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OL;"81582 Mathematica Anthony8 PUBLIC SECTOR INITIATIVES TO CONTROL COSTS: MEDICAID 98 Jim Verdier Mathematica Policy Research, Inc. Citizens Health Care Working Group Arlington, VA May 13, 2005 pp1Introduction and Overview National Medicaid spending trends Distribution of Medicaid spending by enrollment group Options for containing Medicaid spending growth Potential to control costs by improving care quality Yg6 !National Medicaid Spending Trends[ Annual Medicaid spending growth dipped in 2003 (7.1%) and 2004 (7.9%) following two years of 10-12% growth (CMS 2005) Reflects comprehensive and aggressive state cost containment efforts Both CMS and CBO project Medicaid spending growth at about 8.5% a year from 2007 to 2014 State revenues are likely to grow at no more than half that rate wPFPPPPl EK=Medicaid Enrollees and Expenditures by Enrollment Group, 2003>>U Cost Containment OptionsProvider reimbursement Nursing facilities (16.8% of total Medicaid expenditures in 2003) MCOs (15.6%) Hospitals (13.6%) Home health (13.0%) Drugs (10.0%) All other (31.0%) *YPV!Cost Containment OptionsSEligibility Non-disabled adults and children are 75% of enrollees, but account for only 31% of costs Annual costs per enrollee in 2003 were $1,700 for children and $1,900 for adults Disabled are 16% of enrollees and 43% of costs ($12,300 per enrollee per year) Elderly are 9% of enrollees and 26% of costs ($12,800 per enrollee per year)V YR YRW"Cost Containment OptionsXBenefits Most costly benefits are concentrated on most needy beneficiaries Defended by well-organized advocacy and provider groups Copayments and other beneficiary cost sharing Maximum copayment of $3 or 5% of cost of service Unchanged since 1982 Greatest potential to change behavior and achieve savings is with Rx drug and emergency room use {.1a {.1a, , X#Cost Containment OptionsJRx drugs Beneficiary co-payments/coinsurance Pharmacy reimbursement Preferred drug lists/formularies Manufacturer rebates Disease management Stand-alone vs. managed care Managed care Expand to disabled, long-term care New Medicare Special Needs Plans Long-term care reform Greater emphasis on home- and community-based services PrPPPPDPP7P rD  7Y$Cost Containment OptionsCreative financing DSH, IGTs, provider taxes,  Medicaid maximization CMS is cracking down Existing and proposed legislative limits Fraud and abuse Crackdowns can be resource-intensive Pharmacy Medicaid estate planning Billing for services not provided 3?%D3?  %DS ConclusionCost pressures in Medicaid will likely continue for many years Reflects underlying health care costs and the special demographics of Medicaid Medicaid functions as the nation s high risk pool Opportunities for improved care abound Not hard to improve on unmanaged fee-for-service Medicaid Improved care can contain costs in some areas over time But savings are neither quick nor assured?POP2PP'P:P9P*P?O2  ':9*/)Z[\]^_`a b P   0` 33̙ff` 3f3f` ___>?" dd@$?lK3Z@ d tA@lK3` n?" dd@   @@``PP     @ ` `pB`B` *j(   " Z gֳgֳ ?P   T Click to edit Master title style! !@ # Z gֳgֳ ?@   RClick to edit Master text styles Second Level Third Level Fourth Level Fifth Level!     SN ' ZA11ȜȜ?hebbbbB ) 3 rD3Ԕ11ȜȜ?de * Z 1?"R \*T  <޽h? ? 33̙ff Default DesignK  0 @' ( X   " Z gֳgֳ ??-   T Click to edit Master title style! ! # T gֳgֳ ?` `    W#Click to edit Master subtitle style$ $N ' ZA11ȜȜ?N ^($m3333T  <޽h? ? 33̙ffV 0 ` f(  p  01 ?E    6 Y:   X*   6u w :  Z*   6Tʐ rX   X*   6ѐ g/:  Z*:   T1 ? @  RClick to edit Master text styles Second level Third level Fourth level Fifth level!     SH  0i? ? ̙3380___PPT10.U' p0( D$\ H  0i ? ̙3380___PPT10.U`> 0L0 0D(    C 8 " L<$ 0   l  C ̧ # HK    H  0޽h ? 33̙ff  0 $(  r  S d"P   r  S TQ#@  H  0޽h ? 33̙ff  0 $(  r  S F"P   r  S |G#<@\  H  0޽h ? 