Medicaid Growth - University of Minnesotahpm.umn.edu/ambul_db/db/pdflibrary/DBfile_45002.pdf ·...

Submitted by the Department of Health and Human Services December 2002

Medicaid Growth

A Report to the Governor and the General Assembly

FY 2002-2003 Appropriations Act Proviso 8.29

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Table of Contents

Executive Summary…………………………………………………….Page 5

Section I: Background and History Legislative Mandate……………………………………………………… Page 6 What is Medicaid?……………………………………………………….. Page 6 What is Medicare?……………………………………………………….. Page 7 Who is Eligible for Medicaid?…………………………………………... Page 7 OBRA and De-linking……………………………………………………. Page 8 Eligibility Milestones in the Congress/Federal Government………… Page 8 Eligibility Milestones in South Carolina………………………………… Page 13 Significant Reimbursement Changes in the South

Carolina Medicaid Program…………………………………….. Page 16 National Trends in Health Care………………………………………… Page 16

o The Uninsured o The Aging of Our Population o Recent State Budget Deficits o The Olmstead Decision o Children’s Health Insurance

South Carolina Morbidity and Mortality Rankings in Health Indicators…………………………………………………. 0

The Evolution of the South Carolina Medicaid Program…………….. Page 21 o Contradictory Directives to Slowing the

Growth of Medicaid o Expansions by the General Assembly

The Role of Government In Insuring the Uninsured…………………. Page 31 o Provision of Basic Coverage o Small Group Insurance Market Exodus o What Should South Carolina Do? o What South Carolina Gains

Establishing Eligibility…………………………………………………… Page 32 Poverty Guidelines……………………………………………………… Page 33 Current Levels and Trends….………………………………………….. Page 35 Section II: How Other State Agencies Benefit From Medicaid Revenue Targeted Case-Management…………………………………………… Page 38

o Restructuring the Children’s Service Delivery System

o Importance of Coordinated Care o Duplication of Services o Interagency Case-Management Training o Utilization and Expenditures

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o Preventive and Rehabilitative Services for Primary Care Enhancement Behavioral Health Services……………………………………………... Page 40

o Children in Need of Mental Health Treatment Services o Children in the Child Welfare System

Community Mental Health Services……………………………………. Page 41 Mental Retardation and/or Related Disabilities and Head………….. Page 41

and Spinal Cord Injuries and/or related Disabilities Children Served by the Juvenile Justice System……………………. Page 41 Severely Emotionally Disturbed Children……………………………… Page 41 Alcohol and Drug Treatment Services…………………………………. Page 42 Services to Children in Residential Settings…………………………. Page 42 Intensive Family Services……………………………………………… Page 42 Clinical Day Programming……………………………………………….Page 42 Children’s Day Treatment: ages 0-6…………………………………… Page 43 Therapeutic Support Services………………………………………….. Page 43 Wraparound Services……………………………………………………. Page 43 Medically Fragile Services………………………………………………. Page 43 Therapeutic Child Treatment……………………………………………. Page 44 Collaborative Organization of Services for Youths…………………… Page 44 Medicaid Waivers………………………………………………………… Page 44 Cost Settlements…………………………………………………………. Page 44 Section Three: Current DHHS Cost Savings and Cost Avoidance Strategies Medicaid Eligibility: Managing It vs. Creating Barriers……………….. Page 46

Enhancements of Existing סEligibility Processes

o Implementation of Plastic Medicaid Cards Medicaid Interactive Voice Response System ס Streamlined and Enhanced Eligibility ס

Determination, Management and Reporting

Senior Services………………………………………………………….. Page 48 Telecommuting…………………………………………………………… Page 48 Moving Toward Regionalization………………………………………… Page 49 ABC Child Care Program Appeals Requests………………………… Page 49 Implementation of Point of Sale and Prospective Drug

Utilization Review System………………………………………. Page 49 Maximization of Federal Medicaid Matching Dollars…………………. Page 51 Change in Crossover Payment Policy…………………………………. Page 51 Enhancement of Medicaid Fraud and Abuse Detection

and Investigation…………………………………………………. Page 52 Provider Self-Audit Policy……………………………………………….. Page 52 Expansion of the Health Insurance Premium Payment Program…… Page 52 Future Revenue Maximization…………………………………………. Page 52

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Section Four: What South Carolina Could Do in the Future Return to Core Benefit Package……………………………………….. Page 55 Reduce or Eliminate Services or Programs…………………………… Page 55

Child Health Insurance Program ס Aged, Blind and Disabled ס Working Disabled ס Foster Care ס Breast and Cervical Cancer ס Katie Beckett ס Optional State Supplementation ס Hospice ס Community Long Term Care ס

Community-based Services Durable Medical Equipment ס Other ס

Reduce Payment to Providers…………………………………………. Page 58 Changes to Medicaid Eligibility………………………………………… Page 58 Gatekeeper Processes in Long Term Care Programs………………. Page 59 Co-payments, Premiums, and other Cost-sharing

Arrangements…………………………………………………….. Page 59 Eliminate Outreach Efforts ……………………………………………… Page 59 Minimization of the Agency’s Administrative Budget………….……… Page 59 Expansion of Managed Care…………………………………….……… Page 59 Reinstatement of the SC Health Access Plan………………………… Page 60 Privatize Services Where there is a Large Enough

Market to Support Service Delivery……………………………. Page 60 Health Insurance Flexibility and

Accountability – 1115 waivers………………………………….. Page 61 A Total State Medicaid Budget…………………………………….…… Page 61 Pursue Changes in Federal Law that Allows

for More Flexibility ………………………………………………. Page 61 Replicate Strategies Used in Other States…………………………… Page 62 Economic Growth……………………………………………………….. Page 63 Managing Care………………………………………………………….. Page 63 Section Five: Conclusion…………………………………………….. Page 64

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Executive Summary Medicaid is a large part of the South Carolina budget and this trend is expected to continue. It provides health care insurance for approximately 800,000 of the state’s most vulnerable citizens - children, the elderly, and the disabled. The maze of Medicaid programs and services, with its varying poverty levels and complex federal laws and regulations, can be difficult to navigate. The consequences of being uninsured have a substantial impact on the individual, the health care system and society. The uninsured tend to wait longer to seek treatment, are often sicker when they finally receive care, and frequently seek care in the emergency room - an expensive and inefficient way to get care. Hospitals, businesses, insurers and taxpayers are left to shoulder the costs that these patients are unable to pay. South Carolina faces many challenges in improving the health of its residents. Policymakers have grappled with how to assure that our citizens have access to health care in general, with an emphasis on preventive health care strategies and healthy behaviors. Since one huge indicator of quality of life in this state is health and health improvements, continuous and unrelenting efforts must be exerted to meet the health needs of the people living in South Carolina. The rates of morbidity and mortality in South Carolina, as compared to other states, leave much work to be done. This report was prepared at the request of the South Carolina General Assembly with the purpose of describing methods that can be used to slow the growth of the Medicaid program. Many strategies to save state dollars are currently in place or are underway at the Department of Health and Human Services (DHHS). DHHS has also initiated efforts to avoid unnecessary costs to the program. This report, in part, describes those efforts. Slowing the growth of Medicaid will have an economic impact on providers and recipients. Any decrease in state matching dollars will result in an ensuing decrease in federal revenue to this state, and federal revenues have a dramatic affect on South Carolina’s economy. Moreover, if Medicaid is not funded adequately, the costs of the uninsured will simply be shifted to the insured. With South Carolina’s very favorable match rate, some would argue that leaving federal dollars on the table is not good public policy. Most states are experiencing de-escalating revenues and a concomitant affect on their Medicaid programs. However, this report is not intended to be an exhaustive evaluation of other states’ strategies. Additionally, DHHS does not necessarily recommend any specific strategy used by other states, since South Carolina has its own unique political and health care infrastructure. Any deliberate attempt to slow the growth in the Medicaid should be done in concert with the executive branch, the legislative branch, the provider community, and advocates.

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SECTION I: BACKGROUND AND HISTORY Legislative Mandate Proviso 8.29 in the fiscal year 2002-2003 Appropriations Act required the South Carolina Department of Health and Human Services (DHHS) to “initiate a study with other state agencies that use Medicaid funds to examine ways to slow down the growth in Medicaid expenditures. A report on this study shall be submitted to the Governor, the Chairman of the House Ways and Means Committee and the Chairman of the Senate Finance Committee by the beginning of the 2002 Legislative Session.” Input from other agencies was sought and is located in the Appendix. What is Medicaid? Medicaid is a grant-in-aid program in which the federal and state governments share the cost of providing medical care for needy persons who have low income. The program was authorized by Title XIX of the Social Security Act that was signed into law by the President on July 30, 1965. Congress has continuously changed the Medicaid Program since the legislation creating it was enacted. South Carolina began participation in the Medicaid Program in July 1968. In FY 02, the match rate for administration was 50% state-50% federal, although in some cases, enhanced rates may be available. For Medicaid assistance, the state rate is 30.19% and the federal rate is 30.19%. Because the cost of the Medicaid Program is shared by the state and federal governments, states are given some flexibility in providing coverage to their needy citizens. For this reason, the rules for Medicaid coverage vary from state to state. An individual who is eligible in South Carolina is not necessarily eligible in another state. The Department of Health and Human Services (DHHS) is the single state agency designated for administration of the Medicaid program. This program provides essential supports for over 800,000 recipients, involves services delivered by over 30,000 service providers, and encompasses a budget of approximately $3.7 billion. As the primary steward of the public funds for this program, DHHS is committed to maximizing and effectively managing its resources by working with its stakeholders and partnering with

“Medicaid costs are influenced by a variety of factors including the size and health care needs of theeligible population, the scope of medical benefits provided, service utilization levels, and the amountof payment provided. The double digit Medicaid increases in the first half of the 1990’s wereprimarily attributable to: (1) increase in eligibility; (2) inflation in the costs of medical services paid forthrough the program; and (3) special financing measures to maximize federal funds… Otherinfluences include broad social and economic conditions such as increases in the poverty level,unemployment rates, the number of uninsured, the aging of the population, the explosion of newmedical technologies, and inflationary trends in the health care system which also place spendingpressures on the Medicaid program. Many of these pressures will continue well into the future. Source: Bill Fairgrieve, Medicaid Costs in Michigan, www.house.state.mi.us/hfa/medcost.htm

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providers to contain costs, avoid duplication, and leverage other available sources of funds to address the needs of beneficiaries. DHHS is involved in streamlining eligibility and reporting processes, maintaining a strong network of service providers, providing a strong information and referral network, and reaching out to individuals and families to provide information regarding programs and services. DHHS actively works toward improvements in the quality of care by establishing service outcomes, incentivizing quality improvements, and offering professional development for caregivers. Through the FY 2001-02 strategic planning process, the mission and values were developed for the agency and adopted by agency staff and managers. For more discussion of the strategic planning process, visit the agency’s website at www.dhhs.state.sc.us. The agency’s mission is to provide statewide leadership to effectively utilize resources to promote the health and well being of South Carolinians. The agency fulfills its mission by planning, setting policies, pursuing resources, developing programs, building partnerships, providing program oversight, and ensuring fiscal accountability to promote an accessible system of quality health and human services. The agency’s values are quality, integrity, customer service, teamwork, professionalism, accountability, communication, knowledge, stewardship and innovation. What is Medicare? Medicare is administered through the Social Security Administration. It is a health insurance program for people age 65 and over or people who have received Social Security disability benefits for twenty-four months. There is no financial eligibility test for Medicare. Medicare is divided into two parts. Part A is called hospital insurance. It pays at least part of such care as hospital services, skilled nursing home care, hospice care, etc. Part B is called medical insurance. It pays at least part of such care as doctor's services, x-ray and other radiation therapy, durable medical equipment, out-patient surgery, certain physical and occupational therapy, ambulance services, dialysis, home health services, etc. A person can be eligible for both Medicaid and Medicare. For a person who has both, Medicaid will pay the monthly Medicare premium and certain services not covered by Medicare. Cost sharing will be paid only for Qualified Medicare Beneficiaries (QMB). Who is Eligible for Medicaid? Individuals must meet financial and categorical requirements to qualify for benefits. States are required to cover certain groups, and are given the option of covering other groups. The groups the states are required to cover are known as mandatory groups. The other groups are known as optional groups. Historically, Medicaid eligibility rules have been closely linked to those of the cash assistance programs such as Family Independence (FI), previously known as Aid to

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Families with Dependent Children (AFDC) or the Supplemental Security Income (SSI) program. However, in recent years, Congress has given states more flexibility in establishing policies for the different coverage groups. At the same time, Congress has added more mandatory coverage groups and placed more requirements on some of the services provided. For a comprehensive overview of Medicaid, visit http://www.hcfa.gov. OBRA 1989 and Delinking In the United States, the entire social welfare system has undergone significant changes in the past two decades. As a result of the Omnibus Reconciliation Act of 1989, welfare reform moved many individuals off welfare and into the workforce; however, Congress retained Medicaid benefits for this new working population as an essential support to help them make the transition from welfare to work. Congress ultimately de-linked Medicaid from welfare assistance by tying eligibility to family income rather than public assistance. With the advent of the national Children's Health Insurance Program (CHIP), children slightly above the federal poverty level became eligible for Medicaid. As a result of all of these changes, in the last decade the percent of Medicaid recipients receiving welfare assistance has declined to only 6%. Those receiving Food Stamps only make up 33%. Because Medicaid has been “delinked” from welfare to comply with federal rules, it is easier to apply for Medicaid. Once many families were reluctant to apply for “welfare.” Medicaid no longer has this stigma. Medicaid is now a health insurance program. By providing insurance for children and families, Medicaid helps stabilize the work force for small businesses that cannot afford to provide insurance for their employees. Eligibility Milestones in the Congress/Federal Government Many changes in Medicaid have been produced by the United State Congress and have been implemented by the US Department of Health and Human Services. Activity by the federal government can shape states’ Medicaid programs.1 1965 Medicaid Program enacted – program began Jan. 1, 1966.

1976 Health Maintenance Organization Amendments enacted. • Established federal requirements for Medicaid contracts with HMOs. 1980 Omnibus Reconciliation Act (OBRA) of 1980

Boren Amendment 1 Excerpted from Discovering Leadership That Matters, Monica Friar, JF Kennedy School of Government, Harvard University, March, 1999.

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• Repealed requirement that states follow Medicare principles in

reimbursing nursing facilities and ICFs/MR. Substituted language that said payments to nursing homes must be “reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities,” but not necessarily tied to actual costs.

• Required that Medicaid pay enough to ensure that poor people have “reasonable access” to hospital care.

1981 OBRA 1981: Cost Containment Measures (Reagan Era)

• 3-year reduction in Federal reimbursements. • Reduced eligibility for welfare benefits. • Established Freedom of Choice, 1915 (b) waivers: States can require

recipients to obtain services from certain providers. Waiver is needed to enroll recipients in HMOs or to use primary care case management systems.

• Home and Community Based Care, 1915 (c) waivers: Enabled states to provide wide range of home and community-based care (including homemaker, personal care and case management) to elderly, mentally retarded and other chronically ill populations who might otherwise be institutionalized. States must demonstrate that average expenditures for a person receiving waiver services would not exceed expenditures for that person in the absence of a waiver.

• Expanded Boren Amendment to hospital reimbursements. Repealed requirement that states follow Medicare “reasonable cost” reimbursements for hospital inpatient services, but required that states take into account the situation of hospitals with “disproportionate shares of low-income patients with special needs.

1982 Tax Equity and Fiscal Responsibility Act of 1982. 1983 Medicaid/Cost sharing.

• Allowed states to extend Medicaid eligibility (TEFRA) to certain disabled

children living at home who would be eligible for SSI if they were institutionalized.

• Permitted states to require cost sharing (co-payments, deductibles) for nearly all mandated or optional services provided to both the categorically and medically needy.

1983 Prospective Payment System phased in over 1983-84: (adopted with Medicare first).

• Changed payment methodology to pay hospitals based on Diagnostic Related Groups (DRGs), i.e. System sorts admissions into one of 600-700

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categories then pays hospital a fixed fee for each admission in that category (based on labor costs in region).

• Prior to DRGs hospital payments were based on costs. 1984: First Provider tax levied – in Florida on physicians. DEFRA (Deficit Reduction Act) 1984.

• Required coverage of all children born after 9/30/83 meeting state AFDC income and resource standard regardless of family structure.

• Required coverage of pregnant women if they would qualify for AFDC or AFDC-UP once child was born even if state didn’t have AFDC-UP program.

• Required automatic coverage for 1 year after birth if mother is already receiving Medicaid and remains eligible.

OBRA 1985

• Additional coverage for pregnant and postpartum women with income below state AFDC levels.

• Required coverage for adoptive and foster children. • Established optional hospice and case management benefits.

HCFA Rule in 1985

• States allowed to receive donations from private medical care providers. OBRA 1986 (Switching to optional eligibility based on poverty rate versus AFDC or SSI

levels).

• Established option for states to extend Medicaid coverage to all pregnant women, infants up to age 1, and children up to age 5 with family incomes up to 100 percent of the poverty level.

• Established option for state to extend Medicaid coverage to all elderly and disabled with incomes up to 100 percent of poverty and meeting SSI asset test.

• Required states to continue Medicaid coverage for disabled individuals with severe impairments who lose eligibility for SSI as a result of earnings from work.

1986: Provider Taxes and Donations and Intergovernmental Transfer Programs.

• With OBRA 1981 Medicaid programs were allowed to make Disproportionate Share Hospital (DSH) payments. Congress took limits off those payments. Payments to hospitals and mental health facilities that

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serve disproportionately high level of low-income patients could be higher than Medicare payments.

• West Virginia one of first to seek permission to use donations from hospitals and to increase payments to hospitals through DSH program.

• Big growth in hospital inpatient spending in 1990 and continuing through 1992.

OBRA 1987: Nursing Home Reforms.

• Nursing home services made mandatory. • Specified standards for scope of services to be provided, levels and

qualifications of staff, assessment of each resident’s functional capacity and sanctions.

• Options to extend coverage to pregnant women and infants up to 185 percent of the poverty level.

• Established a new home and community-based waiver authority for persons over 65.

1988: Medicare Catastrophic Cost Act (MCCA)

• States required to extend eligibility to pregnant women and children with incomes up to 75 percent of poverty by July 1, 1989 and 100 percent of poverty by July 1, 1990.

• Increased the amount of income and assets a non-institutionalized spouse of a Medicaid recipient receiving nursing home services may retain.

• Imposed a new national “transfer of assets” policy for institutionalized Medicaid recipients.

• States required to pay Medicare premiums, deductibles and coinsurance for low-income aged and disabled Medicare beneficiaries.

Family Support Act of 1988

• Required states to continue Medicaid coverage for 12 months to working poor families who leave cash assistance due to earnings.

• Required states to provide full Medicaid coverage to all members of two-parent families on AFDC-UP even in months when cash assistance is not being paid.

OBRA 1989

• Required states to raise Medicaid eligibility for pregnant women and children and infants to 133 percent of poverty.

• Required states to cover children through age 6 up to 100 percent of poverty, and to pay for all “medically necessary” services for problems identified during regular Medicaid-covered checkups.

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1990: Supreme Court permits Boren Amendment Lawsuits by Medicaid providers.

• Reduced states’ abilities to modify hospital and nursing home payment rates.

• 21 States were being sued for hospital reimbursements. • 20 states were being sued for nursing home reimbursements.

OBRA 1990

• Taxes imposed by the state solely on hospitals, nursing facilities or ICF/MRs were not a reimbursable Medicaid cost.

• Required states to phase in coverage of children through age 18 in families at or below 100 percent of poverty.

• Required continuous coverage of 60 days post-partum for pregnant women and 1 year for infants. Required states to conduct outreach.

• Authorized programs within Medicaid for home and community-based care for frail or immobile elderly and developmentally disabled.

September, 1991 effective FY 1993: Amendments to Medicaid Voluntary Contributions

and Provider Specific Taxes.

• Banned provider donation for most reasons. • Required that provider taxes be “broad-based” taxes across an entire class

of providers such as acute care hospitals, nursing homes. • Prohibited states from guaranteeing that DSH payments will exceed tax

payment for each hospital. • Permitted HCFA to set state caps for DSH payments. • Repealed provision that provider taxes are not reimbursable Medicaid

costs. Allows them to be reimbursed. • States using provider taxes included Alabama, Arkansas, Illinois, Indiana,

Kentucky, Massachusetts, Maine, Minnesota, Montana, New Hampshire, New Jersey, Nevada, New York, Ohio, South Carolina, Tennessee, Vermont, Washington, Wisconsin.

