SOURCE: Medicaid and CHIP Payment and Access Commission, June 2013 MACStats. Data is from FY 2010. Compiled by PGPF.
One common myth about Medicaid is that it primarily benefits poor children and their mothers. But the facts show otherwise. Although children make up about half of Medicaid’s enrollment, they account for only 19 percent of total costs. By contrast, elderly and disabled beneficiaries account for 66 percent of the program’s costs. The main reason for these differences is that the average spending per child is $2,500 (less than one-half of the program’s average), while per-beneficiary spending on the elderly and disabled is about $19,000 (almost three times the program average).
(Reuters) – U.S. health insurers will face challenges over the next decade as they expand their marketing to individuals who in many cases will be less educated and poorer than their current policyholders, according to a report released on Tuesday.
As a result of the Patient Protection and Affordable Care Act, 30 million Americans are expected to gain access to health insurance through regulated exchanges in each state, more plans from employers, and an expansion of the federal Medicaid program for the poor.
It will be easier and cheaper for these new customers, particularly on the health exchanges, to switch providers, said Vaughn Kauffman, a principal with PwC Health Industries, which prepared the report.
“What we’ve seen with this group, which is a little bit less educated with lower incomes, is that most of their decisions are going to be driven based on price initially,” Kauffman said.
Insurers will need to change their marketing to a retail model, including using technology and social media, he said.
PwC Health Industries is part of consultancy PwC.
The median income of the incoming group of health insurance customers will be about 166 percent of the federal poverty level, or $38,263 for a family of four, the report said. That is about half the currently insured’s median of 333 percent of the poverty level.
In terms of education, PwC said it expected 14 percent of the newly insured to hold a bachelor’s degree or higher, compared with 37 percent of the currently insured.
About 42 percent of the new group will be employed full-time, versus 59 percent of current policyholders, and about 30 percent say English is a second language, compared with 12 percent now.
Excluding children, the median age of the newly insured will be 38, compared with 42 for people who have insurance now.
Of the 30 million people expected to become insured over the next decade, about 45 percent will buy health coverage through state exchanges, PwC said.
Currently, only a few states have public health exchanges.
About one-third of the 30 million will become covered through Medicaid, and the remaining 25 percent will receive coverage from employers, according to the report.
The healthcare exchanges will create a $205 billion market from insurance premiums by 2021, the report said.
States have a November 16 deadline to report on their plans to the government. Some states have already announced that they will run exchanges themselves or with the federal government, while others have resisted the mandate to create the exchanges.
About 12 million Americans are likely to begin enrolling in these exchanges next year, the report said.
Texas’ public hospitals are asking the state to make some taxpayer money now spent on Medicaid care instead pay for the uninsured, a group that soon may be mostly illegal immigrants.
The proposal, under consideration by the Texas Health and Human Services Commission, is pitting public and private hospitals against each other for hundreds of millions of dollars allocated annually in a supplementary Medicaid program. The public hospitals argue the program favors private hospitals.
“We’re committed to the program, but the status quo isn’t an option,” says David Lopez, president of the Harris County Hospital District and chairman of a group of Texas’ nine public hospital systems. “Without change, public hospitals will suffer losses that would mean a cut in services. We won’t do that.”
Lopez acknowledged last week that because of the conflict, the public hospitals have not transferred money – due more than a week ago – required to receive federal matching funds. The public hospitals put up the funds so the state can draw down the match and then disburse it.
The program makes up some of the difference between what hospitals spend caring for Medicaid patients and the uninsured poor and what the federal government reimburses them. As chairman of the public hospital group, Lopez in February wrote HHSC Executive Commissioner Tom Suehs proposing that the program instead pay solely for the uninsured, public hospitals’ largest patient group.
Texas public hospital funding through the program has dwindled in the last 15 years, the result of private hospitals increasing their level of Medicaid care. According to Lopez, public hospitals in 2012 project to get $78 million to private hospitals’ $721 million, down from a virtual 50-50 split in 1996.
But some private hospital leaders question the priorities implicit in the proposal, particularly if the Patient Protection and Affordable Act goes into effect in 2014 and adds 2 million Medicaid enrollees in Texas.
