COVID-19 vaccine distribution has accelerated across states as the Biden Administration updates its vaccine goal to 200 million doses by April 23, 2021 and many states are opening eligibility to all adults by early April. The National Academy for State Health Policy (NASHP) recently spoke with several state Medicaid officials to learn more about how their agencies – and specifically their Medicaid managed care organizations (MCOs) – are leveraging partnerships and data to advance their vaccination efforts.
To improve coordination, Medicaid agency officials participate in, and sometimes lead, weekly meetings with state and county officials to update them about the latest vaccine progress. They have also worked with state and county officials to identify and share data about Medicaid enrollees to enable improved targeting of high-risk, and/or priority populations for outreach by state and local authorities. Medicaid agencies have also shared data about provider networks to aid vaccine administration efforts. Specifically, data has been used to recruit providers who are already actively engaged in serving certain populations as part of direct vaccination efforts, including as vaccine administrators at mobile vaccination sites.
Empowering Medicaid health plans encourages innovative vaccination promotion strategies.
Along with collaborating with state and local agencies, Medicaid agencies have also cultivated stronger relationships with their MCOs and other participating health plans to promote vaccinations. Several states’ officials report meeting with their health plans on a biweekly or weekly basis to share the latest updates on vaccination policy, as well as to strategize about best practices to encourage vaccination. United by a mutual goal of encouraging members toward health and away from catastrophic illness, the vaccination effort provides a unique opportunity for Medicaid to work in partnership with its health plans and encourages innovative approaches to improve vaccination rates. Some innovative strategies include:
- Distributing educational material about how to schedule appointments and appointment reminders;
- Enabling plans and plan representatives to schedule appointments on behalf of enrollees;
- Active post-vaccination outreach to assess vaccine side effects;
- Communication to family members and care takers about vaccine eligibility and access; and
- Development of training modules for care managers to address vaccine hesitancy.
Several officials especially noted the challenge of ensuring transportation to and from vaccination sites. To mitigate these issues, states have employed various methods of moderating this barrier – from providing access to free transportation services to mandating that health plans cover transportation to and from vaccination sites. One state had a policy to reimburse enrollees for miles traveled, while another worked with carriers to set a rate for transit services that included a “wait time” between arrival at and departure from the vaccination site.
Access to state data is critical to health plan participation in vaccination efforts.
Beyond sharing strategies to encourage outreach and access to vaccination sites, Medicaid agencies have played a key role in sharing critical data about Medicaid enrollees directly with MCOs or other participating carriers.
Medicaid agencies have unique access to state data sources, including Medicaid enrollment and claims data and vaccination data from public health data repositories, which is otherwise not available to private companies or other agencies. Access to this data not only positions a state Medicaid agency to take an active role in identifying enrollees to target for vaccination outreach, but it also enables it to perform analytics across data sources. For example, some states are cross-walking vaccine registry data with Medicaid data to identify Medicaid recipients who have scheduled vaccination appointments or who have been vaccinated. This ability to crosswalk data from vaccine registries is especially important, as many vaccines are scheduled and administered without an insurance claim, leaving health plans without any information about the vaccination status of their enrollees. However, armed with Medicaid data and analytics, health plans are able to conduct direct follow-up with their members. In several cases, states report active participation from health plans that are using data to encourage vaccination, including among high-risk individuals. Others go further and connect enrollees with case managers who may be able to assist with arranging transit to and from appointments or scheduling follow-ups for the second vaccine dose.
Capacity to conduct complex analytics may be limited based on states systems’ ability to extract and share data across agencies, and outdated claims processing systems may affect the timeliness of available data. Meanwhile, vaccination databases are in the midst of being brought to scale in tandem with escalating vaccination efforts, and data may not yet be fully accessible or up to date in state systems. State agencies are rapidly working to improve data capacity, including efforts to enable direct connections between carriers and providers to data sources or analytic information. One state also reported efforts to access data from border states, to ensure it had updated vaccination information even for those that may get vaccinated outside of the state.
States have and continue to rapidly adapt in response to the ever-evolving pandemic. As vaccine capacity increases, they will continue to build on their growing resources and infrastructure to address changing needs and circumstances. As they do, NASHP will report on the development of new policies and promising practices from those at the forefront of addressing the COVID-19 crisis.
In addition to providing critical funding for state COVID-19 response efforts, the American Rescue Plan requires drug manufacturers to pay more in Medicaid rebates for drugs with large price increases. This change, effective in 2024, has the potential to generate significant federal and state savings.
- A basic rebate: This rebate amount is based on a percentage of the average manufacturer price (AMP) – 23.1 percent for most brand-name drugs and 13 percent for generic drugs, and
- An inflationary rebate: An additional inflationary rebate is applied if the increase in a drug’s AMP exceeds inflation, defined by the urban consumer price index.
Under the current formula, the total rebate amount a state can receive (when the basic plus inflationary rebates are applied) cannot exceed 100 percent of a drug’s AMP. A drug manufacturer typically triggers this cap only if it increases a drug’s price substantially over time and therefore must provide such a large inflationary rebate that the rebates equal the drug’s price. Once the cap is reached, a manufacturer has little incentive to moderate drug price increases as they can charge a higher price to other private plans without paying larger rebates to Medicaid programs.
The American Rescue Plan eliminates the rebate cap, creating incentives for manufacturers to limit price increases and enabling state Medicaid agencies to collect more in rebates when large price increases occur. Without the rebate cap in place, manufacturers face a new pricing landscape that requires them to pay larger Medicaid rebates if they significantly increase a drug’s price.
This change reflects a June 2019 Medicaid and Children’s Health Insurance Program Payment and Access Commission (MACPAC) recommendation. In its recommendation, MACPAC highlighted that the change would result in higher Medicaid rebates and put downward pressure on manufacturer price increases. At the request of MACPAC, the Congressional Budget Office estimated potential savings from this change would be $15 to $20 billion in federal savings over 10 years. States would receive the non-federal share of these savings to their Medicaid programs. MACPAC, however, did caution that this change would only address drugs with large price increases – not drugs with high-launch prices.
MACPAC is currently considering an additional recommendation to change the MDRP related to rebates on drugs that receive accelerated approvals. An accelerated approval is a Food and Drug Administration (FDA) pathway that allows for quicker approval of drugs that treat serious or life-threatening conditions and fill an unmet medical need. MACPAC is considering a proposal to increase rebates required for drugs that receive an accelerated approval until the manufacturer completes the required post-market clinical trials.
The goal of the MDRP change would be to increase rebates on these drugs while there is limited clinical evidence of their effectiveness and to incentivize manufacturers to complete the post-market trials that are often delayed or take a number of years to complete.