• States using voluntary contributions included California, Georgia Michigan, Missouri, North Carolina, Pennsylvania, South Carolina and Utah.

• States using both – Florida, Maryland, and Mississippi

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Eligibility Milestones in South Carolina 1986 Implemented coverage for children up to age 18 at AFDC income

and resource limits (Ribicoff). October 1987 Implemented coverage for pregnant women and infants (OCWI).

• Income limit – 100 % of poverty. • No resource test. • Continuous coverage.

November 1987 Outstationed 11 eligibility workers were placed in seven (7) health

districts. Workers were located in prenatal and child health clinics. July 1988 Two additional outstationed eligibility workers were placed in other

prenatal and child health clinics. January 1989 Healthy Mothers/Healthy Futures Initiative – Maternal Care

Component. Increased Medicaid reimbursement for maternal care. The increase was tied to a requirement that enhanced services be provided (i.e., health education, follow-up for non-compliant patients, family planning, parenting education and WIC referral.)

Expanded coverage to include Qualified Medicare Beneficiaries. March 1989 Added coverage of children to age 2. Healthy Mothers/Healthy Futures Initiative – Child Health

Component.

1. Increased rates for newborn care when:

• The infant is referred to WIC. • A home visit was scheduled. The home visit is made

by trained pediatric nurses. They assess the health status of the infant and mother, the home condition and make referrals for Medicaid, EPSDT, etc.

2. Increased reimbursement for EPSDT screenings for infants

(to age 1). 3. Added a separate fee ($80) for the initial exam conducted

after an infant is discharged from neonatal intensive care unit.

April 1989 Increased Medicaid income eligibility limit for pregnant women and

infants to 125 % of poverty (OCWI).

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June 1989 Increased income eligibility limit for pregnant women and infants to

185 % of poverty (OCWI). October 1989 Expanded coverage to include children to age 7 at 100 % of

poverty. Expanded coverage to include aged and disabled individuals with

income at or below 100% of poverty (ABD). March 1990 Implemented a medically needy program to cover pregnant women,

children and caretaker relatives of children as well as aged, blind and disabled individuals (state legislation).

April 1990 Increased income eligibility limit for children age 1 to 6 to 133% of

poverty. July 1990 Implemented coverage to pay Part A Medicare premiums for the

working disabled (QDWI). July 1991 Expanded coverage to include children to age 8 at 100% of

poverty. October 1991 Expanded coverage to include children to age 9 at 100% of


poverty. Eliminated the Medically Needy Program coverage of pregnant

women, children and caretaker relatives of children as well as aged, blind and disabled individuals.

January 1993 Implemented coverage to pay Part B Medicare premiums for

Specified Low Income Medicare Beneficiaries (SLMBs) with income between 100% and 110% of poverty.

October 1993 Expanded coverage to include children to age 11 at 100% of


poverty. January 1995 Expanded coverage to pay Part B Medicare premiums for SLMBs

with income between 100% and 120% of poverty.

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Implemented coverage for severely disabled children who meet institutional level of care under the Katie Beckett/TEFRA option (state legislation).

October 1995 Expanded coverage to include children to age 13 at 100% of


poverty. Implemented coverage for children who were terminated from

Family Independence (formerly AFDC) due to FI sanctions. August 1997 Expanded coverage to include children age 1 to 19 at 150% of

poverty -Partners for Healthy Children (PHC). January 1998 Implemented coverage for individuals who are entitled to Medicare

Part A, have income of at least 120% FPL, but less than 135% FPL or at least 135% FPL, but less than 175% FPL, resources that do not exceed twice the limit for SSI eligibility, and are not otherwise eligible for Medicaid. (Qualifying Individuals (QI- 1 and 2s).

September 1998 Implemented Section 1931 coverage for families who meet income

and resource criteria for FI. October 1998 Implemented coverage of disabled working individuals with family

income of less than 250% of FPL, individual unearned income less than SSI income limit and resources less than $2000 (state legislation).

July 2000 Implemented coverage for children age 18 to 21 who were in foster

care on their 18th birthday and aged out of the foster care system. October 2001 Implemented coverage to females under age 65 who were

screened by DHEC’s Best Chance Network and diagnosed with breast and/or cervical cancer.

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Significant Reimbursement Changes in the South Carolina Medicaid Program Over the years, the Medicaid program has experienced significant changes in its reimbursement to providers of Medicaid reimbursed services. Such reimbursement changes were made as a result of changes in the appropriations to the agency, changes in federal or state law or regulation, or internal policy decisions. National Trends in Health Care Health care is a one of the largest sectors of the national economy, accounting for 12% of the Gross Domestic Product. Health policy set at the national level directly impacts how these funds are prioritized and spent. The following is a summary of the major health issues facing the United States and South Carolina. The Uninsured In 2000, 38.4 million Americans, or 16% of the non-elderly population, were uninsured. Low-income persons (those earning less than 200% of the Federal Poverty Level or $27,476 for a family of three) run the highest risk of being uninsured. Four out of five of the uninsured are in working families. South Carolina has a 15.8% rate of uninsured for the general population and 28.1% of the population at or below 200% of the Federal Poverty Level lack health insurance.2 The consequences of being uninsured has substantial impact on the individual, the health care system and society. The uninsured tend to wait longer to seek treatment and are often sicker when they finally receive care. They frequently seek care in the emergency room, an expensive and inefficient way to get care. Hospitals, businesses, insurers and taxpayers are left to shoulder the costs that these patients are unable to pay. The number of ER visits increased 15% nationally between 1990 and 19993. This increase was due partly to the greater numbers of uninsured. The uninsured are four times more likely than people who have health insurance to use the ER as their regular source of care. People without health insurance get sicker and are more likely to die sooner than those who have health insurance. According to research from ACP/ASIM: in a study of more than 28,000 Florida patients, those without insurance were more likely to be diagnosed with skin, colorectal, breast and prostate cancers later, and therefore, more dangerous stages than those with insurance. All these cancers can be detected earlier through regular screening – an option usually unavailable to the uninsured; uninsured persons tend to be sicker upon admission to the hospital; the uninsured are significantly more likely than the privately insured to die in the hospital; according to a study of nearly 4,700 breast cancer patients, uninsured

2 Kaiser Commission on Medicaid and the Uninsured, February, 2002. 3 American Hospital Association, Trend Watch, March 2001

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women had a 49% greater chance of dying following diagnosis of cancer than did privately insured women4. Most disturbingly, a recent (May, 2002) study by the Institute on Medicine states 18,314 persons die each year because they lack preventive services, a timely diagnosis or appropriate care. The study goes on to say: uninsured people with colon or breast cancer face a 50% higher risk of death; uninsured trauma victims are less likely to be admitted to the hospital, receive the full range of needed services and are 37% more likely to die of their injuries; about 25% of adult diabetics without insurance for a year or more went without a checkup for 2 years. That boosts their risk of death, blindness and amputation5. Families are impacted by the lack of health insurance. Because they lack coverage, families must often choose between paying for medical care and paying basic household expenses. For instance, uninsured children are: less likely to have a regular source of care; less likely to have up-to-date immunizations; less likely to have had a recent physician visit; likely to delay seeking care; and more likely to have untreated vision problems.6 There is a financial cost to communities and society. Providing charity care to the uninsured means that cost is “shifted” to insured patients who wind up with higher charges as a result. Taxpayers also pay the cost of caring for the uninsured through federal and state subsidies to hospitals and clinics. Public hospitals, teaching hospitals, academic health centers and non-profit community hospitals – the primary providers of care to the uninsured – incur heavy operating losses, forcing them to cut back on services to all patients or even close facilities. Care for the uninsured is paid for by everyone, often in inequitable ways. The Aging of Our Population The senior population - persons 65 years or older – numbered 35 million in 2000. They represented 12.4% of the U.S. population, about one in eight Americans. This group will continue to grow significantly in the future. By 2030 there will be about 70 million seniors comprising 20% of the population7. South Carolina’s older residents show the same trends. Seniors, as a group, out-paced others with a 50% growth rate between 1980 and 19908. Overall, persons age 60 and above in South Carolina are anticipated to increase from 637,673 in 2000 to1,291,211 in 2025 for a 102.5 increase.9 Although longevity and income have risen, there are still a significant number of low -income seniors who are in poor health. A little over 43% of senior South Carolinians 4“No Health Insurance? Its Enough to Make You Sick.” American College of Physicians/American Society of Internal Medicine”, 2000. 5 USA Today, May 22, 2002. 6 Covering the Uninsured.org – A Project of the Robert Wood Johnson Foundation. 7 A Profile of Older Americans: 2001, Administration on Aging, U.S. DHHS 8 Mature Adults Count, S.C. DHHS 9 S.C. State Plan on Aging - 2001-2004, S.C. DHHS

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have an income of 200% or below of the Federal Poverty Level10. Although seniors make up roughly 30% of the Medicaid population, almost 70% of the Medicaid expenditures are for seniors.11 Approximately 80% of nursing home care is paid for by Medicaid. Medicaid is a major investment in the senior citizens of the state, since much of Medicaid is devoted to medical services for seniors. Recent State Budget Deficits State governments are facing their biggest budget crises in eleven years as a weak business climate has lead to huge declines in revenue. The National Conference of State Legislatures (NCSL) estimates states are facing a $27 Billion shortfall this fiscal year. NCSL issued a report in May 2002 showing April, the most crucial month for tax collections, as “disappointing”. To close the gap, states are taking drastic means to deal with the drop. According to NCSL, 29 states have cut budgets for higher education, 17 states have cut outlays for K-12 grades, 25 states have cut corrections budgets and 22 have cut Medicaid spending.12 The Olmstead Decision In 1999, two people with disabilities residing in institutions for persons with mental retardation sued the state of Georgia on the grounds that they were capable of independent living in the community. Georgia refused to provide the support services for them to do so. The U.S. Supreme Court ruled that under the Americans With Disabilities Act, Georgia had discriminated against these individuals by confining them to a segregated institution rather than an integrated community-based program.13 In part, this ruling held that if a person is capable, the state must provide a range of services to enable them to live in the community. The impact of the Olmstead Decision is far ranging. Each state is mandated to write an Olmstead plan and to provide comprehensive services in the community. This may mean the expenditure of millions of additional dollars, especially in Medicaid programs. Olmstead has served to increase Medicaid spending in other states and hastened the creation of flexible service options for the disabled. While Olmstead has been a boon to the disabled community, it will very likely to cost states additional resources. Children’s Health Insurance Program In 1996, Congress passed the Balanced Budget Act, containing Title XXI. This Title created the Children’s Health Insurance Program (CHIP). Each state has a CHIP program and can choose the level of poverty it wishes to serve, but the program has a comprehensive range of almost unlimited services.14 South Carolina covers children up

10 S.C. State Plan on Aging – 2001-2004, S.C. DHHS 11 S.C. DHHS MMIS report 12 USA Today, May 23, 2002 13 Proceeds of the Disability Advocacy in a Post-Olmstead Environment Conference, June 28-30, 2001 14 Partners for Healthy Children Update, March 1998

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to age 18 at or below 150% of the Federal Poverty Level. Currently there are over 43,000 children in the South Carolina CHIP program with a cost of over $52 Million in FY 02.15 This program is a Medicaid expansion and the state must appropriate matching funds to it each year. South Carolina Health Care Trends According to a study by the Centers for Medicare and Medicaid Services (CMS) released in July 2002, “per person spending for health services…and…public and private health plans varied by nearly $2,000 from state to state in 1998.”16 From 1991 to 1998, the US average was 4.9% on personal health care spending per capita. The South Carolina average was 6.5%. Data shows that for Medicaid personal health care spending per enrollee in 1991, the state’s share was 14.8% in South Carolina. In 1998, the state’s share was only 16.6%. According to the report, the states with the fastest growth in health spending over these years were Maine, Mississippi, West Virginia, North Carolina and South Carolina. However, the Older Americans Report, referencing the same study by CMS, points out that South Carolina ranks 42nd in overall Medicaid spending per enrollee. South Carolina ranks 28th in Medicare spending per enrollee.17 Because the trends in health improvements in South Carolina have been so disappointing, health and human services professionals have sought to improve the health and well-being of our citizens through a variety of interventions. Some of these strategies have relied on Medicaid dollars to support health improvement activities. State agencies have used state dollars to leverage federal Medicaid funds in an effort to expand health improvement and public health strategies. Despite those interventions, data continue to show that South Carolina ranks at or near the bottom as compared to other states.

15 DHHS MARS recipient report 16 CMS News, Press Release dated July 9, 2002; later published in the journal Health Affairs 17 Older Americans Report, July 12, 2002.

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South Carolina Rankings

2001 2000 1990 Overall Ranking 48 48 36 Lifestyle Prevalence of Smoking 38 30 8

Motor Vehicle Deaths 48 49 43 Violent Crime 49 48 42 Risk For Heart Disease 35 41 43 High School Graduation 49 49 42

Access

Unemployment 24 32 22 Adequacy of Prenatal Care 34 30 49 Lack of Health Insurance 17 30 28 Support for Public Health Care 7 25 20

Occupational Safety and Disability

Occupational Fatalities 38 38 12 Limited Activity Days 43 45 43*

Disease

Heart Disease 31 32 37 Cancer Cases 24 25 11 Infectious Disease 34 32 33

Mortality

Total Mortality 38 38 39 Infant Mortality 47 48 49 Premature Death 47 46 49

Source: http://www.unitedhealthfoundation.org/rankings2001/states/sc.html.

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The Evolution of Funding for the South Carolina Medicaid Program The South Carolina Medicaid Program has evolved over the years as a result of policy decisions made by former and current Governors as well as the General Assembly. In some years, provisos in the Appropriations Act have created program expansions without funding to support them. In many instances, when funding was provided, those funds were in non-recurring dollars. Moreover, the Department of Health and Human Services received directives and mandates from the South Carolina General Assembly for many years. Fiscal Year 1992-1993 38A.6 The income limitation for the Medicaid Program shall continue to be three hundred percent of the SSI single payment maximum. Explanation: This proviso raised the income limit threshold and resulted in eligibility for more individuals. 38A.16 Funds appropriated herein for hospital administrative days and swing beds shall not be reduced in the event the agency cuts programs and the services they provide. Explanation: This proviso protects the administrative day and swing bed programs from any reductions resulting from programmatic cuts. These programs benefit hospitals. 38A.19 To the extent the Finance Commission (now DHHS) can increase Medicaid federal matching funds through changes in reimbursement formulas for other state providers, the Commission, with the permission of the state providers, is authorized to retain these funds in an earmarked account on deposit with the State Treasurer and use these funds to cover unanticipated increases in Medicaid expenditures. The Commission should not hold any other state provider liable for disallowances resulting from these changes. Any funds realized as a result of this proviso shall be reported as part of the following year budget process. Explanation: This proviso required the agency to change reimbursement formulas for state agencies so as to maximize federal matching dollars. Fiscal Year 1993-1994 30.8 (Medicaid State Plan) Where the Medicaid State Plan is altered to cover services that previously were provided by 100% state funds, the Finance Commission can bill other agencies for the state share of services provided through Medicaid. The Finance Commission (now DHHS) will keep a record of all services affected and submit periodic reports to the House Ways and Means and Senate Finance Committees.

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Explanation: This proviso required the agency to determine which services previously covered by 100% state funds could be altered in order to leverage federal matching funds. 30.10 (Medically Indigent Assistance Fund) The Finance Commission is authorized to expend disproportionate share funds to all eligible hospitals with the condition that all audit exceptions through the receipt and expenditures of these funds are the liability of the hospital receiving the funds. These funds must be used to reimburse the hospital for expenses in providing uncompensated indigent care, however, this requirement does not apply to funds used to reimburse facilities at the Department of Mental Health Explanation: This proviso authorized the agency to increase reimbursement to hospitals providing uncompensated indigent care. Fiscal Year 1994-1995 Same as 1993-1994 Fiscal Year 1995-1996 72.60 (GP: TEFRA-Tax Equity and Fiscal Responsibility Act) It is the intent of the General Assembly that the State Medicaid Plan be amended to provide benefits for disabled children as allowed by the Tax Equity and Fiscal Responsibility Act (TEFRA) option. State agencies, including but not limited to, the Office of the Governor – the Continuum of Care, the Department of Health and Environmental Control, the Department of Mental Health, the Department of Disabilities and Special Needs, and the Department of Health and Human Services shall collectively review and identify existing state appropriations within their respective budgets that can be used as state match to serve these children. Such funds shall be used effective January 1, 1995 to implement TEFRA option benefits. Explanation: This proviso required DHHS to create a new eligibility category to expand services to disabled children without regard to family income. Fiscal Year 1996-1997 29.7 (DHHS: Medicaid State Plan) Where the Medicaid State Plan is altered to cover services that previously were provided by 100% state funds, the Department can bill other agencies for the state share of services provided through Medicaid. The Department will keep a record of all services affected and submit periodic reports to the House Ways and Means and Senate Finance Committees. Explanation: Same as 1993-94. 29.9 (DHHS: Admin. Days/Swing Beds Reduction Prohibition) Funds appropriated herein for hospital administrative days and swing beds shall not be reduced in the event the agency cuts programs and the services they provide.

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Explanation: Same as 1992-93. 29.11 (DHHS: Reimbursement Formula Changes) To the extent the Department can increase Medicaid federal matching funds through changes in reimbursement formulas for other state providers, the Department, with the permission of the state providers, is authorized to retain these funds in an earmarked account on deposit with the State Treasurer and use these funds to cover unanticipated increases in Medicaid expenditures. The Department should not hold any other state provider liable for disallowances resulting from these changes. Any funds realized as a result of this proviso shall be reported as part of the following year budget process. Explanation: Same as 1992-93. Fiscal Year 1997-1998 29.11 (DHHS: Reimbursement Formula Changes) To the extent the Department can increase Medicaid federal matching funds through changes in reimbursement formulas for other state providers, the Department, with the permission of the state providers, is authorized to retain these funds in an earmarked account on deposit with the State Treasurer and use these funds to cover unanticipated health and human services expenditures. The Department should not hold any other state provider liable for disallowances resulting from these changes. Any funds realized as a result of this proviso shall be reported as part of the following year budget process. Explanation: Same as 1992-93. 29.15 (DHHS: Residential Care Optional Supplement) From the appropriation made herein for General Assistance, the Department will supplement the income of individuals who reside in those licensed residential care facilities that have an approved Optional Supplement Request with the Department. Individuals who reside in those residential care facilities with approved Optional Supplement Requests must also qualify as aged, blind or disabled under the definitions of Public Law 92-603, U.S. Code, or who would qualify except for income limitations or residence in a residential care facility reclassified as a public institution by the Social Security Administration. For the period of the current fiscal year, the Department will, based on availability of funds, supplement the income of the above defined group up to a maximum of $795.00 per/month and the residential care facilities are authorized to charge a fee of $762.00 per/month for the defined group. Each individual in the defined group is allowed a $33.00 per/month personal needs allowance. The Department will issue the recipient an Optional Supplemental check in an amount that will permit the recipient to comply with the above payments; however, if the federal government grants a cost of living increase to Social Security and Supplemental Security Income recipients, the maximum amount that the facility is permitted to charge is $762.00. The Department shall establish the maximum number of Optional Supplement Requests that can be funded and will develop a waiting list based on present and future applications received from each county. Each facility that participates in the Optional Supplement Program must submit a notarized operating

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cost report. The cost information will include all income and operating costs for the facility. The Department will develop a time schedule for reports to be submitted. Facilities failing to submit costs information and adhere to the time schedule will not be eligible to serve Optional Supplement residents. Information received by the Department will be consolidated and submitted to the Senate Finance Committee and the Ways and Means Committee. The Department shall explore any options for maximizing state matching dollars in the provision of services to residents of licensed community residential care facilities and options for reviewing the quality and adequacy of care and report to the Senate Finance Committee, the Ways and Means Committee and the Governor’s Office no later than January 15, 1998. All services rendered to a Residential Care Facility resident must be in compliance with state health licensing laws and regulations. Explanation: This proviso moved the OSS Program (state funds only) to DHHS from DSS. The proviso was amended further to require DHHS to explore options for maximizing state dollars by matching the funds, when possible, with federal matching funds. OSS funds had historically never been matched. 29.17 (DHHS: Medical Home for Clients) The Department of Health and Human Services (DHHS) shall establish a program to encourage physicians to establish a “medical home” for Medicaid clients. This program is intended to provide continuity of care for Medicaid clients, increase access to primary care services for Medicaid clients and ensure increased and continued participation in the Medicaid program by physicians who render primary care services. The DHHS shall have the responsibility to define a “medical home” and have signed agreements with physicians willing to meet the requirements of providing a “medical home.” Physicians signing agreements to become medical homes for Medicaid will receive enhanced reimbursement to be defined by DHHS. Federally Qualified Health Centers (FQHCs) and Rural Health Centers (RHCs) must meet the requirements set forth for a “medical home” in order to continue to receive cost based reimbursement from DHHS. Explanation: This proviso required DHHS to explore ways to create medical homes for clients by increasing reimbursement rates. The net effect was to increase the numbers of recipients and the number of primary care physicians participating in the program. Fiscal Year 1998-1999 8.21 (DHHS: Prescriptions) From the funds appropriated herein, the Department is directed to increase the prescription/refill limit to four (4) prescriptions/refills per month for each recipient effective January 1, 1999, and to ensure that unlimited prescription/refill coverage is available for children. Explanation: This proviso required DHHS to increase the prescription drug limit to four per month. No additional funds were appropriated in that fiscal year.

