Medicaid Expansion

Tonight we met in closed caucus to discuss Medicaid expansion (dubbed UtahAccess+). I'm attaching information from three documents that cover the cost shares, waiver request and an overview. 

OVERVIEW:

UtahAccess+ offers sustainable health care to 95,000 Utah adults AND protects general taxpayers by asking the groups that financially benefit from expansion to pay 7 cents for every new dollar they’ll receive in revenue. 

UtahAccess+ expands healthcare coverage to Utah citizens and families earning up to 138% of the federal poverty level (FPL), currently $33,465 per year for a family of four. Most citizens in the expansion population will receive premium assistance and cost sharing to purchase private commercial health plans. Covered individuals who can share a small portion of the cost will be asked to do so, with higher income individuals paying higher costs. Medically frail individuals will receive traditional Medicaid benefits.

Health care providers would collect commercial reimbursement for non-medically frail expansion patients. To protect other important budget priorities like education, other social services, and public safety, provider groups that benefit from expansion would be asked not only to participate in the cost of expansion, but to share the risks of enrollment volatility and federal government uncertainty. Their assessments will go in a financial strongbox that can only be used to match federal Medicaid funds, and won’t require legislative appropriation.

UtahAccess+ Smart Coverage

Consistency: Individuals whose employers offer affordable insurance will enroll in employer plans, but will get financial assistance to do so. Those without employer offered insurance plans will get help buying a commercial plan.

Responsibility: Newly insured individuals between 100% and 138% of FPL will share in the cost of insurance, but their premium contributions, deductibles, and copays will be limited to what they would pay for coverage on the federal exchange. Certain plans will not reimburse for non-emergent use of emergency rooms or for non-emergency transportation.

Nurture: Adults in the expansion population whose children qualify for Medicaid may enroll their children in the same health plan used by the parent, keeping families together.

Continuity: Transitions both to and from expansion would be seamless. During implementation, expansion individuals between 0% and 100% of FPL will be enrolled in traditional Medicaid. Those between 101% and 138% will enroll in or remain on the federal exchange at 100% federal match. Should expansion be discontinued, active participants would remain enrolled. At discontinuation, those below 100% of FPL who are not participating will receive a Medicaid alternative similar to the Primary Care Network.

Guardianship: Children who are currently eligible for Medicaid but are not currently enrolled – part of the so-called “woodwork effect” – will be paid for using general tax dollars. Medically frail citizens will receive Medicaid benefits at an enhanced match rate through Accountable Care Organizations (ACOs), where available. A pilot program will integrate behavioral and physical health care for the medically frail. 

UtahAccess+ Sound Fiscal Management

Sustainability: State government, financial beneficiaries in the health care industry, and some newly insured individuals would share the financial downsides of expansion. General Fund savings resulting from federal coverage of substance abuse and mental health services as well as certain inmate health care would be reinvested in expansion. The State would further pay for children newly enrolled in Medicaid due to the “woodwork” effect. The State and drug companies would implement a preferred drug list. Health care providers would pay an assessment. The newly insured would participate in premiums, deductible, and co-pays.

Equity: Every provider class that benefits from expansion will help pay for it. Amounts collected from each provider class will be
proportional to the new revenue generated by expansion for that class. Rates will be adjusted each year to true-up collections given the prior year’s experience. Via the true-up, the Medicaid Inspector General will assure providers do not pass-on assessments to customers.

Efficiency: For most provider classes, collections will be made via an existing government transaction – like at the time of licensure, inspection, or taxation.

Accountability: General Fund savings and assessment proceeds will be deposited into a financial strongbox for use exclusively on

Medicaid expansion. Use of the account to draw down federal Medicaid dollars would not require legislative appropriation.

Certainty: Assessments would begin in fiscal year 2017, allowing the strongbox to accumulate a cash balance during the period in which federal subsidies cover a portion of the State’s cost. Headroom under assessment caps would allow for unforeseen enrollment of up to three times current projections. Caps will grow as Medicaid grows. 

Who’s Covered?

  • 32,000 Adults above 100% FPL

  • 63,000 Adults below 100% FPL

  • 31,500 Woodwork Children and Adults 

 

PROPOSAL FOR WAIVER REQUEST:

Who is covered?

Optional Medicaid expansion population up to 138% of the federal poverty level.

What benefits will Utah provide?

Medically frail individuals in the optional expansion population will receive Medicaid benefits under the current state Medicaid program at the enhanced match rate. (ACO in urban areas, fee for service in rural areas.) The state will develop a medically frail screening tool. A pilot program to integrate behavioral health and physical health for the medically frail will be implemented in selected geographic areas to maximize coordination of care and control costs.

