Presentation to the Senate Finance Workgroup on Healthcare Costs Health and Human Services Commission Charles Smith, Executive Commissioner February 3, 2017
Presentation Overview Key Texas Medicaid Numbers – Fiscal Year 2015 Texas Medicaid Annual Budget Expenditures Percent of Medicaid Expenditures in Texas State Budget Vendor Drug Expenditures Vendor Drug Expenditures Total Growth Trends Medicaid Cost Drivers Other Cost Drivers Historical Methods for Containing Costs Reduction in Potentially Preventable Events for 2013-2015 HEDIS Measures for 2013-2014 Texas Medicaid Caseload by Group Texas Medicaid Beneficiaries and Expenditures Current Medicaid/CHIP Eligibility Levels, March 2014 Texas’ Long-term Services and Supports Waiver Programs Impact of ACA on Medicaid Caseloads Policy Impacts of ACA: Costs and Savings Key HHS System Cost Containment Initiatives Cost Containment – Preferred Drug List Formulary, PDL and Prior Authorization Carve-in to Medicaid MCOs 2 Optional Benefits and Services
Key Texas Medicaid Numbers Fiscal Year 2015 $38 billion: Medicaid spending, including supplemental healthcare payments $3.7 billion: Medicaid prescription drug expenditures $2.7 billion: Medicaid payments to nursing homes 78 percent: Texas Medicaid clients under age 21 52 percent: Births covered by Medicaid 45 percent: Children covered by Medicaid or CHIP 3
Texas Medicaid Annual Budget Expenditures 4
Percent of Medicaid Expenditures in Texas State Budget (in billions) State Year Medicaid Budget, All Funds* Total State Budget, All Funds** Annual Percentage 2000 $ 10,000 $49,453 20.22% 2001 $10,952 $52,440 20.88% $12,678 $56,621 22.39% 2002 2003 $14,593 $59,058 24.71% $14,585 $61,507 23.71% 2004 2005 $15,561 $65,204 23.87% 2006 $16,534 $69,961 23.63% 2007 $17,275 $75,099 23.00% 2008 $19,053 $82,150 23.19% 2009 $20,798 $ 89,981 23.11% 2010 $22,821 $92,056 24.79% $24,816 $95,461 26.00% 2011 2012 $25,438 $92,914 27.38% $25,614 $ 97,840 26.18% 2013 2014 $ 27,121 $100,652 27.11% 2015 $29,403 $102,648 28.64% * Excludes Disproportionate Share Hospital (DSH), Upper Payment Limit (UPL), Uncompensated Care (UC) and DSRIP funds 5 ** Medicaid is FFY, State Budget reflects the state fiscal year, beginning a month prior (September)
Vendor Drug Expenditures 4,000,000,000 3,500,000,000 3,000,000,000 VENDOR DRUG EXPENDITURES 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 STATE FISCAL YEAR 6
Vendor Drug Expenditure Total Growth Trends Fiscal Year 2000-2016 Total Drug Cost Growth Trend 30.00% 25.00% 20.00% VENDOR DRUG EXPENDITURES 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% -25.00% FY 01 FY 02 FY 03 FY 04 FY 05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY 16 STATE FISCAL YEAR 7
Medicaid Cost Drivers Medicaid cost is typically categorized into one (or more) of four “buckets” Eligibility Type (case mix) and number (magnitude) Benefits Services provided Utilization How many and what type of service Appropriateness of service Payments, Revenues and Cost Sharing Rates and payments 8
Medicaid Cost Drivers Medicaid cost is determined by the caseload and cost per client Caseload – Volume or number of individuals served in each category Case Mix – Mix or type of clients in the caseload Cost Per Client – A function of: Utilization – Number of services a client receives Type of services a client receives 9
Other Cost Drivers External factors impacting Medicaid costs include: Changes to federal or state law or policy Population growth and changing demographics Economy Natural disasters and epidemics Consumer expectations and awareness Costs can be impacted by: Payer type Evolutionary and revolutionary advances in medicine Payment rates and policies Changes in clinical practice standards 10
Historical Methods for Containing Costs Multi-pronged approach to improved quality and appropriate utilization Targeted MCO Oversight and Performance Improvement Expectations Hospital Quality Based Payment Program Reduced preventable readmissions rate by 31 percent from 2013-2015 Delivery System Reform Incentive Payment Program (DSRIP) – Statewide Outcome Examples Outpatient visits increased from 872 per 1,000 member months to 894 per 1,000 member months from 2013-2015 Increase in 7 day follow-up after hospitalization for mental illness from 34 percent to 39 percent from 2013-2014 11
