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Medicaid Reforms to Expand Coverage, Control Costs and Improve Care: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2015 and 2016

Introduction
  1. An archive of previous survey reports is available at: “50-State Medicaid Budget Survey Archives,” Kaiser Commission on Medicaid and the Uninsured, accessed October 1, 2015, http://kff.org/medicaid/report/medicaid-budget-survey-archives/.

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  2. State fiscal years begin on July 1 except for these states: NY on April 1; TX on September 1; AL, MI and DC on October 1.

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Eligibility, Enrollment, Premiums and Cost-Sharing
  1. New York transitioned parents with incomes between 138 percent FPL to 150 percent FPL who received an additional Medicaid-funded premium wrap to purchase coverage in the Marketplace to the BHP.

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  2. Family planning waivers and SPAs offer limited benefits while the breast and cervical cancer treatment program and the medically needy spend-down programs offer full Medicaid benefits but are limited to those with either a specific condition or after meeting spend-down requirements. Medicaid for Pregnant Women varies in scope of services. Some states only cover services very directly related to the pregnancy while other states deem that any health care issue could possibly affect a pregnancy.

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  3. Previously this requirement had applied to states that applied alternative cost-sharing arrangements under 42 U.S.C. § 1396o-1.

    David Machledt and Jane Perkins, Medicaid Premiums and Cost Sharing (Washington, DC: National Health Law Program, March 25, 2014), http://www.healthlaw.org/publications/browse-all-publications/Medicaid-Premiums-Cost-Sharing#.Vg1KQ_lVhBe.

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  4. Since the survey was fielded, two states (AZ and MI) have submitted waiver requests that include premium and cost-sharing proposals. Each of these waiver proposals must be approved by CMS before the states could implement such changes. Additionally, state legislation in Ohio requires the state to seek a waiver to implement Health Savings Accounts (HSAs) for non-disabled adults in Ohio Medicaid. The state is still developing such a proposal; at the time of this report, no proposal had been publicly released.

    - Arizona released a waiver proposal in August 2015 based on state legislation calling for the establishment of HSAs with contributions of up to 2 percent of income for new adults and copayments of up to $25 for non-emergent use of the emergency room.

    Arizona Health Care Cost Containment System, Arizona’s Application for a New Section 1115 Demonstration (Arizona: Arizona Health Care Cost Containment System, September 2015), http://www.azahcccs.gov/shared/Downloads/AZWaiverPackage9-30-15RealFinal.pdf.

    Nick Lyon, Amendment to Michigan’s Section 1115 Demonstration Known as the “Healthy Michigan Plan” Submitted Under Authority of Section 1115 of the Social Security Act (Michigan: Michigan Department of Health and Human Services, September 1, 2015), http://www.michigan.gov/documents/mdch/CMS_HMP_1115_Waiver_Amendment_Submission_498740_7.pdf.

    “FY 2016- 2017 State Budget – Health Savings Accounts,” Ohio Department of Medicaid, accessed October 1, 2015, http://medicaid.ohio.gov/INITIATIVES/StateBudget.aspx.

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  5. In order to impose higher cost sharing than otherwise allowed under federal law, a state needs to meet separate cost sharing waiver requirements under Section 1916(f) of the Social Security Act. Section 1916(f) permits a state to seek a demonstration waiver to charge cost sharing above otherwise allowable amounts if the state meets specific requirements and criteria, including testing a unique and previously untested use of copayments and limiting the demonstration to no longer than two years.

    Robin Rudowitz, Samantha Artiga and MaryBeth Musumeci, The ACA and Medicaid Expansion Waivers (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, February 2015), http://kff.org/report-section/the-aca-and-medicaid-expansion-waivers-issue-brief/.

