HRSA/ MCHB 2005 FEDERAL/STATE PARTNERSHIP MEETING

PUBLIC HEALTH ACROSS THE LIFESPAN

Nuts and Bolts on Medicaid Reform

NEVA KAYE: What I’m going to talk about to you today is a little different. I’m going to talk to you about a project that NASHP conducted called “Making Medicaid Work for the 21 st Century” and for those of you who are not familiar with NASHP, the National Academy for State Health Policy, we are a non-profit, non-partisan organization dedicated to helping states achieve excellence in health policy and practice.

And essentially what we decided back in 2003 was that the program had been around for about 40 years and it had changed and evolved and the states had served as laboratories during these 40 years to try new things. As Matt so eloquently put it, it’s the same statistics here. It is indeed, the largest health care program in America right now. And it does indeed face significant challenges. Due to rules, requirements, and costs. It is quite probably unsustainable. States have been cutting back.

And then, just to go back and emphasize, it plays an incredibly important role for children and low income elderly and disabled. It covers one in four of all children, over half of poor children. So what happened in Medicaid governs what happens in children’s health care coverage very much.

And what NASHP decided back in 2003 is there was a lot to be learned. The program has changed, people have tried things, that it was time to step back and say how can we make the program better for the future. This isn’t how can we contain cost now, this is what can be done to make it work more efficiently, what can be done as an improvement.

And what we did is, we convened a working group of stakeholders and we assigned them the task of reviewing the Medicaid program based on their experience, and identifying their strengths and weaknesses in ways it could be improved. The members of this work group included health secretaries, Medicaid directors, budget officers. We just made a concerted effort to get everyone who had a stake in the program into one room, so that they could talk about what they learned and what their experience had indicated was needed. We had CMS representation on this work group as well. They provided technical assistance and participated in the discussion, but I need to say that they do not necessarily endorse any of the recommendations out of the discussion, but they did participate.

So what we did was we took a year and a half to do this. We started in July of 2003 and the final report was released in January 2005. And the seven nation efforts continue. The work group members are people who have worked in Medicaid for a very long time and they dedicated enormous amounts of time to this project. They attended three in-person meetings, we held 15 conference calls, they reviewed untold documents; options, literature reviews, to make sure their decisions were based not only on their experience, but on what the research shows.

And because Medicaid is a big program, we found that even with this much to work with, that we needed to focus our discussions. And we looked at eligibility, benefits, and financing and cost controls, but we also felt that we could not look at just active and preventive care without also looking at long-term care. And so we looked at all those aspects of the Medicaid program.

We wish to thank our funders who sponsored this work, primarily the Packard Foundation, with also support from AARP, RWJ. And before I get to the actual recommendations themselves, there are a couple of things I need to point out about these recommendations.

First of all, they are drawn from the experience and expertise of a diverse work group. And we did ask that the people who were on the work group to essentially check their representation at the door. We wanted them for their knowledge, not necessarily because they represented any particular group.

These recommendations were really designed to help the Medicaid program move forward and achieve goals that we actually had established as part of the earliest part of the discussion. The recommendations, those that are published as recommendations, do reflect the consensus or majority view of the work group, but it’s very important to remind you that they are not necessarily the views of project funders and remembering some of the discussion, most definitely not of all individual members.

And this package is meant to be considered as a whole. This was a long term, complex process. It was a negotiation. For example, there’s a great emphasis on increased flexibility and there were trade offs give, such as increased coverage. And so to pull some of these recommendations apart would go against the what the work group would wish to see.

So what were the recommendations? First of all, they’re all in that book over there and you can download them and there were a fair number of them. I’m going to hit the highlights.

One of the first things that the group came to was that they felt that categorical eligibility was not a good thing. I don’t know how familiar all of you are with Medicaid eligibility policy, but it is complex. And you spend a lot of time, finding out, you know, how much somebody spent on childcare. How much did they pay on heating depending on what state you’re in. And they felt that having the categories, and deciding whether or not you’re to going cover somebody based on family status, age, or health status, was below a certain level just not the way they felt we should go.

They had much more discussion about where to set that level. We got some cost estimates from the Urban Institute and we ended up picking a hundred percent. And, according to our cost estimates, that hundred percent of eligibility, or a hundred percent for everyone, but then maintaining the current eligibility levels for the children age 0-6 and pregnant women were the federal requirements already went beyond the hundred percent. What we found is that would bring in 5.3 million new individuals, four of which were uninsured. And it would cost an estimated total of 16.6 billion per year when fully implemented for the long term care benefit.

The work group also felt that states should retain the ability to extend eligibility above the mandatory levels if they wanted to. And that once they did that, they could define their groups how they wished. So if they wanted to extend eligibility just for children, they could do so.

And then, as you’ll see, a lot of our recommendations for long-term care really are an attempt to balance the system and to give states some tools to manage long term care system. We defined long term care to include both institutional as well as the home and community based services and what we wanted to do was to give the states the ability to maintain more people in the community, is the bottom line.

And right now, in order to qualify home and community based services, you have to meet the same, you have to be just as sick and just as unable to take care of yourself as somebody who qualifies for a nursing home. So one of the things the work group thought, was let’s de-length those two things and allow states to set different functional levels for determining eligibility so that somebody could be provided services in the community before they were sick enough to need the nursing home and that they could really tighten some of the nursing home standards, so that only those who had really intense needs would go.

We also discussed establishing a combined income and asset test. This is actually something that’s in place in Wisconsin right now. And it’s really designed to get a very small group of people. Those who are very poor, very low income, and have assets that are not that much, but are just a little bit over the Medicaid level. And it would allow the states to consider if they’re going to spend all their assets within six months and end up being on Medicaid by the time they’re in a nursing home, have been in a nursing home for six months or three months and it’s difficult to move them back. Why not say we know it’s going to happen, let’s provide the community based services now and keep them out of the nursing home where it’s not as costly.