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8.24 (DHHS: Working Disabled) From the funds appropriated herein, the Department is directed to provide Medicaid benefits during the current year to working disabled individuals whose family income is less than 250% of the federal poverty level and who would be considered to be receiving Supplemental Security Income (SSI) benefits except for their earned income. Explanation: This proviso required DHHS to create a new eligibility category in the Medicaid program for the working disabled. No funds were appropriated. 8.25 (DHHS: Residential Care Pilot Project) The Department shall establish a pilot project to determine the appropriateness and feasibility of providing care to dementia patients, including Alzheimer’s patients, in residential care facilities that meet nursing home level of care criteria. In order to fund the appropriate level of care, the Department shall develop, if feasible, a methodology to provide Medicaid services to these patients. State matching funds must be identified from the existing state funding provided to the Optional Supplement Program. DHHS must report on the progress and findings of this pilot project to the House Ways and Means Committee, the Senate Finance Committee and the Governor by March 15th of each year. Explanation: This proviso required DHHS to establish a new program to provide Medicaid services to certain residents in residential care facilities. 8.26 (DHHS: Chiropractic Services) From the funds appropriated herein, the Department is directed to provide coverage for medically necessary chiropractic services for Medicaid eligible recipients. Explanation: This proviso required DHHS to establish a new service to add to the benefit package of the Medicaid program. This service had never been a part of the benefit package in the past. Fiscal Year 1999-2000 8.22 (DHHS: Dental Home) The Department shall establish a program to encourage dentists to establish a “dental home” for Medicaid clients. This program shall provide Medicaid clients with continuity of care, increase access to dental care services and ensure dentists’ participation who render primary care services. The Department shall define “dental home” and administer signed agreements with dentists agreeing to meet the requirements of the program. Dentists signing agreements will receive enhanced reimbursements defined by the Department. Federally Qualified Health Centers must meet the requirements set forth for a “dental home” in order to continue to receive cost based reimbursement. Explanation: This proviso required DHHS to create a program to encourage dentists to increase participation in the Medicaid program by enhancing reimbursement.

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8.30 (DHHS: Rehabilitative Therapy Services Fund) There is established the Rehabilitative Therapy Services Fund for the payment to private providers for Medicaid eligible children. The Services include physical, occupational and speech therapies that are provided by private providers to Medicaid eligible children. The Fund consists of state matching funds provided by the Department of Health and Human Services, the Department of Health and Environmental Control, the Department of Education and the Department of Disabilities and Special Needs as provided in Fiscal Year 1996-97, based on Medicaid expenditures to private providers and direct service staff of Rehabilitative Therapy Services for that fiscal year. If additional funds are required, each agency’s share of the additional funds will be determined in accordance with a methodology to be designed and agreed upon by the agency directors. Explanation: This proviso required DHHS to establish a fund to pay private providers for certain Medicaid services. State funds are maximized by matching the funds with federal Medicaid monies. 8.31 (DHHS: Title XIX Payment Methodology) The department is directed to develop a Title XIX payment methodology for hospital services including disproportionate share payments which will give special consideration to high volume hospitals and small and rural hospitals. Explanation: This proviso required DHHS to change its reimbursement methodology to hospitals to pay more to high volume hospitals and small rural hospitals. 8.32 (DHHS: Children’s Dental Care) The Department of Health & Human Services shall develop and implement a plan to increase patient access and participation of dental providers in caring for the needs of Medicaid-eligible children. The Department is directed to implement a reimbursement schedule that shall be based on the 75th percentile of the current usual and customary rate schedule and on the funds appropriated to the dental program. Five percent of the total funding shall be set aside for treatment of special needs patients as defined by Health and Human Services of South Carolina as follows: children with special health care needs are those who have a chronic physical, developmental, behavioral or emotional condition and who also require health and related services of a type or amount beyond that required by children generally. Patients meeting this criteria shall be clearly identified on the Medicaid card and treatment of these patients shall be at an enhanced reimbursement level. Explanation: This proviso required DHHS to develop a new program to increase patient access and the participation of dentists. It increased the reimbursement to dentists to the 75th percentile of the usual and customary rate schedule. 8.33 (DHHS: DAODAS Prior Authorization Program) The Department of Health & Human Services is to continue to provide state matching funds up to $200,000 for the support of the Department of Alcohol and Other Drug Abuse Services (DAODAS) prior authorization program for alcohol and drug abuse services for FY 2000. Prior to receiving subsequent year funding, DAODAS must provide documentation that the

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system is cost effective and supportive of a continuum of services that will increase the linkage between inpatient services and necessary follow-up services in the DAODAS system that improve client outcomes. Explanation: This proviso requires DHHS to continue to provide $200,000 to DAODAS and essentially protects these funds from reduction, even if the agency were to be required to reduce growth or spending. 8.34 (DHHS: Medicaid Demonstration Project Study) The Department shall conduct a study on developing a demonstration project to extend Medicaid health care coverage to children under the age of 18, under 200% of the federal poverty level, consistent with all federal laws, rules and regulations governing the Medicaid Program. The study shall examine alternative delivery and payment systems under Medicaid to maximize resources in providing services to children. The Department shall report to the Governor and General Assembly on the findings from the study. Explanation: This proviso requires DHHS to create a new demonstration to extend Medicaid benefits to children up to 200% of the federal poverty level. 8.35 (DHHS: Personal Care Aide Salaries) From the funds appropriated herein, the Department shall require, under its contracts with personal care aide providers, that a rate increase granted shall be paid to the provider’s personal care aide employees only and shall not go toward the Provider’s administrative cost. This wage increase shall be $1.64 per hour and $0.16 per hour fringe benefit. Explanation: This proviso was used as a vehicle to increase rates paid to personal care aides by DHHS. FY 00-01 8.39 (DHHS: Primary Care Reimbursement) The Department shall develop and implement a plan to increase patient access and participation of primary care providers in caring for the needs of Medicaid-eligible children. Beginning January 1, 2001, the department is directed to implement a reimbursement schedule that shall be based on the 65th percentile of the current usual and customary rate schedule and on the funds appropriated to the physicians program. Explanation: This proviso required DHHS to increase patient access and physicians participation by increasing rates. 8.40 (DHHS: Pediatric Sub-Specialists) Beginning January 1, 2001, the monies appropriated for pediatric physician sub-specialist shall only be available to a physician who: a) in his/her medical practice, has at least 85% of their patients who are children 18 years or younger; (b) practices in the following sub-specialties: Adolescent Medicine, Cardiology, Cardiothoracic Surgery, Critical Care, Emergency Medicine,

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Endocrinology, Gastroenterology/Nutrition, Genetics, Hematology/ Oncology, Infectious Disease, Nephrology, Neurology, Neurological Surgery, Opthamology, Orthopaedic Surgery, Otolaryngology, Psychiatry, Pulmonology, Rheumatology, Surgery, Urology and such other pediatric sub-specialty areas as may be determined by the Department, after consultation with the Children’s Hospital Collaborative; and c) is affiliated through appointment, privileges or other contractual arrangement for services with a Children’s Hospital/healthcare system which meets criteria for institutional or associate membership established by the National Association of Children’s Hospitals and Related Institutions (NACHRI) or which is affiliated with a NACHRI qualified institution. Explanation: At that time, $1,675,000 non-recurring was appropriated to increase rates for pediatric specialists at the Children’s Hospitals to increase access. The program has been expanded since then. Fiscal Year 2001-2002 8.52 (DHHS: Increased Revenues and Cost Recoveries) Notwithstanding any other provision of law, including the otherwise applicable effective date for this part, the Department of Health and Human Services shall withhold and retain up to $53,505,063 from positive Medicaid cost settlements due state agencies from previous programmatic activities. Further, the Department of Health and Human Services shall withhold and retain up to $56,494,937 in increased revenue earned by state agencies and school districts through June 30, 2002, as a result of rate changes and/or activation of Medicaid payment for new services and/or through increased Medicaid utilization, and/or generated through limitations in the Medicaid pharmacy program. The total amount retained by the Department of Health and Human Services through all of the mechanisms above is limited to $110,000,000. Of the funds retained, $1,500,000 shall be used towards a cost of living adjustment for nursing homes. Further, the state agencies and school districts shall also aggressively pursue the delivery of Medicaid services and earnings related to Medicaid reimbursement. The Department of Education and the school districts shall aggressively pursue implementation of an administrative claiming program, transportation services under the Medicaid program. Explanation: DHHS was directed to withhold and retain up to $110,000,000 of Federal Financial Participation in prior and current year cost settlements with other state agencies, generated through rate changes and other mechanisms. $1,500,000 had to be used for a cost of living adjustment for nursing homes. This funding was needed to fund the Medicaid program at the current levels that fiscal year. The proviso was deleted in FY 02-03, as this was an unusual one-time action to generate non-recurring revenue to fund recurring programs. Fiscal year 2002-2003 8.6. (DHHS: Medicaid State Plan) Where the Medicaid State Plan is altered to cover services that previously were provided by 100% state funds, the department can bill other agencies for the state share of services provided through Medicaid. The

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department will keep a record of all services affected and submit periodic reports to the Senate Finance and House Ways and Means Committees. Explanation: Same as 1993-94 8.10. (DHHS: Reimbursement Formula Changes) To the extent the department can increase Medicaid federal matching funds through changes in reimbursement formulas for other state providers, the department, with the permission of the state providers, is authorized to retain these funds in an earmarked account on deposit with the State Treasurer and use these funds to cover unanticipated health and human services expenditures. The department should not hold any other state provider liable for disallowances resulting from these changes. Any funds realized as a result of this proviso shall be reported as part of the following year budget process. Explanation: Same as 1992-93; and DHHS is directed not to hold any other state provider liable for disallowances arising from the mandated changes. 8.33 (DHHS: Reimbursement to School Districts) For the purpose of Medicaid reimbursement for FY 2001-02, rates cannot be less than the FY 00-01rates for therapy services provided by school districts. Explanation: This proviso requires rates not be reduced for therapy services. 8.36 (DHHS: Psychological Services for Children) The Department of Health and Human Services shall suspend restrictions placed on reimbursements for counseling and mental health programs as a result of the Medicaid Bulletin issued on October 31, 2001 and as further clarified on November 30, 2001. Explanation: This proviso reinstates reductions to reimbursements for counseling services. The DHHS cut these funds as a part of the 4% reduction required by the Budget and Control Board in Fall 2001. 8.39 (DHHS: Prescription Reimbursement Payment Methodology) The two dollar and five cents reduction in the prescription reimbursement payment methodology provided in item II of Medicaid Bulletin Pharmacy 01-06, published by the Department of Health and Human Services on November 7, 2001, is suspended effective with reimbursements paid for Medicaid prescriptions filled on and after July 1, 2002. Explanation: This proviso suspends the budget cut of $2.05 dispensing fee per prescription made last Fall as a part of the agency’s budget reduction plan relating to the DHHS prescription reimbursement. Major Expansions by the General Assembly The following information is provided as an historical representation of recent actions taken through the Appropriations Act by the South Carolina General Assembly to

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increase the base appropriation to the Department of Health and Human Services and to essentially grow the Medicaid program. Fiscal Year 1996-1997 Funding -$7,731,100 Type

• Additional Nursing Facility Beds (300)

$2,142,000 Non-recurring

• Community Long Term Care Slots (812)


• Nursing Facility rate Adjustment

$4,000,000 Recurring

Fiscal Year 1997-1998 Funding -$18,082,979 Type • Nursing Facility Rate

Adjustment $4,000,000 Non-recurring

• Hospital Rebase $4,733,628 Recurring • Expanded Coverage for

Children $2,000,000 Recurring

• Residential Care Payments


• Community Long Term Care Slots


• Nursing Facility Beds $2,000,000 Non-recurring • Medicare Premium Increase $1,135,725 Recurring • Rural Health Clinic

Growth $1,201,626 Recurring

• Medical Home for Children

$200,000 Recurring

Fiscal Year 1998-1999 Funding - $18,224,109 Type • Nursing Facility Rate

Adjustment $4,000,000 Non-recurring

• Medicare Premium Increase


Nursing Facility Beds (570) $4,739,861 Recurring • Community Long Term

Care Slots (4,322) $6,354,967 Recurring

• Rural Health Clinics $1,499,735 Non-recurring Fiscal Year 1999-2000 Funding - $47,131,616 Type

• Nursing Facility Rate Adjustment

$6,260,000

• Nursing Facility Beds (100)


• Community Long Term Care Personal Care Aides


• Hospital Rebase $12,200,000 Recurring • Hospital Rebase Match $10,000,000 Non-recurring • Residential Care $2,000,000 Non-recurring • Physician, Lab, X-ray

Rate Adjustment $1,150,000 Non-recurring

• Partners Program –Expansion

$8,400,000

• Children’s Dental $4,900,000 Non-recurring

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Services – 75th Percentile

• Chiropractic Services $175,000 Recurring Fiscal Year 2000-2001 Funding - $39,857,643 Type

• Rural Health Clinics $341,000 Recurring • Community Long Term

Care Slots $1,600,000 Non-recurring

• Nursing Facility Beds (100)


• Pediatric Subspecialists $1,675,000 Non-recurring • Primary Care

Reimbursement $7,233,065 Non-recurring

• Hospital Base Increase $23,259,778 Non-recurring • Nursing Facility Rate

Increase $4,748,800 Non-recurring

Fiscal Year 2001-2002 Funding – $10,698,000 Type • Nursing Home Rate

Adjustment $8,448,000 Recurring

• Nursing Home Rate Adjustment


• Breast & Cervical Cancer Program

$750,000 Recurring

Fiscal Year 2002-2003 Funding - $41,269,126 Type • Nursing Facility Rate

Increase $7,500,000 Recurring

• Physician Reimbursement Increase


• Ambulance Reimbursement Increase

$594,198 Recurring

• Silver Card $23,200,000 Recurring The Role of Government in Insuring the Uninsured Provision of Basic Coverage There has been much debate about the role of the federal and state governments in insuring persons without health insurance. Providing such coverage is an excellent investment, because a healthier South Carolina is a more productive South Carolina. Short of some action on the part of the U.S. Congress to provide basic coverage for all citizens, states will be forced to set their own health policy agendas to invest in fundamental approaches to address the needs of the uninsured, as well as the needs of providers who have provided disproportionate amounts of free care. Small Group Insurance Market Exodus According to the Department of Insurance, “Over the past four years, a number of insurers have exited South Carolina’s small group market. When faced with the choice of whether to share in the cost of health insurance or pay some other living expense, it

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appears that many South Carolinians opt to go uninsured and depend on the ability of emergency care facilities and/or other programs to provide for their medical needs.” 18 What Should South Carolina Do? Should South Carolina’s government invent, or avail itself of, strategies that assure basic health care coverage for its citizens? Furthermore, should health care providers provide unsubsidized or under-subsidized care to South Carolina’s citizens? Until politicians and key policymakers can agree upon the answer to those questions, conflict will exist regarding whether it even makes sense to slow the growth in the Medicaid program. What South Carolina Gains Costs are indeed increasing for the Medicaid program, as are costs associated with every other health insurance carrier. The reasons for this increase are consistent with attempts made over the last several years in South Carolina to provide coverage for the uninsured so that people get health care benefits and providers are paid for their services. By providing coverage through various Medicaid program expansions over the years, the state has capitalized on the federal Medicaid revenue streams provided to South Carolina as a result of the favorable match rate (30.19% state and 69.81% federal). Medicaid expenditures in South Carolina have significant positive economic impacts. Specifically, the Federal Medicaid match supports more than 61,000 jobs in the state, and generates more than $1.5 billion in income for South Carolinians. Importantly, these impacts are felt across the state, in both urban and rural areas.19 These impacts are generated solely by the direct and ripple effects stemming from the federal portion of Medicaid spending. 20 Establishing Eligibility Income and resource limits are different for each program, often creating confusion and adding complexity to the Medicaid program. Income is anything an individual receives in cash or in kind that can be used to meet his/her needs for food, clothing or shelter. Income exclusions and disregards differ between Temporary Assistance for Needy Families (TANF) related and Supplemental Security Income (SSI) related groups. Disregards are those amounts of income that are not counted in the eligibility determination process. 18 Dept. of Insurance grant application to the Health Resources and Services Administration’s Office of Special Programs at the U.S. Department of Health and Human Services. 19 These results, further discussion of the results, and the methodology used to derive the results are available in the full report, “Economic Impact of Medicaid on South Carolina,” developed by researchers at the Division of Research for the South Carolina Department of Health and Human Services. This report is currently available from a link at the Division of Research’s website: http://research.moore.sc.edu, or directly from the DHHS website: http://www.dhhs.state.sc.us. 20 Moore School of Business, University of South Carolina, 2002.

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Additionally, there are certain disregards that are mandated by federal regulations. See 42 CFR 435, Subparts G, H, and I. Also, see 42 CFR 436, Subparts G and H. Further information can also be viewed at http:/www.hcfa.gov/pubforms/ 45_smm/ sm_03_3_toc.htm. Resources are assets that can be considered available to the applicant/recipient. These assets are assigned a value in calculating the total assets available. Assets may not be transferred in order to qualify for coverage. The value of some assets is excluded in determining eligibility.

States cannot use requirements for determining eligibility for optional coverage groups for families and children that are more restrictive than those used for Family Independence, and for the aged, blind and disabled that are more restrictive that those used under SSI, except for Optional State Supplement (OSS) recipients. Poverty Guidelines Certain poverty levels are applied to certain coverage groups by congressional action. For example, coverage of the Pregnant Women and Infant (PWI) category was first established by Congress as an optional category that could cover families up to 185% of poverty. South Carolina implemented this optional coverage at 185% in order to address the very high infant mortality problem in South Carolina. South Carolina’s rate was second highest. Only Mississippi’s rate was higher. Congress later changed the law to make coverage of PWI a mandatory group at 133% of the poverty guidelines for any state that had covered PWI at 133% or less and established each state’s level of coverage at that time as mandatory for any state that had covered PWI at a higher level. Therefore, 185% is mandatory in South Carolina.

2002 HHS Poverty Guidelines Size ofFamily Unit

48 ContiguousStates and D.C. Alaska Hawaii

1 $ 8,860 $11,080 $10,200

2 11,940 14,930 13,740

3 15,020 18,780 17,280

4 18,100 22,630 20,820

5 21,180 26,480 24,360

6 24,260 30,330 27,900

7 27,340 34,180 31,440

8 30,420 38,030 34,980

For each additional person, add 3,080 3,850 3,540

SOURCE: Federal Register, Vol. 67, No. 31, February 14, 2002, pp. 6931-6933.