Guidance from the Centers for Medicare & Medicaid Services in 2018 made it clear that state Medicaid programs are required to cover drugs approved through the accelerated approval pathway, despite the fact that these drugs often having high prices and unclear evidence of clinical benefit. Recently, indications for two drugs that received accelerated approvals – the cancer drugs Tecentriq and Imfizi – were withdrawn after follow-up trials showed the drugs did not improve overall survival.
MACPAC will vote on the recommendation to increase rebates for drugs with accelerated approvals at its April meeting. The National Academy for State Health Policy will follow its actions.
Since reaching an all-time low in 2016, the rate of uninsured children has climbed from 4.7 percent in 2016 to 5.7 percent in 2019. In response, several state legislatures are considering bills designed to improve children’s coverage options and promote child enrollment in Medicaid and the Children’s Health Insurance Program (CHIP).
Program and Enrollment Expansions
One of the most notable efforts to expand children’s coverage was included in New Jersey Gov. Phil Murphy’s fiscal year 2022 budget, which establishes the Cover All Kids initiative to provide coverage to all uninsured children. At an estimated cost of $20 million, it is forecasted to cover 88,000 children by expanding Medicaid eligibility thresholds and extending coverage to children currently ineligible due to immigration status.
The Cover All Kids program aligns with initiatives previously proposed by New Jersey advocates and legislators to ensure all children have coverage. The governor’s proposed budget also directs the Department of Human Services to eliminate premiums and the waiting list for children enrolled in CHIP and provides funds for an enhanced outreach campaign to increase Medicaid and CHIP child enrollment.
In Utah, lawmakers considered two children’s coverage bills during this session. In 2019, Utah had the third-highest increase in the rate of uninsured children and the highest rate of uninsured Latinx children in the country. In response to these troubling statistics, the Utah Legislature passed HB262, which creates the Children’s Health Care Coverage program. This program directs the Utah Department of Health, Department of Workforce Services, and the state Board of Education to develop a program to promote health insurance coverage for children when they enroll in school and when they apply for free and reduced lunch.
The Utah law also requires the state to:
- Conduct research on families who are eligible for Medicaid and CHIP to determine their awareness of coverage options;
- Analyze trends in disenrollment to identify barriers for coverage renewal; and
- Administer surveys to gather information about current enrollees’ experiences with the programs.
Findings from this research will be used to redesign the CHIP and children’s Medicaid enrollment websites and inform future outreach partnerships.
Another Utah bill, SB158, designed to address the state’s coverage crisis through the creation of a robust outreach program, focused on enrolling underserved populations, providing application assistance, and launching an advertising campaign to draw attention to coverage opportunities for children. In addition, the bill would have expanded public coverage to children whose family income fell below 200 percent of the federal poverty level (FPL). Despite senate approval, the bill did not pass.
Like Utah, Florida experienced a dramatic increase in childhood uninsured rates since 2016. The Center for Children and Families at Georgetown University’s Health Policy Institute 2020 report found that more than 55,000 Florida children had lost coverage between 2016 and 2019, representing the second-highest coverage drop in the nation during that period. Florida legislators are currently considering HB 201 and SB 1244, both of which would increase the eligibility threshold for their CHIP program from 200 percent of FPL incrementally by 20 percent each year beginning in the 2021-2022 fiscal year, until reaching 300 percent of FPL, which is expected in the 2026-2027 fiscal year.
In Maine, legislators are considering LD 372, a bill to expand access to CHIP. The bill includes provisions to:
- Expand income eligibility from 200 to 300 percent of FPL;
- Eliminate the waiting period for children whose families have lost employer-sponsored coverage;
- Extend coverage eligibility from age 19 to 20; and
- Eliminate premium payments for all enrollees.
Last week, the Georgia Legislature passed HB 163, which directs the Department of Community Health to seek federal approval to establish express-lane-eligibility (ELE) for children whose families apply for the Supplemental Nutrition Assistance Program (SNAP). By implementing the ELE option, children will automatically be enrolled or renewed in Medicaid or the state’s CHIP program, PeachCare for Kids, based on the current information provided in their SNAP application. State child health advocates estimate that this could increase child enrollment in Medicaid in the state by 70,000. Currently, five states use SNAP data to determine eligibility for Medicaid and/or CHIP.
CHIP Buy-in Programs:
Legislators in Iowa and West Virginia are considering bills to create CHIP buy-in programs, which allow families with incomes above their state’s CHIP eligibility thresholds to purchase coverage.
Iowa’s SF220 would allow families to purchase CHIP coverage for children and young adults up to age 26 whose household income exceeds the maximum income eligibility threshold of 302 percent of FPL. Iowa’s CHIP-buy in plan differs from traditional CHIP buy-in programs as it would allow families to purchase CHIP coverage for their children as an alternative to qualified health plans on the exchange or plans on the individual market — which unlike CHIP are not tailored to children’s needs.
The CHIP coverage would be sold through the marketplace, allowing families to compare their coverage options, and could be paid for with premium tax credits for eligible enrollees. If passed, the state would need federal approval to implement the plan.
West Virginia’s HB2278 would establish a buy-in program for children’s whose families earn more than 300 percent of FPL and could afford to pay the cost of CHIP coverage in full.
Despite states continuing to grapple with managing the COVID-19 pandemic, many are still seeking to improve coverage for children in Medicaid and CHIP. The National Academy for State Health Policy continues to track states’ efforts to increase enrollment in children’s coverage in Medicaid and CHIP.
To address the housing needs of their Medicaid enrollees, states can leverage a variety of federal Medicaid authorities to deliver housing-related support services to individuals with disabilities and chronic conditions. This report explores the various federal waivers states used to increase supportive housing and reduce their Medicaid costs.
Housing is an essential social determinant of health. Evidence shows a strong association between access to safe, affordable, and stable housing and positive health outcomes. Housing with supportive services, known as permanent supportive housing, supports individuals with complex medical needs and reduces emergency department use. Supportive housing also helps individuals remain stably housed over the long term.
There is also a strong return on investment for states that implement permanent supportive housing programs. By investing in supportive housing, states and localities can reduce health care, homeless shelter, and corrections costs. For example, Oregon reported a 12 percent savings in Medicaid expenditures one year after moving 1,625 individuals into affordable housing with support services. Many states support housing’s role in health by funding housing-related services in their Medicaid programs.
NASHP recently finished its three-year Health and Housing Institute with state officials from Illinois, Louisiana, New York, Oregon and Texas. The institute’s goal was to break down agency silos within states and strengthen services and supports that assist low-income and populations with complex conditions in becoming and remaining successfully and stably housed. Maximizing policy levers and authorities available through the Medicaid program was critical to increasing housing-related services and tenancy supports.