Now regarding benefits. This was a major discussion. In the end, the work group came down that they thought that for those people below a hundred percent and the pregnant women and children below six, that the current Medicaid rules should continue to apply. This was a very long discussion, including all the current rules about amount, durations, (inaudible) and cost sharing, and EPSTD.

It was much more of a discussion about the higher income, because a lot of the states felt very strongly that they needed more flexibility, that it’s a different population. The higher up the income level you go, the more people can afford to pay, even if they are still low income. So they decided that states did not, they would not recommend requiring states to offer the same package to everybody on Medicaid. That indeed for the optional ones, they would for sure not be required to offer long-term care. They could offer it if they wish, but it wouldn’t be a requirement.

For adults, they decided that the benefits could be less than for the higher income people, could be less than the full Medicaid package, but they would still have to be comprehensive. So they would establish some sort of benchmark, very similar to SCHIP. The way SCHIP is run.

For children, there was no consensus on the Medicaid package. And this all boils down to EPSTD. When we got this group of stakeholders in the room, there was no way to bring them to consensus on the package. Many of them felt that for the higher income children, EPSTD was a rich benefit and it was the same arguments that Matt was making. About how giving these children coverage, they could afford more and the states could afford to cover more people. But there also people in the discussion who felt that no matter what, given the importance of children’s development and of getting children the services they need at a lower age, anything that undermined the ability to get anything a child needed when they were very young, was just not something that they wanted to see Medicaid do under any circumstances, so we just couldn’t reach a consensus.

We did agree, the work group did agree, that cost sharing should be increased for the higher income. They felt it was a very sound idea, they felt there should be a limit. It shouldn’t be an unlimited amount, but they didn’t agree on where that limit should be.

They also spent some time on talking about the relation to CHIP. They felt very strongly that parents should be able to choose to enroll their Medicaid eligible children into CHIP. For two reasons. There are some parents, who they’ve heard, just simply prefer CHIP, so why not let them? And also, there are some families that are split now between some of the children are covered under CHIP and some of them are covered under Medicaid and this would allow those families to get their children on the same program. But that could only be done under certain conditions, joint applications, parents have the right to change their mind, and Medicaid states would only get the Medicaid matches for those children that were Medicaid eligible enrolled in the CHIP program, so there would be no financial incentives.

They also felt that they should give the states the flexibility to allow those that had expanded their coverage of children beyond the federal requirements before CHIP was put in place to move those children into the SCHIP program. That was simply a matter of giving the states, some states flexibility that had essentially already been given to others.

Around financing, the work group felt very, very strongly that the current structure had served them well. It wasn’t perfect by any means, but it was a solid structure on which to base Medicaid. And that it should continue as a federal state partnership with federal funds matching state expenditures and they wanted enhanced match for the new beneficiaries.

Some very clear rules that were prospective and would define the state expenditures and protect fiscal integrity in Medicaid. Because what people tend to focus on these recommendations is that is the minimum threshold. I have just pulled out some of the recommendations. Those that we put in that are more related to cost controls. Primarily, more flexibility to offer more restrictive for the greater cost sharing for the optional population. So, coverage with pretty much current Medicaid rules up to a minimum threshold and then beyond that, a lot of flexibility to the states who wish to go and to provide coverage to many of those people.

We also said more options for premium assistance, premium assistance for those of you who don’t know, is when the Medicaid agency buys the employer’s insurance that some people are eligible for. We wanted to change Medicaid laws so that some people would be, or some states would be able to do things under a state plan amendment that they can now only do on waiver such as not wrap around benefits, if the benefits meet a certain criteria. And also, one of the things that has been very difficult for a lot of states in their premium support programs is that employers don’t want them to enroll, the people they’re willing to pay for into the employer’s insurance. So the worker felt that federal laws should be changed so that when Medicaid identified that it would be cost effective for them to purchase an employer’s insurance for a Medicaid beneficiary, that they could require that employer to actually allow that Medicaid beneficiary and his or her family to enroll. Ability to do selective contracting without a waiver. This is the concept of negotiating with nursing homes say and hospitals for best price and best quality. Right now, states can do that under waivers. Some have done so, but we want to move it so that it would be easier for them to cut the best deal they could. And then, a lot of our cost control is really focused on the long-term care side. What the work group recommended was establishing a separate home and community based program and allowing states at their option to change their waivers into an ongoing program so that they could not have to go back for the waiver request every three years. And under that, they can maintain their expenditure caps, dealing with the nursing home community long-term care functional eligibility and they could require that long term care services be more tightly managed and more controlled.

The work group also felt very strongly that waivers should continue, because they have served very well as a state laboratory for people to learn how to improve the Medicaid program. And so they felt it was very important to allow that ability to continue states, even while this process was going on, continued to move ahead. Florida, for example, has taken a new waiver to move some consumer directed care elements into their Medicaid program. They’re not the only state to be doing that. So states are, even as we were learning from what they’ve already tried, we’re already moving forward to try new things and we wanted to leave the ability to do that so that we can continue to learn from the states as laboratories.

Just in summary, as you all know, this is just a significant time. Everything’s out on the table for reexamining Medicaid and Medicaid reform. And we undertook this project at NASHP to help inform this discussion. Kaye mentioned being ready when the window of opportunity opens. We wanted to have some concrete suggestions out there that would be an improvement so that when the Medicaid reform wouldn’t focus solely on cutting, but on ways to make it work better. And thank you.