Fiscal Fitness: How States Cope: New Mexico Medicaid has some difficult choices to make for FY 2010
Fiscal Fitness: How States Cope
New Mexico Medicaid has some difficult choices to make for FY 2010
A long list of proposed cost- containment possibilities for New Mexico's Medicaid program never happened, due to funding the state received from the American Recovery and Reinvestment Act (ARRA) of 2009. Other than tightening up its managed care contracts, no changes whatsoever were made to the Medicaid program in fiscal year (FY) 2009.
However, in FY 2010, "all possibilities are back on the table for consideration," according to Carolyn Ingram, New Mexico's Medicaid director. "We are seeing huge increases in enrollment growth, above and beyond anything we've ever seen before. Primarily because of that, the ARRA funding that we are getting in FY 2010 isn't going to be enough."
Currently, Ms. Ingram says the Medicaid program's two biggest challenges are getting through FY 2010 and planning for FY 2011, when the ARRA funding will be discontinued.
"We are very thankful for the funding that did come. It helped the state to be able to shift general funds that...normally would have been put into the Medicaid program to other programs, so those programs didn't get cut," says Ms. Ingram. "But unfortunately, it's just not enough with the increased enrollment we are seeing. That is driving the increased utilization we are seeing in FY 2010 that we are just now entering. For FY 2010, we are looking at about a $35 million shortfall in state general funds."
In a one-year period (March 2008 to March 2009) there was a 7% increase in the total Medicaid enrollment of 490,241, which occurred with very little outreach. "From March 2007 to March 2008, we saw a 9% increase, with lots of outreach efforts," says Ms. Ingram. "Comparing March 2007 to March 2006, we saw only a 1.5% increase. That is what we were more used to seeing."
Over the past 18 months, Medicaid enrollment had been increasing slowly and steadily, but Ms. Ingram says "now we are seeing that coming in faster. In the beginning, we generally saw our food stamps caseload increasing. For us, the economic downturn hit a little bit later than other states because oil and gas revenues were higher here in New Mexico for a long time. About the time oil and gas revenues started to drop off, that was about the time that we saw our enrollment growing."
Initially, people who lost their jobs may have applied for food stamps, but many didn't sign up for Medicaid, possibly because they expected to regain employment. "But as time is going by, we are seeing our enrollment increases become faster and heavier," says Ms. Ingram.
Tough decisions to be made
Currently, the legislative committee and other stakeholders are going through the list of proposed cost-containment measures for FY 2010. "We are looking at some of the big things we can do, to get some of our expenditures back under control," says Ms. Ingram. "Unfortunately, most states have already done all the low-hanging fruit, and New Mexico is no different."
Back in 2003 to 2005, Ms. Ingram says that "we really cleaned up the program, because budgets were tight. We really did a lot of cost- containment and what I call 'scrubbing every benefit.' We went through every benefit we offer and tried to see what we could do to tighten it to make it more like commercial or Medicare, and be more reasonable or conservative in our approach." Provider payments were modified, and orthodontic adult dental, pharmacy, laboratory, X-ray, Personal Care Option, long-term care services, and other benefits were tightened.
Since a great deal of cost containment was already done at that point, now Medicaid is facing some very difficult choices for cutting benefits or services. "Now you are coming down to the really hard decisions that nobody wants to do when you are administering a health care program for people who are needy and people who are disabled," says Ms. Ingram. "Unfortunately though, those are the decisions that are left in terms of saving money."
For FY 2009, the Medicaid program was able to control some of the costs through its managed care programs. "We went back to all of our managed care contractors and renegotiated rates. This achieved a total program savings of approximately $40 million without reducing services or benefits," says Ms. Ingram. "We placed a cap on managed care profits." For FY 2010, it is expected that managed care utilization will increase as more eligible members participate in the state's Salud! Program.
"I definitely think that has helped, in terms of maintaining the overall growth of Medicaid in the budget," says Ms. Ingram. "But now, we are going to have to go in and look at things even tighter than that."
New Mexico's Medicaid program has implemented a variety of cost-saving initiatives in an effort to control expenditures. For example, its Coordination of Long-Term Services program is an integrated approach for dual-eligible beneficiaries. The statewide program incorporates Medicare and Medicaid primary, acute, and long-term care services in one coordinated and integrated program that is seamless to beneficiaries.
"We have had this in place for one year," says Ms. Ingram. "It is a brand-new program and took us a while to implement it. It is mandatory for people who are dual-eligible to participate."
Already, it is clear that the program has identified unmet needs of beneficiaries, who have begun to get the services they need. Not surprisingly, this resulted in increased costs to the program.
"In working with advocates to implement the program, managed care companies were required to go out and do an assessment of everybody off the bat," says Ms. Ingram. "So, the downside is it is going to cost us a little more in the beginning, as we start to implement those care changes for people. The good side, though, is that we are getting people the care they need."
Ms. Ingram says that ultimately, however, she expects to see positive changes in health outcomes for the targeted population. "We weren't doing disease management; we weren't helping them to ensure they got access to care. So, I think we will have a much better story for those folks. We expect this program to reduce the growth trend we are seeing in long-term care, which will help us to serve more people with the state's resources."
Preventive care is a critical component of the state's managed care programs. Initiatives in such critical areas as asthma, diabetes, and individuals with multiple conditions can achieve a cost savings without reducing benefits. For example, providing inhalers and nebulizers for individuals with chronic asthma helps reduce repeated emergency room visits and helps alleviate burdens placed on providers," says Ms. Ingram.
Cuts on the table
"To control costs, we are looking at a couple different areas," says Ms. Ingram. In terms of benefits, long-term care options provided in the community likely will be cut. One area in particular involves personal care services, such as house cleaning, that can help clients to stay in the community.
"That has expanded beyond what we have the capacity to pay for in New Mexico, so we will have to tighten that up," says Ms. Ingram.
Another area being looked at for possible cuts is pharmacy costs. The state previously did utilization review, added requirements to use generic drugs first unless they are not available or the provider can demonstrate a medical need to have a brand-name drug, and implemented a preferred drug list. "So, we have picked all the low-hanging fruit," says Ms. Ingram. "We are looking at whether we can tighten pharmacy payments even more. A court case was recently settled on the national level to allow states to do more tightening on how they do pricing. We will be doing that this coming year if our legislature and stakeholders approve it."
Another area involves payment methodology. Since New Mexico's Medicare fee schedule is lower than in other states, sometimes Medicaid pays higher rates than Medicare.
"We will be going back and looking at the overall payments and how we pay overall in that fee schedule," says Ms. Ingram. "One place we've been focusing on is outpatient services, such as radiology." Although provider rates weren't cut in FY 2009, this is likely to change in the near future. "The budget deficit we are looking at for FY 10 is so big, the only way we will be able to get there is by having to look at provider rate cuts," says Ms. Ingram.
As for healthcare information technology (HIT), an e-prescribing program was implemented, but Ms. Ingram says it's been a challenge to get the state's rural "mom-and-pop shop" providers on board.
"We have seen generally some good take-up in that area, but definitely with the big push for HIT, we will have to get more providers to take this up," says Ms. Ingram. "Other states are implementing things like that, and the more we can get this started, the more efficient it will make us overall."
Contact Ms. Ingram at (505) 827-3106.
A long list of proposed cost- containment possibilities for New Mexico's Medicaid program never happened, due to funding the state received from the American Recovery and Reinvestment Act (ARRA) of 2009. However, in FY 2010, "all possibilities are back on the table for consideration," according to Carolyn Ingram, New Mexico's Medicaid director.Subscribe Now for Access
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