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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

Priorities for FY 2016 and Beyond Reported by Medicaid Directors

Medicaid is a large and complex program that provides health coverage for an increasing share of the population in each state. As the program continues to evolve, key priorities for most directors center around implementing the Medicaid expansion, controlling costs, implementing an array of complex delivery system reforms, and standing up new information technology systems related to eligibility, enrollment, claims processing and delivery system reform. Emerging priorities are focused on population health and social determinants of health. Tackling these major issues is a significant challenge for Medicaid directors, especially since administrative resources (both in terms of staff and funding) are often constrained. Key priorities for Medicaid directors identified in this year’s survey are described below.

Implementing the myriad provisions of the ACA. All states continue to focus on eligibility and enrollment changes, and 31 states (including DC) have adopted the ACA Medicaid expansion. Many directors reported that implementing the Medicaid expansion and expanding access to care for residents who have not had insurance continues to be a key priority.

Controlling costs. While not as acute as during the recession, states still report that controlling costs and spending is a top priority. Given the size of the Medicaid program as a share of state budgets, ensuring high quality and cost effective care is a perennial issue. Several expansion states indicated that as the overall program grows, maintaining or reducing state Medicaid spending or achieving other state budget savings (such as those related to behavioral health or corrections) has been key. More broadly, many states mentioned the growing costs of specialty drugs and improving program integrity as areas of focus. In addition, a number of states noted that while the economy has been improving, state revenues may not have kept pace, which has implications for all state programs including Medicaid. Looking ahead to FY 2017, a few states implementing the Medicaid expansion reported that finding general funds for the state share of Medicaid spending beginning in January 2017 is an upcoming challenge.

Implementing a wide range of payment and delivery system reform initiatives. Medicaid programs have embarked on a range of initiatives designed to better coordinate and integrate care. These initiatives often utilize reimbursement approaches that incentivize high quality care and reward optimal outcomes. These are complex initiatives to design, adopt and implement. States also continue to prioritize efforts to “rebalance” the delivery of LTSS toward greater use of home and community-based services. Some of these Medicaid reforms may have effects that ripple throughout the entire health system.

A number of Medicaid payment and delivery system reforms rely on managed care. With the increasing reliance on MCOs to manage physical health care, a growing number of states are focusing on the integration of physical health, behavioral health and long-term services and supports under the umbrella of managed care. States mentioned that expanding the scope of managed care involves a number of specific challenges, including the procurement and contracting for Medicaid health plans, the need for effective oversight of MCO contracts and performance and the new potential challenges from the recently proposed CMS rules for Medicaid managed care.

Ensuring that information technology systems are in place to support program operations with constrained administrative resources. In almost half of states, systems and administrative initiatives were listed as a top priority for FY 2016. These priorities include procurement or implementation of new Medicaid Management Information Systems (MMIS), ongoing work on upgrades or replacement of eligibility systems, and other information technology or system projects designed to improve administrative efficiency and to achieve program goals. Development data analytics capability for is one example of using systems technology to develop information that can help a program run more effectively. Technology systems initiatives take several years to procure and often present major administrative challenges, especially since workload and demands on staff continue to increase while resources remain constrained in most states. Medicaid directors noted continued strain on administrative resources, in particular staff, as Medicaid programs are working to implement a number of major initiatives across multiple arenas (delivery system and payment reform, coverage expansions and information technology.)

Improving population health and addressing the social determinants of health. Expanding access to coverage and needed care was highlighted as a key element in addressing population health, especially among states implementing the ACA Medicaid expansion. However, broader efforts to improve population health are emerging priorities for Medicaid directors. State Medicaid programs are looking for opportunities to leverage other resources and stakeholders (such as state public health agencies and other payers) to improve the quality of care provided and ultimately affect health outcomes for the populations they serve. Pursuing these significant goals, however, has caused Medicaid to evolve into a major player in transforming the overall health care system.

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