Fiscal Fitness: How States Cope: Vermont seeks to maintain its 'generous' Medicaid program
Fiscal Fitness: How States Cope
Vermont seeks to maintain its 'generous' Medicaid program
Although Vermont Medicaid, which offers some of the most generous benefits of any state, proposed several cuts to its program to make the program sustainable in the long run, the legislature didn't approve any of these. As a result, Medicaid was forced to make provider cuts to get through the short term. To maintain the program over the long term, however, cost-containment programs and increased use of health information technology (HIT) will be key.
Susan W. Besio, PhD, director of the Office of Vermont Health Access and Vermont Health Care Reform, says her biggest challenges of the moment are twofold: maintaining programs in the current fiscal environment, and also understanding the implications of federal health care reform.
"Because things keep changing, we don't really know what is going to happen ultimately. It's hard to know what we can and can't do moving forward, and what we should be doing to be smart for our programs, our beneficiaries, and our budget," she says.
Minimal fiscal analysis is being done, since this is complex work that is difficult to do without concrete details. "However, we are doing a lot of policy analysis of the different versions on a daily basis, saying, 'This would be good for us, this wouldn't be, this would be OK," says Dr. Besio. "We are also working with our congressional delegation to get them information about current versions of the bills and analyzing the policy implications."
'Maintenance of effort' is concern
When it comes to health care reform, Dr. Besio says "because every state Medicaid program is very, very different, including a state's readiness to operate an exchange or cover Medicaid beneficiaries up to 133%, it's hard to give a global response."
Dr. Besio says she is particularly concerned about "maintenance of effort" requirements. "The language seems to be pretty consistent across all the different versions. I really think this ties all states' hands, in terms of our ability to manage within our current economic strengths."
The basic intent is to require state Medicaid programs to keep whatever eligibility methods, standards, and procedures they have in place. "That language is in the ARRA [American Recovery and Reinvestment Act] funding, which goes until December 2010. So, we can't change any of that anyway, until then. But the language in the federal health care reform bills would cause us to have to keep that maintenance of eligibility until 2013 or 2014, depending on the version," says Dr. Besio.
The dilemma, therefore, is that the ARRA funding will be discontinued in December 2010, while states are not expected to be economically stable for another year or two. "We would be required to keep our existing program intact, but without the help," says Dr. Besio. "So, the only place we can go as state Medicaid programs to deal with that cliff is to cut provider rates, which creates an access issue. You can't change the benefits within the program. You can require higher copays or cost-sharing. But you can't increase premiums if people pay premiums, because that's considered an eligibility procedure."
Vermont Medicaid's only options to balance its budget may be increasing cost-sharing or cutting services such as dental or chiropractic. With the state facing significant deficits in projected revenue, this may be an untenable situation. "If you are just doing both of these things alone, you would have do them so drastically that it would not be feasible," says Dr. Besio. "This is especially true for high-coverage states, frankly. For those of us covering a lot of people at much higher income levels and offering very generous, robust benefits, we're kind of stuck with that. So, maintenance of effort is a major dilemma."
Another fiscal challenge for Vermont Medicaid came last year, when the legislature didn't approve the elimination of chiropractic services as an optional benefit. Instead, they agreed to reduce it to certain codes without eliminating it altogether. Next, Medicaid proposed reducing dental benefits for adults, but again, this wasn't approved. A third proposal to eliminate Medicare Part D wraparound coverage, which is funded totally by state general funds, was not approved.
"Those are some examples of cutting state-funded only programs or benefits that we were proposing to help make our program sustainable, but the legislature chose not to do," says Dr. Besio. "On the one hand, we were hopeful that the legislature would understand the significant financial situation we are going to be in for the next couple of years. The earlier we can make changes to our program to accommodate that, the better. But on the other hand, no one really wants to cut benefits. So, it's a very difficult dilemma."
In the end, provider rates were cut by 2%, and the way pharmacy is reimbursed was changed significantly. However, certain evaluation & management codes primarily used for primary care were exempted from the provider rate decrease. "We tried to protect primary care physicians in that rate reduction. We also exempted some other provider categories that have either cost-based reimbursement or a federal requirement that they get an annual inflationatory increase each year," says Dr. Besio. "The stimulus funds were used basically to balance our budget, so we didn't have to implement significantly more cuts."
