Slowing Cost Growth In Medicaid

Wisconsin’s Experience in Slowing Cost Growth In

Medicaid

Medicaid Managed Care Conference

Curtis Cunningham, Deputy Director

Bureau of Fiscal Management

Wisconsin Department of Health Services

September 28, 2010

Agenda

� Impetus for Rate Reform

� Rate Reform Approach

� Rate Reform Process

� Highlights from Rate Reform Version 1.0

� Rate Reform Version 2.0 and Beyond

� Lessons Learned

Wisconsin Department of Health Services 2

Rate Reform Overview� The Medicaid program was required to find $625 million (all funds) in savings

(2009 Act 28) as a result of the 2009-11 State Budget Deficit.

� Rather than achieving these savings by doing across-the-board cuts, DHS decided to take the opportunity to find real reform opportunities in the Medicaid program.

� DHS’s Rate Reform approach includes:� A comprehensive examination of how MA purchases specific health care services � Identification of areas where true reform can be achieved in Medicaid and the program

can achieve savings� Goal – to utilize the creativity of stakeholders to help identify ways to make Medicaid

more efficient without harming the program. We invited all the provider and advocate groups to participate. Everyone had a seat at the table.

Wisconsin’s Rate Reform Project is Now Our Process for Continuous Quality Improvement and Program Reform.

3Wisconsin Department of Health Services

What Wisconsin could do to meet the legislative mandate to reduce Medicaid spending by $600 million AF

� Across-the-board rate cuts of approximately 5.5% over the biennium; 19% if applied only to non-institutional services

� Sweeping reductions in benefits and services. Samples of submitted ideas included: � Eliminating oral health coverage for BC+ Benchmark plan

� Expanding use of provider assessments

� Ending the expansion of Family Care

� Eliminating SeniorCare

� Dramatically increasing co-payments for expansion populations


� ARRA Restrictions

� Mandatory covered service requirements

� Governor’s Priorities

� Guiding Principles

Context of Rate Reform:


� The American Reinvestment & Recovery Act (ARRA) prohibits the imposition of stricter eligibility standards.

� Wisconsin risks losing $1.2 billion in federal funding.

� ARRA funding is up for a 6-month continuation; however, this funding comes with no guarantees and eventually will end.

ARRA Restrictions


� The Federal Government requires that states cover:� Inpatient hospital services (other than IMD services) � Outpatient care and ambulatory services of RHCs and FQHCs� Laboratory and X-ray services� Nursing facility services (other than an IMD) for individuals 21 or

older� Early and periodic screening, diagnosis and treatment (EPSDT) for

individuals who are eligible under the plan and are under age 21� Family planning services and supplies � Physicians' services and the medical services of dentists� Pregnancy-related services, including treatment of conditions

which may complicate the pregnancy or threaten the safe deliveryof the fetus, until 60 days after delivery

� Nurse midwife and nurse practitioner services in states where they are licensed

� Medicare cost-sharing for dual-eligible beneficiaries

Mandatory Services


� Wisconsin should continue to be a national leader in access to basic, affordable health care coverage

� We need to build on our achievements in providing healthcare coverage

� Budget savings will not be accomplished through stricter eligibility standards or reductions in benefits

� The state will have to trim back reimbursement rates for services such as medical care

Governor’s Priorities


� Identify savings to reach targeted reduction levels� Look for both short-term solutions and long-term

systemic changes� Ensure that no one provider group is singled out for rate

reductions� Ensure access to care for MA patients� Align payments with value rather than volume� Build on previous MA quality improvement efforts

including managed care P4P initiative� Implement care management/coordination strategies� Focus on high-intensity services� Cost containment now about “continuous improvement”

Guiding Principals


� Very public process.� 200 stakeholders participating in multiple meetings.

� On-line survey tool.

� Process generated over 500 ideas.

� Rate Reform Version 1.0 was completed June 2009.

� State is now implementing the plan.

� Process was well received. � Key was everyone was at the table and understood that

something had to be done. Status quo was not an option.

