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Vorys Health Care Advisors

For health care reformers, the challenge is to improve care quality and expand access to providers and services while controlling costs. It is not a job for the timid. Instead, it requires creativity, experience and leadership. Vorys Health Care Advisors’ strategic solutions and guidance exemplify each of these imperatives. Our health care and Medicaid consultants help providers, business decision makers, state and federal government agencies and professional associations respond to the complex needs of health care consumers by discovering, developing and implementing innovative policies and programs.

CMS to Study States’ Compliance With Medicaid Managed Care Actuarial Soundness Requirements; Early Reports “Troubling”

Posted in Managed Care, Medicaid

As recently reported in Modern Healthcare, the Centers for Medicare & Medicaid Services (CMS) have announced two initiatives that are likely to impact reimbursement to and operations of Medicaid managed care plans (MCPs).

The first initiative is a study of the adequacy of how states set reimbursement rates for Medicaid MCPs.  Federal regulations require that Medicaid MCPs’ rates be “actuarially sound”.  State Medicaid departments must work with actuaries who evaluate rate information and provide an “independent” certification as to the adequacy of the rates.   

According to the Balanced Budget Act of 1997, actuarially sound rates are payments that are adequate to cover medical costs, administration, taxes, and fees.  In 2002, CMS issued regulations defining actuarially sound rates as those that are:

  • Developed in accordance with generally accepted actuarial principles and practices;
  • Appropriate for the populations to be covered and the services to be furnished; and
  • Certified as meeting applicable regulatory requirements by qualified actuaries.

The CMS analysis will aim to determine whether the rates are adequate to cover all anticipated medical and administrative costs, as well as taxes and fees, but not overpayments. 

The adequacy of managed care plans’ rates impacts the adequacy of payments to providers with which the MCPs contract.  However, while MCPs’ rates are to be adequate to cover their costs, there is no downstream requirement that rates paid to providers be adequate to cover the providers’ costs.  Each state specifies requirements for provider access and networks, and the MCP is free to pay more or less than the state’s existing Medicaid fee-for-service rates, but adequate access must be assured.

CMS intends to release the results of the study this summer, although a CMS official reports that early findings are troubling.  Criticism of CMS in the recent past has ranged from approval of rates that are too high or too low, inconsistency in reviewing rates for compliance with the actuarial soundness requirement, and approving rates that had not been certified by an actuary at all (according to the Modern Healthcare article, a 2010 GAO report found that Tennessee received approximately $5 billion a year in federal funds for rates that had not been certified by an actuary).

The second initiative is a new rule that will update Medicaid managed care regulations.  The current regulations have been in existence for 16 years, and a lot has happened in the Medicaid managed care arena since then.  Namely, significant expansion in participation in managed care.  As of May 2011, 23 million people – about 40% of the Medicaid population – were enrolled in risk based managed care and another 13 million, or 22%, were enrolled in primary care case management programs (a non-risk based form of managed care).  As of October 2010, only three states (Alaska, New Hampshire, and Wyoming) reported that they did not have any Medicaid managed care.

The regulations will include stronger beneficiary protections and account for major federal legislation that has been passed since the 1998 regulations were instituted.

Local Cleveland Leaders Share Fond Memories of Their Favorite Teachers

Posted in Uncategorized

Positive Education Program (PEP) recently released a video as part of its “Thanks for Bringing Out the Best In Me!” campaign and in conjunction with teacher appreciation week.  The short video features local Cleveland leaders – including Congresswoman Marcia Fudge, State Representative Nickie Antonio, State Senator Tom Patton, and County Executive Ed FitzGerald – sharing stories about their favorite teachers.  The messages are uplifting, insightful, and heartfelt, and highlight the important, life-long impact teachers have on young students.  

PEP is Greater Cleveland’s largest non-profit agency committed to our community’s kids.  PEP’s caring and competent professionals help troubled and troubling children learn and grow, providing strength-based special education and mental health services in partnership with families, schools, and communities. 