Reductions in Potentially Preventable Events for 2013-2014 (per 1,000 member months) 0% -2% -4% -6% -8% -10% -12% -14% Potentially Preventable Admissions Potentially Preventable Readmissions 12
HEDIS Measures for 2013-2014 2013 Rate 2014 Rate 100 90 89 87 90 83 80 79 80 69 70 65 65 59 60 50 44 42 40 30 30 30 20 10 0 STAR STAR STAR STAR STAR+PLUS STAR+PLUS STAR+PLUS Well-Child Visits Adolescent Well- Prenatal Care Postpartum Care Diabetes Care - Antidepressant Antidepressant Care Visits HBA1C Control Medication Medication Management (Acute Management Phase) (Continuation Phase) 13
Texas Medicaid Caseload by Group 14
Texas Medicaid Beneficiaries and Expenditures 15
Current Medicaid/CHIP Eligibility Levels, March 2014 (As a Percent of FPL) 250% 202% 222% 200% 201% 201% 198% CHIP Optional Percent of Federal Poverty 150% Mandatory 144% Level (FPL) 133% 133% 100% 74% 74% 50% 17% 15% 0% Pregnant Children Ages Children Ages Parents and Medically SSI for Aged Long Term Needy** and Disabled Care Women and 1-5 6-18 Caretaker Infants Relatives* Effective January 1, 2014, ACA required states to adjust income limits for pregnant women, children, parents, and caretakers to account for Modified Adjusted Gross Income (MAGI) changes (i.e. the elimination of most income disregards). *In FY 2014, the monthly income limit for a one-parent household is $230 and the monthly income limit for a two-parent household is $251. **For Medically Needy pregnant women and children, the maximum monthly income limit in FY 2014 is $275 for a family of three, which is the equivalent of approximately 17 percent of FPL. CHIP is currently governed by a maintenance of effort (MOE) requirement through FY 2019, stemming from the American Reinvestment and Recovery Act (ARRA), which limits changes to program eligibility.
Texas’ Long-term Services and Supports Waiver Programs STAR+PLUS Home Medically Community Living Deaf Blind with Home and Texas Home and Community Dependent Assistance and Multiple Community Living Based Services Children Support Services Disabilities Services Financial Eligibility Monthly income Monthly income Monthly income Monthly income Monthly income 100% SSI ($721 per within 300% of SSI within 300% of SSI within 300% of SSI within 300% of SSI within 300% of SSI month) monthly income monthly income monthly income monthly income monthly income limit ($2,163) limit ($2,163) limit ($2,163) limit ($2,163) limit ($2,163) Medical Assistance Only (MAO) Consideration of No No No No No Yes parental income for eligibility of a minor Individual annual 202% of the 50% of the $114,736.07 $114,736.07 $167,468 for LON 1 $17,000 maximum cost institutional average institutional average (intermittent); LON 5 Resource Utilization RUG value as of (limited); and LON 8 Group (RUG) value 8/31/2010 (extensive) $168,615 for LON 6 (pervasive) $305,877 for LON 9 (pervasive plus) Waives off Nursing Facility Nursing Facility ICF/IID ICF/IID ICF/IID ICF/IID 17
Impact of ACA on Medicaid Caseloads (March 2016 Estimates) ACA-Related Caseload to FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Medicaid 12-Month 7,349 96,806 97,040 97,928 99,387 101,838 Recertification MAGI Changes/ 45,796 113,007 116,151 119,298 121,838 124,438 Eligible, Newly Enrolled Foster Care to 562 1,722 1,816 1,846 1,875 1,904 Age 26 CHIP to 46,890 228,002 247,261 253,927 260,773 267,803 Medicaid (not “New” clients) 100,598 439,536 462,269 472,999 483,873 495,984 Total Note: All FY 2014 numbers are average monthly Recipient Months (annualized) These changes are now assumed to be in Medicaid caseload. As such, distribution of “type” of addition to the caseload is estimated for the step-ups due to MAGI 18 changes, 12-month recertification and newly enrolled clients. Underlying caseload trends are assumed as a basis for the estimates.
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