DHCF FY12 BRT Presentation Final

8/4/2019 DHCF FY12 BRT Presentation Final

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The Department of Health CareFinance

FY12 Budget Review Team

Presentation

February 17, 2011

1

DHCF Budget Review Team 2/17/11 - EMBARGOED


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Table of Contents

Agency Overview

FY12 Budget Development

MARC and Adjustments

Key Assumptions

Savings Proposals

Medicaid Enrollment and Expenditure Trends

Alliance Enrollment and Expenditure Trends

FY11 Savings Initiatives Status Report

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Agency Overview

Total Agency FY12 Budget: $2,129,260,361

Total Agency Local Fund FY 12 Budget: $609,441,494

96% of budget spent on Provider Payments (Obj. Class 50) Influencing Factors:

Eligibility

Benefits

Utilization

Provider Rates

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FY12 Budget Development:MARC and Adjustments

Maximum Allowable RequestCeiling

FY 2011 Revised Budget $529,623,529

Adjustment for stimulus funding[ends 6/30/2011] $79,817,962

FY 2012 MARC $609,441,491

February 1st Revision

Revised Policy MARC $614,064,283

Increase $4,622,792

Budget Adjustments

FY 2011 Revised Budget $529,623,529

Adjustment for stimulusfunding [ends 6/30/2011] $79,817,962

Adjustment to PS and non-50NPS for RMTS $2,104,339

Align fixed costs to estimates ($53,695)

Shift ICF/MR spending fromStevie Sellows Fund $3,688,714

Waiver growth $10,449,619

Fee-for-service growth $6,089,796

Managed care growth $1,445,348

Savings ($23,724,118)

TOTAL $609,441,494 4



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FY12 Budget Development:Key Assumptions

KeyAssumption

BudgetImpact

Relevant History LikelyResistance

Possible UnintendedConsequences

FY11 SavingsInitiatives remainin effect

$16.9M FY11 Savings Initiatives include: holdingnursing facility rates flat; reducing physician,hospital, DD waiver and adult dental rates;

correcting non-physician rates; and loweringPCA benefit to 520 hours per year. See Slide31 for details.

N/A N/A

No RateIncreases

$21.1M This will require holding MCO rates flat for 2consecutive years - 2011 & 2012.

MCOs maythreaten to exitthe program.Currently, thereare only 2. Fedrequires at least

2 for choice.

May not be able todemonstrate actuarialsoundness for the MCOrates.If MCOs hold provider ratesconstant, this could

adversely affect providerparticipation.

Maintaining EPDWaiver cap at 3,940

up to $7.3M In FY 2011 DHCF capped the state plan PCAbenefit at 520 hours per year. Previously itwas 1040 without a PA. Prediction is thatmany people will move to EPD waiver tocontinue PCA services. $7.3M figure is basedon 140 people per month moving in FY 2011,and 100 per month moving in FY 2012.

Current EPD enrollment allows for 1400 morepeople to enroll before hitting cap.

If DHCF reaches cap,creates a waiting list, andthis prevents a disabledbeneficiary from leaving aninstitutional setting, it couldaggravate the District'sposition in the current

Olmstead lawsuit. 5



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6


Concept EstimatedLocalSavings


PossibleUnintendedConsequences

CappingAlliance

enrollment at18,750

$10.6M Current Alliance eligibility is up to 200% FPL forthose not eligible for Medicaid. July 2010

approximately 35,000 beneficiaries up to 133%FPL transitioned to Medicaid as a result of EarlyOption. December 2010 another 2,600 between133% - 200% FPL transitioned to Medicaidthrough a DSH waiver. Current Allianceenrollment is approximately 23,000, so closingenrollment and attriting down to 18,750 in FY2011 is required. Increase due to revisedMARC would be applied here. Increases cap to21,500.

The Alliance hasnever been

capped, soresistance likelyfrom advocates.

People waitlisted for theAlliance will show up at

hospitals for charity carewhen they are sickenough or injured.

Changetreatment oftherapies innursing homerate setting

$2.8M Nursing home rates are being rebased in FY2011 retroactive to FY 2009 based on FY 2007.This change in treatment of therapies wasattempted, but ultimately not implemented.Complaint was improper notice. Giving noticewould be required.

Nursing homeindustry foughtthis before. Theyclaimed thathomes would goout of business,but when pressed

could not saywhich one(s).

FY12 Budget Development:Savings Proposals


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Eliminateincentives in

nursing homerate settingmethodology

$7.8M This savings is so substantial that it negatesthe industry's gains from rebasing the rates.

