Health Care Finance Medicaid and SCHIP

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Health Care Finance Medicaid and SCHIP

• Developed and narrated by
• C. A. Galeener, PhD

This module is provided by the Texas Public
Health Training Center in part through a grant
supplied by the Public Health Training Center
Program, Health Resources and Services
Administration, U.S. DHHS.
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Preamble
This module is part of the Health Care Finance
course that provides an intermediate level of
competence in the Financial Planning and
Management Skills competency domain for public
health professionals. The material presented is
at the level of graduate Healthcare Finance
classes. At the end you can test yourself on the
key concepts. The module should take about 60
minutes to complete.
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Objectives

• Understand Medicaid/
• and SCHIP
• History and evolution
• Spending levels
• Who/ what is covered
• How Medicaid is funded
• Spending trends and long term financing issues

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Medicaid (SS Title XIX)

• State-administered program providing medical care
  for the poor
• Each state establishes eligibility rules and
  benefits funded by general revenues
• Eligibility is combination of financial (income
  and resources) and categorical

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Broad categories of eligibility

• Children
• Pregnant women
• Adults in families with dependent children
• Individuals with disabilities
• Individuals 65 or over

Medicaid is insurer of last resort for the
dually eligible
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Who is categorically needy

• AFDC-eligible (July 16, 1996)
• Pregnant women/ children lt 6 with income lt 133
  FPL
• Children 6 19 with income
• lt 100 FPL
• SSI recipients
• Individuals/ couples in medical institutions with
  family income lt 300 FPL

Federal Poverty Level 2005
Not an exhaustive list of criteria
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Categorically needy mandatory coverage

• (Unless state has a Section 1115 waiver)
• Inpatient/ outpatient hospital
• Physicians services
• Medical/ surgical dentist services
• Labs/ x-rays
• Nurse/ pediatric practitioners
• EPSDT for under ages lt 21
• Family planning services/ supplies
• Some home health care

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Who is medically needy

• 35 States have medically needy programs that
  expand Medicare coverage to
• Children up to 21 if in school
• Caretakers of children
• Blind or disabled (per SSI)
• Qualified Medicare beneficiaries
• Qualified working disabled
• Special groups TB, breast or cervical cancer
• Texas covers only mandatory groups, not
  aged, blind, disabled.

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Medically needy mandatory coverage

• Prenatal care and delivery
• Postpartum care if under 18
• Home health services if eligible for nursing
  facility care under state plan

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Medicaid an Entitlement
States may expand coverage beyond minimum Iowa,
e.g., allows near-poor buy in. Medicaid growth
34M (99) to 47M (04) Low income workers often
choose Medicaid over private insurance. Uninsured
children declined from 1997 (14.8) to 2004
(11.8). Childhood vaccination index rose from
72 (2000) to a record 81 (2004).
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Medicaid How it works
Medicaid pays the provider some states require
beneficiary co-payment Federal match to state
funds based inversely on state per person income

Federal Matching 2006
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States coverage of services

• Varies widely by service
• Some states have rich coverage, often with some
  limits on services to the categorically needy
  (e.g. NY, NJ, CA, OR)
• Examples key Texas coverage gaps
• Optometrists
• Psychologists
• Prosthetics
• Eyeglasses and dentures
• Diagnostic/ screening/ preventive services

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Texas Income Data
41,275 44,473

• Higher of Texans are below the poverty line
  than
• the U.S. average.
• Texans average income 8 under U.S. average

Source Kaiser Family Foundation State Fact
Sheets
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Medicaid profile by group
Source Kaiser Family Foundation State Fact
Sheets
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How is Medicaid money spent?

Source Kaiser Family Foundation State Fact
Sheets
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Disproportionate Share Hospital (DSH) Payments --
1981
Historically low reimbursement rates for indigent
care resulted in providing Disproportionate Share
Hospital payments to safety net institutions.
Analog to Medicare DSH Cover 2/3 hospital
uncompensated care costs
Source Public Health Policy Forum, 2002
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Medicaid expanding

• States use waivers to expand eligibility, add
  more programs 25 increase in enrollment from
  1999 to 2002.
• Demographics
• Elderly and disabled (25) of total Medicaid
  population (47M), account for 70 of costs.
• LTC makes up 35 of Medicaid outlays (2003) and
  47 of national LTC expenditures.

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Medicaid stressing budgets

• Medicaid competes with other programs
• Largest state spending program
• 2nd largest state funds expenditure
• 3rd largest federal entitlement

Medicaid consumes a large fraction of federal
funds spent by the states.
Source http//www.nasbo.org/Publications/PDFs/20
04ExpendReport.pdf
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Total Medicaid Spending (B) 1966-2005(includes
SCHIP expansion 2003 are projections)
Source CMS
Actual 2004 Medicaid spending was 291B (Source
CMS).
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Can Medicaid costs be contained?

