Presentation to Senate Appropriations Committee April 8, 2014

Julie Hamos, HFS Director

• To empower Illinoisans to lead healthier and more independent lives through the "Triple Aim" by improving the quality of healthcare, improving health outcomes and reducing the growth in healthcare costs; and

• To enhance children's well-being and families' self-sufficiency by establishing and enforcing child-support obligations.

• Redesign the Medicaid healthcare delivery system

• Implement the Affordable Care Act (ACA)

• Rebalance the long-term care system

• Continue program integrity initiatives

• Manage Medicaid budget growth

• HFS is the largest insurer in Illinois

• Current Medical Programs Enrollment (11/30/13): 2.76 million*

  • Children: 1.60 million

  • Seniors: 182,700

  • Adults with Disabilities: 261,800

  • Other Adults: 634,500

  • ACA Adults: 80,600 (County Care)

* Excludes enrollees in partial benefit programs

• Originally estimated 509,000 enrollees post-ACA by 2017, but current surge of enrollment is higher than anticipated

• Newly eligible "ACA Adults" – 100% federal match

  • 350,000 estimated enrollment by the end of FY 2014

  • 385,000 projected enrollment by the end of FY 2015

• Medicaid clients who were previously eligible, but had not yet applied – 50/50% match

  • 80,000 estimated by end of FY 2014 – in addition to historical enrollment

  • 85,000 projected additional enrollment by end of FY 2015

Reflects average annual enrollees. Excludes enrollees in partial benefit programs.

17% of recipients who are Seniors and Persons with Disabilities (SPD) result in 57% of Medicaid costs  (all agencies) – they have most complex health/behavioral health needs.

Medicaid costs are driven by the number and type of recipients (eligibility rules), their service utilization patterns and the established reimbursement methodologies for those services.

• 2011 Medicaid reform law (P.A. 96-1501) mandates 50% of clients to be enrolled in "care coordination" by 1/1/15

• Even without state mandate, we believe that care coordination is needed to achieve the Triple Aim:

  • Improving the quality of care

  • Improving the health of populations, and

  • Reducing the growth in health care costs

• We use "care coordination" and "managed care" interchangeably - it's about "managing" care

• Testing different models for 5 different Medicaid populations

  • Seniors and Persons with Disabilities (SPD) – Medicaid only

  • Seniors and Persons with Disabilities (SPD-duals) – Medicare/Medicaid

  • Children with complex medical needs

  • Children/family & caregivers

  • Newly eligible ACA Adults

• 4 different models, generally called "Managed Care Entities"

  • Managed Care Organizations (MCO)

  • Managed Care Community Networks (MCCN)

  • Care Coordination Entities (CCE)

  • Accountable Care Entities (ACE)

• Managed care entities organize networks of providers

• Networks include primary care, specialists, hospitals, behavioral healthcare

• Clients select a managed care entity, then stay within network for 1 year

• Patient-centered health homes coordinate care of clients with complex needs

• Multidisciplinary teams focus on clients' holistic needs

• Care coordinators help navigate the system, arrange care transitions and follow-up care

• Electronic health records make care coordination possible with sharing of clinical information

• Payments reward for quality and health outcomes ("value-based purchasing"); transition from fee-for-service to full risk

• Renewed focus on social determinants of health and wellness

• Managed care is mandatory in 5 regions, implemented in stages - about 2 million clients

  • Chicago region – 6 counties

  • Rockford region – 3 counties

  • Central Illinois region - 15 counties

  • Quad Cities region – 3 counties

  • Metro East region – 3 counties

• Clients in rural counties will continue to be in IL Health Connect (fee-for-service) for a while

• Seniors and Persons with Disabilities – Medicaid only

  • Called Integrated Care Program

  • Offers Service Package I (medical) and II (long-term services and supports, or "LTSS"), as needed

  • Fully implemented in all mandatory regions by September 2014

  • MCOs, CCEs, MCCN

• Seniors and Persons with Disabilities – Duals

  • Called Medicare Medicaid Alignment Initiative (MMAI) – federal demonstration in 2 regions

  • Offers Service Package I and II, as needed

  • Enrollment has begun

  • MCOs only

• Children with complex medical needs

  • Enrollment to begin in July 2014

  • 3 CCEs (plus other children as below)

• Family health population: children/families or caregivers

  • Enrollment to begin in July 2014

  • ACEs, MCCNs, MCOs

• Newly eligible ACA adults

  • Enrollment began with CountyCare in February 2013; ongoing

  • ACEs, MCCNs, MCOs

• Assisting sister agencies with 3 Consent Decrees

• Applied for and received Balancing Incentive Program (BIP) award, with enhanced federal match, to increase community capacity

