MCHB 2006 Federal/State Partnership Meeting

The Nuts and Bolts of the Deficit Reduction Act (DRA)

October 15-18, 2006

KAY JOHNSON: Thanks, Jamie. So, I hope most of you were able to see Jamie's slides this morning because I think they really were very instrumental in framing this. Because we don't have Jocelyn's slides, we thought we were working off the same computer but now we're in a different room, we're in a different computer, I'm going to talk about a couple of the things that Jocelyn's did as the first presenter this morning, and then I'm going to go into my slides. This is an older slide set. I'm just going to use a couple of things from here, from a presentation that Anne Markus and I did for CityMatCH. To just remind you that Medicaid is Health Care Financing that's like insurance but it covers things that most private insurance doesn't cover and that it's a federal state partnership and certainly Joy is going to give you some context about that. We know about its benefits and the four primary areas of the Deficit Reduction Act that we're really going to emphasize in the context of this are these four things. Some of these you heard Sara Rosenbaum talk about this morning and some of these we're just going to kind of get into a little more of the detail of what it means. The other things that Jocelyn, I think, really did a very good job this morning talking about was the environment in which this is happening and reminding us that the reason for this policy is in the title of the Act. And that the focus was on deficit reduction. It wasn't on improving health coverage in the United States, it wasn't on making child health better, and Joy is going to give you later on a little bit more context about all of that. So let me flip over now to talk to you a little bit about the context in which I see this happening. With any luck, these are the right slides.

I want to really back up and talk about why we would emphasize this topic in the context of this meeting. And thinking again about the partnership theme and the collaboration theme, this relationship between Title V Medicaid and EPSDT, and I've had the privilege to work on a couple of HRSA projects where we've been both developing a website on this topic that I'm going to give you the link for later on, as well as the fact that Jamie and I have been visiting a number of states to talk about Title V and Medicaid collaboration to improve EPSDT. So I just want to frame our conversation with a little bit of that. If you couldn't see this morning from the back, the numbers that Jamie put up when he did the introduction to the plenary session, here are a couple of the general highlights of what he said. He said in that slide that if you look at the intersection between the population served by Title V and the Medicaid beneficiary numbers, it's almost 70 percent of the children with special healthcare needs. It's about half of the maternity and infant group. It's a little over that for the infants and toddlers and even at the regular school age children and adolescence, it's up between 35 and 40 percent overlap between the program's populations. And I think it's easy to forget about that. This is a slide, which shows you the percentage of infants served by state Title V programs who had Medicaid coverage. And you can see that virtually all cases, they're above the third. So thinking about the overlap and the way that changes in Medicaid, not only as Sara Rosenbaum said, anything that changes Medicaid affects kids, anything that changes Medicaid affects you.

Since 1967 these programs have been linked. When the EPSDT program was created, there was an amendment to Medicaid and there was simultaneously an amendment to Title V. These programs have had a history and there was always the vision that they would work interactively and that Medicaid would, as it says here, provide coverage but the Title V will help do the assurance role about seeking out, screening, and treating children as well as having the linkage with Medicaid to pay for what we now know as children with special healthcare needs. This has been there since 1967. Today in the Medicaid rules they have an obligation to establish agreement with you and they also have an obligation, which is probably changing under the DRA, to reimburse Title V providers even if services are provided free of charge to low income and uninsured families when a Title V provider is involved. There is likewise a set of rules in the Title V law that talk about Medicaid in EPSDT linkage, and notice that the first element is the same: establishing coordination agreements with Medicaid. Jamie, in his portfolio of work around Title V and Medicaid also had a contract out for Georgetown to put together a compendium of these coordination agreements. It's very nice and it should be out shortly. But if you haven't taken a look for a while at your coordination agreement with Medicaid, I would encourage you to do so. And I think you see a lot of the other functions there are familiar to you.