The incentive payments explicitly pay homesmore than their cost.

Nursing homeindustry will

oppose this.

ReplaceAverageWholesale Price(AWP) minus

10% inpharmacypricingmethodologywith WholesaleAcquisition Cost(WAC) plus 3%

$1.3M WAC is estimated to be roughly 82% of AWP, soWAC+3% is roughly equal to AWP-15%. That'sa 5% rate cut for drugs subject to this method --brand names without substitutes. AWP is being

phased out at the end of FY 2011, so DHCFmust change this methodology regardless.

Pharmacies willresist the rate cut.

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Improvedmanagement of

PCA services

$1.2M Numerous audits and anecdotal reports haveshown there is waste and abuse in this benefit.

The hours were limited to 520 per year in FY2011. This initiative would do three things: 1)replace the existing assessment tool with onefrom another state with a proven track record, 2)selected real time monitoring of authorizations,so the wasteful spending is prevented ratherthan caught after the fact, and 3) promulgatingnew rules that strictly limit the use of staffingagencies.

The industry willresist.

Total EstimatedSavings

$23.8M

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Revised Policy MARC: $4,622,792 Increase Raise enrollment cap on the Alliance by 2,750 (from 18,750 to 21,500)


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MedicaidEnrollment and Expenditure Trends

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District of Columbia Eligibility Levels for MedicaidGroups

Notes: For all groups in red, eligibility cannot be cut due to maintenance of effort requirements from ARRA (stimulusfunding) and the Affordable Care Act (health reform). Yellow denotes Medicaid programs whose eligibility can bechanged, and green represents programs that are solely locally funded.

MedicaidEligibilityGroups

$10,890

2011 FederalPoverty Level(One Person)

$21,780/yr

$32,670/yr $32,670/yr

$21,780/yr$24,176/yr

$8,059/yr

$10,890/yr

$580.80/m

o

Families w/Children

ChildrenAge (0-18)*

PregnantWomen*

SSI Non-SSIABD

MedicallyNeedyIncomeLimit

ChildlessAdults

(Medicaid)

Institutionand

Waiver

200%

300% 300%

200%222%

74%

100%

64%

Income Eligibility Threshold As A Percent of Federal Poverty:

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MedicareEligibilityGroups

$10,890


2011 Federal

Poverty Level(One Person)

At Different Income Thresholds MedicareBeneficiaries Qualify For Some Medicaid Benefits

Full Duals MedicaidServices &

Medicare Premium

QualifiedDisabled &

Working

QualifiedMedicare

Beneficiaries

$21,780/yr

$32,670/yr

$10,890/yr

100%

200%

300%

Notes: For all groups in red, eligibility cannot be cut due to maintenance of effort requirements from ARRA (stimulus funding) andthe Affordable Care Act (health reform). Yellow denotes Medicaid programs whose eligibility can be changed, and greenrepresents programs that are solely locally funded. ).

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FY10 Actual ($) FY11 Budgeted ($) FY12 Proposed ($)

Inpatient Hospital 307,407,496 297,311,333 305,165,500

Outpatient Hospital 35,308,950 36,187,112 36,187,996

Physician's Services 52,572,496 43,630,496 43,980,396

Nursing Facilities 212,597,582 219,497,381 187,228,855

Lab & X-Ray 11,266,838 7,055,853 9,672,930

Transportation 20,383,296 22,619,339 24,286,064

Private Clinic 16,339,947 8,977,576 15,719,790

FQHC 13,619,577 14,297,243 14,187,258

Cost Settlements 6,742,398 7,666,667 12,000,000

Notes: Certified pediatric and family nurse practitioner services, midwife and nurse practitioner services, and rural healthclinic services are also mandatory, but expenditure data were not available. Early and Periodic Screening, Diagnosis, andTreatment services are generally included in other categories of services above.

Source: FY10 Actual figures from CFO$olve ad hoc dated 1/28/11.