States are currently engaged in supportive housing initiatives for people with disabilities, mental health diagnoses, substance use disorder (SUD), multiple chronic conditions, and those experiencing or at-risk of homelessness.
States are also focused on deinstitutionalization due to mandates set by the 1999 Supreme Court case, Olmstead, Commissioner, Georgia Department of Human Resources et al. vs. L.C.. The case stated that institutionalization of individuals with disabilities who can be served in the community is unjustified segregation. Research indicates that community-based settings are more cost effective, less restrictive, and provide better outcomes for individuals with disabilities than institutions. As a result, the Centers for Medicare & Medicaid Services (CMS) has issued guidance, known as the Olmstead Letters, to help states identify services that support deinstitutionalization.
Medicaid and Housing-Related Services
Medicaid provides services for individuals with low incomes as well as specific populations, including those with intellectual, developmental, and physical disabilities. People who are homeless or at risk of homelessness generally qualify for Medicaid, especially in states with expanded programs for low-income adults. There is also increased national attention and resources for supportive housing for people with SUD. In November 2020, the Secretary of Health and Human Services released a report on housing-related services and supports under state Medicaid programs as a part of the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act. This report identifies federal authorities to provide housing-related services to people with SUD.
While Medicaid cannot pay for housing development or rent, with the exception of security deposits in some states, it can support services for enrollees to find and sustain housing. These services, defined by each state, can include:
- Education and training on the role, rights, and responsibilities of the tenant and landlord;
- Early detection and intervention for behaviors that may jeopardize housing, such as late rental payment and lease violations;
- Assistance with the housing recertification process; and
- Coordination with services and service providers for primary care, SUD treatment, mental health providers, and vocational and employment support.
Medicaid authorities allow states to test approaches to program financing and delivery by waiving Medicaid statutory requirements, and amending existing state plans. The following explores how states use Medicaid Section 1115 Demonstration waivers, 1915(b) Managed Care Authorities, 1915(c) Home- and Community-Based Services (HCBS) waivers, 1915(i) HCBS state plan amendments, the 1915(k) Community First Choice Option, and Health Homes to finance housing-related services.
Federal Medicaid Authorities for Housing-Related Services
Section 1115 demonstration waivers allow for “experimental, pilot, or demonstration projects that are found by the Secretary to be likely to assist in promoting the objectives of the Medicaid program.” Section 1115 demonstrations allow states to test innovative models and address social determinants of health and are considered to be more flexible than other federal Medicaid authorities. Section 1115 waivers also allow states to target services for population groups and within specific geographies.
Section 1115 waivers must be budget neutral to the federal government, meaning the federal contribution cannot exceed the amount without the demonstration initiative. Savings generated from the demonstration can also be invested in other innovations, such as coverage expansions in state Medicaid programs. States are also required to conduct monitoring and evaluation of their 1115 demonstrations, findings that can be useful to other states looking into implementing similar demonstration waivers. Most 1115 waivers are approved for a five-year period and can then be renewed for up to three to five years.
Trends across housing-related 1115 waivers show that states target different groups, but primarily focus on individuals with high emergency department use, SUDs, and serious mental illness (SMI).
- Virginia recently added eviction prevention and housing transitional services for individuals with serious behavioral and physical health needs at risk of homelessness through a 1115 demonstration waiver. These services include:
- Individual housing and pre-tenancy services: Includes a housing assessment, financial literacy education, application assistance, an individualized housing support plan, and identification of resources to obtain housing.
- Individual housing and tenancy-sustaining services: Updating individual housing support plans as needed, assisting in securing independent living supports, educating about roles and responsibilities of tenants and landlords, making home modifications, linking to community resources, and providing annual pest eradication treatment as needed.
- Community transition services: Provides up to $5,000 per member per lifetime to help individuals obtain an independent community-based living setting. Allowable expenses include security deposits, home furnishings, and home modifications.
A section 1915(b) waiver is one avenue for states to implement a managed care program among other provisions. This waiver allows states to waive requirements for comparability, statewide access, and freedom of choice and it can be approved for two years. Savings achieved through managed care can be used to provide housing-related services.
As identified by the SUPPORT Act report, few states leverage the 1915(b) authority for housing-related services.
- In Colorado, the state’s Community Mental Health Services Program includes Assertive Community Treatment (ACT). ACT teams, staffed by licensed clinicians and peer specialists, provide 24/7 individualized services to adults with a serious mental health diagnosis including housing assistance.
Section 1915(c) HCBS waivers are designed to provide services in community-based settings rather than institutional settings. These waivers must provide services that cost less than services offered in institutions, protect individuals’ health and welfare, have adequate and reasonable provider standards, and are individualized and person-centered.
States can operate multiple HCBS waivers and define target groups by age or diagnoses and choose the maximum number of enrollees allowed. HCBS services can be offered to individuals earning up to 300 percent of the federal poverty level (FPL). HCBS waivers can cover housing, pre-tenancy services, tenancy-sustaining services and transition services. States primarily use 1915(c) waivers to cover individuals with disabilities – not individuals at risk of homelessness, with chronic conditions, or SUD. This is due to the waivers’ requirement that individuals meet an institutional level of care for services. Some states, including Louisiana, operate different waivers for children and adults.
Louisiana currently operates four 1915(c) HCBS waivers:
- Children’s Choice Waiver: Covers housing stabilization and transition services for individuals with autism, intellectual disabilities (ID) and developmental disabilities (DD) for ages 0-20.
- New Opportunities Waiver: Provides housing stabilization, transition services, and $3,000 per member per lifetime maximum for security deposits and essential home furnishings.
- Residential Options Waiver: Covers in-home caregiving, community living supports, one-time transitional services, housing stabilization, and transition services for individuals of all ages with autism, ID and DD.
- Supports Waiver: Promotes housing stabilization and transition services for individuals of all ages with autism, ID, and DD.
The 1915(i) state plan authority is similar to 1915(c), but allows states to provide HCBS services through a State Plan Amendment (SPA), rather than a waiver. States cannot limit the number of individuals eligible or geography for services and beneficiaries qualify through needs-based criteria, rather than institutional criteria used for the 1915(c). States can use age, disability status, diagnosis and/or Medicaid eligibility group to target their benefit for individuals earning below 150 percent of FPL.
The 1915(i) state plan option is considered to be more broad than the 1915(c) option, however states may struggle to create targeted service programs due to eligibility requirements. States can use risk of homelessness as a needs-based criteria, however eligibility must include other levels of functionality, such as behavior, cognitive abilities and medical risk factors.
- North Dakota’s 1915(i) state plan amendment (SPA) was recently approved to provide community transitional services and housing support services to individuals with a mental health or SUD or disability. Services include benefit application, lease applications, one-time expenses for furnishings and modifications, financial literacy training and education on the roles of landlords and tenants.