  • $19.5 million included in HFS' FY 2015 budget request

  • $90.3 million expected for State by September 2015

• Nursing home reimbursement system has been modernized (RUGs)

• Quinn Administration has made it a priority to root out Medicaid waste, fraud and abuse

• State verifies eligibility through data matching

  • Secretary of State driver's license and state identification data

  • Social Security Administration data

  • Automated Wage Verification System data

  • DHS' SNAP and cash assistance data

  • HFS' child support data

  • IL Department of Revenue tax records

  • The Work Number – Income verification service vendor

• State enhanced the annual redetermination process with assistance from Maximus

• 234,000 clients (148,000 cases) removed from Medicaid – mainly between March and December 2013

• Maximus reviews focused on clients receiving Medicaid, but not other types of assistance

• Cases reviewed by priority order – based on likelihood client would be found ineligible

• Resulting cancellation rate was 41%

  • Most cases were cancelled due to lack of response to the initial redetermination letter

  • 33% of clients cancelled returned to Medicaid within 3 months of cancellation – when they presented required information for eligibility

• HFS and DHS have worked to reorganize the redetermination project to be compliant with AFSCME arbitration resolution and SMART Act

• DHS has hired and trained additional caseworkers and support personnel to staff two main redetermination hubs

• Maximus continues to staff call center, mail room and provides needed software

• In February and March 2014, 35,994 cases were reviewed – 50.6% were cancelled

  • 83% were cancelled due to lack of response

• OIG's mission is to prevent, detect and eliminate fraud, waste, abuse, mismanagement and misconduct in HFS programs

• Fraud Prevention Investigation (FPI) program ensures only those eligible for Medicaid receive benefits

• Long-Term Care Asset Discovery Investigations (LTC-ADI) uncover undisclosed assets and improper asset transfers in the long-term care program

• OIG collects overpayments and seeks sanctions of providers through audits, peer reviews, civil/criminal investigations and advanced data mining

• Health care inflation is a national issue

  • General health care expenditures have been growing about 4%

  • State Medicaid programs have been growing slightly more than 2% the past couple years

• Illinois base Medicaid costs grew by an average of 6.3% per year from FY 2007 to FY 2011

• Base Medicaid costs were relatively flat in FY 2012

• Base Medicaid costs declined approximately 6% in FY 2013 (SMART Act)

• HFS projects base Medicaid liability growth (excluding ACA impact and other program modifications) of 2% in FY 2015

• Medicaid budget requires constant attention

• Section 25 statutory caps:

  • Require payment of GRF and related fund medical bills received by June 30th from current year appropriations

  • Eliminate long "budgeted" payment cycles – cannot push large amounts of unpaid medical bills into future fiscal years

• With Section 25 caps, Governor and General Assembly imposed discipline on spending within Medicaid budget

• HFS is generally processing GRF-related bills to Comptroller in less than 30 days

• FY 2015 introduced budget will allow HFS to continue meeting Section 25 caps

• Introduced budget is maintenance budget; increases for:

  • $35m for restoration of adult dental benefits

  • $60m for care coordination fees

  • $130m for nursing facility RUGs methodology

  • $70m for anticipated hospital rate reform transitional payments

Total Liability in Billions

(Dollars in Millions)

• Division of Child Support Services (DCSS) serves both families who receive TANF and Medical Assistance and families who are not receiving government assistance, but still need child support services

  • In FY 2013, for the ninth straight year, the Department achieved collections of more than $1 billion, with a total of $1.38 billion – most of it passed on to families

• Child Support services are authorized under Title IV-D of the federal Social Security Act, state law and administrative rules

• DCSS costs are mainly driven by increases in staffing expenses since child support services functions are administrative in nature

• FY 2015 budget assumes that only 14 cents of every child support services operational dollar comes from GRF; remaining resources include:

  • retained child support collections from clients receiving TANF grants

  • federal performance incentives -- $15.3M for improved performance in FY 2012

  • federal match -- 66% match rate

* In FY2014, the General Assembly appropriated GRF Operations, including the Inspector General and the Child Support fund deposit, from a lump sum appropriation which is reflected in Program Operations. The FY2015 budget assumes operations costs are budgeted in the legacy appropriation lines.

HFS on-board headcount has decreased by 28%, or 821 staff since FY 2001, while enrollment in medical programs has increased 90% (1.3 million clients) and cases for which the Division of Child Support Services receives collections has grown by 54% (75,800 cases).