Individuals with an offer of employer sponsored insurance will be required to enroll in the employer sponsored insurance and will receive cost sharing subsidies that may vary depending on whether the person is below 100% of the federal poverty level or above 100% of the federal poverty level. If the employer drops coverage, the individual may not enroll in Medicaid for six months.

Individuals not eligible for employer sponsored insurance who are above the federal poverty level will receive premium and cost sharing subsidies to purchase a commercial insurance plan that is actuarially equivalent to a silver level plan on the federal exchange, plus cost sharing reductions similar to what the individual would receive on the federal exchange.

  •   An individual will pay a premium contribution up to 2% of income, and cost sharing (deductibles, copays) up to 6% of the cost of care.

  •   An individual may only enroll in the new Medicaid program during open enrollment or after a qualifying life event.

  •   If an employer drops employer coverage for its employees, the employees may not enroll in Medicaid for six months.

  •   An individual is eligible for coverage only after paying the first premium, and may be dropped from coverage if subsequent

    premiums are not paid within a grace period.

  •   A plan may not make a facility payment for non-emergent use of the emergency department, and will not pay for non-

    emergent transportation.

    Individuals not eligible for employer sponsored insurance who are below the federal poverty level will receive premium subsidies and cost sharing subsidies to purchase a commercial plan that is actuarially equivalent to a silver level plan on the federal exchange, with maximum cost sharing by the enrollee as allowed by CMS.

 The plan will not make a facility payment for non-emergent use of the emergency department and will not pay for non- emergent transportation.

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September 28, 2015

Plans for an enrollee who is not eligible for employer sponsored insurance, and who is not medically frail, will be offered on a marketplace (perhaps Avenue H) and will allow broker involvement, including broker compensation, similar to Avenue H, Utah Premium Partnership Program, and plans sold on the federal marketplace.

Keeping Families Together

An individual in the adult expansion population who is enrolled in the expanded access program, but is above the federal poverty level, shall enroll the individual's child into the same insurance plan as the plan selected by the adult, if the child qualifies for Medicaid or CHIP and the child is not medically frail.

An individual in the adult expansion population who is enrolled in the expanded access program, but is below the federal poverty level, may enroll the individual's child into the same insurance plan as the plan selected by the adult, if the child qualifies for Medicaid or CHIP and the child is not medically frail.

Children enrolled in a plan with their parent will receive cost sharing subsidies and benefit wrap-around that is required by CMS.

Seamless Benefit Transition During Implementation

After the state obtains waivers for the expanded access program, a transition plan will be offered while the department develops and implements the new program and funding mechanisms. Eligible individuals who are 0-100% of the federal poverty level will be enrolled in the traditional Medicaid program with the enhanced federal match rate. Individuals 101-138% of fpl will enroll in or remain in the federal marketplace and receive federal cost sharing subsidies with no state matching dollars.

Seamless Benefit Transition if Expansion is Discontinued for Any Reason

An individual who is enrolled in the expanded access program on or before the date the program is discontinued shall stay in the expanded access program as long as the individual remains eligible for the expanded access program, and the state shall continue to receive the enhanced federal match rate for that individual.

An individual who is not enrolled in the expanded access program on or before the date the program is discontinued, who is in the adult expansion population and is above the federal poverty level, will enroll in the federal marketplace with federal premium and cost sharing subsidies with no state matching dollars.

An individual who is not enrolled in the expanded access program on or before the date the program is discontinued, who is in the adult expansion population and is below 100% of the federal poverty level, shall receive an alternative Medicaid benefit.

The alternative Medicaid benefit shall include limited benefits similar to those offered under the Medicaid Primary Care Network waiver, and may include additional benefits if the benefit is prioritized by the department based on a system that evaluates the state budget and the cost and efficacy of the potential benefit. 

 

UTAHACCESS+ COST SHARES:

 

B

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D

E

J

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O

S

T

1

Provider Service Class
(Per Federal Regulation)

Who/What

#of Entitie s

Method

Total Annual Target
FY 17 & 18

FY 17 & 18 Annual Minimum Tax Liability

FY 17 & 18 Annual Maximum Tax Liability

Total Target FY 2021

FY 2021 Minimum Tax Liability

FY 2021 Maximum Tax Liability

2

3

Outpatient Hospital

Hospitals

63

Assessment

$9,330,700

$10

$2,622,000

$13,652,400

$20

$3,840,000

4

Inpatient Hospital

Hospitals

63

Assessment

$6,768,300

$1,600

$1,884,300

$9,903,100

$2,300

$2,760,000

5

Physician

Physicians, Surgeons, Osteopathic, Naturopathic, and Physician Assistants

8,008

Licensing Fee

$6,384,600

$797

$797

$9,341,600

$1,170

$1,170

6

Outpatient Prescription Drugs

Pharmacy Benefit Managers, Pharmacies, and Drug Manufacturers

1,503

Gross Receipts Tax

$4,415,400

$7

$510,000

$4,304,100

$7

$490,000

7

Outpatient Prescription Drugs

Drug Manufacturers

N/A

Preferred Drug List

$850,000

N/A

N/A

$3,400,000

N/A

N/A

8

Managed Care Organization

Health Plans (Individual)

