downturns
- Covers families when they go into unemployment, loss of job based coverage or declining incomes

f. Medicaid funding is the dominant source of financing for safety-net providers that serve low income and uninsured people
- In 2010, Medicaid payments accounted for 1/3 safety-net hospitals’ total revenue

g. Medicaid is the main source of financing for long-term services and supports (LTSS)
- Nearly 10 million Americans need LTSS, though largely not covered by Medicare or private insurance
- Medicaid finances 40% of all LTC spending and covers more than 6 of every 10 nursing home residents

3. How is Medicaid Structured?
   a. Financed through federal-state partnership
   - Federal government matches state Medicaid spending based on formula specified on Social Security Act
   - Federal match must be at least 50% in every state
   - For states with lower per capita income, they receive higher federal match

b. States administer Medicaid within broad federal guidelines and state programs vary widely
- Each state has single agency that administers it, under oversight of CMS
- State participation is voluntary, though all states participate
- Allows flexibility in eligibility, benefits, provider payment, delivery systems and more
- To make a change in Medicaid state plan, it must submit to CMS for approval (document is called State Plan Amendment (SPA))

c. States can seek federal waivers to test new approaches outside of regular federal rules
- Section 1115 waivers allow them to waive statutory and regulatory requirements if “likely to assist in promoting the objectives of the program”
- Federal spending under Section 1115 must be “budget-neutral” (can’t exceed projected spending if waiver didn’t exist)
- Waivers have been used to expand coverage to certain adults, change benefits and cost-sharing and change deliver or payment systems
- Also have Section 1915 “program waivers” to mandate managed care for certain beneficiaries that are normally exempt

d. Medicaid’ structure enables program to evolve and innovate
- Flexibility allows it to respond to economic downturns, pandemics (like HIV/AIDS), short-term benefits (e.g. after 9/11 terrorist attacks)
- Provides coverage and financing for states to drive innovation and improvements

e. General public and those in the program view Medicaid favorably
- Survey shows a high degree of satisfaction - people value the breath of benefits and affordability of coverage

Question 3

What Does Medicaid Cover?

1. Low-income people - currently covering 62 million people
2. Children, pregnant women, disabled and more
3. ACA expanded it to cover people under 65 below 138% FPL

Answer 3

1. What is Medicaid’s coverage role?
   a. Medicaid, along with Children’s Health Insurance Program (CHIP), covers more than 1/3 of children and more than 1/2 of all low-income children

b. Covers certain low-income people
- Most are working families without access to job-based health insurance or can’t afford the premiums

c. Medicaid is an entitlement program - if you qualify, state can’t limit enrollment or establish a waiting list
- This guarantee of coverage distinguishes it from CHIP and other block grant programs where funding levels are pre-set adn enrollment can be capped

2. Who can qualify for Medicaid?
   a. State must cover core groups of low-income individuals and have flexibility to expand coverage
   - Core groups covered by Medicaid:
   i. Pregnant women
   ii. Children
   iii. Parents
   iv. Elderly
   v. Disabled
   vi. (where income is below threshold such as 100% or 133% of FPL)
   - States can extend this coverage to others

b. Eligibility is limited to American citizens and certain lawfully present immigrants
- Most lawfully present immigrants are barred from enrollment during their first 5 years in the US
- States can eliminate this waiting period for children or pregnant women
- Emergency services can be paid on behalf of individuals in this waiting period

c. Documentation of citizenship and identify is required

3. Who is covered currently?
   a. Currenly covers 62 million Americans (1 in every 5)
   - Particularly large role for some subpopulations who are disaproportionately likely to be poor and who lack access to private coverage

b. Largest source of health insurance for children in the US
- In 2009, covered about 31 million children
- CHIP builds on Medicaid and covers 8 million in low to moderate income families

c. Key source of coverage for pregnant women
- 20 states cover pregnant women up to 185% FPL and 17 states provide eligibility at higher income levels
- Improved access to prenatal and neonatal care

d. Coverage for low-income adults lags far behind coverage of children
- State eligibility for parents is much more strict than for children
(1) Many states at 100% FPL and some use 50% FPL
(2) Sharp variation in the levels by state (16% in Arkansas up to 215% in Minnesota)
- Most childless adults are excluded by federal law

e. Covers 9.3 million non-elderly people with disabilities (including 1.5 million children)
- Disabilities such as cerebral palsy, Down Syndrome, autism

f. Assistance for 9 million low-income Medicare beneficiaries (dual-eligibiles)
- 1 in 5 Medicare beneficiaries is also covered by Medicaid