“While this change would clearly benefit those serving the uninsured in Texas, the great majority of the low-income patients who come to Texas hospitals could be those who do not qualify for Medicaid based on citizenship status,” Steve Hanson, chairman of the Texas Association of Voluntary Hospitals, a group of nonprofit hospitals, wrote Suehs in March.
The letter continues, “At a time when hospitals need to build infrastructure for the looming expanding Medicaid population, the proposal appears to support services to the non-Medicaid eligible population at the expense of serving those who legitimately qualify for Medicaid.”
Where is the incentive?
Lopez downplays the concern, arguing that public hospitals’ uninsured patients also will include the homeless and people who opt not to buy insurance. He says he expects the district to attract a competitive share of the new Medicaid patients.
The concern is also downplayed by Memorial Hermann Healthcare System President Dan Wolterman, who says his 10 hospitals will continue to treat many illegal immigrants admitted through emergency departments.
Still, Wolterman opposes the proposal. He says Memorial Hermann would lose roughly $25 million in 2012 if the proposal is enacted and argues that the hospital district’s more than $500 million in local taxes provides funding for care of the poor.
“Where is the incentive to take Medicaid patients without this program,” asks Wolterman, noting that Texas’ primary Medicaid program pays hospitals just 52 cents for every dollar they spend on Medicaid care. “There’s no way private hospitals will take many patients without the program.”
Lopez invites private hospital leaders to make counterproposals to HHSC and let Suehs evaluate which is best, something the Texas Association of Voluntary Hospitals has already done. Indeed, concerns about the proposal led to a March 26 letter from the president of the Texas Hospital Association to Suehs requesting HHSC not move forward on any new rule-making until the industry has time to develop some consensus. The letter followed a number of THA meetings attended by representatives of both public and private hospitals.
HHSC spokeswoman Stephanie Goodman said Friday she didn’t know if Suehs has responded to the letter, but added that the commissioner is sympathetic to public hospitals and doesn’t believe they should carry so much of the burden of the care of uninsured.
The process for changing the program includes HHSC’s formal proposal of a new rule on April 20, subsequent presentations to advisory committees and a 30-day public comment period and the final rule revision May 31st.
Lopez said he’ll talk to Suehs this week to try to work out a payment plan that public hospitals can make to ensure the state gets its federal match.
“Even with this change, public hospitals won’t get back to 50-50 footing with private hospitals,” said Lopez. “But there’s no way we can continue putting up so much of the program’s funding and suffer such net losses.”
More States Get Insurance Exchange Grants Joseph Goedert; February 27, 2012 5:01pm ET; HealthDataManagement The Department of Health and Human Services has awarded grants totaling $229 million to 10 states to establish health insurance exchanges, authorized under the Affordable Care Act.
States awarded the funds include Arkansas, Colorado, Kentucky, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania and Tennessee. The insurance exchanges are designed to provide consumers and small businesses with one-stop shopping for coverage, increase competition in the marketplace and give small businesses higher purchasing clout.
HHS previously awarded $1 million planning grants to states, the District of Columbia and four territories. Six states and a multi-state consortium received $241 million in “early innovator” grants to develop model exchanges for other states to consider. With the new grant awards, 33 states and the District of Columbia have made significant progress toward establishing an exchange, according to the department. The federal government will establish an exchange in states that decline to do so. So far, at least two states, Kansas and Oklahoma, have declined. More information is available here. HHS also has published a final rule giving states more flexibility to pursue alternative strategies to ensure residents’ access to insurance. More information on the State Innovation Waivers program is available online.
HHS: Essential benefits to be determined by states By doverland FierceHealthPayer; 12/16/2011 – 15:35 Insurers are slowly inching toward knowing what essential benefits they must offer in plans sold through health insurance exchanges. But that doesn’t mean they’re any closer to learning about what specific benefits are actually required.
The Department of Health & Human Services (HHS) is giving states almost complete flexibility to determine what essential benefits they will require as a condition of participation in their exchanges, according to a “pre-rule bulletin” the agency issued Dec. 16.
The health reform law lists 10 broad benefits categories that every plan sold through exchanges must provide, but it leaves the determination of specific requirements to HHS, which has decided to pass the decision on to the states, according to The Hill’s Healthwatch.
