1. Healthcare Payment Systems & Policy: Medicaid & CHIP
Kimberly Davis
Policy Advisor for Policy Development
Medicaid/CHIP Division

2. Medicaid & CHIP Background
Overview
Medicaid & CHIP Background
Benefits
Eligibility & Enrollment
Costs & Financing
Delivery Models
Texas Specifics
Current HHSC Initiatives

3. Medicaid & CHIP: Overview

4. Provides medical coverage to eligible individuals primarily:
Medicaid: What is it?
Provides medical coverage to eligible individuals primarily:
Low-income families
Non-disabled children
Related caretakers of dependent children
Pregnant women
People age 65 and older
People with disabilities
Entitlement program = no enrollment limitation

5. Federal / State Program
Medicaid: What is it?
Federal / State Program
Funded jointly by state and federal governments
Administered by states
Subject to federal law and regulation:
Requires coverage of certain populations and services
Allows states to cover additional populations and services

6. Medicaid: Who runs it? Federal level Texas level
Centers for Medicare & Medicaid Services (CMS)
Within the U.S. Department of Health and Human Services:
Kathleen Sebelius – Secretary of Health and Human Services
Cindy Mann – Director, Center for Medicaid and State Operations
Texas level
Administered by single state agency – HHSC
Billy Millwee – Texas State Medicaid Director
Single point of contact with federal government
Establishes Medicaid Policy
Administers state plan or agreement with the federal government
Administers Medical Care Advisory Committee (MCAC) mandated by federal Medicaid law

7. Medicaid in the Federal Budget, Federal Fiscal Year 2009

8. Medicaid State Plans: State & Federal Program
State Plans = agreements with federal government on:
Eligibility
Services
Program administration
Financial administration
Other program requirements
State Plan Amendments (SPA) = requests to CMS to change:
Optional services provided, or
Manner benefits are offered.

9. Medicaid Waivers: State & Federal Program
Waivers = state request to CMS for permission to deviate from certain requirements, often to:
Provide services beyond those in state plan.
Limit geographical areas.
Limit free choice of providers.
Implement innovative new service delivery and management models.
Common Types of Medicaid Waivers
1115 Waiver – Research and Demonstration – Test policy innovations likely to further Medicaid program objectives.
1915(b) Waiver – Freedom of Choice – Allow states to implement managed care delivery systems or otherwise limit individuals' choice of provider under Medicaid (i.e. STAR+PLUS).
1915(c) Waiver – Home and Community-Based Services – Waive Medicaid provisions to deliver long-term care services and supports in community settings as an alternative to institutional settings.
Scarves & Umbrellas Analogy –
Waivers are intended to provide certain benefits to certain populations in certain areas. For instance, a SPA would be used to provide scarves to all Medicaid recipients in the state to keep them warm in the winter and help combat seasonal medical conditions. This proposition would be well suited for Amarillo, but the people in Corpus Christi don’t need scarves—the temperature does not get that cold down in South Texas. Instead, South Texans need umbrellas because they have wet winters. A Waiver (i.e. demonstration project) would be used to target the specific populations (Amarillo vs. Corpus Christi) and specific expansion of benefits (scarves vs. Umbrellas).

10. Children’s Health Insurance Program (CHIP)
CHIP: What is It?
Children’s Health Insurance Program (CHIP)
Medical coverage for uninsured children up to age 19.
Joint state-federal program, either:
Extension of state Medicaid program
Separate program
Federal funding
Limited to block grant amounts allocated to each state.
Not entitlement program, so states can:
Determine age and income eligibility.
Cap enrollment.
Limit service benefits (as approved by HHS).