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  6. Michigan released a waiver proposal in September 2015 based on state legislation calling for those with incomes between 100 and 138% FPL who have had coverage through the Healthy Michigan Plan for 48 cumulative months to be given the choice of either purchasing private insurance through the Marketplace with eligibility for advanced premium tax credits and cost-sharing reductions or remain in Healthy Michigan Plan but with increased cost-sharing and premiums capped at 7% of income (instead of federal maximum of 5%.) Such beneficiaries would also have increased monthly contributions (up to 3.5%) that could be reduced if they complete healthy behavior activities. If approved, this change would not go into effect until April 1, 2018. If this waiver is not approved, state law requires that the Healthy Michigan Plan ends as of April 30, 2016.

    Nick Lyon, Amendment to Michigan’s Section 1115 Demonstration Known as the “Healthy Michigan Plan” Submitted Under Authority of Section 1115 of the Social Security Act (Michigan: Michigan Department of Health and Human Services, September 1, 2015), http://www.michigan.gov/documents/mdch/CMS_HMP_1115_Waiver_Amendment_Submission_498740_7.pdf.

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  7. Kaiser Commission on Medicaid and the Uninsured, Proposed Medicaid Expansion in Montana (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, September 2015), http://kff.org/medicaid/fact-sheet/proposed-medicaid-expansion-in-montana/.

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  8. This is in lieu of the “217-like option” which had been approved by CMS as part of the state’s comprehensive waiver, but proved challenging to implement.

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Managed Care Reforms
  1. Mississippi is included in the counts for states operating MCOs; however, its risk-based managed care program as of July 1, 2015 did not cover inpatient hospital services. Idaho’s MMCP program, which is secondary to Medicare, has been re-categorized by CMS from a PAHP to an MCO by CMS but is not counted here as such. California has a small PCCM program operating in LA County for those with HIV. Wyoming’s Patient Centered Medical Home program uses PCCM authority to make PMPM payments but is not counted here as such.

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  2. California notes that the delivery of substance abuse services is moving to an “Organized Delivery System operated by counties” in FY 2016. For purposes of this report, this new arrangement is treated as a PHP as it is recognized at the federal level.

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  3. One MCO state (North Dakota) had no children enrolled in its MCO which is limited to Medicaid expansion adults; they are therefore excluded from this count.

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  4. There are 10 MCO states (DE, GA, HI, ND, NH, NV, TN, TX, VA and WV) that either do not cover adult dental services or only cover emergency dental services for adults. Georgia and Tennessee indicated that MCOs could offer adult dental services as a value-added benefit or cost effective alternative.

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  5. Maryland indicated that MCOs could offer add-on adult dental plans for non-covered populations.

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  6. The “Program of all All-Inclusive Care for the Elderly” (PACE) is a capitated managed care benefit for the frail elderly provided by a not-for-profit or public entity that features a comprehensive medical and social service delivery system. It uses a multidisciplinary team approach in an adult day health center supplemented by in-home and referral services in accordance with participants' needs.

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  7. For purposes of this survey, Idaho Medicare Medicaid Coordinated Plan is considered a PHP rather than an MCO as Medicare provides primary coverage for primary and acute care including inpatient hospital services.

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  8. Hawaii and Tennessee auto assign all new members to a health plan and then offer them a choice.

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  9. 80 Fed. Reg. 31097-31297 (June 1, 2015), available at https://federalregister.gov/a/2015-12965.

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  10. Julia Paradise and MaryBeth Musumeci, Proposed Rule on Medicaid Managed Care: A Summary of Major Provisions (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, July 23, 2015), http://kff.org/medicaid/issue-brief/proposed-rule-on-medicaid-managed-care-a-summary-of-major-provisions/.

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  11. Julia Paradise and MaryBeth Musumeci, Awaiting New Medicaid Managed Care Rules: Key Issues to Watch (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, March 24, 2015), http://kff.org/medicaid/issue-brief/awaiting-new-medicaid-managed-care-rules-key-issues-to-watch/.

