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Policy and Legislative Positions
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Legislative Agenda
2001-2002
FINANCIAL SUPPORT FOR MEDICAID PLANS
- Plan Access to Medicaid Drug Rebate -- When the drug rebate program was instituted in 1990, less than 10% of the total Medicaid population of 28 million were enrolled in managed care. Thus, the vast majority of all recipients received their drugs through the fee-for-service program and were covered by the rebate. Today the situation is very different. Almost 12 million or 36% of all Medicaid beneficiares are enrolled in some type of capitated managed care.
Managed care plans are experiencing growth rates in pharmaceuticals of 10-15% per year. The capitation rates that the plans receive from the States are based on what the States would have paid for the beneficiaries’ care if they were in fee-for-service. These rates typically are set net of the State’s Medicaid rebate. Anecdotal evidence suggests, however, that plans are receiving only about 50% of the rebates that that States receive.
AHCAHP proposes that Medicaid managed care plans have access to the Medicaid rebate program. They would continue to pay for drugs the way that they do now, but the rebate would not be a negotiable item with the manufacturers or with the pharmacy benefits manager. Instead, for plans that are capitated for drugs, the plans would receive the same level of rebate as the State would have, had the beneficiary remained in managed care. This should apply both for Medicaid and SCHIP beneficiaries enrolled in capitated managed care.
While this would be a significant savings to the plans, it could also have budgetary implications for the state and federal budgets. States would be able to mitigate the increases that they might otherwise have been forced to pay in order to maintain the plans in their program. The other benefit to the federal governments would be that plans are more likely to remain in the Medicaid managed care program if they had access to the rebate.
ENHANCED QUALITY INCENTIVES
- Autoassignment Based on Quality – Under the Balance Budget Act, states using a State Plan Amendment to mandatorily enroll their beneficiaries into managed care must then auto-assign the beneficiaries in such a way that they continue to have access to either their existing provider or with a provider that has traditionally served Medicaid beneficiaries. If this is not possible, then the state must randomly auto-assign the beneficiaries equitably among the plans. AHCAHP suggests that the statute be changed so that States operating under a State Plan Amendment can use quality indicators to auto-assign.
INITIATIVES TO REDUCE THE LEVEL OF CHURNING
- Lengthen the Redetermination Period to 24 Months – Under current regulation, the States may extend the period before a redetermination is necessary for up to 12 months. Many states have recently taken advantage of this provision and expanded their redetermination time period. However, the problem of the churning of the Medicaid population continues. For instance, in New York State, on average, the plans lost 4% of their enrollment each month due to involuntary disenrollments from June of 1998 through January of 2000[1]. Of those people involuntary disenrolled a survey by the New York State Coalition of Prepaid Health Services Plans found that 64% of them had had no change in status that would have led to their ineligibility for Medicaid[2].
This high churning rate has a significant impact on the lives of Medicaid and CHIP beneficiaries and on the financial viability of plans that serve them, especially community health center owned plans which do not have large capital reserves to support them. Beneficiaries are harmed because plans are no longer responsible for monitoring their quality of care and the beneficiaries may not be receiving necessary yearly preventative care such as pap smears. The plans are harmed because they cannot amortize the costs of case management over a longer average enrollment period, may suffer from adverse selection as higher cost beneficiaries may be recertifying at higher level, and do not have the ability to recoup the significant upfront costs of new enrollees.
AHCAHP supports giving the States the ability to extend the redetermination period for up to two years. This would reduce the churning in the beneficiary population, enhance the financial stability of the plans, and improve the health of the beneficiaries who would be able to receive preventative care on an on-going basis. This proposal could also be proposed on a more limited basis. For instance, two year redetermination only for children, for children of SSI recipients, or for the lowest income families.
- Continuous Eligibility for Adults – The BBA allowed for continuous eligibility for children in the Medicaid and SCHIP programs for up to 12 months. Twenty-two states have used this option in Medicaid and 24 in the SCHIP program. This allows a state, at its option, to keep children enrolled regardless of their income. They are therefore eligible for all services for a 12 month period. AHCAHP supports continuous eligibility for adults as well, at state option.
