Joint Budget Committee
Summary of Hearing for Health Care Policy and Financing
January 4, 2012
Prepared by Miles Consulting, Inc.
Jennifer Miles: and
Diana Protopapa:
On January 4, 2012, the Joint Budget Committee (JBC) held a hearing for the Department of Health Care Policy and Financing (HCPF) regarding their FY12-13 budget request. This is the department’s opportunity to discuss their budget proposal with the JBC. Those in attendance included the JBC members (Senators Hodge, Steadman and Lambert and Representatives Gerou, Becker and Levy). Additional legislators who attended at least part of the hearing were Senators Aguilar and Lundbergand Representatives Johsi, Peniston and Summers. HCPF staff included Executive Director Sue Birch, Chief Medical Officer Judy Zerzan, Medicaid Director Suzanne Brennan and Budget Director John Bartholomew. The hearing responses can be foundhere and the slideshow provided by HCPF can be found here. Both documents are attached. The slideshow and hearing responses reduce the need for a detailed summary from Miles Consulting and we would advise interested clients to review them.
General Summary of Key Points
As of November 2011, there were 614,146 clients enrolled in Medicaid. This is a historical high and represents at 57.7% increase in caseload since January of 2007. CHP+ enrollment was 71,988 children and pregnant women, with a caseload growth of 42.7% over the same time period. Medicaid and CHP+ account for over 13% of the Colorado population. Kids are typically enrolled in Medicaid for 10 months, while the average enrollment for adults is 7 months. Colorado has the leanest Medicaid program in the region with administrative costs under 3%. This compares to an overhead/administrative cost of 7-30% for private sector health insurance plans.
The budget request from HCPF includes $185.5 million in new General Funds alone. Several JBC members expressed concern about the high growth rate of the Medicaid budget given the current budget outlook, including additional K-12 cuts. In response to a question, Director Birch indicated that an increase of 20-30% in FTE would be needed to adequately staff the Department, but that a request was not considered at this time given the current budget environment. Instead, they will continue to leverage staff resources among their sister agencies (Department of Human Services and Department of Public Health and Environment) and to maximize federal grants and other funds that support staff.
Accountable Care Collaborative
The Department provided an update on the implementation of the ACC through the written hearing responses (pages 20 – 27) and through the slideshow (slides 22 – 27). HCPF reported that they have enrolled over 74,000 patients in the ACC program with over 23,000 additional client enrollments scheduled for January 1, 2012. The hearing responses included anecdotal stories of Medicaid clients’ positive feedback about the program. The Department indicated strong involvement and general support from Medicaid providers, indicating that providers continue to tell the Department they want to help the program succeed. When pressed, Budget Director John Bartholomew indicated he was confident that the ACC would generate a savings of 6% for enrolled patients based on reduced utilization of services.
Adults Without Dependent Children (AwDC):
Director Birch answered questions about this new Medicaid expansion, indicating that the implementation date is currently being negotiated and that AwDC clients will all be enrolled in the ACC. HCPF is determining how to attribute these clients to Regional Care Collaborative Organizations (RCCOs), since they may not have a Medicaid claims history. When asked if the limit of 10,000 patients was related to $75M of the hospital provider fee being used to balance the budget, Director Birch indicated that it was not related, as the $75M would have been returned to the hospitals if it had not been used to balance the budget. The $75M has been proposed over two years ($50M in FY11-12 and $25M requested by HCPF for FY12-13).
Health Outcomes/Healthy LivingIntiatives:
HCPF staff reviewed the Winnable Battles and partnership with CDPHE to accomplish these goals. Their focus is on dental services for children, adolescent depression/suicide, obesity and tobacco cessation.
