Putting Medicaid in the Larger Budget Context: An In-Depth Look at Three States in FY 2017 and FY 2018

Nevada

Economic and Budget Outlook

Economy and State Revenues

While Nevada’s recovery from the Great Recession initially lagged behind much of the rest of the country, in recent years, the state’s economic growth has outpaced the national average. In 2016, Nevada’s Gross Domestic Product (GDP) grew by 2.4 percent to $147.5 billion compared to the national average of 1.5 percent growth. Finance, insurance, real estate, rental, and leasing are the largest industries in Nevada, followed by the arts, entertainment, recreation, accommodation, and food service industries. While per capita personal income in Nevada was only 88 percent of the national average in 2016,¹ per capita personal income growth in the state (3.9 percent) outpaced the national average 2.9 percent. During the Great Recession, Nevada’s unemployment rate peaked at 13.7 percent in September 2010, above the national peak of 10 percent in October 2009. As of August 2017, however, the state has an unemployment rate of 4.9 percent, down from 5.5 percent in August 2016, but still slightly above the August 2017 U.S. average of 4.4 percent.²

While Nevada gaming revenues have been affected by the increased availability of gaming throughout the U.S., Las Vegas remains a strong tourist destination, with an estimated 42.3 million visitors in 2016. The Governor’s budget for the 2017-2019 biennium notes that “Nevada’s tourism industry has diversified its offerings by expanding its amenities beyond gaming with world class entertainment, dining and high-end shopping. In fact, non-gaming revenue now makes up about two thirds of this industry’s revenue.”³ At the time of this report, however, the economic impact of the tragic October 1^st mass shooting in Las Vegas on the tourism sector remains unknown.

State Budget

The Nevada legislature meets only in odd-numbered years, when it addresses the full range of legislative issues and must adopt a balanced biennial budget. The enacted budget for FY 2017-18 mirrors actual spending in FY 2015-16 for most budget categories within Medicaid.⁴ While the aggregate authorization for Medicaid is 3.5 percent less than actual expenditures in FY 2015-16, the state general fund share is increased by nearly 12 percent, due in large part to the reduction in the federal share of funding for the Medicaid expansion.

Demographic Characteristics and Medicaid’s Role

Fewer Nevada residents live in poverty (10 percent in 2016) compared to the national average (13 percent),⁵  but Nevada has a low per capita income ($43,567 in 2016 compared to $49,246 nationally)⁶ that generates a relatively high federal Medicaid matching assistance percentage (FMAP) at 66 percent.⁷ Medicaid plays an important role in the state, covering 18 percent of the population in 2016,⁸ and Medicaid spending per full-benefit enrollee in Nevada in federal fiscal year 2014 ($4,003) was lower than that in any other state.⁹ While this suggests that the state’s program is already relatively efficient, it also means achieving increased savings in response to a potential future cap on federal Medicaid financing could be particularly difficult in Nevada.¹⁰After expanding Medicaid under the Affordable Care Act (ACA) to all individuals up to 138 percent of the federal poverty level (FPL) in 2014, Nevada experienced the largest percent decline in the nonelderly uninsured rate of any state between 2013 and 2016 (11.8 percent).¹¹

While Nevada’s population distribution by age as of 2016 is relatively close to the national average,¹² the state has the second highest projected growth rate of its age 85+ population (95 percent) between 2015 and 2030.¹³ Because Medicaid is the primary payer for institutional and community-based long-term services and supports, this growth could increase future Medicaid spending levels in the state as the demand for these costlier services increases with age. Nevada is also a relatively diverse state in terms of its racial/ethnic population distribution. Over a quarter of Nevadans (27 percent) are of Hispanic origin, which is the 5^th largest percentage of any state. Data suggest that Nevada’s adoption of the ACA Medicaid expansion has helped reduce longstanding disparities in health coverage faced by Hispanics in Nevada: between 2013 and 2015, the uninsured rate for nonelderly Hispanics in Nevada fell from 34 percent to 19 percent.¹⁴

Nevada has been more severely impacted than most states by the HIV and opioid epidemics. The state has an estimated HIV diagnosis rate of 20.1 per 100,000 population compared to a national average of 14.7 per 100,000 population, the 7^th highest in the country.¹⁵ In addition, Nevada’s opioid death rate was 13.8 deaths per 100,000 population in 2015, compared to a national average of 10.4 deaths per 100,000 population.¹⁶ The state is closer to national averages on certain other measures of health status: the percentage of the population that reports poor health status (17.6 percent),¹⁷ reports poor mental health status (34.9 percent),¹⁸ or is overweight or obese (64.7 percent).¹⁹

Update on the Affordable Care Act and Other Eligibility Changes

Nevada expanded Medicaid coverage to newly eligible groups under the ACA in January 2014. As of August 2017, more than 211,000 people were enrolled in the expansion group, representing nearly one-third of total Nevada Medicaid enrollment.²⁰ Nevada uses its State General Fund to finance the state share of Medicaid expansion costs.

