Recently in State Health Policy Category

As legislative sessions are kicking off, it will be interesting to see which states take steps towards implementing the Affordable Care Act (ACA) this year. A new report from the Urban Institute and the Robert Wood Johnson Foundation shows that those states that have been moving most slowly on reform are also the one's whose residents have the most to gain from it.

The study divides the states into three groups:

1. Group 1 includes the 15 states that have either established an exchange through legislation or an executive order. {They are: CA, CO, CT, DC, HI, IN, MD, MA, NV, OR, RI, UT, VT, WA, and WV.}

2. Group 2 is made up of the 21 states that, while not having established an exchange, have demonstrated interest in doing so, such as by receiving an establishment grant. {They are: AL, AZ, DE, ID, IL, IA, KY, ME, MI, MN, MS, MO, NE, NJ, NM, NY, NC, PA, TN, VA, and WI.}

3. Group 3 represents those 15 states that don't fit into either of the above groups (although 9 of these states have made progress by setting up a study or planning group). {They are: AK, AR, FL, GA, KS, LA, MT, NH, ND, OH, OK, SC, SD, TX, and WY.}

Let's start with the uninsured - Group 1 and Group 2 are expected to see similar declines in the number of uninsured people following implementation of the ACA. Group 3 states start with a higher baseline of uninsured, but are expected to see a greater decrease (in almost all cases, exceeding 50%) in the number of uninsured than states in Groups 1 or 2.

Group 3 is also expected to see the largest gain in the number of people covered by Medicaid or CHIP (an overall increase of 54%), while Groups 1 and 2 see an increase of about 30%. Enrollment among those who are currently eligible is expected to increase by 1 to 2 percentage points across all states, regardless of which group they fall into. (As always, there is variation among the states within each group).

The gains in coverage through the exchanges are comparable across groups; however, Group 3 will have the largest share of their population receiving subsidies and a higher per capita subsidy relative to the other two groups of states.

With their residents having the most to gain in terms of affordable coverage for themselves and their families - it will be interesting to see whether the states in Group 3 pick up the pace or whether residents will have to wait for the federal government to step in instead?

By Gretchen Hammer, Colorado Coalition for the Medically Underserved

This month, All Kids Covered released Crossing the Finish Line: Achieving Meaningful Health Care Coverage and Access for All Children in Colorado.  The report provides an update on the current status of meaningful health care coverage and access for children in Colorado, and describes the significant progress we have made to make sure that all our children can get the health coverage and health care services they need. 

The good news is that roughly 90% of kids in Colorado have health insurance and between 2008 - 2010 over 40,000 children gained coverage.  In addition, the most recent Colorado Health Access survey reports that most of children in Colorado have a usual source of care - a place where they regularly go to get their health care.

Cue the Kool and the Gang music, start the disco ball and break out your best dance moves! Let's take a moment to celebrate these great accomplishments. 

As with any great success, many people have contributed to this progress.  Over the last five years, state policymakers, state and local agencies, community leaders, health care providers, advocates and private foundations have worked together with a common goal and concerted effort to achieve these milestones.

While recognizing and celebrating success is important, there is still more work to be done.  Much of that growth in coverage has come through higher enrollment in Medicaid and CHP+, resulting from policy changes to improve public programs and unfortunately, economic hardships facing many Colorado families which make them eligible for these programs.

Additionally, the most recent estimates suggest that between 112,200 (8.2%) and 124,128 (10.1%) children in Colorado still do not have health insurance.   And, access to care varies across the state.  While fewer than 5% of children in the metro area, the Eastern Plains and Northwest Colorado report they do not have a usual source of care, nearly 1 in 13 children (7.6%) in Southwest Colorado do not have a usual source of care.  And that's too many!

