AAHAMTexas Bluebonnet Chapter

Annual State Institute

August 4, 2016

Presented by:

John Berta

Texas Hospital Association

What is up and coming from our State

Medicaid Program?

What could this election bring?

Medicaid Re-enrollment 9/24/2016

Texas Medicaid must revalidate the enrollment of all

providers in state Medicaid programs. For Texas Medicaid,

this means all providers, including ordering and referring

providers, who have not met all PPACA revalidation

requirements must do so through re-enrollment by Sep.

24, 2016

To avoid disenrollment on Sep. 25, 2016, and possible

disruption in claims payment, providers should submit a

re-enrollment application to the state or TMHP today.

http://www.tmhp.com/Pages/Topics/Reenrollment.aspx

Today’s Discussion

November 8th Election

85th Texas Legislature & the State Budget

Trauma funding

Medicaid waiver

Other Items

Vote

Tuesday, November 8, 2016 - Election Day

7:00 a.m. to 7:00 p.m.

Early Voting

October 24th-November 4th, 2016

November Election – Key Dates

Item Date

Last Day to Register to VoteTuesday, October 11, 2016*

*First business day after Columbus Day

First Day of Early Voting Monday, October 24, 2016

Last Day to Apply for Ballot by Mail (Received, not Postmarked)

Friday, October 28, 2016

(* NEW LAW: 11th day before election day; ABBM and FPCA.)

Last Day of Early Voting Friday, November 4, 2016

Last Day to Receive Ballot by MailTuesday, November 8, 2016

(election day) at 7:00 p.m. (unless overseas deadline applies)

Texas Election – Key Races

U.S. President - 4 yr. term

All 36 United States Representatives 2 yr. term

16 State Senators - 4 yr. term

All 150 State Representatives 2 yr. term

National Election - Debates

Sept. 26 — Presidential debate at Wright State University in

Dayton, Ohio

Oct. 4 — Vice presidential debate at Longwood University in

Farmville, Virginia

Oct. 9 — Presidential debate at Washington University in St. Louis

Oct. 19 — Presidential debate at University of Nevada-Las Vegas

Nov. 8 — Election Day

Texas Voting - Resources

http://www.sos.state.tx.us/

http://www.votetexas.gov/

Today’s Discussion

November 8th Election

85th Texas Legislature & the State

Budget

Trauma funding

Medicaid waiver

Other Items

Major Issues for Texas Leaders

10

State Budget – FY 2016-2017 Highlights

$373 million GR - Savings and Cost Containment Rider

(highlights of activities that may impact providers)

Therapy Rates

Fully implement Dual Eligible Medicare/Medicaid integrated care model.

Implement FFS payment changes and MMC premium adjustments that

incentivize the most appropriate and effective use of services.

Improve birth outcomes, including access to information and payment reform.

Continue strengthening prior authorization and UR.

Develop MCO premium development process for ongoing methodology for

reducing inappropriate utilization, improving outcomes, reducing unnecessary

spending and increasing efficiency.

Increase third party recoupments.

Assess options to reduce costs for retroactive Medicaid claims.

11

State Budget – FY 2018-2019

Oil and gas downturn hurts Texas sales tax revenue

12

Major Driver – Sales Tax

Texas Sales Tax Collections

Oil Prices

Speaker Letter to House

Appropriations Committee 4/19

Speaker Straus laid out a host of tough issues lawmakers must

consider as they begin discussing the next budget:

• Plunging oil prices slowing revenues and the economy,

• a foster system in crisis that courts may require Texas to fix,

• a potentially costly ruling in long-winding school finance suit and

• the need for a long-term solution to fund health care for retiring

teachers.

15

Medicaid Caseload Growth

State Budget – FY 2018-2019 – Drop in

Federal Rate

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00

FY2013 FY2014 FY2015 FY2016 FY2017

Cost to Provide $100.00 in Texas Medicaid Payments

Texas Feds

17

Year Texas Feds

FY2013 $40.70 $59.30

FY2014 $41.31 $58.69

FY2015 $41.95 $58.05

FY2016 $42.87 $57.13

FY2017 $43.82 $56.18

85th Texas Legislature

LEGISLATIVE PRIORITIES

Coverage Expansion the Texas Way

Possible Components

Personal Responsibility

Co-pays

Employment

Marketplace Coverage

NEXT STEPS

Continue promoting the need to

expand coverage and reduce

uninsured.

