Medicaid Managed Care Across the U.S.

The North Carolina Senate  discussed today a proposal for Medicaid reform that would be the broadest application of managed care in any State nationally. By broad I mean:

  • They want all categories of Medicaid beneficiary (children, adults, aged, blind and disabled–including the dual eligibles) to be a part of managed care
  • Soon: 2016 for those covered by private insurance company plans; 2018 for provider-based plans (think Duke offering a plan for Medicaid beneficiaries in Durham, Granville, Vance and Franklin counties)
  • For the full benefit package, including long term care and specialized services for the long term disabled, behavioral, etc
  • Based on a capitated payment (insurance plans or provider organizations get a fixed amount per month to be responsible for the full benefit package)
  • With the capitation rate set low enough so that North Carolina would spend less on Medicaid than it would under the default system

Actually doing this–putting all Medicaid beneficiaries, under full capitation, for the full benefit package within 2 or 4 years and reducing the state’s Medicaid costs–would amount to the grandest health policy change in U.S. history. And you thought liberals had wild eyed schemes! Read more of this post

Others move ahead on Medicaid while N.C. stands still

New Hampshire became the latest state to move ahead with a Medicaid expansion tailored to the preferences of their state (adults with incomes up to 138% of poverty can be covered by their Medicaid managed care program, or they can receive payments to subsidize employer provided health insurance for workers with low wages). New Hampshire has divided government (Dem Governor, divided Legislature), as does Arkansas that has adopted a privatized Medicaid expansion under which federal money will be used to purchase private health insurance for those who would otherwise qualify for Medicaid.

So far 7 states with Republican Governors have managed to figure out a beneficial means of expanding Medicaid in spite of not being a big fan of the President’s, and 3 others: Utah, Pennsylvania, and Indiana are currently negotiating with the federal government to obtain waivers that will allow them to expand under state-specific details/models (that generally include some sort of privatized expansion).

Drew Altman notes that Red States will pay close attention to what other Red States do regarding Medicaid expansion/health reform, and there will likely be a drip-drip-drip move toward expansion/reform proposals that make sense within the politics of a given State, that will eventually give way to a rush of expansions except for perhaps the deep south. In North Carolina, which is totally red in terms of control (Governor, both state houses), but which had the closest margin of any State in the last two Presidential elections (14,000 and about 100,000 votes), the Republican party appears to be dead in the water on Medicaid, unable to negotiate with itself, leaving our state which was once thought of as a leader in the South, relegated to the sidelines to watch others embark on state-specific reform plans.

Long Tem Care Not Included in ACA Plans

Following up on my coverage of the North Carolina Senate budget:

As noted in the link above, elderly who have Medicaid via the medically needy provision are ineligible for ACA plans due to their age. The blind and disabled who are younger than age 65 who lose Medicaid are eligible for ACA plans, but a large proportion of the costs of the medically needy who are disabled is Long Term Care. And Long Term Care is not covered by benefit package required by ACA plans. The 10 Essential Health Benefits that are mandated to be covered by the ACA are as follows:

What’s covered in the Health Insurance Marketplace

These essential health benefits include at least the following items and services:

  1. Outpatient care—the kind you get without being admitted to a hospital
  2. Trips to the emergency room
  3. Treatment in the hospital for inpatient care
  4. Care before and after your baby is born
  5. Mental health and substance use disorder services: This includes behavioral health treatment, counseling, and psychotherapy
  6. Your prescription drugs
  7. Services and devices to help you recover if you are injured, or have a disability or chronic condition. This includes physical and occupational therapy, speech-language pathology, psychiatric rehabilitation, and more.
  8. Your lab tests
  9. Preventive services including counseling, screenings, and vaccines to keep you healthy and care for managing a chronic disease.
  10. Pediatric services: This includes dental care and vision care for kids

Specific health care benefits may vary by state. Even within the same state, there can be small differences between health insurance plans. When you fill out your application and compare plans, you’ll see the specific health care benefits each plan offers.

As noted above, states are able to add extra benefit requirements/mandates. However, states are explicitly prohibited from making ACA benefit package include Long Term Care. From the CMS guidance (emphasis below is added by me):

Excluded Benefits

Pursuant to 45 CFR 156.115, the following benefits are excluded from EHB even though an EHB-benchmark plan may cover them: routine non-pediatric dental services, routine non-pediatric eye exam services, long-term/custodial nursing home care benefits, and/or non-medically necessary orthodontia. Please also note that although the EHB-benchmark plan may cover abortion services, pursuant to section 1303(b)(1)(A) of the Affordable Care Act, a QHP issuer is not required to cover these services. Section 156.115(c) provides that no health plan is required to cover abortion services as part of the requirement to cover EHB. Nothing in this provision impedes an issuer’s ability to choose to cover abortion services or limits a state’s ability to either prohibit or require these services under state law.

