SAFETY NET COALITION URGES NY TO RECONSIDER CARVE-OUT

 

In March 2020, under former Governor Andrew Cuomo's administration, the New York Medicaid Redesign Team recommended that the state carve-out pharmacy benefits from the Medicaid program because of concerns pertaining to pharmacy spend and provider transparency. The reform essentially changes prescription drug reimbursement from a managed care model to a fee-for-service model, making the state responsible for the Rx benefit rather than MCOs and PBMs. To date, seven other states, including California, West Virginia, Wisconsin, Missouri, Ohio, Kentucky, and Tennessee, have carved-out pharmacy benefits from their Medicaid programs.

The state's decision was instantly met by opposition from safety net providers, 340B entities, community leaders, and nonprofits. They warned legislators of the harmful impact the move would have on the Medicaid prorgam and its beneficiaries' access to care. As a result, the carve-out was postponed in April 2021.

After a two-year postponement, the New York State Department of Health announced earlier this year that it would continue with the carve-out. Beginning April 1, 2023, Medicaid members will begin receiving their pharmacy benefits under the state's new delivery model, NYRx.

In spite of the state's decision, those in opposition to the change continue to make a concentrated effort to derail the carve-out as the April start date approaches. Save New York's Safety Net is a statewide coalition of providers and community organizations that represent vulnerable populations in the state. The coalition is fighting the transition because of its potential to disrupt access to specific drugs and its repercussions for community health centers.

For example, State officials that support the move to a fee-for-service model believe that it will increase program revenue by $250 million. That being said, under the current program framework, this money goes to safety-net providers around the state as a part of the 340B drug discount program. The program provides qualifying hospitals and clinics that treat low-income and uninsured patients with pharmaceutical drugs at a significantly lower cost. These savings help to fund programs such as vaccination clinics, housing assistance, transportation, outreach, and nutrition services. If the carve-out is carried out, it will divert these funds and lead to a reduction of services, clinic closures, and disruptions to the coordination of care.

Jacqui Kilmer, CEO of Harlem United, is amongst those in opposition to the state's decision. She expects the carve-out to drive up healthcare costs and views the measure as bad government from a policy and legal standpoint. However, the former business attorney is hopeful and strongly believes there is still a chance to convince Gov. Hochul to repeal the carve-out. According to Kilmer, "she can do that on her own without legislative approval, any kind of other oversight, budgetarily, or from the Department of Health."

Among lawmakers, several representatives sponsored bills in the former legislative session to repeal the pharmacy carve-out, but they were unsuccessful. These efforts are expected to be reintroduced this year, and legal challenges are anticipated if NYRx is implemented.

Along with the coalition's concerns surrounding the shift, there is also data that suggests New York and other states may want to reevaluate carving-out pharmacy benefits. In a 2018 report from the Association for Community Affiliated Plans (ACAP), the trade association found that when compared to fee-for-service models, managed care improves the quality of care and saves significantly more on brand name and generic drugs. ACAP analyzed Medicaid drug spending over a six year period and found the following:

• Managed care drug benefits produced considerable savings despite increasing prescription drug costs. "The average net (post-rebate) cost per MCO-paid Medicaid prescription during 2016 was $37, 73 percent of the average net cost of Medicaid prescriptions paid in the fee-for-service (FFS) setting during 2017, which was $50.".
• Managed care Rx services had greater utilization of generic drugs, which helped to decrease drug expenses. "In 2017, generic drugs represented 88.1 percent of MCO-paid Medicaid prescriptions versus 83.7 percent in the FFS setting.".
• Six states that implemented managed care prescription benefits only had a 1 percent increase in net costs per prescription between 2011 and 2014. On the other hand, seven states that carved-out pharmacy benefits saw a 20 percent increase in net costs per prescription during the same period. These seven states missed out on an estimated $307 million in savings in 2014 in comparison to the six states that transitioned to managed care.
• Carving-in prescription drug benefits decreases complexity and improves the quality of care for beneficiaries because managed care plans can coordinate with providers more efficiently.