The CFC state plan option was established by the Affordable Care Act (ACA and allows states to provide person-centered home- and community-based attendant services and supports. States receive a 6 percent increase to their Federal Medical Assistance Percentage (FMAP) for this option. States cannot cap the number of individuals participating and cannot target special populations. Eligible individuals must:
- Be eligible for Medicaid under the state plan;
- Meet an institutional level of care;
- If not entitled to nursing facility services, have an income below 150 percent FPL; and
- Enroll voluntarily.
Under the option, states can finance transition costs such as security deposits and home furnishings and other expenditures that support and individual’s independence.
- Oregon and Maryland cover these housing-related services in their CFC programs.
Section 2703 of the ACA allows states to develop health homes for Medicaid enrollees with chronic conditions. States can implement a health home through an SPA. Health home services are eligible for a 90 percent-enhanced FMAP for the first two years of the SPA. Health home services include these six core services;
- Comprehensive case management;
- Care coordination;
- Health promotion;
- Comprehensive transitional care and follow-up;
- Individual and family support; and
- Referral to community and social services.
Health homes do not expire like waivers and SPAs. As of December 2020, 21 states and Washington, DC were operating 37 health home models. Six states terminated their SPAs and are no longer offering health home services.
- California’s health home program provides housing transition and tenancy-sustaining services for individual with chronic conditions, mental illness, or chronic homelessness as defined by its SPA. Multi-disciplinary care teams must include a housing navigator to “…foster relationships with housing agencies and permanent housing providers, including supportive housing providers; partner with housing agencies and providers to offer the member permanent, independent housing options, including supportive housing; connect and assist the member to get available permanent housing; coordinate with member in the most easily accessible setting.”
To address the housing needs of their Medicaid enrollees, states can leverage a variety of federal Medicaid authorities. These authorities allow states to target housing-related services for individuals with disabilities, SUD, SMI, and other chronic conditions. Research from supportive housing programs in Seattle, Santa Clara, CA, and New York City show that supportive housing programs help individuals achieve sustained housing.
It is also expected that there may be a shift in the approval of Medicaid authorities under a new Administration. Section 1115 waiver demonstrations generally reflect priorities identified by leadership at CMS. Under the Trump administration, 1115 waivers could be used to support work requirements and payments for individuals in institutions for mental disease, despite the deinstitutionalization priority recommended under Olmstead.
The Biden administration, supportive of the ACA and Medicaid expansion, is expected to support continued flexibility for states through 1115 waivers without block grants or work requirements. This additional flexibility could include coverage expansions and additional services, such as housing supports.
While these authorities allow for the financing of services for specific individuals, states cite the ability to work across health and housing sectors and data sharing as other important tools for supportive housing. The National Academy for State Health Policy (NASHP) will begin a second health and housing institute this spring to support additional states in strengthening their services and supports that assist low-income and vulnerable populations in becoming and remaining successfully and stably housed.
Acknowledgement: This project was supported by the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS) under grant number U2MOA394670100, National Organizations of State and Local Officials. This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the US government.
New Jersey, like many states, faces rising maternal mortality rates and racial disparities. A recent review of pregnancy-related deaths in the state from 2009 to 2013 found 46.2 percent of deaths occurred in Black women, compared to 26.9 percent in White women. With approximately 40 percent of New Jersey’s births covered by Medicaid, the governor’s office recently announced the following Medicaid initiatives to improve maternal health and reduce overall health care costs.
Medicaid Coverage of Doula Care: Legislation passed in 2019 enabled Medicaid coverage of doula services in the state. A doula is a trained professional who provides continuous physical, emotional, and informational support to the birthing parent throughout the perinatal period. Doula care has been shown to reduce cesarean rates, improve birth experiences, and improve birth outcomes. Once doulas receive the community-based doula training from an approved program, they are able to enroll as fee-for-service providers and with Medicaid managed care organizations.
New Jersey has designated two levels of doula care eligible for reimbursement, standard and enhanced care.
- Services for standard care include up to eight perinatal visits and attendance during labor and delivery with a reimbursement rate of $800.08.
- Enhanced care is for members age 19 or younger and services include 12 perinatal visits and attendance during labor and delivery with a reimbursement of $1,066.
- Additionally, for both levels of care there is an $100 incentive for postpartum, follow-up visits.
In order to receive the incentive payment, doulas must provide a postpartum service visit within six weeks of delivery and use the code 99199 HD U8 for billing. An obstetric clinician follow-up visit must occur within six weeks of delivery to receive the incentive payment but is not required for doulas to receive reimbursement for other services. Doulas serving Medicaid enrollees must be trained to provide culturally competent care that supports the diversity of the members and assist members with community-based services to improve health outcomes. Currently, Minnesota and Oregon cover doula services for all Medicaid recipients and New York has a pilot program running in two counties. Additionally, as directed by their state legislatures, Virginia and Washington State have submitted reports and studies on implementation of Medicaid reimbursement.
Increased Payments to Certified Nurse Midwives: In an effort to increase access to quality maternity services, New Jersey Medicaid has also increased the reimbursement rate of certified nurse midwives (CNMs) to be equivalent to 95 percent of the current rate for physicians who provide prenatal, labor and delivery, and postpartum services. A CNM is an advanced practice registered nurse (with a master’s degree in nursing) who specializes in the care of women throughout their life course, including pregnancy, childbirth, and the postpartum period. According to the most recent Pregnancy Risk Assessment Monitoring System (PRAMS) data, 33.1 percent of Black, non-Hispanic mothers in New Jersey reported receiving late or no prenatal care, compared to 14.6 percent of White, non-Hispanic mothers. The increase in reimbursement rates for CNMs is designed to build a larger network of midwives and increase access to quality pregnancy-related care for mothers and babies in New Jersey. As of 2013, approximately 34 states and Washington, DC, reimburse CNMs at 90 to 100 percent of the rate of earned by practicing physicians.
Medicaid Will Not Pay for Non-Medically Necessary, Early-Elective Deliveries (EED): In 2019, New Jersey passed a law that no provider will be approved for reimbursement by Medicaid for a non-medically indicated, early-elective delivery performed at a hospital on a pregnant woman earlier than the 39th week of gestation. Scheduled cesarean sections or medical inductions performed prior to 39 weeks carry risks for both mother and baby. Overall, New Jersey’s rate of surgical births (cesareans) is 30.3 percent. The benefits of non-surgical birth include shorter hospital stays, reduced infection rates, lower blood clot risk, and fewer infants born with difficulty breathing. Currently, 20 states have reduced or eliminated payment for procedures (EEDs, elective inductions, and non-medically necessary cesarean sections) that do not follow clinical guidelines. The new Medicaid policy in New Jersey supports education campaigns and hospital initiatives that are already in place to lower non-medically necessary EEDs. The new policy will not affect mothers who have medical indications for early delivery.