The fact that Long Term Care is not covered by ACA plans (and my and your employer sponsored private insurance BTW) is a big problem because a large portion of the care being financed by those who would lose Medicaid under the proposal is for Long Term Care Services (From KFF).

ScreenHunter_21 May. 31 09.56

This is not N.C. specific, but provides guidance. For persons age 65+ who lose Medicaid under the proposal, they cannot buy a plan in the ACA marketplace. They will still have Medicare, but it does not cover most Long Term Care. The dark blue bars to the right in the figure above (Long Term Care) will not be paid by Medicare since it does not cover most Long Term Care (the dark blue bars to the left are already mostly being paid by Medicare; these costs will shift to the beneficiaries). For younger than age 65, the light blue bars to the left (acute care) would be covered by ACA plans. The light blue bars to the right (Long Term Care) would not be covered under ACA plans because Long Term Care is not included (and explicitly forbidden) to be covered by ACA plans as noted above.

Summing Up:

  • WRAL reports that there are ~15,000 persons who would lose Medicaid coverage as of Jan 1, 2015 (the numbers in my earlier post were based on 2010 numbers; the magnitudes are not the same, by the by group analysis is)
  • Any of these 15,000 who are age 65 and over cannot buy ACA plans (I can’t find a definitive age breakdown; anyone got it?).
  • Those who are younger than age 65 are eligible for ACA plans, but these plans to do not cover Long Term Care–the most expensive type of care for most of these people, and the very thing that pushed them into medically need Medicaid eligibility in the first place. But, the acute care services incurred by these patients would be covered by ACA plans. There will be some idiosyncratic differences by person in terms of what proportion of their total spending is covered by ACA plans. Those with more acute costs will be better covered by ACA plans than will those with more LTC costs, will be in trouble.

Bottom line is that the Senate Medicaid policy is mostly vague, until it gets to their desire to have Medicaid eligibility as low as possible. I think this is a bad policy. Even worse is that bad policy is being supported by faulty policy logic.

Could people who lose Medicaid coverage get ACA plans?

The North Carolina Senate budget would reduce the Medicaid eligibility for aged, blind and disabled beneficiaries who qualify due to being medically needy–meaning they have high health care costs but their income would otherwise be too high.  It is difficult to say for sure how many persons would be effected because the budget lays out a principle–get eligibility as low as allowable under federal law. But here is a ball park estimate in terms of number of persons who could lose eligibility: of the ~54,000 medically needy persons in 2010, at a cost in 2010 of around $900 Million (I estimate that around 32,000 of them are aged or disabled (with blind mixed into disabled). I don’t believe children or adults are included in the proposal.

These are obviously expensive Medicaid beneficiaries on the whole, but the groups that would be targeted by this change are particularly expensive on a per capita basis:

ScreenHunter_04 May. 30 17.17

According to WRAL via their @NCCapitol twitter account, this afternoon on the Senate floor, Sen. Hise said that these persons being cut from Medicaid can buy insurance on the ACA exchange so they don’t need Medicaid. Is this true?

I believe this is false for some persons losing coverage, but true for others. And for some who could get coverage, the ACA benefit package–as expansive as it is–would not cover the Long Term Care Services that are so expensive for these persons. Lets walk it through.

  • The 21,500 elderly persons who are medically needy are not eligible for ACA plans. Anyone who is age 65 and over cannot buy health insurance in the ACA marketplace. They have Medicare for acute care services, and Medicaid due to high expenses as compared to income. From a recent Kaiser Family Foundation brief on the medically needy (p1):

Elderly living in nursing homes and children and adults with disabilities who live in the community and incur high health care costs comprise a large portion of spending in the medically needy program.

I believe that Senator Hise and others are misinformed.

  • The 10,100 disabled and blind persons younger than age 65 are eligible for ACA plans sold in the marketplace. However, there is a good chance that most of the care they are receiving via Medicaid won’t be covered by an ACA exchange plan because Long Term Care services are not typically covered by acute care insurance (or Medicare). That is why Medicaid has gotten involved in the first place.  Consider the figure below from KFF on the types of care that the medically needy receive:

ScreenHunter_05 May. 30 17.40

Part of the care costs of the 10,100 disabled and blind persons who would lose coverage could get some of their expenses covered by ACA plans, lets say one-third as a ball park estimate. However, two-thirds of these costs will not be met because acute care insurance doesn’t cover Long Term Care.