In 2021, Medicaid expenses were the largest spending category, accounting for 27 percent of state budgets on average. In the same year, Medicaid spent around $80.6 billion on outpatient prescription drugs. Some states have elected to transition to fee-for-service models and carve-out pharmacy benefits to reduce program expenditures. While this is one strategy to try and reduce costs, states should also turn to opportunities to improve efficiency and cost avoid in their Medicaid plans.

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JANUARY MEDICAID NEWS

 

Syrtis Solutions distributes a monthly Medicaid news summary to help you stay informed. The monthly summary highlights developments, analysis, and legislation that pertains to Medicaid program integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a summary of last month's significant Medicaid news.

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BAD DATA IS COSTING MEDICAID BILLIONS

Medicaid currently fails at providing a system that efficiently and accurately stores and utilizes member data. As Medicaid is a joint state and federally run program, there are many problems with coordinating data platforms. Different states have their own unique data processing and storing, and while federal Medicaid data can reveal a clearer picture of consistent problems across state lines, lack of communication and data sharing produces significant barriers. While technology has advanced, gaps in existing data or errors in computation have direct consequences to the swift identification of third party liability (TPL), resulting in costly reimbursement strategies for Medicaid. The lack of uniformity in these systems prevents Medicaid from functioning smoothly.

One of the major challenges facing Medicaid is the lack of quality TPL data. In testimony before Congress in 2012, HHS Regional Inspector General Ann Maxwell delivered an alarmingly unfavorable evaluation pertaining to the reliability of data federal and state authorities use to identify overpayments and fraud in the Medicaid program. She stated, "much of the data used to identify improper payments is not current, available, complete, [or] accurate." A decade later, the exact same issues with TPL data that Maxwell outlined in her testimony to congress exist today. Apart from simple mistakes at the point of service with providers, there are fundamental problems in the health care data used by the Medicaid program that result in the loss of literally billions of dollars a year.

STATE DATA ISSUES

Each state Medicaid agency (SMA) is responsible for delegation of funds and detecting TPL through their own data sources. That being said, states have differing policies and benefits for Medicaid enrollees, producing inconsistent results. State policies may have existing gaps in information or may be so complicated that they are virtually impossible to navigate, leading to administration frustration. The Medicaid Management Information System (MMIS) works to centralize information and uses patient identification numbers to help with payment delegation. That being said, because of the large Medicaid population, in addition to continual churn, these datasets can be cumbersome and create missing information that causes difficult identification of TPL. Furthermore, Medicaid information is not communicated across state lines, creating repetitive errors that could be avoided. Health care organizations may share patient data with Medicaid for payment purposes, but the various types of data management could be an issue when trying to translate to Medicaid-specific forms.

FEDERAL DATA ISSUES

While states may send routine reports to federal Medicaid agencies, a working federal database may have a hard time deciphering the varying information from different SMAs. Data can be lost, infrequently collected, or incorrect across state lines. An individual in one state could move to an adjoining state and lose specific Medicaid benefits. Data might only show a small piece of the big picture and can not properly address the nuances of a social program and the problems that persist across states. Federal guidelines may only guide overarching procedures, and not have control over individual states' Medicaid programs and policies. This disjunction of administration proves difficult when trying to accurately find TPL data for not only individuals, but also states and federal overview.

Data sharing is therefore an efficient and effective way to decrease the number of inconsistencies between states and local organizations that require Medicaid payment. Nevertheless, a slew of issues stem from data sharing in totality. Even within states, health care organizations are hesitant to share patient data. Sacred protected health information (PHI) delegates immense responsibility to hospitals, providers, and care coordinators to handle data cautiously. Even if organizations are willing to share patient data, unique technology systems across health care do not always capture the same data or translate it in the same way. SMAs are responsible to intake this information and identify TPL, which increases difficulty when trying to smooth operations. This reluctance to share information translates to state and federal Medicaid agency issues. Sharing large amounts of diverse data has been troublesome and leads to inconsistent data and high costs to the Medicaid program.

