Joan Henneberry Vernon K. Smith, PhD Health Management Associates

1. State Approaches to Medicaid ExpansionMontana HealthCare Forum ConferenceHelena, MontanaNovember 4, 2013 Joan Henneberry Vernon K. Smith, PhD Health Management Associates

2. Medicaid Is a State Program:A State- Federal Partnership • States operate Medicaid programs under federal law and regulations that define the terms and conditions for a state to receive federal matching funds • States are entitled to federal Medicaid matching funds on all qualifying expenditures, as defined in • Medicaid state plan, including • Any federally-approved waivers that allow expenditures that otherwise would not qualify 1

3. Within Federal Rules, States Define Their Own Medicaid Programs • State Medicaid programs are designed and administered by state policy makers, within federal rules. • Each state Medicaid program is unique • State programs vary based on state decisions on • Eligibility, provider payment levels, benefits and limits on benefits, cost sharing, delivery systems, use and types of managed care, quality requirements, special initiatives and innovations • Decisions reflect state priorities, fiscal realities, health care systems, traditions and values 2

4. Medicaid Expansion Debate Has Highlighted Medicaid Concerns • Concern that federal government might not live up to its commitment for ongoing funding, due to its focus on federal debt • Concern about local political backlash • Concern about access and lack of providers to serve more Medicaid patients • Concern that current Medicaid program can be improved and should be reformed first. 3

5. Debate Has Also Highlighted the Impact and Value of Medicaid • Improves access to medically needed care • Improves health status • Improves financial security • Improves school performance and health of current and future workforce • Benefits medical providers, especially hospitals and community health centers • Lowers cost of health insurance for business • Adds economic activity and jobs • Achieves savings in the state general fund budget • Operates efficiently, low administrative costs

6. State Medicaid Expansion Decisions (as of November 4, 2013) ME VT WA NH2 MT ND MN OR MA NY WI SD ID MI1 RI CT WY PA NJ IA1 NE OH DE IN IL NV MD CO UT WV VA CA DC KS MO KY NC TN1 AZ SC OK AR1 NM GA AL MS AK LA TX FL HI Moving Forward at this Time (26 States including DC) Not Moving Forward at this Time (25 States) NOTES: 1 - Medicaid expansion approach likely to require waiver approval. 2- Discussing a special session on the Medicaid expansion. SOURCES: State decisions on the Medicaid expansion as of October 22, 2013. Based on data from the Centers for Medicare and Medicaid Services, available at: http://medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html. Data updated to reflect recent activity.

7. Medicaid Enrollment: FY 2014 Average Growth, by State Medicaid Expansion Decision NOTE: States moving forward with the ACA Medicaid expansion reported anticipated growth due to increased take-up as well as enrollment of newly eligible beneficiaries. States decisions about the Medicaid expansion as of September 30, 2013. Based on data from the Centers for Medicare and Medicaid Services, available at: http://medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html. SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2013.

8. TotalMedicaid Spending: Projected Growth As Appropriated in State Budgets for FY 2014 Yes NOTE: State Medicaid expansion decisions as of September 30, 2013. Based Centers for Medicare and Medicaid Services, at: http://medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html. SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, 2013.

9. Total and State GF Medicaid Spending Growth, As Appropriated in State Budgets for FY 2014,by State Medicaid Expansion Decision Yes NOTE: State Medicaid expansion decisions as of September 30, 2013. Based on Centers for Medicare and Medicaid Services, at: http://medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html. SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2013.

10. Possible State Approaches to Expanding Medicaid • Extend current state Medicaid coverage to non-elderly adults up to 133% of FPL • Builds on current payment and delivery systems • Uses all current tools for coordinating care, controlling costs and improving quality. • Incorporates any new delivery system reform or cost containment initiatives as they are adopted • Use private / commercial insurance options, with premium assistance • Develop a new approach, with reforms that may require CMS approval of a waiver 9

11. Medicaid Expansion Plans of 25 States and DC • 22 states and DC: Extension of Medicaid eligibility to 133% of FPL • Built on current payment and delivery systems • Uses all current tools for coordinating care, controlling costs and improving quality, incorporating updates as implemented. • 3 states: Extension of eligibility to 133% with reforms or variations requiring a waiver • Arkansas: Premium Assistance (CMS approved) • Iowa: (CMS reviewing) • Michigan: (will require waiver in 2015) • Other states: Considering options for FY2015 10

12. Medicaid Expansion in Michigan • Expand Medicaid eligibility to 133% of FPL • Benefit package similar to Medicaid state plan. • All mandatorily enrolled in Medicaid managed care plans • FY 2014 GF savings of $135 million in (6 mos.) • From mental health, corrections, replacing spend-down, ending state funded waiver program for adults 11

