Looking for a new direction Ohio Medicaid at a Crossroads Looking for a new direction March 2011 www.chanet.org

Medicaid: What You Should Know Fifteen percent of Ohioans rely on Medicaid. Medicaid enrollment grew 9% from 2008 to 2009 due to the recession. Federal law precludes states from dropping enrollment. Medicaid is the largest item in the state’s budget – accounting for 26% of spending. The state faces $8 billion budget gap for the 2011-2012 biennium. For full citation information please refer to accompanying issue brief available on our website at www.chanet.org. ____________________________________________________________________________________________________________________________ Catherine Candisky, “Medicaid Growth Burning Budget,” The Columbus Dispatch, August 8, 2010.

Healthy Start and Healthy Families Who is Covered? Healthy Start and Healthy Families Who is Covered? Income Eligibility Guidelines Gross Monthly Income Family Size 1 2 3 4 Children (up to 19) 200% FPL $1,805 $2,429 $3,052 $3,675 Pregnant Women Families 90% FPL $813 $1,093 $1,374 $1,654 Healthy Start covers children up to age 19 and pregnant women. Healthy Families covers parents or guardians of children who are 19 or younger. Together, Healthy Start and Healthy Families comprises what is known as the Covered Families and Children (CFC) program. Each month Medicaid covers around 992,000 children, 340,000 parents, 108,000 seniors and 259,000 people with disabilities. ______________________________________________________________________________________ •Ohio Department of Job and Family Services, Ohio Medicaid Eligibility Guidelines. •Health Policy Institute of Ohio, “Ohio Medicaid Basics 2009.”

Older Adults and People with Disabilities Who is Covered? Older Adults and People with Disabilities Who is Covered? Income Eligibility Guidelines Income Resources Individual Couple Older adults, (age 65 or older & disabled people (of any age) 64% FPL $589 $1,011 $1,500 $2,250 In addition to children and families, Medicaid also provides coverage for older adults and people with disabilities, also known as the Aged, Blind and Disabled (ABD) population. The ABD population program covers people who are age 65 or older, those who are legally blind and those with disabilities. Ohio’s Medicaid program also includes a supplement to Medicare for low-income elderly through its Medicare Premium Assistance Program (MPAP). For people with disabilities who are able to work, Medicaid in Ohio is available as a buy-in program for those with incomes up to 250 percent of the poverty level. ________________________________________________________________________________- •Ohio Department of Job and Family Services, Ohio Medicaid Eligibility Guidelines.

Medicaid Services Examples of Federally Mandated Services Examples of Ohio’s Optional Services Early & periodic screening, diagnosis and treatment for children Independent psychological services for children Inpatient hospital care Prescription drugs Physician services Vision including eyeglasses Outpatient – including hospital, health clinics & FQHCs Home- and community-based alternatives to facility-based care Medical and surgical vision Occupational therapy Medical and surgical dental Speech Therapy Transportation to Medicaid services Podiatry Home Health Hospice Nursing Facility Community mental health services Medicare Premium Assistance Private duty nursing The broad federal regulations that govern the Medicaid program mandate that states provide certain services. States can also choose to offer additional optional services. __________________________________________________________________________________________________ •Health Policy Institute of Ohio, “Ohio Medicaid Basics 2009.”

How is Medicaid Funded? The Federal Portion Based on a percentage known as Federal Medical Assistance Percentage (FMAP) FMAP reflects the portion of Medicaid costs the federal government will cover Enhanced FMAP (e-FMAP) percentages were part of the stimulus legislation passed in 2009 E-FMAP ends June 2011 Ohio FMAP will then be 63.39 percent Medicaid is funded jointly through the state and federal governments. A state’s FMAP is determined by the U.S. Department of Health and Human Services and is based on a three-year average of per capita personal income in comparison to the national average. ___________________________________________________________________________________________________________________ •Federal Register: November 27, 2009 (Volume 74, Number 227) pages 62315-62317. Department of Health and Human Services, 2011 FMAP Notice, http://aspe.hhs.gov/health/fmap11.htm. •Health Policy Institute of Ohio, “Ohio Medicaid Basics 2009.”