4. What about participation in Medicaid ?
   a. Participation is high compared to other voluntary programs, but still many not enrolled who are eligible
   - 85% of children eligible for Medicaid or CHIP participate
   - Participation rates for eligible adults overall = 63% (38% for childless adults)
   - Families may not be aware of it or may not believe they are eligible

b. To improve participation, states have simplified the process and streamlined enrollment and renewal process
- Few states require face-to-face interviews
- Most offer online application and renewal

c. States also invest in outreach and enrollment assistance
- Eligibility offices with in-person assistance and hotlines

5. How will the ACA affect who is covered?
   a. ACA opens Medicaid to millions of uninsured adults
   - Adults under 65 with income at or below 138% FPL
   - Medicaid enrollment expected to increase by 21 million by 2022

b. Medicaid expansion is a state option
- Due to Supreme court ruling in 2012, federal has no power to enforce this to states, so it becomes a state decision

c. Non-citizen continues to face restrictions
- Same five year waiting period

d. State adoption will help reduce the number of uninsured

e. ACA simplifies eligibility and calls for “no wrong door” enrollment system, with coordination between Medicaid and new exchanges
- Provisions for States to Coordinate Medicaid under ACA
(1) Must use Modified Adjusted Gross Income (MAGI) to determine eligibility (instead of multiple measures used in the past)
(2) Use single, streamlined application for Medicaid, CHIP and subsidies for exchange coverage
(3) Individuals must be able to apply online, by phone, fax, mail and in person
(4) Eliminate in-person interviews and asset tests and must first rely on electronic data matches to verify eligibility
(5) Provide application assistance

f. Limited time enhanced federal match (90%) for state expenses to upgrade or replace againg Medicaid eligibility and enrollment systems

g. Effective Medicaid outreach and application assistance will be important for ACA to achieve its goals
- To reduce uninusred, must be high rates of participation in Medicaid
- Need both broad and targeted outreach programs

Question 4

What Does Medicaid Cover?

1. Broad array of health and LTC services
2. Restricted cost-sharing to minimize financial barriers
3. Alternative Benefit Plans (ABPs) for adults
4. “Health homes” for those with multiple chronic conditions

Answer 4

1. What does Medicaid Benefit Package include?
   a. Broad range of health and LTC benefits
   - Covers benefits typically covered by private insurance, plus oral and vision care, transportation, and nursing homes and community-based LTC

b. Federal law specifies “mandatory services” that must be covered
- Mandatory services to be covered by Medicaid
(1) Physicians’ services
(2) Hospital services (inpatient and outpatient)
(3) Lab and services
(4) Early and periodic screening for individuals under 21
(5) Federally qualified health center (FQHC) and rural health clinics (RHC)
(6) Family planning
(7) Pediatric and family nurse practitioner
(8) Home health care
(9) Transportation sevices

c. States can cover optional services as well
- Optional services may be vital to those with chronic conditions, disabilities or the elderly
- Optional benefits are particularly vulnerable to budget cuts
- Commonly offered Optional Services under Medicaid
(1) Prescription drugs
(2) Clinic services
(3) Care from other licenses practitioners
(4) Dental services
(5) Prosthetic devices, glasses and other durable medical equipment
(6) Rehabilitation and other therapies
(7) Case management
(8) Nursing facility services for individuals under 21
(9) Immediate care facility for intellectual disabilities
(10) Home and community-based services
(11) Inpatient psychiatric services for individuals under 21
(12) Respiratory care services for ventilator-dependent individuals
(13) Personal care services
(14) Hospice services

2. How do Medicaid benefits differ from typical private insurance benefits?
   a. Pediatric Medicaid benefit (Early and Period Screening, Diagnostic and Treatment (EPSDT)) encompasses a comprehensive array of services
   - Covers screening, preventive and early intervention services
   - Also covers diagnostic services and treatment to ease acute or chronic physical or mental health conditions
   - Service limits imposed on adults (such as limited number of sessions) cannot be applied to children

b. Covers a wide range of LTSS that Medicare and private insurance usually limit or exclude
- Such as home health care, personal care, durable medical equipment and supplies, rehab services, case management, home and community based services and other services

c. Broad spectrum of services provided by Medicaid is particularly important for people with chronic illnesses and disabilities
- Fills major gaps in coverage for mental health and LTC services

d. States can impose premiums and cost-sharing in Medicaid, subject to specific federal limitations, exemptions and aggregate cap
- Premiums may be charged for adults over 150% FPL
- Cost sharing is largely prohibited for mandatory children and limited for adults under 100% FPL
- Some services are exempt from cost-sharing, such as preventive services for children, emergency services, family planning services and pregnancy related services

