MEDICAID ENROLLMENT SPIKED 5.7%

Data from the federal government shows that more than 4 million individuals enrolled in the Medicaid program this spring due to the pandemic driven economic downturn. The 5.7% spike came after the swell in unemployment and the loss of corresponding employer-sponsored healthcare. In response to the Coronavirus and the economic decline, the CARES Act was passed in March. The bill restricted states from disenrolling beneficiaries and scaling back program eligibility during the course of the public health crisis.

Prior to the Coronavirus pandemic, there had been a decline in Medicaid enrollment since 2017. This year's rise in enrollment amounted to over 2.4 million adults and 1.4 million children. By June, CMS determined that 68 million people were enrolled in the Medicaid program, and 6.7 million children enrolled in CHIP.

Even with the considerable flux, healthcare analysts anticipated an even higher Medicaid enrollment rate. However, their predictions were not met since some employees were only temporarily laid off and retained their employer-sponsored coverage. Furthermore, Medicaid enrollment normally trails behind unemployment in an economic decline.

Unfortunately, these temporary furloughs are becoming permanent in many cases. The CBO predicts that in 2021 Medicaid and CHIP enrollment will grow by an additional 9 million people. Their estimate takes into account the stipulations of the CARES Act and the pandemic's economic impact.

Earlier this year, the federal healthcare exchange also experienced additional activity. Compared to 2019, enrollment rose by 46% in the first two quarters of 2020. Almost half a million people who lost health insurance turned to the exchange for coverage. State-run exchanges with special enrollment periods also had higher utilization.

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MEDICAID NEWS SUMMARY - SEPTEMBER 2020

Syrtis Solutions distributes a monthly Medicaid newsletter to help you stay informed. The newsletter focuses on legislation, insights, comments, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse. Here is a summary of last month's noteworthy stories.

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MEDICAID NEWS RECAP - AUGUST 2020

Syrtis Solutions publishes a monthly Medicaid newsletter to help you stay informed. The newsletter concentrates on legislation, insights, comments, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse. Here is a summary of last month's noteworthy stories.

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PRESCRIPTION DRUG COSTS LEAD TO CARVE-OUT IN OHIO

Aside from the pandemic driven economic recession and the consequential surge in Medicaid enrollment, rising prescription drug costs in the Medicaid program have caused tremendous fiscal pressure on state budgets throughout the years. In 2017, prescription drugs accounted for 5.1 percent of Medicaid benefit spending, and this expenditure continues to rise. States typically utilize managed care organizations and pharmacy benefit managers (PBMs) to deliver pharmacy benefits and lower prescription drug costs. That being said, a handful of states have opted to carve-out pharmacy benefits and move to fee-for-service (FFS) models. In July, Ohio became the most recent state to shift from its managed care model and released a RFP for a single pharmacy benefit manager (SPBM).

The carve-out approach reduces drug costs by centralizing a state's purchasing power, allowing it to take advantage of the size of its population to negotiate drug prices with pharmaceutical manufacturers directly. Right now, Tennessee, West Virginia, Wisconsin, and Missouri have carved-out their pharmacy benefits. Because of the potential savings from FFS models, some other states are now considering carve-outs and other methods to drive pharmacy costs down.

OHIO RFP FOR SINGLE PHARMACY BENEFIT MANAGER 

Over the last five years, there has been criticism of how Ohio Medicaid PBMs oversee the state's prescription drug program. After complaints of overcharging, double-dipping, anti-competitive practices, and transparency concerns, the state legislature mandated that the state selects a SPBM to manage prescription drugs. In addition, the SPBM would contract with the state directly to increase transparency.

Last month, the Ohio Department of Medicaid (ODM) released a request for proposal to change the agency's managed care program and carve-out pharmacy benefits. Ohio intends to improve and build on administrative efforts that will increase transparency and financial accountability. According to ODM, implementing a SPBM will help the Medicaid program by reducing costs, alleviating administrative burdens, and improving fiscal oversight.

CALIFORNIA Rx CARVE-OUT

California's governor authorized an executive order at the beginning of the year to move all of Medi-Cal's pharmacy benefits from managed care to a FFS model starting January 2021. According to the state, the carve-out is an economical way to negotiate prices and purchase medications. State officials believe that the new model will also standardize drug access for all Medicaid beneficiaries.

The state's FFS move has been controversial, and there are concerns over its possible effect on MCOs, PBMs, pharmacies, and the coordination of care. Critics contend that it will make the coordination of care difficult. While purchasing in bulk directly from manufacturers could drive down costs, it's uncertain how drugs will be dispensed and how local pharmacies will maintain profitability.

MICHIGAN CARVE-OUT TO SINGLE PDL

In October, Michigan's Department of Health and Human Services announced that outpatient prescription drug coverage would no longer be a Michigan Health Plan (MHP) benefit. MHP would change to a FFS model. The state anticipated saving $10 million in general funds under the FFS model through Rx rebates and the elimination of MHP administrative capitation costs.

At that time, healthcare payers and PBMs opposed the decision. They insisted that the move would impair the delivery of whole-person integrated care by increasing out-of-pocket costs, and members wouldn't have the proper overview of their medications.

A couple months later, the state decided against the carve-out and rather decided to implement a single Medicaid preferred drug list while also increasing MHP's dispensing fee to $3 for independent pharmacies.

