South Carolina Department of Health and Human Services

1. South Carolina Department of Health and Human Services Senate Finance Committee Budget Presentation April 24, 2012

2. Section 1: Overview & FY 2012 Update • Section 2: FY 2013 Budget Request • Section 3: Looking Ahead • Appendix: Update Regarding Improper Release of Medicaid Beneficiary Data, and PERM Table of Contents

3. Section 1: Overview & FY 2012 Update

4. Trends in Medicaid Enrollment Most Recent 15 Months FY 2012 SCDHHS original budget reflected 40,930 additional members. YTD enrollment growth is expected to be 45,290 members. Revised enrollment growth forecast for FY 2012 is 50,040 members, for an average monthly enrollment of 904,653. Increased enrollment growth is primarily in children and Family Planning. FY 2012 year to date expected monthly enrollment: 907,025 – January 912,657 – February 918,714 – March

5. Bending the Cost Curve The Department is pushing costs out of the system, by bending Medicaid’s PMPM cost curve. Unique members grew 8% from FY 2007 to FY 2011. PMPM costs grew 12% from FY 2007 to FY 2011. PMPM costs are projected to grow 2.38% from FY 2012 to FY 2013. Sources: RSS3870 & Thomson Reuters Advantage Suite and Milliman Winter 2012 Update Preliminary FY10 data in SAP as of 9/13/11 and estimated for FY 2012 and FY 2013

6. As of March 31, 75.5% of the fiscal year has passed. Medicaid Assistance Expenditures are at: 71.2% of the 12-month budget expended as of March 31. 95.4% of an estimated nine month budget projection. State agency, medical contracts and other operating contracts are below budget primarily because of claims and payment timing. FY 2012 Year to Date Financial Results

7. Section 2: FY 2013 Budget Request

8. Original SCDHHS Budget Request was $5.96 billion which is a 2.8% increase over the FY 2012 appropriation. 98% of the request is required simply to keep the program operating at the current level. FY 2013 Original Budget projected 28,771 additional members. FY 2013 Revised Forecasts projects 32,438 additional members. FY 2013 Budget Request: Total All Funds

9. Executive Budget is $15.7 million less than original submission. The FY 2013 Executive Budget is a 2.6% increase over the FY 2012 appropriation. FY 2013 Executive Budget re-categorizes $165.8 million of General Fund request (Tobacco Tax and Tobacco Settlement) to Other Funds. DHHS FY 2013 Budget Request to Proposed Executive Budget

10. $932 million was submitted for Medicaid estimates for other state agencies, a 3.8% growth over FY 2012. 61% of new funding request is related to Maintenance of Effort (MOE) and other mandates. More than $4.4 billion of Medicaid request is for Medical Assistance payments. Recap of FY 2013 Executive Budget Appropriation Request by Major Program Use

11. FY 2013 Executive Budget by Major Purpose

12. Section 3: Looking Ahead

13. Affordable Care Act (ACA) Medicaid Expansion Impact ACA Projections By FY 2015, latest actuarial estimates indicate that enrollment in the SC Medicaid program will exceed 1.47 million members. For FY 2014 and 2015, SCDHHS will need at least $189 million in additional match for ACA provisions and enrollment. Source: Milliman (April 6, 2012 Projections)

14. ACA Projections South Carolina can expect to spend $1.1 billion to $2.4 billion more in state funds through FY 2020 as a result of the Affordable Care Act.  Affordable Care Act Impact: FY 2014 to FY 2020 Low High

15. Appendix: Update Regarding Improper Release of Medicaid Beneficiary Data, and PERM

16. Improper Release of Medicaid Beneficiary Data: What Happened • An operational performance review uncovered that an employee inappropriately transferred personal information of 228,435 Medicaid beneficiaries to his personal email account. • SCDHHS discovered the transfers on Tuesday April 10, and contacted SLED. The employee was terminated the following morning. Charges were filed against him on Thursday, April 19. • Transferred information included: names, phone numbers, addresses, birth dates and Medicaid ID numbers. In 22,604 cases, Medicare ID numbers, which contain Social Security numbers, were also linked to beneficiaries’ names. This was a serious violation of Department policy and state and federal law. No medical or financial information was included and the release will not affect Medicaid eligibility.

17. Map of Impacted Medicaid Beneficiaries More than 90% of the affected beneficiaries live in six counties: Allendale, Bamberg, Barnwell, Lexington, Orangeburg and Richland.

18. Improper Release of Medicaid Beneficiary Data: SCDHHS Actions • Contracted with Experian to set up a toll-free call center at 1-888-829-6561 to answer beneficiary questions and help them enroll in free credit protection services including: • A free credit report • Daily credit monitoring to detect any suspicious activity • A $1 million identity theft insurance policy • Created www.myscmedicaid.org website., to provide up-to-date information. • Placing print and radio advertising throughout the state. • Reaching out to local organizations and the provider community to assist in educating beneficiaries about of the incident and the services available. Other Actions Taken Provided SLED with the employee’s computer and files. Contacted appropriate state and federal agencies including Department of Consumer Affairs and HHS’ Office of Civil Rights. Froze access to personal identifiable information for much of its staff. Hired an external firm to conduct a risk assessment of its data management polices and IT systems security.

19. Improper Release of Medicaid Beneficiary Data: Status • Letters sent to impacted beneficiaries • Mailings started on Monday, April 23 • Call center operations • Started on Thursday, April 19 • 659 calls as of Monday, April 23 • 126 beneficiaries/families have signed up for credit services as of Monday, April 23 • Newspaper ads and radio spots began the week of April 23. • Communicated with leadership from impacted state agencies. • SCDHHS directly contacted over 120 key stakeholders on Thursday, April 19 and held several informational conference calls. Call Center Average length of call has been approximately 5 -9 minutes. Average call wait time has been approximately 30 seconds. Websites As of Sunday, April 22, www.myscmedicaid.orghad about 1,500 visitors. As of Sunday, April 22, www.scdhhs.gov visitors were up about 20%.

20. Payment Error Review Measurement (PERM) Update • To date, seven (7) cases were referred to the Attorney General for fraud investigation. • SCDHHS Program Integrity has completed a review of all 52 cases to identify potential fraud and abuse. • USC has reviewed all 52 cases for identifying process improvements. • Initiated new Eligibility Quality Improvement Program (EQUIP) with USC Center for Health Services & Policy Research. • Over 1,700 reviews were completed in one region, with 11 counties. • Overall error rate in initial reviews was 5.3%. • Analysis of EQUIP reviews for trends and approaches to improve and ensure quality is underway. • Inspector General has collected information from on-site interviews and observations and is preparing an independent report. Commitment to Improvement Initiated a process review with the Office of Inspector General Appointed Interim Quality Manager Implemented mandatory Eligibility Determination checklist Started EQUIP process for measuring quality Will tie error rate and processing time to supervisor performance review