Secretary Alan Levine's Presentation to the Louisiana House - Slide 1

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Secretary Alan Levine's Presentation to the Louisiana House - Slide 1 Powered By Docstoc
This is about people…the people
whose well-being is entrusted to us.

Louisiana’s health care costs are among the
highest in the nation, but….
• United Health Foundation • Agency for Healthcare
  • 49th                       Research & Quality
  • (ranked 50th in 15 of 17

• Commonwealth Fund
  • 46th

• Congressional Quarterly
  • 49th

What does this mean for our citizens?
•   More people per 100,000 die of cancer each year than in every other
    state but two.

•   More infants per 1,000 die each year than in every other state but

•   More children per 100,000 die each year than in every other state
    but two.

•   Blacks experience 54 percent more premature death than whites.

•   Louisiana is ranked 51st for avoidable hospitalizations.

•   More than 1 in 5 of our citizens have no insurance.

Louisiana Medicaid Outcomes

                                 Louisiana               National Medicaid HMO
     HEDIS Measure             All      PCCM               LA       Benchmark
                            Medicaid     Only           Percentile 90th Percentile
Breast Cancer Screening       40%        40%              10th          60%
Well Child 3-6 yrs.           62%        62%              25th          80%
Well-Care 12-21 yrs.          35%        36%              25th          59%
HBA1c testing                 67%        68%              10th          89%

…and we have the 20th highest Medicaid expenditures in the nation

                   LA outcomes compiled by ULM for 2007
                   Percentile and Benchmarks from

    Our budget picture
•    This year Medicaid will pay more than $6.7 billion for 54 million
     claims for more than 1.1 million citizens – $1.6 billion more than 2
     years ago. Continuation budget growth next year is $450 million.

•    Overall budget will reach $11.5 billion in 2015 assuming 8% growth
     (federal estimate for annual growth).
•    In 2004, Medicaid consumed 10.4 cents of every discretionary SGF
     dollar. By 2011, Medicaid will consume 21.2 cents of that dollar.
•    We are just under the federal DSH cap. Projections are that we
     could spend as much as $600 million over the DSH cap in 2015/16 –
     all of which is unmatched SGF
•    $1.2 billion has been requested to build a new Academic Medical
     Center to educate LSU and Tulane medical residents.
•    CMS asserts Louisiana owes $771 million in disallowances

DSH growth over cap is unmatched

              $1.5 billion additional
                  SGF spending
                  in this period

Fraud, abuse and waste is a problem
According to America’s Attorneys General, up to 10% of national
Medicaid spending may be the result of fraud, abuse or over-billing.

The President of the Institute for Healthcare Improvement estimates
as much as 30-40% of healthcare costs are wasted.

“Not only is American health care inefficient and wasteful, much of
it is dangerous”. – Kaiser Permanente CEO George Halvorson, Washington
Post, 11/30/2008

Fraud, abuse and waste is a problem

Recently in Louisiana:

•A Home Care Agency billed for services which were never rendered to
many recipients who were paid kickbacks to help cover up this fraud by
assisting in the preparation of falsified service documentation. Nearly $4
million was stolen.

•A hospital billed Medicaid for care in a Pediatric Unit even though it was
not certified to bill as PICU. This resulted in $3.3 million of false billing
over a 5 year period. The case was settled with the DOJ.

•A pharmacy billed for prescriptions which were never dispensed. Over
an approximate two year period it is estimated that the scheme resulted
in more than a $3 million loss to Medicaid.

Stakeholders support change
Plans offered by:                   Common principles*:

•   Louisiana Health Care           •   Expanding insurance
    Redesign Collaborative              coverage and maximizing
•   Blueprint Louisiana                 eligibility for Medicaid
•   Coalition of Leaders for        •   Expanding primary care and
    Louisiana Healthcare                medical homes through
•   Louisiana State Medical             effective reimbursement and
    Society                             reallocation of DSH
•   Public Affairs Research         •   Increasing transparency and
    Council                             accountability for health
•   Governor’s Transition Council       outcomes
    on Health Care                  •   Investing in HIT
                                    •   Assuring adequate supply of
                                        health care professionals

       *2008   AARP Analysis
Major components of proposal
Focus on Improved Outcomes and Access
1. Expansion of coverage state-wide for parents & caretakers
   of Medicaid eligible children up to 50% FPL

