deficit reduction act impacts - mapping a diverse and ...dra benchmark benefit impact overview ltc...
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Avalere Health LLC | The intersection of business strategy and public policy
Deficit Reduction Act Impacts -Mapping a Diverse and Shifting Landscape
National Conference of State Legislatures
June 9, 2006
Mike Cheek
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Presentation Challenge from NCSL
State Legislators face a dizzying array of issues related to long term care and long term care populations – people with disabilities of all ages and seniors.
» These policy challenges compete with other pressing issues such as budgeting, education, terrorism, and pandemic concerns.
Provide a cogent overview of the Deficit Reduction Act of 2006 (DRA) implications for states, Legislators’ constituents, and the long term
care provider marketplace.
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0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2005 2010 2020 2030 2040 2050Years
Ages 65 - <Ages 85 - <
Incidence of disability and higher levels of acuity increase with age; only old-old will likely need NH care
Most significant population growth will be in lower age brackets who will have less intense service needs
Regarding the 85 and older group, while growing rapidly from 2020 – 2050, it is unclear whether this will lead to a significant increase in the need for traditional nursing home services
Bridge Period (2005 – 2015)
Demand Spike (2016 – 2050)
Possible NH Users
Demography and Demand Are Not So Clear Cut
Source: Avalere analysis of U.S. Census Bureau data.
% o
f ove
r age
65
popu
latio
n
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Proportion of the Population with a Disability is Increasing
Reflects longevity, increased disease incidence, enrollment, other factors
Similar trends are evident in the Social Security Disability Insurance (SSDI) program.
Population Growth of Diabled Individuals vs. Total Population
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4
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8
1974
1976
1978
1980
1982
1984
1986
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1990
1992
1994
1996
1998
2000
2002
2004
Year
SS
I Enr
ollm
ent
(in m
illio
ns)
0
50
100
150
200
250
300
350
US
Pop
ulat
ion
(in m
illio
ns)US Population
SSI Enrollment
Source: Avalere analsysis of Social Security Administration data.
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As Medicaid Spending Increases, States are Pursuing Innovative Reforms to Increase Efficiency & Reduce Costs
Medicaid Spending by Service, 1990-2015*
$0
$100
$200
$300
$400
$500
$600
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
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2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Billio
ns
Total Medicaid Hospitals Nursing HomesPhysicians Prescription Drugs
Actual Projected
Hospitals
Nursing Homes
Prescription Drugs
Physicians
* Source: CMS, National Health Expenditures. Years 2006 and beyond are projections
Total Medicaid SpendingMedicaid is currently the biggest item
in state budgets – a trend expected to continue in future years
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1.7 1.7 1.9 2.5 2.8 3.14.0 4.1 4.2
5.3 5.7 5.9
10.9 10.8
13.2
15.2 14.715.7
8.4 8.8 8.79.9 9.9
11.2
0
5
10
15
20
1999 2000 2001 2002 2003* 2004*
Dolla
rs (in
billi
ons)
Long-term care hospitalsInpatient rehabilitationSkilled nursing facilityHome health
Sector is Small, but Attracts Focus on Medicare Growth
Note: These numbers are program spending only, and do not include beneficiary copays.*EstimatesSource: Centers for Medicare and Medicaid Services, Office of the Actuary.
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Medicaid and Long Term Care Reform
Deficit Reduction Act
»DRA really contains three – not two – state plan options for expanding Home and Community Based Services (HCBS)
– Home and Community-Based Services and the fate of Section 1915(c) waivers
– Self-Determined Personal Assistance Services or Cash and Counseling State Plan Option
– Benchmark Benefit Plan Options
»Assets Transfer Provisions
»LTC Partnerships
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DRA HCBS State Plan Option Impact Overview
LTC Providers
Constituents
States
NegativePostive
Persons with SMI could benefit most.
None Minimal Moderate Significant
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Key State HCBS SPO Considerations
Considerations include
» What are the implications of changing nursing home or intermediate care facility eligibility for persons with mental retardation (ICF/MR)?
» Do we have adequate HCBS provider capacity to significantly expand HCBS while reducing facility-based services?
» How will we control “woodwork” and total long term care budget growth?
» What are the implications for our Section 1915(c) HCBS waivers?
» Bottom-line: What does this option really offer us?
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DRA Cash and Counseling Impact Overview
LTC Providers
Constituents
States
NegativePostive
Administrative burden challenges
Could create a tougher competitive environment
None Minimal Moderate Significant
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Key State Cash and Counseling Considerations
Considerations include
» Does my state have a starting point for this approach?
– Robert Wood Johnson Cash and Counseling grant
– Individualized budgeting model in an existing waiver
» What other resources could be leveraged to explore this option?
– Money Follows the Person Grants
– Real Choice Systems Change Grants
» What are the key barriers?