Providers Required to Complete the Perinatal Risk Assessment (PRA) Forms: In 2019, the state passed a law requiring Medicaid providers to complete PRAs during the first prenatal visit for all Medicaid enrollees. The tool is used to identify demographic, medical, and psychosocial factors that can help determine case management plans for pregnancies. The PRA form has been updated to included assessment of alcohol and drug use and COVID-19-related challenges. The state will use the data collected from the PRAs to analyze and identify risk factors among pregnant Medicaid enrollees in the state.
State Medicaid programs have the opportunity to implement policy changes, similar to New Jersey’s, that support improving maternal and infant health outcomes. Given current budget challenges in states, funding can be challenging, but these policy changes can result in cost savings by lowering cesarean rates, decreasing length of stays in hospitals, and improving overall birth outcomes. The National Academy for State Health Policy (NASHP) will continue to track state maternal and child health policies.
Last week, the House passed the American Rescue Plan Act of 2021 (ARPA). The $1.9 trillion relief package’s current proposals would change health coverage programs, including Medicaid, health insurance marketplaces, and continuation coverage offered through the Consolidated Omnibus Budget Reconciliation Act (COBRA).
If enacted, the changes could have significant ramifications for states and individuals served by these programs. States should be prepared to act quickly to implement and/or respond to the changes, some of which will be effective immediately upon passage.
ARPA is now before the Senate, which may make modifications and will review its provisions to determine if they meet budget reconciliation rules. Both House and Senate leadership have expressed strong interest in quickly passing the legislation, with passage possible by mid-March.
The following highlights key proposed Medicaid and Children’s Health Insurance Program (CHIP) changes as well as provisions designed to help increase access to affordable care for individuals who have lost employer-sponsored insurance.
Key Medicaid and CHIP Provisions
Coverage of COVID-19 vaccines and treatment under Medicaid and CHIP:
- Requires Medicaid and CHIP coverage of COVID-19 vaccines and treatment without cost sharing for all eligible enrollees;
- Increases federal medical assistance percentage (FMAP) to 100 percent for vaccine administration for one year after the end of the public health emergency (PHE); and
- Provides an option for states to provide coverage of COVID-19 vaccines and treatment without cost sharing for uninsured individuals at 100 percent FMAP.
Option to provide additional Medicaid and CHIP postpartum coverage:
- Allows states to extend Medicaid or CHIP coverage for 12 months after childbirth. (This option would be available for seven years).
Enhanced FMAP for mobile crisis intervention services:
- State option would provide Medicaid coverage for qualifying community-based mobile crisis intervention services.
- Provides 85 percent FMAP for these services. (This option would be available for five years.)
Temporary FMAP increase to incentivize Medicaid expansion:
- Provides 5 percentage point FMAP increase to states’ base FMAP rates for eight calendar quarters to states that opt to implement the Affordable Care Act’s Medicaid expansion after enactment of the American Rescue Plan. (This increase is in addition to the temporary 6.2 percentage-point FMAP increase available during the PHE provided by the Families First Coronavirus Response Act)
- FMAP increase applies to all Medicaid eligibility groups except the expansion group. Newly expanding states would receive the current 90 percent FMAP provided for the expansion group.
Temporary extension of 100 percent FMAP for care provided at Urban Indian Organizations and Native Hawaiian Health Care Systems:
- Provides 100 percent FMAP for eight calendar quarters for services provided at Urban Indian Health Programs or the Native Hawaiian Health Care System to Medicaid enrollees.
Sunset of Medicaid Drug Rebate Limit:
- Beginning in calendar year 2023, this provision would eliminate the cap on Medicaid drug rebates.
Temporary enhanced FMAP for home- and community-based services:
- Provides 7.35 percentage-point FMAP increase for one year to help states implement improvements to Medicaid home- and community-based services.
Creation of state strike teams for nursing facilities:
- Provides $250 million to the US Department of Health and Human Services for states to create strike teams to help nursing facilities manage COVID-19 outbreaks.
Key Private Market Coverage Provisions
Support for continuation coverage through COBRA:
- Provides federal funding so that individuals would only have to pay 15 percent of their premiums toward COBRA coverage. COBRA allows individuals who have experienced job loss to continue enrollment in their employer-sponsored health insurance plan for a period of up to 36 months. Normally, individuals pay 100 percent of COBRA premiums. Federal funding will be available through Sept. 30, 2021.
- Requires employers to provide updated information to qualifying employees about the program and be prepared to expedite review for any employees who are denied premium assistance.
Enhanced tax credits to purchase coverage through health insurance marketplaces:
- Provides a two-year enhancement to premium tax credits (PTCs) available to eligible individuals who qualify to purchase coverage through health insurance marketplaces. The enhancements both increase the amount of PTCs available at all income levels and eliminate the 400 percent earnings (of federal poverty level – FPL) limit to qualify for PTCs.
- Funding would cap monthly premiums at no more than 8.5 percent of an individual’s income.
- The PTC enhancements would be available for the 2021 and 2022 plan years. Individuals who are currently enrolled in marketplace coverage would be eligible for rebates to cover expenditures already made toward 2021 coverage.
- Disregards income above 133 percent of FPL for purposes of calculating eligibility for PTCs for any individual who receives unemployment compensation in 2021.
- For more information about these proposals, read the February, 2021 National Academy for State Health Policy (NASHP) blog, Congressional Proposals Could Improve Coverage Affordability and Access for Millions.
NASHP will follow the American Rescue Plan Act as it moves through Congress and will continue to share information on provisions that are critical to states.
In 2019, more than 500,000 individuals experienced homelessness and nearly 20 million renters spent 30 percent or more of their income on housing. These numbers are increasing as the COVID-19 pandemic exacerbates housing insecurity for people of color and low-wage workers. To improve housing stability – a critical social determinant of health (SDOH) – states are using Medicaid managed care contracts to encourage health plans to support members’ housing-related needs and promote coordination between housing providers and health plans.
How States Use Medicaid Managed Care Contracts to Address Housing Needs
While Medicaid managed care contract language varies significantly between states, there are some similarities in states’ approaches to addressing Medicaid enrollees’ housing needs, including these managed care organization (MCO) contractual requirements:
- Screen enrollees for housing-related needs;
- Hire designated housing coordinators; and
- Ensure the coordination of care between housing providers or agencies and Medicaid programs.
States working to address housing insecurity and homelessness among Medicaid enrollees, or states that already require plans to focus on SDOH more broadly but wish to tailor initiatives specifically towards improving housing status, can adopt some of the contractual language and initiatives described below.