11. Medicaid Benefits: Acute and Long-Term Care
Acute Care
Physician, inpatient, outpatient, pharmacy, behavioral health, lab, X-ray services
Health care for children and pregnant women for episodic health care needs.
Long-Term Services and Supports
Chronic health conditions requiring ongoing medical care & often social support.
Includes care:
In facilities, e.g. nursing homes
For behavioral health conditions
Distinction based on:
Cognitive and medical condition
Need for assistance with activities of daily living
Degree to which a disability is chronic
Nature of services provided
Setting in which services are provided

12. Medicaid Benefits: Mandatory vs. Optional
Inpatient hospital services
Outpatient hospital services
Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services
Nursing facility services
Home health services
Physician services
Rural health clinic services
Federally qualified health center services
Laboratory and X-ray services
Family planning services
Nurse midwife services
Certified pediatric and family nurse practitioner services
Freestanding birth center services (when licensed or otherwise recognized by the state)
Transportation to medical care
Smoking cessation for pregnant women
(1) Medically-necessary HIV testing covered through laboratory benefit. (2) Children can be tested for HIV through EPSDT.
**This and the following slide provided by CMS February 3, 2011:

13. Medicaid Benefits: Mandatory vs. Optional
Prescription drugs
Clinic services
Physical therapy
Occupational therapy
Speech, hearing and language disorder services
Respiratory care services
Other diagnostic, screening, preventive and rehabilitative services
Podiatry services
Optometry services
Dental services
Dentures
Prosthetics
Eyeglasses
Chiropractic services
Other practitioner services
Private duty nursing services
Other services approved by HHS Secretary
(1) HIV testing is an optional benefit under preventive/screening services.(2) HIV testing is optional under CHIP depending on well-baby / well-child services & state’s elected benefit package.

14. CHIP: Benefits Inpatient hospital services
Outpatient hospital & ambulatory services
Lab & X-ray
Surgical & medical physician / physician extender services (including immunizations & well-baby / well-child exams)
Emergency services
Prescription drugs
Behavioral health & substance abuse benefits
Physical / speech / occupational therapy
Home health
Transplants
Durable medical equipment
Dental services
Hospice care services
Skilled nursing facilities
Vision (eye exams / eyeglasses)
Chiropractic services
Tobacco cessation
1. With an eye toward preventive care, CHIP currently provides the following benefits.

15. CHIP: Benefits
Perinatal benefits = limited, basic prenatal care including:
Prenatal & postpartum visits
First 28 weeks of pregnancy: 1 visit every 4 weeks
28 to 36 weeks of pregnancy: 1 visit every 2-3 weeks
36 weeks to delivery: 1 visit per week
Delivery
Hospital facility charges
Professional services charges
Other
Pharmacy (based on CHIP formulary)
Prenatal vitamins
Limited laboratory testing
No cost-sharing requirements
2 postpartum visits
Additional visits if medically necessary
Perinatal began accepting applications on Jan. 2, 2007
– Assessments
– Planning services
– Education and counseling

16. Income and Federal Poverty Levels
Federal Poverty Level (FPL)
Compared to family’s income level.
Basis for Medicaid financial eligibility.
Intended to identify the minimum amount of income a family would need to meet certain, very basic, family needs.
Indicate annual income levels by family size and are updated each year by the U.S. Department of Health and Human Services.

17. Federal Poverty Income Levels, 2011
U.S. Department of Health and Human Services poverty guidelines based on annual income
Family Size 100% FPL
,890
,710
,530
,350
,170
,990
,810
,630
At 100% of poverty, for families larger than 8, add $3,820 for each additional person.
SOURCE:  Federal Register, Vol. 76, No. 13, January 20, 2011, pp

18. Medicare and Medicaid Eligibility
Federally funded
Federally administered
Eligibility
People age 65+
People with disabilities
People with end stage renal disease
Medicaid
Jointly funded by federal and state government
Administered by state
Eligibility
Low-income individuals
Pays for most long-term care services & supports
Reference 2-year waiting period fact sheet

19. Medicaid & Medicare: Dual Eligibles
Individuals who are aged or disabled (Medicare eligible) AND
Limited income (eligible for some Medicaid coverage)
Full Dual Eligibles
Entitled to Medicaid benefits that Medicare does not cover.
Include low-income individuals who are aged or disabled in community, waiver programs, nursing homes, and state schools.
Other Dual Eligibles
Eligible only for Medicaid payments for Medicare premiums, deductibles, and coinsurance for Medicare services.
Not entitled to Medicaid services.
Include several categories of eligibility; incomes generally up to 135% of FPL.