33̙ff  0 SK ((  (+8  (H ( C < H ( C b I > H ( C < H ( C b S >I H ( C < H ( C b >S B ( 3 < B ( 3 b ><B ( #  f  ( 6h1l@ 6  I Enrollees$  ( 6) @   L Expenditures$  ( <Q \  m'Total = 52 million Total = $252 billion(( QTB ( c $D b  ( <h2B{ @ Elderly 9%    ( <6S ? Elderly 26%   ( <:BJ JBlind & Disabled 16%  ( <>Sh HBlind & Disabled 43%   ( <x<jB @ Adults 27%     ( <l8S@   > Adults 12%    ( <4n8 B  B Children 48%     ( <D|S| ')  @ Children 19%  TB  ( c $D Z TB ( c $D p a TB ( c $D  T ` ( <܀' SOURCE: Kaiser Commission on Medicaid and the Uninsured estimates based on CMS, CBO and OMB data, 2004. NOTE: Total expenditures on benefits excludes DSH payments.  x ( c $l"3   H ( 0޽h ? ̙33  0 pT$(  Tr T S "P   r T S д#@  H T 0޽h ? 33̙ff  0 X$(  Xr X S L"P   r X S M#@  H X 0޽h ? 33̙ff  0 \$(  \r \ S , "P  ,  r \ S , #@ ,  H \ 0޽h ? 33̙ff  0 `$(  `r ` S ԋ"P   r ` S h#@  H ` 0޽h ? 33̙ff   0 d$(  dr d S  "P   r d S #@  H d 0޽h ? 33̙ff   0 `D$(  Dr D S , "P  ,  r D S , #@ ,  H D 0޽h ? 33̙ff 0 ~vPx( ̃@p@ xX x C E   v x T-1 ? J   Introductory slide: Public Sector Initiatives to Control Costs: Medicaid. Presenter: Jim Verdier, Mathematica Policy Research, Inc., before the Citizens Health Care Working Group, Arlington, VA, May 13, 2005.c eH x 0i ? ̙33N 0 l^(  lX l C E     l S lL   @    `LOverview slide indicates the discussion will cover Medicaid spending trends, enrollment, options for slowing growth of spending and potential cost controls through improved quality of care. States have great incentives to control costs and use many of the same strategies as does the Federal government to control Medicare spending.H l 0i ? ̙3380___PPT10.U!   0 p0(  pX p C E     p S  Y   @    2National Medicaid spending trends: growth  dipped to 7 and 8 percent, respectively, in 2003 and 2004 following two years of 10-12 percent growth. Growth projected to be around 9 percent a year from 2007 to 2014. State revenue growth anticipated at only half that rate.H p 0i ? ̙3380___PPT10.UK 0 UMt(  tX t C E    M t S J   @    The elderly, the blind and disabled comprise 25% of enrollees but 69% of expenditures; conversely, non-disabled adults and children comprise 75% of enrollees but account for only 31% of expenditures in Medicaid.H t 0i ? ̙3380___PPT10.Uڱ  0 ^Vx(  xX x C E    V x S 9   @    Potential cost containment options include changes to reimbursements of providers (including nursing facilities, managed care organizations, hospitals, home health, and drugs).$6mH x 0i ? ̙3380___PPT10.U@;! 0 E=|(  |X | C E    = | S B   @    Other potential cost containment options involve changes to eligibility. This is one of the last things states want to do but many states have done so.$1QH | 0i ? ̙3380___PPT10.U0h[n" 0 D< (  X  C E    <  S    @    tOther potential cost containment options include changes in benefits, copayments, and other cost sharing mechanisms.$u<%F %H  0i ? ̙3380___PPT10.U # 0 0(  X  C E      S |~   @    lPotential cost containment options also include changes in payments for prescription drugs or changes in care, including disease management, managed care, and long-term care reform. Home and community based care is popular but does not reduce costs because, while less expensive per person, more people find this option attractive than want to be in nursing homes.$m;*H  0i ? ̙3380___PPT10.UL$ 0 @\(  X  C E      S 0   @    ^(Cost containment options also nclude limiting  creative financing and continuing to address fraud and abuse. States have become more circumspect about creative financing. Finding savings from fraud and abuse is difficult because individuals are actively hiding this behavior.H  0i ? ̙3380___PPT10.UW 0 OGP(  X  C E    G  S    @    Cost pressures in Medicaid will probably continue; opportunities for improved care abound; improved care can contain costs n some areas but savings are neither quick nor assured. 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