2. Region V full coverage model

3. New Orleans Academic Medical Center Governance

4. Investment in the community based health care safety net

5. Coordinated systems of care

What we are not doing

1. Creating a one-size-fits-all program

2. Taking DSH from the Charity system or rural hospitals

      • We are releasing pressure on the DSH cap to preserve it

3. ―Turning the system over‖ to anybody

      • We are strengthening our oversight to demand
        accountability for outcomes

Access to affordable coverage
Expand access to affordable health care coverage to up to 106,000
individuals in the state through two specific programs:

•Increased insurance coverage is strongly associated with better health

•Expansion under Medicaid releases pressure on the DSH cap reducing
unmatchable expenditures in out years. We may seek expansion only to
targeted population with chronic illness, which would more closely match
with services currently being provided by DSH funding and thus minimize
SGF expenditure growth.

•DSH does not lend itself to integrated care since DSH discourages
primary care use, encourages expensive ER and hospital use and has
led to disallowances.

State-wide expansion
A statewide expansion of Medicaid eligibility for parents and
caretakers of Medicaid eligible children who live at or below 50% of
the Federal Poverty Level:

•Children in Medicaid whose parents/caretakers also have insurance
have better outcomes.
•Currently, eligibility is at or below 12% of the FPL; almost 60,000
additional individuals will qualify state-wide (outside Region V- Lake
Charles and surrounding parishes).
    – Possible to limit expansion to those with chronic conditions, which
       decreases pressure on SGF in difficult budget years
•Administered through private health plans in pilot areas. Implement
comprehensive disease management in non-pilot areas. Much latitude
to create various models of care in underserved areas

Region V full coverage model
Request for a federal demonstration program in Region V (Lake
Charles and surrounding parishes) to provide full access to
affordable coverage for all in the region:

•Approximately 46,000 persons are uninsured in Region V – the highest
rate of uninsurance in the state (28%).

•All persons living at or below 200% FPL (approximately 25,000) would
be Medicaid financing eligible, and program will encourage applying
Medicaid premium to employer-sponsored coverage.

•Uninsured individuals between 200% and 350% FPL would be eligible
for a matching program, where their contribution would be matched by
federal dollars.
        –   Federal contribution on a sliding scale based on income
        –   Requires no additional SGF

Region V full coverage model (cont’d)
•   Reorient and invest in Moss Regional Medical Center in Lake
    Charles to focus on functionality for primary care, mental health,
    urgent care and other outpatient uses which complement the current
    community providers.

•   DSH from Moss would be used to help fund coverage model, and
    some would continue to be used to pay for outpatient services.

•   Rural Hospitals keep DSH for unfunded costs –DSH would continue
    to fill ―cost gap‖.

•   Invest three to five million dollars annually (from the disallowances)
    over five years to provide every resident in Region V with an
    electronic medical record/personal health record.

New Orleans AMC governance
Modernize the governance of the new Academic Medical Center in
New Orleans:

•Louisiana is only 1 of 6 states where the number of medical residents
declined between 1997 and 2006. Competition is national.

•The current governance structure of Charity forces it to act as a state
agency, and hamstrings its ability to invest and compete. In order to
compete, the new hospital must be able to finance its growth and behave
in a similar manner as its national competitors.

New Orleans AMC governance MOU
Under LSU‟s current authority, create a not-for-profit entity with an
independent board to govern the new Academic Medical Center:

•   Of 11 members, 5 would have no LSU affiliation, 4 would be
    nominated directly by LSU, but all would receive the consent of the
    LSU Board of Supervisors.
•   One member would represent Tulane University and one member
    would be appointed by the Secretary of the US Department of
    Veterans’ Affairs.
•   Payments and conditions for the care for the uninsured and
    residency programs would be negotiated through contracts.
•   LSU and Tulane would maintain historical residency slots (373 for
    LSU and 200 for Tulane).
•   The state would not guarantee this organization’s debt and it would
    not impinge on the state’s current debt cap.

Invest in the community based safety net
The state received a $100 million, three year grant to fund primary
care in Region 1. The grant expires in one year. The state will
request a waiver to use limited DSH funds for primary care and
outpatient services in Region I (New Orleans and surrounding

•Utilize $10-15 million of existing DSH funds annually in community
based safety-net clinics in the region caring for the uninsured.
    –   $30 million annual federal funding for PCASG clinics expiring in
        September of 2010
    –   Over 90,000 individuals under care of these clinics
    –   Current funding is restricted for use at current clinics; funding is needed
        for new clinics in other locations.

