Oct 19, 2017 | Kathleen Gifford, Eileen Ellis, Barbara Coulter Edwards,
Aimee Lashbrook, Elizabeth Hinton, Larisa Antonisse,Allison Valentine,
and Robin Rudowitz
Follow @RRudowitz on Twitter
Medicaid covers one in
five Americans, accounts for one in six dollars spent on health care in the
United States and more than half of all spending for long-term services and
supports, and is a state budget driver as well as the largest source of federal
revenues to states. Medicaid is constantly evolving as policymakers strive to
improve program value and outcomes through delivery system reforms, respond to
economic conditions or public health concerns (such as the opioid epidemic), or
implement federal policy changes including those in the Affordable Care Act
(ACA) or other regulatory changes (like the recent Medicaid managed care rule).
As states began state fiscal year (FY) 2018, Congress was debating major ACA
repeal and replace legislation generating great uncertainty for states around
Medicaid including the future of the ACA and financing for the Medicaid
expansion as well as overall financing for the Medicaid program.
This report provides an
in-depth examination of the changes taking place in Medicaid programs across
the country during this time of uncertainty. The findings are drawn from the 17th annual budget survey of Medicaid officials in all 50 states
and the District of Columbia conducted by the Kaiser Family Foundation (KFF)
and Health Management Associates (HMA), in collaboration with the National
Association of Medicaid Directors (NAMD). This report highlights certain
policies in place in state Medicaid programs in FY 2017 and policy changes
implemented or planned for FY 2018. The District of Columbia is counted as a
state for the purposes of this report. Given differences in the financing
structure of their programs, the U.S. territories were not included in this
analysis.
Key findings show that
despite uncertainty about federal legislative changes, many states were
continuing efforts to expand managed care, move ahead with payment and delivery
system reforms, increase provider payment rates, and expand benefits as well as
community-based long-term services and supports. Emerging trends include
proposals to restrict eligibility (e.g., work requirements) and impose premiums
through Section 1115 waivers, movement to include value-based purchasing
requirements in MCO contracts, and efforts to combat the growing opioid
epidemic. Key areas to watch include federal legislative efforts to restructure
and limit federal Medicaid financing as well as Section 1115 waiver activity
(state waiver proposals and CMS approvals). These issues will have implications
for states, providers, and beneficiaries that could shape the future of the
Medicaid program in FY 2018 and beyond (Figure ES – 1).
Figure
ES-1: Survey Themes for FY 2017 and FY 2018
ELIGIBILITY
POLICIES
Since 2014, most major
eligibility changes have been related to adoption of the ACA Medicaid
expansion. To date, 32 states have implemented the expansion (Louisiana was the
latest state to adopt the expansion in FY 2017). Largely because the Medicaid
expansion made many individuals involved in the criminal justice system newly
eligible for coverage (including childless adults who were not previously
eligible in most states), many states have implemented policies to facilitate
enrollment in Medicaid upon release and to suspend, rather than terminate,
Medicaid eligibility for incarcerated individuals. The majority of states also
have policies in place to provide Medicaid coverage of inpatient care for those
incarcerated in prisons or jails.
What to watch: Several non-expansion states (Idaho,
Tennessee, Virginia, and Wyoming) reported this year that consideration of the
Medicaid expansion was on hold due to uncertainty about the future of the
Medicaid expansion option. For FY 2018, several states are seeking Medicaid
eligibility restrictions through Section 1115 waivers, including conditioning
eligibility on meeting work requirements,1 elimination
of retroactive eligibility, and elimination of Medicaid expansion coverage for
those with incomes above 100 percent of the federal poverty level (FPL).2 Eligibility
provisions in proposals in Arkansas and Indiana would apply to ACA Medicaid
expansion populations and proposals in Iowa, Maine, and Utah would apply to
non-expansion populations. Two states (Arkansas and Indiana) reported activity
related to Medicaid premiums in FY 2017 or FY 2018, both through Section 1115
waivers.