More recently, in June 2017, the Nevada legislature adopted the Immigrant Children’s Health Improvement Act (ICHIA) option to remove the five-year bar on coverage for lawfully-residing immigrant children. If approved by CMS, the plan is estimated to provide coverage to up to 7,500 Nevada children.²¹ The legislature also passed the Nevada Care Plan to offer a state-based health coverage plan to uninsured individuals. Approximately 9 percent of Nevadans were uninsured in 2016.²² Under the Nevada Care Plan, sometimes called “Medicaid for all”, individuals would have been able to purchase a product with covered benefits and provider payment rates based on the Nevada Medicaid program. The proposed legislation, which had a proposed implementation date of January 1, 2019, provided a general concept without many details.²³ On June 16, Governor Sandoval vetoed the legislation, indicating that there were too many unanswered questions about how the program would work.²⁴

Health System Reform in Nevada

Section 1115 Nevada Comprehensive Care Waiver

The Nevada Comprehensive Care Waiver (NCCW) was implemented in 2013 to provide care management services for individuals that are not eligible for MCO enrollment and who have at least one qualifying chronic health condition or a complex condition, as well as individuals that are high utilizers of medical services, including those with excessive use of the emergency room.²⁵

While 68 percent of Nevada Medicaid enrollees are now served by HMOs,²⁶  some of the costliest and sickest beneficiaries are in unmanaged fee-for-service.²⁷ Under the NCCW waiver, up to 41,500 beneficiaries can be enrolled with a Care Management Organization (CMO). The CMO functions are much more extensive than primary care case management. The CMO does not provide direct medical care but it performs beneficiary assessments and works with the beneficiary’s health care team to develop, manage, and maintain a care plan. The CMO also coordinates care transitions, referrals to community and social support services.²⁸ The Health Care Guidance Program is the selected CMO.²⁹

Nevada Medicaid Delivery Model Review

In 2015, the Nevada Legislature passed a bill requiring an impact analysis of the Medicaid managed care program. The Nevada Division of Health Care Financing and Policy (DHCFP) engaged Navigant to perform a comprehensive review of the Nevada Medicaid delivery system and make recommendations for revisions to that model, based on stakeholder input, data about Nevada Medicaid, and Navigant experience with models used in other states.

Navigant delivered a draft report on January 3, 2017 that recommends a phased approach to Medicaid delivery system changes in Nevada. Navigant indicates that the four phases are “designed to address performance, access, and satisfaction issues that exist in the current program, and build upon positive program elements.” The report recommends that DHCFP work on strategies to increase access to care for Medicaid enrollees, build additional capacity to oversee Medicaid MCOs, and work with providers to increase the number of Primary Care Medical Homes and enable value-based payment arrangements. The final phase would be a managed fee-for-service program that would replace the current CMO model and could serve as a pathway to prepare Nevada MCOs to take on full-risk for additional Medicaid populations and services.” ³⁰

Section 1115 Waivers in Development

Nevada Medicaid officials reported that two new Section 1115 waivers were under development at the state level as of Summer 2017: one that would extend the CMO demonstration and potentially add some additional features, particularly related to the adult expansion population, and a second that would apply to children in foster care. In 2015, Nevada received a System of Care Implementation Grant from the federal Substance Abuse and Mental Health Services Administration, which the state is using to focus on children’s behavioral health care needs.³¹ The grant initiative includes development of specific service packages for therapeutic foster care homes for clinical interventions. As a part of that process, the state is exploring a potential Section 1115 waiver that would relate to children with serious emotional disturbances.

Other Delivery System Reforms

Paramedicine Initiative

Nevada implemented Medicaid coverage for medically necessary community paramedicine services as of July 1, 2016 with the goal of increasing access to primary health care services, especially in medically underserved areas. Community paramedicine services are provided by emergency medical technicians (EMTs), advanced EMTs, or paramedics. The services must be part of the care plan ordered by the recipient’s primary care provider and provided under the supervision of an ambulance service’s Medical Director.³² While there has been some success in the cities of Reno and Winnemucca and in Clark County (Las Vegas), rural counties have not taken advantage of this option to the extent the state had hoped would occur.