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Poverty guidelines since 1982 for the 48 contiguous states and the District of Columbia can be calculated by addition using the figures shown below. (However, note that this simple calculation procedure does NOT reflect the procedure by which the poverty thresholds were originally developed or the procedure by which the poverty guidelines are calculated from the poverty thresholds each year.) Before 1982, the poverty guidelines were issued by the Office of Economic Opportunity/Community Services Administration. 21

Year First Person

Each Additional Person

(Four-Person Family)

2002 $8,860 $3,080 ($18,100)

2001 8,590 3,020 ( 17,650)

20001/ 8,350 2,900 ( 17,050)

19991/ 8,240 2,820 ( 16,700)

1998 8,050 2,800 ( 16,450)

1997 7,890 2,720 ( 16,050)

1996 7,740 2,620 ( 15,600)

1995 7,470 2,560 ( 15,150)

1994 7,360 2,480 ( 14,800)

1993 6,970 2,460 ( 14,350)

1992 6,810 2,380 ( 13,950)

1991 6,620 2,260 ( 13,400)

19902/ 6,280 2,140 ( 12,700)

19892/ 5,980 2,040 ( 12,100)

1988 5,770 1,960 ( 11,650)

1987 5,500 1,900 ( 11,200)

1986 5,360 1,880 ( 11,000)

1985 5,250 1,800 ( 10,650)

1984 4,980 1,740 ( 10,200)

1983 4,860 1,680 ( 9,900)

19823/ 4,680 1,540 ( 9,300)

1. Note that 1999 and 2000 poverty guidelines figures should NOT be used in connection with determining poverty population figures from 2000 Decennial Census data. Poverty population figures are calculated using the Census Bureau poverty thresholds, not the poverty guidelines.

2. Note that 1989 and 1990 poverty guidelines figures should NOT be used in connection with determining poverty population figures from 1990 Decennial Census data Poverty population figures are calculated using the Census Bureau poverty

21 US Census, www.Census.gov.

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thresholds, not the poverty guidelines.

3. Figures for nonfarm families only

Current Levels and Trends Medicaid expenditure growth has remained fairly constant at 10-12% within the last several years. Many of the factors behind this level of growth underlie more general trends in health care costs such as double digit increases in drug prices. Additional specific growth factors for Medicaid have been significant increases in enrollment of children and low-income families. The agency has implemented certain cost saving measures that it anticipates will help maintain the growth level for SFY '03 to 9% or less.

Comparison of Expenditure and Eligible Annual Growth Rates

0%10%20%

1998-99 1999-00 2000-01 2001-02

SFY

An

nu

al %

G

row

th

Expenditures Eligibles

The following graph depicts medical assistance expenditures from baseline SFY 1999 to 2002, showing expenditures for state agencies as well as for DHHS.

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Medical Assistance Expenditures SFY 1999 - 2002

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

$4,000,000,000

1999 2000 2001 2002

SFY

State Agencies DHHS

The following graph depicts the ratio of Medicaid eligible individuals to Medicaid recipients for SFY 2000 to 2002. An eligible individual is a person who has been found to meet all of the categorical, income and asset requirements. A Medicaid recipient is a person who is Medicaid eligible and has actually received a Medicaid sponsored service that was reimbursed during the fiscal year.

0200,000400,000600,000800,000

1,000,000

2000 2001 2002

SFY

Comparison of Medicaid Eligibles to Recipients

Eligibles Recipients

89% 87% 91%

A Summary of Medicaid Expenditures (Excel spreadsheet) is included with this report that describes the growth by service line in the Medicaid program since 1993-94.

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Spreadsheets are provided in total dollars, state dollars, and other dollars. Included in these totals are the dollars associated with other state agencies and the growth and their Medicaid funded services. For hospitals, total Medicaid expenditures for FY 93-94 were $359,132,660. In FY 01-02, expenditures for the same line were $616,263,806. For hospitals, total state expenditures were $66,595,243 in FY93-94. In FY 01-02, total state expenditures increased to $105,051,811. For nursing homes, total expenditures in FY93-94 were $210,086,057. In FY01-02, total expenditures were $ 360,362,235. State expenditures for nursing homes in FY93-94 were $60,653,650. In FY 01-02, total state expenditures had increased to $94,109,673. For pharmaceutical services, total expenditures in FY 93-94 were $94,610,092. In FY 01-02, total expenditures were $ 417,965,171. In FY93-94, total state expenditures were $27,354,285. In FY 01-02, total state expenditures had increased to $ 60,675,860. For total DHHS assistance payments (excluding other agencies), in FY93-94, expenditures were $950,357,022. In FY 01-02, expenditures were $ 2,509,936,113.

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How Other State Agencies Benefit from Medicaid Revenue Streams Other state agencies in South Carolina use Medicaid revenue to generate income to cover state agency mandated services and to stretch state appropriated dollars by leveraging federal funds. The following examples are services that have been used in this state that take full advantage of Medicaid. Targeted Case Management The inclusion of TCM as a Medicaid reimbursable service allowed the Department of Health and Human Services (DHHS) to assist agencies in funding case management services.22 Federal funds were allocated in April 1986 under Title XIX of the Social Security Act. TCM has expanded Medicaid funded activities to: address complex social and medical problems of our state; improve access to service delivery programs; promote meeting needs at the local level or use of less restrictive or lower cost services, and reduce the likelihood of costly hospitalization/ institutionalization. Agencies have utilized Medicaid funding for services like TCM to enhance the quality of services provided their clients without a significant increase in state appropriations. Targeted case management programs formerly funded solely by state dollars, now receive federal matching dollars. Programs have been developed by the DHHS in partnership with sponsoring agencies on a priority basis based on identified needs of target populations and the availability of state funds. Restructuring the Children's Service Delivery System The foster care delivery system was restructured in South Carolina, in part, with the implementation of TCM in July 1992, which changed the duties and responsibilities of the foster care case managers. TCM is individually designed with the needs of the child and family directing the services accessed. Instead of providing treatment, the emphasis of the TCM program was now on coordinating needed services and monitoring the appropriateness of service provision. The second step in the restructuring process was to support changes in the DSS service delivery system. Local initiatives in each county were developed/enhanced to strengthen families, provide them with the skills and knowledge to promote the development of individual family members as well as the family unit, and allow families to remain intact or to be reunited whenever possible. The third step in the process was to support and facilitate change in the service delivery systems of the other state agencies and providers of children's services. Emphasis was placed on prevention, strengthening families, and development/enhancement of treatment services. 22 42CFR.440.225.

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Importance of Coordinated Care Targeted case management should be delivered in the context of a systems approach recognizing that services must be integrated with all of the active participant's in the individual's life. Effective interagency collaboration is critical if needs are to be adequately met and duplication of services are to be avoided. A system exists within each case management program to promote an environment in which service providers are communicating, coordinating care and services and adequately meeting the needs of clients. Duplication of Services While case management has been effective in improving care and services for Medicaid recipients, it soon became evident that some who were dually diagnosed or had complex social and/or medical problems could not be successfully managed within one TCM program. The Medicaid Case Management Hierarchy was developed in early 1992 to determine a primary case manager in each situation where more than one case management provider was serving a client. Interagency Case Management Training The Interagency Case Management Institute was envisioned by the Department of Health and Human Services as a means of providing a coordinated state-wide interagency system that would provide a continuity of training for agencies providing case management services. The Institute began in 1995 training case managers who rendered services to Medicaid recipients. Preventive and rehabilitative services for primary care enhancement

Preventive and Rehabilitative Services for Primary Care Enhancement (P/RSPCE) was introduced to replace targeted case management, psycho-social intervention, nutrition services and health education for pregnant women, infants, and children. In 1996, a State Plan Amendment was submitted to allow provision of ancillary or support services to patients in order to support primary medical care delivery, increase the number of Medicaid patients who have a medical home, and decrease the number of Medicaid patients who used the emergency room for “routine” medical care. In 1998 P/RSPCE was redirected to address medical and psycho-social risk factors that compromise a patient’s ability to maintain an optimal state of health. Development of the plan of care for P/RSPCE must be in conjunction with the patient and the primary care physician or designated medical home. Currently, P/RSPCE interventions include provision of goal-oriented, risk specific interventions in-group or individual settings that address identified medical problems or needs documented in a medical plan of care. Major providers include: South Carolina Department of Health and Environmental Control (SC DHEC), Greenville Hospital System, Palmetto Health Alliance, and

40

Florence Crittenton Programs of South Carolina. Providers of services include most professional disciplines. In November 2001, the definition and standards for P/RSPCE were enhanced to allow a wider range of psychosocial risks factors to be addressed. P/RSPCE is cost-based and reimbursed in 15-minute increments. No provider may be paid a higher rate than the largest provider (i.e., DHEC, because it is state-wide). For the present service, rates were originally set to be effective July 1998. There has been one rate increase (July 2001). Behavioral Health Services The Department of Health and Human Services (DHHS) manages Medicaid programs which provide a continuum of residential and community-based services. Clients are served directly by or through referral from state agencies. All services are state plan services. Behavioral Health Services are cost based reimbursed. Public Providers such as state agencies are responsible for state match. These state agencies provide state match for services they provide directly and for services provided by subcontracted private providers. Children in need of mental health treatment services Since 1992 the DHHS, and other state agencies, have been involved in the implementation of a system of care to ensure that emotionally disturbed children in S.C. are in appropriate therapeutic placements and receive quality treatment services. This system of care, called the Interagency System for Caring for Emotionally Disturbed Children, was created as a result of a proviso in the Appropriations Act. Children in the child welfare system In 1992, the DHHS began working with the DSS in the provision of targeted case management (TCM) services to children in the foster care system. TCM services are provided to these children in order to ensure that their social, medical, and educational needs are met. TCM for severely emotionally disturbed children in foster care are provided by the DSS – Division of Managed Treatment Services. Wraparound Services are available for children served by DSS with special emotional, behavioral, physical, mental and/or medical needs to stabilize or prevent out-of-home placement. Children must meet medical necessity criteria for the service. In 1995, the DHHS began a new initiative with the DSS to serve children in foster care who had behavioral or emotional problems that could not be managed in a regular foster home. This initiative, called Therapeutic Foster Care - Level A Services, provides additional services and support to foster children and their foster parents in order to maintain the child in current placement.

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Community Mental Health Services The goal of community mental health services for children and adolescents is to provide early intervention and community programs to help prevent a child from being institutionalized or hospitalized. Children may access community mental health services through Medicaid providers which include 17 Department of Mental Health Community Mental Health Centers, the Medical University of South Carolina in Charleston, doctoral level private practicing psychologists, and private therapeutic providers. Providers are located throughout all 46 counties and include mental health center satellite offices with staff specially trained to serve children and adolescents. An array of treatment services are also available to adults. The Department of Mental Health renders TCM to both children and adults. Mental Retardation and/or Related Disabilities & Head and Spinal Cord Injuries and/or Similar Disabilities The DHHS contracts with the Department of Disabilities and Special Needs (DDSN) to provide TCM services to clients (children and adults) with mental retardation and/or related disabilities, and head and spinal cord injuries and/or similar disabilities. In July 1999, DHHS contracted with DDSN to provide Wrap-Around Services to their clients under 21 who are also emotionally disturbed. Services are available state-wide through the local Disabilities and Special Needs boards. Children Served by the Juvenile Justice System The Department of Health and Human Services funds services for children in the Juvenile Justice system ages 0-21 through a variety of programs, specifically, TCM, High and Moderate Management Group Home Services, Psychological Testing and Evaluation, Crisis Management, and Counseling. Services are available statewide. Severely Emotionally Disturbed Children. The Governor’s Office – Division of Continuum of Care for Emotionally Disturbed Children (CCEDC) renders TCM and Wraparound Services to Severely Emotionally Disturbed Children 0 to 18 years of age or to 21 years of age if in special education. Program criteria includes the failure of other psychological or psychiatric service providers to positively impact a child. Services are available statewide. Alcohol and Drug Treatment Services In July 1997, SCDHHS designated the South Carolina Department of Alcohol and Other Drug Abuse Services (SCDAODAS) as its agent to coordinate and prior authorize all Medicaid sponsored alcohol and other drug (AOD) services. South Carolina Medicaid has reimbursed approved AOD providers since 1988. All Medicaid eligibility groups (children and adults) may receive AOD rehabilitation treatment services if they meet the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM-IV) criteria. DHHS reimburses providers for both inpatient and outpatient AOD treatment services.

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Services to Children in Residential Settings The following out-of-home therapeutic services are available: Therapeutic Foster Care, High & Moderate Management Rehabilitative Services, Supervised Independent Living, Specialized Treatment Services for Sexual Offenders, Residential Treatment Facilities, Inpatient Psychiatric Hospitals, and Intensive Crisis Care. Inpatient Psychiatric Hospital Services and Residential Treatment Facility Services Program, for children under 21 began in 1992. Inpatient Psychiatric Hospitals provide intensive inpatient services designed to render treatment for severely emotionally disturbed and mentally ill children with 24hour physician and nursing coverage. Residential Treatment Facilities provide for the diagnosis and treatment of mentally ill children who require less than acute inpatient care but who need a structured environment with intensive treatment services. In 1994, the DHHS contracted with the Department of Mental Health to provide residential treatment services to Medicaid children under 21. Intensive Family Services Intensive Family Services (IFS) involve a range of clinical services predominately provided in the home environment of the identified child. Services are designed for children under the age of 21 who are emotionally disturbed. IFS is behavioral, psychological, and psycho-social in orientation and is delivered by both public and private providers. Services are rendered based on the needs of the child, but at a maximum, are limited to no more than twenty-four (24) weeks in a fifty-two (52) week period. Clinical Day Programming Clinical Day Programming (CDP) treatment services are provided in coordination with public education services for children and adolescents ages six to twenty-one who have an emotional/behavioral disorder. CDP is a comprehensive system of individual, family, and group treatment services dedicated to the mitigation of the effects of serious emotional and/or behavioral disturbances on children and adolescents. Treatment is provided within a psycho-social context that integrates therapeutic interventions and educational and recreational activities. CDP is rendered by public and private providers. Children’s Day Treatment: Ages 0-6 Children’s Day Treatment (CDT) is an intensive treatment program for children and adolescents with severe emotional/behavioral disorders who are at risk for a more serious, long-term psychiatric disturbance that will make their education and medical/psychiatric care costly in the future. CDT is available through DMH, the

43

Medical University of South Carolina (MUSC), and one private provider located in Richland County. Therapeutic Support Services Therapeutic Support Services (TSS) is a program designed to work with foster families and children with severe emotional and/or behavioral disturbances to minimize experiences of disruption that result in a child being removed from a family environment. The TSS program provides a range of clinical services predominantly provided within the child’s biological or foster home and surrounding environment. The TSS program serves Abbeville, Anderson, Greenville, Greenwood, Laurens, Oconee, Pickens, and Spartanburg counties. TSS focuses on skill development, behavior management, family and individual therapy, and crisis interventions when warranted by the client’s behavior. Wrap-Around Services Wrap-Around Services are provided to children under 21 years of age who have special emotional/behavioral needs and their families. These services are provided in order to stabilize or strengthen the child’s current placement or prevent out-of-home care. Wrap-Around Services are treatment oriented and goal directed. Without the provision of Wrap-Around Services, such as counseling, therapy, behavioral intervention, or independent living skills, the child may be in jeopardy of placement disruption. There are 9 private providers and 1 public provider of Wrap-Around Services. Medically Fragile Services Medically Fragile Services is a therapeutic service provided to children in the foster care system who are medically fragile with behavioral/emotional needs. These services, provided on three different levels, provide the additional supervision and therapeutic interventions that are needed for children with severe medical problems. The program is operated by Palmetto Richland Hospital and currently serves the midlands area for children with severe and very complex medical conditions. The hospital is paid a bundled rate to cover a broad array of non-institutional services and it assumes the management of, and responsibility for, care of severely handicapped children. The program was originally developed to help the state address the needs of high-cost, medically fragile foster children. It has since been expanded to cover children not in foster care. There is no coverage for children in other geographic areas and children with some extremely complex conditions are excluded, e.g., those who are ventilator dependant. Therapeutic Child Treatment

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Therapeutic Child Treatment is a psycho-social and developmental system of services for young children (ages 0-6) whose goal is to cultivate the psychological and emotional well-being of children and to promote their developing competencies. The child/client will show significant problem indicators. The family will frequently be found at the highest risk for care-giving dysfunction. Service delivery is facilitated through direct treatment services to the child and intervention with the family. Collaborative Organization of Services for Youth The Collaborative Organization of Services for Youth (COSY) is a collaborative effort to develop community based system of care for children with emotional problems. The initiative is designed to return the children of Beaufort County from out of state therapeutic placements to their community, reduce the number of children sent out of county, enabling them to live in their community in a less restrictive environment, reduce service duplication and related cost, and expand existing local community services for Beaufort county residents. Medicaid Waivers South Carolina has used federal Medicaid waivers to facilitate both management of specific high-utilizer groups and to provide flexibility in the service package available for the manager to use in addressing the needs of each recipient. This has been an effective way to case manage several high-utilzer populations. The purpose of the waivers now in place is to enable care in a community setting and to avoid, delay, or decrease the need for institutional services. The populations currently served by Medicaid waivers are: elderly and disabled who need nursing home care; persons with head and spinal cord injuries; persons with mental retardation and related disabilities who need a level of care provided in an Intermediate care facility for the mentally retarded; persons with HIV-Aids; persons who are dependent upon mechanical ventilation. Cost Settlements Relating to Medicaid reimbursement for services administered by SCDHHS, services are generally categorized as capitated, fee-for-service, prospective or retrospective rates. Descriptions of reimbursement methodologies for specific provider types and/or services are covered in sections 4.19-A, B, and D of South Carolina’s Title XIX State Plan. Generally, in the first three instances, providers of service accept the fee or rate, as calculated and defined by the State Plan, as full payment for services rendered and billed on behalf of Medicaid recipients. These fees are established to approximate the costs of services provided to Medicaid beneficiaries. Actual costs incurred by providers may or may not be recovered by these fees. Note: With prospective reimbursement systems, any overpayment for services as discovered on audit will be collected by SCDHHS.

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Regarding retrospective systems, there are a number of South Carolina Medicaid reimbursement methodologies that are considered retrospective in nature. Current examples are Home Health, FQHC, RHC, ICF/MR, and medical and case management services provided by numerous state agencies. In a retrospective reimbursement system, interim rates are established to estimate the cost of the services, and these rates become the billed rates through out the contract period. At the end of the provider’s fiscal year, the service provider accumulates and reports actual expenditures by service to the applicable division in the Bureau of Reimbursement Methodology and Policy where the report is evaluated for accuracy and compliance to federal and state regulations. Upon completion of this review, a cost settlement is generated which either reimburses the provider for any deficit between interim reimbursements and actual costs or establishes a receivable on the books of SCDHHS to collect overpayments made to a provider based on interim rates. In both instances, the service provider’s reimbursement is adjusted to that allowable under the Title XIX State Plan. The Medicaid Program does not allow a state agency to be reimbursed at a level which allows that state agency to make a profit. The maximum reimbursement amount allowed for state agencies is 100% of allowable Medicaid costs. Therefore, the cost settlement process is prevalent with state agency medical and case management services because it allows the state agencies to recover their total allowable Medicaid costs.

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Section Three: Current DHHS Cost Savings and Cost Avoidance Strategies In 2001, DHHS completed its first strategic plan since 1988. Because of the growth in the size, diversity, and complexity of agency programs, development of a strategic plan was essential to insure the most efficient use of agency resources and to provide focus on agency priorities. Implementation began in July 2001 and progress toward objective accomplishment is measured quarterly. The strategic plan and the operational plan enabled the agency to set and communicate goals and objectives, measure its effectiveness in meeting them and report on accomplishments. The agency developed, and is committed to carrying out, eight key goals (also referred to as key results) for present and future years. These goals and initiatives link to the agency’s mission and details regarding the strategic initiatives for the goals can be found on the agency’s website. The eight goals are: 1) Maximize and effectively manage resources; 2) Promote quality improvement; 3) Promote and assure accountability to stakeholders; 4) Promote customer service; 5) Promote effective communication; 6) Promote appropriate care; 7) Promote access to services; and 8) Strengthen organizational infrastructure. In conjunction with the DHHS strategic planning process, the agency implemented many cost savings and cost avoidance strategies. Such strategies link to at least two of the key results mentioned above: Maximize and effectively manage resources and Promote and assure accountability to stakeholders. In some cases, it is too soon to evaluate specific dollars savings to the agency. Medicaid Eligibility Consolidation of the Management of Medicaid Eligibility in One Agency

Prior to establishment of DHHS (formerly the Health and Human Services Finance Commission) in 1983, the Department of Social Services (DSS) was the state Medicaid agency. When DHHS was established and designated as the state Medicaid agency, eligibility determination was retained at DSS under a contract between the two agencies because most Medicaid recipients at that time were eligible by virtue of being welfare recipients. Due to welfare reform, the de-linking of Medicaid eligibility from welfare assistance and implementation of the Children’s Health Insurance Program (CHIP), the composition of the Medicaid population has changed from predominantly welfare recipients to low income, working families. Recognizing that nearly two thirds of the Medicaid population no longer had a direct link to DSS and the need to contain costs in the program, DHHS, DSS, and the Governor took steps to consolidate the management of the Medicaid program in one agency. State DSS Medicaid workers transferred to DHHS earlier this year. County DSS Medicaid workers transferred to DHHS effective July 1, 2002.

