1. September 24, 2014 Pam Coleman Senior Consultant Medicaid Managed Care Trends and Opportunities

2. About Sellers Dorsey Sellers Dorsey is a national healthcare consulting firm that navigates the ever-changing landscape within the public and private sector. Together with its clients, Sellers Dorsey realizes opportunities that enhance the bottom-line and ultimately improve the lives of people. 2

3. About the presenter Pam Coleman, Senior Consultant, leads projects focusing on long term services and supports, a rapidly growing area of healthcare. She brings a deep background in managed care techniques in delivering LTSS to a diverse population. Pam frequently presents at national conferences on complex care populations and integrated delivery systems. Most recently Pam served as the Senior Vice President of Government Programs at OptumHealth after dedicating 26 years to the Texas Health and Human Services Commission. 3

4. Today we will: 4 Review Medicaid Managed Care growth. 1

5. Today we will: 5 Review a “top ten list” of market trends. 2 Review Medicaid Managed Care growth. 1

6. Today we will: 6 Review a “top ten list” of market trends. 2 Highlight select opportunities to leverage emerging trends. 3 Review Medicaid Managed Care growth. 1

7. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Source:

8. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Temporary Assistance to Needy Families (TANF) 36M Members $163B Spend Source:

9. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Temporary Assistance to Needy Families (TANF) 36M Members $163B Spend Aged Blind and Disabled (ABD) 14M Members $265B Spend Source:

10. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Temporary Assistance to Needy Families (TANF) 36M Members $163B Spend Aged Blind and Disabled (ABD) 14M Members $265B Spend Children 25M Members $80B Spend $3,246 PMPY Source:

11. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Temporary Assistance to Needy Families (TANF) 36M Members $163B Spend Aged Blind and Disabled (ABD) 14M Members $265B Spend Children 25M Members $80B Spend $3,246 PMPY Adults (pre- expansion) 11M Members $56B Spend $4,841 PMPY Source:

12. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Temporary Assistance to Needy Families (TANF) 36M Members $163B Spend Aged Blind and Disabled (ABD) 14M Members $265B Spend Children 25M Members $80B Spend $3,246 PMPY Adults (pre- expansion) 11M Members $56B Spend $4,841 PMPY Dual Eligibles 9M Members $160B Spend $19,758PMPY Source:

13. Medicaid Population and Spending - 2012 Total Medicaid Population: 50M Members Temporary Assistance to Needy Families (TANF) 36M Members $163B Spend Aged Blind and Disabled (ABD) 14M Members $265B Spend Children 25M Members $80B Spend $3,246 PMPY Adults (pre- expansion) 11M Members $56B Spend $4,841 PMPY Dual Eligibles 9M Members $160B Spend $19,758PMPY Non Duals 5M Members $104B Spend $17, 337 PMPY Source:

14. Growth Predictions for Medicaid Managed Care Currently two-thirds of Medicaid members are served through managed care 20% growth in Medicaid managed care in 2014 1 28 states with Managed LTSS by 2015 2 75 Million Medicaid members in Medicaid managed care by 2020 (compared with 40 Million in 2014) 3 All but Alaska and Wyoming have all or a portion of their Medicaid population in a managed care system (includes PCCM) 4 1.Avalere - Analysis: Medicaid Plans Expected to Grow 20% This Year Under ACA Expansion – January 2014 2.http://www.ahcancal.org/News/news_releases/Pages/Surge-of-Medicaid-Managed-Care-is-Fraught-with-Problems-Unless-Root-Concerns-are-Addressed.aspx 3.HMA projections HMA, based on CMS, Office of the Actuary, September 2013 “ 4.http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Data-and-Systems/Downloads/2011-Medicaid-MC-Enrollment-Report.pdf

15. ABD environment as of November 2013 Managed Care for Seniors and Persons with Disabilities Existing ABD (29) Transitioning to ABD (4) Remaining FFS (17)

16. Source: Kaiser Family Foundation – August 28, 2014 Current Status of State Medicaid Expansion Decisions Implementing Expansion (28) Open Debate (2) Not Moving Forward Now (17)

17. Source: Kaiser Family Foundation – August 28, 2014 Medicare Medicaid Integration Program States Pursuing

18. Medicare Medicaid Integration Program (Capitated vs FFS) Capitated Fee for Service *Washington pursuing FFS and capitated