� So well in fact that we hope to continue into the future.

� This is the way we should do business!

Framework for Project


� All-Provider Kick-Off Call (3/23/09)

� Round 1 Advisory Group Meetings (4/2/09-4/17/09)

� Over 200 advisory group participants

� Web survey to 30,000 portal users

� Generated over 500 ideas

� Highest volume of ideas for Pharmacy, LTC & PA-related changes

� Package Development (4/20/09-7/1/10)

� Balanced approach across all providers

� State Budget Impact Need: SFY10-11 savings; target has grown

� Round 2 Advisory Group Meetings (7/15/10-7/22/10)

� Implement Recommendations (begin 8/1/10)

Rate Reform Project Overview


� Ideas analyzed and prioritized based on:

� Short & long term impact

� Current spend & potential savings

� Benefit considerations

� Policy impacts

� Regulatory parameters

� Contract changes

� Reviewed and triaged each idea internally

� Developed list of short-term savings ideas for

2009-11 biennium

Template completed for each idea

Idea Analysis and Development


� Original Target (March 2009): Governor’s SFY 10-11 Budget� $140 million GPR $415 million AF

-------------------------------------------------------------------------------� Revised Target (May 2009): Joint Finance Committee

� $191 million GPR $581 million AF------------------------------------------------------------------------------� Final Target (June 2009): Conference Committee

� $205 million GPR $625 million AF-------------------------------------------------------------------------------Separate Savings Items:

� Hospital assessment� $300 million GPR (over three fiscal years)

� Increase in hospital assessment� $93 million GPR (over three fiscal years)

� New ambulatory surgical center assessment� $21 million GPR (2009-11 biennium)

� Increase in nursing home assessment� $23 million GPR (2009-11 biennium)

Savings Target


� SE Wisconsin Managed Care RFP – New focus on quality.

� Reimburse Physicians based on cost effectiveness.

� Create an incentive for nursing homes to avoid preventable adverse health conditions (e.g. pressure ulcers) or other alternative.

� 100 Day Supply requirement for specified maintenance drugs/earlyrefill limits.

� Reimburse C-Sections at Same Rate As Vaginal Deliveries, Unless C-Section is Medically Necessary.

� Care Management contract for high cost Fee-For-Service members.

� More aggressive approach to MAC pricing/Balanced with additionalpayments for enhanced pharmaceutical care.

� Reform the way Critical Access Hospitals are paid.

� Adopt APC approach for outpatient payments.

Highlights of Specific Proposals


�On track to save $633 million (all funds) as required by the 2009-11 state budget.

� Initially explored 72 items, though some have been eliminated or consolidated.

�32 of the remaining 56 ideas have been implemented to date.

�These 32 ideas are projected to save $277.8 million (all funds) over the biennium.

Rate Reform Version 1.0 has been a success!


� However, Medicaid program grows during difficult economic times.� Demand for Medicaid services exceeds current funding.

� Continually looking for more efficiencies and enhancements to the program.

� Result = Wisconsin Medicaid Rate Reform 2.0.

Continuous Quality Improvement & Rate Reform


RATE REFORM VERSION 2.0

DRAFT PACKAGE

Rate Reform 2.0 Package Summary� Rate Reform 2.0 is much smaller than version 1.0

� We did not hit our target of $100M GPR

� Total Preliminary Savings Estimate:

$39,779,668 (AF)

� Focus is on:

� Program Improvement

� Medicare Alignment

� Focus is not on:

� Items needing legislation changes

� Total Number of Recommended Ideas: 36


Jan.

Ongoing

Jul.Jun.

MayApr.

Mar.Feb.

1/26Kick-Off Meeting

2/19 – 3/9Meetings with 4 Stakeholder

GroupsBrief the

Secretary’s Office

ImplementationsBegin*

7/1Final

Package

Modify Package

Brief the Legislature

DRAFT Final Package to

Stakeholders at Meeting

Brief the Governor’s

Office

*Note: Some initiatives require State Plan language changes. Implementation

start dates will be impacted by these changes.