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The agency infrastructure was established with a Bureau of Eligibility Processing to oversee the local and central eligibility determination functions. Staff transfer was initiated with the move of DSS State office staff to DHHS earlier this year. The eligibility staff from the county DSS offices was transferred in June 2002. County positions were reallocated to establish eight regional administrators who will be co-located in CLTC regional offices. Their primary function is to supervise and manage Medicaid eligibility functions in these regions. Implementation of Plastic Medicaid Cards DSS, under contract with DHHS, formerly issued and mailed approximately 400,000 paper Medicaid cards per month at an annual cost of $1.6 million. The initial one-time production and distribution cost for the plastic cards and a new client Medicaid handbook was $572,000. The on-going cost of issuing plastic cards and handbooks to new eligibles is estimated at $25,000 per month. The net annual savings beyond the first year is estimated at $1.3 million. Not only did the plastic card save money, it also makes it possible to provide accurate, up-to-date information to service providers regarding eligibility and service limits; thereby avoiding inappropriate Medicaid billing. The plastic Medicaid cards were implemented December 2001. Initially, those eligible for Medicaid in December 2001 received both a plastic card and the paper Medicaid card. Beginning January 2002, no paper Medicaid cards were issued. Approximately 752,000 plastic Medicaid cards were sent in the initial release. Medicaid Interactive Voice Response System In October 2001, DHHS implemented a Medicaid Interactive Voice Response System (IVRS) to enable providers to use a touch-tone phone to verify Medicaid eligibility. The toll free number is located on the back of recipients plastic Medicaid card. To access the IVRS, providers must use their Medicaid Provider ID and may obtain ten verification transactions per call. Providers may also use the IVRS to access their most recent Medicaid payment information. This mechanism has diverted calls previously directed to staff, allowing for reallocation of staff time to addressing provider billing issues. With the tremendous growth in the program and no additional FTEs to absorb the growth, implementation of this mechanism has made it possible to accommodate growing demand from providers with the same number of staff. Approximately 8,000 to 9,000 calls per day are received through the IVRS. These are calls that the agency’s provider representatives would have to answer if not for the IVRS so there is a cost avoidance benefit to the system. Medicaid Eligibility Determination System In 1997, the agency established the MEDS project team to develop and implement a system that would replace the twenty-eight year old batch eligibility system operated by DSS, with a real-time system operated on the same mainframe as the agency’s information system. The benefits of this project are to: increase eligibility worker

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efficiency by reducing worker time per case; enhance system support by reducing the time to implement system software changes; improve the accuracy of eligibility determinations by maintaining or reducing the error rate; improve service to Medicaid applicants and recipients by lowering the average time to decision, providing timely notices, and providing notices with consistent language and manual citations; and improve service to providers by reducing the percent of claims suspended for correction of eligibility records. With eligibility workers handling 800 to1000 cases each, it is anticipated that this new system will provide for greater worker efficiency. Piloting of the MEDS system is in progress. Full implementation will occur in the fall of 2002. Senior Services The state Olmstead planning process revealed several problems and issues related to the accessibility, flexibility, and availability of home and community based services for seniors and persons with disabilities. One of the main issues was the lack of information to help individuals and families understand community-based options and evaluate community resources and services that might offer an alternative to institutional placement. During the current year, DHHS began the ambitious, multi-year goal of developing and implementing SC Access to create a web-based information and referral database of comprehensive information, assistance, and referral services for children and adults of any age with a disability, long term illness, or need. Since no new state funds were available, DHHS sought and received a three-year grant totaling $2.3 million from the Centers for Medicare and Medicaid (CMS) to develop SC Access. A broad based advisory committee was established to guide the development of the system. A project team was assembled and is developing the functional and technical requirements for the database, reviewing other Intake and Referral systems, gathering/updating the resource information, and developing public information and marketing materials. An agreement was negotiated with the USC School of Medicine to transfer an existing web-based system to DHHS to serve as the interim database for SC Access. A team of DHHS staff was trained and certified by the national Alliance for Information and Referral Systems (AIRS) in preparation for conducting training and certification in South Carolina for I&R staff of local agencies. All of the above activities will continue in FY 2003 along with development of training, testing, and implementation in pilot area(s). During FY 2004, statewide implementation will begin. Telecommuting DHHS implemented a telecommuting program during the current fiscal year to increase employee productivity, reduce office space lease cost, and reduce turnover and sick leave among employees. The program is also anticipated to benefit the community by reducing traffic, reducing pollution, and saving on fuel consumption. All anticipated outcomes are being carefully monitored as telecommuting is being phased in throughout the agency. The agency has already avoided cost by freeing up office space to accommodate the transfer of state level DSS Medicaid eligibility workers to DHHS without additional lease costs. Without the downsizing of office space relative to

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telecommuting, the additional office space required to accommodate these employees would have cost the agency approximately $112,500 in FY 02. Moving Toward Regionalization The agency took steps over the past year to regionalize some program area functions and increase the efficiency and effectiveness of these program operations. The area offices of the Community Long Term Care (CLTC) program were utilized for these regional offices. The co-location of staff in existing offices was a cost-effective means to regionalize these program functions and to better serve beneficiaries and providers. The number of appeals requests from Medicaid applicants/recipients increased by 31% in calendar year 2001 while the number of hearings officers remained the same. To reduce travel time and expense for staff to conduct appeals hearings, arrangements were made for the hearings to be held at the CLTC regional offices. It is anticipated that the move to regionalized hearings will permit the reallocation of 270 man-hours. Less travel will allow for more efficient use of time to conduct appeals and will save at least $1,300 in travel costs. An informal review and reconsideration process was developed for the ABC Child Care program. The Medicaid eligibility function and resources were divided into eight regions within the state. There will no longer be forty-six county directors to manage Medicaid eligibility. Instead workers and supervisors will be under the direct supervision of eight regional administrators. The eight Regional administrators will regionalize county staff and resources and manage eligibility functions outside of the traditional county boundaries. Eligibility staff (workers and supervisors) will be moved as appropriate within the counties of each region to assist other staff as needed. The eight regional administrators will be co-located in eight of the fourteen CLTC regional offices. ABC Child Care Program Appeals Requests An informal review step in the appellate process serves as a mechanism to resolve issues that do not rise to the level of a formal appeal and thereby alleviates the need for a formal evidentiary hearing. The ABC Child Care program staff can informally handle many of the appeals requests and save time for the Appeals Division staff. It is anticipated that this process will relieve the Appeals Division of approximately 60 (90%) of the ABC Child Care appeals per year and will expedite the processing of ABC Child Care reconsideration requests (67 ABC Child Care appeal requests were received in calendar year 2001). Implementation of a Point of Sale (POS) and Prospective Drug Utilization Review (Pro-DUR) System A pharmacy Point of Sale/Prospective Drug Utilization Review (POS/Pro-DUR) system was implemented November 1, 2000. Pharmacy claims are now submitted via POS for adjudication in an on-line, real-time environment. The POS system captures, edits, and

50

adjudicates pharmacy claims at the point of sale. Providers receive immediate, on-line information regarding eligibility, prescription coverage, and Medicaid reimbursement amount. Additionally, the on-line, real-time Pro-DUR, electronically reviews claims at the point of sale for potential drug therapy problems. Pro-DUR results in improved quality of Medicaid-reimbursed health care services, improved quality of health outcomes, and cost avoidance by precluding issuance of a prescription, which may result in health problems and/or have to be discarded because of contraindication. Prior to POS, all pharmacy prior authorizations (PAs) were submitted to the program area for manual evaluation and pricing. This entirely manual process greatly limited DHHS’ abilities to expand the PA program. In the current POS environment, many PAs are processed electronically through the POS system while the POS contractor’s clinicians review those PAs requiring intervention. With these processes in place, DHHS expanded its PAs to include a number of other high cost drugs. Prior to implementation of the POS program and consequent expansion of prior authorization, expenditures in the pharmacy program had consistently grown by approximately 20% per year. The charts below illustrate the growth in pharmacy recipients, transactions, and expenditures from FY 93-FY 02. While recipients and transactions have continued to climb, cost savings measures produced a leveling of expenditures between FY 01 and FY 02. In fact, there was virtually no growth in expenditures from FY 01 to FY 02. According to DHHS estimates, had no action been taken to slow the growth in the Pharmacy program, there would likely have been an approximately 14% increase over FY 01.

PHARMACY RECIPIENTS

300,000

350,000

400,000

450,000

500,000

550,000

600,000

FY92-93

FY93-94

FY94-95

FY95-96

FY96-97

FY97-98

FY98-99

FY99-00

FY00-01

FY01-02

PHARMACY TRANSACTIONS

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

FY92-93

FY93-94

FY94-95

FY95-96

FY96-97

FY97-98

FY98-99

FY99-00

FY00-01

FY01-02

PHARMACY EXPENDITURES

0100,000,000200,000,000300,000,000400,000,000500,000,000

FY92-93

FY93-94

FY94-95

FY95-96

FY96-97

FY97-98

FY98-99

FY99-00

FY00-01

FY01-02

Maximization of Federal Medicaid Matching Dollars DHHS is responsible for oversight and management of a 3-year contract with a human services consulting firm, entered into on September 1, 2000 to maximize federal revenue in the state. Department of Health and Human Services, Department of Social Services, Department of Juvenile Justice, Department of Mental Health, Department of Disabilities and Special Needs, Department of Health and Environmental Control, School for Deaf and Blind, Department of Education, Department of Alcohol and Other Drug Abuse Services, Commission for the Blind, Department of Vocational Rehabilitation, and Employment Security Commission are parties to the contract. Claims filed as of June 2002 as a result of this initiative include more than $27.7 million for the initiatives implemented at DSS for Title IV-E Foster Care Services and approximately $3.3 million for Section 1931/CHIP expenditures, $5.5 million for the Community Mental Health Medicaid Rate Enhancement, and $1.6 for the Targeted Case Management Rate Enhancement. Revenues are contingent upon CMS approval of claiming methodology and other factors.

Additionally, the agency was directed by a proviso to maximize federal revenue. A total of $95 million in revenues has been realized from the project and properly posted in the agency’s accounting system. All project revenue has been utilized to support Medicaid program expenditures. Change in Cross-Over Payment Policy The Medicaid program experienced significant growth in the early months of FY02, indicating need for the agency to contain costs through policy and program changes in order to remain within budget. Effective October 20, 2001, DHHS implemented a change in its payment of Medicare crossover claims for physicians and other non-institutional service providers. The projected savings from this change for the current fiscal year (2002) was approximately $11.6 million total dollars. Projected annual savings are expected to be $19.3 million. Had the agency not taken steps to control expenditures through this mechanism, the agency would have run a deficit by year-end.

51

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Enhancement of Medicaid Fraud and Abuse Detection & Investigation The agency initiated efforts to enhance fraud and abuse detection and investigation by educating providers and the procurement of fraud detection software. Staff has participated in meetings with various organizations representing dentists, pharmacies, medical equipment providers, state agencies, and the Attorney General’s Medicaid Fraud Control Unit to provide education and awareness regarding fraudulent activities. Additionally, during FY 01, DHHS acquired and installed new fraud detection software to enhance fraud detection efforts. In contrast to the $431,000 recovered in FY 01, the agency recovered $6.7 million in FY 02. Provider Self-Audit Policy DHHS implemented a provider self-audit policy during the current fiscal year. Under this policy, identified discrepancies are submitted to the provider for self-audit and re-payment. This procedure enables DHHS to increase collections while maintaining the same level of agency manpower devoted to this task. DHHS has processed 59 cases in to date, collecting over $424,304, with minimal administrative costs. Expansion of the Health Insurance Premium Payment Program States are required to provide Medicaid coverage to Medicaid eligible individuals irrespective of whether they have any other insurance plan. Medicaid is the payer of last resort for individuals with other insurance coverage, but there is nothing that precludes a Medicaid eligible individual from dropping other insurance coverage. However, the federal government does permit states to pay the insurance premiums of individuals when it is cost effective for Medicaid to do so. DHHS has in place a Health Insurance Premium Payment Program which, in accordance with federal guidelines, authorizes the agency to pay all premiums, deductibles, coinsurance and other cost sharing obligations for items and services, subject to any nominal Medicaid co-payment for Medicaid eligible individuals in employer based group health plans whenever it is determined by the State to be cost effective. In FY 01 data shows 87 cases were closed with $1,400,000 in estimated savings. During the current fiscal year the agency expanded the Health Insurance Premium Payment Program. Future Revenue Maximization Develop and Implement an Electronic Monitoring and Automated Billing System for CLTC In-Home Services DHHS is implementing electronic monitoring and automated billing for in-home services providers under the Community Long Term Care program, referred to as Care Call. DHHS is responsible for authorizing and overseeing the provision of in-home services for elderly and disabled individuals. An on-going concern has been ensuring that recipients receive the services that are authorized and billed.

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The electronic monitoring system will require in-home workers to dial in upon arrival and departure to validate their services delivery in line with the authorization. The system will also act as a billing mechanism so that claims will be paid based on recorded time in the home. The system will also act to verify eligibility. The system should eliminate fraud and abuse in billing for services not rendered, prevent service delivery to ineligible recipients, and assure that recipients receive the services required. DHHS will be monitoring and assessing the cost avoidance generated by this system. Step Down Program for Medically Fragile The Medically Fragile Children’s Program (MFCP) is a managed care medical program for children with special needs provided at Palmetto Richland Memorial Hospital. Services include access to a pediatrician 24 hours a day, 7 days a week; unlimited occupational, physical and speech therapy; all necessary medications, both prescription and over the counter; supplies; durable medical equipment; transportation to and from medical appointments; and education and respite for parents. An outside evaluation of the program demonstrated improved health outcomes and cost reduction for children served by the program. However, children who left the program due to improved health, quickly regressed and health care costs rose. DHHS implemented a step down program to maintain the health of the children and control costs. A bundle of services was created that children with less medically complex special needs utilized most frequently. These services include primary and emergency medical care; EPSDT; laboratory; durable medical equipment; speech, occupational and physical therapies; pharmacy; training; and medical care coordination. The initial site for the step down program is Richland County with services available to children within a 30 to 45 mile radius. Environmental Health Program During the current fiscal year, DHHS conducted planning for implementation of an Environmental Health Program. The children’s environmental health program is a pilot program intended to address environmental factors that negatively impact children’s health. Proposed target areas are asthma/asthma triggers, second hand smoke, lead exposure/poisoning, and unsafe drinking water/unsanitary sewage disposal. The purpose of the project is to improve prevention and management of chronic disease, to improve health outcomes and contain costs. The project will be piloted in Aiken, Allendale, Bamberg, Barnwell, Calhoun, Orangeburg and Richland counties beginning with Bamberg and Richland counties. Rather than traditional fee-for-service reimbursement, an alternative reimbursement methodology will be utilized to compensate providers for services rendered under the project. Program components include completion of a screening form by a primary care provider or public health staff at the request of the primary care provider and for children who have no medical home; an in-home environmental assessment by the Department of Health and Environmental Control (DHEC) with any applicable education and counseling that might be indicated by the assessment by DHEC or the primary care

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provider; blood lead level testing and follow-up services that might be indicated; services applicable to the individual target areas; and linkage to a medical home and feedback to the primary care provider. Expansion and Enhancement of the Agency’s Website to Promote Increased Intranet and Internet Utilization The agency has focused on promoting internet/intranet communication, where feasible, to reduce the cost of copying, printing, and postage, to maximize effective communications and to share information in a timely manner. With access on the website to longer reports and documents, more information can be shared than with a paper process. A major focus of this initiative was to communicate via the Internet with committees and organizations with which the agency has on-going, regularly scheduled meetings including the agency’s Medical care Advisory Committee (MCAC). Meeting notices and agenda packages are disseminated through this mechanism. DHHS also initiated web-based distribution of provider manuals with re-issuance of a new 430-page hospital services manual on the web. Rather than sending three copies per provider, only one copy was provided each hospital along with encouraged use of the web-based manual. DHHS avoided $27,900 in printing and postage based on $13 per manual for printing and $18 per manual for postage charges. The agency plans to expand this web-based application. Instead of faxing or mailing materials in response to news media requests, the Office of Public Information has been able to discuss these materials with reporters in a real-time, on-line basis. During March and April of 2002, the Office of Public Information fielded an average of 12 media calls daily. Had the materials discussed with reporters been faxed or mailed to them, rather than being available on the DHHS website, the cost could have been several hundred dollars. Changing to an electronic communication pattern has been so successful and so accepted that DHHS has suspended the printing of its internal newspaper and is now distributing it electronically. This will save $540 through the remainder of FY 2001-02.

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Section Four: What SC Could Do In the Future Return to a Core Benefit Package If South Carolina were to return to a core benefit package, the state would be left with a Medicaid program that covers the mandatory populations with services required under federal law and little or no optional features in its program. Reduce or Eliminate Services or Programs According to a report by the Kaiser Commission on Medicaid and the Uninsured, the Medicaid pharmacy is the main focus of states’ cost containment strategies. “State proposed changing payment and rebate mechanisms, instituting prior authorization and preferred drug lists, and encouraging the use of generic drugs…In addition, some states were considering proposals to limit the number of prescriptions…and requiring co-payments for prescription drugs.” 23 The SC Medicaid program could choose to reduce or eliminate programs or services, including those in other state agencies where those state agencies put up the state match; however, many of the services are targeted to special needs populations, and actually save the program dollars in the long-term. Child Health Insurance Program (CHIP)

• This is an optional Medicaid coverage group for approximately 42,000 children. • These are children ages 1-5 in families with income between 133% and 150% of

the poverty level and children ages 6-18 in families with income between 100% and 150% of the poverty level.

• For a family of 3, the annual income is up to $22,530 (i.e. 150% of federal poverty level).

• There is 78.87% federal funding and 21.13% state funding.

Aged, Blind and Disabled

• This is an optional Medicaid coverage group for 45,828 citizens. • The primary service this group receives through Medicaid is prescription drugs. • Without Medicaid coverage, this group would likely displace the current 40,000

Silver Card recipients. • While a portion of these have Medicare, 17,000 eligibles do not have Medicare

and will loose all health care insurance. Without coverage for basic health care, the disabled citizens may be in danger of needing institutional care.

• These are disabled, blind and elderly citizens with incomes up to 100% of the poverty level. ($8,860/year for an individual and $11,940/year for a couple)

• Their resources must be below $4,000 for an individual or $6,000 for a couple. 23 Modernizing Medicaid, Kaiser Commision, May2002.

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Working Disabled

• This is an optional Medicaid coverage group for approximately 85 persons. • These are permanently and totally disabled citizens with incomes up to 250% of

the poverty level, which are $22,150 per year for a family of one and $29,850 per year for a family of two.

• Most were eligible for Medicaid-based on disability before they became employed and this option allows them to enter the work force and keep Medicaid coverage as long as their income does not exceed the above amounts.

• A typical example is a quadriplegic who is able to be gainfully employed with adequate support.

• Many of these individuals require daily attendant care to perform such functions as toileting, bathing, dressing and feeding functions. With their Medicaid coverage, they can be employed and sometimes be covered by private insurance. However, insurance does not typically cover attendant care. If these disabled persons must pay for attendant care, they would not have enough earned income left to pay for food, housing and other normal living expenses.

Foster Care

• This is an optional Medicaid coverage group; 1,300 foster children are covered by Medicaid health insurance.

• These are children under 21 who live in foster homes or group homes and are under state custody. The State is responsible for all of their care including medical services.

Breast and Cervical Cancer

• This is an optional Medicaid coverage group for approximately 40 women. • These are uninsured women who have been screened through the Center for

Disease Control (CDC) program for breast or cervical cancer. In South Carolina, DHEC administers the screening program and it is called the Best Chance Network. While CDC provides funding for screening, no funding was available for treatment prior to this Medicaid coverage group.

• This eligibility group was established by Congress in FFY 2001 and included an enhanced match rate (80/20%) as an incentive for states to implement the program.

Katie Beckett (TEFRA)

• This is an optional coverage group for 2,100 disabled children. • These are severely and permanently disabled children who need at least

intermediate nursing home or hospital care for an extended period but have family members who are willing to care for them at home. An example is a child who is ventilator dependent requiring around the clock care.