MANAGED
CARE AND DELIVERY SYSTEM REFORMS
Managed care is the
predominant delivery system for Medicaid in most states. Among the 39 states
with comprehensive risk-based managed care organizations (MCOs), 29 states
reported that 75 percent or more of their Medicaid beneficiaries were enrolled
in MCOs as of July 1, 2017. More states continue to carve complex populations
as well as behavioral health services into MCO contracts. Twenty-six of the 39
MCO states reported that they plan to use authority to receive federal matching
funds for adults receiving inpatient psychiatric or substance use disorder
(SUD) treatment in an institution for mental disease (IMD) for no more than 15
days a month included in the 2016 managed care regulations. Close to half of
MCO states reported that the day limit is insufficient to meet acute inpatient
or residential treatment needs for those with serious mental illness (SMI) or
SUD.3 Nearly
all states have managed care quality initiatives in place such as pay for
performance or capitation withholds. Working in conjunction with or outside of
MCO contracts, the majority of states (40) had one or more delivery system or
payment reform initiative in place in FY 2017 (e.g., patient-centered medical
home, ACA Health Home, accountable care organization, episode of care payment,
or delivery system reform incentive program (DSRIP)).
What to watch: States are using MCO arrangements to increase
attention to the social determinants of health and to promote value-based
payment. States are increasingly requiring MCOs
to: screen beneficiaries for social needs (19 states in FY 2017 and two
additional states in FY 2018); provide care coordination pre-release to
incarcerated individuals (six states in FY 2017 and one additional state in FY
2018); and use alternative payment models (APMs) to reimburse providers (13
states in FY 2017 set a target percentage of MCO provider payments that must be
in APM and nine additional states plan to set a target in FY 2018). More than
one in three states also have initiatives to expand dental access or improve
oral health outcomes (for children and/or adults) and to expand the use of
telehealth.
LONG-TERM
SERVICES AND SUPPORTS (LTSS)
The vast majority of
states in FY 2017 (47 states) and all states in FY 2018 are using a variety of
tools and strategies to expand the number of people served in home and
community-based settings. The most common strategies include using home and
community-based services (HCBS) waivers or state plan options, serving more
individuals through Programs of All-Inclusive Care for the Elderly (PACE), and
building rebalancing incentives into managed long-term services and supports
(MLTSS) contracts. Twenty-three states cover LTSS through one or more capitated
managed care arrangements as of July 1, 2017.
What to watch: Housing supports are an increasingly important
part of state LTSS benefits. Over half of states (27) reported that they
implemented or expanded housing-related activities outlined in CMS’s June 2015
Informational Bulletin (e.g., housing transition services or housing and
tenancy sustaining services) in FY 2017 or FY 2018 (up from 16 states reported
last year). States are also focused on addressing LTSS direct care workforce
shortages and turnover: 17 states reported efforts in FY 2017 or 2018 to
increase wages for direct care workers and/or engage in targeted workforce
development activities (recruiting, training, credentialing, etc.).
PROVIDER
PAYMENT RATES AND TAXES
In FY 2017 and FY 2018,
more states made or are planning provider rate increases compared to
restrictions across all provider types, except for inpatient hospital rates
(hospital rate restrictions are primarily rate freezes, which are counted as
restrictions in this report). All states except Alaska rely on provider taxes
and fees to provide a portion of the non-federal share of the costs of
Medicaid. Three states indicated plans for new provider taxes in FY 2018 and 13
states plan provider tax increases.
What to watch: Survey responses related to MCO rate setting
show that 18 of 39 MCO states require MCO rates to follow fee-for-service (FFS)
rate changes for some provider types, and two
states require MCO rates to follow FFS rate changes for all provider types. Twenty-four states reported
they had MCO rate floors for some provider
types, and five states said they had rate floors for all types of Medicaid providers. Federal
legislation considered in the Senate proposed limiting the use of provider
taxes by lowering the “safe harbor threshold” from the current allowable level,
6.0 percent of net patient revenues, to 5.0 percent of net patient revenues by
FY 2025 in one proposal and 4.0 percent by FY 2025 in another. The survey shows
that 29 states reported having at least one provider tax exceeding 5.5 percent
of net patient revenues and 46 states reported having at least one provider tax
exceeding 3.5 percent as of July 1, 2017.
