1. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Kentucky Chamber of Commerce Patient Protection and Affordable Care Act Seminar “Impact on Kentucky Medicaid” Elizabeth A. Johnson, Esq. Commissioner Department for Medicaid Services Cabinet for Health and Family Services Elizabeth A. Johnson, Esq. Commissioner Department for Medicaid Service Cabinet for Health and Family Services

2. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES National Perspective on Medicaid Medicaid: –is the nation’s major public health program for low- income Americans –finances health and long-term care services for more than 50 million people –supports tens of thousands of health care providers throughout the country –Medicaid spending enable the program to make significant contributions to state economies in terms of jobs, income and overall economic activity 2 Source: Kaiser Family Foundation – The Role of Medicaid in State Economies: A look at the Research (January 2009)

3. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Kaiser Family Foundation “As state policymakers grapple with closing budget shortfalls, many look to Medicaid for savings, as it is a major component of state budgets. However, it is argued that cutting Medicaid not only adversely affects the beneficiaries and providers, but also may have an impact on the larger state economy.” 3

4. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Flow of Medicaid Dollars Through a State Economy 4 State Medicaid Dollars Health Care Services Vendors (ex. Medical Supply firm) Employee Income Consumer Goods and Services Taxes Federal Medicaid Matching Dollars – Injection of New Money Direct Effects Indirect Effects Induced Effects JOBS Source: Kaiser Family Foundation – The Role of Medicaid in State Economies: A look at the Research (January 2009)

5. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Key Findings (KFF Study) “If the Medicaid program were shut down and the funds returned to taxpayers who saved/spent the funds according to typical consumer expenditure patterns, employment in North Carolina would fall by an estimated 67,400 jobs and labor income would decline by $2.83 billion, due to the labor-intensive nature of Medicaid expenditure.” SOURCE: North Carolina Journal of Medicine, 2008 “The administration of the Oklahoma Medicaid program creates an economic impact on the economy of Oklahoma. In FY 2006, total business spending generated from the Medicaid program was $8.0 billion. Additionally, 99,036 jobs were created, income increased by $2.8 billion and tax revenue increased by $315.0 million.” SOURCE: Oklahoma Health Care Authority “In 2004, federal matching funds to the state of Missouri generated $5.82 billion in economic activity, support 79,892 jobs in the state and increased wages and other income earned by Missourians by $2.8 billion, which generated $211 million in tax revenue.” SOURCE: Missouri Foundation for Health, 2005) 5

6. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES 6 KY Medicaid Statistics Medicaid: –Provides coverage to over 789,000 of Kentucky’s most vulnerable citizens –Provides coverage to over 58,600 children who are enrolled in the Kentucky Children’s Health Insurance Program (KCHIP) –Covered 21,236 births in Kentucky or approximately 37% of all Kentucky births

7. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Expenditures 7 For every dollar received, DMS spends approximately 2.2% for administrative cost (salaries, supplies, etc). Medicaid Benefits Administrative Cost

8. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Economy Unprecedented growth in the number of new enrollees During the current biennium Medicaid has added, on average, 3,400 (900 adults and 2,500 children) new recipients each month compared to just 930 per month in prior biennium 264% increased eligibility growth over the last 17 months (June 2008 – November 2009) 8

9. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Economic Impact for KY Medicaid is the largest payer for long-term care Medicaid has 40,733 enrolled providers (as of 1/2010) Medicaid is the primary payer of healthcare in Kentucky 9

10. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES 10 Medicaid Payments By Member’s Area Development District State Fiscal Year 2009 ($5,543.1 million) Payments by date of payment and by member’s residence. Figures reflect prorated distribution of “below the line” payments such as DSH payments and Medicare premiums. Source: Department for Medicaid Services Decision Support System.

11. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Medicaid Expenditures FY 09 11

12. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Healthcare Reform 2010 Creates option to cover childless adults** Creates state option to provide coverage for family planning services** Creates option to provide CHIP coverage to children of state employees** Increases Medicaid drug rebate percentages* Provide funding to include assessments for adult services*** 2010 Requires states to implement fraud, waste and abuse programs and increases funding $10M per year through 2020* States must make MMIS methodologies compatible with the federal National Correct Coding Initiative* Requires coverage for smoking cessation for pregnant women without cost sharing (10/1)* 2010 States are subject to a Maintenance of effort on Medicaid eligibility, methodologies and procedures until an Exchange is operational in the state*** Requires coverage for free standing birth center services* Extends the Medicaid Money Follows the Person Rebalancing Demonstration program*** 12 *Mandatory **Optional *** Federal Change

13. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Healthcare Reform 2010 Established CMS Innovation Center to test, evaluate and expand Medicaid to foster patient-centered care, improve quality*** Provides states with new options for offering home and community-based services through a Medicaid State Plan Amendment rather than a waiver** 2011 Prohibit federal payments to states for services related to healthcare acquired conditions* Create new option to permit Medicaid enrollees meeting certain conditions to designate a provider as a health home. Provide states taking up the option with 90% FMAP for 2 years** Establishes a national, voluntary insurance program for community living*** 2011 Creates State Balancing Incentive Program to provide enhanced Federal matching payments*** Authorizes $100 million in grant funding for states to establish programs for Medicaid to cease tobacco use, control weight, lower cholesterol, lower blood pressure and/or avoid or improve management of diabetes** 13 *Mandatory **Optional *** Federal Change

14. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Healthcare Reform 2011 Establishes the Community First Choice Option in Medicaid to provide community-based attendant support services to certain people with disabilities** Establishes procedures for screening, oversight, and reporting requirements for providers and supplies that participate in Medicaid* 2012 Establishes a bundled payment demonstration project for up to 8 states for acute and post-acute care Establishes demonstration projects in Medicaid and CHIP to allow pediatric medical providers organizes as accountable care organizations to share in cost-savings 2013 Increase Medicaid payments for primary care services provided by primary care doctors for 2013 and 2014 with 100% federal funding* Extends and increases funding provided in CHIPRA for Medicaid and CHIP enrollment*** Extends authorization and funding for CHIP through 2015*** 14 *Mandatory **Optional *** Federal Change

15. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Healthcare Reform 2013 Provides states with a 1% increase in the FMAP for preventive services** State Medicaid agencies are required to conduct an assessment of the capacity of entities, such as providers of home care, home health, etc., to serve as fiscal agents for personal care attendants who provide services to people receiving benefits through the CLASS Act* 2014 Expands Medicaid to all non-Medicare eligible individuals under age 65 with incomes up to 133% FPL and provides enhanced federal matching for new eligibles* Reduce states’ Medicaid Disproportionate Share Hospital allotments* State Medicaid programs are required to offer premium assistance for employer-sponsored insurance* 2014 Eliminates smoking cessation drugs, barbiturates and benzodiazepines from excluded drug list* States are required to use modified adjusted gross income to determine eligibility. Also required to apply a 5% income disregard when determining eligibility.* 15 *Mandatory **Optional *** Federal Change

16. COMMONWEALTH OF KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES DEPARTMENT FOR MEDICAID SERVICES Healthcare Reform 2014 Establishes Medicaid (with EPSDT benefits for children under age 26 who were in foster care at age 18* Permits all hospitals participating in Medicaid to make presumptive eligibility determinations and allows hospitals and other providers to make presumptive eligibility determinations for all Medicaid eligible populations* 2014 Permits states the option to create a Basic Health Plan for uninsured individuals with incomes between 133- 200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange** Requires states to enable individuals to apply or renew Medicaid coverage through a website with electronic signature; establish procedures to apply for Medicaid* 2015 and beyond Requires states to report annually changes in Medicaid enrollment by population, outreach and enrollment processes * CHIP eligible children who cannot enroll in CHIP due to federal allotment caps must be screened to determine if they are eligible for Medicaid and if not would be eligible for tax credits in a plan that is certified by the Secretary* 23% increase in CHIP match rate*** 16 *Mandatory **Optional *** Federal Change