3. How do states define their Medicaid benfit packages?
   a. State must provide same Medicaid benefit package to all its residents
   - Regardless of individuals’ diagnoses or conditions
   - States define amount, duration and scope of services; Must be sufficeint in amount, duration, and scope to reasonably achieve its purpose

b. States have limited authority to provide narrower benefits to some groups
- Limited coverage to certain Medicaid Groups by State must meet benchmark plans
(1) BCBS Standard PPO option under Federal Employees Health Benefit Plan (FEHBP)
(2) Generally available state employee plan
(3) HMO with largest commercial non-Medicaid enrollment
Secretary-approved coverage appropriate for population
- Only 8 states have used this authority

c. Medicaid benefits vary considerably from state to state
- States define and apply “medically necessary” standards in different ways

4. How do Medicaid enrollees receive their care?
   a. Medicaid beneficiaries obtain care primarily from private providers and health plans
   - Publicly financed program but NOT a government-run health care delivery system
   - States pay physicians, hospitals, and other providers for services; can pay using FFS or through risk-based contracts

b. Most Medicaid beneficiaries are enrolled in managed care plans
- 3/4 Medicaid beneficiaries get all or some of their care through managed care
- Two Primary Models of Managed Care in Medicaid
(1) Managed Care Organization (MCO) - paid on a capitation basis
(2) Primary Care Case Management (PCCM) - FFS system, Medicaid pays Primary Care Provider a small monthly fee per enrollee for case management

c. States are epanding managed care to more complex populations
- Vast majority of Medicaid enrollees in managed care are children and parents (relatively healthy population); but states are moving individuals to individuals with more complex needs

d. States are using a variety of approaches to rebalance LTC delivery systems in favor of community settings
- Help make benefits more flexible and involve consumers in determining and managing their services

e. Safety-net providers play a major role in delivering health care
- Community health centers play a major role in underserved areas where many low-income individuals reside

f. State Medicaid programs have been innovators in area of delivery system reform
- Many states have developed model programs to improve disease management and coordination

5. How will Medicaid benefits work under ACA?
   a. Adults in expansion groups’ benefits based on Medicaid benchmarks already in law, but also must include ten Essential Health Benefits (EHB)
   - Groups currently exempt from mandatory enrollment in benchmark plans are carried over to the expansion population
   - Medicaid benchmark coverage options are known as Alternative Benefit Plans (ABPs)

b. Traditional Medicaid benefits and ABPs could vary within a state
- ACA requirement that ABPs include the ten EHBs does not apply to traditional Medicaid benefits
- By aligning ABPs and traditional Medicaid benefits, states could reduce disruptions in service when individuals shift between Medicaid eligibility groups

c. Federal initiatives reinforce and accelerate state efforts to improve delivery of care
- “Health homes” for Medicaid beneficiaries with chronic conditions, including severe mental illness
- Involve integration and coordination of primary, acute, mental and behavioral health and LTSS
- Medicaid-Medicare Coordination Office created within CMS
- Innovation Center created in CMS

d. New state opportunities to expand access to home and community based LTSS
- Enlarges scope of covered services and exapnds access by broadening financial and functional criteria for eligibility

Question 5

What is the Impact of Medicaid on Access to Care?