Today’s Discussion

November 8th Election

85th Texas Legislature & the State Budget

Trauma funding

Medicaid waiver

Other Items

Trauma Account 5111

Collections - $100M

Expenditures - $175M

Expenditures exceed Collections

Trauma Sources of Revenue

Sources of 5111 Funding

23

73%

27%

Account 5111 - FY2015 Revenue

Drivers License Surcharge Court Fines

DRP Surcharge (3 years)

24

DRP Program FY2015 Revenue

25

$152$97

$30

2015 DRP Revenue in Millions

Collected

Waived

Not Collected

DRP Program Revenue by Type

26

$1,397

$1,675

$779

$36

DRP Lifetime Revenue in Millions

DWINo InsuranceNo DL, DWLIPoints

Uses of DRP Net Revenues

27

50%50%

Drivers License Surcharge Revenue

Account 5111 State GR

Uses of Court Fine Revenues

28

33%

67%

Court Fines

Account 5111 State GR

Total Contribution to Account 5111

29

43%57%

Court Fines & DRP Surcharges

Account 5111 State GR

Trauma Account 5111

Collections - $100M

Expenditures - $175M

Inpatient Funding Increases from 84th

Session - I

Safety Net Add-on for Children’s and Urban Hospitals

Special Provision 59; FY 2016 = $135,340,736 AF; FY 2017

= $133,777,545 AF.

Must have qualified for DSH in most recently completed DSH

program year.

Rates determined by allocating appropriated funds by the

number of Medicaid days for each qualified hospital. The

allocated amount was then divided by the hospital’s total

relative weights, which yields the add-on amount.

Funds started flowing for services provided on or after

September 1, 2015.

Inpatient Funding Increases from 84th

Session - II

Increased Trauma Add-on

Special Provision 32; FY 2016 = $178,780,092 AF; FY 2017 =

$176,715,177 AF.

Funds started flowing for services provided on or after September 1,

2015.

Inpatient Funding Increases from 84th

Session - III

Quality Add-on for Safety Net Hospitals

Special Provision 59; FY 2016 = $15,037,860 AF; FY 2017 =

$14,864,172 AF.

Must be a Safety Net Hospital.

Based on performance on PPRs and PPCs.

Goals is to pay FY 2016 funds in lump sums to qualifying hospitals

prior to end of FY 2016.

Inpatient Funding Increases from 84th

Session - IV

Special Provision 58 directed HHSC to expend certain funds to

provide increases in, or add-ons to, Medicaid outpatient provider

rates for rural hospitals to ensure access to critical services.

FY 2016 = $28,043,936 AF; FY 2017 = $30,030,030 AF

Increased general outpatient reimbursement such that final

payments do not exceed 100% of cost.

Increased reimbursement for outpatient emergency

department services that do not qualify as emergency visits

such that final payments do not exceed 65% of cost.

Created rural hospital add-ons to the outpatient hospital

imaging services fee schedule.

State Budget – FY 2016-2017 Highlights

(cont’d) – Hospital Specific

• $129 million in state funding for a Medicaid rate add-on for

safety net hospitals

• $67 million for trauma add-on over 2016-2017 biennium in

addition to the $44 million already appropriated add-on

payment for trauma care

• $25 million for rural outpatient services at 100% of costs

• All but $5 million comes from unspent trauma funds

35

Texas Trauma Centers

36

175

195

215

235

255

275

295

FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Total Trauma Centers

Level FY2000 FY2015 Variance

Level I 10 17 7

Level II 11 15 4

Level III 33 55 22

Level IV 127 197 70

Total 181 284 103

Texas Level-I Trauma Centers

37

Population

Level I –

13.9 Million

Contiguous

6.5 Million

All Other

6.9 Million

Today’s Discussion

November 8th Election

85th Texas Legislature & the State Budget

Trauma funding

Medicaid waiver

Other Items

1115 Medicaid Transformation Waiver Extension

What’s at Stake?

UC Funding

$17.6 billion between 2011 and 2016

Offset some of the costs of providing care to uninsured and Medicaid patients

DSRIP Projects and Funding

1,491 active projects

Increasing access to primary care, behavioral health services, specialty care

Improving chronic disease management

Reducing unnecessary use of hospital ER

Promoting better health outcomes

Integrating behavioral health and physical health care

$11.4 billion in earned payments between 2011 and 2016

Statewide Medicaid Managed Care - $8.65 B in savings

Medicaid Waiver – Overview

Managed care expansion – FY2017 = 92% MCO

Allows statewide Medicaid managed care services (STAR, STAR+PLUS,

and Children’s Medicaid Dental Services) while preserving historical UPL

funding.

