commissioner becky hultberg commissioner bill streur

Commissioner Becky Hultberg Commissioner Bill Streur

Health Careand Fiscal Sustainability

2

State budget: 2001 - 2010

The rate of spending growth over the last decade averaged 7.5% per year, but inflation (Anchorage CPI) over the last decade averaged only 2.6% per year.

Total state spending (operating and capital, PFD excluded) has doubled from $4 billion to $8 billion in 10 years. Spending per capita has increased from $6,639/person in 2001 to $11,234/person in 2010.

Health Care and Fiscal Sustainability

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State revenue

TAPS subsidizes much of modern life in Alaska• Schools - about 66% of K-12 spending• State - about 90% of state general purpose unrestricted

revenue• PFDs - over $900 million in payouts each year• State capital projects


4

State oil production: 2001- 2010

Oil production has steadily declined by just over 5% per year.Health Care and Fiscal Sustainability

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Health care spend: 2001-2010

Medicaid, AlaskaCare active, AlaskaCare PERS/TRS, State Workers Compensation, Department of Corrections, union trusts

The rate of growth of state health care costs, 2001-2010: 9.4% per year.

2001: $856 million

2010: $1.9 billion

This includes the federal portion of Medicaid.


6

Health care spend by component

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010$0.0

$200.0$400.0$600.0$800.0

$1,000.0$1,200.0$1,400.0$1,600.0$1,800.0$2,000.0 Corrections

MedicaidWorkers CompTRSPERSAlaskaCare

(Chart in millions of dollars)


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Where does our current path lead?

If state paid health costs continue to increase at 9.4% per year, in FY 2020 they will exceed $4 billion (before Medicaid reimbursement).

State health care expenditures, 2020

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Challenge

20112012

20132014

20152016

20172018

20192020

20212022

20232024

20252026

20272028

20292030

2031

Millions$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0

Projected Medicaid Cost Growth


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AK DHSS 10-Year PlanOperating BudgetFY2013: $2.6 Billion Projected: FY2022 $6.6 BillionUnknowns• Impact of the U.S. National health care initiative• Tighter federal and state budgets• Broad economic problems – e.g. financial markets, energy costs, mortgage defaults, medical

inflationMedicaid• Population• Medical InflationPublic Assistance• Inflation• Population Growth in• Population 20-34 years• Population growth 65+

years of age –Adult Public Assistance

20122013

20142015

20162017

20182019

20202021

20222023

20242025

20262027

20282029

20302031

Millions

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0

2011


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Medicaid Direct ServicesBeneficiaries and Expenditures


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Medicaid Direct ServicesBeneficiaries and Expenditures

Senior and Disabilities Medicaid

$401,911.929%

Health Care Services Medicaid

$740,619.954%

Office of Children’s Services Medicaid$7,900.7 - 1%

Adult Preventative Dental Medicaid$9,249.1 - 1%

Behavioral Health Medicaid - $203.628.115%

FY 2011 Medicaid Direct Services

Expenditures by Division(thousands)

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Controlled Growth in Medicaid

The Options are Limited

• Eligibility • Compliance/Anti-Fraud

• Covered Services • Innovations in Service Delivery

• Rates • Technology

• Utilization Controls • Maximize Revenue


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State Policy Actions Implemented in FY 2011 and Adopted for FY 2012

NOTE: Past survey results indicate not all adopted actions are implemented. Provider payment restrictions include rate cuts for any provider or freezes for nursing facilities or hospitals.SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, September 2011.

3528 33

2213 13

32 33

3946

2 4

18 18 14 11

FY 2011

Adopted FY 2012

States with Expansions / Enhancements

States with Program Restrictions

Provider Payments Eligibility Benefits Long Term Care


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Medicaid Services

Mandatory• Inpatient hospital• Outpatient hospital• Physicians• Nurse midwives• Lab and X-ray• Advanced Nurse Practitioners• Early Periodic Screening,

Diagnosis, and Treatment• Family planning services• Pregnancy-related services• Nursing facility (NF) services• Home Health (NF qualified)• Medical/surgical dental services

• MH Rehab/Stabilization• Diagnostic/Screening/Preventive• Therapies (OP, PT, SLP)• Inpatient psychiatry <21 years• Drugs• Intermediate Care Facility for the

Intellectually Disabled • Personal care• Dental• Other home health• Other licensed practitioners• Transportation• Targeted Case Management

Optional


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Payment Comparisons

Payment Levels Office Visit (99215) Obstetrical Care (59400)

Alaska Medicaid $221.58 $2821.81

Alaska Medicare $177.40 $2354.90

Alaska Commercial Mean $290.64 $4704.80

Washington Medicaid $76.86 $2034.50

Washington Commercial Mean

$183.24 $2601.20

North Dakota Medicaid $186.19 $2339.40

Idaho Medicaid $117.01 $1539.21

Milliman Client Report: Physician Payment Rates in Alaska and Comparison States prepared for Alaska Health Care Commission 2011