1. Increased access to care and improved child health and birth outcomes
2. Adults with Medicaid have increased access and use of preventive and primary care
3. Provider shortages and low provider participation in Medicaid still a concern

Answer 5

1. What does the research on access to care in Medicaid show?
   a. Medicaid increases access to care and lowers financial barriers to care
   - Increased access and use of Medical care for children and pregnant women
   - Rates of cancer screening icreased
   - Decreased likelihood of growing without doctor care due to cost
   - Higher utilization and lower out-of-pocket burden than uninsured counterparts

b. Powerful evidence of impact of Medicaid on adults’ access to care
- Oregon Health Study conpared certain adult groups and showed significant increases in use of preventive care, outpatient care, presctiption drugs and hospital care in the Medicaid population compared to those withou Medicaid (comparable group)

c. Children in Medicaid and CHIP fare as well as children with private insurance, though adults face more difficulty
- In terms of preventive and primary care, access and quality

d. Medicaid restricts cost-sharing and lowers financial barriers to access
- Cost-sharing impedes access to services for low-income individuals, and they often end up delaying or not seeking needed care

e. Majority of emergency department (ED) visits are for urgent or serious symptoms
- Similar rates as those with private insurance
- However, Medicaid patients do have a higher percentage of usage of emergency, consistent with their higher burden of illness or disability

f. Evidence on access in MCOs relative for FFS is limited and mixed
- Suggests that the details of states’ managed care programs matter

2. How do provider shortages and participation affect access?
   a. Large majority of physicians serving children participate in Medicaid and CHIP, but only about half accept new Medicaid and CHIP patients
   - 83% of PCP and 71% of specialists participate in Medicaid and CHIP patients

b. Shortages and geographic inequalities in the distribution of health care providers and low Medicaid participation by some provider types results in gaps to access
- Issues with dental and specialty providers
- Low payment rates and administrative hassles are leader barriers to provider acceptance
- Transportation is also a barrier to access

c. Actions to address workforce challenges and low provider participation will be important to improve access
- Actions to imrpove Provider Participation in Medicaid
(1) Increased state outreach to providers
(2) Higher and quicker payment
(3) Streamlined enrollment and billing processes
(4) Liberalizing scope-of-practice laws for nurse practitioners and dental therapists

d. Medicaid and CHIP payment and Access Commission (MACPAC) monitors access and payment issues
- Monitors access in Medicaid and CHIP, identifies gaps and makes recommendations to Congress about payment and access issues
- Reports to Congress every March and June

3. How is quality monitored and promoted in Medicaid?
   a. States use array of data and payment strategies to improve quality
   - Standardized data to measure and improve quality of care
   - MCOs must provide utilization and performance data
   - Growing number of states require MCO accreditation
   - Pay for performance measures in place in most states to reward high performance by MCOs and physicians, hospitals, nursing homes and other providers

b. MCO quality is subject to external reviews of quality
- External Quality Review Organization (EQRO) provide independent assessment of quality of performance
(1) Reviews access, timeliness and outcomes
(2) Reviews “performance improvement projects” of states

c. Health Information Technology (HIT) to improve quality and safety in Medicaid, and substantial federal investment fosters greater HIT activity
- Initiatives for electronic prescribing and health records for better coordination

d. Numerous Health and Human Services (HHS) efforts focused on measuring, reporting and improving quality of care for children

4. What doe the ACA do to improve access to care in Medicaid?
   a. ACA temporarily boosts Medicaid payment rates to Medicare levels for PCPs
   - In 2012, Medicaid fees for PCPs average 59% of Medicare fees for same services
   - Overall fee ratio for all services of Medicaid-to-Medicare was 66%
   - In 2013-2014, states must pay PCPs at least Medicare rate for many services
   - Helps improve support for physicians serving Medicaid already and promote wider participation among PCPs

b. New models of patient centered care aimed at improving care, especially for those with complex needs
- Quality measures will be monitored closely

Question 6

How Much Does Medicaid Cost?

1. 2011 Spending was $414 billion, excluding administration
2. Main driver of spending growth during recession was increased enrollment
3. Spending changes now driven by changes in service mix and utilization
4. 2/3 of spending attributed to elderly and disabled
5. Dual-eligibles account for 40% of Medicaid spending

Answer 6

1. What does Medicaid cost?
   a. $414 billion in 2011
   - 2/3 attributable to acute care
   - 30% to LTC
   - 5% to administrative costs

b. Special payments to hospitals that serve a disproportionate share of low-income and uninsured patients
- DSH payments help support safety-net hospitals - accounts for 4% of Medicaid spending in 2011