Bottom line: it is false that all persons who lose Medicaid under the Senate proposal will be able to be covered by an ACA plan. The elderly are not eligible. And for the blind and disabled who are younger and who could get coverage, the acute care plans sold on the exchange (and provided by Duke as a benefit of employment, for example) don’t cover Long Term Care. There seems to be a fairly large error behind the logic of this aspect of the Senate proposal.

If you think I have made an error above, let me know. It would of course be nice to have more detailed information about this sort of proposal–it is knowable with precision–including what type of care is being paid for by Medicaid and whether it would be covered under an ACA plan.

This is a bad day for my beloved North Carolina.

N.C. Senate Budget on Medicaid

The N.C. Senate released its budget, and the key Medicaid section starts on page 91. A few highlights and some questions and comments:

  • Section 12H.1.(b) stops the movement toward a regionalized “Medicaid ACO reform approach” that was the direction that the Executive branch (NC DHHS) had been moving, and is really back toward the Governors initial plan, which I labelled as ‘unworkable’. But, the phrasing below about full-risk capitated plans and provider led and non provider led plans is quite vague, so might really encompass Medicaid ACOs. I don’t know if the language is trying to be coy, or if they don’t really appreciate the nuance under the labels.
  • Section 12H.1.(a) would move Medicaid out of NC DHHS and into an independent agency (first sentence below). The execution of such a move is key, but I actually think this is a pretty good idea.
  • Section 12H.1.(a) also has some generalities that are difficult to judge without lots more details. There is *massive* amounts of health policy in lines 16-21

SECTION 12H.1 .(a)It is the intent of the General Assembly to transfer the
14 Medicaid and NC Health Choice programs to a new state entity that will define a new, more
15 successful direction for the programs and that will be able to focus more clearly on the
16 operation of the programs. Specifically, the Medicaid program shall move away from
17 unmanaged fee -for-service towards a system that manages care. To that end, Medicaid shall
18 include all dimensions of care for a recipient through full-risk, provider-led and
19 non-provider-led, capitated health plans. Such full-risk capitated health plans shall include all
20 aspects of care, without exceptions, so that the State will bear only the risk of enrollment
21 numbers and enrollment mix

Several comments:

  • The paragraph implies that Medicaid is one program, when in reality it is at least 4 programs when viewed in terms of who is covered, what type of care they need, and how much they cost (see below; I know I write this over and over, but it is the most fundamental thing to understand about Medicaid).

ScreenHunter_20 May. 29 21.50

For example, the figure below illuminates the “dual eligible” persons, who are covered by Medicare because they are age 65+ typically, and Medicaid because they are poor. They have both acute care needs (doctor, hospital) that are shared by Medicare and Medicaid, and Long Term Care needs (nursing home) that is primarily paid for by Medicaid. There are some children who need nursing home care, for example, but that is very rare for that category of Medicaid beneficiary. And the groups of Medicaid that are the most expensive as shown above (aged, disabled) cost so much because they use lots of acute care as well as Long Term Care. Kids and adults, on the other hand, mostly use acute care.

ScreenHunter_03 Jun. 07 09.36

  • The biggest problem with the proposal in lines 17-21–the movement to a completely at risk, capitated system is that it does not make clear what parts of the Medicaid program they intend to do this in? If they mean adults and children–the relatively inexpensive portions of the Medicaid program who mostly need acute care, then it is doable over time. In fact, my white paper is consistent with what they say if that is the patient group focus [I also call for coverage expansion using Medicaid expansion money, but putting beneficiaries into risk based private plans, be they organized by providers or insurance companies].
  • If they mean the entire Medicaid program (the aged and disabled, including the dual eligibles as well–the folks who need lots of Long Term Care) will be put totally into an at risk system right away, I don’t think that will work in one of two ways. First way to fail: if you hold a geographical based at-risk system and the price to bid is that you must take all the beneficiaries in an area, then no one is going to bid in at least some parts of the state (or if they do and are for profit, I want to make sure I don’t own their stock). Second way to fail: you break down and say we can’t do it all at once, we will let managed care companies in and bid a subset of the at risk lives, then the insurance companies and perhaps others will cherry pick the best risks (see New York), and later say they need more money or they will leave the state, or stop covering Medicaid. Some of the big health systems might take all comers in certain areas, likely in exchange for Medicaid expansion via a private route (in the language of above, provider led risk plan) or otherwise. However, moving all of the Medicaid program into 100% at risk plans would be one of the biggest health policy changes in the nation’s history. To say more details are needed is an understatement….
  • Sections 12.H.3(a) and (b) on page 92 seeks to reduce categorical eligibility and medically needy eligibility criteria for Medicaid beneficiaries who are aged, blind or disabled. The way the Medicaid program works is there are minimums that you must cover, and states can go beyond that if they wish, both in terms of services and eligibility levels (and the federal government pays around two-thirds of the cost in N.C.). This section directs the state to find the lowest eligibility level allowable by law for the elderly, disabled and blind in Medicaid (based on this KFF link, there were ~54,000 medically needy North Carolinians in 2011; total medically needy spending was ~$900 Million in 2011). This would eventually go to zero under the proposal. As a lifelong North Carolinian, I find this section embarrassing.