State budgets are experiencing fiscal pressure from the public health crisis and skyrocketing prescription drug costs. Each year pharmacy spend accounts for a larger portion of state budgets. Because of this, some Medicaid plans are carving-out pharmacy benefits and transitioning to FFS models to lower costs. While this is one approach to save money, states should also look for opportunities to improve efficiency and cost avoid in their Medicaid plans.

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JULY MEDICAID NEWS ROUNDUP

Syrtis Solutions sends out a monthly Medicaid newsletter to help you stay up-to-date. The newsletter concentrates on regulation, insights, comments, and industry advancements pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse. Here is a recap of last month's noteworthy articles.

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CORONAVIRUS' EFFECT ON STATE BUDGETS AND MEDICAID

The COVID pandemic has had a devastating impact on the country's economy. As of June, the U.S. Bureau of Labor Statistics reported that the national unemployment rate reached 11.1 percent which translates to 17.8 million unemployed people. Many Americans that have lost employer-sponsored health insurance are now looking to Medicaid for healthcare coverage. According to the Georgetown University Health Policy Institute, Medicaid enrollment has increased by 5.8 percent in the last three months. In Florida alone, enrollment has nearly reached 10 percent. Due to the rise in unemployment and Medicaid enrollment and the reduction in revenue, states are experiencing severe budget gaps. As a result, some states have made considerable cuts to their Medicaid programs, the NGA is requesting additional federal funds, and Medicaid programs are likely to focus on cost containment reform to balance their budgets.

STATE BUDGET GAPS AND SPENDING CUTS

By law, states are required to comply with balanced budget requirements that prohibit states from carrying deficits into the upcoming fiscal year. These requirements combined with the increase in Medicaid enrollment are putting tremendous pressure on state budgets. Recently, a few states have made significant spending cuts because of this. In May, Georgia announced a 14 percent decrease in funding to all of its state agencies, Colorado made a $183 million spending cut to its Medicaid program, and Ohio decreased its Medicaid spending by $210 million. Additionally, Arizona and New Mexico have seen surges in Medicaid enrollment that far exceed their predictions. State officials are worried that they will also have to make major cuts if they do not receive further aid from the federal government.

FEDERAL ASSISTANCE INITIATIVES

On March 18th, the Families First Coronavirus Response Act (FFCRA) was put into law in response "to the COVID-19 (i.e., coronavirus disease 2019) outbreak by providing paid sick leave, tax credits, and free COVID-19 testing; expanding food assistance and unemployment benefits; and increasing Medicaid funding." The FFCRA specifically raised the Federal Medical Assistance Percentage (FMAP) to 6.2 percent. All states and territories are eligible for the increased FMAP provided that they abide by the maintenance of effort (MOE) protections and the following requirements:

a. Keep eligibility standards, methodologies, or procedures that are no more restrictive than what the state had in place as of January 1, 2020 (maintenance of effort requirement).

b. Not charge premiums that exceed those that were in place as of January 1, 2020

c. Cover, without impositions of any cost-sharing, testing, services, and treatments-- including vaccines, specialized equipment, and therapies-- related to COVID-19.

d.Not terminate individuals from Medicaid if such individuals were enrolled in the program as of the date of the beginning of the emergency period, or becomes enrolled during the emergency period unless the individual voluntarily terminates eligibility or is no longer a resident of the state (continuous coverage requirement).

However, the FFCRA did not take into account the massive swell in enrollment. To further protect public health and recover economic prosperity, the National Governors Association (NGA) is requesting that the Senate allocates an extra $500 billion to make up for lost revenue. Additionally, the NAG is requesting a temporary increase of FMAP from 6.2 percent to 12 percent. The increased percentage would be retroactive to January 1, 2020, and would remain in effect until the national unemployment rate dropped to below 5 percent.

To date, there have been no additional funds allocated and the FMAP has not been increased. On July 22, the NGA issued an additional statement urging the Senate to authorize their request.

The NGA says, "Governors have already cut budgets and reduced our payrolls by 1.5 million people, but without Senate action, we will need to make steeper cuts and reduce payrolls even more, at precisely the time when these services are needed most ... We need the Senate's strong support now, so we can fight the virus together and make an economic recovery a reality."

MEDICAID CUTS AND DELIVERY SYSTEM REFORM

Besides federal assistance and budget cuts, states normally control costs by reducing Medicaid benefits such as dental coverage or optional Rx benefits. However, in the current public health emergency, these methods are not necessarily feasible because of the MOE protections under the FFCRA. Additionally, slashing Medicaid spending would also decrease needed federal aid. At the moment, the federal government pays for about 60 percent of total Medicaid costs. That being said states will most likely turn their focus to modifying provider reimbursement rates, managed care profit margins, provider taxes, and managed care and delivery system reform to contain costs and balance their budgets.

The Coronavirus public health emergency's effect on the nation's economy and government-funded healthcare programs has states facing substantial budget gaps. Some have made tremendous spending cuts that will certainly impede Medicaid's ability to provide care when it is needed the most. Millions of Americans are relying on Medicaid for healthcare and states must do everything in their power to contain costs before reducing benefits or access to care. Along with federal support from the FFCRA and the NGA's request to increase FMAP, states should focus on further efficiency and cost-saving technology solutions in their Medicaid plans before reducing funding, access to care, and benefits.

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SYRTIS SOLUTIONS MEDICAID NEWS RECAP

Syrtis Solutions distributes a Medicaid newsletter on a monthly basis to help you stay informed. Here is a summary of June's Medicaid news, legislation, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse.

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