Screening for Housing Insecurity
According to NASHP’s scan of states’ Medicaid managed care contracts, 16 states (of 38 with publicly available contracts or requests for proposals) require contractors to conduct routine screenings for certain SDOH. Of the 16 states, 14 require their managed care plans to screen members about their housing needs during these assessments. These screenings can occur at any interval from annually to quarterly, with some states specifying that individuals who qualify as high-needs members should be screened more frequently. In New Hampshire, community mental health programs that contract with the state’s Medicaid program are required to conduct quarterly assessments and document all members’ housing status. In Pennsylvania, providers must complete an SDOH assessment that focuses on housing security, among other things, at least annually and more often depending on the individual’s risk level.
While some states require health plans to screen all enrollees, others only require screenings for certain populations. For example, Minnesota’s Medicaid MCO requires outreach and screening for members who have been to the emergency department for services three or more times within four consecutive months. In Alabama, the maternity psychosocial assessment includes questions related to homelessness.
Screening for housing status in order to identify members experiencing housing insecurity or homelessness is an important first step in addressing housing needs. However, in the absence of mechanisms to connect individuals to community resources that can help them find appropriate housing assistance, the impact of SDOH screenings is limited.
Hiring Housing Coordinators
According to NASHP’s analysis, seven state Medicaid MCOs identify a designated, full-time employee exclusively responsible for addressing enrollees’ housing needs – Arizona, Kansas, Louisiana, New Hampshire, New Jersey, New Mexico, and North Carolina. Other states, including Delaware and Pennsylvania, require their plans to hire more broadly defined care coordinators or SDOH specialists. They work on housing as part of their jobs, but are also responsible for addressing other member needs, such as employment, transportation, and education.
Through its contract with Kansas Medicaid, United Healthcare employs a housing navigator, a position added in 2016. The housing navigator develops partnerships statewide to identify resources for providing housing supports – including vouchers, prevention services, public housing, and homeless service agencies – and to help members locate housing. United Healthcare’s housing navigator has assisted more than 200 Medicaid members with housing needs.
The Louisiana MCO contract requires the plan to hire a permanent supportive housing program liaison who works with the Louisiana Department of Health to help implement the PSH program deliverables, which include providing affordable housing and tenancy supports. While hiring housing navigators or specialists requires MCOs to invest financial resources, onboarding navigators to help connect members directly to housing services and supports has been shown to be one effective way to address Medicaid enrollees housing-related needs, especially those identified during SDOH screenings.
Some state Medicaid contracts also identify opportunities for MCOs to support housing initiatives run by state or federal housing agencies. In Texas, the Medicaid MCO service coordinator must work with staff from their Section 811 Project Rental Assistance program, a federal program that helps provide supportive housing for individuals with disabilities, to coordinate care for Texans receiving Section 811 services and those leaving nursing facilities. This helps integrate health and housing services for individuals previously identified as having housing needs. In Louisiana, the state housing authority and the Department of Health co-manage the permanent supportive housing (PSH) program. The Louisiana MCO contract outlines a number of ways that MCOs are required to support the PSH program, including:
- Provide outreach to members who qualify for PSH;
- Help members apply for PSH;
- Ensure timely prior authorization for PSH tenancy and pre-tenancy supports;
- Refer members approved for PSH to relevant providers; and
- Work with PSH program management to ensure an adequate and qualified network of PSH program staff and service providers.
The MCO is also required to contract directly with housing providers approved by the state to provide tenancy and pre-tenancy supports to members participating in the PSH program. One analysis of Louisiana Medicaid recipients pre- and post-PSH showed a 26 percent reduction in emergency room visits, a 12 percent reduction in hospitalizations, and an increased use of behavioral health services among participants. Through partnerships with PSH programs, MCOs can improve integration of health and housing services for members and expand the reach of housing programs by helping to identify Medicaid enrollees in need of housing and connect them directly to resources.
State Medicaid managed care contracts employ creative ways to use Medicaid funding to support efforts to address housing insecurity among enrollees. Although Medicaid cannot directly fund housing, there are many other strategies to effectively invest in housing services. Oregon’s Coordinated Care Organizations (CCOs) are required to spend a portion of their profits or reserves on health-related services, and specifically on housing supports. Starting January 2021, CCOs are also required to submit annual spending plans to the state, which include the CCO’s spending priorities related to addressing SDOH and health equity, and how they align with the state’s housing-related priorities. In Kansas, the state’s MCO request for proposal calls for alternative payment strategies to incentivize warm handoff transitions for individuals moving from institutions into community-based programs and services.
In Massachusetts, the managed care contract mentions the Social Innovation Financing for Chronic Homelessness Population Program (SIF), a Pay For Success (PFS) initiative that finances PSH. Through the Community Support Program for People Experiencing Chronic Homelessness (CSPECH), Medicaid managed care entities fund support services for PSH tenants in the PFS program. As of October 2020, 860 members have enrolled in CSPECH. Together with the PFS program, CSPECH has improved housing retention, decreased emergency room stays, and saved millions in costs. While the current budget climate arising from the COVID-19 pandemic makes adopting new funding strategies difficult, investing health plan dollars in housing services can not only improve members’ housing status, but also decrease Medicaid spending down the line.
In addition to established methods, such as screening for housing needs and partnering with housing service providers, some states are using their managed care plans to launch new initiatives to address their Medicaid enrollees’ housing needs. In Florida, MCOs are participating in a voluntary pilot program to provide behavioral health services and supportive housing assistance directly to Medicaid enrollees who are homeless or at risk of homelessness and who also experiencing either serious mental illness or substance use disorder. The North Carolina managed care contract provides for an Enhanced Case Management Pilot program in up to four areas of the state. MCOs in each area work to determine the most effective, evidence-based interventions to address four priority domains, which include housing. The program also requires each program to evaluate the effect of the interventions on health care costs and outcomes. There is no “one-size-fits-all” approach to addressing housing, but piloting programs like these, or creative financing solutions like those mentioned above, can help MCOs determine which methods are best for reaching housing-insecure members in their state, while also improving health outcomes and decreasing costs.
As efforts to address SDOH become increasingly common among Medicaid managed care plans, many states are narrowing their focus to address housing insecurity and homelessness specifically. By working to identify enrollees’ housing needs and directly connect them to housing and supportive services, health plans can improve housing stability, which in turn improves health outcomes and decreases costs.
