Rhode Island models Medicaid concerns

Many Medicaid reports from national organizations discuss concerns with the program by using national averages. But an FY 2005 Medicaid report from the Rhode Island Public Expenditure Council (RIPEC) shows the impact the program has in the state that ranks second in the nation in per-capita spending on Medicaid and gives recommendations for increased efficiencies that may be of assistance to other states.

RIPEC describes itself as an "independent, nonprofit and nonpartisan public policy research and education organization dedicated to the advancement of effective, efficient, and equitable government in Rhode Island."

Almost 20% of all Rhode Islanders receive Medicaid benefits, and since FY 2000, there has been a 30.2% increase in the caseload, from 146,439 in 2000 to a projected 190,709 in FY 2005. Three-quarters of the caseload are children and families, but they account for only one-third of total Medicaid expenditures.

Adults with disabilities represent 14.3% of the caseload and 34.4% of Medicaid expenditures, while the elderly are 10.8% of the caseload but consume more than 25% of Medicaid expenditures.

Between FY 2000 and FY 2005, Medicaid spending in Rhode Island increased by 49.1% from $1.2 billion to a projected $1.7 billion in FY 2005. That compares to a 34.4% increase in total state spending in the same time period. However, Rhode Island’s average annual Medicaid growth rate of 8.3% between FY 2000 and FY 2005 was lower than the national average annual growth rate of 9.4%.

The caseload in Rhode Island’s Medicaid managed care program, RIte Care, increased from 95,687 people in FY 2000 to a projected 133,940 people in FY 2005, an increase of 38,253 people or 40%. The caseload includes some 5,400 children in foster care and with special health care needs. About two-thirds of RIte Care recipients are children.

RIPEC says that given the uncertainties about the future level of federal support for Medicaid and demographic factors that will continue to influence Medicaid costs in the future, it has recommended several steps to control costs while enhancing the delivery of necessary medical services to needy Rhode Islanders.

The organization has called for enhanced coordination of health and human services in state government through creation of a Human Services Secretariat that would bring together the five cabinet-level departments that now share the human services function — Department of Human Services; Department of Children, Youth, and Families; Department of Mental Health and Retardation; Department of Elderly Affairs; and Department of Health.

"Creation of a Human Services Secretariat could strengthen coordination between related state functions, improve focus on strategic initiatives, and provide for greater accountability for department operations," RIPEC says.

Secretariat sought

Based on recommendations from the state’s Fiscal Fitness Team, the governor earlier this year created the Office of Health and Human Services as the first step toward a cabinet-level Health and Human Services Secretariat.

RIPEC suggests the new organization might help foster inter-departmental coordination of Medicaid policies and programs, leading to an enhanced system of service delivery. For example, it says, both the Department of Human Services and the Department of Children, Youth, and Families provide services for children’s behavioral health. Improved coordination of these services could lead to a more effective and efficient service delivery system for the children, parents, caseworkers, and providers.

RIPEC’s second recommendation is for unified Medicaid expenditure reporting. It says the Secretariat for Health and Human Services should be responsible for developing and maintaining a unified Medicaid expenditure reporting system, so there is greater accountability of department operations.

Currently, it says, only the Department of Human Services reports its Medicaid expenditures and caseloads for population subgroups — the elderly, disabled, and children and families.

The other departments that spend Medicaid money are not required to break it out the same way. RIPEC also suggests the secretariat publish statewide Medicaid expenditure data and analysis as part of the budget process, including trend data. To monitor and evaluate use of Medicaid resources, it says, the secretariat should collect and disseminate data to help evaluate utilization of Medicaid dollars. If the state ends up not establishing a secretariat, RIPEC says responsibility for unified Medicaid expenditure reporting should be assigned to an existing agency.

The group’s third recommendation is to monitor the impact of the new Medicare prescription drug benefit on the Rhode Island Medicaid program.

Although Medicaid and Medicare were created to serve distinct populations, certain Medicare beneficiaries with low incomes and limited resources also may receive assistance through Medicaid.

In 2002, these so-called dual-eligibles accounted for 16% of all Rhode Island Medicaid enrollees. Some 82% of all dual-eligibles are eligible for full Medicaid benefits, and for them Medicaid pays for services such as prescription drug coverage and long-term care that, although not available through Medicare, are offered as part of the state’s Medicaid benefits package.

Beyond those fully eligible individuals, federal law mandates partial Medicaid coverage for certain other groups of qualified beneficiaries.

In Rhode Island, total expenditures on dual-eligibles accounted for about 52% of total Medicaid spending in 2002 and for 16% of all Medicaid enrollees. The largest category of expenditure was for long-term care, which represented some 68% of total dual-eligible spending.

Under provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, as of Jan. 1, 2006, dual-eligibles will receive prescription drug coverage under the new Medicare Part D. As a result, states will no longer need to cover them with their own outlays.

If dual-eligibles do not enroll in Part D, or if they need more coverage than is available under their Part D plan, states can provide it using their own funds, but they will no longer receive a Medicaid match for those expenditures.

Coverage could hurt budgets

But, RIPEC says that other provisions of the new law could significantly lower the savings that states actually achieve. Chief among those provisions is the so-called clawback that requires states to continue financing some of the cost of providing the prescription drug benefit to dual-eligibles.

The Congressional Budget Office has estimated that in the initial years, the new law will cost some states more Medicaid spending as a result of clawback payments in 2006 that will, possibly, remain larger than the amount of fiscal savings that certain states will secure as a result of no longer providing prescription drug coverage to dual-eligibles.

Also, the new law places significant new responsibilities on states to administer Medicare’s low-income subsidy program. As a result of these new requirements, states may incur substantial administrative costs that will offset savings resulting from elimination of state-funded dual-eligible drug coverage.

(To see the full report, go to www.ripec.com.)