The other reason that we talk about Medicaid in the context of Title V is the same way that Title V has this sweeping vision and mission. EPSDT is the child health benefit component of Medicaid. And again, created to discover and to provide continuing follow-up and treatment for children. And President Johnson had a vision of this program himself. He personally was committed to doing this based on the work that he had done in rural Texas with low-income children. The Congress' commitment by and large was related to two other things. One, there was, in the context of the Civil Rights Movement, an equal access to healthcare under Medicaid for children. And then the other, and Sara Rosenbaum's written in a very nice paper about this, is that the percentage of young men, then young men, entering the draft who were not qualified to serve was fairly high. That Four F number was too high. And so the point of view of Congress, we weren't, if you pardon me expression, producing high-quality cannon fodder and therefore we needed to get in there and get those kids screened as we work on reducing those disabilities. But there was a two-part phase to why we were doing this but it became a very sweeping guarantee. The other thing I think is important to remember in all of this is that children with Medicaid coverage have access to health care that is similar to their privately insured counterparts and much different than those children who are uninsured.

Now, all of you have stories about children, about why EPSDT or Medicaid doesn't work, about children not getting coverage for developmental services, about kids not being able to find a dentist. At the same time, I think it's very important to remember that access through this insurance card has been hugely effective in changing. We know that the letters, if you follow the letters, you follow the framework of the program. It's about starting before problems worsen, it's about periodic intervals for checking on kids, it's about doing comprehensive well child screening, doing the diagnosis as appropriate follow-up to that screening and treatment.

The program has a dual nature. It's both about paying for the services and reaching out to families. And Medicaid hasn't really done a terrific job on either of these throughout the history of the program. It has a medical necessity definition that is different than what is in most private insurance. And this was long seen as important in setting this EPSDT standard, that it's not only if the service is treatment, which is the typical language for private insurance, or if it's related to injury or illness. When Sara Rosenbaum and I started this work and were doing this at the Children's Defense Fund, it was common even in Medicaid to have that other definition implied, also when I worked at the March of Dimes, if a child was born with a birth defect a private insurance plan would say, "Oh, no. That's habilitation. That's not rehabilitation. A condition that a child is born with we don't have to cover." They were even times when people said it was a pre-existing condition, something that was considered a birth defect, and that private insurance plans didn't have to cover it. And so we've made a real shift in making sure that at least in the Medicaid program, that isn't so.

The other thing that's important to say about this program is that there've been a lot of implementation issues, some of which had been addressed. But you know these. Not all components of the screening get done. Providers don't really know what it's all about. Medicaid, because it's good, sometimes better, at paying the bills than doing outreach to families, doesn't always fulfill its function.

In 1989, there were a series of amendments to the law about mandating all of the federal benefits as medically necessary, about ending arbitrary limits, about allowing for unbundling of services in some states like Iowa and Illinois have just now been able figure out how they want to do this with relationship to developmental services under their common well-funded ABCD programs, and it's set an 80 percent screening performance benchmark. Let's just look for a moment. Why does she keep talking about this when we're supposed to be talking about DRA? I'm going to get there in just a moment, I promise. The EPSDT participation ratios, these are for toddlers so these are for children ages one and two, from their first birthday to their third birthday. Not using the infant data because we do a little better with infants because they have so many visits called for. And with the older children, there aren't visits called for every year. So this is the percentage of one and two-year-olds who had at least one EPSDT screen. Now, what did I just say the performance benchmark was?

MALE SPEAKER: Eighty percent.

KAY JOHNSON: Eighty percent. So you don't have to count. There are six states that have reached the 80 percent mark. There are another about eight that they're up at 79 to 80 percent so they're really very close to the benchmark. But what you can see is that there are still quite a few states that are really in that other area. Now, this is more than a decade. It's about 15 years since the benchmark was set. And this is the population we would think would be most likely to be seen. I'm not going to dwell on it but if you do the analysis on referral ratios in your state, I can assure you, they won't look very good. And what most states here are having in terms of referrals is less than 10 percent of the kids, even in this age range.

