Wisconsin Medicaid Update
Michael Heifetz
Medicaid Director
October 13, 2016
Wisconsin Department of Health Services
What is Medicaid?
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Public program that provides acute health care and longterm care coverage to certain categories of low-income
individuals and individuals with disabilities.
Federal/state partnership; governed by both.
Federal government sets general Medicaid policy & rules.
Each state administers its own program within the
framework of the general federal policies and rules.
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Brief History of Medicaid
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Created in 1965 through the Social Security Act.
By 2010, Medicaid had grown to the largest centrallyadministered public program in at least 40 states.
Top-three budgetary obligation in 41 out of 50 states.
Since 1987, it has grown from comprising 10% of state budgets
to 25% in 2013.
The largest jointly-funded federal/state program.
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Centers for Medicare and
Medicaid Services (CMS)
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CMS is the agency within the federal Department of
Health and Human Services (DHHS) that oversees
Medicaid administration.
CMS provides technical assistance and oversight to
ensure regulatory compliance.
States must provide CMS with information about the
operation of their state Medicaid program.
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Centers for Medicare and
Medicaid Services (CMS)
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States must obtain written approval from
CMS to modify their Medicaid program.
Examples of changes that require approval:
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Structure of the state Medicaid agency;
Covered health care services;
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Eligibility requirements.
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Who is enrolled in Medicaid?
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Over one million low-income Wisconsin
residents are enrolled in Medicaid.
That’s about 1 out of every 6 Wisconsin
residents.
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Medicaid Providers
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Many types of public and private health care providers
can choose to participate in Medicaid.
Each state establishes minimum standards that providers
must meet, referred to as enrollment criteria.
Enrollment criteria examples:
– Professional license or accreditation.
– Pass a background check.
– Other professional or administrative standard.
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How Much Does Medicaid
Cost?
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Total annual budget: $8 billion.
Second largest state expenditure category,
after primary and secondary education.
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Medicaid Funding
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Jointly funded by the federal and state governments.
Federal share varies by state.
Each state is paid a percentage of the total cost of
their program using a formula generally based on
per capita income.
Generally, the split for WI is 60% FED; 40% state.
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% of Total WI Medicaid Spending
by Fund Source , 2013-14
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Medicaid Expenditures and
Participation
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Expenditures
($ in Millions)
$4,453.9
4,421.4
4,692.3
4,950.7
5,944.9
6,696.1
7,181.7
6,597.2
7,187.7
8,115.4
Average Monthly
Enrollment
741,000
761,300
765,500
801,100
894,500
1,042,500
1,098,000
1,112,700
1,104,100
1,098,700
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Medicaid Cost Drivers
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Pharmaceutical Costs
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Caseload growth (elderly and disabled)
Federal mandates (Medicare Part-D clawback provision phase-down, Medicare Part B
premium payments fluctuations)
Growing aging population requiring services
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Specialty Drugs (Hepatitis C, etc.)
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Distribution of Spending
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1% of the US population accounts for 22% of
total healthcare expenditures.
In Medicaid nationally:
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5% of Medicaid beneficiaries accounting for 54%
of total Medicaid expenditures, and
1% of Medicaid account for 25% of total Medicaid
expenditures.
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How are Medicaid Services
Delivered?
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A delivery system refers to the way in which
enrollees receive Medicaid coverage.
Two main delivery systems:
Fee-for-service (FFS) and managed care.
States can choose the delivery system(s).
Benefits are the same in each system.
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Delivery Systems in
Wisconsin
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About 35% are enrolled in FFS and about 65% are
enrolled in managed care.
The percentage of members who receive coverage
through managed care in Wisconsin has been
increasing over the past several years.
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Fee-for-Service (FFS)
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In FFS, individuals obtain coverage directly from
providers.
Provider delivers services and directly bills the state.
The state processes claims to verify that services are
covered under Medicaid; reimburses the provider
accordingly.
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Fee-for-Service (FFS)
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12 Largest FFS Service
Expenditure Categories
Expenditures ($ in millions)
Inpatient and Outpatient Hospitals*
Nursing Homes
Prescription Drugs
Long-Term Care Waiver Programs
Home Care
Medicare Premiums and Cost-Sharing
Physicians/Clinics
Clawback Payments to CMS (100% GPR)
Federal Funds Claimed on Certain County-Supported Services
Federally Qualified Health Centers
State Centers for Persons with Developmental Disabilities
$791.7
770.0
710.6
511.9
377.3
274.8
222.0
178.4
174.2
135.1
128.3
Health Information Technology Incentive Payments (100% FED)
58.5
Total
$4,332.7
All Other Fee-for-Service Expenditures
$450.1
Total Benefit Expenditures
$8,030.4
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% of Total
9.9%
9.6
8.8
6.4
4.7
3.4
2.8
2.2
2.2
1.7
1.6
0.7
54.0%
5.6%
100.0%
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Managed Care
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Members receive coverage indirectly from the state.
