The State of Medicaid Managed Care in an Era of Federal Reform: Current Trends and Issues Steve Aragón Chief Counsel | Texas Health & Human Services Commission Payors, Plans, and Managed Care Practice Group Annual Luncheon

Prologue: January 2011 $15B Budget Deficit

Texas Medicaid Today Over $30 billion (federal and state funds) during SFY 2011 Medicaid pays for more than 1/2 of all Texas births 15% of all personal healthcare spending in Texas Provides assistance for 2/3 of Texans in nursing homes Insurance for 3.8 million low income, aged, and disabled Texans each month 1 out of 4 Texas children covered Billions in non patient-specific, supplemental federal funds to help care for indigent, uninsured Texans

FY 2011: Approx. $23B, all funds

The Next Wave

Legislative Response $15.2 billion budget cuts Rainy Day Fund intact No new taxes

HB 1 Mandates Expand and improve Medicaid managed care Implement quality based payment systems Streamline and maximize federal funding Encourage personal responsibility Prevent fraud and abuse Establish healthcare collaboratives

Texas Medicaid 1115 Transformation Waiver Expands Medicaid managed care statewide Authorizes Regional Healthcare Partnerships Establishes Quality-based Payment Systems Uses savings to increase reimbursement for uncompensated care Incentives for delivery system improvements Protects hospital supplemental payments (i.e., UPL)

Hospital Finance Components Establishes 2 funding pools Uncompensated Care (UC) Pool Delivery System Reform Incentive Payment (DSRIP) Pool Expands categories of Uncompensated Care E.g., physician costs Enables local governments to cover more uncompensated care costs Removes Charge Caps

Waiver Timeline Regional Boundaries Public Hearing Adopted RHP Rules Effective Date 8/24/12 5/17/12 DSRIP menus sent ot CMS Final DSRIP Menus, Regions, Protocols submitted to CMS 6/1/12 8/31/12 Proposed RHP Rules published in Texas Register Final RHP Plans submitted to CMS RHP Plans submitted to HHSC 6/22/12 9/1/12 10/31/12 ' 12 2012 Jun Jul Aug Sep Oct ' 12 Final RHPs/Anchors Announced 5/28/12 5/31/12 RHP Rules Public Comment Period 6/22/12 7/23/12 RHP Plan Review/Revision Period 9/1/12 10/31/12 Detailed information available at http://www.hhsc.state.tx.us/1115-waiver.shtml

Medicaid Managed Care Timeline HB 7: Medicaid Managed Care Pilot Authorized 9/1/91 HB 2913, SB 1163-1165: Managed Care Client & Provider Protections Travis County Pilot implemented 8/1/93 9/1/97 Tri-County Pilot PCCM Expanded to 197 Counties SB 2896: Moratorium on Managed Care Expansion 12/1/93 9/1/05 9/1/99 Medicaid Managed Care Plan for Foster Children NorthSTAR BH Pilot Launches 4/1/08 SB 10: Statewide Restructuring of Medicaid 11/1/99 Managed Care Expansion begins Moratorium Lifted 9/1/11 9/1/95 9/1/01 Managed Care Expands to South Texas 3/1/12 1991 1991 1994 1996 1999 2002 2004 2007 2009 2012 Made with Office Timeline 2010 www.officetimeline.com

Managed Care Service Delivery Models STAR (State of Texas Access Reform) Capitated, Health Maintenance Organization (HMO) model for non-disabled pregnant women and children. STAR+PLUS Provides acute care services. Capitated HMO model for disabled Medicaid clients and dual eligibles (Medicaid and Medicare). Provides acute and long-term services and supports (LTSS). Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

Managed Care Service Delivery Models STAR Health Capitated HMO model for foster care children. Provides acute care services with emphasis on behavioral health and medication management. Primary Care Case Management (PCCM) Non-capitated service delivery model. Includes non-disabled pregnant women, children, and disabled adults. Acute care services only. Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

Medicaid STAR Program: Geographic Distribution (prior to 03/01/2011) Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

Medicaid STAR Program The STAR Program provides acute care services for pregnant women, Temporary Assistance to Needy Families (TANF) recipients and low-income children and families. STAR operates under the authority of a federal 1915(b) waiver. Risk-based, capitated managed care. Each STAR member is enrolled in a health maintenance organization (HMO) and has a primary care provider (PCP). PCP is chosen by member or assigned by state or HMO.