20. CHIP Eligibility CHIP covers children in families who:
Have too much income or too many assets to qualify for Medicaid.
Cannot afford to buy private insurance.
Generally are below 200% of the FPL.
States can design their CHIP program as:
Medicaid expansion (7 states, D.C. and 5 territories)
Separate from Medicaid (17 states)
Combination of the two approaches (26 states)

21. Medicaid & CHIP: Texas Specifics

22. Texas Medicaid: Organization

23. Texas Medicaid: Optional Benefits
The state may choose to provide some, all, or no optional services specified under federal law.
Optional services provided in Texas include:
Prescription drugs
Physical therapy
Occupational therapy
Targeted case management
Some rehabilitation services
Certified Registered Nurse Anesthesiologists
Eyeglasses/contact lenses
Hearing aids
Services provided by podiatrists
Certain mental health provider types

24. Texas Medicaid: Pharmacy Benefits
HHSC Vendor Drug Program performs most pharmacy services functions, including policy and program oversight, formulary management, and pharmacy customer services.
Texas contracts with private companies for:
Pharmacy claims processing
Prior authorization services
Administration of drug rebate program
Texas contracts with pharmacies to provide Medicaid clients with pharmacy benefits.
Over 4,200 licensed Texas pharmacies are under contract.
Beginning March 2012, managed care organizations (MCOs) will be responsible for providing pharmacy benefits to their members

25. Texas Medicaid Women’s Health Program (WHP): Benefits
Certain screenings related to family planning:
Pregnancy test
Rubella antibody test
Routine urinalysis
Urine culture
Complete blood count (CBC)
Hemoglobin and hematocrit tests
Blood typing
Blood glucose screening
Lipid panel
Thyroid stimulating hormone test
Annual family planning exam & Pap smear
Follow-up visit, if related to contraceptive method
Counseling on specific methods & use of contraception
Female sterilization
Follow-up visits related to sterilization
Sexually Transmitted Infection (STI) Screenings

26. Texas Medicaid Women’s Health Program (WHP): Benefits
Services not covered through WHP:
Mammography - screens for breast cancer are limited to a clinical breast exam.
Treatment for any conditions diagnosed during a WHP visit.
Visit for pregnancy test only.
Visit for STI test or treatment only.
Follow-up after an abnormal Pap test.
Counseling on and provision of emergency contraceptives.
Referrals made for medical problems to providers that perform elective abortions.
Other visits that cannot be appropriately billed with one of WHP- allowable diagnosis codes.

27. Texas CHIP: Benefits
Inpatient general acute & rehabilitation hospital services
Surgical services
Transplants
Skilled nursing facilities
Outpatient hospital, comprehensive outpatient rehabilitation hospital, clinic & ambulatory health care center services
Physician/physician extender professional services (including well-child exams & preventive health services)
Laboratory & radiological services
Durable medical equipment, prosthetic devices, & disposable medical supplies
Home & community-based health services
Nursing care services
Inpatient mental health services
Tobacco cessation
Outpatient mental health services
Inpatient & residential substance use treatment
Outpatient substance use treatment
Rehabilitation and habilitation services
Hospice care services
Emergency services
Emergency medical transportation
Care coordination
Case management
Prescription drugs
Dental services
Vision
Chiropractic services

28. Texas CHIP Perinatal Program
Provides prenatal & post-partum care to pregnant women ineligible for Medicaid due to:
income (whose income 186%-200% FPL), or
immigration status (with income below 200% FPL).
Upon delivery, CHIP Perinatal newborns in families:
With incomes at or below 185% FPL:
are deemed to Medicaid
receive 12 months of continuous Medicaid coverage
With incomes above 185% FPL up to 200% FPL:
remain in CHIP Perinatal Program
receive CHIP benefits for the remainder of the 12-month coverage period
Members receiving CHIP Perinatal benefits are exempt from:
90-day waiting period, asset test & all cost-sharing, including enrollment fees & co-pays

29. Medicaid Benefits: Compared to Private Employer-Sponsored Coverage

30. Texas Medicaid: Eligibility
Medicaid serves:
Low-income families
Non-disabled children
Related caretakers of dependent children
Pregnant women
People age 65 and older
People with disabilities
Texas Medicaid does not currently serve:
Non-disabled, childless adults