- Twelve Month Guaranteed Eligibility for All Individuals in Managed Care – The BBA allowed States at their option to provide guaranteed eligibility for up to 6 months for people enrolled in managed care. Thus, if someone enrolls in an MCO, they have a guarantee that they will receive those services for six months, regardless of their income. AHCAHP supports extending this optional provision for up to twelve months.
MEDICARE+CHOICES CHANGES
- Wrap-around for Medicare Managed Care – Community health centers currently serve nearly one million Medicare beneficiaries. Community health centers excel at providing crucial services to this population, including treatment of chronic diseases, mental health services and prescribed medications, as well as transportation services. When the Medicare+Choices program was enacted in 1997, it failed to take into account the crucial role played by the CHCs in the care for Medicare beneficiaries. Unlike the Medicaid program, CHCs were not entitled to cost based reimbursement and were not provided wrap-around payments from Medicare for managed care beneficiaries.
AHCAHP supports NACHC in calling for community health centers to receive reasonable cost payments under Medicare Part C, just as they do under Medicare Part B. In addition, AHCAHP could support a wrap-around provision that would require CHCs to be paid the same as other providers by the managed care plans, but require Medicare to wrap-around the difference between what they would have been paid under Part B and what the plan actually paid them. This would eliminate the disincentive for plans to contract with CHCs, ensure that beneficiaries enrolled in managed care can continue to use CHCs for care, and reduce bureaucratic and financial burdens for managed care plans.
EXPANSIONS IN COVERAGE
- Expansions for Uninsured Persons -- Although almost 90% of all children in low income families are now eligible for Medicaid or SCHIP, fully 25% of those children have not yet enrolled. Part of the reason for this enrollment gap is the ineligibility of the children’s parents for public insurance. Medicaid eligibility for parents typically ends at about 60 percent of the poverty line, or about $10,000 for a family of four. As a result of this low eligibility limit and substantial gaps in employer coverage for low-wage workers, more than one third (34 percent) of low-income parents in America are uninsured. Recent research has found that Family-based Medicaid expansions substantially improve health care access and utilization for both adults and children[3]. And, States can reduce the uninsured population with broad Medicaid expansions that include parents without significantly discouraging employer-provided coverage.
AHCAHP supports the Congressional Budget Resolution which set aside $28 billion over five years to expand Medicaid coverage to the uninsured, as well as other proposals to expand coverage to all uninsured individuals.
OTHER SUPPORT FOR AHCAHP PLANS
- Definition of AHCAHP-type Plan -- Because AHCHAP plans typically are Medicaid only plans, do not have the large capital reserves that commercial plans typically do and yet, provide higher quality care, the plans have special needs that Congress should recognize and support. Congress recognized the special nature and needs of the AHCAHP plans in the Balanced Budget Act when it allowed states to set different solvency standards from other licensed HMOs for AHCAHP-type plans. Congress is currently debating 330 reauthorization which would allow both health plans and health center networks which receive 330 funding to directly access the HRSA loan guarantee program, with the permission of the health center. This may include an enhancement of the loan guarantee authority to allow the guarantee to cover up to 90-100% of the outstanding principal amount. The Senate HELP committee legislation calls for a study to examine the feasibility, costs and implementation requirements of a program to provide a federal guarantee to AHCAHP-type plans so that they could meet the State solvency requirements. AHCAHP supports creating a legislative definiation of AHCAHP plans that could then be referenced to create special support for these plans.
[1] Coverage Gaps: The Problem of Enrollee Churning in Medicaid Managed Care and Child Health Plus,” Prepared by Zalkines, Arky, Zall, and Bernstein, LLP, June 2000.
[2] Billings, John and Gretchen Morley. Findings from a Survey of Involuntarily Disenrolled Medicaid Managed Care Patients Conducted by the New York State Coalition of Prepaid Health Service Plans”, April 2, 1999.
[3] Ku, Leighton and Matthew Broaddus, “The Importance of Family-Based Insurance Expansions,” Center of Budget and Policy Priorities, September, 2000.
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