Certified Community Behavioral Health Clinics

Nevada was one of eight states awarded a demonstration grant for Certified Community Behavioral Health Clinics (CCBHC). ³³ As of July 1, 2017, there are four organizations with five locations enrolled in Nevada Medicaid to provide services under a prospective payment system (PPS) model for the two-year grant period. The goal of the CCBHC initiative is to support improvement of behavioral health outcomes through integration of primary health care with behavioral health care, and increased access to high quality coordinated care.

Dental Carve-Out

Nevada Medicaid provides comprehensive dental care for individuals under age 21 as part of Early and Periodic Screening, Diagnosis, and Treatment (EPSDT). For non-pregnant adults, the dental benefit is generally limited to emergency extractions and palliative dental care. Some prosthetic care (dentures or partials) is also covered under certain guidelines and limitations. Through June 30, 2017, the Medicaid MCOs were responsible for these dental services for their child and adult members. Nevada carved the dental benefit out of the MCO benefit package effective July 1, 2017, at which time dental services were covered through the Nevada Medicaid FFS program.³⁴ The state has now selected a prepaid dental health plan which will be operational on January 1, 2018 and will provide dental care for the MCO population. (Dental services for the FFS population will continue to be managed by the current vendor.) Nevada expects that this change will improve the quality of Medicaid dental care as the dental benefits manager will be accountable for the quality of care.

Addressing the Opioid Abuse Crisis

In August 2016 Governor Sandoval convened a drug abuse summit with approximately 500 stakeholders to develop a plan to prevent drug abuse in Nevada. Governor Sandoval continues to chair the Governor’s Opioid State Action Accountability Taskforce. One component of the plan developed at the August 2016 summit was a proposal for legislation to further strengthen opioid prescribing policies. The resulting state law³⁵ includes provisions that limit initial painkiller prescriptions to 14-day supplies, requires that physicians conduct mental health assessments before prescribing certain painkillers for the first time, and includes a new requirement that Medicaid prescribers check the Prescription Drug Monitoring Program before prescribing opioids.

Nevada has also adopted the CDC guidelines for opioid policy for its fee-for-service Medicaid program and plans to add a requirement during FY 2018 that Medicaid MCOs follow the guidelines as well. DHCFP revised its quantity limits for opioid prescriptions to require prior authorization for any opioid prescription exceeding a 7-day supply.

DHCFP, in collaboration with the Division of Public and Behavioral Health, was awarded a $5.7 million Opioid State Target Response (STR) grant from the Substance Abuse and Mental Health Services Administration.³⁶ Nevada plans to use its grant to reform its Medication Assisted Treatment (MAT) program, including development of criteria for the certification of MAT centers which will then be used for purposes of Medicaid provider enrollment and reimbursement. This project is currently in the planning stages with a goal of implementation for January 1, 2018.

Nevada Medicaid Policy Changes FY 2017 and FY 2018

Eligibility Policies

Nevada made no changes to eligibility policy in FY 2017. In FY 2018, if they receive approval from CMS, Nevada plans to eliminate the five-year bar on Medicaid eligibility for lawfully-residing immigrant children.37 Medicaid outreach or assistance strategies to facilitate enrollment of inmates prior to release were expanded in FY 2018 for both prisons and jails.

Delivery System and Payment Reforms

In FY 2018, plan to implement a pilot program encouraging MCOs to provide care coordination and other services to corrections-involved enrollees prior to release from incarceration. Goal is to ensure continuity of care and reduce recidivism.

Provider Rates and Provider Fees/Taxes

For FY 2017, provider rates frozen across-the-board, except for rate increases for MCOs and home and community based services (HCBS). For FY 2018, rates were cut for outpatient hospital, specialty physicians and dentists, based on budget issues and some realignment with Medicare rates. Inpatient hospital, nursing facility, primary care physician, and HCBS rates are being increased in FY 2018. Nevada’s only provider tax, for nursing facilities, was unchanged. State legislation requires Nevada Medicaid to work with “other interested facilities” or “personal care services” during FY 2018 to potentially establish new provider taxes.

Benefits and Pharmacy

Added coverage for paramedicine services for all coverage groups effective 7/1/2016. Reduced hours for Targeted Case Management, from 30 per month to 10 for initial month and 5 for next three consecutive calendar months for non-seriously mentally ill (SMI) adults and non-seriously emotionally disturbed (SED) children as of 2/23/2017. Restored coverage for adult podiatry and added coverage for nutritional therapy by registered dieticians for state plan (non-expansion) population as of 01/01/2018 Added coverage for one-year contraception for both expansion and non-expansion groups as of 7/1/2017. Changed several coverage policies as of 7/1/2017 to limit coverage of Private Duty Nursing, hospice, case management, and orthodontia. These changes affected all non-expansion populations. Expanded coverage for home health durable medical equipment services 07/01/2017, and for gender reassignment surgery as of 01/01/2018