31. Texas Medicaid Eligibility: Percent of FPL June 2010

32. Texas Medicaid Women’s Health Program (WHP): Eligibility
WHP Eligibility Criteria:
Ages 18 – 44.
U.S. citizens & qualified immigrants.
Reside in Texas.
Not eligible for full Medicaid benefits, CHIP, or Medicare.
Not pregnant.
Not sterilized, infertile, or unable to get pregnant due to medical reasons.
No private health insurance coverage covering family planning services.
Exception if filing a claim would cause physical, emotional, or other harm from a spouse, parent, or other person.
Countable household income at or below 185% FPL.

33. Texas CHIP: Eligibility
General eligibility
Uninsured children under age 19.
CHIP Perinatal serves unborn children meeting eligibility requirements.
Gross income up to 200% FPL.
U.S. citizens or legal permanent residents.
Not eligible for Medicaid.
Families with net incomes above 150% FPL must meet assets criteria:
Assets below $10,000.
One vehicle is exempt up to $18,000; additional vehicles are exempt up to $7,500.
Eligibility is determined for a 12-month period; income verification at 6th month for families at 185% FPL and above
CHIP Perinatal eligibility is determined for a 12-month period
CHIP serves:
To qualify for CHIP, a child must be under age 19, a Texas resident and a U.S. citizen or legal permanent resident.
The citizenship or immigration status of the parents does not affect the children's eligibility and is not reported on the application form.
An eligible child must live in a household with federal poverty income limits (FPL) at or below 200% and not be otherwise eligible for Children's Medicaid
Any adult who lives with an uninsured child and provides care for that child can apply.
A family's size, income and assets determine whether the children qualify for CHIP.
If the family has a net income above 185% FPL, they must meet assets test.
Finally, eligibility is determined for a 12-month period. If the family has a net income above 185% FPL, they have a six-month income verification.
Facing a budget shortfall in 2003, the 78th Legislature passed major reforms to the Children’s Health Insurance Program.
In the 80th Legislature, those major reforms were reversed with House Bill 109 by Rep. Sylvester Turner, including:
Figuring eligibility on net income, rather than gross income to disregard certain expenses;
Removing a 90-day waiting period for coverage designed to prevent “crowd out;”
Increasing the liquid assets allowable to be eligible from $5,000 to $10,000 per household;
Along with the exempt value of vehicles;
And granting coverage for 12 months, rather than 6.
In the bill eventually sent to the Governor, the Senate amended the period of eligibility to require an electronic check on families with the highest incomes at the six-month mark. Starting last month, families with incomes above the 185 FPL had their six-month review to see if the family’s income had changed.
HB 109 also required outreach to increase awareness of CHIP, which included radio ads in both English and Spanish. The campaign also includes messages on buses, ads in publications that serve primarily African-American and Hispanic communities; ads for Spanish language TV, and brochures in English, Spanish, and Vietnamese. HHSC has also contracted with 28 community-based organizations to provide application assistance and conduct grassroots outreach efforts about CHIP or other HHSC programs.

34. Texas Medicaid: Enrollment
The Texas Medicaid program has grown considerably in recent years.
Texas Medicaid now serves over 3.4 million people out of a total population of about 25 million (as compared to 2.8 million in 2006).
Persons who are aged, blind or disabled represent:
25% of Texas Medicaid recipients.
58% of Texas Medicaid costs.
They often have complex medical conditions, needing both
Acute care (e.g. hospitalization, outpatient services, and laboratory), and
Long term services and supports (LTSS) provided in the home or community (e.g. assistance with daily living, skilled nursing, and therapy services).

35. Texas Medicaid: Historical Enrollment
History of Medicaid Eligibility: Caseload
September August 2010

36. Texas Medicaid: Enrollment by Age, State Fiscal Year 2009

37. Texas Medicaid: Enrollment & Spending
June 2011, 3.3 million people received Medicaid.
Over 2.3 million are children.
Over 700,000 are individuals who are aged, blind, or disabled.
Texas Medicaid beneficiaries & expenditures, state fiscal year 2009
If you ever see ABD in an or report, it refers to the Aged, Blind and Disabled population.