Waiver goals:

Expand Medicaid managed care statewide

Develop and maintain a coordinated care delivery system

Improve health outcomes while containing costs

Protect and leverage federal match dollars to improve the healthcare

infrastructure

Transition to quality-based payment systems across managed care and

hospitals

Medicaid Waiver - Overview

Section 1115 of the Social Security Act gives the

Secretary of Health and Human Services authority to

approve experimental, pilot, or demonstration projects

that promote the objectives of the Medicaid and CHIP

programs

Expire/Begin Approval Date

Texas 10/1/2011 CMS – 12/12/2011

California 1/1/2016 CMS – 12/30/2015

Tennessee 6/30/2016 6/30/2016 – 2 Month

Texas 12/31/2017 TBD

1115 Medicaid Transformation Waiver Extension

Extension Timeline

Current five-year waiver expires Sept. 30, 2016

Gov. Greg Abbott submitted an extension application to

CMS in September, 2015

Request was for another 5-year term

No major changes to managed care, DSRIP or UC terms

and conditions

CMS Granted 15-month extension!

Waiver Timeline

Waiver Renewal – Agreements

As part of the 15 month extension, CMS required Texas to agree that:

CMS and Texas will work over the next 15 months on an agreement to

reform the state’s UC pool and DSRIP.

If, at the end of calendar year (CY) 2017, CMS and the state have not come

to an

agreement that is consistent with CMS’ UC pool principles and a DSRIP that

supports Texas’ commitment to managed care:

DSRIP will not be renewed except as a phasedown starting at the end of CY

2017. The phase down would begin at 25 percent in 2018, and phase down by

an additional 25 percentage points each year afterwards.

UC will not be renewed except at a reduced level consistent with CMS’

principles for uncompensated care.

Waiver Components

Uncompensated Care (UC) Pool:

Replaces UPL

Covers Medicaid shortfall and costs of care provided to individuals who have

no third party insurance coverage.

Creates 20 Regional Healthcare Partnerships (RHPs)

Delivery system Reform Incentive Payment (DSRIP) Pool

New incentive program to support coordinated care and quality

improvements through the RHPs.

Goals: transform delivery systems to improve care for individuals (including

access, quality and health outcomes), improve health for the population and

lower costs through efficiencies and improvements.

Targets Medicaid recipients and low income uninsured individuals

Waiver Extension UC and DSRIP

GAO Report June, 2013

GAO Recommendations

1. Update the agency’s written budget neutrality policy to reflect actual criteria and processes used to develop and approve demonstration spending limits, and ensure the policy is readily available to state Medicaid directors and others; and

2. Reconsider adjustments and costs used in setting the spending limits for the Arizona and Texas demonstrations, and make appropriate adjustments to spending limits for the remaining years of each demonstration.

Waiver Spending

FY2012 FY2013 FY2014 FY2015 FY2016

Medicaid Capitation Waiver Spending

WOW WW

Sample Per Member Per Month Amounts

Waiver Spending

FY2012 FY2013 FY2014 FY2015 FY2016

Medicaid Capitation Waiver Spending

WOW WW

Savings

UC

DSRIP

NAIP

CMS Initiatives

Response: address all portions of

the graph:

- Top line, tighten inflation;

disallow older costs

- Bottom line, tighten

Medicaid managed care rules

- Gap – tighten rules around

measurement and allowance

supplemental payments

Waiver Spending

Control Spending – Lower WOW

1.Lower inflation (CA) 6.2% down to <4.0%

2.Cost Sharing

1.Phase out savings

2.Projects > 5 Years – savings phased down

1.YR 6= -10%

2.YR 7= -20%

3.YR 13= -75%

Waiver Spending

FY2012 FY2013 FY2014 FY2015 FY2016

Medicaid Capitation Waiver Spending

WOW WW

Savings

UC

DSRIP

New WOW

Managed Care Rules

-Actuarial Soundness Requirements -Rate Development Standards and Rate Certification Requirements -Medical Loss Ratio -Delivery System Reform

In-Lieu-of-Services Capitation Payments for Enrollees with a Short-Term Stay in an Institution for Mental Disease Incentive Arrangements Withhold Arrangements Delivery System Reform and Provider Payment Initiatives