13. Michigan Medicaid Expansion Includes “Personal Responsibility” Reforms • Mandated cost share of not more than5% of income for adults with incomes 100-133% FPL (~ $25.00 / month) • Cost share to not >7% of income after 48 months • Option to enroll in Exchange (waiver by Dec., 2015) • Structure similar to Health Savings Account is to be created in 2015 • Contributions to HSA can be made by enrollee, employer or public/private entities. • MCOs are to establish cost sharing to encourage enrollee healthy behavior • MCOs have strong incentives to comply: • withhold of 0.25% to enforce cost sharing; • withhold of 0.75% for quality metrics • 12

14. Arkansas: Premium Support with Private Insurers • Arkansas waiver links Medicaid expansion to enrollment in private insurance plans in the Health Benefit Exchange (Marketplace). • Choice between at least two Exchange plans. • Each enrollee will complete a health assessment; Frail enrollees are exempt and will go to regular fee-for-service Medicaid • Premiums to be paid by state to commercial plan. • Cost sharing for those with incomes 100-133% FPL. • Proposed in future years to extend to adults with incomes between 50-100% FPL. • 13

15. Iowa “Health and Wellness Plan” • Two part plan, with incentives for healthy behavior, emphasis on care coordination and access to care. • 1) Iowa Wellness Plan for adults up to 100% FPL • 2) Iowa Marketplace Choice Plan for adults with incomes between 101% and 133% of FPL • Federal approval is being negotiated; not yet approved. • 14

16. Iowa Part 1: Wellness Plan • For adults ages 19 – 64, incomes up to 100% FPL • Comprehensive benefits: equivalent to state employee health insurance. • Medicaid provider network, with medical home • Care coordinated by Accountable Care Organizations • ACOs are accountable for cost, quality outcomes for population attributed to them • ACOs assist in care, do preventive care, outreach • Share savings, if meet quality and cost metrics • No copayments (except $8 for non-emergency ER) • First year, no monthly premiums • After 1styear, premiums only if income > 50% FPL and if preventive care / wellness activities not done • Out of pocket costs never > 5% of income • 15

17. Iowa Part 2: Marketplace Choice Plan • For adults ages 19 – 64, incomes 100% - 133% FPL • A Premium Assistance program • Members select a commercial health plan through the Health Benefit Exchange(“Marketplace”) • Medicaid will pay the premium to the health plan • Commercial health plan will meet standards for benefits, out-of-pocket costs, statewide network • Benefits equivalent to state employee insurance • Copay, premium rules same as for < 100% FPL • Use of commercial plans through Marketplace will • Allow continuous enrollment when income rises • Allow access to same plans as other Iowans seeking private insurance through the Marketplace • 16

18. Indiana: Healthy Indiana Plan (HIP):Example of Plan Not CMS Approvable • CMS approved extension of Healthy Indiana Plan • HIP is a current Medicaid waiver program for low- income, uninsured adults up to 200% FPL • Medicaid-funded “POWER Account,” $1,100 / year, funded by state and premiums; modeled on Health Savings Account (HSA) • Premiums (2% of income up to 100% FPL, up to 5% @ 200%) • One-Year lockout if beneficiary doesn’t pay premium • Limited benefits (e.g., no vision, dental, maternity) • Enrollment cap (currently 34,000 adults) • Indiana proposed Medicaid expansion via HIP • CMS was unable to approve as Medicaid expansion, due to: mandatory premiums/ cost sharing, lockout, limited benefits • 17

19. Summary • States have several options to include reforms when covering adults to 133% of FPL • Personal responsibility requirements, through cost sharing, premiums, incentives for healthy behaviors • Private insurance options • Managed care, with mandatory enrollment • Coordinated, integrated care tailored to populations with chronic conditions. • CMS must approve plans, within federal law. • 18

20. CMS Says: “We Want to Help States Cover Adults the Way States Want To” • “We are eager to continue these conversations with states around the country.” • --Secretary Sebelius, speaking to NCSL on August 12, 2013 • “We are open for business, eager to partner.” • -- Cindy Mann, Deputy CMS Administrator for Medicaid, at NCSL, August 12, 2013 • 19 Source: Atlanta Journal – Constitution, August 13, 2013.

21. Urban Institute/KFF Analysis • “The Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis,” November 2012 • Access at http://www.kff.org/medicaid/upload/8384.pdf • Medicaid Expansion Analysis Tool • Created by State Network Initiative Technical Providers including SHADAC, CHCS and Manatt Health Solutions • Access at: http://www.statenetwork.org/resource/medicaid-expansion-framing-and-planning-a-financial-impact-analysis/ • CHCS – Planning for Medicaid Expansion: An Online Toolkit • Access at: http://www.chcs.org/publications3960/publications_show.htm?doc_id=1261397 • CBPP – Health Reform’s Medicaid Expansion: A Toolkit for Advocates • Access at: http://www.cbpp.org/cms/index.cfm?fa=view&id=3819 Assessing the State Fiscal Impact: Guides for Analysis

22. jhenneberry@healthmanagement.com vsmith@healthmanagement.com Let us know if you have questions.