The Centers for Medicare and Medicaid Services Issues Home and Community-Based Settings Toolkit

Posted in Managed Care, Medicaid

On March 20, 2014, the Centers for Medicare and Medicaid Services (CMS) posted a “Transition Plan Toolkit” to assist states in developing their Home and Community-Based Settings (HCBS) 1915(c) waiver and section 1915(i) state plan amendment or renewal application(s) so that they comply with new requirements in the HCBS Final Rule, released earlier this year. The toolkit includes:

  • A summary of the regulatory requirements of fully compliant HCB settings and those settings that are excluded. This document summarizes the final rule’s requirements for HCB settings, including the additional criteria for provider-controlled settings. It also sets forth the settings that are statutorily excluded from HCB settings as well as those presumed to not be HCB settings;
  • Schematic drawings of the “heightened scrutiny process” as a part of the regular waiver life cycle and the HCBS 1915(c) compliance flowchart to assist states in developing their transition plans;
  • Additional technical guidance on regulatory language regarding “settings that isolate.” This document describes characteristics of settings that may have the effect of isolating individuals receiving HCBS from the broader community. In broad terms, the guidance points to settings that have the effect of isolating individuals as those that are designed for or inhabited by primarily people with disabilities, settings that provide residents with an array of services and activities on-site, settings that give individuals limited, if any, interaction with the broader community, and settings that use interventions/restrictions that are used in institutional settings or that are deemed unacceptable for use in Medicaid institutional settings (i.e., seclusion). This document also provides a non-exhaustive list of particular settings that tend to isolate people from the broader community. This list includes farmsteads or disability-specific farm communities, gated communities for people with disabilities, residential schools, and settings that are co-located and operationally related (i.e., operated and controlled by the same provider) that congregate a large number of people with disabilities together and provide for significant shared programming and staff. CMS mentioned that depending on the program design, this could include, for example, group homes on the grounds of a private ICF or numerous group homes co-located on a single site or close proximity (multiple units on the same street or a court, for example). Notably, CMS also mentioned that most Continuing Care Retirement Communities (CCRCs) do not raise the same concerns around isolation as these examples, particularly since CCRCs typically include residents who live independently in addition to those who receive HCBS. Though none of the listed characteristics is dispositive in and of itself, settings that exhibit one or more of these characteristics will be subjected to heightened scrutiny in order for the Secretary to make a determination regarding its status as an HCB setting; and
  • Exploratory questions that may assist states in the assessment of residential settings. This document in the toolkit sets forth questions that states may use as an optional guide in assessing whether the characteristics of Medicaid HCBS as required by the final rule are present. Characteristics that are expected to be present in all HCB settings, as well as all provider owned or controlled HCB settings, and associated traits that individuals in those settings might experience, are listed. For example, several questions in this document focus on individual choice, asking questions such as whether the setting was chosen by the individual and if the individual chooses when and where to eat. Other questions focus on isolation and access to services, such as whether individuals receiving HCBS receive services in a different area of the setting separate from individuals not receiving Medicaid HCBS. Specific privacy concerns are also highlighted, including whether an individual’s activity, diet, and medication schedule is posted publicly and whether a person has the ability to lock his or her bedroom or bathroom door. For provider owned or provider controlled HCB settings, states must address whether there is a legally enforceable agreement for the unit or dwelling where the individual resides such as a lease or written residency agreement. Further, for settings in which landlord tenant laws do not apply, states are to determine if the written agreement includes language that provides protections to address eviction processes and appeals comparable to those provided under the jurisdiction’s landlord tenant laws.

Absent from the toolkit was technical assistance or guidance regarding non-residential settings. However, according to CMS, they are currently developing additional information for states with regard to non-residential settings for HCBS participants. In the comments accompanying the regulations, subregulatory guidance was referenced in several areas: adult day and prevocational services, the process of operationalizing person centered planning, and issues associated with a client’s right to refuse. We will update you on any additional guidance that is issued.

The toolkit can be located at http://www.medicaid.gov/HCBS. If you have any questions, please contact VHCA President Maureen Corcoran at 614.464.5461 or Vorys Partner Suzanne Scrutton at 614.464.8313.

Payment Reform and Maryland’s All Payer Agreement with CMS

Posted in Articles, Health Care, Health Care Reform

Payment reform is considered essential to the transformation underway across the United States. Catalyst for Payment Reform (CPR) indicates that almost 90% of all private sector payments are still provided on the basis of fee-for-service. CPR defines payment reform as “payment methods that reflect or support provider performance, especially the quality and safety of care that providers deliver, and are designed to spur provider efficiency and reduce unnecessary spending.”

