Session 1.02 Improving Access to and Quality of Medicaid for Pennsylvanians

1. Session 1.02Improving Access to and Quality of Medicaid for Pennsylvanians Medicaid Congress June 5, 2008 Presented by: Stefani Pashman Pennsylvania Department of Public Welfare

2. Agenda • Background on Pennsylvania State Medical Assistance (Medicaid) Program • Pennsylvania Medical Assistance Priorities • Cost Containment Efforts Lead to Improved Access • Initiatives Focused on Quality and Value

3. Background on Pennsylvania State Medical Assistance (Medicaid) Program

4. Medical Assistance in Pennsylvania: At a Glance Serves 1.9 million low-income individuals • 2/3 in mandatory managed care (based on geography) with behavioral health carve out • 1/3 in AccessPlus primary care case management program for physical health, behavioral health carve out Generous optional benefit package Diverse geography with significant urban and rural populations Conservative legislature creates budget challenges

5. All Other 14% Debt Service 3% Corrections PreK-12 6% Education 34% Higher Education 7% Medical Assistance Other DPW State Share Human Service 19% Programs 17% Medical Assistance Makes Up 19% of Commonwealth Budget FY 07-08

6. Other $1.3 Billion FY 07-08 Medical Assistance Budget (by Service Program) Long Term Living $3.8 billion Physical Health Services $6.6 billion Behavioral Health Services $2.9 billion

7. Ongoing Budget Challenges We Face… Uncertain national economic outlook Growth in national health care costs Eligibility growth Increase in elderly & disabled Loss of federal funding

8. Federal Government Continues to Cut State Funding in 2007-08 In 2007-08, Pennsylvania will have to absorb an additional $717.7 million in additional federal cuts (Dollars in millions) 10

9. +3.4% +3.9% +4.9% Medical Assistance Eligibility Trend +7.8% +4.9% -0.2% +4.8% +4.3% -3.6% +7.0% +4.5% -8.2% +2.8% +10.5% -2.9% +1.4% -1.7% *Projected Average Monthly Enrollment Source: DPW Budget Office 11

10. PA Medical Assistance Growth Areas are Elderly and Disabled

11. Seniors and Persons with Disabilities use more Medical Assistance resources Persons Costs FY 07-08 Estimated

12. II. Pennsylvania Medical Assistance Priorities

13. Despite Budget Climate, Governor Committed to Core Principles Since 2005 CORE PRINCIPLE #1 No one currently receiving services will lose eligibility CORE PRINCIPLE #2 Children will not experience any reduction in services CORE PRINCIPLE #3 Pennsylvania will provide coverage for the growing number of vulnerable individuals and families that need our assistance

14. What has PA done to address funding challenges? • Focus on quality and value • Cut administrative spending • Work smarter • Build on existing cost containment initiatives

15. III. Cost Containment Efforts Lead to Improved Access

16. State Administrative Spending $40 million lower despite 5 years of inflation and cost increases Governor Rendell has Reduced Statewide Administrative Spending Despite inflationary increases in health benefit costs, fuel costs and numerous other costs, administrative spending is still 2 percent lower in 2007-08 than in 2002-03 Dollars in millions

17. Medicaid Program has Similarly Reigned in Administrative Spending Over the last four years, achieved $374.2 million in savings Planning to save over $150 million next year

18. Changes Made to FFS Pharmacy Program in Last 3 Years • Established Pharmacy Division • Implemented Payment Rate Changes • Implemented Dynamic Pricing • Established Preferred Drug List (PDL) • Introduced Quantity Limits • Implemented Clinical Prior Authorizations

19. FFS Pharmacy Non-Dual Eligible PMPM Trends(Federal and Supplemental Rebates are not excluded) 20

20. Cost Containment Also Improved Program Operations • Maximizing Recoveries and Minimizing Payments in Error • $140.7 million in Third Party Liability (TPL) cost recoveries in 2007 • $24.9 million in recoveries for fraudulent and erroneous payments in 2007 • Negotiating Better Contracts $29.1 million in negotiated contract savings in 2007 • $42.2 million in negotiated savings over the life of these contracts • Reorganized Mental Health and Substance Abuse operations to improve integration and significantly reduced administrative expenses

21. Under ACCESS Plus We Now Have a Managed FFS Program AccessPlus takes managed care concepts and applies them to the fee-for-service program, in rural areas. • Over 290,000 recipients enrolled in ACCESS Plus • Medical home established for both children and adults • Significant improvement in clinical quality for recipient with chronic disease • Over 34,000 recipients involved in disease management (DM) managed by contractor • 50% of Disease management recipients in the highest severity of illness (level 3) improved to a level 1 or 2 • Complex case management unit is actively involved with over 550 recipients per month