19. Source: Kaiser Family Foundation – August 28, 2014 Medicare Medicaid Integration Program (MOUs) With MOU Without MOU

20. Medicare Medicaid Integration Program (Enrolling) Currently Enrolling* Not Enrolling * Washington enrolling in FFS

21. Trends in Medicaid Managed Care

22. Trend 1: Movement to Managed Long Term Services and Supports Currently 24 states have implemented MLTSS MLTSS includes nursing facility and community based services and supports Goal is to integrated physical, behavioral, and LTSS in a person centered plan of care Requirements for service coordination Assessment of all members to determine unmet needs Flexibility in services – in lieu of services Focus on serving members in the most integrated setting and transitioning persons out of institution 22

23. Trend 2: New Medicaid Populations for Managed Care Medicare Medicaid dual eligible population Adults with disabilities Children with Special Health Care Needs Persons with Intellectual and Developmental Disabilities Foster Care Children Medicaid Expansion population 23

24. Trend 3: Focus on Quality Improvement and Performance Begins with the contract - Value based purchasing concepts Performance incentives and disincentive Shared savings models New quality measures for MLTSS are under development Evidence-based, best practices to detect both under and overutilization of LTSS Member and Provider Complaints and Grievances analyses Member Satisfaction Survey MLTSS-oriented Performance Improvement Projects 24

25. Trend 4: Person Centered Service Integration Section 2402(a) of the Affordable Care Act requires the Secretary to ensure all states receiving federal funds develop service systems that are responsive to the needs and choices of beneficiaries receiving home and community-based long-term services (HCBS), maximize independence and self-direction, provide support coordination to assist with a community-supported life, and achieve a more consistent and coordinated approach to the administration of policies and procedures across public programs providing HCBS. 25

26. Trend 5: Carve-Ins Instead of Carve-Outs Most Medicaid Directors agree that services should be carved-in when possible Carve-ins support trend of integration of care Widespread view that medical issues cannot be addressed without also addressing behavioral issues, pharma, and community supports Integration hindered by lack of progress in developing EMRs among providers of behavioral health services 26

27. Trend 6: Increased Regulatory Requirements Increase focus on fraud and abuse Increase regulations around rate setting methodology Increased focus on quality ratings and outcomes Increased focus on Network Adequacy Increased focus on readiness review processes Expansion of reporting requirements 27

28. Trend 7: Rate Setting Risk adjustment programs that account for both clinical and community support needs Rates that are actuarially sound Medical expenses to include care coordination, health homes, and other similar activities Rates that consider new medical technologies Rates that consider new medications like Sovaldi MLR requirements should consider MLTSS and pass-throughs 28

29. Trend 8: Focus on High Cost Members and Services 5% of Medicaid Managed care membership drives 50% of the expenses Need for MCOs to target these high cost, high risk members for in-home interventions Biggest cost drivers are ED and inpatient services Focus also on post-acute care and short term interventions 29

30. Trend 9: Information Systems, Technology, and Reporting Comprehensive, accessible, and integrated real time electronic health records and care management platforms IT hardware for field-based staff (laptops, cell phones, portable printers/faxes, etc.) Electronic Verification Systems for home-based services Risk stratification and Comprehensive performance reporting metrics Telemedicine, and telepysch 30

31. Trend 10: The Future of Medicaid Managed Care The total cost of Medicaid will continue to increase and there are increased pressure to reduce costs Managed care saving typically represent 3-4% Managed care produces short-term savings yet there remains concerns about the long-term trend toward increased costs The movement to ACOs, Health Homes and other initiatives will continue but the results of these models remains unclear There will continue to be a movement away from FFS to more integrated models of service delivery 31

32. OPPORTUNITIES: The Future of Medicaid Managed Care

33. OPPORTUNITIES: The Future of Medicaid Managed Care Innovative programs for new managed care populations Stakeholder engagement and consumer outreach Care management interventions for high cost, high risk members Integration of Medicare and Medicaid services Person-centered care models that integration of physical, behavioral, social and community services and supports with the member in the pilot seat Supportive models for moving persons out of institutions with creative ideas funding housing 33

34. OPPORTUNITIES: The Future of Medicaid Managed Care Provider engagement and payment reforms that move away from FFS and offer shared savings or performance incentives/disincentives New strategies for detecting and preventing fraud and abuse IT enhancements that allow for sharing of data between providers, health plans and the state Improvements in RFPs and MCO contracts to establish value based performance and purchasing States will always be looking for the next best approach for cost containment and improved outcomes for Medicaid beneficiaries 34

35. Questions? Sellers Dorsey sellersdorsey.com Pam Coleman Senior Consultant Sellers Dorsey pcoleman@sellersdorsey.com 35