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Classen_HealthEcon_Class23 - Medicaid and CHIP Medicaid and...

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Unformatted text preview: Medicaid and CHIP Medicaid and CHIP Class 23 Loyola University Chicago Prof. Tim Classen March 23, 2011 Class Outline Medicare Medicaid and CHIP Read Chapter 21 Next week: Hospitals April 4 ­ 8: Physicians April 11: Pharmaceuticals Presentations: April 13, 18 and 20 Papers due: Sunday, May 1 Prospective Payment and RBRVS Costs of Public Programs for Costs of Public Programs for Health Insurance Program costs at core are a function of C = N*(P*Q) + Administrative costs N = number of enrollees (eligibility) P = price paid for services (reimbursement rates) Q = amount of services (extent of coverage) Medicare’s Prospective Payment Medicare’s Prospective Payment System Began in 1983 to control escalating costs under fee­for­service (FFS) reimbursement Reimburses providers at fixed level based on Diagnosis­Related Group (DRGs) Not affected by cost of care or duration of hospital stay. Based on: Reduced costs by 20% by 1990 Based on characteristics of hospital combined with relative DRG cost Principal Diagnosis (why the patient was admitted) Complications and Comorbidities (other secondary diagnoses) Surgical Procedures Age and Gender Discharge Disposition (routine, transferred, or expired) Large urban hospitals vs. other hospitals. Local wage variations Teaching hospitals and hospitals with a disproportionate share of financially indigent patients are compensated higher. Case Management Index (CMI) is measure of patient health used to determine hospital reimbursement Modifications to PPS Modifications to PPS Many changes to rate of payment for DRGs over time 1985 COBRA legislation included provision for hospitals serving low­income patients Expansions of PPS to other Medicare programs Rate freezes during budget crises Changes due to technology innovations Resource­based relative value scale (RBRVS) developed in 1992 for physician reimbursement Sets relative payment schedule based on physician time, effort, costs of services and malpractice costs Attempt to remedy disparity between specialist and primary­care physician reimbursement Implications of PPS Implications of PPS Who benefits from PPS relative to fee­for­service reimbursement? How will quality of care and provider behavior change? Providers with low cost patients and most efficient care Why is setting of RBRVS and DRG reimbursement so contentious? Reduced duration of hospital stays Shift toward lower cost treatments Increased coding of diagnoses Other Effects of PPS Other Effects of PPS How does modification to reimbursement affect new technology adoption? Difficult to measure impact since policy was implemented across entire country at same time How are DRG reimbursement rates determined? Need capital subsidization to compensate? If everyone’s cost are above reimbursement rate, how long before change? Hospital Payment-to-Cost Ratios 140% 130% Payment to Cost Ratio 120% 110% 100% 90% 80% 70% 60% 19 80 19 82 19 84 6 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 19 8 Medicare Medicaid Private Payer Source:Trendwatch Chartbook 2009, Trends Affecting Hospitals and Health Systems, Table 4.4, p. A­35, at http://www.aha.org/aha/trendwatch/chartbook/2009/appendix4.pdf. Medicaid Today Health Insurance Coverage 29 million children & 15 million adults in low­income families; 14 million elderly and persons with disabilities Assistance to Medicare Beneficiaries 8.8 million aged and disabled — 21% of Medicare beneficiaries Long­Term Care Assistance 1 million nursing home residents; 2.8 million community­based residents MEDICAID Support for Health Care System and Safety­net 16% of national health spending; 41% of long­term care services SOURCE: Kaiser Commission on Medicaid and the Uninsured, 2010 State Capacity for Health Coverage Federal share ranges 50% to 76%; 44% of all federal funds to states Summary of Medicaid Summary of Medicaid Joint federal­state program Began in 1965 Financing (Roughly $300 billion program) States can have own eligibility standards, benefits package, payment rates and program administration under broad federal guidelines. As a result, there are essentially 56 different Medicaid programs – one for each state, territory and the District of Columbia. Jointly financed by states and the federal government. Share paid by Feds is Federal Medical Assistance Percentage (FMAP). FMAP is matching rate inversely related to a state’s per capita income and can range between 50 to 76 percent. The federal share of administrative costs is 50 percent for all states. Federal spending (from general revenues) are determined by the number of people participating in the program and services provided. Averages roughly 62% of total Medicaid costs Federal Medical Assistance Percentages (FMAP), FY 2010 WA MT OR ID WY NV CA NE UT CO KS OK ND MN SD IA ILIL MO IN KY TN AR MS TX AK HI LA FL AL GA WI MI PA OH WV NY CT NJ DE MD DC MA RI VT NH ME VA VA NC AZ NM SC 71+ percent (6 states) 62 to <71 percent (20 states including DC) 51 to 61 percent (10 states) 50 percent (15 states) SOURCE: Federal Register, February 2, 2010 (Vol. 75, No. 21), pp 5325­5328, at http://frwebgate6.access.gpo.gov/cgi­bin/PDFgate.cgi?WAISdocID=985592272797+0+2+0&WAISaction=retrieve . Total State Spending and Federal Funds Provided to States, 2004 Over twenty-two percent of state total spending and over forty-four percent of federal funds provided to states were spent on Medicaid. Total State Spending Elementary & Secondary Education 21.4% Higher Education 10.9% Public Assistance 2.1% Federal Funds Provided to States Elementary & Secondary Education 11.4% Transportation 8.0% Corrections 0.6% Higher Public Education Assistance 5.6% 3.6% Transportation 8.0% Medicaid 22.3% Corrections 3.5% All Other 26.3% Medicaid 44.5% All Other 31.7% Stimulus plan included $80 billion for state Medicaid payments Source: National Association of State Budget Officers, 2004 State Expenditure Report. Medicaid Eligibility for Working Parents by Income, December 2009 WA MT OR ID WY NV CA NE UT CO KS OK ND MN SD IA IL MO IN KY TN AR MS TX AK HI LA FL AL GA WI MI PA OH WV NY CT NJ DE MD DC MA RI VT NH ME VA NC AZ NM SC < 50% FPL (17 states) 50% ­ 99% FPL (17 states) 100% FPL or Greater (17 states, including DC) Note: The federal poverty line (FPL) for a family of three in 2009 was $18,310 per year. SOURCE: Based on a national survey conducted by Kaiser Commission on Medicaid and the Uninsured with the Center on Budget and Policy Priorities, 2009. Median Medicaid/CHIP Income Eligibility Thresholds, 2009 2 35% 185% Medicaid Eligibility under Health Reform = 133%FPL 75% 64% 38% 0% Children Pregnant W omen Elderly and I ndividuals w it h Disabilit ies W orking Parent s Non­ W orking Parent s Childless Adult s Note: Medicaid income eligibility for most elderly and individuals with disabilities is based on the income threshold of Supplemental Security Income (SSI). SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for Kaiser Commission on Medicaid and the Uninsured, 2009. ...
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