•Allow clinics to use a portion of PCASG funds to support adoption of
electronic medical records.
    –   Currently restricted by the federal government
Coordinated care and payment reform
Dartmouth studies estimate that 30 percent of medical spending in
America – or $700 billion – per year, does nothing to improve care.

“Even if only a third of that could be invested in critical programs,
„imagine the possibilities‟, said Peter Orszag, head of the
Congressional Budget Office, and incoming Director of the Office of
Management and Budget in the Obama White House. “Given the
scale of it, I am puzzled as to why we are not doing more to improve
the efficiency of the health care system.”

The Health Care Reform Act of 2007 directs DHH to implement a
health care delivery system that provides a continuum of evidence-
based, quality driven health care services utilizing the principles of
successful managed care reimbursement models.

September 2008 MedPAC testimony….
 ―The health care delivery system we see today is not a true system;
 care coordination is rare, specialist care is favored over primary
 care, quality of care is often poor, and costs are high and increasing
 at an unsustainable rate. Part of the problem is that Medicare’s fee-
 for-service (FFS) payment systems create separate payment “silos”
 (eg., inpatient, physician). They do not encourage coordination
 among providers within each silo or among different types of
 providers across payment silos. We must now move beyond those
 limitations – creating new payment systems that will encourage
 providers to change how they interact with each other. Providers
 need to increase care coordination and be jointly accountable for
 quality and resource use. The objective is a delivery system that is
 focused on the beneficiary, improves quality, and controls spending.
 Other private and public payers will need to change payment
 systems as well to bring about the conditions needed to change the
 broader health delivery system.‖
                                      Dr. Mark Miller, Executive Director

Research funded by Robert Wood Johnson
•   ―One major cause of cost and quality problems is that current healthcare
    payment methods penalize hospitals, physicians, and other healthcare
    providers who deliver the highest quality, most efficient care.‖
•   ―Without payment reform, quality improvements are doomed to be anecdotal
    in nature and glacial in pace.‖
•   Payment methods should ―shift the incentives of care toward the best,
    evidence -based practices of medicine and improved outcomes for patients.‖
•   ―For example, instead of paying physicians for each office visit from a
    diabetic patient, reimbursements might be restructured to provide periodic
    (e.g. monthly) Comprehensive Care Payments to cover all of the care
    management, preventive care and minor, acute services associated with the
    patient’s chronic illness.‖
•   ―The payments would be based on specific diseases and on patient-specific
    factors, such as age, that are likely to affect the level of services required.‖

Commonwealth Fund
Commission on a High Performance Health System
•   ―A critical step toward achieving a high performance health system is to provide
    insurance coverage to all Americans. But equally essential are bold actions that
    simultaneously improve the quality and efficiency of health care delivery—so
    that we improve the lives of Americans, alter the trajectory of health care costs, and
    make it easier for patients to obtain the care they need and providers to practice the
    best of modern medicine.‖
    •    Affordable health coverage. Providing everyone—regardless of age or
         employment status—with affordable insurance options, including a
         comprehensive package of benefits, will enhance access to care.
    •    Reforming provider payment. Our open-ended fee-for-service payment system
         must be overhauled to reduce wasteful and ineffective care and to spur
         innovations that can save lives and increase the value of our health care dollars.

Physicians and the medical home
In addition to over 300,000 physicians in the four major primary care
societies – the American Academy of Family Physicians, the American
Academy of Pediatrics, the American College of Physicians and the
American Osteopathic Association, the following specialty societies
endorse the joint principles of the patient centered medical home:
               American Academy of Chest Physicians
               American Academy of Hospice and Palliative Medicine
               American Academy of Neurology
               American College of Cardiology
               American College of Osteopathic Family Physicians
               American College of Osteopathic Internists
               American Geriatrics Society
               American Medical Directors Association
               American Society of Addiction Medicine
               American Society of Clinical Oncology
               Society for Adolescent Medicine
               Society of Critical Care Medicine
               Society of General Internal Medicine

Experience in Medicaid coordinated care
•   DHH researched programs in Kentucky, Florida, Pennsylvania, North
    Carolina and other states. Representatives of these state’s programs
    have visited Louisiana to share their experiences.