Rate Reform 2.0 Timeline


DescriptionProjected Biennial

Savings*

Recoup double payments for Medicare cross-overs $858,000

Reduce paper mailings $55,000

Allow WIC Agencies to become Medicaid certified to do blood lead

testing $0

Reform policy for enteral nutrition $200,000

Expand never events beyond Medicare requirements to all ,

Children's hospitals, and Critical Access Hospitals$0

Rev Max: review income maintenance and child care programs in

Milwaukee county$4,825,000

Avoid Medicaid payment for rental equipment in nursing homes that

is eligible for Medicare reimbursement$497,407

APCs for Hospitals (Start collecting 7/10, start paying based on

APCs 1/11 or 7/11)$0

*All Funds

Rate Reform 2.0 DRAFT Package



Savings*

PA for atypical antipsychotics prescribed by PCPs for children TBD

PA for growth hormone prescribed for children $200,000

Medicare/Medicaid analysis for radiology $4,200,000

Implement 3rd Party Identification and recovery processes to

maximize the recovery of funds from liable parties, including

casualty and subrogation cases.

$1,450,000

Use HMS's national eligibility database to ID commercial insurance

coverage upon applicationTBD

Use Pharmacy and Rx Claim Audits to systematically audit client

retail pharmacy providers.$5,000,000

Contain Costs through Clinical Editing (Bloodhound) TBD

Enhanced Medicare Reimbursement at State Mental Health

InstitutesTBD

Educate pharmacists and doctors on OTC coverage policy TBD


21

*All Funds



Savings*

Improve data-sharing for children in foster care $370,000

Develop a Health Care Fraud Prevention and Enforcement Action

Team (HEAT) for Home Health ServicesTBD

Paper Claims Payment Reduction $700,000

Enroll Part B entitled into Medicare$12,000,000

Examine whether state should do HMO subrogation or adjust HMO

rates (no COB or TPL)TBD

Establish uniform residential rate-setting methodology in Family

CareTBD

Maximize capture of Medicare, third party reimbursement and

casualty claims in Family Care TBD

Review time studies that impact claiming to various DHS programs,

including FoodShareTBD

Contract with UW for specialty pharmacy TBD


22

*All Funds



Savings*

Lab Fee settlements for HMOs TBD

Enhance DHCAA's current data exchanges with DWD and DOR for

state wage data and unemployment compensation data.TBD

Modify Enrollment and Benefit booklets sent to Nursing Home

residents to use less paperTBD

Investigate utilizing certain recycled/used DME (e.g., wheelchairs) TBD

Implement improved drug utilization controls $5,000,000

Increase dispensing fee to pharmacists for increasing generic fill

rates $1,000,000

Use a group number to distinguish benefit plans $0

Claim portion of case management cost in Partnership program for

Medicare reimbursement (note: long term goal)$2,000,000

Raise criteria for eligibility for bedhold payment $1,424,261


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*All Funds



Savings*

Contract with Medicare Advantage Organizations for services to

dual eligible enrollees (SNPs)TBD

National Health Care Reform: Require physicians to see patients in

person in order to receive Home Care servicesTBD

National Health Care Reform: Allow children in hospice to continue

to receive treatmentTBD

National Health Care Reform: FFS members to have Primary Care

Provider under a Medical Home$8,959,064


24

*All Funds


� Thanks to BadgerCare Plus, Wisconsin leads the nation in health care access.

� Budgets are about values and priorities. Governor Jim Doyle has made health care access a priority during good and challenging budget times.

� Managing the budget effectively must include engaging stakeholders and thinking creatively.

� Legislative changes are difficult to accomplish� Fewer focus groups are easier to manage � Be aware of systems and staff limitations� In open process - be prepared for anything

Lessons Learned


[email protected]

(608) 250-5833http://www.dhs.wisconsin.gov/medicaid/ratereform/


Slowing Cost Growth In Medicaid

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