38. Texas Medicaid: State Budget
Medicaid spending FY
$44.9 billion from all fund sources
$18.8 billion from General Revenue (GR), GR-Dedicated, and Tobacco Settlement Receipts
75% of all appropriations for HHS

39. Texas Medicaid: Historical Spending
$16.1 B
Federal Spending
$8.6B
Federal Client Services Payments ($Millions) $ $2, $6, $16,146.3
Federal Client Services ARRA Portion ($Millions) $1,345.8
State Client Services Payments ($Millions) $ $1, $4, $8,550.1
Total Spending ($Millions) $1, $3, $10, $24,696.4
State Spending

40. Texas CHIP: Enrollment & Spending
How many children in Texas are enrolled CHIP?
Caseload for June 2011: 539,137 children
How much is spent on CHIP?
Total state fiscal year 2010 budgeted* for CHIP
$815.6 million from all fund sources
$270.2 million from GR
*Based on FY 2010 Operating Budget.  Includes all traditional CHIP costs: client service costs for federally funded children, legal immigrants, school employee children, and vendor drugs; administrative and operating expenses.
In FY 2007, the average number of children on CHIP per month was 312, 101 children. The average for 2006 was 308,762. As of January of 2008, enrollment in CHIP had increased to a total of 352, 981 children, and is expected to increase to over 450,000 by the end of the biennium based on the latest forecasts.
Funding totals $2 billion in All Funds ($624 million in General Revenue Funds).
Keep in mind that these figures do not include those in the CHIP Perinatal program.

41. Texas CHIP: Average Monthly Enrollment, State Fiscal Year 2000-2010

42. Texas CHIP: Enrollment by Age, State Fiscal Year 2010

43. Texas CHIP Perinatal Program: Enrollment, State Fiscal Year 2007-2010

44. Texas Medicaid: FMAP Federal Medical Assistance Percentages (FMAP)
Portion of total Medicaid costs paid by the federal government.
Texas FMAP for federal fiscal year 2012: 58.42
Of each dollar spent on Medicaid services in Texas, the federal government pays approximately 58 cents.
Based on average state per capita income compared to the U.S. average.
Small changes in the FMAP could result in significant loss or gain of federal funds.

45. Texas Medicaid: DSH Payment
Medicaid Disproportionate Share Hospital (DSH) Program
Source of reimbursement to state-operated and non-state (local) Texas hospitals that treat indigent patients.
Federal law requires that state Medicaid programs make special payments to hospitals that serve a disproportionately large number of Medicaid and low-income patients.
Not tied to specific services for Medicaid-eligible patients, unlike other Medicaid payments.
Total funds to all DSH hospitals in state fiscal year 2009: $1.615 billion
State DSH Hospitals: $339 million
Non-state DSH Hospitals: $1.276 billion

46. Texas Medicaid: UPL Payment
Upper Payment Limit (UPL)
Financing mechanism used by states to provide supplemental payments to hospitals or other providers.
Federal regulations allow states to pay providers up to what Medicare would have paid, or the amount the hospital charges for services.
States may use local funds transferred to the state to fund the supplemental payments.
HHSC currently makes UPL payments to:
4 state-owned hospitals
11 non-state large urban public hospitals
100 non-state owned rural public hospitals
7 children’s hospitals
11 state university physician group practices
unknown number of privately-owned hospitals in Private Hospital UPL program

47. Texas CHIP: EFMAP
Enhanced Federal Medical Assistance Percentages (EFMAP)
Portion of total CHIP costs paid by the federal government.
Generally higher than Medicaid
In 2012, the federal government pays 70.89% of CHIP medical care expenditures
Compared to 58.42% of Medicaid medical care expenditures.