    •   Kentucky Passport:
        •   10 years experience/145,000 members
        •   Medical cost trends have average 5% annually for the network-
            compare to a regional average of 10% in 2007
        •   Rated excellent by NCQA in all health plan rating categories
        •   92 cents of every dollar goes to providers
        •   EPSDT screening 93% compared to 65% in Louisiana Medicaid

•   A 2003 GAO reports that states with coordinated care are better
    equipped to ensure provider participation and availability versus
    states which remain in a Medicaid FFS-based system.

Medicaid Health Plans in Northeastern States More Likely to Cover
Nutritionist Services for Obesity than FFS Medicaid
Percent of health plans covering services*





                               Dietician or Nutritionist          Other Obesity
                                 Services Covered                Services Covered

                *Surveyed states: CT, DE, DC, MD, MA, ME, NH, NJ, PA, RI, VT, VA, WV
Source: Tsai, et al (American Journal of Managed Care, 2003)                                 27
  California Medicaid Health Plans Reduce the Rate of Hospitalization for
  People with Ambulatory Care Sensitive Conditions (Conditions where
  good outpatient care can prevent the need for hospitalization)



                                  Average Hospitalization Rate/1000*

              * Reflects beneficiaries who are required to enroll in CA’s Managed Care program, which constitutes the majority

Source: Bindman, et al (Health Serv Res., 2005)                                                                                  28
  Racial Disparities Decrease in California Medicaid Health Plans
  MHP Reduction in Hospitalizations for Ambulatory Sensitive Conditions Compared to FFS

                                                                                                          African Americans



                                                                               18.8%                      Whites

                                    Reduction in Hospitalizations for
                                   Ambulatory Sensitive Conditions *
              * Reflects beneficiaries who are required to enroll in CA’s Managed Care program, which constitutes the majority

Source: Bindman, et al (Health Serv Res., 2005)                                                                                  29
  District of Columbia Medicaid Health Plans Reduce Unmet Needs for
  Special Needs Children
  Percent Reporting Unmet Medical Needs

                                         23.0%                                                  MHP



                                                        10.6%    11.0%

              8.6% 9.0%                          8.2%


               Physician,          Dental Care   Mental Health     Medical       Prescription
              Hospital or ER                      Specialist      Equipment         Drugs

Source: Mitchell & Gaskin (Pediatrics, 2004)                                                          30
  District of Columbia Medicaid Beneficiaries with Special Needs Enrolled in
  Health Plans Are More Likely to Have a Medical Home




                                  Percent of DC Medicaid SSI Children
                                       with a Regular Physician

Source: Mitchell & Gaskin (Pediatrics, 2004)                                  31
New York Medicaid Health Plans Improve Access to Critical
Preventative Care
Percent of enrollees receiving services
                                       76%                                                     MHP
                                                             64%             64%               FFS



                  Cervical Cancer          Diabetes            Childhood      Adolescent
                    Screening               Testing          Immunizations   Well Care Visit

Source: Roohan (American Journal of Medical Quality, 2006)                                           32
U.S. Medicaid Health Plans Demonstrate Improvement on HEDIS Measures
Percent of enrollees by HEDIS indicators

                                                                                85.7%   2001
                       65.0%                            66.6%
              61.1%                         61.4%                       60.1%

               Cervical Cancer     Controlling Blood      Cholesterol     Asthma
                 Screening            Pressure            Screening       Med Use

Source: National Committee on Quality Assurance, 2006                                          33
The evidence is mounting…fee for service
leads to less coordination

 ―The managed care plans still arguably do a better job
 than traditional Medicare at coordinating care and
 eliminating duplicative services.‖ – New York Times, 11/29/08,
 editorial advocating eliminating subsidies for fee-for-service plans in

Health Care Reform Act of 2007
The Act is specific about the requirements for medical home systems of
care. They shall:

   •   Coordinate and provide access to evidence-based health care;
        Convenient, comprehensive primary care
        Access to appropriate specialty care and inpatient services
   •   Have strong and effective medical management ;
   •   Require patient and provider accountability;
   •   Prioritize local access to the continuum of health care services;
   •   Require the use of an interoperable electronic medical record;
   •   Evaluate, promote and improve the quality and cost efficiency
       through the use of performance measures;
   •   Reimburse so as to ensure provider participation and success;
   •   Incorporate reimbursement features of successful managed care

Coordinated Care Networks
Aligning the Incentives
   Provide Choice Counseling and health literacy to consumers as they
             make choices for themselves and their families

Risk-adjust premiums to incentivize early identification of chronic conditions
                    and eliminate “adverse selection”

  Require networks to provide disease management for all persons with
                     diagnosed chronic conditions,