22. New Initiatives to Improve Access to Medical Assistance Prescription drug coverage • Today 43,000 low income adults qualify for MA but are not eligible for prescription drug benefits • New initiative would fill that gap in conjunction with the implementation of Cover All Pennsylvanians Selected fee increases • Skilled nursing care and home health services • Dental and primary care providers Goal is to ensure access for children and families

23. IV. Initiatives Focused on Quality and Value

24. Quality and Value Drive Budget Initiatives • Implemented Preventable Serious Adverse Events Policy • Implementing Predictive Modeling QUALITY & VALUE • Focusing on Credentialing • Implemented Family Planning Waiver • ER Diversion

25. Quality and Value Drive Budget Initiatives • Address Childhood Obesity and Weight Management • Updating Specialty Pharmacy QUALITY & VALUE • Adopting Telemedicine • Addressing Disparities

26. Pay for Performance incentives leads to better health outcomes • Managed Care Organizations can earn up to a 2.5% performance bonus (up from 0.5% two years ago) based on specific measures • ACCESS Plus providers are eligible for similar incentive payments • Hospitals • Can apply for competitive grants for quality improvement projects • Access additional funds based on quality efforts

27. Rebalancing the Long-Term Living System Enhances Efficiency and Quality GOAL: 50/50 split between home & community based and institutional care WHY? Better quality, better efficiency, consistent with consumer preference HOW? • Established cross-department office • Expanding Adult day care to help seniors stay at home longer while giving their families the support they need • Tenant based rental assistance pilot broadened to include 10 more counties • Funding for services for 1,170 additional persons with disabilities and 2,100 additional older persons • Building the systems to license, certify and inspect Assisted Living residences

28. Take-Aways • Having a mandate from the Governor helps stabilize the Medicaid program • Cost containment initiatives pay off, but are labor-intensive to operationalize (there’s no more “low hanging fruit”) • Investments in quality and pay for performance are long-run • Each year only gets more difficult

29. Questions? Stefani Pashman, Special Assistant to the Secretary Pennsylvania Department of Public Welfare Email: spashman@state.pa.us

30. Appendix

31. PA Medicaid Optional ServicesBenefits for Adults Over 21 Years* • Birthing Center Services • Chiropractic • Drug & Alcohol Outpatient Clinic • Hospice • Intermediate Care Facilities for Persons with Mental Retardation (ICF/MR) • Independent Medical Clinic/Surgical Center • Optometry • Primary Care Case Management (PCCM) Services • Podiatrist • Psychiatric Clinic • Renal Dialysis • Transportation • Ambulatory Surgical Center • Case Management (Targeted) • Dental**, including orthodontics • Home and Community-Based Waiver • Inpatient Hospital and Nursing Facility Service for 65+ in an Institution for Mental Disease (IMD) • Intermediate Care Facilities/Other Related Conditions (ICF/ORC) • Medical Supplies and Equipment** • Pharmacy** • Prosthetic Devices** • Rehab Services • TB Related • Therapy (Occupational, Physical and Speech for Adults Limited to Those Provided by Hospital, Outpatient Clinic or Home Health Provider) *These Normally Optional Services are Redefined as Mandatory when Medically Necessary for Eligibles Under Age 21 **Adults eligible under the Medically Needy Only (MNO) category are not eligible for these services with some exceptions.

32. Hospital P4P • Hospital Quality Incentive • Incentives funded through incremental increase in DSH and Med Ed payments for DSH qualifying hospitals • Rate of payment increases for DSH hospitals tied to performance measures focused on: • Re-admission rates for chronic disease • Clinical indicators • Commitment to EMR, pharmacy error reduction and quality reporting

33. Hospital P4P • Hospital Quality Grant Program • $2.2 million (total) set aside in FY07-08 • Provide grants up to $100,000 to acute care DSH hospitals who have made investments in the following: • Pharmacy error reduction • Single medical record • Programs that have a positive impact on the hospitals treatment and management of asthma, diabetes, CHF or COPD • Programs that assist hospitals to improve LVF and community acquired pneumonia quality results

34. Other New P4P • ACCESS Plus P4P • Expand physician P4P to encourage physicians to actively engage in care management programs • HealthChoices Provider P4P • Implement P4P program to incentivize providers. All monies will go directly to the provider for activities which improve quality of care • Increased MCO Contract Incentive Payments • Opportunity to earn up to 2.5% of capitation rate in incentive payments • Contract incentives focus on improving health status of members, not utilization controls, e.g. : • Controlling high blood pressure • Improving prenatal care in 1st trimester • Improving adolescent well-care visit rates

35. http://www.dpw.state.pa.us