48. Texas CHIP: Historical Spending, State Fiscal Year 2000-2010

49. Texas CHIP: Cost Sharing
CHIP annual enrollment fee:
$0 for families with net income less than 150% FPL
$35 for families between % FPL
$50 for families between % FPL
Families are required to pay the enrollment fee upon enrollment or renewal of CHIP.
There are two types of cost share obligations: enrollment fees and co-payments. Most CHIP eligible families are subject to cost share obligations.
The CHIP annual enrollment fee varies based on the net income of the family. There is no annual fee for families less than or equal to 150% of the FPL.
For families between 151 to 185% of the FPL, the annual fee is $35.
For families between 186% to 200% FPL, the annual enrollment fee is $50.
Eligible children cannot enroll and receive covered benefits before receipt of the enrollment fee. Families must pay the enrollment fee at renewal before continuing coverage.

50. Texas CHIP: Cost Sharing
Families enrolled in CHIP are responsible for
co-payments for certain plan benefits.
At or below 100% FPL
101% to
150% FPL
151% to 185% FPL
186% to 200% FPL
Preventative Health Care and Shots
Office Visit
Non-Emergency Room Use
Generic Prescription
Name-brand Prescription
Inpatient Hospital Care
Outpatient Hospital Care $0 $3
$10 $5
$25 $7
$50
$20
$100
The other type of cost sharing obligation that most families are required to pay are co-payments, which again will vary on the families’ incomes.
Something to note is that families have a cost-sharing cap which is the maximum amount of out-of-pocket expenses a family is required to pay during the enrollment segment.
When a family reaches their cost sharing cap during the enrollment segment, the family is not required to make co-payments for the remainder of the enrollment segment.
Families with gross income at or below 150% FPL has a cost-sharing cap during the 12-month coverage period of 1.25% of its annual gross income.
Families with gross income greater than 150% FPL has a cost-sharing cap during the 12-month coverage period of 2.25% of its annual gross income.
On cost sharing all together, CHIP perinatal recipients are not subject to cost share obligations. CHIP perinatal recipients do not pay enrollment fees or copayments.

51. Texas Medicaid Women’s Health Program (WHP): Savings
In 2008, WHP saved:
$63 million (all funds) due to reduction in expected births.
$42.4 million (all funds) after paying program costs.
State share of reduced Medicaid costs totaled:
approximately $23.5 million (GR)
net state share of savings after paying WHP expenditures totaled approximately $21.4 million (GR)

52. Medicaid Delivery Models: Managed Care vs. FFS
Managed Care Programs in Texas
STAR – provides acute care services to children, pregnant women, and families.
STAR+PLUS – provides acute and long-term services and supports to individuals with disabilities and elderly people.
NorthSTAR – provides behavioral health services to individuals in a multi-county area in and around Dallas.
STAR Health – provides a comprehensive managed care program for children in foster care.
Fee-for-Service (FFS)/Traditional Medicaid
A few eligibility categories remain in FFS.
Individuals in FFS can choose any provider.
FFS does not offer the management or utilization controls that managed care provides.

53. Provider Reimbursement: Managed Care vs. FFS
Payment and processes vary by delivery model
Managed Care:
HHSC pays MCOs a capitated rate.
MCOs pay providers reimbursement rates established by contracts with the providers.
Providers send claims (bills for services) to the MCO for payment.
FFS:
HHSC establishes FFS methodologies to pay providers.
Claims are sent to state for payment.

54. Texas CHIP: Delivery Systems
CHIP Service Delivery Models include:
MCO: A type of health care plan that arranges for or provides benefits to covered clients
The state pays the CHIP MCOs on a capitation basis: a set dollar amount PMPM to cover the health care costs of clients.
Client selects an MCO and a Primary Care Provider (PCP)
PCP authorizes services within the network
Providers are paid reimbursement rates established by the MCO
Exclusive Provider Organization: A health plan that arranges for or provides benefits to covered persons through a network of exclusive providers
Limited to services provided to client in network, except for emergencies.
Dental Maintenance Organization for dental services
Maximus is responsible for the enrollment process for CHIP clients. Once determined eligible, families receive an enrollment packet and are asked to select a health plan and PCP (if in an MCO area).
If a health plan or PCP is not selected, the client is defaulted into a plan and assigned a PCP (there is a formula for rotating the default plan so one is not favored over another).
Superior is currently the sole Exclusive Provider Organization.