Oral Health: The Department stated that they are looking at how to enhance dental services for children due to correlation between dental and physical health. They reported that 45% of Medicaid children received a preventive dental service in FY09-10 vs. only 37% in FY08-09- a marked improvement already. HCPF staff also indicated that CDPHE is “lending” HCPF about 4 employees on the oral health work to accomplish their mutual goals. In response to a question about a proposed bill to add dental benefits for pregnant women in Medicaid, HCPF indicated that the outcomes for kids are linked to their moms’ oral health, however the issue with this bill is a possible fiscal note. Savings will be seen in several years, but not without upfront investment. HCPF is currently reviewing data from Dental Dental on the cost of providing dental benefits for pregnant women (from Delta’s experience serving CHP+ pregnant women).
Payment Reform:
Budget Director John Bartholomew presented on this topic (slides 65-66 and pages 18-20 and 27-29 of hearing responses.) He indicated that HCPF wants to move toward incentives for providers to improve outcomes. This would be accomplished by sharing savings with providers who “render services in a way that reduces costs without patients forgoing necessary care”. Based on their positive relationships and discussions with FQHCs and BHOs, the Department believes they can implement a shared savings model with these providers immediately with an estimated savings of $1.8M in FY12-13 and $4.1M in FY13-14. HCPF is requesting two additional FTE for these projects. He noted that this was the only request for additional staff in their proposal. The multi-year strategy for payment reform includes studying the issue (started in FY09-10), implementing and studying FQHC/RHC and BHO shared savings projects, and then implementing the model with other types of Medicaid providers. He also discussed other payment reforms the Department is studying, including bundled payments. The Department’s goal: Medicaid providers that achieve consistently better outcomes will be paid more.
Cost Sharing for Medicaid and CHP+:
The hearing included a fairly lengthy discussion on HCPF’s proposal to increase co-payments (copays) for Medicaid patients. Director Birch indicated that she believes providers cannot be solely responsible for a Medicaid patient’s health, the patient needs to be responsible as well. The federal government released rules for maximum Medicaid copays in October. HCPF’s proposal is to increase Colorado’s Medicaid copays to the federal maximums. The biggest increase would be for non-emergency ER visits, an increase from $3 to $7.30 per visit. HCPF staff indicated that Medicaid copays can be applied to less than ½ of all Medicaid patients, as the federal government does not allow copays for pregnant women or kids. Federal requirements also limit copays to 5% of a client’s income, but the client is required to keep track of receipts to prove this through the “shoe box” method.
Several JBC members asked questions about the impact on providers since they would have the responsibility of collecting the copays and would have their reimbursement rates reduced by the amount of the copayment, whether it is collected or not. HCPF staff indicated that they hoped the increased copay for inappropriate ER usage would provide incentives for providers to discuss ER usage with their patients since patients may save money if they go to the appropriate place. Currently, there is a disincentive for hospital ERs to send a patient away, as they get paid more for the ER visit than they would in another setting. Rep. Becker asked if providers would really spend resources to collect the copays, mentioning that an annual fee increase was used instead of copay increases in the CHP+ bill (SB11-213) to avoid a reduction in provider reimbursement. Senator Steadman and Rep. Levy both asked for more information about the proposed copay schedule for all services and expressed concern about a greater impact of copay increases on Medicaid patients due to their lower incomes. In response to a question, Director Birch indicated that a group of stakeholders were comfortable with the proposed copay increases for both Medicaid and CHP+.
CHP+ For Children of State Employees:
JBC members asked questions about the proposal to provide CHP+ coverage for children of state employees. HCPF staff indicated they were working with the Department of Personnel (DPA) to determine the cost of this proposal. Senator Steadman said he was interested in this as a way to offer state employees a more affordable health insurance option. Rep. Gerouasked if the state would be competing with private sector health insurance that the state is now paying for. Director Birch clarified that the children impacted have family incomes so low that they are uninsured and not on generally on the state employee plan. Senator Aguilar reported that she had a meeting with Department of Transportation employees recently, and they said some will be dropping coveragedue to the rising employee costs. She would be interested in carrying this bill if cost savings are found.
Contact: Jennifer Miles, 303-668-3979,
Eliza Schultz, 720-732-0217,