medicaid coverage in arizona january 2015. history of arizona medicaid arizona was the last state to...

Medicaid Coverage in Arizona

January 2015

History of Arizona Medicaid• Arizona was the last state to

participate in Medicaid – Arizona Health Care Cost Containment System (AHCCCS)

• Joined in 1982 as the only mandatory managed care program in the country.

• Added Arizona Long Term Care System (ALTCS) in 1989 also under a mandatory managed care program

2

“Gold Standard” of Medicaid Managed Care

• Built on competition and public/private partnership; strong competition by private health plans to participate in the program

• One of highest rates of community placement nationally for those at risk of institutionalization (84% living at home or in community)

• #1 ranking nationally for serving members with Developmental Disabilities by United Cerebral Palsy Report last 3 years

• National leader in Integrated system for dual eligibles: all AHCCCS health plans are also Medicare plans; 1/3 of dual eligible population is served by one health plan for both Medicaid and Medicare

• Very strong provider participation rates by private providers – no “Medicaid mills” or government-provided care

• High member satisfaction – less than 3% switch plans each year

• Error rates well below national average• Quality performance measures above national averages

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4

2012 3rd Presidential Debate“Number two, we take some programs that we are going to keep, like Medicaid, which is a program for the poor. We're — take that health care program for the poor, and we give it to the states to run because states run these programs more efficiently. As a governor, I thought, please, give me this program…I can run this more efficiently than the federal government. And states, by the way, are proving it. States like Arizona, Rhode Island have taken these Medicaid dollars, have shown they can run these programs more cost effectively.”Governor Romney 10-22-12

AHCCCS Coverage History• Mid 1990s – Governor Symington proposed adult

eligibility increase to 100% FPL to leverage state only spending

• 1996 – voters pass initiative after lack of legislative support

• 2000 – voters pass Prop. 204 initiative mandating coverage for all Arizonans up to 100% FPL

• 2001 – coverage up to 100% FPL implemented for parents and childless adults

• 2010 – ACA passes; Medicaid coverage up to 133% FPL• 2011 – State imposes childless adult enrollment freeze • 2012 – US Supreme Court ruling on ACA makes adult

coverage optional but Prop. 204 still mandatory under Arizona law

5

Infants

(0-1)Child

ren

(1-5)Child

ren

(6-19)

Pregnant W

omen

Parents

Aged, Blin

d and Disa

bled

Childless

Adults*

0%

50%

100%

150%

200%Exchange Subsidies

Full Expansion

Healthcare Reform Mandatory

Prop 204 Expanded Coverage

State Expanded Coverage (Non-Prop 204)