55. Medicaid & CHIP: New Initiatives

56. Budget-Related Outcomes of the 82nd Texas Legislature
Summary of Medicaid Funding for FY
$40.6 billion in All Funds ($17.1 billion in GR).
Assumes expansion of managed care, anticipated to result in a net savings of $385.7 million GR and increases in insurance premium tax revenue collections.
Funding levels continue provider rate reductions implemented during the biennium, including an 8% hospital rate reduction.
Cost containment initiatives totaling $1.8 billion in GR funds, including $450 million assumed in Rider 61.

57. Budget-Related Outcomes of the 82nd Texas Legislature
Statewide Standard Dollar Amount (SDA)
Converted hospital reimbursement from a hospital-specific, cost-based reimbursement to a statewide base SDA effective September 1, 2011.
HHSC worked closely with hospital industry to develop the statewide SDA.
Add-on adjustments for hospital wages, medication education, and trauma centers to recognize high-cost services and geographic variations.
Hold Harmless:
HHSC authorized to use up to $20 million in GR ($48.1 million all funds) to mitigate losses to hospitals that are disproportionately impacted.
Funding available up to September 1, 2012.

58. Budget-Related Outcomes of the 82nd Texas Legislature
Medicare Equalization
Past Texas Medicare-Medicaid Policy
Part A - State limits Medicare coinsurance and deductible payments to no more than the Medicaid rate for the same service.
Part B - State makes Medicare coinsurance and deductible payments. Total payment for service may exceed Medicaid rate.
As of January 2012
The General Appropriations Act directs HHSC to align payment policies for Medicare Part A and B cost sharing.

59. Initiatives from the 82nd Texas Legislature
Managed Care Expansion
September 1, 2011
Expanded existing STAR and STAR+PLUS service areas to contiguous counties.
March 1, 2012
Expand STAR to new service areas.
Expand STAR+PLUS to new service areas.
Replace TX Primary Care Case Management Program (PCCM) with a capitated MCO program.
Carve the pharmacy benefit into the services delivered by the Medicaid and CHIP MCOs.
Develop statewide Medicaid dental MCOs.

60. Initiatives from the 82nd Texas Legislature
Reduce inappropriate utilization of Emergency Departments (ED) by Medicaid recipients
ED hospital rates
As of September 1, 2011, HHSC applied a 40% reduction to facility charges for non-emergent services delivered in an ED setting to recipients of Medicaid FFS
Medicaid cost-sharing
Encourage personal accountability and appropriate use of health care services.
Cost-sharing includes non-emergency services through a hospital ED.
HHSC is researching options for implementation.
Target implementation date is December 2012.
Develop incentives though MCOs for providers to:
Offer evening and weekend hours, and
Educate recipients about appropriate Emergency Department utilization.

61. Initiatives from the 82nd Texas Legislature
Quality Initiatives
Shift to paying for outcomes and quality instead of volume.
Quality-based payments for hospitals and managed care.
Policy changes
Example: Ending Medicaid payments for elective deliveries prior to 39 weeks.
S.B. 7 established:
Quality-Based Payment Advisory Committee
Texas Institute of Health Care Quality and Efficiency

62. Healthcare Transformation 1115 Waiver
Texas Health Care Transformation and Quality Improvement Program 1115 Waiver includes:
Managed care expansion
Expands Medicaid managed care services statewide.
Includes legislatively mandated pharmacy carve-in and dental managed care.
Hospital financing component
Preserves hospital funding under a new methodology.
Creates Regional Healthcare Partnerships (RHPs).

63. Healthcare Transformation 1115 Waiver
Under the waiver, trended historic UPL funds and additional new funds are distributed to hospitals through two pools:
Uncompensated Care Pool
Costs of care provided to individuals who have no third party coverage for the services provided by hospitals or other providers (beginning in first year).
Delivery System Reform Incentive Payments
Support coordinated care and quality improvements through RHPs to transform care delivery systems (beginning in later waiver years).

64. Healthcare Transformation 1115 Waiver Pool

65. Healthcare Transformation 1115 Waiver
RHPs:
Will form around hospitals currently receiving UPL payments.
Will develop plans to address local delivery system concerns with a focus on improved access, quality, cost-effectiveness, and coordination.
Must provide opportunities for public input in plan development and review.
Should encourage broad engagement of local stakeholders in RHPs.

