1. Alliance for Health Reform Medicaid Briefing: Role of States
Barbara Coulter Edwards, Principal
Health Management Associates
February 13, 2009

2. Medicaid: A Partnership
December 6, 2018
Medicaid: A Partnership
Federally authorized, State administered
Federal mandates, State options
Eligibility
Benefits
Reimbursement
Service delivery arrangements
States buy health care in the marketplace
New Medicaid options
- “Benchmark” benefits and enforceable cost-sharing for some populations
- New options for reforming long term care
- New options to expand eligibility
- Health Opportunity Accounts
New Medicaid requirements
- Citizenship documentation
- Asset transfer limits for long term care
- Restricted use of Case Management

3. State Plan Describes Program
December 6, 2018
State Plan Describes Program
Centers for Medicare and Medicaid Services (CMS) at HHS must approve State Plan, State Plan Amendments
Secretary of HHS has discretion to waive Medicaid requirements
State Plan (and waiver Terms and Conditions) become binding on state
Waive statewideness, free choice of provider, eligibility requirements, comparability to promote home and community alternatives to institutional care, to cover groups not otherwise eligible for federal matching funds, to experiment with new delivery and financing arrangements

4. December 6, 2018
Financing Medicaid
States pay for services, receive federal reimbursement for a portion of spending
Federal Medical Assistance Percentage (FMAP)
minimum = 50%
maximum (‘09) = 75.67% (MS)
Varies based on relationship of state’s per capita income to national per capita income
FMAP adjusted annually, lagging data
(FMAP for administration fixed at 50%, with enhanced percentages for information systems)

5. Federal Medical Assistance Percentages (FMAP), FY 2009NH VT WA ME MT ND MN MA OR NY ID SD WI MI RI WY CT PA IA NJ NE OH IN NV IL IL WV DE UT VA CO VA MD CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS TX LA
50% minimum, 83% maximum (not counting any temporary “stimulus” bump AK FL HI
71+ percent (6 states)
62 to <71 percent (19 states including DC)
51 to <61 percent (12 states)
50 percent (14 states)
SOURCE: Federal Register, November 28, 2007 (Vol. 72, No. 228), pp , at correction for North Carolina at Federal Register, Friday, December 7, 2007 (Vol. 72, No. 235), p , at
December 6, 2018

6. How States Finance Medicaid
December 6, 2018
How States Finance Medicaid
State and/or local general fund revenues appropriated to Medicaid (from sales, income, other general taxes)
“Permissible” health care-related taxes and “bona fide” provider-related donations
Inter-Governmental Transfers (IGTs)
Certified Public Expenditures (CPEs)
In May 2008 CMS published a final regulation that would impose new restrictions on when and how states can claim use CPEs or IGTs in relationship to publicly operated providers (like public hospitals). Very controversial, Congress placed the regulation under a moratorium and that moratorium was extended by the Supplemental Appropriations Act of 2008 until April 1, The regulation may be further extended by the stimulus package.

7. Medicaid = State Budget Challenge
December 6, 2018
Medicaid = State Budget Challenge
About 22% of total state spending
Medicaid costs typically grow at faster rate than state revenues
Medical inflation
Aging population
Policy changes
Economy (Medicaid is “counter-cyclical)
States must balance their budgets every year!

8. = & Impact of a 1% Growth in Unemployment 1% $3.4 b $1.4 b State 1.1 m
December 6, 2018
Impact of a 1% Growth in Unemployment
1% increase in unemployment also = a 3-4% decline in state revenues
$3.4 b
$1.4 b
State
1.0%
1.1 m
1.0 m =
& 1%
$2.0 b
Federal
Increase in National Unemployment Rate
Increase in Medicaid and SCHIP Enrollment
Increase in Uninsured
Increase in Medicaid and SCHIP Spending
(billion)
Source: Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, Kaiser Commission on Medicaid and the Uninsured, April 2008

9. Medicaid Grows Faster than State Revenue
December 6, 2018
Medicaid Grows Faster than State Revenue
Overall Medicaid spending increased by just 2.8% in FY This was one of the lowest rates of spending growth in the history of the program.
For the first time since 1999, Medicaid spending growth was less than growth in state revenues.
This has changed the atmosphere in which Medicaid policy making occurs.
NOTE: State Tax Revenue data is adjusted for inflation and legislative changes. Preliminary estimate for 2006.
SOURCE: KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates and KCMU / HMA Survey for 2006 Medicaid Growth Estimates; Analysis by the Rockefeller Institute of Government for State Tax Revenue.

10. Controlling Medicaid Spending
December 6, 2018
Controlling Medicaid Spending
Short-term (balance the budget!)
Eligibility
Benefits/cost-sharing
Reimbursement*

11. State Medicaid Cost Containment Strategies FY 03–07
December 6, 2018
Cut rates, benefits or people
Try to get better value for dollars spent
Reduce underlying costs
NOTE: Past survey results indicate not all adopted actions are implemented.
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, September and December 2003, October 2004, October 2005, October 2006

12. Medicaid Total Spending Projected to Double to Over $700 Billion in Ten Years: 2007 - 2017
December 6, 2018
All funds: Federal, State and Local
Source: Health Management Associates estimates based on data from CBO and CMS, 2007.

13. State Medicaid Challenge
December 6, 2018
State Medicaid Challenge
“Bend the trend” of cost growth:
Delivery system reforms – HIT, disease management, pay for performance, service integration, centers of excellence
Coverage reforms – prevention/primary care, comparative effectiveness, Medicare/Medicaid coordination, community LTC
Consumer behavior, community wellness focus
Increased rates of private coverage

14. Health Costs a Shared Concern
December 6, 2018
Health Costs a Shared Concern
Medicaid buys in the health care marketplace
Impacts, and is impacted by, the larger system
Can only act within federal parameters
Ultimately, can’t resolve Medicaid’s challenges in isolation of the realities of the larger health care system, federal health policy