Sample Per Member Per Month Amounts

Actuarial Soundness

1903(m) of the Social Security Act requires that capitation rates paid to managed care organization be actuarially sound in order for a State to receive FFP on the capitation payment

438.4(b)(5): Payments from any rate cell must

not cross-subsidize or be cross-subsidized by

payments for any other rate cell

Waiver Spending

FY2012 FY2013 FY2014 FY2015 FY2016

Medicaid Capitation Waiver Spending

WOW WW

Savings

UC

DSRIP

New WOW

Supplemental Funding @ Risk

CMS interpretations of federal regulations pertaining to the use of certain

types of public/private arrangements such as Low-Income and Needy Care

Collaboration Agreements, Collaborative Endeavor Agreements and Public-

Private Partnerships.

New federal managed care regulations limiting the use of IGT Responsibility

Agreements.

Statutory reductions in future DSH allocations under the Affordable Care Act

CMS UC pool principles

CMS’ position regarding “pay-to-play” arrangements

Method of Finance

CMS Deferral – 18 months ago

Public/Private Affiliation Agreements Reviewed

THHSC met with CMS over the summer

CMS notifies Texas current arrangements are good thru

August 2017

THHSC to continue to “draw out” CMS on August 2017

position

60

DSRIP

1,451 active DSRIP projects

• 298 providers – hospitals (public and private), physician groups, community

mental health centers and local health departments

• Major project focuses:

Over 25% - behavioral healthcare

20% - access to primary care

18% - chronic care management and helping patients with complex needs

navigate the healthcare system

9% - access to specialty care

8% - health promotion and disease prevention.

• Over $7.1 billion earned through January 2016

HHSC Future DSRIP Principles

• Further incentivize transformation

• Maintain program flexibility

• Integrate with Texas Medicaid managed care quality

strategies

• Streamline and lesson administrative burden

• Improve project-level evaluation

• Support the healthcare safety net for Medicaid and low

income uninsured Texans

62

Supplemental Funding – DSH

UC Pool Evaluation 8/30/2016

CMS is requiring Texas to submit an Evaluation of Uncompensated Care Costs for the

Uninsured report by August 31, 2016

Report must be completed by an independent entity (HHSC is using Health

Management Associates and Deloitte Consulting)

Should review the role of UC and DSRIP payments in the overall Medicaid

system for paying hospitals.

Consider adequacy of base Medicaid payment levels and their relation to

Medicaid shortfalls and indicate degree to which UC pool and DSRIP payments

compensate for insufficient base payment levels.

Identify percentage of UC pool payments not specifically related to Medicaid

shortfalls.

Estimate what Texas’ UC burden would be in FFY 2017 if Texas Medicaid rates

fully funded the Medicaid shortfall and if Texas opted to expand Medicaid as

allowed under the ACA.

UC Pool Evaluation

Estimate what Texas’ UC burden would be in FFY 2017

• If Texas Medicaid rates fully funded the Medicaid shortfall

• If Texas opted to expand Medicaid as allowed under the ACA.

• Shortfall = ~$2.4B

• Expansion = 1/3 of Uninsured

Florida – LIP

• Florida has a Low Income Pool (LIP) that serves a similar purpose to Texas’ UC

pool.

• CMS granted Florida a one year extension of its pool when it initially expired but

required Florida to commission a UC study similar to the study now required of

Texas and indicated that it would apply the same principles to Florida’s UC pool

renewal as detailed on the previous slide.

• In June 2015, CMS and Florida agreed to extend the LIP for two years with pool size

limited to projected costs of care for those uninsured individuals who would not be

eligible for Medicaid coverage if Florida had expanded Medicaid, whether or not

Florida actual expands Medicaid.

• Final LIP pool size is $1 billion for July 2015 – June 2016 and $608 million for July

2016 – June 2017.

Texas’ UC pool and Florida’s LIP pool

waivers,

Texas UC - Florida LIP

• Florida LIP 2014 = $2.16 billion

• For 2015-2016, the federal government will send

approximately $1 billion to the low-income pool.

• In 2016-2017, that amount will drop to about $600 million.

68

Texas UC - Florida LIP

• CMS Three Principles

• Use Medicaid Rates to Address Medicaid Rate Problem

• Use Medicaid Expansion to Address Uninsured Issues

• Other Uninsured Cost LIP funds are available

69

QIPP/MPAP

MPAP has existed since NFs were carved in to managed care on March 1,

2015.