         Provide enhanced benefit dollars to engage consumers in
                       their own health behaviors

    Permit payment policies which reward CCN and provider outcomes

       Publishing performance measures on access, satisfaction and
                     health outcomes for each network
Coordinated Care Networks
•   Increase access to providers by:
    •   Requiring ―adequacy of provider networks‖ by specialty and
    •   Allowing CCNs to negotiate rates with physicians to increase
        provider participation for shortage areas/specialties

•   Provide for patient choice by:

    •   Offering choice between CCNs or employer sponsored coverage
    •   Providing a range of benefit packages – not one-size-fits-all

•   Provide resources to help CCNs invest in providers’ transition to
    medical homes and implement electronic health records over time.

•   Share savings gained from better care with physicians

Coordinated Care Networks
•   Hold CCNs accountable for efficiencies through quality

    •   Implement strong anti-fraud and abuse protections;

    •   Disallow mail-order only pharmacy to promote community
        pharmacists role in the medical home;

    •   Create rate floors and require sharing of premium increases
        with providers;

    •   Ensure all medically necessary services are provided;

    •   Consider systematic denial of care as fraud.

•   Bring predictability and growth stabilization to state budgeting by
    paying CCNs risk adjusted premiums.

Coordinated Care Networks
•   Initially, roll out pilots in four regions, including Shreveport, Baton
    Rouge, New Orleans and Lake Charles

•   DHH has contracted with UNO to provide independent evaluation.
    Expansion would occur only after evaluation demonstrates success.

•   There is significant flexibility for other regions of the state. For
    instance, rural networks could be formed, and the state could provide
    a variety of reimbursement methodologies to support rural networks.

•   The system of care MUST reflect the community it operates in

•   Finally, outcomes must be transparent. This enables the state to
    invest in those networks that demonstrate successful improvement in
    outcomes, and to hold those accountable that perform poorly.

Alignment between ABC & Health First
              LSMS ABC Plan                               LA Health First
    Provide Medicaid beneficiaries with        Choice of 2 to 4 privately
     private insurance vouchers and              administered health plans in each
     medical savings accounts.                   pilot region offering a range of
                                                 benefit packages.
                                                Beneficiaries may accumulate
                                                 enhanced benefits for healthy
    Provide participants with a choice of      Beneficiaries state-wide are currently
     purchasing private insurance, high          allowed to apply their Medicaid
     deductible catastrophic health              premium to employer sponsored
     insurance, or a benefit payment             insurance – provided that doing so is
     schedule plan, or enrolling in a            cost effective.
     managed care plan.                         In the four pilot areas, Medicaid
                                                 beneficiaries will have the choice of
                                                 ESI or CCN
Alignment between ABC & Health First
              LSMS ABC Plan                               LA Health First
    Allow low-income people ineligible         In Region V, allow individuals
     for traditional Medicaid to buy into        between 200% FPL up to 350% FPL
     the program with subsidized                 to contribute premiums with federal
     premiums on a sliding-scale cost            matching dollars to pay for ESI.
     schedule based on the financial            Federal contribution on a sliding
     status and size of the low-income           scale based on employee income.
    Establish an ongoing education and         Choice counseling and health
     information program to introduce            literacy services are required for the
     general and specific health insurance       purposes helping individuals make
     and managed care principles and             educated choices about plan, benefit
     concepts to the project’s potential         package and providers.
     and actual participants and other          Patient navigators help patients
     eligible individuals.                       engage with the system more
What we may achieve through federal

1. As much reduction in disallowances as possible to invest in

2. ―Freezing of Interest‖ – $100 million in savings

3. Extension of repayment over 60 months (vs. 15-21 months)

4. Increased FEMA payment with request from administration for
   additional Congressional funding for balance of AMC costs

Important timeline considerations
•   Louisiana must apply for federal permission to proceed with the
    design of coordinated care networks, the Region V full access to
    affordable coverage, and Region I DSH investment into primary

•   This is only the first step. Once any waiver is approved by the

    1. The waiver must be submitted HHS and a public comment
       period is required;
    2. Once the waiver is approved HHS requires submission of a
       detailed implementation plan;
    3. New legislation, rule making and appropriations will be required
       to implement some aspects of the plan;
    4. RFPs for CCNs and Choice Counselors must be designed,
       approved, released and reviewed;
    5. Contracts for CCNs and Choice Counselors must be designed
       and approved.