It is not too much to ask that all of Colorado's kids have access to they health care they need, when they need it.  To build on the strong momentum of the last few years we need to focus on five key strategies that we believe will continue the progress in Colorado and would likely be useful in other states, as well:

- Leadership and Accountability

- Coverage and Access for All Children

- Systems and Practices for Maximizing Enrollment and Retention

- Messaging and Communications

- Regional Adaptation

Check out the report for more details on these strategies and examples of how to implement them from Colorado and across the country.

Colorado is 90% of the way there to crossing the finish line and covering all kids.  It is going to take all of us working together to ensure that our children will have the health coverage and health care services they need to have healthy and fulfilling lives.   And, once we get there, we can really get the party started!

To access the full report, visit www.allkidscoveredcolorado.org/report.pdf

There are people in my family who think I am unduly obsessed with Tom Brady.  They might even accuse me of co-authoring a paper on states at the forefront of covering our nation's children that features Massachusetts just so I could say "Just as Tom Brady is in a league of his own when it comes to quarterbacking, the Commonwealth of Massachusetts is the clear national leader when it comes to covering children." But, the honest-to-goodness truth is that the new paper we issued yesterday with the Kaiser Commission on Medicaid and the Uninsured, "Secrets of Success: An Analysis of Four States at the Forefront of the Nation's Gains in Children's Health Coverage," grew out of a discussion that CCF and Kaiser Commission on Medicaid and the Uninsured staff had together last spring.  It took place long before Tom Brady beat Tim Tebow and the Denver Broncos (soundly, I must add) and resulted in a paper that examined Massachusetts, but also three other states -- Alabama, Iowa and Oregon -- that are at the forefront of covering children.

Here is how it started.  We were discussing the news that Massachusetts had achieved a 99.5 percent coverage rate among children in 2010 and commenting on the extraordinary nature of this achievement.  Tricia Brooks with CCF, Samantha Artiga with the Kaiser Commission on Medicaid and the Uninsured, and I decided to jump in and try to untangle how the state got there.  At the same time, we didn't want to leave it just at Massachusetts.  While it is in a league of its own, states around the country have made enormous strides in covering kids.  Indeed, as we've pointed out repeatedly at CCF, the nation now has the lowest uninsured rate of children on record despite sharp jumps in child poverty and lots of other dire economic news.  So, we selected a diverse group of four states - one state from each region of the country at the forefront of covering kids: Alabama, Iowa, Massachusetts and Oregon - to investigate the "secrets" to their success.

Even though these four states have dramatically different political and policy cultures, we heard a number of common themes when interviewing state officials and advocates from each of the four states: 

* At least one political leader in the state - and, in most instances, a number of political leaders over time - made coverage of children a top priority.

* Expansive eligibility levels for children and adoption of a broad range of simplification strategies have been key elements of achieving progress. All four states have expanded eligibility for children to 300% of the federal poverty level and have taken up many of the opportunities to streamline and simplify enrollment and renewal processes for families.

* Community partners and providers play a vital role in helping families to enroll in coverage. We heard this in each of the four states, but perhaps most strongly in Massachusetts.  Interestingly, Massachusetts lags somewhat in the extent to which it has simplified its application and enrollment process, but makes up for it in no small part by relying heavily on community partners to help people enroll in coverage.  (Hey, even Tom Brady has someone weakness - a poor running game - but he also makes up for it in other areas.)The state and advocates have a robust relationship in which they exchange information on emerging issues and ideas about how to improvement enrollment.  It also has the advantage of a strong culture of coverage, which can be directly linked to its passage of broad health reform in 2006. 

* Strong coordination between Medicaid and CHIP aid in outreach and enrollment efforts and smooth transitions between programs. Each of the four states has taken steps to promote close alignment between Medicaid and CHIP, with Massachusetts and Oregon fully unifying the two programs. 