One example of the exception to CFR’s statistics is Maryland. As announced earlier this year, the Centers for Medicare & Medicaid Services (CMS) has approved Maryland’s plan to reform hospital rate setting. The stated goal is the triple aim of better health, better care and lower costs for Maryland residents. With this plan, Maryland guarantees a savings to Medicare of $330 million in total hospital costs.

The model is key…and has never been done on such a large scale. Maryland will transform its hospital reimbursement system from a per admission reimbursement system to one based on population based reimbursement for hospital services. The plan will limit the state’s per capita hospital cost growth to 3.58% per year, which is the state’s 10-year average gross state product. In short, the state will set hospital rates and budgets to meet its financial targets, while over five years shifting virtually all of their hospital payments into global payment models.

The model’s per capita cap design approach will put great pressure on the health care system to improve outcomes and quality, focus on care coordination and overall population health, as well as reducing avoidable costs. Quality targets are built in, to reduce hospital acquired infections and readmissions. The plan includes stakeholders and medical schools in the planning to sustain the transformation.

Maryland has the unique ability to take on this challenge given its current all-payer hospital reimbursement system. This system is based on a federal waiver approved nearly forty years ago. Under the waiver, every payer in the state — private insurers, self-insured employers, Medicare, Medicaid or someone who simply shows up on a hospital’s doorstep — pays the same for a hospital stay, an emergency room visit or an inpatient test or procedure. Although the program initially reduced costs, over time, Maryland’s per capita Medicare hospital costs became among the highest in the country. (Considered in terms of cost shifting, the higher rates for Medicare and Medicaid to cover the uninsured was part of the arrangement to lessen the cost shifting and rate negotiations of commercial payers.)

We can only speculate on the various effects that this change will have on the hospital providers and residents of Maryland. With the targets set, a strong incentive exists to find efficiencies.  However, perverse incentives that can affect quality of care also may be present. The state’s Health Services Cost Review Commission has significant opportunity to influence these issues.

Still, what is clear is that this Maryland initiative has the potential to take over our collective attention.  Maryland’s jump into the great foray of  payment reform is just one teaser for the unknown – the outer limits of what health care payments, service and quality is and should be.  Marylanders are all in it together!

Is One Brand of Medicaid Expansion Waiver Better than Another?

Posted in Affordable Care Act, Health Care, Health Care Reform, Medicaid

Different strokes for different folks as the old adage goes.  This saying, however, is particularly true when you look at the states that have chosen to expand their Medicaid programs under the Affordable Care Act (ACA) through waivers.

States do not have to seek a waiver from the federal government in order to expand their Medicaid programs under the ACA.  However, if a state wants to implement the expansion in a way that does not comport with federal law, it must seek a waiver from the federal Centers for Medicare & Medicaid Services (CMS).  Three states – Arkansas, Iowa and Michigan – have received approval from CMS to provide access to health care coverage through specifically-tailored, Medicaid expansion programs.

Review of these waivers provides insight into the availability of coverage for the mostly uninsured, poor and childless adult population. These waivers also provide an opportunity to observe and analyze additional issues for states, including utilization of health services, possible health outcomes, health care spending priorities and states’ values related to these issues.  Insight on these issues will affect future policy, not only in the waiver states but across all states that are considering the needs of this population.

Before looking into the different waivers, it is worth noting that the expansion of Medicaid was intended to cover mostly low-income adults without dependent children who earn up to 138% of the federal poverty level ($15,856 for an individual).  Since the U.S. Supreme Court’s ruling made the expansion of Medicaid optional for states, 25 states have chosen not to expand coverage.  The vast majority of the states that have expanded, chose to provide to this population Medicaid benefits that look like the state’s traditional Medicaid program or a similar Medicaid benefit.  In these states, you can predict service utilization because the benefit packages are the same.

The Arkansas, Iowa and Michigan waivers present fresh opportunities to consider how states provide services, effect positive outcomes and attempt to keep health care costs down.  Notable similarities exist among the waivers.  For example, cost-sharing, or requiring individuals to pay for a portion of the cost of service, is required in all three plans.  The cost-sharing component is structured in accord with Medicaid laws that limit the percentage of income that can be required of an individual to pay out-of-pocket costs.  The inclusion of cost-sharing requirements may be reflective of a desire for Medicaid expansion consumers to use mechanisms that are very common in commercial health insurance plans.