Mandatory Medicaid Services ExpendituresFY10-FY12 (Proposed)

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DHCF B d R i T / / EMBARGOED


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Optional Medicaid Services ExpendituresFY10-FY12 (Proposed)

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FY10 Actual ($) FY11 Budgeted($)

FY12 ProposedGross ($)

FY12 ProposedLocal ($)

Inpatient DSH 71,233,573 75,793,037 75,256,446 21,758,204

Day Treatment 9,749,532 23,394,119 23,755,911 7,126,773

ICF/MR 69,977,621 69,927,532 65,112,840 19,533,852

Residential Treatment 15,508,322 24,075,000 16,155,336 4,837,451

Dental 16,605,070 14,727,787 16,081,763 4,812,227

Optometry/Vision 723,351 614,563 617,625 185,133

Optician 768,484 1,294,778 800,436 239,905

Podiatry 1,351,754 1,156,969 967,462 290,227

Durable Medical Equipment 19,664,398 13,886,315 20,515,446 6,154,475

Hospice 4,989,258 6,126,695 5,470,122 1,641,036

Rehab Services 59,246 6,205 49,819 14,946

Mental Health Clinic 805,593 1,000,828 2,241,504 672,236

Sterilization 3,490 3,488 3,632 1,089

Home Health / Personal Care Aide 75,180,585 95,970,015 101,522,198 30,456,636

Pharmacy 58,893,859 69,478,929 58,572,456 17,569,292

Managed Care Services 412,289,459 569,383,682 586,037,489 158,176,203

Medicare Buy In 27,958,573 33,102,328 46,987,144 14,096,143

COBRA 428,995 493,247 446,275 133,883

Waivers 221,881,398 226,830,862 262,412,303 78,723,691

Source: FY10 Actual figures from CFO$olve ad hoc dated 1/28/11.

DHCF B d R i T 2/17/11 EMBARGOED


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FY10 Actual ($) FY11 Budgeted ($) FY12 Proposed ($)

D.C. Public Schools 8,312,211 21,047,044 4,500,000

OSSE/ Transportation 2,500,000

Charter Schools 162,253 2,050,000 2,050,000

Department of Mental Health 7,780,612 8,342,531 9,176,784

Child and Family Services

Administration 297,864 1,500,000 1,039,606

Fire and Emergency Medical

Services 4,292,854 3,000,000 3,000,000

Notes: FY11 and 12 Budget is based on Provider Agency Budget Submission. Expenditures represent the 70%FMAP only. FY10 budget for transportation for Special Needs children was allocated to D.C. Public Schools

Source: FY10 Actual figures from CFO$olve ad hoc dated 1/28/11

Public Provider ExpendituresFY10-FY12 (Proposed)

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DHCF B d t R i T 2/17/11 EMBARGOED


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Average Monthly Medicaid Enrollment In TheDistrict of Columbia, FY99-FY10

Notes: D.C. fiscal year is October 1 through September 30; enrollment was averaged from October to September to createaverage monthly enrollment. The Department of Health Care Finance moved over 30,000 from the Alliance to the Medicaidprogram in July of 2010 while implementing a new coverage option state plan amendment. Data shown above for 2010 reflectOctober-June monthly average (pre-SPA) and July-September average (post-SPA). The Department transitioned over 2,700people in December of 2010 while implementing an 1115 waiver for adult beneficiaries with incomes between 133 and 200percent of the Federal Poverty Level.

AverageMonthlyEnr

ollment

160,665

197,624

0

50,000

100,000

150,000

200,000

250,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Pre-SPA

Post-SPA

.44%Average

Growth

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DHCF B d t R i T 2/17/11 EMBARGOED


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Historical and Projected Quarterly DHCFEnrollment, FY07-FY12

Notes: Enrollment projected using data from FY12 budget model. Childless Adult Expansion includes new coverage option stateplan amendment, which covers childless adults from 0 to 133% FPL, and childless adult waiver, which includes childless adults

from 133 to 200% FPL. Data labels shown are February 2011, October 2012, and September 2012. Projections assume EPDwaiver cap of 3,940 beneficiaries, and Alliance program cap of 18,750.

Qu

arterlyEnrollm

ent

65,524

114,822

18,75040,260

240,607

0

50,000

100,000

150,000

200,000

250,000

300,000 Fee-For-Service Managed Care Alliance Childless Adult Expansion Total


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DHCF B dget Re ie Team 2/17/11 EMBARGOED


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Total Annual DC Medicaid Expenditures,FY06-FY10

$1,343,625,101$1,426,504,949

$1,513,653,506$1,608,210,902

$1,825,679,456

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

FY2006 FY2007 FY2008 FY2009 FY2010

Notes: Total annual expenditures include local and federal share of spending, but excludes spending on the Alliance.

Source: CFO$olve ad hoc report 1/28/2011. Date -of-payment basis including all object 50 spending.