Federal Minimum

*Frozen July 2011 – Jan 2014

~~~~~~

Medicaid and ACA Populations

67% 67% 67% 67% 67% 67% 85%

100%

100%

Medicare

400%

100-133% FPL Estimated 57,000 to enroll

Percentage of costs paid by federal government

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Impact of Great Recession • Recession had devastating impact on Arizona

o Unemployment went from 3.5% to over 10%o GF revenues dropped 30%o AHCCCS enrollment increased 30%

• $2.5 Billion in annual reductions in AHCCCS program.o Provider Reimbursement – up to 15% reductions, most

still in placeo Benefits – eliminated/limited nearly all optional benefitso Eligibility – froze enrollment for Prop. 204 childless

adults (0-100% FPL) ; Froze KidsCare enrollment; phased out spend down program

o Administrative reductions – 30% decrease in staffingo Cost Sharing – maximized at/above federal requirements 7

Childless Adult Enrollment Freeze• State Medicaid programs were bound by

Maintenance of Effort (MOE) provisions in the ACA. • Arizona was one of 6 states that covered childless

adults prior to ACA expansion.• AZ’s coverage permitted under federal 1115

waiver authority; that waiver expired September 30, 2011.

• Because that waiver, and its expiration date, existed before the MOE, CMS took the position that Arizona could make changes to coverage for that population.

• AZ requests authority to freeze enrollment for childless adults; request approved; freeze began July, 2011.

• Authority to continue frozen program expired Jan. 2014.

8Reaching across Arizona to provide comprehensive quality health care for those in need

Medical Profile of Childless Adults Before Freeze


Prop. 204 Childless Adult Population – Enrollment

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Impact of Childless Adult FreezeBased on FFY 2011 Spend (3 months of freeze) - $1.7 B• Hospitals $720 million; for rural hospitals, $160 m• Physicians/Clinicians - $283 million; $50 m rural AZ• Behavioral Health - $125 million - $27 m rural AZ• Emergency and Non-Emergency Transportation -

$80 m• Radiology and Lab - $72 mWaiver Authority Expired 1-1-14• To make supplemental payments to Hospitals for

Uncompensated Care • To cover Childless Adults up to 100% FPL

Impact of Childless Adult Freeze• Enrollment declined due to attrition --

220,000 enrolled at time of freeze July 2011; 67,770 by December 2013

• Medical needs did not disappear• Cost of care largely borne by hospitals• Uncompensated care costs were

becoming unmanageable and were not sustainable

• A long-term solution was needed to address coverage for this population 12Reaching across Arizona to provide comprehensive

quality health care for those in need

The Journey to Restoration• In State of the State, Gov. Brewer called for restoration of

Prop. 204 childless adult coverage (estimated 240,000 Arizonans 0-100% FPL) and new adult coverage (estimated 50,000 – 60,000 Arizonans between 100-133% FPL).

• Because Arizona expanded early under Prop. 204, the State was not eligible for 100% federal funding for childless adults.

• ACA included transitional enhanced federal match for expansion states (approx. 85% federal – compares to AZ regular match of 67% federal)

• Arizona could only access higher 85% match for childless adults if it lifted freeze and “expanded” to include adults from 100-133% FPL.

• CMS would not approve regular match for maintaining freeze• The State could not afford Prop 204 restoration (adults 0-

100% FPL) without expansion (adults 100-133% FPL). 13

Relatively Minor Tweak to Populations Already Covered by Arizona Voters

Jan-10

May-1

0

Sep-10

Jan-11

May-1

1

Sep-11

Jan-12

May-1

2

Sep-12

Jan-13

May-1

3

Sep-13

Jan-14

May-1

4

Sep-14

Jan-15

May-1

5

Sep-15

Jan-16

May-1

6 -

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

If Arizona does not expand, it may have to eliminate coverage for remaining 50,000 Childless Adults on 1/1/14

Difference- 57,000 PeopleProp 204 Popula-tion

Full Expansion to 133%

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Medicaid Restoration Plan• Circuit Breaker – includes requirement that if

federal funding decreases below 80%, coverage for new adults terminates.

• Funding Source – hospital assessment to cover state costs associated with Prop 204; frees up State monies ($100M) to fund other needs.

• Pursue payment modernization opportunities – updates inpatient payment system; includes price transparency requirements; acknowledges cannot increase enrollment without addressing payment reform.

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2013 Coverage Policy OptionsOptions Lives covered GF Impact (FY

14-16)Federal $ available

Prop 204 Vote Honored

Medicaid Restoration Proposal

300,000 $(100) m savings

$4.1 billion Yes

Continued Freeze (assume state only)

63,000 and shrinking

$850 m plus cost

$0 No

Terminate Coverage 1-1-14

0(63,000 lose coverage)

$0 $0 No

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AHCCCS Prop 204 Restoration and Medicaid Coverage • Honor the will of the Voters – twice have approved

coverage for low income Arizonans – up to 100%• Keeps Arizona Economically competitive –

Arizona families and businesses have to support uncompensated care – states that expand Medicaid have competitive advantage

• Protect rural, safety net and healthcare infrastructure - AHCCCS is an integrated system and the impact of a continued freeze will be dramatic on the delivery system all Arizonans enjoy

• AHCCCS part of sustainability solution – Healthcare financing is a national policy dilemma that requires a federal solution – AHCCCS is nationally recognized system and similar efficiency levels should be achieved elsewhere

• Achieve healthier Arizona – New England Journal of Medicine found AHCCCS expansion saved lives and coverage also supports lower costs of care for patients

Wide Support for the Restoration Plan• Every alternative was reviewed with broad

stakeholder input• Supporters included over 400

organizations:o State and Local Chambers of Commerce,

business leaderso Economistso Faith-based leaders and organizationso Hospital industryo Physicians, nurses, behavioral health and other

providerso Community organizations, families and

individuals18

Medicaid Restoration

Reaching across Arizona to provide comprehensive quality health care for those in need

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12/1/2013 12/1/2014 Change

Prop 204 Restoration 67,770 276,638 208,868

Adult Expansion 0 32,594 32,594

KidsCare 46,761 1,898 -44,863

Family Planning 5,105 0 -5,105

AHCCCS for Families & Children (1931) 672,135 720,498 48,363

All Other 505,379 604,856 99,477

Total Enrollment 1,297,150 1,636,484 339,334

Medicaid Restoration• Enrollment figures show the

Restoration plan was really about restoring coverage to the Prop. 204 eligible childless adult population

• Enrollment projections were overall on target


Total AHCCCS Acute


Jul-11

Aug-11

Sep-11

Nov-11

Dec-11Jan

-12

Mar-12

Apr-12

Jun-12Jul-1

2

Aug-12

Oct-12

Nov-12

Dec-12

Feb-13

Mar-13

May-13

Jun-13Jul-1

3

Sep-13

Oct-13

Nov-13Jan

-14

Feb-14

Apr-14

May-14

Jun-14

Aug-14

Sep-14

Oct-14

Dec-14Jan

-15

Mar-15

Apr-15

May-15

Jul-15

Aug-15

Oct-15

Nov-15

Dec-15

Feb-16

Mar-16

Apr-16

Jun-16 -

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Actual FY15 Forecast FY16 Forecast

Hospital Assessment & LitigationAssessment• Hospital industry sought assessment; Created

through collaboration with stakeholders so no hospital system would be negatively impacted

• Assessed $75 m in FY 2014; $233 m in FY 2015Litigation• Lawsuit brought by 36 Republican Legislators• Won at Superior Court – Standing• 4/22/14: Court of Appeals rules legislature has

standing • 12/31/15: State Supreme Court rules legislature has

standing; back to Superior Court for litigation on the merits 22

AzHHA Uncompensated Care Reports• Self reported data from 78% of

hospitals, based on inpatient casesSeptember


2012 2013 2014 Percent Chg

Uncomp Billed Charges $238.4 m $259.6 m $158.6 m -38.9%

Costs of Uncomp Care $56.5 m $61.2 m $37.4 m -38..8%

Percent of total charges uncomp care

7.8% 8.2% 4.5% -45.4%

Operating Margin 2.6% 3.0% 2.6%

medicaid coverage in arizona january 2015. history of arizona medicaid arizona was the last state to...

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