State Officials Discuss Medicaid Programs

Reston, Virginia—At the Leadership Summit on Medicaid Managed Care, 3 state Medicaid officials discussed issues they face balancing difficult economic conditions with an increasing enrollee base and offered insights into how they will deal with potential problems. During a keynote session titled State Medicaid Panel: State Approaches to Medicaid Fiscal Challenges and Infrastructure, they offered a glimpse into how they are dealing with the current environment. As more people are on Medicaid, the majority of states already are or plan on relying on managed care to help defray costs. They are also looking ahead to 2014, when provisions included in the Patient Protection and Affordable Care Act (ACA) will add millions more people to Medicaid.

Arizona’s Perspective

Thomas Betlach, director of Arizona’s Health Care Cost Containment System (the state’s Medicaid program), said Arizona was the last state to join Medicaid in 1983. Today, approximately 1.4 million people (20% of the state’s population) are enrolled in Medicaid, which is the state’s largest insurer. Arizona has a mandatory managed care program for all residents covered by Medicaid, with the exception of Native Americans and those in the Federal Emergency Services program for immigrants. In all, there are 9 acute managed care plans, 4 behavioral health managed care plans, and 3 managed long-term care plans in the state. Children account for 54% of the program’s population, while adults between 21 and 64 years of age account for 41%. Mr. Betlach said the Medicaid program has been successful, with <3% of members changing plans each year and provider participation remaining high despite rate reductions. He added that 17 of the 25 quality measures were better than the Medicaid mean, according to the National Committee for Quality Assurance’s Healthcare Effectiveness Data and Information Set.

The average Medicaid managed care plan earns 2% to 3% profit. The program receives one third of its funds from the state and the balance from the federal government. However, the $8.5-billion budget for fiscal year (FY) 2012 is down 21% from FY 2011. To close the gap, the state took several steps, including decreasing provider rates by 5% to 15%, freezing enrollment of childless adults, and cutting one third of the administrative staff. At the same time, Arizona is preparing for the expansion of Medicaid in 2014, when it estimates 247,000 more people will be in the program. Mr. Betlach said the additional enrollees will increase the state’s costs by hundreds of millions of dollars. Arizona was among 10 states selected by the Centers for Medicare & Medicaid Services for a Federal Matching Assistance Percentage pilot program to help with the expansion, but Mr. Betlach said that the state is still awaiting feedback from the federal government about the program. Arizona is among the 26 states involved in a lawsuit declaring that the ACA is unconstitutional. The Supreme Court heard oral arguments in late March and is expected to make its decision by June. Arizona is planning on establishing an insurance exchange as part of the ACA. The state received a $29-million establishment grant from the federal government, and Mr. Betlach said Arizona has put out a request for proposal (RFP) for exchange plan functions and is developing eligibility infrastructure. “There’s a lot of work to be done,” Mr. Betlach said. “We’re certainly impacted by a lack of federal guidance.”

New Jersey’s Perspective

Karen Brodsky, director in the office of managed health at the New Jersey Department of Human Services, followed with an overview of the state’s Medicaid program. Of the 1.2 million people in New Jersey enrolled in Medicaid or the Children’s Health Insurance Program (CHIP), 98% are in managed care. Although New Jersey has had a Medicaid managed care system for 10 years, Ms. Brodsky said the state did not have an RFP process. In the coming years, she said there will be a competitive bidding process for the state’s Medicaid program, and any health plan is eligible to apply. To control costs and revamp its Medicaid program, New Jersey asked the federal government for a comprehensive waiver for Medicaid and CHIP that “encompasses all services and eligible populations served under a single authority that provides broad flexibility to manage all programs more efficiently,” according to the state. If the waiver is granted, New Jersey will consolidate Medicaid and CHIP under a single-waiver authority; integrate primary, acute, long-term, and behavioral healthcare; and promote home-and-community–based services for long-term care enrollees. New Jersey submitted the waiver in September and will likely hear soon if it is accepted, according to Ms. Brodsky. New Jersey’s Medicaid budget is $5 billion for FY 2012, and the state is planning on reducing the budget with the waiver.

Nebraska’s Perspective

Vivianne M. Chaumont, director of the Division of Medicaid & Long-Term Care, Nebraska Department of Health and Human Services, concluded the discussion with an overview of the state’s Medicaid managed care program, which began in 1995 in 3 counties. The program expanded to 10 counties in November 2009. In September 2011, the state issued an RFP to have Medicaid managed care in all 93 counties. Of Nebraska’s 1.7 million residents, 238,000 are covered by Medicaid and 103,000 are in Medicaid managed care. Unlike Arizona and New Jersey, Nebraska’s economy has fared relatively well in the past few years. The state has the third lowest unemployment rate in the United States. Providers had also been receiving rate increases until last year, when rates (with the exception of primary care codes) were cut by 2.5%. Still, Nebraska is preparing for an influx of Medicaid enrollees that could affect its finances. When managed care is expanded statewide, an estimated 173,000 enrollees will be in Medicaid managed care, according to Ms. Chaumont. She added that an estimated 100,000 to 140,000 people will be enrolled in Medicaid in 2014 when the ACA provisions are in place. Nebraska is also revamping other parts of its health system. In July, the state plans on putting out an RFP for a statewide at-risk managed care contract for behavioral health, which will be awarded to a managed care organization this fall. The program is expected to be implemented by next July, according to Ms. Chaumont. Ms. Chaumont said Nebraska hopes to consolidate and have 2 or 3 statewide managed care organizations and expand its use of medical homes. There is also a desire to focus on capitation payments for providers and move away from fee-for-service. Nebraska has 53,000 aged and disabled people enrolled in long-term care. By July 2014, the state would like to move all of long-term care into managed care programs. “I think [long-term care] will be the last frontier,” Ms. Chaumont said.