BENEFITS,
PRESCRIPTION DRUGS, AND OPIOID STRATEGIES
A total of 26 states
expanded or enhanced covered benefits in FY 2017 and 17 states plan to add or
enhance benefits in FY 2018, most commonly for behavioral health/substance use
disorder services and dental services. Thirteen states reported changes to copayment
requirements in either FY 2017 or FY 2018, including new or increased
copayments for enrollees with income above 100 percent FPL, for non-emergency
use of a hospital emergency department, and pharmacy. Most states identified
high cost and specialty drugs (including hepatitis C antivirals) as a
significant cost driver for state Medicaid programs. The majority reported
actions to refine and enhance their pharmacy programs, especially
implementation of new utilization controls (e.g., prior authorization
requirements, clinical edits, and quantity limits). Thirty-five of 39 MCO
states reported that the pharmacy benefit was “generally carved-in.” Of these
35 states, the majority reported requirements that MCOs have uniform clinical
protocols (31 states) or uniform preferred drug lists (PDLs) (19 states) that
will be in place for one or more drugs as of the end of FY 2018.
What to watch: A growing number of states have chosen to adopt
the CDC guidelines for the prescribing of opioid pain medications for adults in
primary care settings (34 states as of the end of FY 2018). Nearly all states
have various FFS pharmacy management strategies targeted at opioid harm
reduction in place as of FY 2017, including quantity limits (48 states);
clinical criteria claim system edits (46 states); step therapy (34 states); and
other prior authorization requirements (32 states). Somewhat fewer states (28
states) reported requirements in place for Medicaid prescribers to check their
states’ Prescription Drug Monitoring Program before prescribing opioids to a
Medicaid patient. Among the 35 states that used MCOs to deliver pharmacy
benefits, 24 reported that they required MCOs to follow some or all of their
FFS pharmacy benefit management policies for opioids. For FY 2017, the vast majority
of states (46 states) reported that naloxone (a prescription opioid overdose
antidote) was available in at least one formulation without prior authorization
(PA) and most states (42) also covered the naloxone nasal spray formulation
without PA. The standard of care for opioid use disorder is medication-assisted
treatment (MAT), which combines psychosocial treatment with medication. All 49
states that responded to a new question about medication-assisted treatment
(MAT) drugs reported coverage of buprenorphine and both oral and injectable
naltrexone, but a somewhat smaller number (36 states) reported coverage of
methadone in FY 2017.4
LOOKING
AHEAD
Medicaid is constantly
evolving as policymakers strive to improve program value and outcomes through
delivery system reforms, respond to economic conditions or public health
concerns (such as the opioid epidemic), or implement federal policy changes
including those in the ACA or other regulatory changes (like the recent
Medicaid managed care rule). As states began FY 2018, Congress was debating
major ACA repeal and replace legislation generating great uncertainty for
states around Medicaid including the future of the ACA and financing for the
Medicaid expansion as well as overall financing for the overall Medicaid
program. On this year’s survey, Medicaid directors were asked to comment on
state-specific implications of federal proposals. Most Medicaid directors from
the 32 ACA Medicaid expansion states reported that they would not be able to
continue covering the expansion population, or that coverage would be at
substantial risk, if the ACA enhanced federal match for this population were
terminated. Almost all Medicaid directors expressed concern about the likely
negative fiscal consequences tied to proposed limits on federal Medicaid
spending. Some directors mentioned that they welcomed potential new state
policy flexibility under federal legislative proposals, but a greater number of
Medicaid directors expressed concern that proposals to convert Medicaid to a
per capita cap or block grant would not provide sufficient flexibility to
enable states to make up for the reduction in federal funds.
Despite the uncertain
policy environment, many states continue efforts to expand managed care, move
ahead with payment and delivery system reforms, increase provider payment
rates, expand benefits, and expand community-based LTSS. Emerging trends from
this year’s survey include proposals to restrict eligibility (e.g., work
requirements) and impose premiums through Section 1115 waivers, movement to
include value-based purchasing requirements in MCO contracts, and efforts to
combat the growing opioid epidemic. Key areas to watch include federal
legislative efforts to restructure and limit federal Medicaid financing as well
as Section 1115 waiver activity (state waiver proposals and CMS approvals).
These issues will have implications for states, providers, and beneficiaries
that could shape the future of the Medicaid program in FY 2018 and beyond.
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