Texas Medicaid Program: Reimbursement Methodologies

Michelle Apodaca, J.D.VP, Advocacy, Legal & Public PolicyTexas Hospital Association

Greater El Paso Chamber of CommerceHealthcare CouncilFebruary 22, 2012

Texas Medicaid Overview

Jointly funded state-federal health-care program, and administered by the Texas Health and Human Services Commission (HHSC).

Entitlement program, which means the federal government does not, and a state cannot, limit the number of eligible people who can enroll, and Medicaid must pay for any services covered under the program. Texas treats only mandatory populations required by federal government .

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Medicaid Expenses

Medicaid Beneficiaries and Expenditures:

2009- 65 and older/disabled = 30% caseload, 60% cost 3

Health Care and Texas 2012-2013 Budget: Adopted Version

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Rate Cuts 2010-2011 2012-2013

Nursing Homes 3% 0%

ICF-MR (not SSLC) 3% 2%

HCS Waiver 2% 1%

NF-related Hospice 2% 1%

Other Community Waivers 0% $12.5 million GR cut in in admin for

agencies

Medicaid & CHIP physician, dentist, orthodontist

2% 0%

Medicaid Hospital 2% 8%

Medicaid DME & Labs 2% 10.5%

Other Medicaid Providers 2% 5%

Other CHIP Providers 2% 8%

Medicaid Pediatric private duty nursing & home health

2% 0%

Medicaid Managed Care premiums reduced to “average acuity”

n/a $169.3 million GR cut

Medicaid Managed Care Expansion

Estimated $386M GR in savingsMedicaid lives under capitation

(MCO)

–Over 3 million, which is 77% of all lives

–Pre-expansion, 1.8 million lives, 50% of all lives

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Medicaid - Rate Methodologies

1. Medicare-Linked (Traditional Medicaid – FFS)

– Rates based on actual Medicare rates, % of Medicare rates, or the methodology used by Medicare.

– Physicians and other Practitioners

Based on Medicare Relative Unit (RVU) time and resource weighted system; CMS updates RVUs.

– Inpatient hospital: Rates based on Medicare Standard Dollar Amount (SDA) x Diagnostic Related Group (DRG).

– Children’s and Rural Hospitals: Rates based on costs.

– Other programs: Ambulatory Surgical Centers, Ambulance

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Medicaid - Rate Methodologies

2. Actuarial Based – “Capitation Rates” (Managed Care Programs)

- Rates established using encounter and experience data.

- Programs: STAR, STAR+PLUS (aged and disabled), STAR Health (foster care), CHIP, CHIP Perinatal, CHIP dental, NorthSTAR (Behavioral health in North Texas), and PACE.

- Rates vary by geographical area, risk group (pregnant women, TANF adults, TANF children, newborns, etc.), and acuity.

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Capitation Rate Methodology

Existing Areas– Service areas that have been in existence for 2 yrs. combine all

the MCO’s medical costs (encounter data) by risk group and service area.

– Annual adjustments are made prospectively for benefit changes, reimbursement changes (i.e., Frew) and cost trends.

– Allowances are made for administration, premium tax, and risk margin.

– All MCO’s start with the same overall average ‘community’ rate (e.g., Hildalgo).

– Thereafter, rates are adjusted from the community rate to reflect different levels of acuity each MCO experiences.

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Capitation Rate Methodology (cont’d)

New Areas– Rates are determined using data from fee-for-service

(FFS) and/or primary care case management (PCCM) programs.

– A managed care efficiency adjustment is made to anticipate savings.

– Similar to existing MMC service areas, adjustments are made for administration, premium tax, benefit changes and changes in reimbursements.

– Because the acuity of the clients enrolling into each MCO is unknown, no risk adjustment is applied.

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Medicaid Reimbursement Fee-For-Service vs. Managed Care (MC0)

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HHSC

MCO

Hospitals Doctors Other Providers

MCO MCO

HHSC

TMHP

Hospitals Doctors Other Providers

Fee-For-Service

Managed Care

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1 : Medicare Based2 : Capitation Rate – Actuarial based3 : Individually Contracted

1 1

2 2

3

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Medicaid – Capitation Rates (effective 3/1/12) (source:http://www.hhsc.state.tx.us/rad/managed-care/ )

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El Paso Travis Hidalgo

El Paso 1st. Molina SuperiorBCBS/ Sendero-

Travis Seton- Travis Superior- Travis Hidalgo

TANF Children (over age 1) 140.56 134.75 130.00 144.34 143.66 148.28 201.77

TANF Children (<1) 311.11 297.47 285.35 360.88 360.88 354.09 365.27

TANF Adults 356.62 351.53 345.89 382.30 375.90 400.95 429.92

Pregnant Women 364.98 365.25 365.50 563.57 549.28 564.57 356.33

Newborns 490.14 480.99 472.31 687.69 687.69 691.17 643.28

Expansion Children (over age 1) 137.83 138.84 139.61 147.85 147.74 151.95 219.38

Expansion Children (<1) 267.93 289.72 313.33 303.32 303.32 297.61 279.82

Federal Mandate Children 115.73 117.59 119.16 114.10 113.59 115.66 154.52

Delivery Supplemental Payment 3443.04 3443.04 3443.04 3247.49 3247.49 3247.49 3409.95

SB 1299 & SB 1053 Task Force Recommendations

Improve Medicaid and CHIP funding by increasing Medicaid fee schedule to Medicare and thereafter, update Medicaid rates each year by Medicare inflation factor.

Prohibit further funding reductions to the Medicaid and CHIP programs as a result of reductions in the Appropriations Act or cost containment strategies.

Continue to examine potential changes in rate methodologies - all Medicaid and CHIP rate methodologies should promote the same outcomes in the programs related to access, provider rates, HMOs rates and motivation for high quality of care to members.

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Local Economic Impact

Largest El Paso county employers Number of employees

El Paso Independent School District 8,663

Fort Bliss (civilian employees) 6,803

Ysleta Independent School District 6,500

City of El Paso 6,264

University of Texas at El Paso 4,871

Socorro Independent School District 3,995

Sierra Providence Health Network 3,761

El Paso Community College 3,728

Wal-Mart 3,706

County of El Paso 2,700

Las Palmas and Del Sol Regional Health Care System 2,244

Echostar Satellite Corp. 2,012

Source: http://www.city-data.com/us-cities/The-South/El-Paso-Economy.html 13

Local Economic Impact of Funding

Nursing School Funding (est. FY 10 $280,000; est. FY 11 $420,000)

Trauma Funding (FY 04- FY 10 = $11.3 M)

Upper Payment Limit (UPL) Supplemental Funding: $49M (public) + $12M (private) = Est. FY11 $61M

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Questions?

Michelle Apodaca, J.D.VP, Advocacy, Legal & Public PolicyTexas Hospital Association512/465-1506mapodaca@tha.org www.tha.org