-279 publically owned NFs will receive $601 million in MPAP for FY2016

-Since the implementation of the precursor program NF UPL in October, 2013,

the number of publically owned NFs has grown from about 20 to 279.

-Most MPAP NFs are owned by small public hospital districts but Dallas County

Hospital District and Bexar County Hospital District also participate.

-In an April 2016, letter to HHSC, CMS indicated that it would not approve the

continuation of the MPAP beyond August 31, 2016 because:

-HHSC requires MPAP NFs to enter into an agreement to provide an

IGT to fund the non-federal share of the MPAP.

-MPAP payments are only made to NFs that have entered into such

an agreement, making the funding contingent upon the IGTs.

Quality Incentive Payment Program –

Delayed until 9/1/2017

• The Texas Legislature directed HHSC to base paymentsthrough the QIPP upon improvements in quality andinnovation in the provision of nursing facility services:

▫ Culture change

▫ Small house models

▫ Staffing enhancements

▫ Improved quality of care and life for nursing facilityresident

71

Network Access Improvement Program

“NAIP”

• Public Hospitals and health-related institutions

• Existing Medicaid managed care structure

• Costs incorporated into MCO capitation rate

• MCOs develop and implement provider incentive

programs with hospitals and HRIs

• Project examples: bonus fund incentives for access to

PCPs; expansion of hours/services; targeted specialty

recruitment; telehealth/telemedicine; chronic condition-

specific focus; pregnancy and childbirth; behavioral

health integration; medication management; integrated

service delivery for primary and acute care services.

72

1115 Medicaid Transformation Waiver Renewal

Major Obstacles

Medicaid Expansion in Texas?

Current UC Pool Includes Medicaid Shortfall

CMS: Tight Method to calculate UC

Method of Finance

Deferral of federal UC payments

CMS agreed to give state until end of August 2017

to resolve any issues with private hospital funding

methodology

Medicaid Waiver - Options

Unwind – return to FY2011 rules?

No waiver – state plan amendment?

Work with CMS to address the

problems.

Today’s Discussion

November 8th Election

85th Texas Legislature & the State Budget

Trauma funding

Medicaid waiver

Other Items

Section 1332 State Innovation Waivers

Gives states the option to apply for a waiver to waive some, but not all,

requirements of the ACA related to marketplace (exchange) coverage and

to implement innovative ways to increase access to quality health care.

The waivable provisions are limited to:

1. those dealing with the health insurance marketplace, including

provisions related to benefits;

2. the subsidies available through the marketplace;

3. the requirement for individuals to have coverage or pay a penalty

(individual mandate); and

4. the “shared responsibility” requirement for employers with 50 or more

full-time-equivalent workers (employer mandate).

Local Provider Participation Fund

• Local Provider Option - New

• Bowie

• McLennan

• Bell

• Beaumont

• Gregg

• Hays

• Rusk

• Brazos

77

STAR Kids I

STAR Kids is a new Texas Medicaid managed care program that will

provide Medicaid benefits, beginning November 1, 2016, to children

and adults 20 and younger who have disabilities.Participation in the

STAR Kids program is required for those who are 20 or younger,

covered by Medicaid, and meet at least one of the following:

Get Supplemental Security Income (SSI).

Get SSI and Medicare.

78

STAR Kids II

• Comprehensive needs assessment

• Client-centered planning and service design

• Service coordination

• Health home

• Behavioral health integration

• Early and thorough adult transition planning

• Rural services program design

• Quality monitoring and improvement

• Ongoing MCO collaboration

79

STAR Kids III

80

85th Legislature 2016-2017

Important Dates

9/30/2016 – Current Waiver Expires

11/8/2016 – November Election

1/10/2017 – 85th Texas Legislature Begins

5/29/2017 – 85th Texas Legislature Ends Regular Session

Thru 8/31/2017 – No Deferral of Private Hospital Payments

12/31/2017 15-Month Extension Expires

81

Medicaid Re-enrollment 9/24/2016

Texas Medicaid must revalidate the enrollment of all

providers in state Medicaid programs. For Texas Medicaid,

this means all providers, including ordering and referring

providers, who have not met all PPACA revalidation

requirements must do so through re-enrollment by Sep.

24, 2016

To avoid disenrollment on Sep. 25, 2016, and possible

disruption in claims payment, providers should submit a

re-enrollment application to the state or TMHP today.

http://www.tmhp.com/Pages/Topics/Reenrollment.aspx

Questions?

83

John Berta

Texas Hospital Association

jberta@tha.org