• Volume purchase or other control of prescription
  drug costs?
• Increase managed care penetration?
• Managed care techniques e.g. formularies,
  utilization review, etc.?
• Keep people healthy longer?
• Political/ structural barriers to cost containment

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Medicaid outpatient drug costs

• Medicaid pays on basis
• ingredient cost
• dispensing fee
• manufacturers rebates

Other containment steps State-specific
formularies Prior authorization Drug utilization
reviews Multi-state cooperative
purchasing Generics Limits on s of
prescriptions, refills, cost-sharing
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Medicaid Managed Care Enrollment

• YEAR MEDICAID MC
  Total (M)
  (M)
• 2004 44.6 27.3 61.3
• 2.8 1.2 43.3
• 2000 33.7 18.8 55.8
• 1998 30.9 16.6 53.6
• 1996 33.2 13.3 40.1

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Managed care expansion Deficit Reduction Act 2005

• Nominal cost sharing indexed to medical CPI
• States permitted to boost cost sharing for
  non-preferred drugs
• States may make co-pays enforceable
• Pharmacies not allowed to refuse service to any
  recipient claiming an inability to pay
• States prohibited from compensating for these
  uncollectible
• Source National Association of Chain Drug Stores

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Keep people healthy longer?
The Price of Nursing Home CareNatl average
annual costs, private pay
Source MetLife Mature Market Survey of Nursing
Home and Home CareCosts.
Most states use eligibility requirements for
such individuals that are more liberal than those
normally used in the community. Source CMS
Medicaid General Info
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Who uses long term care?
Most are female and gt 85 years 4 of 5 have no
spouse Almost half have a mental/ cognitive
deficit
What policies can have an impact on long term
care burden?
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State Childrens Health Insurance Program
(SCHIP)Title XXI 1997

• Authorized thru 2007
• Capped grant federal match 65 85 of costs
• States may expand Medicaid, provide separate
  program, or both.
• Texcare has a separate program at
  200 FPL also includes Childrens Medicaid.

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Medicaid/ SCHIP Expenditures then and now
Annual Billions
1967
1968 2002 2003 Medicaid
1.9 3.3 248 273 Fed
Share NA 1.6 140
155 SCHIP NA NA
5 7 Fed Share NA NA
4 5
Source CMS Data Compendium 11/03
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Creative financing or fraud?

• State schemes involving overpayments and
  kickbacks long-standing, e.g.
• Round trip state/ local transfers
• Provider taxes and donations
• Excessive DSH payments to hospitals/ state mental
  facilities
• UPL overpayments laundered back to states
• Some monies doubled up to state Medicaid
• Loopholes curtailed but not eliminated

Source GAO Testimony to Congress
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DSH payment creative financing
http//www.nhpf.org/pdfs_bp/BP_MedicaidDSH_09-14-0
4.pdf
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Test yourself on the material
Select the best answer by clicking on the box.
You will then find out if you were correct and
the reasoning behind the correct answer. The
notes indicated by the light bulbs are further
insights or examples illustrating a point.
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The Constitution guarantees that a poor person in
one state will receive the same Medicaid benefits
as a similar person in another state.
True
False
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The Constitution guarantees that a poor person in
one state will receive the same Medicaid benefits
as a similar person in another state.
Note even though Medicaid was created as a
federal program in 1965, Arizona did not even
participate until 1982.
True
False
False. Each state Medicaid program is unique in
operation. Through waivers states may extend
eligibility and coverage beyond the minimum
required to participate in Medicaid. Thus in
practice eligibility and coverage vary among the
states.
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You read that a state has a 75 Medicaid match.
If the state spends 100 on Medicaid, how much
will the federal government spend?
25
75
300
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You read that a state has a 75 Medicaid match.
If the state spends 100 on Medicaid, how much
will the federal government spend?
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Note for any state federal map (FMAP) you can
figure the amount the federal government will
spend for each of state spending by solving the
simple algebraic equation for x FMAP x/ (1
x)
75
300
The correct answer is 300, this is amount that,
when added to the state Medicaid spending, will
make the federal contribution 75 of the total
(300/ 400).
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Children are the largest demographic group of
Medicaid enrollees.
True
False
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Children are the largest demographic group of
Medicaid enrollees.
True
False
You will recall from the data we discussed that
needy children are actually 50 of Medicaid
enrollees in the U.S. In some states such as
Texas they are a significantly larger percentage
of enrollment. Medicaid eligibility requirements
favor the coverage of children.
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People designated as dually eligible may choose
between Medicare and Medicaid coverage
whichever is better for them.
True
False
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People designated as dually eligible may choose
between Medicare and Medicaid coverage
whichever is better for them.
Exception -- the claw back provision of the
MMA (prescription drug) Act requires states to
repay the federal government 90 of the cost of
drugs the state would have paid previously.
True
False
Dually eligible beneficiaries receive first
dollar coverage from Medicare, and then Medicaid
provides fill in benefits. In most states
Medicaid pays the beneficiary premiums for
Medicare Part B, the program that pays for
outpatient services.
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Who among the following is generally not
categorically eligible for Medicaid?
Poor children
Poor pregnant women
Jobless, childless, poor adults
None of the above
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Who among the following is generally not
categorically eligible for Medicaid?
Poor children
Poor pregnant women
Jobless, childless, poor adults
None of the above
Being poor alone is not a guarantee of Medicaid
eligibility. Poor adults raising children who
qualify for Medicaid are categorically eligible.
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Additional Resources

• http//www.cms.hhs.gov/home/medicaid.asp
• http//www.cms.hhs.gov/MedicaidGenInfo/Downloads/M
  edicaidAtAGlance2005.pdf
• http//www.cms.hhs.gov/home/schip.asp?

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Thank you.