Because the program doesn't function well, there've been a lot of conversations recently about how to modernize it and Jamie Resnick and I, as well as a number of other people, Chris Cusp, who many of you know, and Sara Rosenbaum have been involved in a project around modernizing EPSDT. And one of the things that we did in that was begin to think through what are some of the approaches to this tiered benefit notion? What would be the trigger? What Chris Cusp proposed, as Sara was talking about this morning, you might have this narrow package and then you need a trigger to move to the next year of the benefits, what Chris Cusp proposed is that we use the now nationally recognized tool for screening for children with special health care needs. And that if you had that screen and you were screened positive, you would move into the next tier. A lot of conversations are going to evolve around how this program gets changed.

So let me go back to these four things about the Deficit Reduction Act. I'm going to skip that one because it's related to a topic that Johnson was talking about. We'll jump over it. The first and most positive aspect of the Deficit Reduction Act is related to the Family Opportunity Act. And it was talked about a little bit this morning and Peter mentioned it in the context of the work that Julie Beckett has been doing. And what it does is to create an option for families of children with severe disabilities to buy into Medicaid. It's phased in so the youngest children will be eligible next year for this option. This is an option that states would probably have to enact. The population that this is intended to serve is largely the kids who might be under a Katie Beckett home and community-based waiver, under a medically fragile waiver. It's a way for states to do this without a waiver. And you can see that it goes up to a higher income level.

This is an opportunity for many states to get out from under the problem where they've reached their waiver cap and they have very seriously ill children on waiting lists. And that might be a physical condition, a chronic illness, or a mental health problem. It's also in this piece of a Family Opportunity Act that was rolled into DRA are the parent-to-parent information centers. It calls for every state to have such a parent-to-parent information center over the next four years. Many states have them now. Some states want to improve what they have. But this is really the idea that all of you know, where you have parents of children with special health care needs who can provide information and guidance to other parents about how to manage and negotiate the system.

So here's what our eligibility chart looks like. If you focus at that diagram on the right, you've got the mandatory young children up to 133 percent of poverty. You've got the mandatory children ages six to 18, the children and adolescents. Then you have an option in your state either through Medicaid or through CHP to cover children up to or above 200 percent of poverty. In my state of Vermont, our CHP Program goes to 300 percent of poverty and some other states have used that. And then you have this new layer on top about optional Medicaid for children with disabilities up to or above 300 percent of poverty. Now, above 300 percent of poverty, the Feds aren't kicking in any money but the state could certainly choose to have that coverage and have families buy in. Your state might not be like Vermont, a state that wants to cover all children who are otherwise uninsured, with the buy-in option up to 300 percent, but they might be willing to go for it for children with severe disabilities and chronic illnesses.

Now, I want to talk about this premiums and cost sharing issue. There's a long list on the left-hand side and it's pictured in the diagram at the right. And let me just talk to you a little bit. You can see on the bottom, we have our mandatory groups. For the mandatory groups of children, no premiums and cost sharing.

Now, you can see we're slicing and dicing our children even more. We've got this new yellow bar. Remember, we didn't have a yellow bar on this last one. So now we have this new yellow bar. Special rules for the group up to 150 percent of poverty, no premiums but then cost sharing limited to five percent of income and coinsurance up to 10 percent of the cost of a service. Cost sharing, when I go to the doctor under my HMO, I pay $15 a visit. Coinsurance, I pay a portion of my hospital bill, the percentage versus a flat fee. Then you've got the optional Medicaid and/or CHP up to 200 percent of poverty, a different set of rules again. Up to 300 percent of poverty, a different set of rules again. Above 300 percent of poverty, a different set of rules again.

Now, this is what states can do. This is the framework in which your state legislatures can take action. Or in some cases, without your legislatures to state, a Medicaid agency might take action, although in most states this wouldn't be adopted without legislative action. The take-home message from this slide is how complicated this would be to implement. It's that, for you and I, this is a long list in a complicated slide, and if you really wanted to understand it, we'd do a whole presentation around exactly what it means. The take-home message is also that--how many of you could tell me what percentage of your family income you currently spend on health insurance? How many of you could tell me what percentage of your family income in aggregate you spend on health services including your co-pays and cost sharing? How many of you think you could it without a spreadsheet? Ah, one. Jane's ahead of all of us. But there you are. You know, if we could not do this, if we don't actually know this, what are the chances that a family at 125 percent of poverty is going to know when they get to five percent of their cost sharing or 10 percent of their co-insurance?