VT committed to reform
Vermont remains committed to comprehensive health reform since passing its 2006 landmark health reform legislation. "We continue to see our enrollment grow in our state-sponsored programs and our new programs offered through our health care reform legislation," says Dr. Besio. "And that would make sense, because they are low-cost, high-coverage programs. And they are based, for the most part, on people being at 300% or below the FPL. So, as people are losing their jobs, more are becoming eligible."
A survey done by Vermont Medicaid last fall showed that uninsured rates went from 9.8% to 7.6%, since the new initiatives were launched in November 2007. "So, in a year, we reduced our uninsured rate by 2.2%. That doesn't sound like a lot, but when you get to that low of an uninsured rate, it's really hard to entice those last few people," says Dr. Besio.
Major statewide initiative
A new Medicare demonstration project will allow Medicare to join Medicaid and private insurers in state-based efforts to improve the way health care is delivered. "This demonstration project's specific design is still to be defined, and states have to apply to be a demonstration project state once the guidance is published," says Dr. Besio.
While Vermont will have to apply to be a site, the demonstration is largely designed based on the multi-insurer payment and delivery system reform embodied in Vermont's Blueprint for Health integrated medical home and community health team pilot.
The state's Blueprint for Health program is a major statewide initiative that Dr. Besio says she hopes will have an impact "in the mid- to long-term range."
Blueprint for Health is part of a statewide approach to health, wellness, and disease prevention, with Integrated Health System pilots currently under way in three communities with a combined population of 60,000 patients. These pilots include Patient Centered Medical Homes (PCMH) supported by Community Health Teams (CHTs), and an HIT infrastructure that supports guideline-based care, population reporting, and health information exchange.
Fiscal incentives are aligned with health care goals. With the exception of Medicare, all major insurers are participating in financial reform that includes two major components. First, primary care practices receive an enhanced per person per month (PPPM) payment based on the quality of care they provide. "The payment is based on the practices' official NCQA PCMH score and is in addition to their normal payments," says Dr. Besio. "Every six months, practices are rescored against the NCQA's nationally recognized quality indicators."
This approach provides an incentive for ongoing quality improvement, as payment is adjusted up or down based on five-point incremental changes in the score. Payments can range from $1.20 to $2.39 PPPM, providing a substantive incentive for thorough outpatient care.
In addition, insurers share the costs for the CHTs. Each of the three pilots has a CHT that includes five full-time equivalents (FTEs) at a cost of $350,000 and is intended to provide care support for a general population of 20,000 patients.
"The staffing mix for the CHT is designed in each community based on local need," says Dr. Besio. "The team members form a nucleus that works closely to coordinate with other personnel and services in the community, establishing a functional CHT that is much larger than the five FTEs. The Blueprint model is designed to be sustainable, scalable, and adaptable for all practice sizes, and from rural to urban settings."
ROI projected at $36M
The financial return on investment projected over five years for the Integrated Pilots is more than $36 million. "If Vermont is approved as a demonstration site, we will have the capacity and leverage to broaden the Blueprint's current reach, since right now we are using state funds to support Medicare's portion of the program," says Dr. Besio.
In addition, during the past legislative session, the agency was given the statewide authority for HIT planning. "So, statewide HIT planning and implementation is very closely coordinated with Medicaid, because it's embedded within the same organization," says Dr. Besio. "We are really excited. We think that we can take advantage of the incentives very quickly. It's really going to jump-start our efforts."
An analysis is being done currently to determine the best way to do that, while waiting for further clarification on the "meaningful use" requirement from CMS.
"I think anything that is going to help bring down errors, decrease the need for unnecessary tests and exams, decrease the amount of paperwork, and make individuals more aware of the totality of their medical records, all of that is going to be really helpful in the long run," says Dr. Besio.
Contact Dr. Besio at (802) 879-5901 or [email protected].
Although Vermont Medicaid, which offers some of the most generous benefits of any state, proposed several cuts to its program to make the program sustainable in the long run, the legislature didn't approve any of these. As a result, Medicaid was forced to make provider cuts to get through the short term.Subscribe Now for Access
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