medicaid and chip fundamentals - nhpf.orgmedicaid and chip spending • medicaid o $499 billion =...

Medicaid and CHIP Fundamentals

Chris Peterson Principal Analyst

February 13, 2015

Overview • Brief background on MACPAC • Medicaid and CHIP in context • How Medicaid and CHIP work

o Statutory authority and program administration: What are the federal and state roles?

o Eligibility: Who is covered? o Benefits and cost sharing: What is covered? o Payment and financing: How much?

• Selected policy issues

February 13, 2015 2

MACPAC Background

February 13, 2015 3

Medicaid and CHIP Payment and Access Commission (MACPAC)

• Statutory charges include: o reviewing and making recommendations on a range

of topics affecting Medicaid and CHIP o submitting March and June reports to Congress

• Regular public meetings are held • Publications on a variety of topics, for example:

o issue brief on emergency department use o joint MACPAC/MedPAC data book on beneficiaries

who are dually eligible for Medicaid and Medicare o state payment policy landscapes

February 13, 2015 4

Members of the Commission

• 17 Commissioners representing:

o Different perspectives on Medicaid and CHIP: providers, state officials, beneficiaries, actuaries, health plans, health services researchers

o Geographic diversity

• Appointed by the Comptroller General

• Serve 3-year terms

• 6 new Commissioners as of January 1

February 13, 2015 5

Medicaid and CHIP in Context

February 13, 2015 6

Medicaid Differs from Other Payers

• Medicaid covers people for whom other insurance may not be available or affordable

• Provides benefits other insurance may not (for example, long-term care and transportation)

• Pays premiums and cost sharing for low-income Medicare beneficiaries

• Serves as a major source of financing for care delivered by safety net providers

February 13, 2015 7

Medicaid and CHIP Beneficiaries

• Medicaid and CHIP cover about a quarter of the U.S. population—and about half of all children—for at least part of the year o Medicaid: 72 million ever enrolled (FY 2013) o CHIP: 8 million ever enrolled (FY 2013)

• Nearly half of births nationally (46% in 2010) • More than 16 million age 65+ or eligible due

to disability, including more than 10 million dually eligible for Medicaid and Medicare

February 13, 2015 8

Medicaid and CHIP Spending • Medicaid

o $499 billion = $303 billion federal and $195 billion state, 61% federal (FY 2014)

o 7.7% of federal outlays (FY 2013)

o 14.8% of state-funded state budgets and 23.7% of total state budgets (SFY 2012)

o 61% of long-term services and supports spending (2012)

o 26% of mental health and substance abuse spending (2009)

• CHIP o $13 billion = $9 billion federal and $4 billion state, 70%

federal (FY 2014) February 13, 2015 9

Medicaid Projections • Beneficiaries

o Congressional Budget Office projects that 72 million individuals ever enrolled in FY 2013 will rise to more than 90 million by FY 2018

• Spending o Medicaid share of national health expenditures

projected to rise from 15.1% in 2012 to 17.8% over the next decade

o States project Medicaid spending of $594 billion ($358 billion federal) in FY 2015 and $614 billion ($370 billion federal) in FY 2016

February 13, 2015 10

How Medicaid and CHIP Work: Statutory Authority and Program

Administration


Medicaid and CHIP Legal Framework • Medicaid is an entitlement for eligible individuals,

with open-ended federal matching funds for states • CHIP coverage separate from Medicaid is not an

entitlement to individuals; federal funding to states is capped, appropriated through FY 2015

• Statute, regulations, and guidance o Most statutory provisions are contained in Title XIX and

Title XXI (CHIP) of the Social Security Act o Federal regulations at 42 CFR 430 et seq. o Subregulatory guidance includes letters to State

Medicaid Directors (SMDs); letters to State Health Officials (SHOs); Patient Protection and Affordable Care Act (ACA) FAQs


Medicaid and CHIP State Plans and Waivers

• State plan is a document that governs most aspects of a state’s program

• States may obtain waivers of federal requirements that would otherwise apply o Section 1115: Experimental, pilot, or

demonstration projects o Section 1915(b): Managed care for Medicaid o Section 1915(c): Home and community-based

services for Medicaid


Medicaid and CHIP Program Administration

• States run day-to-day operations and make policy decisions within federal parameters

• Administered at federal level by Centers for Medicare & Medicaid Services (CMS)

• CMS approves (or disapproves): o State plans and state plan amendments (SPAs) o Waiver applications, renewals o Claims for federal reimbursement


How Medicaid and CHIP Work: Eligibility


Medicaid Eligibility Overview

• All individuals must meet financial and other (for example, citizenship documentation) eligibility requirements

• Historically, Medicaid coverage was tied to receipt of cash welfare assistance

• Later expanded to cover specified populations without regard to welfare receipt