The agency’s decision means there won’t be one national standard benefits package for insurers to comply with, but instead different “benchmark” plans in each state where they operate, reports Kaiser Health News.
According to the bulletin, states must choose from one of four benchmark options provided by HHS–one of the three largest small group plans in the state; one of the three largest state employee health plans; one of the three largest federal employee health plan options; or the largest HMO plan offered in the state’s commercial market.
HHS chose to issue the bulletin instead of a proposed regulation, so the guidance doesn’t have the force of law, KHN notes. Also, HHS only addressed services and items covered by a health plan in its bulletin. The agency said it will address cost-sharing features, including deductibles, copayments and coinsurance, in future bulletins and rules.
Kaiser Primer Explains Reform Issues before Supreme Court Joseph Goedert; March 21, 2012 12:25pm ET
With the Supreme Court tackling constitutional challenges to the Affordable Care Act during oral arguments March 26-28, the Kaiser Family Foundation has published a very readable 10-page primer of the issues and arguments before the court.
The issues cover the individual mandate, severability, expansion of Medicaid, the Commerce Clause, the Necessary and Proper Clause, taxing power, and the implications of up or down rulings on those issues.
The foundation also has released results of a survey on public views of the reform law. In particular, the survey finds more than half of respondents believe justices’ ideological views will play a major role in their decision.
The primer for oral arguments and survey results are located on the web. A feature story in the January issue of Health Data Management explained core issues before the court and their implications for health information technology provisions of the law.
Review of Medicaid Audit Program Finds Big Flaws Joseph Goedert; March 20, 2012 3:44pm ET HealthDataManagement
Flaws in processes and use of data are significantly hindering recoupment of Medicaid overpayments under the Medicaid Integrity Contractor Audit program, according to a new report from the Department of Health and Human Services’ Office of Inspector General.
The 370 audits were assigned between January and June 2010 with an estimated $80 million in potential overpayments, but the 11 audits revealing overpayments only yielded a total of $6.7 million. By June 2011, most of the rest of remaining audits were completed with no finding of overpayment, or ongoing but unlikely to identify overpayments.
“Specifically, 109 of the 144 ongoing audits are unlikely to identify overpayments because the methods used to select the audit targets have already proven unsuccessful,” according to the OIG report. “The 109 audit targets were selected using the same algorithms in the same states as other completed audits that primarily had findings of no overpayments.”
Further, 36 percent of 157 audits with no overpayments were mistakenly selected based on conclusions drawn from erroneous data. The data identified the claims for audit targets as inpatient claims, when they were in fact outpatient claims. In 13 other audits, claims data were outdated; the claims were identified as overpayments, but problems had been corrected with changes not reflected in the database.
Among its recommendations, OIG calls for more collaborative identification of audit targets by contractors that conduct audits, contractors that review audits, the states and the Centers for Medicare and Medicaid Services.
Also, improving the ability of review contractors to analyze Medicaid data in the context of state-specific policies through better communication would reduce targets misidentified because of misapplication of state policy, according to OIG. The report, “Early Assessment of Audit Medicaid Integrity Contractors,” is available here.
Millions in Medicaid overpayments uncollected due to faulty auditing By Alicia Caramenico Fierce Healthcare 21 March 2012
Medicaid Integrity Contractor (MIC) audits failed to recoup overpayments due to flawed methods of identifying providers who potentially received excess funds, according to a new report from the Office of Inspector General.
Although the 370 assigned audits between Jan. 1 and June 30, 2010 had about $80 million in potential overpayments, the report found that only 11 percent of the audits identified overpayments–recouping only $6.7 million.
Moreover, 42 percent found no overpayments, while 39 percent remained ongoing as of June 2011 and are not likely to identify overpayments.
“Specifically, 109 of the 144 ongoing audits are unlikely to identify overpayments because the methods used to select the audit targets have already proven unsuccessful,” the report states.
Incorrect claims data, as well as the misinterpretation of the claims data with regards to state-specific Medicaid policies led to misidentified audit targets, according to the report.