During the COVID-19 pandemic, states face budget challenges while their Medicaid managed care plans may experience financial gains from a decline in demand for physical health services. This leaves health plans in a unique position to invest new resources upfront in housing-related services. In 2020, many insurers reported large profits, in part due to the decline in non-COVID-19-related hospital admissions. Medical Loss Ratio rules, however, limit the amount insurers can keep for profit or overhead costs – health plans must either issue rebates or spend more on health-related services, which presents an opportunity to use these additional funds to address housing insecurity and homelessness among enrollees. And, by requiring health plans to indirectly invest in housing by hiring housing coordinators, partnering with existing housing agencies who are already immersed in the work, financing housing-related services, or by piloting new, creative solutions, states can take the lead in guiding Medicaid managed care plans’ work.
This project was supported by the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS) under grant number U2MOA394670100, National Organizations of State and Local Officials. This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the US government.
As state policymakers confront the substance use disorder (SUD) epidemic, they require a wide range of data – often found in disparate systems – to understand its impact and craft more effective treatment programs and interventions. This report explores best practices and sources for data gathering and describes how states can help communities access and use data to support local efforts.
The nation’s substance use disorder (SUD) epidemic poses unique challenges for policymakers working to understand and apply data – which often exists in disparate systems – to guide their treatment and interventions. States, localities, and organizations need to access and generate reliable data, not just in health and behavioral health care, but in workforce, criminal justice, social services, and other systems to design successful SUD interventions.
This report describes the uses and limitations of commonly available data sets that can stand alone or be used in conjunction with other data to answer common questions posed by state and local leaders. The report reviews common data sources that can help state leaders address key issues, such as preventing SUD and diversion of controlled substances, supporting harm reduction, increasing treatment capacity and service delivery, and understanding the needs of vulnerable populations. The report also highlights best practices at the state level, and notes where state strategies can also assist communities in accessing and using data to support local efforts.
The State SUD Data Landscape
Policymakers have access to data sets that are collected, compiled, analyzed, and maintained by state and federal agencies and other entities responsible for providing or overseeing services related to the prevention, reduction, or treatment of SUD. The following highlights data sets that are commonly used by state policymakers in their efforts to analyze key SUD indicators.
Individual claims and administrative and programmatic data collected by states: Individual-level data sets that tie to the unique experiences of one person through a system can help illuminate the ways that individuals and populations seek and use services. This data is often personally identifiable, which requires either consent, legally authorized use, or systematic anonymization that removes identifying characteristics.
|Medicaid claims and encounter data||State Medicaid agency
Medicaid managed care organization
|· Patient demographic data
· Diagnostic/service codes
· Service utilization data
|Prescription drug monitoring programs (PDMPs)||State licensing boards, public health agencies, or free-standing PDMP agency||Patient and prescriber data related to scheduled prescription drugs|
|Vital statistics, forensic epidemiology, or medical examiner/coroner reports||State public health or vital statistics agencies||· Deceased demographic data
· International Classification of Diseases 9-10 codes identifying causes of death
· Toxicology reports
|Homeless management information systems||State housing or social service agencies||Housing program services and client data, including self-reported diagnoses|
|Infectious disease data||State public health agencies||Surveillance data on hepatitis B/C and HIV infections|
|Behavioral health services data||State behavioral health agencies||· Non-Medicaid-funded services for SUD delivered by community behavioral health systems or state hospitals
· Provider licensure information
|Emergency medical systems data||State public health agencies||Overdose response data, including naloxone deployment|
|Hospital admissions and discharge data||State public health agencies||Overdoses treated in hospital settings and/or discharges coded as overdose-related|
|Corrections||State and local corrections agencies||Health and behavioral health assessment and treatment data for incarcerated individuals|
De-identified state/federal data sets available to researchers, organizations, and the public: Aggregate data sets can also be helpful to understand system interactions and population trends. These kinds of data are valuable in gauging systemwide behaviors as well as shifts in services, demographics, or activities that indicate the needs of a given region or population.
|All-payer claims databases (APCD)||Independent state or quasi-governmental organizations||Insurance claims from across payer sources|
|Behavioral Risk Factor Surveillance System (BRFSS)||Centers for Disease Control and Prevention (CDC)||Self-reported health risk factor and health condition data|
|Census data||US Census Bureau||Self-reported demographic data|
|National Overdose Report||CDC||Overdose deaths by demographics, states/regions, and substances present|
|Annual HIV Surveillance Report||CDC||HIV infections by demographics, states/regions, and transmission factors|
|National Survey on Drug use and Health (NDSUH)||Substance Abuse and Mental Health Services Administration (SAMHSA)||Self-reported substance use, mental health, and treatment services by demographics and state/region|
SUD Data Use Cases for State and Community Leaders
The following data use cases and strategies describe how available data can be used, often in innovative ways, to inform and guide state and local policy decisions.
Best Practices in Using Data to Support State and Local Policy Development
Comprehensive data – often gathered from across state, local, and federal resources – enables state and local leaders to tailor their prevention, treatment, and recovery responses and make the most of scarce resources. However, effectively using available data, matching or comparing complementary data sets, and identifying what should be the focus of analyses can be complicated. The following are key considerations for states seeking to improve data quality, explore data-sharing opportunities, and analyze existing data sets across systems.
Leadership is critical: Sharing data across state silos is challenging – many agencies generally prefer not to release data. Encouraging the sharing of health care and related data sets requires unifying leadership and a vision that can maintain momentum through many programmatic, legal, and technical hurdles. In some states, such as Pennsylvania, the governor used a disaster declaration to bring agencies to the table to create and sustain that state’s multi-agency data capacity. Other states, such as Massachusetts, made significant progress in cross-agency data sharing through legislation. That state’s Chapter 55 public law, passed in 2015, provided the impetus and structure needed for that state’s many SUD data innovations.
Engage both technical and policy expertise to make the most of existing data: While technical expertise in essential, policy and programmatic expertise is also a critical factor in successfully using data to support SUD prevention, treatment, and recovery. Data insights help state policymakers understand and explain variances in eligibility groups, interactions between specialty programs, and flag anomalies in the data due to program idiosyncrasies. Data also helps guide analysts in shaping metrics that will have value for policy decision-making.
Allow time and resources to address data governance: How substance use data is stored and shared is covered by both the Health Insurance Portability and Accountability Act (HIPAA) and 42 CFR Part 2 – the latter is specific to SUD data and imposes privacy standards that are often more stringent than those found in HIPAA. With few exceptions, providers and stewards of SUD data must obtain consent before sharing personally identifiable information that is protected by 42 CR Part 2. States can make the most of sharing data across agencies by building in time and resources to manage data governance issues:
- Data use agreements help to clearly articulate how organizations will use data, and specifically how it supports policy development. This Centers for Medicare & Medicaid Services fact sheet on DUAs outlines necessary components, helpful tips, and includes state example documents. Recognizing the limitations of all data sets included in a DUA also helps to expedite work. Confidentiality issues can be addressed clearly and completely, eliminating onerous approaches to de-identification or aggregation that may not ultimately be necessary. State agencies may have existing DUAs in place that can support new/emerging uses.
