A NEW DIRECTION for GEORGIA MEDICAID

1
A NEW DIRECTION for
GEORGIA MEDICAID
Presentation to the Biennial Institute for
Georgia Legislators
Commissioner Tim Burgess Georgia Department of
Community Health December 13, 2004
2
Deficit Drivers - Healthcare Costs

• Health Care Costs are Rising Nationally
• From Deloitte Consulting Presentation to DCH
  Board October 13, 2004
• Health care costs are out of control double
  digit annual increases are common costs will
  double in 5 years
• Health care cost management is a major issue for
  virtually every employer
• Incentives are not aligned to fix the problems
  employers, health plans, providers and consumers
  are out of sync

3
Medicaid Pharmacy Expenditure Growth
Georgias Pharmacy Growth
Cost Per Script Comparison
4
FY03 FY05 Enrollment
Growth
Recession Era

• Enrollment Growth Rate Not Expected to Slow
  Until Latter Part of FY05
• Post Recession Jobs are Lower Wage and Less
  Likely to Provide Private Health Insurance

5
FY03 FY05 Expenditure
Explanation
FY01 FY05 LIM Enrollment Increased 50
(370,000 new members _at_ 770M) FY01 650,000
FY05 1,020,000
FY2003 Cost Drivers
FY2004 Cost Drivers
FY2005 Cost Drivers

• Chronic illness becomes a more
  dominant price contributor

• Pharmacy costs also contributed to 26 of the
  overall cost increase, driven primarily by cost
  which increased 8.1.

• Enrollment continues to be a key driver, adding
  127 million.

Note Cost drivers represent the year over year
incremental growth
6
Utilization Management is a Necessity

• Medicaid utilization drives more than 35
  of total growth year over year

• From FY05 to FY10 utilization is expected
  to increase in the following major categories of
  service
• Inpatient Admissions 23
• Physician Visits 42
• Prescriptions 30
• Outpatient Hospital Visits 34

Utilization Growth
Enrollment Price Growth
7
Quality Indicators ER Utilization Per 1,000
Georgia Better Health Care FY2001
APHSA Medicaid MC Plans HEDIS Benchmark FY2001
State Health Benefit Plan FY2003
Medstat Employer (Commercial) Client Data FY2003
8
Medicaid Growth is Unsustainable!

• In FY2005, Medicaid will require 43 of all new
  state revenue
• By FY2008, Medicaid will require over 50 of all
  new state revenue.
• By FY2011, Medicaid will require 60 of all new
  state revenue.

9
Percent of All New Revenue Required by the
Medicaid Program

10
Why Medicaid Reform?

• To focus on system-wide improvements in
  performance and quality
• To consolidate fragmented systems of care
• To control unsustainable trend rate in Medicaid
  expenditures
• To adopt a management of care approach to
  achieve the greatest value for the most efficient
  use of resources

11
A snapshot of the U.S. Market
for Medicaid
On a national scope, states fall into one of
three categories as it relates to full-risk
managed care programs and their TANF
populations Statewide Partial
Statewide Full-Risk
Full-Risk Full-Risk and PCCM Arizona Californi
a Florida
Connecticut Michigan Kentucky
Delaware Minnesota Indiana
District of Columbia New York Iowa
Hawaii Nebraska Kansas
Maryland Nevada Massachusetts New Jersey
Ohio Missouri
New Mexico Oregon North Carolina
Rhode Island Pennsylvania NorthDakota
Tennessee Washington South Carolina
Wisconsin Texas
Utah Virginia

12
Goals of Reform

• Improve health care status of member population
• Establish contractual accountability for access
  to and quality of healthcare
• Lower cost through more effective utilization
  management
• Budget predictability and administrative
  simplicity

13
Managed Care Can Lower Costs

• A recent study by the Lewin Group consolidated 14
  separate research studies and found
• Experience suggests that Medicaid managed care
  yields cost savings (between 2-19 in states
  studied)
• Experience suggests that significant cost savings
  are attributable to lower inpatient utilization
• Pharmacy costs can expect to be lowered. PMPM
  cost in managed care was 10 15 lower than
  fee-for-service

14
Quality Access

• A national study by the Urban Institute comparing
  Medicaid children and adults in fee-for-service
  and managed care found
• Children and adults in managed care are 10 more
  likely to visit a physician in the last 12 months
• Children in managed care are more likely to have
  visited a dentist

15
Improved Utilization Management

• Care Management Organizations (CMOs) employ
  strong member outreach and education efforts
• Disease management efforts designed to address
  strong incidence of these conditions in this
  population
• Provide medical homes to help lower inappropriate
  utilization of the emergency room

16
Population-based Strategy

• The DCH strategy for the implementation of CMOs
  will be unique to the needs of our population.
  Required enrollment for statewide CMOs will be
  for
• Low-income Medicaid adults and children
• PeachCare for Kids
• Right from the Start Medicaid
• Refugees

17
The Plan

• Regionalized approach 6 geographic regions
• Competitive procurement for up to 2 care
  management organizations (CMOs) in each region
• CMOs will
• Be licensed by Georgia Department Of Insurance as
  risk-bearing entities
• Be subject to net worth and solvency standards
• Have demonstrated ability to provide all covered
  healthcare services and an adequate provider
  network

18
(No Transcript)
19
The Plan

• CMOs will be responsible for providing all
• covered Medicaid services, which include
• Physician visits, laboratory and diagnostic
  testing, and inpatient and outpatient
  hospitalization
• Mental health and substance abuse treatment
• Pregnancy-related services
• Prescription drugs
• Dental and vision care services (to eligible
  populations)
• Screening and preventive services (to eligible
  populations)
• Durable Medical Equipment

20
The Plan

• CMOs will not be responsible for
• ICFMR- Intermediate Care Facility/Mentally
  Retarded
• HCBS- Home and Community-based Services under a
  1915 (c) waiver
• Other long-term services

21
Healthcare Delivery and Access Standards

• DCH will protect the patient/provider
• relationship by contractually requiring CMOs
• To have sufficient numbers of providers of both
  primary and specialty care
• To include sufficient numbers of safety-net
  providers and rural and critical access hospitals
• To have a culturally appropriate mix of providers

22
Quality Management

• DCH will require CMO reporting on
• Well child visits and childhood immunizations
• Rates of breast cancer and cervical cancer
  screening
• Rates of diabetic eye exams and HgbA1c testing
• Early initiation of prenatal care and incidence
  of
• C-Sections
• Appropriateness of emergency room utilization
• Incidence of avoidable procedures
• Other possible quality indicators

23
Timeline

• January 5, 2005 - Release of RFP
• March 21, 2005 - RFP Responses Due
• May 3, 2005 - Winners Announced
• End of May - Contract Finalized and
  Executed
• June through August - Begin Member outreach,
  State Readiness Reviews and Member
  enrollment
• November 1, 2005 - First two regions go-live
• Next 12 Months - Remaining 4 regions
  implemented
• January 1, 2007 - Fully Implemented

24
Conclusion

• Current trend for the Medicaid program is
  unsustainable
• A more efficient and effective system for
  appropriate utilization management is necessary
• This plan will create a more organized and
  accountable system of care
• Quality outcomes must be a primary goal

25

• Questions Comments