We also talked to each of the states about where they see their remaining challenges, and what they are working on now.  In a sure sign of why they are at the forefront of covering kids, each of them had a long list of challenges they were actively working to tackle, such as the need to improve retention, to cope with ongoing growth in enrollment amidst diminishing administrative resources; updating decades-old eligibility systems; and improving communications with families and obtaining better enrollment data.  Just like Tom Brady and the New England Patriots, they do not rest on their laurels and, instead, start each week looking ahead and figuring out how to continue to get better and better.

and Tricia Brooks

For those of you who have been anxiously awaiting (and you can count us, too!) the release of the annual survey on Medicaid and CHIP, today is your lucky day.  In partnership with the Kaiser Commission on Medicaid and the Uninsured, we released "Performing Under Pressure: Annual Findings of a 50-State Survey of Eligibility, Enrollment, Renewal, and Cost Sharing Policies in Medicaid and CHIP" at a briefing today.

Probably not surprising to those who follow such things, but we found that eligibility held steady in nearly all states, with only two states reducing eligibility. And the two that did - they did so for low-income adults relying on limited exceptions to the stability protections (otherwise known as maintenance of effort provisions of the Affordable Care Act). It's very likely that without the stability protections, more states would have made cutbacks and far more children and families would be left without an affordable coverage option during these turbulent economic times.

A far more surprising finding was the fact that 29 states went beyond holding steady and improved coverage through targeted expansions and simplifications. Most of these changes centered around the greater use of technology to boost government efficiency and make it easier for people to enroll in coverage; actions that have a dual benefit of helping eligible children and families while also stretching scarce state administrative resources.

But perhaps the most striking finding is how quickly a large number of diverse states across the country are leaping at the opportunity to make sweeping changes to their decades-old eligibility systems. More than half of the states have already sought the enhanced federal funding to develop the latest technology that will both transform families' experience of applying for health care coverage and make government work better. And, with just three exceptions, the rest of the states are planning to move in that direction in 2012.

And all this in spite of the fact that in 2011, state budgets remained stressed due to dampened revenue growth and the mid-year expiration of the temporary increase in the federal matching rate. So while strained state budgets have taken a toll on administrative resources, states have sharpened their use of technology and streamlined their procedures to create more efficient programs, while also simplifying the steps for families to enroll in and renew coverage. These actions, in addition to the massive systems upgrades they've undertaken, have not only helped states deal with current pressures, but are also laying the groundwork for the coverage expansions and new enrollment requirements that will take effect in 2014.

And let's not forget that amid these ongoing pressures, the stability protections in the Affordable Care Act were central to the preservation of health care coverage last year. So even with a weak economic recovery that has been slow to add new jobs with access to employer-based insurance, Medicaid and CHIP continued to be key sources of coverage for children, and, in some cases, for their uninsured parents. A bit of good news to start the year!

[A parting note to those who like us, want to dig in on the nitty-gritty details - there are several new areas that we report on this year (such as the use of out-stationed state eligibility workers and enhanced functionality with online accounts) all of which can be found in the full report. Enjoy!]

By Beth Morrow, The Children's Partnership 

As all health advocates know, states face a daunting task in preparing to meet the demands of ACA implementation.  Building an eligibility, enrollment, and retention system is one of the first challenges involved in getting ready for state Exchanges' open enrollment period on Oct. 1, 2013.  Deploying such a system involves more than just building the technology.  The design and development of this technology will be driven by complex policy, process, and governance decisions that states are making now.  With aggressive implementation schedules, no state has the luxury of waiting before starting to design their system.

As California proceeds through this very consequential puzzle, The Children's Partnership has written a 40-page blueprint designed to assist in that process and make sure that consumers' interests are front and center as decisions are made.  Written by Dawn Horner and myself, Building A Consumer-Driven Eligibility, Enrollment, and Renewal System: Essential Design Features for Effective Health Reform in California lays out the essential design features that are required in any state for an effective enrollment system that meets federal expectations.  In California, this new system is being called CalHEERS (for California Healthcare Eligibility, Enrollment, and Retention System).