6% AverageAnnual Growth

from FY06 to

FY09

13% AnnualGrowth fromFY09 to FY10

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Nearly half of this increase due to:- Alliance to Medicaid transitiondue to Health Reform- Physician rate increase- Medicaid MCO rate increase- Increased PRTF placements

DHCF Budget Review Team 2/17/11 EMBARGOED


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Managed Care Is A Growing Component ofMedicaid in the District of Columbia

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

FY2007 FY2008 FY2009 FY2010

AverageMonthlyEn

rollment

Fee-For-Service

ManagedCare(Medicaid)

TotalEnrollment

Notes: D.C. fiscal year is October 1 through September 30; enrollment was averaged from October to September to createaverage monthly enrollment. Data were not available for managed care and fee for service enrollment prior to FY2007. Dueto new coverage option state plan amendment and an 1115 waiver for childless adult beneficiaries with incomes between133 percent and 200 percent of the Federal Poverty Level, over 30,000 individuals were moved from Alliance (not includedin the data above) onto the Medicaid program. The net result is a rapid increase in managed care enrollment in FY2010 andFY2011, when looking at Medicaid enrollment data only.

36% 37%37%

64%

33%

67%63%63%

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The Elderly And Disabled Represent 29Percent Of Medicaid Program Beneficiaries

Demographics Of Beneficiaries In The District of ColumbiasMedicaid Program

Adults

Blind & Disabled

AgedChildren

29%

Notes: Distributions may not sum to 100% due to rounding effects. Distribution of beneficiaries by category is based onaverage Medicaid enrollment in FY10.

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Yet They Account For 73 Percent Of

Medicaid Program Spending, FY10

Children

Adults

Blind & Disabled

Aged

Notes: Distributions may not sum to 100% due to rounding effects.

Source: Spending from ad hoc MMIS report 1/26/2011. FY 2010 date-of-service spending excluding DSH, cost settlements,Medicare premiums, and drug rebate.

Children

Adults

Blind & Disabled

Aged

29%

73%

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The Cost of Serving the Elderly andDisabled Is Substantially Greater Than TheCost of Care For Children in Medicaid, FY10

$9,920

$19,171

$27,129

$2,969

$5,131

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

All Recipients Aged Blind & Disabled Children Adults

Average Annual Per CapitaSpending

Source: Spending from ad hoc MMIS report 1/26/2011. FY 2010 date-of-service spending excluding DSH, cost settlements,Medicare premiums, and drug rebate.

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Change in Expenditures for Selected MedicaidProvider Types FY08-FY10

39%

-3%

23%21%

8%

16%

-2%

24%22%

9%

MCOs Outpatient Pharmacy Nursing Facility

Change in Total Expenditures Change in Per Enrollee Expenditures

Expenditure Rate Increases for Fee-For-Service Episode-Based Care

ExpenditureRate of

SpendingIncrease for

Fee-for-Service

Long-Term Care

Source: Spending from ad hoc MMIS report 1/28/2011. FY 2010 date-of-service spending excluding DSH, cost settlements,

Medicare premiums, and drug rebate.

InpatientHospital

22


(includes ER Services)



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Change in Expenditures for Medicaid Home andCommunity Based Waivers FY08-FY10

113%

45%

79%

18%

DD Waiver EPD Waiver

Change in Total Expenditures Change in Per Enrollee Expenditures

Source: Spending is date-of-payment from CFOSolve ad hoc report dated 1/28/2011.

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AllianceEnrollment and Expenditure Trends

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Comparison of District of Columbia IncomeEligibility Levels for Medicaid and Alliance

Programs

Notes: For all groups in red, eligibility cannot be cut due to maintenance of effort requirements from ARRA (stimulus funding) and the Affordable Care Act(health reform). Yellow denotes Medicaid programs whose eligibility can be changed, and green represents programs that are solely locally funded.

$10,890

2011 FederalPoverty Level(One Person)

$21,780/yr

$32,670/yr $32,670/yr

$21,780/yr

Families w/Children

ChildrenAge (0-18)*

PregnantWomen*

ChildlessAdults

(Medicaid)

200%

300% 300%

200% 200%

300%


Medicaid &AllianceEligibilityGroups

ChildlessAdults

(Alliance)

ImmigrantChildrens

Program

$21,780/yr

$32,670/yr

Local FundingFederal & Local Funding

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Inpatient Hospital

Outpatient Hospital

Laboratory & X-Ray Services

Hospital Services

Pharmacy Services (Limited)

Pregnancy Testing

Routine and Emergency Contraception

Family Planning Services

Screening, Counseling, and Immunizations

Emergency ServicesSpecialist Services

Primary Care Services

Adult Wellness Services

Dental (Limited)

