1. 1 Washington Medicaid Study Proposed Final Report Joint Legislative Audit & Review Committee January 7, 2004 Deborah Frazier and Eric Thomas

2. 2 Study Goals  JLARC added study to its workplan at the October 2002 meeting  Initiated to better understand this driver of 30% of state appropriations  Chose to look at Medicaid comprehensively Relation to national perspective Understand how Medicaid is managed

3. 3 DSHS Administers Medicaid Report page 2 60% 40% $12 billion 2003-05 Washington Medicaid Expenditures

4. 4 Medicaid Drives DSHS 96% $2.2b 91% $1.2b 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Report page 11 DSHS Med. Aging Dev. Mental Sub. Children’s Juv. Econ. Admin. Asst. Dis. Health Abuse Rehab Svcs. 82% $1.0b 98% $7.1b 76% $12.0b 18% $42m 18% $167m 9% $182m 6% $13 m 24% $56m

5. 5 Washington Medicaid: Findings and Recommendations  Management Structure  Data  Forecasts and Managing Costs  DSHS and OFM Concur or Partially Concur with Recommendations Report pages: 47-51

6. 6 Key Findings: Management Structure  DSHS is managing a large, complex health system with a decentralized management structure  Structure poses challenges No single point of accountability for the Medicaid program Non-compliance with federal reporting requirements for the total Medicaid program  No regular review of management functions or program as a whole Cabinet meetings and other cross-organization meetings Report page: 47

7. 7 Recommendation: Management Structure  DSHS should create a mechanism for management review  Report by April 2004  DSHS and OFM both partially concur Misreading of recommendation Management review does not require change in management structure  Review does require assuring the effective and efficient operation of the entire program Report page: 47, 55-65

8. 8 Key Findings: Data Systems  Multiple, aging data systems do not support a comprehensive approach to Legislative policy making or DSHS management of Washington Medicaid An example of data problems is a required federal report that is 12 quarters in arrears We have a chance, today, to address data issues: MMIS reprocurement Report pages: 49-51

9. 9 Recommendations: Data Systems  DSHS should become current on federal reporting  Report by April 2004  New MMIS should integrate data to support comprehensive Legislative policy making and DSHS management  Report by February 2004 Report pages: 49-51

10. 10 Key Findings: Forecasting and Managing Costs  Rates for the home and community based programs are not consistent Both managed by the Aging and Disability Services Administration More structure and consistency to Aging’s rates  Review to determine if DD could use Aging’s rate methods Report pages: 48-49, 67-81

11. 11 Recommendation: Forecasting and Managing Costs  DSHS report its progress ensuring consistent rates to the Legislature  Report by June 2004 Report pages: 48-49, 67-81

12. 12 Key Findings: Forecasts and Managing Costs  $5 billion of expenditures not rigorously scrutinized Includes nursing home care, home and community based services for the elderly and disabled, and community care for mental health  Not all Medicaid programs are formally forecast Report pages: 47-50

13. 13 Recommendation: Forecasting and Managing Costs (cont’d)  The Legislature should consider engaging a consultant to: Examine $5 billion in biennial expenditures to evaluate cost containment efforts and identify other cost containment opportunities Examine the program elements and data sources to assess the best techniques for forecasting future caseloads  Initial report due by November 2004  Final report due April 2005 Report pages: 47-50

14. 14 Conclusions  JLARC’s decision to examine Washington Medicaid as one program yielded new insight into 30% of state appropriations Perspective - comparison to national program Comprehensive picture of DSHS management Community services rates inventory  Follow up in coming months