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Medicaid in an Era of Health & Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015

Medicaid Administration and Priorities

Today, the Medicaid program is evolving more rapidly than at previous time in its history. States and the federal government are working to maximize the value and efficiency of Medicaid by reforming payment to reward value over volume, integrating effective care coordination across payers, and streamlining key processes like eligibility determinations across coverage programs. Underpinning a state’s ability to implement these reforms is its capacity to manage its Medicaid program effectively and efficiently. Through the recession, Medicaid, along with other state agencies, often faced cuts in staff and other resources.1 This combined with the transformation of the program, high demand for services and tight deadlines tied to ACA implementation and other federal initiatives (e.g. ICD-10 conversion, HIT meaningful use incentives, etc.) have strained Medicaid administrative staff for the past several years. These transformations also have resulted in the need for different skills for staff and leadership, additional resources and new systems.

In 2013 and 2014, Medicaid agencies implemented complex new systems related to the implementation of the ACA, including implementation of a new Medicaid eligibility system using Modified Adjusted Gross Income (MAGI). At the same time, many Medicaid agencies were updating or replacing their Medicaid Management Information Systems, finalizing system requirements for the exchange of data with the new health insurance Marketplaces (Exchanges), developing and implementing a range of delivery system, payment reform and program integrity initiatives. In implementing these vast changes, directors reported that staffing has been a significant challenge, but that with temporary workers, overtime and contractors, the work has gotten done. Of particular concern was staff for eligibility determinations and IT.

During FY 2014 and 2015, a total of 33 states indicated that they were able to add staff and other resources to address the increased workload, with staff being added most often for eligibility and processing of applications, call centers, data analytics, staff to manage the new reporting requirements and program integrity.

Medicaid agencies cited significant challenges in finding and retaining staff that have the skill sets, experience and credentials required for critical functions. The most frequently mentioned challenges related to the ability to attract and retain specialized staff within the constraints of state civil service hiring rules and state salaries. Medicaid must compete with the private sector in hiring for these types of positions. Medicaid agencies mentioned challenges to find and retain positions most often in these areas: systems and information technology, data analytics, actuarial expertise, managed care expertise, clinical professionals, attorneys, and executive level administrators. In addition, it is a challenge finding staff with experience and knowledge of complex Medicaid rules, policies and procedures.

Given the administrative and staffing challenges, Medicaid directors often pointed to program improvements through delivery and payment system reforms and implementation of eligibility system improvements (including the conversion to MAGI) as major successes. In addition, Medicaid officials that had implemented the ACA eligibility expansion uniformly took pride in the state’s coverage expansion, and in their experience to date as large numbers had enrolled, often at a pace faster than had been anticipated. State officials also mentioned their pride in the efficiency of program administration, the low growth in the cost of care per Medicaid beneficiary, and the productive relationship with providers and other stakeholders in addressing issues and developing new policies and initiatives. An upcoming survey report on Medicaid Operations from the National Association of Medicaid Directors describes the administrative capacity issues and their implications in more detail.2

“We take pride in the amazing, dedicated, passionate, professional team that has dealt with an unprecedented level of change and scrutiny of the Medicaid program and how they have gone above and beyond the call of duty to provide comprehensive, quality and cost effective care to those in need in our state.”

“…a good steward of public funds through effective and efficient administration of Medicaid.”

“…successfully implemented statewide managed care across both physical and behavioral health delivery systems.”

“We are pleased to have expanded coverage to ACA adults, to have managed the expansion as efficiently as possible, and to have achieved a high degree of coordination with marketplace.”

Medicaid Priorities for the Future

When looking forward over the next year, Medicaid directors outlined an ambitious list of both policy and operational priorities for the immediate future. Directors most frequently listed payment and delivery system reform as a top priority with a particular interest in achieving greater value and performance through these reforms. Some Medicaid directors listed specific examples, including the integration of physical health and behavioral health services, or integration of physical health and long term care services and supports. Some states were developing plans in this area and others were in the initial stages of implementation. A significant number of states mentioned as a priority their efforts to improve quality of care, including a focus on improving outcomes and improvements in population health measures. In some cases these were associated with system improvements and their goal to have greater capability for data analytics that would help measure and monitor improvements in quality and measures of health.

A number of states mentioned continued implementation of the ACA as a high priority. In some cases this referred to major upgrades to state Medicaid eligibility systems and the MAGI eligibility rules that are being implemented in 2014, and in other cases this priority referred to the continued enrollment of newly eligible individuals, as sustained enrollment growth continued to occur at the time of the survey across those states implementing the ACA eligibility expansion.

New eligibility systems, a new MMIS or other information technology or systems were listed by a majority of states as top operational priorities. A number of directors also mentioned a focus on data analytic capabilities that would assist in policy development and analysis, as well as be a tool for program integrity. Other operational priorities in some states involved staffing and organizational changes designed to better position the program to address the challenges facing a modern Medicaid program.

“Driving plans and providers to more value-based arrangements as part of our payment modernization efforts.”

“We will continue to work on payment reform to better align payments with value-based outcomes.”

“Implementation of integrated care for dual eligibles, re-procurement of health plan contracts, and continuation of the Medicaid expansion ramp up.”-

“Medicaid will focus on continuing to integrate acute care and long term services and supports into Medicaid managed care [and also] to integrate behavioral health and physical health services.”

“Develop options with regards to high cost treatments like Sovaldi that threaten the overall sustainability of programs like Medicaid.”

“We are working to ensure the online application, eligibility and enrollment system will be ready for open enrollment.”

“Getting the new MMIS in place and functioning is a huge priority. Also, ACA implementation issues and bringing up the new eligibility system.”

Finally, a significant number of states listed a priority of budget stability or cost control. Even as state budget situations continue to improve, Medicaid is subject to perennial pressure to control the growth in Medicaid spending. These issues are tied to strategies of delivery system and payment reforms, which focus on delivering better value and improving outcomes.

Program Integrity Initiatives Methodology

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.