On the other hand, the waivers differ significantly where each state has perceived that individual choice may have some impact on health outcomes and the sustainability of Medicaid expansion.  For example, Arkansas and Iowa will provide premium assistance for adults to enter the ACA-created, health insurance marketplace to purchase a qualified health plan instead of enrolling these individuals in the state’s Medicaid program.  Arkansas will not require these individuals to pay any premiums in the health care marketplace, but in Iowa, individuals may have a premium obligation.  Michigan will not offer premium assistance.  Rather, the state will cover this population through its existing Medicaid managed care delivery system.  Arkansas’ legislature recently approved the private option plan.

These innovations emerged out of a robust debate regarding state values and attitudes toward Medicaid expansion under the ACA.  As we approach future milestones, it will be interesting to see which innovations will have the greatest impact on cost and quality.

New York State’s Budget Relies on Federal Medicaid Money –Expecting an Answer from CMS Soon

Posted in Affordable Care Act, Health Care, Health Care Reform, Medicaid

In 2012, New York Governor Andrew Cuomo submitted to the federal Centers for Medicare & Medicaid Services (CMS) an amendment to New York’s existing Partnership Plan 1115 waiver that sought to “redesign” the state’s Medicaid program.  The amendment proposed to reinvest $10 billion of the $17 billion in savings the state anticipated it would achieve by implementing Medicaid Redesign Team (MRT) recommendations.  CMS has been carefully reviewing the waiver amendment in combination with several other pieces of New York’s Medicaid program that are also before CMS for consideration.

Earlier this week, Governor Cuomo released the New York State budget, which calls for the state to, among other things, spend $1.2 billion to restructure hospitals, long-term care, and other health care services, and to invest an additional $75 million in health information technology.  These projects would be financed, in part, by the $10 billion wrapped up in the waiver amendment.  In his budget presentation, the Governor called on CMS to approve the waiver amendment in order to free up this funding that, along with a 2% cap on state spending growth, will help balance the budget.

Some of the health care related provisions in the budget include the following:

  • Continues the downsizing of institutional programs for individuals with intellectual and developmental disabilities (IDD) by 300 individuals.
  • Encourages more integrated employment opportunities to reduce costs through reforming day service programs for individuals with IDD by transitioning them from full day-day service to Pathways to Employment opportunities.
  • Supports the integration of physical health and behavioral health services within a managed care environment through Behavioral Health Organizations and Health and Recovery Plans.
  • Makes additional funding available for affordable housing.
  • Facilitates the transition of foster care children into managed care.
  • Provides $54.3 million in 2014-15, growing to $148.3 million in state funding between the Department of Health and Department of Financial Service budgets, to sustain the continued operations of the New York Health Benefit Exchange, which will end January 1, 2015.
  • Requires counties to make good faith efforts to link uninsured women with health insurance coverage for prenatal care reimbursement through the General Public Health Works Program.

The Governor’s budget relies on funding still not approved by the federal government in addition to the modest increase in state spending. The health care initiatives are ambitious.  Yesterday’s Democrat and Chronicle from Rochester NY reports a conversation that Senator Schumer had with Secretary Sebelius on the floor of the House of Representatives following the President’s State of the Union Address, in which the Secretary indicated that a decision about the waiver, and the associated $10 billion dollars in funding,  would be made within 30 days. This budget will be one to watch.

Informative and Entertaining Look at Health Reform Issues for 2014

Posted in Affordable Care Act, Health Care Reform

In a move previously thought nearly impossible to pull off, Kaiser Health News recently published a list of “8 Things To Know About Obamacare in 2014” that is both informative and entertaining.

This quick read highlights issues about which readers should be informed as they move into the new year, while injecting some levity into the often intense conversation about health care reform.  Check out the article to read up on important health insurance-related issues sure to remain on our radar screen this coming year.

Ringing in the New Year With Health Insurance

Posted in Affordable Care Act, Health Care Reform

So January 1, 2014, has come and gone.  While many people were busily ringing in the new year, others were celebrating a different kind of fresh start: one marked by the reassurance of having health insurance.