– Nurse Practice Act
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Benchmark Plans are Possible Vehicles for Benefit and Service Integration
State Medicaid Directors’ Letter 06-008 on March 31, 2006
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Duals could receive coverage through integrated MCOs
Medicaid FFS or MCO
Medicare FFSRetiree Health BenefitsMedicare+ChoiceMedigap
Beneficiary Cost Sharing
Medicaid Capitation Payment for all Medicaid Services
Medicare Capitation Payment for all Medicare services (Parts A, B, C, and D)
Medicare Plus Services Tailored to Target Population
Source: Avalere Health LLC
Current Delivery System
Integrated Special Needs Plan Delivery System
Part D Plan MA-PD or PDP
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DRA Benchmark Benefit Impact Overview
LTC Providers
Constituents
States
NegativePostive
As benefit packages and provider networks are refined, consumer outcomes could improve.
State decisions about Medicaid managed care will drive impact on LTC providers
None Minimal Moderate Significant
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Key State Benchmark Benefit SPO Considerations
Considerations include
» How could the state plan option approach differ from the 1115 option?
» How could we use the Benchmark Benefit Option to build a new Medicaid long term care structure?
– Vermont
– Kentucky
» Do we have managed care plans that know long term care populations and long term care services?
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Assets policy changes have negative implications for providers
Under the DRA and in this scenario, potential period of Medicaid ineligibility doubles
LTC provider options
» Pursue Hardship Waiver under DRA
» Pursing private payment
» Beginning discharge under Nursing Home Reform Act protections
» Taking loss
2008
Nursing Home Admission – DRA Penalty Period
Begins
1/1/2010
Penalty Period Ends
Pre-DRA Penalty Period start would have been in 2006 and finished in 2008 when this person entered a nursing home
2006 – After DRA Enactment
Assets Transfer of $140,000
Post-DRA Penalty Period starts in 2008 at nursing home admission or Medicaid application
2009
DRA Penalty Period Continues
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DRA Assets Transfer Impact Overview
LTC Providers
Constituents
States
NegativePostive
Administrative burden challenges
Penalty periods have significant implications
None Minimal Moderate Significant
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Key State Assets Transfer Considerations
Considerations include
» Majority of Assets Transfer changes are mandatory but
– Penalty periods
– Hardship waiver and Bed hold options
» Do we have adequate eligibility worker FTE and related infrastructure to absorb the additional work load?
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DRA LTC Partnership Overview
LTC Providers
Constituents
States
NegativePostive
Savings will be long range
Providers strongly support infusion of private dollars
None Minimal Moderate Significant
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Key State LTC Partnership Considerations
Considerations include
» What sorts of beneficiary protections does our state provide to private LTC insurance purchasers?
» What sorts of tax incentives could we offer to encourage purchase?
» Have we considered strategies to make private insurance – under this option -- affordable for low income populations who could easily and quickly spend down to Medicaid?
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Summary of Preliminary Assessment of State DRA Impacts
HCBS
C&C
Benchmark
AssetsTransfer
Partnerships
NegativePostive
None Minimal Moderate Significant
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For LTC Providers, Public Payment Systems will Remain the Cornerstone
Key drivers
» Private long term care insurance market is immature and limited
» Reverse mortgages are useful to only a very small group of people
» Retirement planning is minimal
» Employers are likely to continue retracting retirement benefits
» People do not understand long term care or their options
» Family care giving capacity is likely to decline as the population ages
State and federal policies and programming are addressing some of these items but actual impact on private financing and planning has been limited and will remain so in the next five years
Bottom line: Will public reimbursement attract sufficient numbers of providers?
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For Constituents, must be prepared for two possible strategies
Waiver
» Development and renewal is time consuming and visible but
» Is likely to be much broader
» May be time limited (i.e., renewal considerations)
Use of DRA state plan options
» More incremental and less visible
» New policy tools that are not completely fleshed out
Key concerns under both approaches include
» Benefit reductions
» Loss of consumer control
» Potential for Increased cost sharing
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States Should Take Bold Steps
High level statewide strategic planning efforts to fundamentally restructure Medicaid and Long Term Care
HCBS as the dominant service model and easier to access benefit
Broad-based prevention and wellness programs to slow disability progression
Encouraging self-reliance and personal planning
Partnerships with employers to encourage access to retirement benefits and/or private long term care insurance
Family Caregiver Support
Managed Integrated Care
Business as usual in Medicaid and Long Term Care is not an optionHCBS expansion alone “Tweaks” to eligibility or benefits access
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Some Basic LTC Reform Framework Questions
How can Legislators strengthen the spectrum of long term care services and be responsive to consumer preferences?
What specific policies Legislators should develop and promote to make Medicaid more sustainable?
» How can long term care strategies be better integrated with other critical services -- including acute care services, disease management and preventative services (such as Older Americans Act programs) – to create an array of Medicaid “diversion” tools?
What strategies should Legislators employ to balance efforts aimed at slowing Medicaid spending while providing -- and encouraging use of -- affordable alternatives?
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Questions and Discussion
Michael Cheek
Voice: 202-262-7094
Email: [email protected]