Jennifer Vermeer Iowa Medicaid Director Iowa Department of Human Services November 11, 2010 Implementing the Affordable Care Act in Iowa: Iowa Medicaid Perspectives

Key Impacts for Iowa Medicaid 11/11/10 Iowa Department of Human Services 2 Eligibility: Expansion to 133% of the Federal Poverty Level $14,400 for family of 1 person or $19,400 for family of 2 New income standard Modified Adjusted Gross Income Integration of Medicaid within the Benefits Exchange / Eligibility Gateway / seamlessness Benchmark benefit plan for new eligibles Other opportunities

Medicaid in Iowa today 11/11/10 Iowa Department of Human Services 3 In FY 2010, Medicaid covered 549,093 Iowans (approximately 18% of Iowans). Total Expenditures (all funds) were $3.0 billion, State share $719 million. Paid over 23 million claims in an average of 6.6 days. Contracts with over 38,000 health providers. Administrative cost of less than 5%. Per person cost growth flat

Iowa Profile 11/11/10 Iowa Department of Human Services 4 Recent expansions for children Expansion to 300% FPL in Medicaid and CHIP (hawk-i) Expansion to 300% FPL for pregnant women Efforts to streamline – express lane, presumptive eligibility. Significant growth in Medicaid over past 2 years due to recession (approx. 60,000) 70-80% of growth is in number of children Coverage of adults limited to parents (less than 28% FPL) and disabled (less than 75% FPL), some other small categories.

Medicaid Expansion – 1/1/ /11/10 Iowa Department of Human Services 5 The ACA removes the categorical restriction in Federal law and mandates Medicaid coverage for ALL individuals up to 133% FPL. Financing – Newly eligible enrollees 2014 to % federal funds 2017 to 2020 – rate decreases on a schedule to 90% Expansion will increase Iowa Medicaid enrollment by estimated 80,000 to 100,000 adults (25%) Parents (currently covered at 28% FPL) Some disabled (SSI group is at 75% FPL) Iowa covers 40,000 non-disabled single adults, childless couples up to 200% FPL under an 1115 waiver called IowaCare. IowaCare is very limited coverage.

Eligibility Policy Options/Opportunities 11/11/10 Iowa Department of Human Services 6 Current Medicaid coverage goes above 133% FPL for some groups Do we continue those groups? Enact option to create a Basic Health Plan between 133% FPL to 200% FPL? Move to the Exchange? Move some, not all? Wraparound? IowaCare planned phase-out Policy decisions for lawmakers

Eligibility Policy Options/Opportunities 11/11/10 Iowa Department of Human Services 7

ACA significantly restructures how Medicaid eligibility will be done 11/11/10 Iowa Department of Human Services 8 Dramatically different way of counting income: Modified Adjusted Gross Income (MAGI) Iowa Today = gross household income from which various deductions and disregards are applied MAGI is based on income tax guidelines (it is very different) New requirements for streamlining eligibility procedures: No asset/resource tests for newly eligible and current adult and children groups

Coordination of Enrollment 11/11/10 Iowa Department of Human Services 9 Eligibility Gateway: ACA requires integration of eligibility and enrollment for Medicaid and the Exchange Common web-based application for Medicaid, CHIP, tax credits Exchange must screen applicants for Medicaid and CHIP and Medicaid/CHIP must accept referral without further review Medicaid must ensure referral to exchange for those found ineligible for Medicaid and CHIP Exchange may contract with Medicaid to determine eligibility for tax credit subsidies Potential for large duplication of effort, financial disputes between Medicaid eligibility processes and Exchange without an integrated approach

Operational Challenge: Transforming the Eligibility Process 11/11/10 Iowa Department of Human Services 10 Current mainframe eligibility system is 30 year old system that has hardening of the arteries and uses a dead language * Paper applications Labor-intensive reviews and work flow Off-system calculations and work-arounds Very inflexible, expensive to maintain and operate * Thanks to Andy Allison, KHPA Executive Director

Operational Challenge: Transforming the Eligibility Process 11/11/10 Iowa Department of Human Services 11

Operational Challenge: Time 11/11/10 Iowa Department of Human Services 12 Building eligibility systems and re-engineering processing across the state to wholly new methods and structures is very complex and takes a lot of time – 3 years is not a lot of time DHS is beginning to research system and redesign options and planning Plan to provide options, budget estimates for the Governor and Legislature for FY 12 budget consideration Appears significant federal financing will be available for IT

Medicaid Expansion Benchmark Plan 11/11/10 Iowa Department of Human Services 13 ACA mandates that new eligibles (those added under the expansion to 133% FPL) have at least a Benchmark Benefit Plan o 100% Federal funds , phases down to 90% match States have flexibility to design the plan What will we cover? o Mental Health benefits? Opportunity to leverage higher Medicaid match rate to save on services currently 100% state and county funded, and impact MH populations in prisons and jails

Other Impacts 11/11/10 Iowa Department of Human Services 14 Challenge of size – managing the size and complexity of implementation and ensuring collaboration with other agencies, at a time of state budget shortages. Challenge of unknowns – designing programs and processes at the same time the federal rules/guidance not available or are still being developed. IME operations: Workload volume – claims, medical review, member/provider assistance Prospect for new claims processing IT system at the same time Medicaid provider network capacity – will there be enough providers? Primary care workforce Cost containment

Fiscal Impact 11/11/10 Iowa Department of Human Services 15 Many unknowns remain; much yet to be determined Potential for increased costs to state: Mandatory Medicaid expansion Costs associated with developing and operating the Exchanges Changes to eligibility systems & interoperability with Exchanges Restructuring of drug rebate programs Reduction in Disproportionate Share Hospitals (DSH) payments Potential for decreased costs to state: Enhanced FFP Shifting current Medicaid populations in part or in whole to the Exchange Long Term Care options at enhanced federal match New Medicaid coverage at enhanced federal match, possibly replacing state-only or county- only funded programs

Opportunities 11/11/10 Iowa Department of Human Services 16 The ACA includes provisions that are not mandatory, but include those that could assist states to implement improvements or re-balancing, such as: New State Plan options Improvements in health care programs Mental Health Long Term Care Early Childhood Programs Demonstration grants Payment reform initiatives Integration of Other Transformation Initiatives Medical Home Health Information Technology (HIT) ICD-10 conversion

Questions? 11/11/10 Iowa Department of Human Services 17