To ensure audits target the right providers, the agency recommends collaborative efforts among Audit MICs, Review MICs, the states and the Centers for Medicare & Medicaid Services, according to an OIG statement. Not only does collaboration eliminate duplicative efforts, it also completes audits an average of 2.5 months faster than regular audits, according to the report’s authors.
Given the findings, CMS said it has revamped how it selects audit targets–such improvements could save the government money as CMS spent about $17.2 million on MIC audits in fiscal year 2010.
In its accompanying study, the OIG concluded last month that MIC reviews are not being used to their full potential because they can only access incomplete data and cannot make specific recommendations about which organizations should be further scrutinized, FierceHealthFinance previously reported.
Medicaid computer system glitches costing states millions By Dan Bowman Fierce Health IT 21 March 2012
Computer problems are plaguing state Medicaid agencies across the nation, according to a number of recent reports, causing everything from overpayments and unauthorized payments to extra front-end work for providers. Technical glitches have been reported for systems in Louisiana, Florida, Colorado and Maine.
In Louisiana, several providers have said the state’s Clinical Advisor system–developed by Connecticut-based Magellan Health Services–has prevented them from submitting claims, Gambit reports. While some providers said their passwords weren’t working, others indicated the system wouldn’t allow them to enter patient medical records and diagnoses.
Specifically, Cecilia McNeil–chief of operations and finance for Chalmette, La.-based mental health rehabilitation provider the Guidance Center–said information she entered into the system simply vanished overnight, causing her to have to re-enter that data into the system all over again.
“It’s caused a huge among of extra work for us,” she tells Gambit.
Meanwhile in Florida, glitches in a computer billing system implemented by the state’s Agency for Health Care Administration have made it nearly impossible to bill the state’s 67 counties for Medicaid expenses with any accuracy, according to a commentary in The Ledger. The AHCA reported more than $300 million in uncollected Medicaid bills, the commentary notes, much of which will need to be repaid by the counties, according to an article in The St. Augustine Record.
In Colorado, computer glitches have caused processing delays for eligibility benefits, as well as incorrect information to be sent to recipients, The Denver Post reports.
Maine’s issues are well-documented, as well. The state’s Medicaid system, according to the Bangor Daily News, likely will have to repay the federal government after 19,000 citizens not eligible for Medicaid received such benefits due to a computer glitch.
A look at the Supreme Court health reform challenge
By Alicia Caramenico
The healthcare industry is bracing itself, as the Supreme Court, whose final ruling will ultimately decide the constitutionality of President Obama’s health reform legislation, will hear the challenge brought up by 26 states next week.
If the court upholds the law, the implementation of provisions can proceed as scheduled. But that could cause more harm than good, warns Joseph Antos, an American Enterprise Institute for Public Policy Research analyst. “In reality, many of the states, including states that really want to do it, are woefully unprepared,” he told Healthcare IT News.
If the law is struck down, provisions already in effect would have to be withdrawn; for example, children would no longer be allowed to stay on their parents’ insurance plan up to age 26.
The Supreme Court also must decide what happens to the rest of the health reform law if only the individual mandate is ruled unconstitutional. While opponents say the entire law should get struck down, the government maintains that only two provisions (including one requiring insurers cover people with preexisting health problems) would have to fall, according to ABC News.
Industry experts warn, though, that such a move would make the rest of the law more difficult to carry out. “Without a mandate the law is a lot less effective,” MIT economist Jonathan Gruber told the Associated Press. “The market will not collapse, but it will be a ton more expensive and cover many fewer people.”
Similarly, Paul Keckley, executive director of Deloitte Center for Health Solutions, said there could be mass effects on the young, newly insured. “Should the individual mandate ultimately be ruled unconstitutional, it will significantly hamper the ACA’s ability to ensure some of those previously uninsured ‘young invincibles,’ as well as seriously undermining a key rationale for funding the new law,” he said in a statement to FierceHealthcare.
Despite the Supreme Court ruling, health executives at hospitals, medical groups and insurers in California said they will press on with healthcare reform, the Sacramento Business Journal reported earlier this month.
“We believe we need to drive health care reform whether it’s legislated or not,” Michael Taylor, Dignity Health’s senior vice president of operations said. “Healthcare costs are out of control and we need to bend the curve.”
Also see an article in YahooNews