25

Premium Tax

$2,512,600

$0

$1,360,000

$3,676,300

$0

$1,990,000

9

Managed Care Organization

Health Plans (Small and Large Group)

17

Premium Tax

$697,900

$2

$280,000

$1,021,200

$6

$1,020,000

10

Managed Care Organization

Stop Loss Insurers

40

Premium Tax

$279,200

$5

$90,000

$408,500

$7

$140,000

11

Psychological

Residential Treatment Centers, Recovery Residences, Psychologists, and Certified / Clinical Social Workers

5,168

Licensing Fee + Gross Receipts Tax

$2,314,600

$50

$70,000

$3,386,600

$50

$100,000

12

Home Health Care

Home Health Agencies, Durable Medical Equipment, and Medical Suppliers

1,001

Gross Receipts Tax

$431,400

$1

$70,000

$631,200

$1

$110,000

Compiled by Russell Frandsen, Fiscal Analyst in collaboration with Nathan Checketts, Health and Nate Talley, GOMB 9/29/2015

Page 1

UtahAccess+ Cost Shares

 

B

C

D

E

J

K

L

O

S

T

1

Provider Service Class
(Per Federal Regulation)

Who/What

#of Entitie s

Method

Total Annual Target
FY 17 & 18

FY 17 & 18 Annual Minimum Tax Liability

FY 17 & 18 Annual Maximum Tax Liability

Total Target FY 2021

FY 2021 Minimum Tax Liability

FY 2021 Maximum Tax Liability

2

13

Ambulatory Surgical Center

Ambulatory Surgical Centers

46

Gross Receipts Tax

$353,500

$6

$320,000

$475,500

$9

$430,000

14

Freestanding Laboratory and X- Ray

Freestanding Clinical Labs, X- Ray Facilities

160

Gross Receipts Tax

$234,400

$3

$180,000

$319,800

$4

$240,000

15

Emergency Ambulance

Ambulance Service Providers

80

Assessment

$197,600

$50

$33,600

$289,100

$70

$50,000

16

Therapist

Physical Therapists, Occupational Therapists, Speech Therapists, Audiologists, and Respiratory Care Practitioners

4,731

Licensing Fee

$148,900

$31

$31

$217,800

$50

$50

17

Podiatric

Podiatric Physicians

160

Licensing Fee

$94,800

$593

$593

$138,700

$870

$870

18

Optometric/ Optician

Optometrists

360

Licensing Fee

$88,000

$244

$244

$128,800

$360

$360

19

Chiropractic

Chiropractic Physicians

806

Licensing Fee

$77,800

$97

$97

$113,800

$140

$140

20

Nursing Facility

Nursing Homes

100

Assessment

$61,000

$2

$1,607

$89,200

$3

$2,300

21

Nursing

Personal Care Agencies, Certified Nurse Midwifes, Registered Nurses, Nurse Anesthetists, Licensed Practical and Vocational Nurses, and Advanced Practice Registered Nurses

31,801

Licensing Fee

$47,500

$1.49

$1.49

$69,500

$2

$2

22

Total

 

54,132

 

$35,288,200

   

$51,567,200

   

Compiled by Russell Frandsen, Fiscal Analyst in collaboration with Nathan Checketts, Health and Nate Talley, GOMB 9/29/2015

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UtahAccess+ Cost Shares

 

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23

Assumptions/Notes:

24

The assessment level by provider class is based primarily on PEHP's non-Medicare claims for its member ages 18-64 by provider category from calendar year 2014. The utilization of psychological services is based on Milliman's estimate.

25

Other adjustments to the PEHP data include: (1) removing savings associated with the Justice Reinvestment Initiative due to Medicaid expansion and (2) 10% administrative costs for managed health care plans.

26

When comparing the PEHP break out to Medicaid spending on adults, PEHP does not have the following separate provider categories: (1) rural health clinics, (2) buy out, and (3) federally-qualified health centers.

27

In order to meet federal requirements for uniformity in provider assessments all providers within each group would be assessed in the same manner.

28

The physician provider count is based on physicians (and physician assistants) holding a license to prescribe controlled substances.

29

Assessments on professionals would exclude inactive licenses and those only providing charity care.

30

Provider (entity) counts for professional services categories include those professionals with addresses within Utah (out of state addresses with license renewals are excluded in the entity count).