First of all, if your state is considering this, use the evidence that this can have a very chilling effect on children's enrollment to convince them they don't want to do it. If you can't convince them they don't want to do it, I think that the role of Title V in educating families, in creating systems that help families make sense of this, is absolutely critical. I talked about that.

Benefit rules. Sara talked a little bit this morning about the benchmark benefit package for certain groups. The big deal here is that this can be done without a waiver, just with a state plan amendment. West Virginia and Kentucky have already gone there. It's similar to non-Medicaid/CHP programs in the options that are given to states. The benchmark plans, in fact, the language in the legislation is exactly the language from the CHP legislation. They lifted the CHP options for benefit packages and put it right into the Deficit Reduction Act. To say that if your state instead of the usual Medicaid benefit package would like to use, for example, the state employee benefit plan, or the Federal Blue Cross Blue Shield PPO option, or the HMO with the largest commercial non-Medicaid enrollment in your state, they could use that as the Medicaid benefit plan. Jocelyn mentioned this morning that if your state employee benefit plan has multiple options, they don't have to use the one that most state employees use. They could use another piece of the state employee plan. Or another benefit package approved by HHS, and some of your states did that with regard to CHP.

For children, states not only may, but they are expected to, supplement with wrap-around EPSDT coverage if they go this route. The wrap-around goes back to the EPSDT standard, that's all the benefits that have been covered since 1989. And that obligation to cover comprehensive children's services appeared to be maintained. It is unclear if ultimately CMS will apply this to all groups but for now, that's the way that we read the letter that was sent by Dr. McClellan to the Medicaid directors.

What does this mean? The parallel to this is what a lot of you have been through in the context of your managed care programs where you have a bunch of things that were covered in the Managed Care Contract, but you had other things that weren't. So maybe your Managed Care Contract didn't cover some of the things that were related to part C but the Medicaid paid for. Maybe the dental benefit wasn't in the Managed Care Contract. Or maybe some of the rehabilitation or durable medical equipment services were not in the Managed Care Contracts. So you think about it as, again, separating the two parts of the program. Just like with Managed Care, the challenge here is how would families know what they were entitled to? Because if they get the information from the plan that's covering them that says, "Here are your benefits," how are they going to know their child is also eligible for dental or for DME or for something that isn't in the standard benefit package? This also gives a lot of flexibility. And we don't know how it's going to work. We can envision the way that things have worked with Managed Care but we're not sure how this works.

The other thing that was talked about this morning by, I think, two of the presenters was around the opt out. Did people understand what Sara was talking about? What she was talking about is that it appears the state could enroll everybody in the benchmark package. So enroll all the kids and families, people without disabilities on the outside and the seniors on the outside, enroll all the children in the families in the benchmark package and you only get out if you know that you can and take action on that. Just like in some states, they enrolled everybody in managed care and then you had auto-enrollment in managed care. It's a similar provision to that in creating that opportunity.

I just want to go back again to a little bit of the context in which all of this is happening. And to say this is a sort of complicated slide but I'm going walk through the first segment. So how are we doing this now in terms of even the basic pieces of managed care? What you have on the top is six or more well-child visits in the first 15 months of life. That's the HEDIS measure. How many people know what HEDIS is? Okay, it's a benchmark for managed care. And these are the aggregate of Medicaid plans that participate in HEDIS, and the aggregate of the commercial plans that participate in HEDIS. And so what you have in that first column there is then the mean. So, 45 percent of plans, in 45 percent of plans, children had six or more well-child visits in the first 15 months of life, Medicaid. In commercial plans, almost 69 percent of the plans had performance at the level of six or more well-child visits in the first--so, these are the plans, not the families. Okay? And so now, let's go over and look at the 10th and the 90th percentile. So that in Medicaid, the low performing plans on average, it was 15 percent of kids, of the infants and toddlers, got those appropriate visits and 66 percent as the average of the 90th percentile. So the gap between the high and the low performing plans here for the Medicaid plans is 50 points. So already, we're not getting the performance from these systems that we expect. And now we're talking about a huge C-change, perhaps with less accountability or fewer measures. A number of us were talking this morning. Sara Rosenbaum, Neil Halfon, Charlie Bruner, Jocelyn, and others, and we were talking about the role of these kinds of measures as we make this transition. How can we use the HEDIS measures? Or how can we enlist AHRQ in helping us get to new measures to change even in more detail? So, for example, looking at child development or looking at newborn screening so that we're sure as we make a transition we're actually collecting some data. And if we don't succeed nationally, we hope you'll go after this in your state.