2. What drives Medicaid costs?
   a. In recession, enrollment growth was dominant driver
   - Other factors include health care cost inflation, demographic trends and use of services

b. Most Medicaid spending is attributable to elderly and disabled
- Even though majority of enrollees are children and parents
- Elderly and disabled are 1/4 of population but 65% of cost

c. Spending per enrollee varies sharply by eligibility group
- 2009 figures:
▪ $2,300 per child
▪ $2,900 per non-elderly adult
▪ $15,840 per disabled enrollee
▪ $13,150 per elderly enrollee

d. 5% of beneficiaries with the highest cost account for over half of all spending
- Similar for most health care cost analytics outside of Medicaid as well

e. Nearly 40% of spending for medical services attributable to dual-eligibles
- Make up 15% of population but 38% of spending - most of this spending for LTC services
- Medicare didn’t have prescription drug coverage until 2006. Now that they do, Medicaid doesn’t pay much
-> States pay a “clawback” amount back to federal government because this amount is now covered by the federal medicare program instead of Medicaid programs

3. How effectively is Medicaid spending managed?
   a. Low-cost program, when health status and needs of beneficiaries are taken into account
   - Enrollees in significantly worse health than low-income privately insured population
   - When accounted for, per capita spending is lower in Medicaid than private insurance; primarily due to lower provider payment rates

b. Per enrollee, spending has been growoing more slowly than underlying medical inflation and private health insurance premiums
- 2007-2010 private costs grew 5.5% while Medicaid costs grew 2.5%

c. Cost-containment is a major focus of state administration
- Strategies such as provider rate restrictions, benefit restrictions and utilization controls
- Pharmacy management tools help manage drug spending
- Delivery system reform to improve care and reduce spending growht

d. Program integrity measures at federal and state levels help ensure proper payment and efficiency
- States are responsible for daily management
- Federal monitors and enforces state compliance, reviews, audits and issues sanctions

4. What impact will ACA have on Medicaid costs?
   a. If all states expand Medicaid, total national Medicaid spending from 2013-2022 will increase by 16% (relative to non-ACA environment)
   - Total spending increase by 16% or $1 trillion
   - Federal governmeny would pay 93%
   - Federal spending would increase by 26% and state spending by 3%

b. Federal government will bear majority of new costs
- Most of additional spending would be attributable to adults in Medicaid expansion group, for whom the federal match is 90-100%

c. Increased state costs may be offset, in part, by reduced spending for health under one programs

Question 7

How is Medicaid Financed?

1. Joint financing by state and federal government
2. Funding expands during economic downturn (when states need it most)
3. Newly eligible adults will be matched 100% by federal funding in first 3 years, and then 90% thereafter

Answer 7

1. Who pays for Medicaid?
   a. Financed by a partnership of federal government and states
   - Federal government matches state spending according to a formula
   - Federal match rate varies based on state per capita income
   (1) Called Federal Medical Assistance Percentage (FMAP)
   (2) Lower per capita income = higher federal match rate
   - Lowest match - 50% (Califonia, New York, etc), Highest Match = 73% (Mississippi)
   - Federal funds around 57% of Medicaid spending overall

b. Medicaid is largest soure of federal revenue flowing to states
- 2011 - accounted for 44% of all federal grants to states

c. States commit substantial funds to Medicaid
- 2011 - states spent 16.7% of all general funds on Medicaid

d. Medicaid is a major engine in state economies
- Has multiplier effect as money injected into state economy generates successive rounds of earnings and purchasing

2. How does Medicaid’s financing structure support the program?
   a. Gives states flexibility to respond to challenging needs and supports state efforts to cover the uninsured
   - Matching federal funds at least double the impact of state investment
   - Better than federal block grants that give a fixed sum with llimited flexibility to respond to actual conditions

b. FMAP formula doesn’t adequately address countercyclical nature of Medicaid program
- During economic downturn, Medicaid enrollment expands, but state tax revenue shrinks, increasing the burden on the state
- FMAP uses lagged data, so it may need temporary adjustments (enacted by Congress)

3. How does the ACA affect Medicaid financing?
   a. ACA provides almost full federal funding for costs of adults newly eligible for Medicaid under the expansion
   - Federal government finances 100% of costs states incurred for newly eligible in the first 3 years of reform (2014-2016) and at least 90% thereafter
   - Government would finance about 93% of the total increase due to ACA from 2013-2022, if all states adopt

b. ACA provides enhanced federal match for selected services and purposes
- Items such as new health home options, increases in Medicaid primary care fees, LTSS services, costs of upgrading eligibility and enrollment systems

c. ACA reduces federal DSH allotments
- Reducing by $14 billion from 2014-2019