Nursing Home Care

Covered Services in the Alliance Program

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Average Annual Enrollment in the AllianceFY07-FY11

Notes: D.C. fiscal year is October 1 through September 30; enrollment was averaged from October to September to createaverage monthly enrollment. The Alliance program in its current form began enrolling beneficiaries in March of 2006. Averageenrollment for FY06 is 27,193, but not shown above because due to high monthly variability as the program began. In July of2010, the Department of Health Care Finance moved over 30,000 from the Alliance to the Medicaid program while implementinga new coverage option state plan amendment. Data shown above for 2010 reflect October-June monthly average (pre-SPA) and

July-September average (post-SPA). The Department transitioned over 2,700 people in December of 2010 while implementingan 1115 waiver for childless adult beneficiaries with incomes between 133 and 200 percent of the Federal Poverty Level.

AverageMonthlyEnrollment

44,88448,694

53,89456,435

25,487

0

10,000

20,000

30,000

40,000

50,000

60,000

2007 2008 2009 2010

Pre-SPA

Post-SPA

Enrollment shiftedto Medicaid as aresult of expandedeligibility due tohealth reform

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Distribution of Alliance Enrollment, byGender, FY10

Male58%

Female42%

Pre-SPA

Male45%Female

55%

Post-Spa

Notes: In July of 2010, the Department of Health Care Finance moved over 30,000 from the Alliance to the Medicaid

program while implementing a new coverage option state plan amendment. Pre-SPA enrollment above reflects October-June monthly average, and post-SPA reflects July-September monthly average.

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C udget e e ea / / GO



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Distribution of Alliance Enrollment, by Race,FY10

Black65%

Other6%

White2%

Hispanic

27%

Pre-SPA

Black

31%

Other

11%

White1%

Hispanic57%

Post-SPA

Notes: Other includes Other Known Race (1% pre-SPA/2% post), Asian or Pacific Islander (1% pre-SPA/2% post), AmericanIndian or Alaskan Native (


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Distribution of Alliance Enrollment, by Ward,FY10

18%

13%

1%

22%

12%

9%

12%13%

31%

10%

2%

36%

9%

3%5%

3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Ward 1 Ward 2 Ward 3 Ward 4 Ward 5 Ward 6 Ward 7 Ward 8

Pre-SPA

Post-SPA

Notes: In July of 2010, the Department of Health Care Finance moved over 30,000 from the Alliance to the Medicaid programwhile implementing a new coverage option state plan amendment. Pre-SPA enrollment above reflects October-June monthlyaverage, and post-SPA reflects July-September monthly average. 30

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FY11 Savings Initiatives Status Report

31

g

Amendment BudgetedSavings

UpdatedSavings

SpendingPressure

Notes

Hold Medicaid nursingfacility rates flat

$1.1m $0.59m $0.51m Public notice done. SPA drafted. Submitted to Council for passiveapproval 1/12/2011. SPA submission to CMS planned after 30 daypassive approval. Budget assumed 10/1/2010 effective date,1/1/2011 is more likely. Savings reduced to $590K based on revisedestimate and delay in implementation.

Reduce Medicaidphysician payment to80% of Medicare

$2.50m $1.88m $0.63m Public notice done. SPA drafted. Submitted to Council for passiveapproval 1/12/2011. SPA submission to CMS planned after 30 daypassive approval. Budget assumed 10/1/2010 effective date,1/1/2011 is more likely. Savings reduced to $2.08M based on revisedestimate and delay in implementation.

Reduce Hospital rates $7.10m $3.55m $3.55m SPA in development. The savings estimate was based on a10/1/2010 effective date. $3.55M potential pressure assumes anApril 1, 2011 implementation date.

Reduce DD Waiverprovider rates

$0.90m $0.45m $0.45m Waiver amendment in development. $450,000 potential pressureassumes an April 1, 2011 implementation date.

Reduce rates for adultdental care to align withnational average

$0.20m $0.20m $0.00m SPA in development. The budget assumed a 4/1/2011 effectivedate. This is on track.

Correct certain non-physician provider rates

$0.35m $0.35m $0.00m Combined with physician SPA above. Public notice done. SPAdrafted. Submitted to Council for passive approval 1/12/2011. SPAsubmission to CMS planned after 30 day passive approval.

Lower cap on PCA state

plan benefit to 520 hoursper year

$3.98m $3.98m $0.00m Public notice done. SPA pending CMS approval. When approved,

the effective date will be 1/1/2011. Budget assumed 1/1/2011effective date

DHCF FY12 BRT Presentation Final

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