Broadly these essential design features are:

• Smart connections that allow consumers to apply for coverage through multiple doorways (whether online, by mail or phone, or in person) and receive consumer assistance -including live human assistance--as needed.
• Integrated eligibility criteria and processes that allow every consumer to apply using a single application for all programs, and to seamlessly move between programs as family circumstances change.
• Real-time, immediate, and ongoing enrollment that utilizes technology to obtain and verify data and eliminates unnecessary paper documentation.
• Easy navigation of coverage that allows consumers to pick their health plan, pay premiums, and update their account through a centralized system.

For each design feature, the report provides specific recommendations (some very detailed, some more general), summarized as a tear sheet in the Executive Summary.  A small sampling of the report's recommendations includes:

•  Establish accuracy and timeliness standards to guarantee quality of consumer assistance.

• Eliminate the three-month waiting period for children with employer coverage for Healthy Families (California's CHIP program).

•  Automatically transfer children from 101% to 138% FPL from Healthy Families to Medi-Cal (the state's Medicaid program) and provide support to maintain continuity of care.

• Integrate human service program enrollment into CalHEERS by the end of 2015, commencing with SNAP and TANF.

•  Establish a policy that finds "incompatibility" within an application only where the inconsistent data would have a "material" impact on eligibility - i.e., would change the outcome. 

• Design the premium payment function so that consumers receive one monthly bill for the whole family. 

Our new report provides a guide for action for California, to ensure that the state gets this right, right out of the gate.  And, while written to address California's specific concerns, this report can help any state move toward a first-class consumer experience that results in individuals getting the coverage and health care they need.

So my previous blog on this topic talked about how the CHIP/Essential Health Benefits analogy has its limits - still it is interesting to look at the choices that states have made for their benefits packages in separate state CHIP programs.

According to data collected and released by NASHP from mid-2008, the most popular choice by states was to use "Secretary approved coverage" - an option that would not be available under EHB. 

Eighteen out of 40 states picked this option. Most states were using this option to provide a Medicaid look-alike package so as to simplify coordination between the two programs - an interesting finding. The second choice was to base CHIP benefits on state employee coverage - again, something with which states are familiar. Only one state has selected the federal employees benefit option - suggesting that few states will pick up this option in EHB.

Four states selected benchmark equivalent coverage.  In two of those states,  South Carolina and Utah,  the benchmark was tied to their state employee coverage and in the other two, Indiana and Wisconsin, the benchmark was tied to the largest commercial HMO.

So a bit of a hodgepodge but it seems to me that the CHIP experience suggests that few states will choose the FEHBP option and are more likely to choose an option that promotes coordination with other aspects of their state coverage picture. This could mean that many states will choose the small group option (so as to have continuity inside and outside of the exchange) or the state employee option.

This is the third in Say Ahhh's blog series on essential health benefits.

As policymakers across the country look to balance their budgets, some are turning to Medicaid, recycling the same harmful policies they've used year-after-year: eliminating coverage for vulnerable Americans, restricting critical benefits like prescription drug coverage, imposing premiums on those who can't afford them, and slashing already-low provider reimbursement rates.

Community Catalyst and Georgetown University Health Policy Institute Center for Children and Families created the States of Innovation blog series to shine a spotlight on states that are trying to find a better way. We will highlight states that are pioneering new approaches to making Medicaid more sustainable without harming - and often by improving - care for the millions of vulnerable seniors, people with disabilities, children and low-income parents that rely on Medicaid.

By Marcia Hams, Community Catalyst

The state of Alabama has pioneered a way to save millions of dollars in its Medicaid program by changing how it pays pharmacies for the drugs they provide to Medicaid patients. 

Like 40 other states, Alabama used to reimburse pharmacies based on a pricing benchmark generated by prescription drug manufacturers, called Average Wholesale Price (AWP). 