How is Medicaid Funded? The State Portion State-generated general revenue fund (GRF) Local levy dollars Pharmacy rebates Healthcare provider taxes Healthcare provider taxes, or franchise fee assessments, contributed $580 million to the state Medicaid budget in the 2010-2011 biennium. __________________________________________________________________________________________________________ •Susan Ackerman, “Medicaid Budget Poses Additional Challenges in the FY 2012-2013 Budget,” The Center for Community Solutions, State Budgeting Matters 7, no. 1 (2011).

Medicaid: Provider’s Perspective Underpayment From 2000-2009 Medicare & Medicaid underpayment rose from $3.8 billion to $36 billion Ohio hospitals receive $0.84 for every dollar spent caring for Medicaid patients. Disproportionate Share Hospital program Additional financial support to hospitals that serve a significant number of low-income patients Hospital Care Assurance Program The reimbursement received from Medicaid is crucial hospitals and the patients they serve, yet it also notoriously underpays providers for their services. In 1981, the Medicaid Disproportionate Share Hospital (DSH) program was established by Congress to help ensure states provide adequate financial support to hospitals that serve a significant number of low-income patients. Ohio’s DSH program is called the Hospital Care Assurance Program (HCAP). Like the traditional Medicaid program, DSH funds are split between the state and the federal government. Ohio secures its portion of DSH funding by assessing an HCAP fee on all hospitals. This money is then pooled with its match from the federal government and redistributed to hospitals based on a formula determined by the Ohio Hospital Association with oversight the Ohio Department of Job and Family Services. _______________________________________________________________________________________________________ •American Hospital Association, “Underpayment by Medicare and Medicaid Fact Sheet,” December 2010, http://www.aha.org/aha/content/2010/pdf/10medunderpayment.pdf (accessed February 18, 2011). •Ohio Hospital Association, “Medicaid Fact Sheet,” http://www.ohanet.org/SiteObjects/C2BF96C2F636E9453B81C5A012E4CAEF/Medicaid%20Fact%20Sheet%20updated%2008-24-09.pdf (accessed February 21, 2011). •The Centers for Medicare and Medicaid Services, “Disproportionate Share Hospital,” http://www.cms.gov/AcuteInpatientPPS/05_dsh.asp#TopOfPage (accessed February 21, 2011).

Medicaid: State’s Perspective Medicaid largest item in state budget Growing at a rate of 8% (+) the last 10 years Crowding out other state-funded services $8 billion budget gap Office of Health Transformation created to address Medicaid costs

Strategies to Stem Spending Lever One: Cut Enrollment Doesn’t erase healthcare needs Targeted population (CFC)has low healthcare needs Lever Two: Cut Services Mandatory services can’t be cut Can create more serious, expensive health needs Lever Three: Cut Provider Payments Cost-shifting Inadvertently drives up private insurance cost Traditionally, there are three “levers” for accomplishing cuts in Medicaid enrollment. Each of these provide only limited opportunity to reduce spending and may also have unintended consequences.

What are Ohio Hospitals Doing? Revised Franchise Fee Model Includes increased hospital assessment $1.2 billion additional dollars for the state Quality Initiatives Cost of poor outcomes avoided e.g. Preventable hospital-acquired infections, reducing heart attack mortality, improving process and outcomes related to pneumonia care Fraud & Abuse Prevention

Suggestions for Stakeholders Urge policymakers include revised franchise fee in state’s two-year budget Support initiatives to improve quality of care Point out unintended consequences of cuts to enrollment, services & provider payments Support the state’s efforts to rebalance long-term care Question lawmakers about funding for elderly and disabled recipients. Is the state the right entity to fund their care?