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Fiscal Fitness: How States Cope
Ohio Medicaid's new claims system about to go live
Ohio Medicaid is set to go live in December 2010 with a new claims adjudication system. This is expected to result in significant savings for the program, says Tracy Plouck, Ohio's Medicaid director. "We're going to have a front-end claims editor, which we see as a benefit relative to where we are today," says Ms. Plouck.
The multiyear initiative started back in 2004. "We are now finishing the development process. We are moving into a robust period of testing on a number of different fronts," she says.
However, Ms. Plouck says that after talking with other Medicaid directors who have gone through conversions to other systems recently, she expects it will take about a year after going live to stabilize the system and achieve federal certifications. "So, any cost savings that would be realized would likely occur beyond that point," she says.
An enhanced Web portal will give providers more self-service functionality. "We will have less of a paper-based system. We see that as a great efficiency from an administrative perspective, both for the provider community and for our state staff," says Ms. Plouck.
A consumer tracking system will be used for inquiries. "If a provider were to call five different folks in a number of months, we would have a record of interactions with that specific provider," says Ms. Plouck.
A smart prior authorization function is planned for 2011. This would autogenerate some requests for authorization for individuals for specific services, based on claims history and diagnosis codes. "So, that would be a provider efficiency, as well as a staff efficiency," says Ms. Plouck.
Ms. Plouck says that the system puts the state in a better position in terms of changes required by health care reform on the claims payment side. "It is a rules-based system, so hopefully we would have a reasonable level of flexibility to effect changes on the claims side," she says. "It's easier to effect changes than if you had to go in and actually hard code your legacy system."
While the system is going live later this year, the major impact of eligibility expansion won't occur until several years later. "So, we will have a period of time to get comfortable in our new environment," says Ms. Plouck. "We can plan for what changes need to be made in the system."
Plan for unanticipated impact
Ohio Medicaid's eligibility system is shared between the state and the counties. "Because the county has a direct interface with the consumer, it is a system that touches a number of our different programs, including Medicaid," says Ms. Plouck. "Speaking from Ohio's perspective, the eligibility system is much more of a concern to me. It is an aged legacy system, and there is more risk to effecting changes there."
Any potential impact to other programs must be considered with any changes made related to health care reform from an information technology (IT) perspective, including the coding of the system and any policy implications.
"We have to be very planful in our approach," says Ms. Plouck. "Our system is about 20 years old, so there is a lot of hard-coded logic. We will need to be very careful. We need to make sure we don't break anything in the system by making changes that will have any unanticipated impact anywhere else."
It is too early to say if the system will need to be replaced, says Ms. Plouck. One reason is that, currently, the federal government does not offer an enhanced match for eligibility systems work, as it does for claims adjudication systems.
"To the extent that any state is contemplating a replacement or major upgrade, it would be at the regular match not anything enhanced," says Ms. Plouck. "So, as we move forward in Ohio, we are going to be very deliberate about the extent of the changes that need to be made. We will then make a fiscal decision. Do we enhance what we have, or do we procure something new? We are not at the juncture where we are making that decision."
Even if the decision was made to procure something new, this would be a multiyear initiative, adds Ms. Plouck.
"We will need to assess the options from a technical perspective and make our decision, probably in the context of the next biennial budget," says Ms. Plouck. "We would need to know by that stage what our plan is going forward."
Currently, Ohio Medicaid is in the process of identifying specifics in the health care reform bill and comparing these to what the current programs contain. The next step is determining what decision points will be, going forward, for various factors. For example, the benefit package that will be available for the expansion population may end up being different from what a state Medicaid agency currently offers.
"So, there may be some policy decisions related to that," says Ms. Plouck. "Also, we know the eligibility process will be different, because there is a new eligibility methodology for some consumers. We need to be mindful of the technical changes that need to be made to our administrative code rules, to our IT systems, consumer notice, all kinds of details."
At the same time, there are different time frames for matching rates, and different federal reimbursement rates for different services and different populations. All of this must be considered. "As we work to quantify what this is going to mean in terms of future years, we will need to layer all these moving parts on top of each other. So that work is under way," says Ms. Plouck.
Possible fiscal opportunities
The state's current biennial budget bill, which is effective from July 1, 2009, through June 30, 2011, calls for the Medicaid program to cost-avoid about $2.5 billion dollars. Ms. Plouck says this will be done through a combination of reduction strategies and revenue augmentation.
"We have made some changes in provider assessment, for example, on the revenue side," says Ms. Plouck. "We really have been quite aggressive in our contributions to help balance the state budget. But we try to do it in a manner that protects consumer interests."
In February 2010, Ohio Medicaid carved out the pharmacy benefit from its managed care plans. However, plans are now expressing an interest in retaking control of the pharmacy benefit, now that changes to the Drug Rebate Equalization Act allow managed care organizations to achieve the same level of rebates as state agencies have been able to realize.
"What we've told the plans and stakeholders is that we really need to assess the overall fiscal impact of the rebate changes to the Medicaid program and examine what subsequent policy changes might mean," says Ms. Plouck. The fiscal impact of leaving it carved out, as opposed to putting it back in, is still being calculated.
"There are related policy implications as well," says Ms. Plouck. "For instance, we like the concept that we have a single formulary and single pharmaceutical authorization process for all of our Medicaid consumers in Ohio. If we carve back in managed care responsibility for pharmacy, that would certainly be a point of discussion with the plan."
Ohio Medicaid is also looking closely at how health care reform could help it to expand on its current quality initiatives involving hospitals. "There are some demonstration projects, some of which have specific funding identified and some of which do not, that may help to further those things. But at this point, we haven't set priorities around which ones we would actually pursue," says Trish Martin, Medicaid health reform project lead at Ohio's Department of Job and Family Services.
Growth was planned
Since Ohio is a state that tends to lag behind national recovery efforts, continued caseload growth in 2010 was anticipated. "And in fact, that is happening," says Ms. Plouck. "It's essentially where we anticipated it would be and relatively consistent with our expectations. So, we're not experiencing any budget shortfall at this point, because we planned for this."
For the first full year after the 2014 expansion, 540,000 individuals are expected to become newly enrolled in Ohio Medicaid because of the expansion to 133% of FPL, added to about 2 million current enrollees. "And, we expect to see almost the same number of folks coming through the door who would be eligible today but have not enrolled," says Ms. Plouck. "We are drawing on data from state-specific health surveys to develop some estimates in that area."
Ms. Martin says that the legislation is bringing lots of state entities together to plan across the board. "One of the things we are trying to get our arms around is the new modified adjusted gross income methodology," she says. "Today, our income eligibility process is really focused quite a bit on the makeup of the family. It's not just based on straight income eligibility. It's also based on other provisions."
If a person is determined not to be eligible post-expansion, it will need to be determined whether that person would have been eligible in the old process. "So, in essence, we're going to have two, maybe even three, processes going at the same time, Because we work with our county partners, our local job and family services entity, we're also going to have to train them on those processes as well," says Ms. Martin. "I'm not saying it's insurmountable, but it's going to be pretty complex."
Contact Ms. Plouck at (614) 466-4443 or email@example.com.