Although the rollout of healthcare.gov and even some state health insurance marketplaces was less than ideal, Americans who need and want health insurance are persisting – and getting results.  Results that amount to more than just receiving a health insurance card in the mail.  As a recent Washington Post article highlighted, results that mean Americans who have put off scheduling routine gynecological procedures and dermatological check-ups can now afford to do so; people who have not had a physical in years can schedule one to put their minds at ease – even if they do not appear to be currently suffering from any ailments; and individuals who previously feared experiencing an injury for which they could not afford treatment are able to go for a jog.

For these individuals, getting insurance may not have been not easy.  But their persistence in seeking coverage through the health insurance marketplace and Medicaid programs newly expanded in some states has paid off in the form of peace of mind and the ability to take better care of themselves.  Putting aside political differences, while the mere presence of health insurance does not in and of itself guarantee better health, having affordable health insurance at least gives Americans a fighting chance to improve their physical, mental, and emotional health.  As the Washington Post article (aptly titled “Beneath health law’s botched rollout is basic benefit for millions of uninsured Americans”) points out:

Various studies have found that children without insurance are less likely to get immunized or treated for a sore throat or even a ruptured appendix.  Adults without coverage are less likely to get mammograms or prostate exams.  If they have high blood pressure or diabetes, it is more likely to be out of control.  If they have a stroke, it is more likely to leave lasting damage.  The Institute of Medicine has said there’s “a chasm”between the health needs of uninsured people and their access to effective care — a gap that “esults in needless illness, suffering and even death.”

Moreover, having health insurance should also have at least a tangential positive impact on the financial “health” of many Americans.  Consider the following statistics reported by the American Journal of Medicine:

  • 62.1% of all bankruptcies have a medical cause
  • Most medical debtors are well educated and middle class – and three quarters have health insurance!
  • The share of bankruptcies attributable to medical problems rose by 50% between 2001 and 2007
  • Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658.

So how many people have actually signed up for coverage so far under the Affordable Care Act?  According to the Obama Administration, as of December 31, 2013, 2.1 million people have signed up for health insurance through the health insurance marketplaces and another 3.9 million people have been determined eligible for Medicaid.

While the architects of the law hypothesized that newly insured individuals would be about split between those who accessed coverage through the marketplaces and those who got coverage under Medicaid, it is likely that the slow rollout of the marketplaces is initially impacting the numbers.

Whether these 6 million Americans are now getting their health insurance through a qualified health plan sold in the marketplace or through Medicaid, one thing is clear.  Despite the difficulty they may have had obtaining coverage, it will provide them new opportunities to improve their health.

Federal Budget Agreement Delays Medicaid DSH Cuts

Posted in Affordable Care Act, Medicaid

Section 1204 of the federal budget agreement, HJ.Res.59, delays the Medicaid Disproportionate Share Hospital (DSH) payment reductions included in the Affordable Care Act (ACA) for two years.  As originally contemplated in the ACA, the DSH reductions were to have become effective in October 2013.  Instead, the budget agreement delays the reductions until October 1, 2015, but doubles the reduction that would otherwise have applied in that year.  In light of the delay, the Centers for Medicare & Medicaid Services has indicated that it will publish updated fiscal year 2014 DSH allotments in the Federal Register early next year.

The budget agreement was recently passed by Congress and signed by the President on December 26th.

Ohio Supreme Court Upholds Medicaid Expansion

Posted in Behavioral Health, Medicaid

The Ohio Supreme Court issued a decision today confirming the constitutionality of the state’s decision to expand the Medicaid program through an action of the Controlling Board.  The Court rejected a constitutional challenge made by six legislators.

In November, our colleagues at Vorys, Sater, Seymour and Pease filed an amicus brief on behalf of Advocates for Ohio’s Future, the Coalition for Healthy Communities, the National Alliance on Mental Health, the Ohio Association of County Behavioral Health Authorities, the Ohio Council of Behavioral Health and Family Services Providers and the Ohio Provider Resource Association urging the Court to uphold the Controlling Board’s decision as constitutional.

Today’s decision ensures that an estimated 275,000 of Ohio’s most vulnerable citizens will have access to health care.

To read the decision, click here.