The state contracts with 19 private health maintenance
organizations (HMOs), to which it assigns a group of
individuals.
The state pays the HMO a fixed monthly amount for each
individual assigned to it (capitation or per-member per-month
payment).
In return, the HMO is responsible for providing health care
coverage for all individuals assigned to it.
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Managed Care
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Managed Care
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Referred to as managed care because it incentivizes HMOs to
better manage an individual’s care.
Managed care is a “risk-based” delivery system because the
HMO bears financial risk for providing coverage.
There is no guarantee that the fixed capitation payment will
equal the cost of services provided.
For example,
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If the capitation payment exceeds the cost of services, the HMO profits.
If the capitation payment is less than the cost of services, the HMO loses.
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Managed Care Capitation
Payments 2013-14
Managed Care Capitation Payments
BadgerCare Plus HMOs*
Family Care Managed Care Organizations (MCOs)
SSI Managed Care HMOs *
PACE/Partnership Programs
Other
Total
Expenditures
($ in Millions)
% of Total
$1,529.6
1,295.8
256.4
138.9
26.9
$3,247.6
19.0%
16.1
3.2
1.7
0.3
40.4%
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Current Challenges/Goals
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Managing the administrative burden of maintaining
compliance with numerous recent federal rule changes.
Improving care management for our most high-cost and
medically complex members (“super-utilizers”).
Improving program data structures to enhance datadriven decision making, improve program integrity, and
modernize business intelligence.
Increasing focus on contract management and
compliance of state contractors.
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Care and Contract Management
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Managed care contract updated to require intensive care
management activities for most medically complex members.
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Increased oversight of HMO performance standards to boost
contract compliance.
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Improves quality of care
Changes made in consultation with clinical experts
Intensive reporting requirements
Corrective action plans
Liquidated damages
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Managed Care Rule
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Issued by CMS in May, 2016.
The rule is the first substantive update to
Medicaid managed care regulations since 2002.
Medicaid managed care has grown
tremendously since 2002 with nearly 75% of
Medicaid beneficiaries enrolled nationwide.
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Managed Care Rule
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Objectives:
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Support State efforts to advance delivery system
reform and improve quality of care.
Strengthen beneficiary experience of care;
Strengthen program integrity;
Align key Medicaid managed care requirements with
other programs, such as Medicare and Exchanges.
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Access Rule
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Issued by CMS in October, 2015.
Requires measurement of access to health
care for individuals enrolled in FFS.
All states must submit a monitoring plan that
analyzes access to care.
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Access Rule
The monitoring plan analyzes access to:
 Primary Care
 Dental
 Physician Specialist
 Behavioral Health
 Pre- and Post-Natal Obstetric
 Home Health
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Access Rule
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Wisconsin’s Medicaid Plan for Monitoring
Access to FFS Health Care is available:
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https://www.dhs.wisconsin.gov/dhcaa/ma-accessplan.htm
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Covered Outpatient Drug Rule
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Issued by CMS in January, 2016.
Objective: address the rising cost of prescription drugs.
The rule requires that Medicaid payment reform
methodologies for prescription drugs and drug rebates
accurately reflect market prices.
To achieve compliance, Wisconsin Medicaid will modify
the two major components of our covered outpatient drug
methodology effective next year.
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Medicaid Data Improvement
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DHS is also working to refine data collection utilized to analyze
program performance and pay for services.
As more members receive benefits through managed care,
DHS uses encounter data to understand the service use of the
65%, or 850,000 members, who are enrolled in managed care.
By working closely with the HMOs to identify gaps in their data,
HMOs have been able to achieve a 95% accuracy rating for
completeness in their data submissions in 2016.
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Medicaid Data Improvement
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Wisconsin Medicaid is currently working to procure for an
improved claims payment and data management system
that will process both FFS and managed care data.
Procurement is focusing on improving various business
areas including claims payment, business intelligence,
and data management.
Improved data allows for data driven and evidence based
program evaluation leading to innovative models of health
care delivery.
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Conclusion
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Wisconsin Medicaid will to continue to lead the way
in providing high-quality health care that improves
health outcomes through efficient delivery models.
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