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AlaskaCare health plan

Includes the active plan (non-unionized employees and some bargaining units) and retiree plan

Plan statistics:

Active plan16,346

members(includes

dependents)

$83,350,793 total spend in FY11

Ability to change plan and impact steerage

Retiree plan63,034

members, about 40% live outside Alaska

$413,524,583 total spend in

FY11

Limited ability to impact

steerage


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Retiree vs. Active EmployeeChronic Diseases in our Populations

Asthma

Congestive Heart Failure

Chronic Obstructive Pulmonary Disease

Cerebrovascular Disease

Atrial Fibrillation

Coronary Artery Disease (incl. MI)

Diabetes

Osteoarthritis

Hyperlipidemia

Hypertension

21

4

7

7

6

18

51

28

71

90

29

29

39

45

56

83

144

147

190

290Actual

Norm

Chronic Liver and Biliary Disease

Atrial Fibrillation

Coronary Artery Disease (incl. MI)

Bipolar Disorder

Congenital Anomalies

Asthma

Osteoarthritis

Diabetes

Hyperlipidemia

Hypertension

5

6

18

7

9

21

28

51

71

90

7

7

9

11

12

23

37

43

74

85

Retiree Member Countper 1,000

Employee Member Countper 1,000

Source: Sightlines Medical Intelligence – Disease Registry (January 2010 to December 2011)

Health Care and Fiscal Stability

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Projected Retirement System Growth

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 20300

10,000

20,000

30,000

40,000

50,000

60,000

70,000


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Jan 10 - Dec 10 Jan 11 - Dec 11

0.710000000000001

0.690000000000001

Jan 10 - Dec 10 Jan 11 - Dec 11

$560.07

$581.80

Jan 10 - Dec 10 Jan 11 - Dec 11

$400.40

$403.87

Active Employee Medical Expense Growth

Change in MedicalPer Member Per Month

Change in Unit Pricing

Change in Utilization

-3%

+4%

+1%

Dollars/eventEvents/m

ember m

onth

Health Care and Fiscal Stability

Source: Sightlines Medical Intelligence – Claims (January 2010 to December 2011)

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Retiree Medical Expense Growth

Jan 10 - Dec 10 Jan 11 - Dec 11

$378.08

$398.55

Jan 10 - Dec 10 Jan 11 - Dec 11

$329.51

$362.52

Jan 10 - Dec 10 Jan 11 - Dec 11

1.15

1.10

Change in MedicalPer Member Per Month

Change in Unit Pricing

Change in Utilization

-4%

+9%

+5%

dollars/eventEvents/m

ember m

onth

Source: Sightlines Medical Intelligence


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AlaskaCare claims data: physician fees

Procedure Alaska Medicare

Area 995 90% UCR (Anchorage)% Medicare

Area 981 90% UCR (Washington)% Medicare

Total Hip Arthroplasty $1,772.07 $12,155.00685.9%

$5,409.00305.2%

Fragmenting of Kidney Stone

$1,154.71 $8,200.00710.1%

$2,120.00183.6%

Nasal/Sinus Endoscopy, Surgery

$369.99 $2,620.00708.1%

$871.00235.4%

Inject Spine L/S (CD) $218.63 $1,260.00576.3%

$683.00312.4%

RPR Umbil Hern, Reduc > 5 yr

$529.40 $3,385.00639.4%

$1,229.00232.1%


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The hidden cost of health care

Opportunity cost of dollars spent on health care: roads, public safety, schools and other public services


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The State’s approach

Our challenge:We must lower the rate of growth of our health care spend. Our current path is not sustainable.

Our approach:o Work together with the hospital and physician communityo Support high-quality, cost-effective health care delivery in

Alaskao Develop and support innovative solutions to our health

care challenges


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Specific strategies: AlaskaCare

• Better leverage our purchasing power • Consider expanded travel benefits or

Centers of Excellence for certain services

• Develop a robust employee wellness program

• Continue to aggressively pursue contractual discounts

• Align contracting strategies around innovative care delivery models

• Develop a comprehensive health management strategy


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Innovations in Service Delivery/Payment

• Medical Home• Tribal Health – exemplar of alternative provider types• Bundled services• Integrated BH/Primary care services• Pay for performance• Utilization review and management (radiology, Rx)• Community based long-term care• Disease/Case Management• Managed Care• Dual eligibles


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Maximize Match/Collections/Refinancing Opportunities

• Replace state funding with federal funding where

allowable• Tribal Partner opportunities• Co-Pays

• 6 states increased and 4 states decreased co-pay amounts


Thank you!For more information:

www.DOA.alaska.gov and www.HSS.alaska.gov

Questions?

http://www.doa.alaska.gov/

http://www.hss.alaska.gov/

commissioner becky hultberg commissioner bill streur

Documents

state health care costs

total state spending

state oil production

states health care dollars

summary of state spending

state revenue3taps

rate of spending growth

total spending