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• Parents’ income is not considered. The child’s income must be at or below the Medicaid cap of $1,635 per month. The Medicaid cap is equal to 300 percent of the current SSI Federal Benefit Rate (FBR) for an individual by state budget proviso.

• Many of these families have exhausted their lifetime maximum benefit for their private health insurance or cannot obtain private coverage and Medicaid is their last resort.

• Without Medicaid coverage, the extraordinary cost of care can cause entire families to become financially unstable and are subject to stress related problems that negatively affect their health and well-being.

Hospice

• Hospice is an optional Medicaid service provided to terminally ill recipients with a life expectancy projection of 6 months or less.

• The hospice package of services includes physician services, nursing services, personal care aide, medical equipment, counseling, certain prescriptive medications specifically pain management medications related to the terminal illness, and bereavement services.

• Annual average number of recipients serviced: 220 • Average number of days in hospice care for SC Medicaid - 27

Community Long Term Care (CLTC) Home and Community-Based Services

• CLTC is an optional Medicaid program which provides home and community-based services to persons who would otherwise require nursing home care.

• These programs build on existing family supports through the provision of such services as home delivered meals, adult day care and hands-on personal care.

• There are four different programs serving the following populations: frail elderly and disabled adults; persons of all ages with HIV/AIDS; adults requiring ventilator care; and medically fragile children in need of in-home hands on assistance.

• Annually, 16,000 Medicaid recipients receive services through one of these programs.

• Recipients must meet the same medical criteria for Medicaid sponsored nursing home care as nursing home patients.

• There are over 3,500 applicants on a waiting list for the CLTC. Durable Medical Equipment (DME)

• DME is an optional service which provides medical equipment; supplies; and methods by which life-sustaining nutrition is given to patients who cannot take food by mouth (hyper-alimentation); devices that correct or prevent skeletal deformities (orthotics), and appliances that replace all or part of the function of an inoperative/malfunctioning organ (prosthetics).

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• Durable medical equipment and supplies must be prescribed by a licensed physician. The prescription is filled by a DME supplier who is enrolled in the Medicaid program.

• The Department of Health and Human Services must prior-approve certain DME and supplies.

• 79,692 citizens receive Medicaid sponsored DME and supplies which improve the functioning of malformed/malfunctioning organ or body parts (e.g. replacements for amputated limbs).

• Without these supplies, the individual’s ability to work or live independently may be reduced or eliminated.

Other Medicaid Professionals

• Various Medical Professionals provide a myriad of services. Only Certified Nurse Practitioners and Certified Nurse Midwives are mandatory services in this category.

o Chiropractic Program: Optional Chiropractic services are $575,000. o Optician and Optometry services: Optional Optometry services are

$855,000. o Podiatry Services: Optional Podiatry services are $420,545. o Private Rehabilitation Therapy Services (e.g. physical therapy, speech

therapy): Optional Private Rehabilitation Services for children under 21 are $5,863,000. The state match is shared between DHHS, DHEC, DOE & DDSN.

Reduce Payment to Providers Certainly, one mechanism to reduce the growth in the South Carolina Medicaid program is to reduce payments to providers. Such an action was taken in the Fall, 2001, when the Department of Health and Human Services suffered a 4% reduction in its base appropriation as a result of the economic downturn. Some of these reductions were restored in the 02-03 Appropriations Act. Reductions in rates to providers often result in providers limiting access to their services (e.g., refusing to accept new Medicaid patients). Changes to Medicaid Eligibility Should a state wish to restrict Medicaid eligibility and thereby reduce enrollments, policies can be developed which make enrolling more difficult.

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Gatekeeping Processes in Long Term Care Programs In long term care programs for senior citizens and persons with disabilities, gatekeeping processes can be strengthened, although South Carolina’s existing level of care criteria is among the strictest in the United States. Toughening the criteria would block admission for some; however, their functional deficits will likely continue to advance, making them much more ill before admission to a nursing home bed or to the Community Long Term Care Program. Clearly, however, many of the waiver programs like CLTC prevent/ delay institutionalization – a more costly care setting. Copayments, Premiums and Other Cost-Sharing Arrangements Copayments, premiums and deductibles can be charged to recipients under certain circumstances. This typically does not generate great sums of revenue for the program, since many Medicaid recipients are exempted by federal law, and such cost-sharing must be nominal by federal law for the regular Medicaid program. Eliminate Outreach Efforts Activities geared toward increasing enrollments can be stopped; however, the costs and consequences of high numbers of uninsured must be considered. Minimization of the Agency’s Administrative Budget Many states are looking at ways to reduce administrative spending associated with their Medicaid programs. The Department of Health and Human Services’ already has one of the lowest administrative rates in the State. Expansion of Managed Care Using traditional managed care approaches as opposed to reimbursing providers under a fee-for service arrangement has been used in other states to save funds. However, Oklahoma reported “ that it would take Medicaid beneficiaries out of managed care to save money.” 24 The Centers for Medicaid and Medicare funded a report dated July 2001 and the report was recently released by Mathematica. It describes a 6- year evaluation of five long-term state HMO managed programs. Mathematica found that the rates of cost increase for the State Medicaid programs reviewed was within 0.5 percentage points of the national average. The report concluded, “States should not expect managed care to generate sizeable reductions in real Medicaid costs, especially during the first few years of operation.”

24 Modernizing Medicaid, Kaiser Commission, May2002.

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Reinstate the South Carolina Health Access Plan (SCHAP) The South Carolina Health Access Plan (SCHAP) was a program approved by the federal government to provide health insurance to currently uninsured employees of small businesses and their families. The program was offered in Horry and Marion counties and a local office was maintained in Conway, South Carolina. The SCHAP used a managed care approach, since the use of covered services was controlled by the primary care physician chosen by the member as their personal physician. Persons eligible for the health insurance coverage provided by the SCHAP were residents of South Carolina and full-time employees (30 hours or more per week, nine (9) or more months per year) of small businesses located in Horry or Marion counties. The following criteria was used for determining eligibility under the SCHAP: Individuals and their dependent family members earning total family incomes under 150 percent of the Federal Income Standard; Individuals under 65 years of age; Individuals and their families not currently covered under Medicaid, Medicare or other health insurance programs; Small businesses (less than 100 employees) with at least three (3) employees who will participate and at least 50 percent of their employees earning incomes under 150 percent of the Federal Income Standard; Small businesses, which currently do not offer health insurance to that group of employees and have not, offered health insurance coverage to those employees within the past twelve (12) months.

Businesses were approved to participate and employees were required to complete a short application form giving information on total income and those family members wanting coverage under the SCHAP. Once enrolled, benefits were provided for as long as the employees maintained their full-time jobs, total family income remained below the stated level, the employer made the premium payments, and the federal government continued funding of the program. SCHAP members received similar health care services as provided under the South Carolina Medicaid Program. Some services were limited. Eligible small businesses paid approximately 30% of the premium. Employees with family incomes below the federal income standard were not asked to contribute. Employees with family incomes between 100% and 150% of the federal income standard were asked to pay a portion of the employer’s share: $9.98 per month for employee-only coverage or $24.82 for family coverage. The remaining roughly 70% of the premium was paid by the federal government. Privatize Services Where there is a large enough market to support service delivery, services could be privatized in some areas. However, services must be statewide in scope. This approach may or may not save funds in the long-term. Health Insurance Flexibility and Accountability 1115 Waiver (HIFA)

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In 2002, the U.S. Department of Health and Human Services allowed states to apply for HIFA waivers. This waiver allows states to address the problem of the uninsured by providing a limited benefit package to expansion populations. Two states, Arizona and California have approved HIFA waivers. In both cases these states elected to provide Medicaid coverage to the parents of CHIP children using unspent CHIP dollars. The state of Utah recently used a similar 1115 process to cover all persons up to 150% of the Federal Poverty Limit. HIFA waivers offer states flexibility and are a partial solution to the problem of the uninsured. However this is a Medicaid expansion and carries the commitment of state funding.25 A Total State Medicaid Budget The General Assembly could, as a part of the Appropriations Act process, institute a carve-out in the state budget for state dollars for Medicaid. This approach could: balance funds; assist in the evaluation of programs across agencies; ensure no competition among agencies for funds, such that one program has a richer benefit package; and allow for an across-agency perspective. Pursue Changes in Federal Law that Allow for More Flexibility States can work with their Congressional delegations to advocate in Congress for changes to federal Medicaid laws and regulations. According to the National Governor’s Association (NGA), the Governors “approved a policy calling for substantial changes in the Medicaid program, improving the state-federal partnership with the Centers for Medicare and Medicaid Services (CMS), improving the waiver and state plan amendment processes, and making major changes in the Medicaid program itself.”26

The NGA is also calling for ways to help states cope with their state budget difficulties, e.g. a temporary increase in federal match rates, increases social services block grant funds, and a “hold harmless provision that would prevent any state's federal medical assistance program (FMAP) from being reduced during this period.” NGA also advocates for revisions to the Medicaid Drug Rebate Program to require pharmaceutical manufacturers to transfer larger rebates to states.27

Members of the Congressional delegation could advocate for increased waiver authority under Medicaid to give states more flexibility in expanding coverage designing benefits packages, creating cost-sharing arrangements with clients, and in coordinating with other insurance carriers. 28 Replicate Strategies Used in Other States 25 www. CMS.gov 26 NGA Website at www.nga.ord/nga/lobbyissues 27 NGA Website at www.nga.ord/nga/lobbyissues 28 NGA Website at www.nga.ord/nga/lobbyissues

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Other states’ are making efforts to control or reduce the growth in their Medicaid programs. A few examples include:

• New York legislators have proposed legislation to prohibit drug companies from

“deducting the cost of advertising on their state tax returns.” Measures such as these “have been introduced in fifteen states.”29

• Mississippi has eliminated non-emergency transportation. • Texas has added a $10 fee to enroll in Medicaid. • The Oklahoma House proposed cutting 22,000 children from Medicaid. • Washington State has proposed a $10-$30 monthly fee to enroll in the Medicaid

program for coverage, along with other co-pays and deductibles. 30 The state has also instituted a therapeutic consultation service. Clinical pharmacists collect data on prescribing patterns, have face-to-face meetings with physicians identified as high volume Medicaid prescribers, and try to guide appropriate use.31

• Michigan instituted a preferred drug list, allowing the state to decide which drugs it will cover under Medicaid. 32

• Massachusetts has proposed lowering eligibility from 133% of poverty to 100% of poverty, a move that would impact 100,000 people.

• Nevada filed a lawsuit against twelve drug companies, alleging fraud by inflating prices of drugs reimbursed by Medicare and Medicaid.33

• Oregon is considering a disease management program, and potentially that program would review a client's drugs and manage the total care for the client. Oregon is developing cost containment measures to include a maximum allowable drug cost, implementation of $2-$3 co-pays, limiting the initial supply of chronic medicines to a 14 day supply to determine whether the drug will be effective, encouraging patients to use mail order for drugs, and reducing the amount of dispensing fees and the wholesale price amount. 34

• In Florida, the income eligibility limit for senior citizens will be decreased from 90% to 88% of the poverty level. 35

• Vermont will become the first state to implement a disclosure bill, requiring pharmaceutical companies to disclose their gifts and cash payments to doctors, hospitals, and other health care providers. The hope is that such disclosures will cause a change in drug companies and doctors’ behavior.36

Economic Growth 29 The New York Times, June 13, 2002. 30 Ideas Sought on Overhaul of Medicaid, The Spokesman-Review.com., May 21, 2002. 31 Presentation by Tom Bedell to the Senate health and Long Term care Committee, November 30, 2001. 32 www.Stateline.org, State Continue Rx Onslaught, June 10, 2002. 33 State Health Watch, May 2002. 34 Joan Kapowich, Manager of Programs and Policy, Oregon Dept. of Human Resources, 503-945-6500 35 Modernizing Medicaid, Kaiser Commission, May 2002. 36 The New York Times, June 13, 2002.

Medicaid expenditures in South Carolina have significant positive economic impacts. Specifically, theFederal Medicaid match supports more than 61,000 jobs in the state, and generates more than $1.5billion in income for South Carolinians. Importantly, these impacts are felt across the state, in bothurban and rural areas. These impacts are generated solely by the direct and ripple effects stemmingfrom the federal portion of Medicaid spending. State spending on Medicaid is therefore an important ingredient in South Carolina’s economicdevelopment. Changes in state Medicaid spending will have an amplified impact on the amount ofFederal matching dollars, and can thus have substantial impacts on the state’s economy. In South Carolina, as across the nation, budget writers are faced with another year of difficult decisionsthat highlight the economic concept of opportunity cost – the value of what must be given up as scarceresources are allocated towards a competing end. This summary provides South Carolina’spolicymakers with a quantifiable look at the opportunity cost of a decline in Federal Medicaid dollars –the loss of jobs and income across the state.

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Managing care DHHS is moving toward an approach that allows the agency to manage care. Philosophically, the Department intends to implement a balanced program, and planning activities take into consideration the necessity to invest in the short-term in order to save monies in the long-term. High cost populations may also be targeted. The agency is authorized to enroll any provider to deliver services; however, the provider must be appropriately licensed and the Medicaid program must need to purchase the specific service, e.g “open enrollment.” If the Medicaid program elects to limit the enrollment of providers, it must purchase services through competitive selection procedures in accordance with the SC Procurement Code. Federal regulations previously required states to obtain a freedom-of-choice waiver to implement mandatory managed care for any eligibility group covered by Medicaid. Now, a choice of providers must be available for each recipient if managed care become mandatory. The Medicaid program requires that an HMO be a domestic organization with corporate headquarters in the state. The HMO must be licensed by the Department of Insurance. DHHS is examining all options for managing the care of Medicaid beneficiaries to determine which models can be implemented that have the following outcomes: health outcomes for those in need are improved; health status of the overall population is improved; ability of the patient to manage their condition by patient education, monitoring and communication is improved; ability to predict cost and expenditures is improved; ways to address the health disparities among various demographic groups are identified; and resources invested in prevention and wellness are increased.

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Section Five: Conclusion Although Medicaid has grown significantly over the past several years, this growth is the result of several key factors, including deliberate policy decisions by the General Assembly and others to make Medicaid services available to more people – especially children. There have decisions by the General Assembly and others to increase the rates paid to providers for Medicaid services, especially hospitals, nursing homes, physicians, dentists, pharmacists – the major provider groups in the Medicaid program. While Medicaid growth has been substantial, it has largely been due to rate increases, eligibility expansions, and increases in the cost of the Medicaid pharmacy program. All decisions were made with the full support and, sometimes, at the explicit direction of, the General Assembly. These expansions, improvements, and increases were not bad or unnecessary. In fact, as a matter of public policy, they were good decisions that have benefited many South Carolinians who otherwise would not have had access to good health services. These activities are simply the root cause of increased Medicaid spending. If the general Assembly desires to reduce Medicaid spending, it can only be accomplished by reducing payments to providers, reducing the level of services available to recipients, or by cutting the number and classes of individuals who are eligible for Medicaid. There is no magic bullet to undo the actions taken over the years. There will be a loss of services to current eligibles and/or a loss of revenue to providers. Over the past two years, DHHS has undertaken numerous steps to reduce costs, increase Medicaid revenue coming into South Carolina, and control the unnecessary utilization of services by both recipients and providers. Last year, growth in the Pharmacy program was less than one percent and the growth in eligibility has basically flattened – with the exception of children. DHHS is currently looking at ways to further reduce the level of growth in Medicaid, such as managing care and using technology to achieve greater efficiencies. However, at some point, cutting costs and implementing efficiencies has its endpoint. DHHS is almost at that endpoint. DHHS stands ready to work with the General Assembly to assure that growth in the Medicaid program is responsible, controlled, and accountable to the people of South Carolina.

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3-year average

1999-2000

Average 1999-2000

Average 1998-99

Difference in 2-year

Moving averages

Appendix A

State

Percent

90-pct. C.I. (+)

Percent

90-pct. C.I. (+)

Percent

90-pct. C.I. (+)

Percent

90-pct. C.I. (+)

United States ……………………. Alabama……………………………….. Alaska…………………………………. Arizona………………………………...Arkansas………………………………. California……………………………… Colorado………………………………. Connecticut…………………………… Delaware……………………………… District of Columbia………………….. Florida…………………………………

Georgia………………………………... Hawaii………………………………… Idaho…………………………………... Illinois…………………………………. Indiana………………………………… Iowa…………………………………… Kansas………………………………… Kentucky……………………………… Louisiana……………………………… Maine…………………………………..

Maryland……………………………… Massachusetts…………………………. Michigan………………………………. Minnesota……………………………... Mississippi…………………………….. Missouri……………………………….. Montana……………………………….. Nebraska………………………………. Nevada………………………………… New Hampshire………………………..

New Jersey…………………………….. New Mexico…………………………… New York……………………………… North Carolina………………………… North Dakota………………………….. Ohio…………………………………… Oklahoma……………………………… Oregon………………………………… Pennsylvania…………………………... Rhode Island…………………………...

South Carolina………………………… South Dakota………………………….. Tennessee……………………………… Texas…………………………………... Utah……………………………………. Vermont………………………………... Virginia………………………………... Washington……………………………. West Virginia………………………….. Wisconsin……………………………… Wyoming………………………………

11.9 14.6 8.3 13.6 15.8 14.0 8.5 7.6 9.8 17.3 12.1

12.6 10.5 13.3 10.5 8.2 7.9 10.4 12.5 18.6 9.8

7.3 10.2 10.2 7.8 15.5 9.7 16.0 10.6 10.0 7.4

8.1 19.3 14.7 13.2 12.7 11.1 14.1 12.8 9.9 10.0

11.9 9.3 13.3 14.9 8.1 10.1 8.1 9.4 15.8 8.8 11.0

0.2 2.1 1.6 1.8 2.1 0.8 1.6 1.8 2.0 2.6 1.0

1.7 2.1 1.9 1.1 1.6 1.7 1.9 2.0 2.2 2.0

1.7 1.3 1.1 1.6 2.1 1.8 2.1 1.9 1.8 1.8

1.1 2.3 1.0 1.5 2.1 1.2 2.0 2.1 1.0 2.1

2.1 1.7 2.0 1.1 1.5 2.0 1.6 1.8 2.1 1.7 1.9

11.5 14.6 7.8 12.0 16.4 13.3 8.1 6.7 9.5 14.8 11.5

12.1 10.3 13.5 10.8 7.6 7.3 10.8 11.9 18.3 9.5

7.4

10.9 9.9 6.6 14.5 9.7 15.8 9.8 9.7 6.3

7.9 18.7 13.8 12.9 11.5 11.1 14.0 11.6 9.2 9.2

11.0 8.6 13.3 14.9 7.6 10.2 7.8 9.6 14.8 8.9 11.2

0.3 2.4 1.9 2.1 2.5 0.9 1.9 2.0 2.3 2.8 1.2

2.0 2.4 2.2 1.3 1.9 1.9 2.2 2.3 2.6 2.3

2.0 1.6 1.3 1.7 2.4 2.1 2.5 2.2 2.0 1.9

1.2 2.6 1.1 1.7 2.3 1.3 2.3 2.3 1.2 2.4

2.3 2.0 2.4 1.2 1.7 2.4 1.8 2.2 2.4 2.0 2.3

12.3 14.8 8.5 14.3 14.7 14.6 8.7 8.3 10.3 18.6 12.8

13.2 10.9 13.5 10.0 8.0 8.3 10.9 12.8 19.1 10.5

7.2 10.2 10.3 8.8 16.9 10.7 16.1 11.6 10.9 8.8

8.2 20.5 15.4 13.8 14.1 11.6 13.4 13.8 10.3 10.7

12.7 9.3 12.7 15.0 7.3 9.8 8.4 9.2 16.8 8.7 11.1

0.3 2.5 1.9 2.2 2.4 1.0 1.9 2.2 2.3 3.1 1.2

2.1 2.4 2.3 1.2 1.9 2.0 2.2 2.3 2.6 2.4

1.9 1.6 1.3 1.9 2.6 2.2 2.5 2.3 2.2 2.2

1.3 2.7 1.1 1.7 2.5 1.4 2.3 2.5 1.2 2.5

2.4 2.0 2.3 1.3 1.7 2.3 1.9 2.1 2.5 1.9 2.2

*-0.7 -0.2 -0.7 *-2.2 1.6 *-1.2 -0.6 -1.6 -0.8 *-3.7 *-1.2

-1.1 -0.6 - 0.8 -0.5 -1.0 -

-0.9 -0.8 -1.0

0.2 0.7 -0.4 *-2.2 *-2.4 -1.0 -0.3 -1.8 -1.2 *-2.5

-0.3 -1.8 *-1.6 -0.9 *-2.6 -0.5 0.6 *-2.1 *-1.2 -1.5

-1.7 -0.7 0.6 -0.2 0.3 0.4 -0.6 0.4 -2.0 0.2 0.1

0.2 2.0 1.6 1.8 2.1 0.8 1.6 1.8 1.9 2.6 1.0

1.7 2.0 1.8 1.1 1.7 1.6 1.8 1.9 2.2 1.9

1.6 1.3 1.1 1.6 2.0 1.7 2.1 1.8 1.7 1.7

1.0 2.2 0.9 1.4 2.0 1.1 2.0 2.0 1.0 2.0

2.0 1.8 2.0 1.0 1.5 2.0 1.5 1.8 2.0 1.7 1.8

Percent of People in Poverty by State: 1998, 1999, and 2000

-Represents zero. *Statistically significant at the 90-percent confidence level.; Note: For an explanation of confidence intervals (C.I.), see “Standard errors and their use” at www.census.gov/hhes/poverty/poverty00/pov00src.pdf. Source: U.S. Census Bureau, Current Population Survey, March 1999, 2000, and 2001.