31

Staff assumed the managed care organization gross revenues by subgroup from expansion based on Milliman's estimate of 72% of costs projected to be spent on qualified health plans (individual plans). Another 8% of costs is projected for employer sponsored insurance (stop loss insurance). Final 20% on traditional Medicaid via accountable care organizations (small and large group).

32

The ongoing administrative cost with collecting the provider assessments is included in the target figures and ranges from $400,000 for FY 17/18 to $500,000 for FY 21.

33

There is $4.0 million in one-time administrative costs associated with starting and setting up these providers assessments.

34

The estimated state administrative cost for collections on providers are rough estimates from the assigned state agency prior to talking to any other entities.

35

The proposed collection systems are an attempt by staff to use an existing state-business/individual relationship to collect the desired assessment. Some charges could be a surcharge added to existing licensing fees. For licensing fees collected bi-annually, the tax liability for two years would be collected at licensing.

36

All "licensing fees" in the "method" column would be collected bi-annually with the regular licensing cycle, so the amount paid at licensing would be for two years (twice the amount listed in the annual tax liabilities column).

37

The federal government limits provider assessments two ways (1) no more than 25% of all state match can come from private provider assessments (although according to CMS this rule is not currently enforced) and (2) cannot charge more than 6% of provider revenues.

38

The federal government is currently not enforcing the 25% limitation on the state’s share of funding coming from the collection of provider taxes. The federal statute is ambiguous as to whether the 25% limitations still applies. A cautious approach would suggest that the state stay within the 25% limitation.

39

The current provider assessment levels are (1) private hospitals 1.8%, (2) nursing homes 6%, (3) intermediate care facilities 5.3%, and (4) ambulance providers 1.7%.

40

The current hospital assessment excludes the University of Utah and other government-affiliated hospitals. Those hospitals pay via an intergovernmental transfer.

Compiled by Russell Frandsen, Fiscal Analyst in collaboration with Nathan Checketts, Health and Nate Talley, GOMB 9/29/2015

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UtahAccess+ Cost Shares

 

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41

FY 2016 projected total assessments from private providers for services (before expansion) are $80.3 million. 25% of all state match for FY 2017 (estimated) Medicaid actuals is $200 million vs total projected assessments under this model of $115 million or 14% with $85 million in room for more assessments. By FY 2021 25% of state match is projected at $260 million vs projected use of $145 million or 14% with $115 million in room for more assessments. These figures currently include new hospital assessments including the University of Utah system ($5 million in FY 2017/2018 and $7 million in FY 2021) which has the option of being done as an intergovernmental transfer and not counted against the cap.

42

The PEHP data indicated that the following provider service classes would not receive significant increased revenues from Medicaid expansion and therefore not pay any assessments: intermediate care facility for individuals with intellectual disabilities and dental.

43

Some fees where the recoupment per provider is smaller, a flat fee would be assessed where larger amounts per provider would be done based on gross receipts or some other measure of provider volume.

44

Gross receipts taxes cannot be applied to payments received from the federal government for medical services. Currently the min/max tax liability figures include revenues from all sources.

45

 

46

Definitions for "Method" Column:

47

Assessment - proposed surcharge to existing facility licensing fees to be collected by licensing agency (Departments of Health).

48

Gross receipts tax - new tax based on the gross receipts of a business/individual.

49

Licensing fee - proposed surcharge to existing professional fees, these are currently charged every two years by the Department of Commerce or annually by the Department of Human Services (some of its licenses are on a bi-annual schedule).

50

Premium tax - new tax on a health plan's premiums to be collected by the Tax Commission or the Department of Insurance.

51

 

52

Sources:

53

LFA calculations based on Tax Commission, DWS, BLS, and Moody's data

54

Milliman file for S.B. 164 fiscal note from 2015 General Session

55

https://medicaid.utah.gov/Documents/pdfs/annual%20reports/medicaid%20annual%20reports/MedicaidAnnualReport_2014.pdf

56

https://insurance.utah.gov/health/documents/2014HlthInsMrktRpt.pdf

57

http://le.utah.gov/interim/2015/pdf/00001182.pdf

58

http://le.utah.gov/interim/2015/pdf/00001318.pdf

59

U.S. Census Bureau, Economic Census and Moody’s Investor Services. Data are available for various years, depending on the industry. Projections by Fiscal Analyst.

60

http://hslic.utah.gov/db-search/

61

RAND Corporation and Federal Form 5500

62

Milliman memorandums July 2014

63

Information provided by the Department of Health July to September 2015

64

Information provided by the Division of Occupational and Professional Licensing July to September 2015

65

Information provided by the Tax Commission August 2015

66

Information provided by the Department of Insurance September 2015

67

Information provided by the Department of Human Services September 2015

Compiled by Russell Frandsen, Fiscal Analyst in collaboration with Nathan Checketts, Health and Nate Talley, GOMB 9/29/2015

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