But documents made public in court cases have shown that drug manufacturers and others sometimes inflate their AWP list prices to incentivize pharmacies to buy their drugs. The manufacturers actually charge the pharmacy less than the published list price that Medicaid uses to reimburse the pharmacy for the drugs. For example, in Massachusetts from 1995 to 2003 the drug maker Warrick reported widely inflated list prices for an albuterol drug that was nearly seven-times the actual sales price. The pharmacies often reap a profit from this price "spread."  

Use of inaccurate, sometimes almost fictional list prices like AWP has led not only to overpayment but to outright fraud when companies lure pharmacies into favoring their products over competitors by increasing the profit margin.  As a result of litigation on such pricing fraud, the main publisher of the AWP list (First Databank) ceased publishing it in September, 2011. However, this list price continues to be published by others, and as of now, 40 states and many private health plans continue to use this or other manufacturer generated list prices. 

Alabama paves the way for a fairer - and more cost-effective - system

Alabama recently began reimbursing pharmacies based on an "evidence-based" benchmark, called Average Acquisition Cost (AAC.) It is based on an ongoing average of actual invoices of pharmacy purchases from drug manufacturers and wholesalers, which best reveals the actual cost of the drugs to the purchasing pharmacies. A dispensing fee is also paid to the pharmacy to cover the cost of pharmacist services and overhead.

Alabama's Medicaid program has projected a 6.1 percent savings on its fee-for-service drug expenditures -- that amounts to $30 million in the first year --without affecting prescription drug benefits provided to Medicaid beneficiaries or impacting quality of care. Indeed, the president of the Medical Society of the State of Alabama affirmed that changing to AAC should not affect patients' access to care.

Three other states have followed Alabama's lead: Oregon has implemented AAC pricing and expects to save $1.6 million, or 1 percent of its $160 million fee-for-service Medicaid drug expenditures. Idaho is in the process of implementing AAC, and expects to save $2 million in state general funds. And California has authorized a shift to AAC pricing as well.

CMS itself has also begun collecting drug cost data from pharmacy invoices nationally in order to assist states in evaluating their current payments systems. If CMS shares such information, it could help reduce the implementation costs to states, since they may not have to collect their own invoice data. 

Private sector benefit

Alabama's drug price information is available online here, and Oregon's is published here. By making these regularly audited drug prices available to the public, these states and CMS can also make it easier for private insurance plans to adopt AAC and reduce their costs. Private plans will also be selling their products through the Affordable Care Act mandated Exchanges, often to low-income people not eligible for Medicaid or employer coverage. Since lowering pharmaceutical costs could help play a role in controlling premium costs, this would be of particular benefit to these low-income purchasers, and to the government, which will pay a sliding scale percentage of their premiums. 

Pharmacy resistance

Some pharmacies have fought AAC pricing, claiming they cannot survive without the "spread" between what they paid for the drug and what they're reimbursed from Medicaid. However, as court documents have revealed, many have been overpaid for years in a system with no transparency. If pharmacies were transparent about their actual cost of doing business--something they typically resist--and they could prove actual losses, the per-prescription dispensing fee Medicaid pays could be increased to cover those costs. 

To find out more, see the AAC section of Community Catalyst's new Medicaid Report Card.  

Last week, NASBO released their 2010 Report of State Expenditures and per usual, the top line message picked-up by most of the media was the large share of state expenditures used on Medicaid. 

However, there are always exceptions to the rule, and Kristen Stewart writing for a Salt Lake City Tribune Blog got it right.  In her piece, "Medicaid Not the Budget-Buster it's Said to Be," she pointed out the often-neglected distinction between state and federal spending on Medicaid.  While detractors of the program have been known to publicize figures for total Medicaid spending -the combination of state and federal funds- doing so distorts the picture on state spending. 

For instance, Stewart points out in her analysis that Utah Governor Gary Herbert's recent claim that Medicaid spending takes up 17.6 percent of the state's budget is not true.  Utah State spending on Medicaid is actually only eight percent of the general fund, meaning the state is not as strapped for funds for other critical social services as the governor would like you to think.