DEPARTMENT OF HEALTH AND HUMAN SERVICES SUMMARY OF MEDICAID EXPENDITURES TOTAL

January 3, 20039:07:21 AM FY 1993-94 FY 1994-95 FY 1995-96 FY 1996-97 FY 1997-98 FY 1998-99 FY 1999-00 FY 2000-01 FY 2001-02

HISTORY FY 93-02 EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURESTOTAL TOTAL % TOTAL % TOTAL % TOTAL % TOTAL % TOTAL % TOTAL % TOTAL %

HEALTH SERVICES PROGRAMS HOSPITAL 359,132,660 383,575,124 6.81% 405,464,426 5.71% 384,164,904 -5.25% 406,348,251 5.77% 423,003,300 4.10% 509,626,877 20.48% 527,295,956 3.47% 616,263,806 16.87% NURSING HOMES 210,086,057 224,344,733 6.79% 240,729,778 7.30% 251,330,667 4.40% 271,760,081 8.13% 295,864,250 8.87% 323,998,103 9.51% 341,331,485 5.35% 360,362,235 5.58% PHARMACEUTICAL SERV 94,610,092 109,370,688 15.60% 123,274,937 12.71% 137,417,947 11.47% 163,107,637 18.69% 204,142,246 25.16% 260,278,527 27.50% 319,726,528 22.84% 417,965,171 30.73% PHYSICIAN SERVICES 102,046,272 113,037,456 10.77% 111,716,579 -1.17% 117,630,788 5.29% 123,220,881 4.75% 136,370,202 10.67% 152,557,929 11.87% 177,229,314 16.17% 203,633,032 14.90% DENTAL SERVICES 13,564,584 14,311,411 5.51% 14,326,210 0.10% 15,407,635 7.55% 16,413,156 6.53% 15,680,983 -4.46% 31,243,109 99.24% 60,936,129 95.04% 79,718,384 30.82% C.L.T.C. 29,540,148 34,591,355 17.10% 38,145,448 10.27% 46,989,725 23.19% 54,136,247 15.21% 66,860,376 23.50% 90,172,774 34.87% 78,980,952 -12.41% 80,973,315 2.52%OTHER MEDICAID SERVICE HOME HEALTH 7,032,268 11,459,464 62.96% 16,809,195 46.68% 17,048,940 1.43% 14,909,014 -12.55% 16,512,095 10.75% 15,923,103 -3.57% 15,201,950 -4.53% 16,722,648 10.00% EPSDT SCREENING 6,521,584 7,270,836 11.49% 7,498,746 3.13% 7,367,891 -1.75% 7,451,123 1.13% 7,736,005 3.82% 7,879,959 1.86% 8,674,215 10.08% 11,075,033 27.68% MEDICAL PROFESSIONAL 6,953,029 7,770,490 11.76% 7,899,365 1.66% 8,256,247 4.52% 7,867,266 -4.71% 8,935,293 13.58% 10,549,790 18.07% 12,310,532 16.69% 14,034,915 14.01% TRANSPORTATION 13,914,321 18,295,064 31.48% 20,138,082 10.07% 22,254,552 10.51% 23,962,346 7.67% 33,231,961 38.68% 34,783,387 4.67% 34,619,578 -0.47% 39,071,348 12.86% LAB & X-RAY 7,974,713 9,145,310 14.68% 9,560,316 4.54% 11,035,802 15.43% 11,725,396 6.25% 11,732,547 0.06% 14,371,283 22.49% 17,007,094 18.34% 20,928,022 23.05% CASE MANAGEMENT 3,367,994 3,606,555 7.08% 1,835,192 -49.12% 229,039 -87.52% MANAGED CARE 686,629 3,757,109 447.18% 7,839,506 108.66% 10,640,478 35.73% 20,955,330 96.94% 38,985,055 86.04%TOTAL OTHER MEDICAID SERV 45,763,909 57,547,719 25.75% 63,740,896 10.76% 66,879,100 4.92% 69,672,254 4.18% 85,987,407 23.42% 94,148,000 9.49% 108,768,699 15.53% 140,817,021 29.46%

FAMILY PLANNING 7,282,199 6,808,613 -6.50% 7,664,506 12.57% 7,788,045 1.61% 10,027,378 28.75% 11,195,839 11.65% 12,672,946 13.19% 13,162,198 3.86% 15,740,278 19.59% SMI-REGULAR 46,414,591 54,527,393 17.48% 57,149,633 4.81% 58,110,069 1.68% 59,061,540 1.64% 61,899,455 4.81% 63,526,160 2.63% 69,053,925 8.70% 76,047,169 10.13% SMI-MAO 3,275,022 3,719,055 13.56% 3,691,700 -0.74% 3,502,175 -5.13% 3,853,101 10.02% 4,354,001 13.00% 4,941,383 13.49% 5,600,030 13.33% 6,407,431 14.42% HOSPICE 1,022,382 2,406,613 135.39% 2,680,676 11.39% 2,597,171 -3.12% 2,590,427 -0.26% 3,026,984 16.85% 3,384,361 11.81% RESIDENTIAL CARE OSS 14,168,456 14,484,489 2.23% 15,450,655 6.67% 16,143,117 4.48% 16,088,596 -0.34% CHILD HEALTH INS (CHIP'S) 10,783,858 27,529,809 155.29% 36,613,738 33.00% 43,112,216 17.75% CLINICAL SERVICES 21,754,431 28,586,836 31.41% 31,772,440 11.14% 36,251,400 14.10% 39,726,845 9.59% 44,442,019 11.87% 49,833,451 12.13% 59,193,582 18.78% 62,713,300 5.95% DURABLE MEDICAL EQUIP 16,887,057 21,318,990 26.24% 22,635,845 6.18% 26,123,036 15.41% 30,237,899 15.75% 30,805,772 1.88% 36,253,916 17.69% 41,195,887 13.63% 38,657,053 -6.16%TOTAL DHHS ASSISTANCE PAYME 950,357,022 1,051,739,373 10.67% 1,121,334,780 6.62% 1,154,002,104 2.91% 1,275,198,260 10.50% 1,425,217,319 11.76% 1,683,907,995 18.15% 1,864,757,002 10.74% 2,118,771,152 13.62%

OTHER AGENCIES MENTAL HEALTH 107,314,897 113,282,934 5.56% 117,762,653 3.95% 124,208,921 5.47% 125,984,641 1.43% 131,593,547 4.45% 142,700,289 8.44% 154,771,202 8.46% 176,915,739 14.31% DISABILITIES/SP NEEDS 192,489,690 242,597,435 26.03% 240,626,919 -0.81% 253,894,193 5.51% 282,921,305 11.43% 299,775,023 5.96% 325,276,797 8.51% 361,844,091 11.24% 447,672,251 23.72% DHEC 18,256,163 21,249,944 16.40% 25,638,420 20.65% 23,558,344 -8.11% 30,797,956 30.73% 28,640,884 -7.00% 29,136,307 1.73% 37,912,332 30.12% 33,915,283 -10.54% MUSC 4,097,615 7,274,813 77.54% 8,259,987 13.54% 7,944,148 -3.82% 8,208,775 3.33% 9,149,985 11.47% 14,310,950 56.40% 10,338,737 -27.76% 14,538,468 40.62% U.S.C 1,140,802 901,974 -20.94% 495,594 -45.05% 822,732 66.01% 1,216,382 47.85% 1,262,094 3.76% 1,653,467 31.01% 2,370,369 43.36% 2,833,498 19.54% ALCOHOL /DRUG ABUSE 1,356,706 2,742,980 102.18% 4,620,847 68.46% 5,659,031 22.47% 5,499,361 -2.82% 5,780,142 5.11% 7,378,683 27.66% 8,788,887 19.11% 15,857,149 80.42% CONTINUUM OF CARE 7,461,261 6,493,855 -12.97% 4,540,239 -30.08% 4,630,378 1.99% 5,701,287 23.13% 5,884,728 3.22% 6,101,502 3.68% 6,371,355 4.42% 8,529,603 33.87% SCHOOL DEAL/BLIND 437,978 1,005,156 129.50% 1,361,557 35.46% 1,580,625 16.09% 1,659,309 4.98% 1,584,887 -4.49% 1,427,395 -9.94% 1,325,643 -7.13% 1,391,696 4.98% SOCIAL SERVICES 48,111,749 28,377,235 -41.02% 29,993,894 5.70% 40,210,823 34.06% 53,119,000 32.10% 51,239,537 -3.54% 50,303,231 -1.83% 58,176,304 15.65% 60,534,139 4.05% JUVENILE JUSTICE 2,631,191 4,169,138 58.45% 6,199,700 48.70% 7,390,004 19.20% 8,760,801 18.55% 16,545,188 88.85% 17,504,305 5.80% 16,316,643 -6.78% 17,786,139 9.01% DEPT OF EDUCATION 9,822,881 10,346,056 5.33% 8,785,810 -15.08% 10,355,745 17.87% 12,561,898 21.30% 15,406,053 22.64% 17,666,767 14.67% 18,611,002 5.34% 74,306,918 299.26% GOVERNOR'S OFFICE 300,000 0 0 COMMISSION FOR BLIND 14,524 20,245 39.39% 37,311 84.30% 27,583 -26.07% 14,201 -48.52% 21,941 54.50% 29,673 35.24% 22,299 -24.85% CLEMSON UNIVERSITY 5,520TOTAL ASST. PYT OTHER AGY 393,120,933 438,761,564 11.61% 448,305,865 2.18% 480,292,255 7.13% 536,458,298 11.69% 566,876,269 5.67% 613,481,634 8.22% 676,856,238 10.33% 854,303,182 26.22%TOTAL ASSISTANCE PAYMENTS 1,343,477,955 1,490,500,937 10.94% 1,569,640,645 5.31% 1,634,294,359 4.12% 1,811,656,558 10.85% 1,992,093,588 9.96% 2,297,389,629 15.33% 2,541,613,240 10.63% 2,973,074,334 16.98%

MEDICAL ADMINISTRATION 16,328,019 17,208,478 5.39% 17,363,009 0.90% 17,940,710 3.33% 19,147,316 6.73% 21,434,283 11.94% 21,588,596 0.72% 21,567,687 -0.10% 23,668,993 9.74%MEDICAL CONTRACTS 51,181,256 66,088,238 29.13% 62,820,227 -4.94% 72,263,049 15.03% 71,589,238 -0.93% 74,232,655 3.69% 81,625,944 9.96% 89,312,712 9.42% 100,705,120 12.76%DISPROPORTIONATE SHARE 567,985,848 464,308,196 -18.25% 434,997,513 -6.31% 445,521,084 2.42% 445,678,485 0.04% 433,786,686 -2.67% 374,783,790 -13.60% 371,947,763 -0.76% 391,164,960 5.17%OTHER ENTITIES 73,311,612 0.00% 70,274,335 -4.14%EMOTIONALLY DISTURBED CHILD 0 41,018,737 0.00% 61,091,204 48.93% 40,632,162 -33.49% 33,779,270 -16.87% 33,973,277 0.57% 41,709,899 22.77% 46,192,149 10.75% 47,091,350 1.95%MUSC MAXILLFACIAL 250,000TOTAL MEDICAID 1,978,973,078 2,079,124,586 5.06% 2,145,912,598 3.21% 2,210,651,364 3.02% 2,381,850,867 7.74% 2,555,520,489 7.29% 2,817,097,858 10.24% 3,143,945,163 11.60% 3,606,229,092 14.70%

DATA IS BASED ON THE GAFR's 9424 EXPENDITURE REPORT.

DEPARTMENT OF HEALTH AND HUMAN SERVICES SUMMARY OF MEDICAID EXPENDITURES STATE


HISTORY FY 93-02 EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURESSTATE STATE % STATE % STATE % STATE % STATE % STATE % STATE % STATE %

HEALTH SERVICES PROGRAMS HOSPITAL 66,595,243 71,246,483 6.98% 76,825,413 7.83% 95,411,225 24.19% 101,886,278 6.79% 86,702,038 -14.90% 127,717,827 47.31% 107,744,537 -15.64% 105,051,811 -2.50% NURSING HOMES 60,653,650 65,505,625 8.00% 70,399,563 7.47% 72,507,198 2.99% 79,172,852 9.19% 87,330,284 10.30% 95,441,053 9.29% 86,115,277 -9.77% 94,109,673 9.28% PHARMACEUTICAL SERV 27,354,285 31,984,722 16.93% 36,144,716 13.01% 34,849,601 -3.58% 42,816,140 22.86% 55,857,503 30.46% 57,133,923 2.29% 60,431,967 5.77% 60,675,860 0.40% PHYSICIAN SERVICES 29,462,593 33,006,634 12.03% 32,671,150 -1.02% 31,190,237 -4.53% 33,125,586 6.20% 37,498,606 13.20% 36,377,625 -2.99% 29,730,481 -18.27% 44,658,709 50.21% DENTAL SERVICES 3,916,098 4,178,551 6.70% 4,190,146 0.28% 3,802,012 -9.26% 4,128,573 8.59% 3,964,302 -3.98% 8,393,053 111.72% 7,365,257 -12.25% 13,804,632 87.43% C.L.T.C. 7,398,757 8,342,291 12.75% 8,564,882 2.67% 9,892,662 15.50% 11,905,116 20.34% 15,947,485 33.95% 27,027,394 69.48% 20,116,239 -25.57% 21,191,969 5.35%OTHER MEDICAID SERVICE HOME HEALTH 2,006,682 3,342,591 66.57% 4,916,288 47.08% 4,601,192 -6.41% 4,032,436 -12.36% 4,595,747 13.97% 4,068,280 -11.48% 2,982,290 -26.69% 2,999,339 0.57% EPSDT SCREENING 1,882,610 2,085,528 10.78% 2,188,525 4.94% 1,977,679 -9.63% 2,043,357 3.32% 2,153,132 5.37% 1,838,614 -14.61% 1,782,451 -3.05% 2,130,603 19.53% MEDICAL PROFESSIONAL 2,000,465 2,265,854 13.27% 2,310,104 1.95% 2,229,737 -3.48% 2,145,259 -3.79% 2,402,594 12.00% 2,276,875 -5.23% 2,306,569 1.30% 2,822,970 22.39% TRANSPORTATION 4,058,702 5,335,893 31.47% 5,877,033 10.14% 6,053,335 3.00% 6,595,080 8.95% 9,249,321 40.25% 9,146,075 -1.12% 6,982,540 -23.66% 7,743,005 10.89% LAB & X-RAY 2,301,653 2,665,920 15.83% 2,784,530 4.45% 3,005,214 7.93% 3,225,031 7.31% 3,265,474 1.25% 3,596,637 10.14% 3,656,444 1.66% 4,421,137 20.91% CASE MANAGEMENT 746,504 866,001 16.01% 487,125 -43.75% 178 -99.96% MANAGED CARE 193,997 1,100,640 467.35% 2,181,939 98.24% 2,704,248 23.94% 5,165,884 91.03% 10,143,409 96.35%TOTAL OTHER MEDICAID SERV 12,996,616 16,561,787 27.43% 18,563,605 12.09% 18,061,332 -2.71% 19,141,803 5.98% 23,848,207 24.59% 23,630,729 -0.91% 22,876,178 -3.19% 30,260,463 32.28%

FAMILY PLANNING 722,185 668,786 -7.39% 722,946 8.10% 742,510 2.71% 966,777 30.20% 1,083,618 12.09% 1,217,403 12.35% 1,019,890 -16.22% 1,287,868 26.28% SMI-REGULAR 13,404,155 15,923,891 18.80% 16,714,929 4.97% 14,933,844 -10.66% 15,285,571 2.36% 15,993,651 4.63% 16,371,606 2.36% 15,016,275 -8.28% 16,628,026 10.73% SMI-MAO 3,275,022 3,719,055 13.56% 3,691,700 -0.74% 3,502,175 -5.13% 3,853,101 10.02% 4,354,001 13.00% 4,941,383 13.49% 5,324,152 7.75% 5,544,020 4.13% HOSPICE 298,841 629,882 110.77% 716,495 13.75% 700,723 -2.20% 729,228 4.07% 784,062 7.52% 912,050 16.32% RESIDENTIAL CARE OSS 14,168,456 14,484,489 2.23% 15,450,655 6.67% 14,824,678 -4.05% 15,267,225 2.99% CHILD CARE HEALTH INS (CHIP'S) 2,000,000 2,000,000 0.00% 7,531,047 276.55% 2,319,635 -69.20% CLINICAL SERVICES 5,966,771 8,334,283 39.68% 9,190,360 10.27% 9,487,452 3.23% 10,462,499 10.28% 12,212,757 16.73% 12,786,846 4.70% 14,127,002 10.48% 14,632,385 3.58% DURABLE MEDICAL EQUIP 4,814,583 6,215,097 29.09% 6,619,900 6.51% 7,114,725 7.47% 8,372,108 17.67% 8,574,050 2.41% 10,367,550 20.92% 10,915,304 5.28% 9,559,478 -12.42% TOTAL DHHS ASSISTANCE PAYM 236,559,958 265,687,205 12.31% 284,598,151 7.12% 302,124,855 6.16% 348,001,355 15.18% 370,551,714 6.48% 445,117,322 20.12% 398,710,934 -10.43% 433,584,169 8.75%

OTHER AGENCIES MENTAL HEALTH DISABILITIES/SP NEEDS DHEC MUSC U.S.C 203,932 185,187 -9.19% 42,476 -77.06% ALCOHOL /DRUG ABUSE CONTINUUM OF CARE SCHOOL DEAL/BLIND SOCIAL SERVICES JUVENILE JUSTICE DEPT OF EDUCATION GOVERNOR'S OFFICE COMMISSION FOR BLIND CLEMSON UNIVERSITYTOTAL ASST. PYT OTHER AGY 203,932 185,187 -9.19% 42,476 -77.06%TOTAL ASSISTANCE PAYMENTS 236,763,890 265,872,392 12.29% 284,640,627 7.06% 302,124,855 6.14% 348,001,355 15.18% 370,551,714 6.48% 445,117,322 20.12% 398,710,934 -10.43% 433,584,169 8.75%

MEDICAL ADMINISTRATION 5,992,566 6,409,344 6.95% 6,455,427 0.72% 6,674,196 3.39% 6,814,088 2.10% 7,582,692 11.28% 7,257,724 -4.29% 7,333,584 1.05% 8,123,090 10.77%MEDICAL CONTRACTS 4,437,990 4,749,296 7.01% 12,586,770 165.02% 13,268,815 5.42% 12,978,474 -2.19% 14,267,569 9.93% 13,388,058 -6.16% 13,419,977 0.24% 12,106,612 -9.79%DISPROPORTIONATE SHARE 2,625,980 318,425 -87.87% 28,429 -91.07% 14,332 -49.59% 15,857,286 14,139,716 -10.83%OTHER ENTITIES 7,438,754 0.00% 7,153,060 -3.84%EMOTIONALLY DISTURBED CHILD - 11,999,588 0.00% 15,000,000 25.00% - -100.00% - 0.00% - 0.00% - 0.00% - 0.00%MUSC MAXILLFACIAL 250,000 TOTAL MEDICAID 249,820,426 289,349,045 15.82% 318,711,253 10.15% 322,082,198 1.06% 367,793,917 14.19% 392,401,975 6.69% 465,763,104 18.70% 442,760,535 -4.94% 475,356,647 7.36%