• Adults without dependent children were added as an eligible population by the ACA


General Requirements for Medicaid Eligibility

• Only citizens and qualified non-citizens can receive full Medicaid benefits

• Some groups receive only limited benefits o Emergency services for nonqualified aliens o Assistance with Medicare costs o Family planning and related services

• Coverage of long-term services and supports may require meeting functional criteria (difficulties with activities of daily living) February 13, 2015 17

Medicaid Enrollment and Spending by Major Eligibility Group, FY 2011


Children 47.4%

Children 19.0%

Adults 28.3%

Adults 15.3%

Disabled 14.7%

Disabled 42.7%

Aged 9.5% Aged

23.0%

Enrollment as a share of total Benefit spending as a share of total

Major Medicaid Eligibility Groups: Aged and Disabled

• Individuals age 65+ and those under age 65 with a disability determination

• Most are eligible through receipt of federal Supplemental Security Income (SSI) o Income below about 74% FPL for an individual

($8,652 annually in 2014) and limited assets • States may cover additional individuals

through other pathways, for example: o poverty level (up to 100% FPL) o medically needy (high health care spending) o special income level (need institutional care)


Major Medicaid Eligibility Groups: Aged and Disabled (continued)

• Individuals dually eligible for Medicaid and Medicare account for: o most Medicaid enrollees age 65+ o about 40% of Medicaid enrollees under age

65 who are eligible on the basis of a disability • For about one-quarter of beneficiaries who

are dually eligible, Medicaid only pays Medicare premiums and cost sharing

• Remaining three-quarters also receive full Medicaid benefits


Major Medicaid Eligibility Groups: Non-Disabled Adults and Children

• Non-disabled adults age 19-64 o Parents (Section 1931 of Social Security Act) o Pregnant women o New adult group (those without dependent

children and parents above 1931 levels) • Non-disabled children under age 19

o Minimum of 138% FPL o Maintenance of effort (MOE) required for

eligibility through FY 2019 o Some Medicaid coverage is financed with

CHIP funds (Medicaid-expansion CHIP)


Selected ACA Medicaid Eligibility Changes

• Modified adjusted gross income (MAGI) and no asset test for most eligibility determinations

• New adult group for those with incomes at or below 138% FPL

• Expansion for ages 6-18 at or below 138% FPL (up from 100% FPL)

• Child MOE through FY 2019 • Former foster care children until age 26 February 13, 2015 22

How CHIP Differs from Medicaid: Eligibility

• CHIP pays for children above each state’s 1997 Medicaid income-eligibility levels o No federal minimum level for CHIP o Upper-income eligibility levels range from 175% FPL

(North Dakota) to 405% FPL (New York) • Two options for creating CHIP programs

o Medicaid-expansion CHIP (children enrolled in Medicaid, paid by CHIP)

o Separate CHIP (children enrolled in and paid by CHIP)

o Can have both types (combination) o Most states are combination states


West Virginia Non-Disabled Child and Adult Eligibility Levels, 2014

0%

50%

100%

150%

200%

250%

300%

350%

400%

Subsidized exchangecoverageSeparate CHIP

Medicaid-expansion CHIP

Medicaid

Note: Subsidized exchange coverage is available only to individuals who are not eligible for Medicaid, CHIP, Medicare, or affordable employer-sponsored insurance, where affordable is defined as out-of-pocket premiums for self-only coverage that do not exceed 9.5% of family income.

24 February 13, 2015

0%

50%

100%

150%

200%

250%

300%

350%

400%

Subsidized exchangecoverageGap

Separate CHIP

Medicaid-expansion CHIP

Medicaid

Note: Subsidized exchange coverage is available only to individuals who are not eligible for Medicaid, CHIP, Medicare, or affordable employer-sponsored insurance, where affordable is defined as out-of-pocket premiums for self-only coverage that do not exceed 9.5% of family income. Figure is for citizens; lawfully present non-citizens may also obtain exchange subsidies below 100% FPL.

Georgia Non-Disabled Child and Adult Eligibility Levels, 2014


How Medicaid and CHIP Work: Benefits and Cost Sharing


Mandatory Medicaid Benefits


•Inpatient hospital services •Outpatient hospital services •Physician services •Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services for individuals under age 21 (screening, vision, dental, and hearing services and any medically necessary service listed in the Medicaid statute, including optional services not otherwise covered by a state)

•Family planning services and supplies

•Federally qualified health center services

•Freestanding birth center services

•Home health services •Laboratory and X-ray services •Nursing facility services (for ages 21 and over)

•Nurse midwife services (to the extent authorized to practice under state law or regulation)

•Certified pediatric or family nurse practitioner services (to the extent authorized to practice under state law or regulation)

