Vermonts Global Commitment Waiver Prepared by Vermonts Legislative Joint Fiscal Office Used as background material at Families USAs Health Action Conference

Vermont’s Global Commitment Waiver

Prepared by Vermont’s Legislative Joint Fiscal Office

Used as background material at Families USA’s Health Action

ConferenceSheila Reed, Vermont Children’s Forum

January 26, 2006

V e r m o n tLegislative Joint Fiscal Office

Introduction to Global Commitment

Steve Kappel, JFO

January 10, 2005

V e r m o n tVermont Legislature

Current Financial SituationVermont Medicaid Revenue, Spending, and Net

(Preliminary Projections)

($3.4)

($76.2)($90.9)

($118.6)($149.2)

($45.8)

($200)

($100)

$0

$100

$200

$300

$400

$500

2006 2007 2008 2009 2010 2011

State Fiscal Year

$M

illio

ns

(S

tate

Fu

nd

s)

Net

Expenditures

Revenue

Excludes Long Term Care Waiver, DSH, SCHIP

FY 2006 is 9 months. FY 2011 is 3 months.


Global Commitment - History• December 2004 – Initial presentation by OVHA• January 2005 – Governor’s “Saving Medicaid”• February 2005 – Global Commitment concept paper.• April 2005 – final proposal to federal government• September 2005 – approval by federal government• September 2005 – provisional approval by Joint Fiscal

Committee, based on recommendation from Health Access Oversight Committee October 1 – Global Commitment implemented

• December 2005 – final JFC approval


Key Concepts

• OVHA to become a public Managed Care Organization (MCO)– Must comply with federal regulations for MCOs

• AHS to pay OVHA a fixed premium– Based on historical spending– Certified by actuary (within a range)

• Premium to include ALL Medicaid spending except Long Term Care waiver, some administrative costs, DSH, SCHIP


Key Concepts (cont.)

• OVHA will contract with other departments to provide or pay for some services.– Contracts will be based on existing programs

and expertise

• Changes to benefits received by mandatory beneficiaries (including optional services) will require an amendment to the waiver.


Key Concepts (cont.)

• There is new flexibility in determining benefits for optional and expansion (previous waiver) populations

• Changes in benefits that change spending by less than 5% can be made without federal approval.

• Possibility of changing methods for payment from fee-for-service.

• Waiver of federal laws could result in changes to the ways benefits are structured & provided.


How the MCO is Funded


How the Premium is Established

• Based on:– Historical Vermont spending– Vermont and national trends– Specified administrative allowance– Need for “reserves”


Financial Overview

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

2007 2008 2009 2010

Cap

Projected Spend

Avail Rev. Spend w/ GCAvail. Rev. Spend

Room under cap

Remaining shortfall

Value of Global Commitment


Financial Opportunity

• According to the “Terms and Conditions” of the waiver, any premium revenue that remains after making payments for the existing Medicaid program can be used for a variety of health-related purposes.

• These funds have been referred to as “savings”


Savings May Be Used to:• Reduce the rate of uninsured and underinsured• Increase access to quality health care for the

uninsured, underinsured, and Medicaid beneficiaries

• Fund public health programs that improve outcome and quality of life for Medicaid beneficiaries

• Support public-private partnerships in health care.


Global Commitment - Example

• Current system– Total Program $1,000– Federal Share $600– State Share (40%) $400– Chronic Care (100%) $40

– Total State Spending $440


Global Commitment – Example

• Under Global Commitment– Premium $1,040 (actuary / appropriation)

• Includes Chronic Care Initiative

– Federal Share $624– State Share $416– State saves $24 (spent $440 before)– This is the source of the $135 to $165 million

in savings.


Other Policy Implications

• Additional funds can be used for supplementing programs such as Chronic Care Initiative, for reducing the Medicaid shortfall, or some combination of the two. However, the amount available to do this is limited.

• At best, Global Commitment is a partial solution to the Medicaid shortfall.

• MCO regulations v. Vermont rules – substantive changes currently undetermined.


Other Policy Implications

• Premium structure will change the appropriations process, because money will flow to OVHA and then to other departments.

• MCO structure will necessitate interdepartmental agreements – could be status quo, could result in change.

• Waiver of specific federal laws allows some changes to eligibility calculations, premium amounts & retroactive eligibility – unclear if OVHA will proceed at this time on these changes.


Opportunities Under Global Commitment

Current CurrentMedicaid Spending

41% 59% State Federal

Global Commitment Certified

PremiumRange Current

Spending

Opportunity Space


SavingsTo ExistingPrograms

New Program

New StateDollars

State-funded programs(existing state spending)

SavingsNew Federal

Dollars


Global Commitment - Risks• Space between the actual costs and the

premium may be smaller than anticipated.– This can occur if a sufficiently high premium can not

be justified or if spending growth is faster than expected. The first is a particular concern in the later years of the waiver.

• The budget neutrality cap may be exceeded.• Documentation of waiver details is not as

complete as many waivers– JFC conditioned approval on complete

documentation.


Global Commitment – FinancesVermont Medicaid - Net Results With and Without Global Commitment

(Preliminary Projections)

($160)

($140)

($120)

($100)

($80)

($60)

($40)

($20)

$0

$20

$40

2006 2007 2008 2009 2010 2011

State Fiscal Year

$M

illio

ns

(S

tate

Do

llars

)

Without GC

With GC

FY 2006 is 9 months.

FY 2011 is 3 months .


The End

Many documents are available at:

http://www.leg.state.vt.us/JFO/default.htm

http://www.ovha.state.vt.us/globalhome.cfm

Documents

Vermonts Global Commitment Waiver Prepared by Vermonts Legislative Joint Fiscal Office Used as background material at Families USAs Health Action Conference