DEPARTMENT OF HEALTH AND HUMAN SERVICES SUMMARY OF MEDICAID EXPENDITURES FEDERAL


HISTORY FY 93-02 EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURESFEDERAL FEDERAL % FEDERAL % FEDERAL % FEDERAL % FEDERAL % FEDERAL % FEDERAL % FEDERAL %

HEALTH SERVICES PROGRAMS HOSPITAL 257,130,491 271,573,706 5.62% 286,887,980 5.64% 270,889,379 -5.58% 285,578,298 5.42% 295,603,248 3.51% 356,377,666 20.56% 370,813,847 4.05% 429,743,205 15.89% NURSING HOME 149,432,407 158,839,108 6.29% 170,330,215 7.23% 177,223,469 4.05% 190,987,229 7.77% 206,933,966 8.35% 226,557,050 9.48% 240,026,917 5.95% 250,854,818 4.51% PHARMACEUTICAL SERV 67,255,807 77,385,966 15.06% 87,130,221 12.59% 96,768,346 11.06% 114,491,498 18.32% 142,484,743 24.45% 181,544,604 27.41% 224,327,824 23.57% 291,630,051 30.00% PHYSICIAN SERVICES 72,583,679 80,030,822 10.26% 79,045,429 -1.23% 82,940,551 4.93% 86,595,295 4.41% 95,371,596 10.13% 106,680,304 11.86% 124,665,655 16.86% 142,406,736 14.23% DENTAL SERVICES 9,648,486 10,132,860 5.02% 10,136,064 0.03% 10,855,623 7.10% 11,534,583 6.25% 10,966,681 -4.92% 21,850,056 99.24% 42,858,009 96.15% 56,320,320 31.41% C.L.T.C. 21,040,263 24,492,031 16.41% 26,990,208 10.20% 33,128,358 22.74% 38,041,954 14.83% 46,760,379 22.92% 62,295,380 33.22% 55,542,377 -10.84% 56,045,375 0.91%OTHER MEDICAID SERVICE HOME HEALTH 5,012,030 8,116,873 61.95% 11,892,907 46.52% 12,020,825 1.08% 10,478,360 -12.83% 11,607,460 10.78% 11,134,416 -4.08% 10,622,015 -4.60% 11,735,180 10.48% EPSDT SCREENING 4,638,974 5,150,234 11.02% 5,310,221 3.11% 5,195,170 -2.17% 5,236,602 0.80% 5,438,157 3.85% 5,510,028 1.32% 6,067,473 10.12% 7,790,667 28.40% MEDICAL PROFESSIONAL 4,927,564 5,504,636 11.71% 5,589,261 1.54% 5,821,364 4.15% 5,529,034 -5.02% 6,068,222 9.75% 7,346,404 21.06% 9,030,234 22.92% 9,915,964 9.81% TRANSPORTATION 9,855,619 12,959,171 31.49% 14,261,049 10.05% 15,697,121 10.07% 16,843,351 7.30% 23,360,976 38.70% 24,322,247 4.11% 24,206,176 -0.48% 27,274,057 12.67% LAB & X-RAY 5,671,920 6,479,182 14.23% 6,766,016 4.43% 7,781,367 15.01% 8,240,280 5.90% 8,247,595 0.09% 10,049,163 21.84% 11,896,741 18.39% 14,638,625 23.05% CASE MANAGEMENT 2,455,001 2,555,037 4.07% 1,298,279 -49.19% 161,712 -87.54% MANAGED CARE 483,592 2,639,680 445.85% 5,510,915 108.77% 7,441,452 35.03% 14,667,878 97.11% 26,991,547 84.02%TOTAL OTHER MEDICAID SERV 32,561,108 40,765,133 25.20% 45,117,733 10.68% 47,161,151 4.53% 48,967,307 3.83% 60,233,325 23.01% 65,803,710 9.25% 76,490,517 16.24% 98,346,040 28.57%

FAMILY PLANNING 6,553,946 6,127,733 -6.50% 6,898,027 12.57% 7,009,186 1.61% 9,024,479 28.75% 10,076,221 11.65% 11,405,543 13.19% 11,845,839 3.86% 14,165,969 19.59% SMI-REGULAR 33,010,436 38,603,502 16.94% 40,434,704 4.74% 40,976,225 1.34% 41,575,969 1.46% 43,705,804 5.12% 44,954,554 2.86% 49,195,888 9.43% 53,690,365 9.14% SMI-MAO HOSPICE 723,541 1,696,731 134.50% 1,884,181 11.05% 1,816,448 -3.59% 1,811,199 -0.29% 2,128,450 17.52% 2,354,884 10.64% RESIDENTIAL CARE OSS CHILD CARE HEALTH INS (CHIP'S) 8,536,502 21,733,479 154.59% 28,905,312 33.00% 34,155,137 18.16% CLINICAL SERVICES 15,472,829 20,250,026 30.87% 22,461,700 10.92% 25,561,885 13.80% 27,919,339 9.22% 30,845,717 10.48% 34,847,287 12.97% 41,614,571 19.42% 43,834,718 5.34% DURABLE MEDICAL EQUIP 12,072,474 15,103,893 25.11% 16,015,945 6.04% 18,419,124 15.00% 21,250,028 15.37% 21,655,445 1.91% 25,351,501 17.07% 28,970,543 14.28% 26,976,722 -6.88% TOTAL DHHS ASSISTANCE PAYM 676,761,926 743,304,780 9.83% 792,171,767 6.57% 812,630,028 2.58% 886,386,662 9.08% 988,187,052 11.48% 1,168,384,166 18.24% 1,302,635,574 11.49% 1,466,369,203 12.57%

OTHER AGENCIES MENTAL HEALTH 75,709,202 80,151,720 5.87% 83,290,005 3.92% 87,572,146 5.14% 88,510,682 1.07% 92,005,147 3.95% 101,815,728 10.66% 109,428,387 7.48% 123,464,565 12.83% DISABILITIES/SP NEEDS 136,913,649 171,877,432 25.54% 170,580,436 -0.75% 179,292,866 5.11% 199,025,665 11.01% 210,142,129 5.59% 227,831,442 8.42% 254,684,666 11.79% 311,738,290 22.40% DHEC 13,143,109 15,417,821 17.31% 18,712,950 21.37% 17,228,790 -7.93% 23,139,611 34.31% 21,779,066 -5.88% 22,409,713 2.90% 28,769,437 28.38% 26,375,595 -8.32% MUSC 2,913,778 5,150,801 76.77% 5,842,930 13.44% 5,603,466 -4.10% 5,769,171 2.96% 6,398,847 10.91% 10,072,590 57.41% 7,308,201 -27.44% 10,178,100 39.27% U.S.C 840,282 638,412 -24.02% 350,631 -45.08% 579,832 65.37% 854,833 47.43% 882,608 3.25% 1,178,989 33.58% 1,680,693 42.55% 1,989,334 18.36% ALCOHOL /DRUG ABUSE 964,761 1,941,356 101.23% 3,269,549 68.42% 3,989,899 22.03% 3,864,955 -3.13% 4,041,016 4.56% 5,254,167 30.02% 6,217,279 18.33% 11,048,727 77.71% CONTINUUM OF CARE 5,306,653 4,599,527 -13.33% 3,191,452 -30.61% 3,264,290 2.28% 4,006,479 22.74% 4,115,052 2.71% 4,464,013 8.48% 4,509,611 1.02% 5,980,118 32.61% SCHOOL DEAL/BLIND 311,337 711,427 128.51% 963,420 35.42% 1,114,761 15.71% 1,166,196 4.61% 1,108,355 -4.96% 1,001,879 -9.61% 934,670 -6.71% 967,074 3.47% SOCIAL SERVICES 34,720,658 20,673,336 -40.46% 23,254,102 12.48% 29,645,728 27.49% 39,728,166 34.01% 37,767,556 -4.94% 35,801,465 -5.21% 42,293,005 18.13% 42,068,927 -0.53% JUVENILE JUSTICE 1,871,152 2,950,581 57.69% 4,386,776 48.67% 5,210,118 18.77% 6,157,363 18.18% 11,569,856 87.90% 13,388,219 15.72% 11,600,662 -13.35% 12,407,780 6.96% DEPT OF EDUCATION 6,992,393 7,370,973 5.41% 6,236,298 -15.39% 7,299,569 17.05% 8,826,467 20.92% 10,771,251 22.03% 12,547,093 16.49% 13,195,050 5.16% 52,800,735 300.16% GOVERNOR'S OFFICE 0 COMMISSION FOR BLIND 13,072 14,320 9.55% 26,290 83.59% 19,391 -26.24% 9,927 -48.81% 15,392 55.05% 20,902 35.80% 15,658 -25.09% CLEMSON UNIVERSITY 3,903TOTAL ASST. PYT OTHER AGY 279,686,974 311,500,361 11.37% 320,092,869 2.76% 340,827,755 6.48% 381,068,979 11.81% 400,590,810 5.12% 435,780,690 8.78% 480,642,563 10.29% 599,034,903 24.63%TOTAL ASSISTANCE PAYMENTS 956,448,900 1,054,805,141 10.28% 1,112,264,636 5.45% 1,153,457,783 3.70% 1,267,455,641 9.88% 1,388,777,862 9.57% 1,604,164,856 15.51% 1,783,278,137 11.17% 2,065,404,106 15.82%

MEDICAL ADMINISTRATION 10,016,054 10,503,832 4.87% 10,588,900 0.81% 10,859,786 2.56% 11,656,014 7.33% 13,097,421 12.37% 13,723,142 4.78% 13,395,683 -2.39% 14,721,261 9.90%MEDICAL CONTRACTS 29,670,055 37,879,030 27.67% 35,455,118 -6.40% 38,786,233 9.40% 38,162,826 -1.61% 39,595,788 3.75% 44,695,564 12.88% 49,719,935 11.24% 56,675,968 13.99%DISPROPORTIONATE SHARE 403,961,759 328,406,856 -18.70% 307,847,096 -6.26% 313,800,134 1.93% 313,000,000 -0.25% 303,000,000 -3.19% 262,000,000 -13.53% 262,000,004 0.00% 271,169,995 3.50%OTHER ENTITIES 51,674,922 0.00% 49,174,907 EMOTIONALLY DISTURBED CHILD - 25,209,514 0.00% 37,041,162 46.93% 25,906,571 -30.06% 21,189,268 -18.21% 23,758,932 12.13% 26,044,299 9.62% 27,592,908 5.95% 28,718,135 4.08%MUSC MAXILLFACIALTOTAL MEDICAID 1,400,096,768 1,456,804,373 4.05% 1,503,196,912 3.18% 1,542,810,507 2.64% 1,651,463,749 7.04% 1,768,230,003 7.07% 1,950,627,861 10.32% 2,187,661,589 12.15% 2,485,864,372 13.63%

DEPARTMENT OF HEALTH AND HUMAN SERVICES SUMMARY OF MEDICAID EXPENDITURES OTHER


HISTORY FY 93-02 EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURESOTHER OTHER % OTHER % OTHER % OTHER % OTHER % OTHER % OTHER % OTHER %

HEALTH SERVICES PROGRAMS HOSPITAL 35,406,926 40,754,935 15.10% 41,751,033 2.44% 17,864,300 -57.21% 18,883,675 5.71% 40,698,014 115.52% 25,531,384 -37.27% 48,737,572 90.89% 81,468,790 67.16% NURSING HOME 1,600,000 1,600,000 0.00% 1,600,000 0.00% 2,000,000 25.00% 15,189,291 659.46% 15,397,744 1.37% PHARMACEUTICAL SERV 5,800,000 5,799,999 0.00% 5,800,000 0.00% 21,600,000 272.41% 34,966,737 61.88% 65,659,260 87.78% PHYSICIAN SERVICES 3,500,000 3,500,000 0.00% 3,500,000 0.00% 9,500,000 171.43% 22,833,178 140.35% 16,567,587 -27.44% DENTAL SERVICES 750,000 750,000 0.00% 750,000 0.00% 1,000,000 33.33% 10,712,863 971.29% 9,593,432 -10.45% C.L.T.C. 1,101,128 1,757,033 59.57% 2,590,358 47.43% 3,968,705 53.21% 4,189,177 5.56% 4,152,512 -0.88% 850,000 -79.53% 3,322,336 290.86% 3,735,971 12.45%OTHER MEDICAID SERVICE HOME HEALTH 13,556 426,923 398,218 -6.72% 308,888 -22.43% 720,407 133.23% 1,597,645 121.77% 1,988,129 24.44% EPSDT SCREENING 35,074 195,042 171,164 -12.24% 144,716 -15.45% 531,317 267.14% 824,291 55.14% 1,153,763 39.97% MEDICAL PROFESSIONAL 25,000 205,146 192,973 -5.93% 464,477 140.70% 926,511 99.47% 973,729 5.10% 1,295,981 33.09% TRANSPORTATION 504,096 523,915 3.93% 621,664 18.66% 1,315,065 111.54% 3,430,862 160.89% 4,054,286 18.17% LAB & X-RAY 1,140 208 -81.75% 9,770 4597.12% 249,221 2450.88% 260,085 4.36% 219,478 -15.61% 725,483 230.55% 1,453,909 100.41% 1,868,260 28.50% CASE MANAGEMENT 166,489 185,517 11.43% 49,788 -73.16% 67,149 34.87% MANAGED CARE 9,040 16,789 85.72% 146,652 773.50% 494,778 237.38% 1,121,568 126.68% 1,850,099 64.96%TOTAL OTHER MEDICAID SERV 206,185 220,799 7.09% 59,558 -73.03% 1,656,617 2681.52% 1,563,144 -5.64% 1,905,875 21.93% 4,713,561 147.32% 9,402,004 99.47% 12,210,518 29.87%

FAMILY PLANNING 6,068 12,094 99.31% 43,533 259.96% 36,349 -16.50% 36,122 -0.62% 36,000 -0.34% 50,000 38.89% 296,469 492.94% 286,441 -3.38% SMI-REGULAR 2,200,000 2,200,000 0.00% 2,200,000 0.00% 2,200,000 0.00% 4,841,762 120.08% 5,728,778 18.32% SMI-MAO 275,878 863,411 212.97% HOSPICE 80,000 80,000 0.00% 80,000 0.00% 50,000 -37.50% 114,472 128.94% 117,427 2.58% RESIDENTIAL CARE OSS 1,318,439 821,371 -37.70% CHILD CARE HEALTH INS (CHIP'S) 247,356 3,796,330 1434.76% 177,379 -95.33% 6,637,444 3641.96% CLINICAL SERVICES 314,831 2,527 -99.20% 120,380 4663.75% 1,202,063 898.56% 1,345,007 11.89% 1,383,545 2.87% 2,199,318 58.96% 3,452,009 56.96% 4,246,197 23.01% DURABLE MEDICAL EQUIP 589,187 615,763 4.51% 576,277 -6.41% 534,865 -7.19% 1,310,040 144.93% 2,120,853 61.89% TOTAL DHHS ASSISTANCE PAYM 37,035,138 42,747,388 15.42% 44,564,862 4.25% 39,247,221 -11.93% 40,810,243 3.98% 66,478,553 62.90% 70,406,507 5.91% 163,410,494 132.10% 218,817,780 33.91%

OTHER AGENCIES MENTAL HEALTH 31,605,695 33,131,214 4.83% 34,472,648 4.05% 36,636,775 6.28% 37,473,959 2.29% 39,588,400 5.64% 40,884,561 3.27% 45,342,815 10.90% 53,451,174 17.88% DISABILITIES/SP NEEDS 55,576,041 70,720,003 27.25% 70,046,483 -0.95% 74,601,327 6.50% 83,895,640 12.46% 89,632,894 6.84% 97,445,355 8.72% 107,159,425 9.97% 135,933,961 26.85% DHEC 5,113,054 5,832,123 14.06% 6,925,470 18.75% 6,329,554 -8.60% 7,658,345 20.99% 6,861,818 -10.40% 6,726,594 -1.97% 9,142,895 35.92% 7,539,688 -17.54% MUSC 1,183,837 2,124,012 79.42% 2,417,057 13.80% 2,340,682 -3.16% 2,439,604 4.23% 2,751,138 12.77% 4,238,360 54.06% 3,030,536 -28.50% 4,360,368 43.88% U.S.C 96,588 78,375 -18.86% 102,487 30.76% 242,900 137.01% 361,549 48.85% 379,486 4.96% 474,478 25.03% 689,676 45.35% 844,164 22.40% ALCOHOL /DRUG ABUSE 391,945 801,624 104.52% 1,351,298 68.57% 1,669,132 23.52% 1,634,406 -2.08% 1,739,126 6.41% 2,124,516 22.16% 2,571,608 21.04% 4,808,422 86.98% CONTINUUM OF CARE 2,154,608 1,894,328 -12.08% 1,348,787 -28.80% 1,366,088 1.28% 1,694,808 24.06% 1,769,676 4.42% 1,637,489 -7.47% 1,861,744 13.70% 2,549,485 36.94% SCHOOL DEAL/BLIND 126,641 293,729 131.94% 398,137 35.55% 465,864 17.01% 493,113 5.85% 476,532 -3.36% 425,516 -10.71% 390,973 -8.12% 424,622 8.61% SOCIAL SERVICES 13,391,091 7,703,899 -42.47% 6,739,792 -12.51% 10,565,095 56.76% 13,390,834 26.75% 13,471,981 0.61% 14,501,766 7.64% 15,883,299 9.53% 18,465,212 16.26% JUVENILE JUSTICE 760,039 1,218,557 60.33% 1,812,924 48.78% 2,179,886 20.24% 2,603,438 19.43% 4,975,332 91.11% 4,116,086 -17.27% 4,715,981 14.57% 5,378,359 14.05% DEPT OF EDUCATION 2,830,488 2,975,083 5.11% 2,549,512 -14.30% 3,056,176 19.87% 3,735,431 22.23% 4,634,802 24.08% 5,119,674 10.46% 5,415,952 5.79% 21,506,183 297.09% GOVERNOR'S OFFICE 300,000 COMMISSION FOR BLIND 1,452 5,925 308.06% 11,021 86.01% 8,192 -25.67% 4,274 -47.83% 6,549 53.23% 8,771 33.93% 6,641 -24.28% CLEMSON UNIVERSITY 1,617TOTAL ASST. PYT OTHER AGY 113,230,027 127,076,016 12.23% 128,170,520 0.86% 139,464,500 8.81% 155,389,319 11.42% 166,285,459 7.01% 177,700,944 6.86% 196,213,675 10.42% 255,268,279 30.10%TOTAL ASSISTANCE PAYMENTS 150,265,165 169,823,404 13.02% 172,735,382 1.71% 178,711,721 3.46% 196,199,562 9.79% 232,764,012 18.64% 248,107,451 6.59% 359,624,169 44.95% 474,086,059 31.83%

MEDICAL ADMINISTRATION 319,399 295,302 -7.54% 318,682 7.92% 406,728 27.63% 677,214 66.50% 754,170 11.36% 607,730 -19.42% 838,420 37.96% 824,642 -1.64%MEDICAL CONTRACTS 17,073,211 23,459,912 37.41% 14,778,339 -37.01% 20,208,001 36.74% 20,447,938 1.19% 20,369,298 -0.38% 23,542,322 15.58% 26,172,800 11.17% 31,922,540 21.97%DISPROPORTIONATE SHARE 161,398,109 135,582,915 -15.99% 127,121,988 -6.24% 131,706,618 3.61% 132,678,485 0.74% 130,786,686 -1.43% 112,783,790 -13.77% 94,090,473 -16.57% 105,855,249 12.50%OTHER ENTITIES 14,197,936 0.00% 13,946,368 -1.77%EMOTIONALLY DISTURBED CHILD - 3,809,635 0.00% 9,050,042 137.56% 14,725,591 62.71% 12,590,002 -14.50% 10,214,345 -18.87% 15,665,600 53.37% 18,599,241 18.73% 18,373,215 -1.22%MUSC MAXILLFACIALTOTAL MEDICAID 329,055,884 332,971,168 1.19% 324,004,433 -2.69% 345,758,659 6.71% 362,593,201 4.87% 394,888,511 8.91% 400,706,893 1.47% 513,523,039 28.15% 645,008,073 25.60%

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