For years Medicaid has struggled to effectively store and utilize program beneficiary data due to disparate data platforms and the inability to accurately share Medicaid data between states and the federal government. Moreover, much of the healthcare data that Medicaid plans do have access to is leading to billions of dollars in improper payments each year. Without having reliable, complete, and accurate TPL data, Medicaid plans will continue to make claims payments in error and rely on costly reimbursement strategies. Plan administrators must look to true TPL technology solutions for additional efficiency and cost avoidance opportunities to protect the program's valuable resources and ensure that plan members receive the care they need.

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MEDICAID NEWS FROM 2022

Syrtis Solutions publishes an annual Medicaid summary to help you stay informed. The yearly roundup concentrates on highlights, analysis, and legislation that pertains to Medicaid program integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a summary of 2022's Medicaid developments.

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DECEMBER MEDICAID NEWS

 

Syrtis Solutions sends out a monthly Medicaid news summary to help you stay informed. The monthly summary focuses on developments, analysis, and legislation that relates to Medicaid integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a list of last month's important Medicaid news.

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STATES CAN START MEDICAID ELIGIBILITY REDETERMINATIONS APRIL 1, 2023

 

Over the last three years, the Coronavirus public health emergency was extended numerous times. The PHE and the Families First Coronavirus Response Act adjusted Medicaid eligibility, and consequently, Medicaid enrollment increased dramatically during the course of the pandemic. Between February 2020 and July 2022, 82 million people enrolled in the Medicaid program, but millions are expected to lose coverage in 2023.

Recently, Congress released H.R. 2617 and within the $1.7 trillion bill was a requirement for states to start Medicaid eligibility redeterminations by April 1. States have been expecting eligibility redeterminations, but up until this point, it was not clear when they would occur because of the PHE extensions.

Due to the April deadline, they will need to review their Medicaid budgets as federal funding decreases and maintenance of eligibility requirements (MOE) expire. States expect the eligibility redeterminations to take at least a year to complete. During that time, it will be critical for states to communicate the change and updated eligibility statuses to program recipients.

In the course of the pandemic, Congress passed the FFCRA to expand Medicaid coverage and deliver additional fiscal aid to states by increasing the federal medical assistance percentage (FMAP) by 6.2 percent. Under the legislation, states were restricted from changing eligibility or removing members from the program. In recent months, states have requested a 120-day notice to prepare for the end of the PHE, but H.R. 2617 only allows for 3 months.

Along with eligibility redeterminations, the bill also features a gradual phase-down of the 6.2 percent FMAP over the next year. Rather than an instant reduction, the FMAP will decrease to 5 percent between April and June and slowly drop to 1.5 percent by the end of December.

States will need to generate monthly reports and make various efforts to correspond with plan members before they disenroll them to qualify for the FMAP step-down. For instance, states can not disenroll a member because their mail was returned. Plans will need to follow up with beneficiaries using other methods, such as email. These efforts will help to reduce the number of beneficiaries that lose coverage.

According to Medicaid.gov, this will be the "single largest health coverage transition event since the first open enrollment period of the Affordable Care Act." DHHS released a report in August predicting that approximately 15 million people would lose coverage based on historical patterns of coverage loss.

Now that states have a deadline to redetermine Medicaid eligibility, coordinating benefits to ensure eligible beneficiaries continue receiving coverage will be crucial. Some members will be eligible for additional benefits. Others may enroll in employer-sponsored healthcare or find coverage on the ACA exchange. While eligibility redeterminations will be a challenging task for Medicaid plans, it will also present an opportunity to ensure that vulnerable populations receive benefits and that program resources are preserved.

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OCTOBER MEDICAID NEWS ROUNDUP

 

Syrtis Solutions delivers a monthly Medicaid news recap to help you stay up-to-date. The monthly roundup highlights developments, research, and legislation that pertains to Medicaid program integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a list of last month's important Medicaid news.

Click here to read the news.