By Laura Summer, Georgetown University Health Policy Institute

(Editor's Note:  Given the increasing interest in Medicaid managed care among states eager to achieve cost-savings, we asked our colleague Laura Summer to blog for us on her latest report on managed care. Her report focused on long-term care services but it provides some helpful insights into broader managed care proposals.)

Currently, a number of states are contemplating a shift to covering new populations and long-term service and support benefits through capitated payments to traditional risk-based managed care organizations (MCOs). Particularly in light of pressures to balance state budgets, the approach is touted as a means to deliver services in a more cost-effective manner. Other advantages cited include the potential to change the balance of care in favor of community-based services and to promote better service coordination and integration as compared to the traditional fee-for-service delivery model. A managed care approach may be one means of providing higher quality care in a more efficient less costly manner, but before embracing the approach, states should take time to evaluate the likely outcome of program changes. Establishing a high quality program is a complex process that requires initial investments to ensure that new arrangements will be effective and viable over the long term.

Experience with and evidence about the impact of Medicaid managed long-term service and support programs (MLTSS) is limited.  Relatively few states currently use capitated models to manage care for the elderly or individuals with disabilities, the populations most likely to require LTSS.  Research to date indicates that relative to fee-for-service programs, MLTSS programs reduce the use of institutional services and increase access to home and community-based services, but there is little definitive evidence about whether the model saves money or about how it affects outcomes for consumers.

Program design is an important component of state MLTSS initiatives. The extent to which MLTSS programs cover institutional services, medical care, or behavioral health services, in addition to community-based LTSS, affects MCOs' ability to coordinate services and manage costs effectively. Other significant program features to consider are whether enrollment in Medicaid MLTSS plans is mandatory or voluntary and whether the MCO is sponsored by a commercial, non-profit, or governmental entity.  In light of budget shortfalls, and particularly if government downsizing is occurring, states may have diminished capacity to develop, implement, and monitor new MLTSS initiatives. Planning and start-up periods should be long enough to allow state agencies to collaborate to make complex program design choices, to work with CMS to obtain the authority to operate new programs, and to consult with stakeholders, including consumers, providers, and MCOs.

Community-based organizations play a vital role in ensuring an adequate supply of long-term services and supports, and it is important to consider their role in a managed long-term care system.  These entities often have long-standing ties with consumers by making LTSS referrals or providing services.  In a managed care environment, community-based organizations in some states function as MCOs or participate in MCO provider networks. 

Strong state oversight of MCOs is essential, and quality measures are needed.  When states delegate functions to MCOs, they cannot cede responsibility for management and guidance, especially for the very vulnerable populations that require LTSS. Significant components of effective oversight include explicit contract language about plans' responsibilities, early attention on the part of states to determining how performance will be measured, and ongoing feedback from consumers and providers to help monitor program operations.  A major challenge is that few quality measures for LTSS have been developed or tested.

Certain program features promote a shift to more community-based and better-coordinated services.  The array of services for which MCOs are responsible and at risk may affect their ability to coordinate services effectively or achieve diversions from institutions or transitions from institutions back to the community. The switch to managed care also raises questions about who bears responsibility for and has the capacity to address the lack of affordable accessible housing alternatives and inadequate pools of qualified formal caregivers, which continue to be significant barriers to keeping people who need LTSS in the community.  

Efforts to improve the quality of services and deliver them in a more efficient manner are worthy goals, but if MLTSS programs are to succeed, careful design should be based on a thorough understanding of the strengths and needs of the various populations that use them. It is important also to retain aspects of current home and community-based service programs that are considered effective. The vision and responsibility for Medicaid MLTSS programs rests with states. It is essential for states to have time, expertise, and financial resources to consult with stakeholders, shape programs, attend to administrative details, clarify expectations, and monitor program operations so that they can strike the right balance between managing care and managing costs.