We can do better.

Update 5/30: there is lots more that is quite bad. For example, section 12H.20.(a) on p. 99 allows the new Medicaid entity created in Section 12H.1.(a) to end the Community Care North Carolina (CCNC) without cause given 30 day notice, and does not allow them to contract with under any circumstances after December 31, 2015. As this post notes, I didn’t think the Governor’s initial plan would really be able to eradicate CCNC, but the Senate budget quite explicitly would.

Benefits of health insurance + Indiana Medicaid reform

A few quick thoughts as the N.C. General Assembly gets cranked up for the short session:

  • Austin Frakt has a nice round up discussing the cost-benefit calculus of universal coverage, engaging with my friend Michael Cannon‘s post on the evidence base for universal coverage. You can actually incorporate the ideas in my post over the weekend on reasons to be for universal coverage outside of health effects–and to counter- or in-favor arguments for it based on liberty–into cost-benefit analysis. It is just that monetizing such ideas is difficult. However, the most important thing about cost-benefit analysis is the attempt to have a comprehensive enumeration of the costs and the benefits, even if the precise measurement of them is difficult.
  • And I think looking carefully at the costs and benefits of how we spend money to expand coverage is more important than I did 19 years ago, but a technocratic solution may not exist (though check out this comment to this post in samefacts.com). It is first and foremost a values/moral discussion. And of course someone could be opposed to the ACA for a variety of reasons and support some sort of universal coverage. That is just not what the tenor of most of the debate has been like, but I would welcome the shift.
  • Gov Mike Pence writes in today’s WSJ about his proposal to move ahead to expand insurance coverage in Indiana by using Medicaid expansion money in a non-traditional means. There are now emerging  a series of expansion approaches outside of simple Medicaid expansion that are being undertaken by states whose political leaders are opposed to Obamacare. My suggestion to jump start comprehensive, state-based reform is here. I wish North Carolina’s leaders would come up with something that they are for in relation to health reform. Our elected leaders seem to be doing nothing, and our state is getting passed by. update: here is a good explainer of Gov. Pence’s proposal.

Duke/UNC student proposal on Medicaid

“A New Health Reform Framework for North Carolina: Medicaid Reform in Our State” (pdf) is the final product that flowed out of the final paper that graduate students from Duke and UNC turned in for a class that I taught in Fall 2013 entitled “The Future of Medicaid in North Carolina.”

The short version of their recommendation:

  • Expand Medicaid from 0-100% of federal poverty and leverage the infrastructure of Community Care North Carolina;
  • Expand from 100-138% of poverty via “private expansion” meaning using Medicaid expansion funds to pay private insurance premiums in exchanges

The report offers many suggestions regarding health system reform in North Carolina as well, that I won’t detail in this post.

It is safe to say that the students who were attracted to this course were reflexively for the Medicaid expansion, and in many ways “didn’t get” how the state of North Carolina wasn’t undertaking the Medicaid expansion as part of the ACA. Most of them are not from North Carolina, and only came here to study. I tried to push them hard over the course of the semester to take seriously the opposition. They mostly still don’t get the opposition or think it is primarily based on opposition to President Obama, but they wrestled mightily to try and understand the perspective of opponents’, and to fashion what they understand to be a plausible way forward that they believe has given some ground.

I should note that these students did independent cost projections, and considered issues of crowd out and woodwork effects. This report represents thousands of a dollars worth of effort at any sort of market rate, especially that done after the final product turned in for the class.

In the spirit of inquiry, I invite my fellow North Carolinians are opposed to expansion, to come wrestle and reason together with these students in their nuanced pages.