Prior law gave a whole series of types of case management. The typical ones that you know about are EPSDT case management for outreach in informing, which was really just a kind of administrative case management. The general administrative case management where someone assisted with applications or help physicians get their paperwork in order. Targeted case management that was more related to individualizing services where you helped a family get to services or you helped with care coordination, that was matched at the state's medical assistance rate, not at the 50-50 administrative match rate. And then there's also case management that required skilled medical personnel expertise. So reviewing care plans, prior authorizations, those kinds of things where it took a skilled professional, typically a nurse or a doctor, to do that. And that got a higher rate of match because they assumed that it would cost the state more to get those professional services.

All in all, case management and targeted case management was pretty confusing before. So the good news is that the definition has been clarified. And basically the definition now says, assessment activities, development of care plans, referrals and monitoring and follow-up. And there are few more words around each of these but these are now the core definitions of what's in this. It excludes, as Sara mentioned, direct delivery of referred medical, educational, social and other services. Here's the rub. It also really explicitly includes a variety of foster care administrative supports that were being financed through Medicaid. That was one of the targets for this change because there was a lot of money being spent in case management and targeted case management. CMS wanted it ratcheted back and Congress took action on their recommendations.

Now, here's what I see from having worked with all of you over a long period of years on the use of case management and care coordination, is that whether it's case management administrative in Medicaid or it's targeted case management, a lot of you have been using these services as the glue or the underpinning for other parts of your larger child and family health system. You've been using it in part C to help for some of the service coordination when the child was Medicaid eligible. You've been using it to fund a portion of the home visit. You've been using targeted case management or Medicaid case management dollars to do your early childhood mental health project or a child development activity. Maybe you were using it for maternity care outreach. What we believe, based on what little we know, is that some of those arrangements are going to be a problem under the new definition. If you haven't taken a look at this, I would urge you to go home and start taking a look at this right away.

The other important information on this slide is in the upper left-hand corner. This provision is retroactively effective to January of this year. You are 10 months into the problem. So go home, take a look at what you've been funding with Medicaid case management or targeted case management, and figure out if CMS comes to visit, are you going to be okay? Is your program going to be undercut? And if you think you need to start shifting around dollars, it would be a good time to make a plan and maybe go to your Medicaid agency or your legislature and try to figure out how are you going to finance those home visits if it's not through Medicaid targeted case management. How are you going to pay for those part C service coordination activities?

The other piece that Sara talked about, and I'm almost done here, is the limits of the availability of federal financial participation where there is third party liability. And they say third parties include medical, social, educational, and other programs. So think about the dollars that you're using for match, as you do this review of what you're funding in case management, and think about what Medicaid might be paying for today that might not be eligible.

I just want to close by saying that in the work that I've been doing with Jamie, through George Washington University and my own firm, we've helped to put together our website, at HRSA that talks about a lot of the issues around Medicaid and EPSDT that we've talked about here today. So I would encourage you to go there, look for opportunities, send us ideas about examples that we're missing that should be included in that. And just to remember that this partnership and your role, both in helping to advocate for families and helping to be the assurance function and helping to shape these policies as they come to your states, you're going to be the experts on protecting children and women and families as this goes forward.

One final footnote, not exactly on child health, but very important, when I talk about those benchmark packages, and Jocelyn mentioned this, there aren't wrapped-around protections for non-children. So things that you once assumed were covered by Medicaid are no longer required. Your state, for example, could change or eliminate family planning coverage or modify prenatal care coverage as you've long covered it. So I want you to think about the dramatic implications here for the kids but don't forget the adult populations who may also be affected. Thank you.