Medicaid STAR+PLUS Program STAR+PLUS structured as an integrated delivery system (both acute and LTSS) for disabled and chronically ill Medicaid recipients: Risk-based, capitated managed care. Most aged and disabled adults who are not in institutions are required to participate. Includes dual eligible (Medicaid and Medicare) recipients (slightly more than half of STAR+PLUS members).

Medicaid STAR+PLUS Program STAR+PLUS is based on a combined 1915(b) and 1915(c) waiver: Implemented as a pilot in Harris County Service Area in 1998. 2007 - Expanded to the full Harris County Service Area, and to Bexar, Nueces, and Travis Services Area in February 2007. 2011 – Expanded to Dallas and Tarrant Service Area. Goal: achieve a seamless continuum of care by integrating acute and long-term services and supports in a managed care environment. Promotes delivery of home and community-based services: Health maintenance organizations (HMOs) are responsible for coordinating acute and LTSS through the use of a service coordinator.

Medicaid STAR+PLUS Program Service coordinator is responsible for: Formulating an individualized plan covering acute and LTSS. Overseeing smooth transition from acute care to LTSS. Making home visits and assessing members’ needs: Authorize community LTSS. Arrange acute care services. STAR+PLUS Medicaid Only members are assigned or choose a primary care provider. Service Coordinators are required to assist with Medicare physician and service coordination.

Medicaid STAR+PLUS Program: Current Geographic Distribution

Medicaid Managed Care Initiatives Expand Existing STAR and STAR+PLUS Service Delivery Areas to Contiguous Counties. Expand STAR and STAR+PLUS to South Texas. Convert PCCM Areas to the STAR Program model. Create a Dental Managed Care Model for Medicaid. Include In-patient Hospital Services in STAR+PLUS. Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

2011 Managed Care Expansion: Geographic Distribution STAR & STAR+PLUS Managed Care Expansion Service Areas

Proposed Medicaid Managed Care Initiatives Expand STAR and STAR+PLUS to South Texas (Proposed Hidalgo Service Area) Effective date March 2012 Process Competitive Procurement General revenue impact $319.4 million in cost savings Proposed Hidalgo Service Area Counties Duval Hidalgo Jim Hogg Maverick Cameron McMullen Starr Webb Willacy Zapata Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

Proposed Medicaid Managed Care Initiatives Convert PCCM Areas to STAR Program (164 counties) Effective date March 2012 Process Competitive Procurement General revenue impact $61.2 million in cost savings Create a statewide Dental Managed Care Model for Medicaid Effective date March 2012 Process Competitive Procurement General revenue impact $101.6 million in cost savings Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

Proposed Medicaid Managed Care Initiatives Include Inpatient Hospital Services in STAR+PLUS Effective date March 2012 Process Rule/Policy change General revenue impact $28.9 million in cost savings Carve Prescription Drugs into Managed Care Effective date March 2012 Process Competitive procurement General revenue impact Option 1 State-specified formulary $56.8 million in cost savings Option 2 MCO-specified formulary $72.7 million in cost savings Medicaid provides medical coverage to eligible persons The federal government pays just under 60 cents of every dollar spent on Medicaid services Funding is open-ended since coverage is an entitlement for those who are eligible Eligible populations and eligibility criteria is listed for your information Caseload info, if asked: 2,623,215 individuals were enrolled in Medicaid in December 2008 1,741,075 of these receive Children’s Medicaid

Fee-for-Service (FFS) Managed Care vs. FFS Managed Care Fee-for-Service (FFS) Provider Directory Includes Primary Care Providers (PCPs)/ Specialists/LTSS. Member Handbook Includes phone numbers for assistance, descriptions of benefits, complaints, and appeal information. Unlimited Prescriptions for adults (non-duals) Value-Added Services (varies by HMO) Such as 24-hour nurse lines, additional transportation help, cell phones for high-risk clients, weight loss programs, Medical Home with a PCP. No Inpatient Limit Member chooses PCP or is assigned a PCP HMO must ensure access to physicians per contract requirements (emergency, urgent, routine care). Client has to locate willing provider Client receives a Medicaid Handbook Limited to 3 prescriptions per month for adults 30-day Inpatient Stay per Spell of Illness (except for transplants) No Primary Care Provider

Steve Aragón Chief Counsel | Health & Human Services Commission Tel. 512.424.6578 | Email: steve.aragon@hhsc.state.tx.us