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  12. National Association of Medicaid Directors, Comments on Medicaid and Children’s Health Insurance Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, Medicaid and CHIP Comprehensive Quality Strategies and Revisions Related to Third Party Liability (CMS-2390-P) (Washington, DC: National Association of Medicaid Directors, July 27, 2015), http://medicaiddirectors.org/node/1241.

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Emerging Delivery System and Payment Reforms
  1. “Patient-Centered Medical Home Recognition,” National Committee on Quality Assurance, accessed October 1, 2015, http://www.ncqa.org/Programs/Recognition/Practices/PatientCenteredMedicalHomePCMH.aspx.

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  2. Kaiser Commission on Medicaid and the Uninsured, Medicaid Delivery System and Payment Reform: A Guide to Key Terms and Concept, (Washington, DC: Kaiser Commission on Medicaid and the Uninsured,) June 2015 Fact Sheet. http://files.kff.org/attachment/issue-brief-medicaid-delivery-system-and-payment-reform-a-guide-to-key-terms-and-concepts.

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  3. Kaiser Commission on Medicaid and the Uninsured, Medicaid Delivery System and Payment Reform: A Guide to Key Terms and Concept (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, June 2015), http://files.kff.org/attachment/issue-brief-medicaid-delivery-system-and-payment-reform-a-guide-to-key-terms-and-concepts.

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  4. Ibid.

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Long-Term Services and Supports Reforms
  1. Steve Eiken, Kate Sredl, Brian Burwell and Paul Saucier, Medicaid Expenditures for Long-Term Services and Supports (LTSS) in FY 2013 (Truven Health Analytics, June 30, 2015), http://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/downloads/ltss-expenditures-fy2013.pdf.

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  2. The “Program of all All-Inclusive Care for the Elderly” (PACE) is a capitated managed care benefit for the frail elderly provided by a not-for-profit or public entity that features a comprehensive medical and social service delivery system. It uses a multidisciplinary team approach in an adult day health center supplemented by in-home and referral services in accordance with participants' needs.

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  3. California Department of Health Care Services, DHCS Issues Statement Regarding the Section 811 Project Rental Assistance Demonstration Program (California: Department of Health Care Services, February 2013), http://www.dhcs.ca.gov/Documents/13-1%20Section%20811%20Demo.pdf.

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  4. “Conflict-free case management” assures, in part, that the person or entity that conducts the functional assessment and/or case management services for a member does not also provide services to that individual.

    Single points of entry (SPOE) systems offer consumers one-stop access to information, support, and linkages to local care services thereby reducing service fragmentation and simplifying access to long-term supports and services.

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  5. Tennessee also reported implementing an individual cost cap in one of its IDD HCBS waivers in FY 2015, but noted that persons whose services exceeded the cap were transitioned to another waiver with an aggregate cost cap so that their services would not be reduced. Also South Carolina) reported temporarily suspending its Certificate of Need program during parts of FY 2014 and FY 2015, but noted that the state did not experience any increases in institutional capacity during that period.

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  6. Molly O’Malley Watts, Erica L Reaves and MaryBeth Musumeci, Medicaid Balancing Incentive Program: A Survey of Participating States (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, June 2015), http://kff.org/medicaid/report/medicaid-balancing-incentive-program-a-survey-of-participating-states/.

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  7. Until June 2014, Indiana operated as a Section 209(b) state; under Section 209(b) of the Social Security Act, states may develop their own disability determination methods for determining eligibility for aged, blind, and disabled groups. As part of this option, states must operate a spend-down program. In June 2014, Indiana switched to operate as a Section 1634 state, which relies on disability determinations by the Social Security Administration. As a Section 1634 state, Indiana no longer had to operate a spend-down program.

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  8. New York reported implementing this option in FY 2015, but was awaiting final SPA approval at the time of the survey. The SPA calls for retroactive implementation. New York State Department of Health, State Plan Amendment #13-35 Community First Choice Option (New York: New York State Department of Health, December 30, 2013), https://www.health.ny.gov/regulations/state_plans/status/non-inst/original/docs/os_2013-12-30_spa_13-35.pdf.