•Rural heath clinic services •Tobacco cessation counseling and pharmacotherapy for pregnant women

•Non-emergency transportation to medical care

Optional Medicaid Benefits


•Prescribed drugs • Intermediate care facility services for individuals with intellectual disabilities

•Clinic services •Occupational therapy services •Optometry services •Physical therapy services •Targeted case management services •Prosthetic devices •Hospice services • Inpatient psychiatric services for individuals under age 21

•Dental services •Eyeglasses •Speech, hearing, and language disorder services

• Inpatient hospital and nursing facility services for those age 65+ in institutions for mental diseases

•Emergency services in a hospital not meeting certain Medicare or Medicaid requirements

•Dentures •Personal care services •Private duty nursing services •Program of All-inclusive Care for the Elderly (PACE) •Chiropractic services •Critical access hospital services •Respiratory care for ventilator-dependent individuals

•Primary care case management services •Services furnished in a religious nonmedical health care institution

•Tuberculosis-related services •Home and community-based services •Health homes for enrollees with chronic conditions •Other licensed practitioners’ services •Other diagnostic, screening, preventive, rehabilitative services

General Requirements for Medicaid Benefits

• Amount, duration, and scope: Services must be reasonable to achieve their purpose o States have flexibility even for mandatory

benefits, except EPSDT for children • Comparability: Same benefits for all enrollees • Statewideness: Same benefits regardless of

place of residence within state • Freedom of choice: Enrollees can choose

among participating providers and managed care plans


Medicaid Cost-Sharing Exemptions

At or below 100% FPL

100%-150% FPL Above 150% FPL

Exempt populations

No cost sharing for most children under age 18, pregnant women, beneficiaries receiving hospice care, certain beneficiaries in institutions such as nursing facilities, American Indians who are furnished a Medicaid item or service through an Indian Health Service provider or through a contract health service referral, and individuals eligible under the Breast and Cervical Cancer Act pathway

Except for certain pregnant women above 150% FPL, these populations are also exempt from premiums

Exempt services

Emergency services, family planning services and supplies, preventive services for children, pregnancy-related services, and services related to provider-preventable conditions


Allowable Medicaid Cost Sharing

At or below 100% FPL 100%-150% FPL Above 150% FPL Aggregate limit

Total premiums and cost sharing incurred by individuals in a Medicaid household may not exceed 5% of family’s monthly or quarterly income

Premiums Specified populations

Up to $20 per month for medically needy Sliding scale for certain disability pathways

(Both may also apply above 150% FPL)

Up to 10% of income exceeding 150% FPL for

certain pregnant women

All others Not permitted No specific limit

Cost sharing for services Outpatient Up to $4.00 Up to 10% Up to 20%

Inpatient Up to $75.00 Up to 10% Up to 20%

Non-emergency use of emergency dept.

Up to $8.00 No specific limit

Drugs Preferred drugs: Up to $4.00 Non-preferred drugs: Up to $8.00

Preferred: Up to $4.00 Non: Up to 20%


How CHIP Differs from Medicaid: Benefits and Cost Sharing

• Medicaid-expansion CHIP programs o These children are enrolled in Medicaid, covering

EPSDT with little or no cost sharing • Separate CHIP programs

o States have flexibility to offer benefit packages patterned after commercial coverage, except must cover dental

o However, a third of separate CHIP programs benchmark to Medicaid benefit package

o Premiums and cost sharing at or below 150 percent FPL must be nominal (very small). More flexibility above 150 percent FPL, but no more than 5% of income


How Medicaid and CHIP Work: Financing and Payment


Federal Medicaid Financing Overview

• Federal Medicaid spending is determined by the amount that states spend o Federal share of service costs determined by each

states’ federal medical assistance percentage (FMAP) o Federal share of administrative costs does not vary by

state and is generally 50%

• States submit actual spending eligible for federal match on the CMS-64 Quarterly Medicaid Statement of Expenditures o Federal matching funds commonly referred to as

“federal financial participation” (FFP) 34 February 13, 2015

Federal Medical Assistance Percentage (FMAP) • Based on a formula that provides higher

reimbursement to states with lower per capita incomes relative to the national average: 50-74%

• Exceptions apply in some cases, such as: o U.S. territories and D.C. (FMAPs set in statute) o Special situations (e.g., temporary state fiscal relief) o Certain populations, providers, and services (e.g.,

Indian Health Service facilities)

• Federal CHIP matching rate is higher: 65–82%


State Medical Assistance Payments are Matched by Federal Government


Source: March 2014 MACStats, Table 14

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

AK CT MA NH NY RI WY IL SD HI DE IA TX FL LA OH OR TN NC IN AZ NM DC SC WV MS

Federal Medical Assistance Percentages (FY 2015)

