Medicaid Modernization and Budget Update
Brent Earnest, Deputy Secretary
NM Human Services Department
New Mexico Human Services Department
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Medicaid Modernization – Why, What and
When
Medicaid Budget – a little bit of ‘101’ and an
FY13 update
Coordination of Long Term Services (CoLTS)
and Personal Care Option (PCO) Update
New Mexico Human Services Department
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Why Medicaid Modernization?
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Medicaid was created in 1965 as an afterthought to the
creation of the Medicare program.
It was meant to be a small, health-insurance program
It was a commercial like benefit package and a
relatively inexpensive way to help the families of
workers who died without pensions.
Since its inception –over 45 years ago—the program has
grown into a massive, unwieldy, complex behemoth
that is used as a device upon which to hang one social
program after another.
New Mexico Human Services Department
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The making of the Medicaid behemoth
1972: long term
care services (NF
and ICF-MR)
Mid-1980’s:
EPSDT – all
medically
necessary
services for
kids
Late 1980s: Congress
mandated one
population group
after another for
required coverage
under the program.
1965 – for widows and
orphans – a commercial style
plan
New Mexico Human Services Department
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Why Medicaid Modernization?
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The program has a benefit package
larger than any other insurance
package in the world!
While Medicaid was constantly being
expanded, Congress never bothered to
stop and modernize the program to
make it less complex and more
efficient.
We are now poised to add hundreds of
thousands of new members—up to
200,000 in New Mexico alone – to a 45year-old system that has never been
overhauled, just merely added to.
This approach is simply unsustainable
at the national and state levels.
State General Fund Cost Under PPACA
FY 2012 - FY 2020
$1.6
$1.4
$1.2
Billions
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$1.0
$0.8
Baseline General Fund
Cost
Low Take Up
$0.6
High Take Up
$0.4
FY 2020
FY 2019
FY 2018
FY 2017
FY 2016
FY 2015
FY 2014
FY 2012
New Mexico Human Services Department
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Why Medicaid Modernization?
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Modernizing our Medicaid program is a rational
response to a difficult situation.
It makes sense that, before we add all these additional
lives to the program, we take this time to do as much as
a state can, under waiver authority, to streamline the
program, review the benefits and cost structure and
demand that the system produce better results at lower
costs.
New Mexico Human Services Department
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Medicaid Modernization’s Guiding
Principles
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Develop and Implement a Comprehensive,
Coordinated Service Delivery System
Personal Responsibility
Pay for Performance
Administrative Simplicity
New Mexico Human Services Department
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Medicaid Modernization – The Basic Approach
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Use an 1115 global waiver to eliminate almost all of the
12 “siloed” waivers the Department now runs.
Reduce the number of MCOs from 7 to 3 or 4
The MCOs will be responsible for the full spectrum of
Medicaid services, including behavioral health services
but excluding Developmentally Disabled Waiver
services
Introduce delivery reforms using varying intensities of
care coordination depending on level of need.
New Mexico Human Services Department
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Medicaid Modernization – The Basic Approach
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Implement payment reform to improve health
care quality and improve outcomes.
Use a combination of incentives and
disincentives to help encourage members to
more wisely use health care resources.
New Mexico Human Services Department
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Medicaid Modernization – The Process So Far
External efforts:
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Conducted public input meetings in Clovis,
Farmington, Las Cruces, Roswell, Santa Fe and
Albuquerque.
Conducted a tribal consultation in Albuquerque.
Conducted specific stakeholder group input sessions.
Conducted multi-stakeholder workgroup sessions
around 3 of the 4 principles.
Presented at LHHS hearings in June and August.
New Mexico Human Services Department
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Medicaid Modernization – The Process So Far
Internal efforts:
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Conducted “public” input session with HSD staff
Alicia Smith and Associates (ASA) working with HSD
staff on specific topics
ASA collecting and analyzing data
Department’s actuaries (Mercer) working on budget
neutrality calculations
ASA writing concept paper
We are about a month behind
New Mexico Human Services Department
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Medicaid Modernization – Next Steps
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Take concept paper and visit with CMS
Start writing waiver request
Start working on RFPs for new MCO
contracts
Submit waiver late this year or early next
year
New Mexico Human Services Department
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Medicaid Budget – the Basics
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Made up of federal and state
funding. State funding is a
combination of appropriations
from the general fund, county
funding, and other state program
revenue and federal funds.
The federal funds are reimbursed
to the state via various federal
financial participation rates, the
most significant is known as the
federal medical assistance
percentage, or FMAP.
FMAP is currently 69.36, falling to
69.07 in FY13.
Every 1 percent drop “costs” the
state about $30 million.
FMAP Rates in NM
85%
80%
75%
70%
65%
60%
New Mexico Human Services Department
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Medicaid Budget – a little history
600,000
550,000
500,000
450,000
400,000
350,000
300,000
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
250,000
Jan-07
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650,000
Jul-06
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Total Medicaid Enrollment (FY06 -FY11)
and
Enrollment Estimates (FY12-FY13)
Jan-06
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Total Medicaid budget in FY05
was $2.46 billion ($534.7 million
from the general fund)
Total FY12 Medicaid Program
budget is about $3.7 billion, with
about $1.1 billion in state funding
($950 million from the general
fund).
FY13 projection is for spending of
$3.88 billion, $1.18 billion in state
funding ($1.01 billion from the
general fund)
Enrollment projected to grow
about 2 percent over FY12 – a
slower pace than in prior years –
and a potential risk to the budget.