- Massachusetts was able to combine protected data from across ten disparate state agencies through a project-specific de-identification process that assigned random identifiers to each record. The state also developed a series of legal agreements that covered how data would be linked, shared, hosted, and accessed.
- Timeliness of data in a rapidly shifting substance use epidemic can be a challenge for virtually all data sets, as very few reporting systems offer real-time data. Longer lags, however, particularly those that pass more than a year from collecting data to reporting, make some data sets better used for understanding the landscape in retrospect rather than as a planning tool. Some states use unconfirmed data when necessary to track particularly urgent indicators, such as drug overdose deaths.
- Completeness of data sets – and the lack thereof – can also pose limitations for policymakers and is a major factor in data quality. State Medicaid enrollees, for instance, may move on and off the program as individual eligibility fluctuates, creating gaps in coverage and in key data points, such as current addresses. Encounter data from Medicaid managed care plans can also be problematic – states can improve encounter data quality through contract incentives, regular communication, and guidance. State-level guidance to providers and/or managed care organizations may be required to improve completeness of data
Many data sets produced by state and federal agencies have value when used individually, but when data can be shared and presented in new ways, it begins to tell a more comprehensive story of the particular and highly localized impact of SUD across systems and populations. There has been unprecedented activity at the state level in recent years to identify and use data sources to better understand and address state and local needs to prevent SUD, reduce the harms caused by SUD, and promote treatment and recovery. While states adopt indicators and metrics that meet specific state needs, there is an increasingly innovative menu of options to support their efforts.
Acknowledgements: The National Academy for State Health Policy provided this report with the ongoing support of JBS International and the federal Health Resources and Services Administration (HRSA). The authors would like to thank Lisa Patton, PhD, Vice President of Health Optimization Program and RCORP-TA Project Director at JBS International, and Marcia Colburn, MSW, Program Analyst in the Federal Office of Rural Health Policy at HRSA, for their continued guidance and expertise in supporting this work.
What does the tool do?
The tool uses publicly available Medicare cost reports (MCRs), which hospitals submit annually to the federal government, to calculate the costs incurred for providing hospital services, as well as its payer mix and more. It answers key questions, including:
What does “breakeven” mean and include?
“Breakeven” is an accounting term for the point at which revenues and expenses are equal. The breakeven point can help purchasers of health care services determine the appropriate baseline that covers a hospital’s costs for providing patient services. As some purchasers may choose to consider additional costs when establishing their reimbursement rate (e.g., the costs of non-hospital health care facilities within the health system), NASHP’s tool presents four breakeven point options. Each level, calculated as a percentage of Medicare rates, accounts for additional costs which are included in the hospital’s MCR.
- Reimbursing at Level 1 covers the cost of providing hospital patient services to commercially insured patients, plus any costs not covered by government programs, charity care, or uninsured patients.
- Reimbursing at Level 2 covers all Level 1 costs, plus all Medicare-allowed costs not allocated to other payers. Level 2 provides an additional degree of accuracy to calculating commercially attributable allowed costs.
- Reimbursing at Level 3 covers all Level 1 and 2 costs, plus Medicare disallowed costs, such as research, cafeteria expenses, and advertising. The tool excludes physician direct patient costs because they are reimbursed separately from hospital reimbursements through other channels, such as fee schedules.
- Reimbursing at Level 4 covers all Level 1, 2, and 3 costs, plus hospital non-operating income and expenses such as parking lot receipts and loss on investments.
Purchasers and hospitals may not agree on what level constitutes appropriate payment and may pursue a fifth baseline option offered by the tool: an average of Level 1 and Level 4.
How can information from NASHP’s Hospital Cost Tool be used to reduce health care spending?
Purchasers can use the tool to better determine what their baseline reimbursement to a hospital could be. Claims can then be run through a Medicare re-pricing tool to identify what is currently paid to each hospital as a percentage of Medicare. This information can aid purchaser negotiations with hospitals to achieve cost-based hospital reimbursement rates. The Montana State Employee Health Plan pursued this reference-based pricing to Medicare strategy and reduced its hospital reimbursements, increasing the plan’s reserves by $112 million within three years, allowing the plan to increase its sustainability without increasing premiums. Additionally, this data can be used to investigate costly drivers of hospital claims across hospitals, when adjusted for utilization. Hospital cost data can also inform state pursuit of cost-containment strategies, such as cost growth benchmarks, global hospital budgets, or public options.
Won’t lowering hospital reimbursements risk decreased access to care?
Every hospital selected by Montana for its new cost-based rates eventually agreed to the policy. Plan members ultimately kept full access to their network of providers. Before the one holdout hospital agreed to join the network at the new rates, the plan paid for members to receive care at a nearby in-network hospital free of copays and coinsurance, covering gas mileage and a hotel stay if needed. Nurse care managers also re-routed care as needed. As a result, members maintained access to care during this brief time period. Importantly, there were zero hospital closures as a result of the change, which maintained the community’s access to care.
Don’t commercial prices need to be so high because government programs underpay hospitals?
The RAND Corporation’s study, Nationwide Evaluation of Health Care Prices Paid by Private Health Plans, found no correlation between a hospital’s prices and the share of its case-mix-adjusted Medicaid and Medicare discharges.
If the question’s assumption was true, hospitals with higher prices would likely have had higher shares of Medicaid and Medicare patients – but that was not the case. NASHP’s Hospital Cost Tool allows purchasers to identify exactly what percentage of a hospital’s Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) costs are reimbursed. The tool also shows what percentage of a hospital’s total charges are attributable to each program, and a hospital’s profit margin for all government programs collectively. The tool’s breakeven levels calculate what the commercial rates as a reference to Medicare would be if commercial payers covered any potential shortfalls from public payers or the uninsured. The RAND study can further inform purchasers as it shows commercial prices at hospitals across the country.
Why address health care costs through hospital spending, particularly during a public health emergency?
Hospital spending is the largest health care expenditure in the United States. Combined with physician practices, which are increasingly being acquired by health care systems, hospital spending accounted for 53 percent of health care expenditures in 2018. According to the Health Care Cost Institute, the main drivers of rising health care spending are price increases, not increased utilization. At a time of diminished state budgets and profitable health care entities, addressing hospital prices presents the most significant potential to reduce health care costs. Analyzing hospital cost data through the tool’s could free up much-needed state revenue while still appropriately covering a hospital’s costs. For more information about health care costs, view the National Academy for State Health Policy’s Understanding the Health Care Cost Conundrum in 2020 slide deck.