ACA FMAPs


State Pop. 2015 2016 2017 2018 2019 2020+

All states Newly eligible

100% 100% 95% 94% 93% 90%

Early expansion

FMAP states

Already eligible

childless adults

80%-92%

85%-94%

86%-92%

90%-93%

93% 90%

All states All others

Regularly applicable FMAPs

Newly eligible = generally not eligible on 12/1/09

Early expansion state = covered parents and childless adults in Medicaid/state-only at 100%+ FPL on 3/23/10

Primary Sources of Nonfederal Funding

1. State general revenue 2. Local government

contributions • Intergovernmental

transfers (IGTs) • Certified public

expenditures (CPEs) 3. Health care related

taxes

38

Source: GAO, GAO-14-627

February 13, 2015

69%

16%

10% 5%

Sources of the Nonfederal Share of Medicaid Payments (SFY 2012)

State funds Local governments

Health care providers Other sources

States’ Use of Health Care Related Taxes

39

Note: Example based on FMAP of 60%

February 13, 2015

Provider Payment: FFS vs. MCO • Fee for service—State sets amounts it will pay

providers; state is billed, pays for services

• Managed care—State pays premiums to plans; plans/managed care organizations (MCOs) pay providers

• 50% of Medicaid enrollees are in managed care plans with comprehensive benefits, which exist in most states

o However, only 24% of Medicaid benefit spending is for comprehensive managed care


Provider Payment Rates • §1902(a)(30)(A)

o Safeguard against overutilization o Payments consistent with efficiency, economy, quality o Sufficient to enlist enough providers …

• Medicaid payments to hospitals (including supplemental payments) averaged 89% of costs in 2012

• Medicaid physician fees averaged 66% of Medicare in 2012 o Ranged from 37% (RI) to 134% (ND)

• Medicaid managed care plans negotiate provider rates


Supplemental Payments

• Supplemental payments are made in addition to the standard payment for services o Not necessarily associated with specific services o Often financed by provider taxes and IGTs

• Disproportionate share hospital (DSH) payments were more than $16 billion in FY13

• Non-DSH supplemental payments—almost all based on upper payment limit (UPL)—were reported at over $23 billion in FY13


Medicaid DSH - Background

• DSH payments are statutorily required payments to hospitals serving low-income patient populations

• Intended to improve the financial stability of safety-net hospitals and to preserve access to necessary health services for low-income patients

• In FY 2013, DSH payments accounted for over $16 billion in total Medicaid spending


Medicaid DSH Reductions • ACA reduced DSH allotments based on expected

decline in number of uninsured o Reductions were to begin in FY14 and end after FY20

• Subsequent legislation has delayed onset to FY17 and extended reduction to FY24 o Under current law, FY25 reverts to pre-FY14 level

February 13, 2015

Fiscal Year Annual reduction amount (billions)

2017 $1.8

2018-2020 $4.7

2021 $4.8

2022-2023 $5.0

2024 $4.4 44

How CHIP Differs: Federal CHIP Funding Will Be Exhausted in FY 2016

• No new CHIP allotments after FY 2015 o Existing CHIP allotments are available for 2 years o Nearly all states expected to begin FY 2016 with leftover

FY 2015 allotments • CHIP matching rate increases by 23 percentage

points for FY 2016–2019 • When CHIP funds are exhausted:

o Medicaid-expansion CHIP eligibility must continue through FY 2019 because of MOE—at higher state cost

o Separate CHIP programs can be closed down


Percentage of States’ CHIP Spending for Medicaid-Enrolled Children, FY 2016

Source: MACPAC analysis of projections of FY 2016 federal CHIP spending provided by states in Medicaid and CHIP Budget and Expenditure System as of December 2014. 1 Includes projected §2105(g) spending.

Enrollment and Uninsurance Among Children Age 0–18 Projected to Lose CHIP in 2016

Among approximately 3.7 million children projected to be in separate CHIP in 2016 if CHIP had continued.

Source: Preliminary Urban Institute analysis (Dubay, Buettgens, and Kenney) for MACPAC of HIPSM-ACS enhanced with MEPS-IC data from the Agency for Healthcare Research and Quality, as of January 13, 2015.

Selected Policy Issues


Selected CHIP Policy Issues

• Should CHIP be extended? • What would be the experience of children

now enrolled in CHIP if the program ended? • Is there an ongoing long-term role for CHIP

even given the availability of new sources of coverage?

49

Selected Medicaid Policy Issues

• Level and growth rate of Medicaid spending and enrollment

• State flexibility within federal parameters and the use of waivers

• Adoption and diffusion of payment, delivery system, and other innovations

• Impact of state decisions regarding ACA eligibility expansion


Contact Information

Chris Peterson, Principal Analyst 202-350-2022

[email protected]

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