Jul-05
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Notes: Includes State Coverage Insurance and other Medical
Assistance Programs
New Mexico Human Services Department
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Medicaid Spending and Enrollment in Major
Programs
FY11 Spending on Major Programs
(Total: $2.81 billion)
FY11 Enrollment in Major Programs
(Total: 422,000)
DD, AIDS,
MF and Mi
Via Waivers
1%
DD, AIDS,
MF and Mi
Via Waivers
11%
SCI
11%
CoLTS
30%
SCI
11%
CoLTS
9%
Salud
39%
Salud
79%
Behavioral
Health MC
9%
Note: Excludes spending and enrollment in fee-for-service and special programs;
Salud and CoLTS Member are enrolled in the Behavioral Health MCO
New Mexico Human Services Department
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Coordination of Long Term Services
(CoLTS) -- Some General Background
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In FY11, the disabled and elderly comprised 14% of
Medicaid enrollees and accounted for 42% of total
Medicaid program expenditures.
The national average for Medicaid expenditures on this
population is closer to 50%.
In 2007, 61% of New Mexico’s total expenditures for
long term services and supports (LTSS) – which
includes nursing home expenditures - were for home
and community based services (HCBS).
This makes New Mexico one of the best balanced states
in terms of keeping its citizens in their communities.
New Mexico Human Services Department
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CoLTS Background – The Numbers
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Just under 40,000 New Mexicans are enrolled in CoLTS.
Enrollees are almost evenly split between the two
CoLTS managed care organizations (MCOs), Evercare
and AMERIGROUP.
CoLTS costs:
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FY2010: $797.4 million
FY2011: $854 million (7.1% increase)
FY2012: $875.4 million (projected) (2.5% increase)
New Mexico Human Services Department
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CoLTS Background
Who is enrolled in CoLTS?
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All Medicare and Medicaid “dual eligibles” and those who
qualify for PCO
All Medicaid enrollees who meet nursing facility level of
care and are in the CoLTS ‘c’ (formerly, D&E) waiver
Enrollees do not include those enrolled in the
Developmental Disabilities (DD), Medically Fragile or
AIDS waivers
Persons in the Mi Via waiver who are not DD waiver
enrollees receive their physical health services through
CoLTS.
New Mexico Human Services Department
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CoLTS Background -- The Federal Waivers
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CoLTS operates under a “combined” or “concurrent”
1915(b) and 1915(c) waiver.
The “b” waiver allows HSD to run a managed care
program.
The “c” waiver allows HSD to pay for HCBS rather than
have persons in an institutions.
New Mexico Human Services Department
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CoLTS Achievements
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CoLTS continues to rebalance its LTSS environment,
keeping more people in the community (diversion) and
reintegrating people from nursing homes into the
community.
Since 2008, the CoLTS MCOs have helped almost 3800
people at risk for nursing home care stay in their
communities.
Since 2008, the CoLTS MCOs have reintegrated 436
persons from nursing homes back to their communities.
CoLTS has reduced costs compared to the old fee-forservice program.
New Mexico Human Services Department
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CoLTS – Improving Care Coordination
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Improved Care Coordination –
Both MCOs use service coordination and case management
to help prevent people from being institutionalized as well
as to reintegrate people from institutions.
 Both MCOs work hard to coordinate their members’ care
across the full spectrum of care ( LTSS and medical care) but
barriers exist.
 The most important barrier is timely access to Medicare data
for the dual eligibles.
 The MCOs have had to get creative to identify when their
members enter and/or leave hospitals
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New Mexico Human Services Department
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CoLTS – Improving Care Coordination
Barriers to Improved Care Coordination:
 Timely access to Medicare data for the dual eligibles.
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It is difficult to coordinate care when a different health plan covers
the member’s medical needs.
The MCOs have developed ways to identify when their members
enter and/or leave hospitals, and when their members use the
emergency room.
Fragmented System of Care:
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NM Medicaid has SALUD, CoLTS and the Behavioral Health
Statewide Entity covering the full spectrum of care.
Care coordination in this environment is difficult, even when
everyone makes their best effort.
New Mexico Human Services Department
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CoLTS – Going Forward
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Improved Program Oversight
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With the consolidation of the CoLTS program at HSD, we are able
to more effectively align our efforts and goals overseeing the
program.
Flattening the Cost Curve
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CoLTS program costs grew quickly in its first two years.
Growth in the cost of the program has slowed and is more aligned
with normal growth in enrollment and health care costs.
CoLTS is more cost effective than a fee-for-service program.
CoLTS is more effective in preventing institutionalization and
promoting reintegration than the old fee-for-service program.
New Mexico Human Services Department
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PCO Program Background
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New Mexico Medicaid’s Personal Care Option
(PCO) program began in 1999.
At that time, HSD estimated total enrollment in
the program would be 1,800.
In SFY11, nearly 17,300 persons accessed PCO
services. Of these, 700 were on the Coordination
of Long Term Services (CoLTS) “c” waiver. The
rest were Medicaid eligible and not in a waiver
program.
New Mexico Human Services Department
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PCO Program Today
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We continue to see significant growth in the
utilization of PCO services in CoLTS.
PCO services are the main cost driver in the
CoLTS program.
We had to slow the growth in the costs of the
PCO program.
New Mexico Human Services Department
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PCO Program Today
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To reduce the costs of the PCO program while
preserving the benefits of the program, HSD
implemented a series of changes to the program’s
regulations over the past year.
HSD believes that the regulation changes will reduce
unnecessary utilization of PCO services and still
provide the services that PCO consumers need.
The regulation changes could reduce service hours for
PCO consumers.
The regulation changes will reduce the costs of the PCO
program while members still receive sufficient service
hours.
New Mexico Human Services Department
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PCO Program in the Future
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No current plans for further regulation changes
PCO is a valuable and important program and
has a place in the modernized Medicaid
program that HSD is working on.
New Mexico Human Services Department
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Questions?
New Mexico Human Services Department
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