66. Chronic Conditions Waiver
S.B. 1, 82nd Legislature, First Called Session, 2011
If feasible and cost-effective, HHSC may apply for a waiver to more efficiently leverage use of state and local funds.
Would provide benefits to individuals eligible to receive services through the county for chronic health conditions.
Requires broad-based input from interested persons.
Must use intergovernmental transfers to maximize federal Medicaid matching funds.
Text of SB 1:

67. Affordable Care Act: Medicaid Expansion
Medicaid eligibility expands to include individuals under age 65 with incomes up to 133% FPL
Includes income deduction of 5 percentage points, creating effective eligibility level of 138% FPL.
In 2014, Texas will experience 1.8 million increase in caseload.
New client populations in Texas include:
Parents and caretakers at % of FPL
Childless adults up to 133% FPL
Emergency Medicaid in expansion populations
Children in foster care through age 25
Federal government bears full cost of coverage for new eligibles for first 3 years of mandatory expansion.

68. Current & Estimated Future Medicaid/CHIP Eligibility Levels
225% FPL
CHIP
200% FPL
CHIP
200% FPL
CHIP
200% FPL
CHIP
200% FPL
Current
Medicaid
185% FPL
Current
Medicaid
185% FPL
Current
Medicaid
185% FPL
Current
Medicaid
133% FPL
NEW
Medicaid
(Currently CHIP)
133% FPL
NEW
Medicaid
133% FPL
133%
NEW
Medicaid
133% FPL
Current
Medicaid
100% FPL
Current
Medicaid
74% FPL
14% FPL

69. Affordable Care Act: Eligibility Changes
State Health Benefit Exchange (HBE)
The law requires each state to have a HBE.
If a state chooses not to operate a HBE, the federal government will operate an HBE for the state.
Texas has not yet decided whether or not it will operate an HBE.
Medicaid, CHIP, and the HBE must interface.
Applications through the HBE must be “deemed” to Medicaid and CHIP with no additional required action by the applicant.

70. Affordable Care Act: Medicaid Benchmark Benefit
Federal law allows for a Medicaid benchmark benefit that:
Will be provided to the new Medicaid adult expansion population in 2014,
May be different from the regular Medicaid benefit package,
Must include essential health benefits (EHB), as defined by federal Department of Health and Human Services (HHS).
In December 2011, HHS released initial guidance on EHB.
Additional guidance specific to Medicaid is forthcoming.
HHSC is reviewing the guidance and researching options for Texas while awaiting additional guidance.
Texas will seek stakeholder input while developing the benchmark benefit.

71. Texas Health Care Coverage: Post ACA Implementation
CHIP
200% FPL
Current
Medicaid
185% FPL
133% FPL
100% FPL
74% FPL
14% FPL
NEW
NEW Medicaid
133%
Sliding Scale
Health Insurance Subsidies, through Exchange
400% FPL
Unsubsidized –
In or Out of Exchange
Estimated Insured but not Subsidized
(In or Out of Exchange)
15.5 million
% of Federal Poverty Level
Estimated Insured & Subsidized in Exchange
1.9 million
Estimated Medicaid/CHIP
5.6 million
The estimated number of Medicaid/CHIP enrollees includes the number of current Medicaid/CHIP enrollees and the additional clients that will be served post ACA implementation.
Estimate of Ongoing Uninsured
2.3 million

72. Current State Challenges
Redesign of existing programs
Strengthening and transforming the health care infrastructure.
Streamlining Medicaid and CHIP eligibility determinations and coordinating with the HBE.
Effectively redesigning existing state and local programs currently serving the population.
Building adequate workforce to serve newly insured populations.
Uncertainties
Pending federal guidance for many provisions, which complicates states ability to implement.
Long term fiscal planning as federal participation levels decrease over time.
Estimating the ongoing needs of the undocumented and remaining uninsured populations.

73. Additional Resources Medicaid Managed Care Initiatives
Approved Healthcare Transformation 1115 waiver
HHSC News Releases
Texas Medicaid Pink Book