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  9. Centers for Medicare and Medicaid Services, Fact Sheet: Summary of Key Provisions of the Home and Community-Based Services (HCBS) Settings Final Rule (CMS 2249-F/2296-F) (Washington, DC: Centers for Medicare and Medicaid Services, January 10, 2014), http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long-Term-Services-and-Supports/Home-and-Community-Based-Services/Downloads/HCBS-setting-fact-sheet.pdf

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Provider Rates, Taxes and Benefits
  1. An additional state (Pennsylvania) had also not enacted a budget at the time of the survey. The state reported current plans but indicated that final actions depended on the final budget approved by state lawmakers.

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  2. Rates for FY 2016 not yet determined at the time of the survey included MCO rates for Florida and all rates for Illinois.

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  3. Illinois indicated that the rate restriction reported for nursing facilities in FY 2015 reflects a composite of a 10 month increase in rates and a two month decrease in rates.

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  4. Stephen Zuckerman and Dana Goin, How Much Will Medicaid Physician Fees for Primary Care Rise in 2013? Evidence from a 2012 Survey of Medicaid Physician Fees (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, December 2012), http://kff.org/medicaid/issue-brief/how-much-will-medicaid-physician-fees-for/.

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  5. Some states also have premium or claims taxes that apply to managed care organizations and other insurers. Since this type of tax is not considered a provider tax by CMS, these taxes are not counted as provider taxes in this report.

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  6. Centers for Medicare and Medicaid Services, CMCS Informational Bulletin: Clarification of Medicaid Coverage of Services to Children with Autism (Washington, DC: Centers for Medicare and Medicaid Services, July 2014), http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-07-07-14.pdf.

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  7. New York State Department of Health, State Plan Amendment #13-35 Community First Choice Option (New York: New York State Department of Health, December 30, 2013), https://www.health.ny.gov/regulations/state_plans/status/non-inst/original/docs/os_2013-12-30_spa_13-35.pdf.

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  8. In years past, New Mexico was reported as having a PDL. In this year’s survey, the state clarified that while the Medicaid MCOs have their own PDLs, the state does not have its own PDL.

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  9. In accordance with federal and state law, states pay the lower of (a) the ingredient cost rate plus a dispensing fee; (b) the Federal Upper Limit (FUL) or State Maximum Allowable Cost rate, if applicable, plus a dispensing fee; or (c) the pharmacy’s Usual and Customary Charge.

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  10. 77 Fed. Reg. 5318-5367 (February 2, 2012), available at http://www.gpo.gov/fdsys/pkg/FR-2012-02-02/pdf/2012-2014.pdf.

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  11. Centers for Medicare and Medicaid Services, CMCS Informational Bulletin: Medicaid Pharmacy – Survey of Retail Prices (Washington, DC: Centers for Medicare and Medicaid Services, May 31, 2012), http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-05-31-12.pdf.

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  12. “Medicaid Covered Outpatient Drug Rule Currently under OMB Review,” National Association of Medicaid Directors Newsletter, accessed August 18, 2015, http://medicaiddirectors.org/node/1249.

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  13. Brian Bruen and Katherine Young, What Drives Spending and Utilization on Medicaid Drug Benefits in States? (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, December 2014), http://files.kff.org/attachment/brief-what-drives-spending-and-utilization-on-medicaid-drug-benefits.

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  14. The Express Scripts Lab, The 2014 Drug Trend Report (Saint Louis, Missouri: The Express Scripts Lab, March 2015), http://lab.express-scripts.com/drug-trend-report/.

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  15. Ibid. According to Express Scripts, roughly half of specialty drug expenditures are billed through the medical benefit (rather than the pharmacy benefit) and are not included in its trend calculations.

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Methods
  1. State fiscal years begin July 1 except for these states: NY on April 1; TX on September 1; AL, MI and DC on October 1.

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