Reform to grow Medicaid rolls, for costs it’s unclear

In Rhode Island today, more than 1 in 4 children are enrolled in RIte Care or another Medicaid program. And of the more than 18,000 who are uninsured, almost three-quarters are eligible for RIte Care. Thousands of uninsured, low-income parents are eligible as well.
Under health care reform, childless adults up to 133 percent of the federal poverty line will be newly eligible for Medicaid. If Rhode Island wanted to – a state official said it’s “highly unlikely” given the budget crisis – it could enroll them tomorrow, three years ahead of when it will be mandatory.
Depending on your perspective, health care reform’s Medicaid provisions are a godsend or a nightmare. By requiring states to cover more people, and ensure that everyone who is eligible is actually enrolled, reform dramatically strengthens the Medicaid safety net.
It also pumps hundreds of billions of dollars into the states, covering 100 percent of new Medicaid enrollees’ costs for three years, then gradually dropping to 90 percent for 2020 and beyond. For Rhode Island, one study estimates that will yield $1 billion in the first five years.
For providers, it means far fewer patients who can’t pay for care, even though for hospitals especially, Medicaid rates still fall far short of cost.
But the expansion of the Medicaid rolls will pose significant challenges. Along with about 25,000 adults who will be newly eligible, there are 30,000 to 50,000 adults and children who already qualify for Medicaid but are not enrolled, said David J. Burnett, associate director of the R.I. Executive Office of Health and Human Services, although some may have insurance and not need Medicaid. For most of those who do need the government program, however, the state could only get its standard federal matching rate (52 percent before the stimulus bill).
So when you ask officials how health care reform will affect the state budget, they can only guess at the answer, although they do tend to sound anxious. And as if the cost issue weren’t enough of a challenge, there are the logistics: How do you find all these people, enroll them and keep them enrolled?
The latter is a longstanding challenge for RIte Care. So-called “churn” is endemic, especially among people who are required to pay a monthly premium. It’s common for enrollees to forget to get recertified for the program, as they must do periodically. Mark E. Reynolds, president and CEO of Neighborhood Health Plan of Rhode Island, which covers about 80,000 Medicaid beneficiaries, said he expects the premium issue to persist with health care reform, “and that will continue to drive uncompensated care.”
But Rhode Island could take some pages from Massachusetts’ playbook, Reynolds added, and reduce churn in other ways. The Bay State has an electronic sign-up system, he noted, with automated eligibility verification, and it covers not only Medicaid, but also subsidized coverage on the insurance exchange – so if someone is found to have crossed the income threshold and become ineligible for Medicaid, he can promptly transition into a new plan.
“It helps people not fall through the gaps and simplifies the process,” he said.
Speaking in Rhode Island in January, Cindy Mann, director of the Center for Medicaid and State Operations at the Centers for Medicare & Medicaid Services, made it clear that federal officials would expect such improvements as health care reform kicked in. CMS will help in any way it can, Mann stressed, but it will also expect states to remove barriers to Medicaid enrollment, track down all who qualify, and keep them covered.
The law also requires states to keep covering people under Medicaid, even if they are not “mandatory” populations under the federal program – but there are exceptions, and given many states’ financial struggles, officials are expected to provide waivers on adults’ coverage.
In Rhode Island, Burnett said, “all options to reduce cost have been discussed,” including benefit changes and reduced eligibility. But the budget impact of scaling back nonmandatory adult enrollment would be “negligible” in the long term, he said, because once the exchange is in place, they’ll be transitioned out of Medicaid and into federally subsidized plans anyway.
These questions “will continue to be discussed through the budget process,” Burnett said, but “it is still [EOHHS’] position that the most effective approach to containing Medicaid costs is through payment reform and utilization management.”
A new report from UnitedHealthGroup’s Center for Health Reform & Modernization takes the same position, estimating that increased use of coordinated care in the current Medicaid population, use of coordinated care with new enrollees, wider use of community-based coordinated care for Medicaid long-term care beneficiaries, and administrative modernization could, combined, save $366 billion from 2011 to 2019 – $149 billion of that at the state level. Rhode Island, the report shows, could save $1.1 billion with those strategies, $625 million of it in long-term care alone. Of course, none of the coordinated-care ideas are new to the state: RIte Care uses an HMO model that has been widely praised for its cost-effectiveness, and the Medicaid “global waiver” obtained by the state for 2009-2013 was motivated, to a great extent, by a desire to overhaul the long-term care system, refocusing it on community-based services.
Asked how the reform law would affect the waiver, Burnett said the long-term care provisions mimic “the authority and intent” of the waiver, and the law “extends and broadens the state’s authority to continue to transform the long-term care system.”
The long-term care system reforms begun under the waiver, Burnett added, “will continue uninterrupted through health care reform and most likely will expand.” Where reform may limit the state’s freedom under the waiver is in terms of benefit and eligibility changes.
One thing Rhode Islanders shouldn’t expect, said Reynolds, is for the state Medicaid program to simply go back to its old setup when the waiver ends. The default is a much more stripped-down Medicaid; the state’s services are as good as they are because of previous waivers.
“We couldn’t go back to plain-vanilla Medicaid,” he said. “Somehow or another, we need to reach another agreement with the federal government three years from now on some kind of new waiver, which may or may not maintain the characteristics of the current waiver.”
Looking ahead, Reynolds said he expects Neighborhood to boost its enrollment – though he’s not sure by how much – and possibly to create new plans for new populations. He also expects a big wave of changes in how providers are paid, with CMS shifting to “bundled” payments and encouraging providers to group together to coordinate care and get paid jointly.
On the state side, Burnett said an internal committee formed late last year by EOHHS and Health Insurance Commissioner Christopher F. Koller is leading the response to health care reform. The group is sorting through the policy implications, working to identify the affected populations, and trying to get a handle on the fiscal impact of reform, he said. •