Implementing the Affordable Care Act in Iowa: Iowa Medicaid Perspectives

1. Implementing the Affordable Care Act in Iowa: Iowa Medicaid Perspectives Jennifer Vermeer Iowa Medicaid Director Iowa Department of Human Services November 11, 2010

2. Key Impacts for Iowa Medicaid • Eligibility: • Expansion to 133% of the Federal Poverty Level • $14,400 for family of 1 person or $19,400 for family of 2 • New income standard “Modified Adjusted Gross Income” • Integration of Medicaid within the Benefits Exchange / “Eligibility Gateway” / seamlessness • Benchmark benefit plan for new eligibles • Other opportunities Iowa Department of Human Services

3. Medicaid in Iowa today • In FY 2010, Medicaid covered 549,093 Iowans (approximately 18% of Iowans). • Total Expenditures (all funds) were $3.0 billion, State share $719 million. • Paid over 23 million claims in an average of 6.6 days. • Contracts with over 38,000 health providers. • Administrative cost of less than 5%. • Per person cost growth flat Iowa Department of Human Services

4. Iowa Profile • Recent expansions for children • Expansion to 300% FPL in Medicaid and CHIP (hawk-i) • Expansion to 300% FPL for pregnant women • Efforts to streamline – ‘express lane’, presumptive eligibility. • Significant growth in Medicaid over past 2 years due to recession (approx. 60,000) • 70-80% of growth is in number of children • Coverage of adults limited to parents (less than 28% FPL) and disabled (less than 75% FPL), some other small categories. Iowa Department of Human Services

5. Medicaid Expansion – 1/1/2014 • The ACA removes the categorical restriction in Federal law and mandates Medicaid coverage for ALL individuals up to 133% FPL. • Financing – “Newly eligible” enrollees • 2014 to 2016 -100% federal funds • 2017 to 2020 – rate decreases on a schedule to 90% • Expansion will increase Iowa Medicaid enrollment by estimated 80,000 to 100,000 adults (25%) • Parents (currently covered at 28% FPL) • Some disabled (SSI group is at 75% FPL) • Iowa covers 40,000 non-disabled single adults, childless couples up to 200% FPL under an 1115 waiver called IowaCare. IowaCare is very limited coverage. Iowa Department of Human Services

6. Eligibility Policy Options/Opportunities • Current Medicaid coverage goes above 133% FPL for some groups • Do we continue those groups? • Enact option to create a Basic Health Plan between 133% FPL to 200% FPL? • Move to the Exchange? • Move some, not all? • Wraparound? • IowaCare planned phase-out • Policy decisions for lawmakers Iowa Department of Human Services

7. Eligibility Policy Options/Opportunities Iowa Department of Human Services

8. ACA significantly restructures ‘how’ Medicaid eligibility will be done • Dramatically different way of counting income: “Modified Adjusted Gross Income” (MAGI) • Iowa Today = gross household income from which various deductions and disregards are applied • MAGI is based on income tax guidelines (it is very different) • New requirements for streamlining eligibility procedures: • No asset/resource tests for newly eligible and current adult and children groups Iowa Department of Human Services

9. Coordination of Enrollment • Eligibility Gateway: ACA requires integration of eligibility and enrollment for Medicaid and the Exchange • Common web-based application for Medicaid, CHIP, tax credits • Exchange must screen applicants for Medicaid and CHIP and Medicaid/CHIP must accept referral without further review • Medicaid must ensure referral to exchange for those found ineligible for Medicaid and CHIP • Exchange may contract with Medicaid to determine eligibility for tax credit subsidies • Potential for large duplication of effort, financial disputes between Medicaid eligibility processes and Exchange without an integrated approach Iowa Department of Human Services

10. Operational Challenge: Transforming the Eligibility Process • Current mainframe eligibility system is 30 year old system that has “hardening of the arteries” and uses a dead language * • Paper applications • Labor-intensive reviews and work flow • Off-system calculations and “work-arounds” • Very inflexible, expensive to maintain and operate Iowa Department of Human Services * Thanks to Andy Allison, KHPA Executive Director

11. Operational Challenge: Transforming the Eligibility Process Iowa Department of Human Services

12. Operational Challenge: Time • Building eligibility systems and re-engineering processing across the state to wholly new methods and structures is very complex and takes a lot of time – 3 years is not a lot of time • DHS is beginning to research system and redesign options and planning • Plan to provide options, budget estimates for the Governor and Legislature for FY 12 budget consideration • Appears significant federal financing will be available for IT Iowa Department of Human Services

13. Medicaid Expansion Benchmark Plan • ACA mandates that ‘new eligibles’ (those added under the expansion to 133% FPL) have at least a ‘Benchmark’ Benefit Plan • 100% Federal funds 2014-2016, phases down to 90% match • States have flexibility to design the plan • What will we cover? • Mental Health benefits? Opportunity to leverage higher Medicaid match rate to save on services currently 100% state and county funded, and impact MH populations in prisons and jails Iowa Department of Human Services

14. Other Impacts • Challenge of size – managing the size and complexity of implementation and ensuring collaboration with other agencies, at a time of state budget shortages. • Challenge of unknowns – designing programs and processes at the same time the federal rules/guidance not available or are still being developed. • IME operations: • Workload volume – claims, medical review, member/provider assistance • Prospect for new claims processing IT system at the same time • Medicaid provider network capacity – will there be enough providers? • Primary care workforce • Cost containment Iowa Department of Human Services

15. Fiscal Impact • Many “unknowns” remain; much yet to be determined • Potential for increased costs to state: • Mandatory Medicaid expansion • Costs associated with developing and operating the “Exchanges” • Changes to eligibility systems & interoperability with “Exchanges” • Restructuring of drug rebate programs • Reduction in Disproportionate Share Hospitals (DSH) payments • Potential for decreased costs to state: • Enhanced FFP • Shifting current Medicaid populations in part or in whole to the Exchange • Long Term Care options at enhanced federal match • New Medicaid coverage at enhanced federal match, possibly replacing state-only or county-only funded programs Iowa Department of Human Services

16. Opportunities • The ACA includes provisions that are not mandatory, but include those that could assist states to implement improvements or re-balancing, such as: • New State Plan options • Improvements in health care programs • Mental Health • Long Term Care • Early Childhood Programs • Demonstration grants • Payment reform initiatives • Integration of Other Transformation Initiatives • Medical Home • Health Information Technology (HIT) • ICD-10 conversion Iowa Department of Human Services

17. Questions? Iowa Department of Human Services