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Baker Deputies Outline Plan To Tame MassHealth Costs

Leaning heavily on the extraction of savings from MassHealth to balance their state budget proposal, top Baker administration health officials on Thursday said that changes to benefits for patients were mostly taken off the table, but the administration may look at co-payments or other commercial market solutions to control cost growth in the future.

According to the Baker administration, MassHealth will cost the state $14.5 billion this fiscal year. The program covers low- and moderate-income adults and children, and is projected to service 1.7 million enrollees in fiscal 2016. Under Baker's $38.1 billion state budget, the program's cost will grow to $15.3 billion next fiscal year.

"We could have eliminated all optional benefits in the commonwealth. That was not something that would be acceptable, I think, to the governor nor to the commonwealth," Health and Human Services Secretary Marylou Sudders said during a media briefing with Assistant Secretary for MassHealth Daniel Tsai.

MassHealth enrollment has grown in recent years, with its insurance coverage playing a key role in helping the state to meet the goals of its 2006 universal health care law, which was signed by Gov. Mitt Romney and implemented in large part by Gov. Deval Patrick.

The growth in spending under Baker's budget is limited to 5.6 percent after subtracting $761 million in savings arrived at through a number of reforms. Otherwise, officials said, the cost could have spiked to $16.9 billion.

"Obviously, the trajectory it was on was just completely unsustainable. The other parts of health and human services that I also care deeply about have basically been level-funded," Sudders said.

The bulk of the savings -- about 65 percent -- come from what officials are describing as "cash management," a budgeting technique partly inherited from the Patrick administration that will push off $456 million in payments to the next fiscal year.

The bulk of the savings — about 65 percent — come from what officials are describing as "cash management," a budgeting technique partly inherited from the Patrick administration that will push off $456 million in payments to the next fiscal year.

Over time, Sudders said, she hopes to wean MassHealth off the practice of deferring expenses from one year to the next, which can range from managed care payments to installments for institutional facilities. The Baker budget team inherited $340 million in cash management practices from former Gov. Deval Patrick, and decided to push another $116 million in expenses onto the fiscal 2017 budget, including supplemental hospital payments and performance incentives.

Sudders said the practice of using "cash management" to ease the pressure on the MassHealth budget has been occurring since at least 2004, when former Gov. Romney oversaw the agency.

MassHealth last week also began the process of redetermining eligibility for 1.2 million enrollees, a process that has not been undertaken for most recipients in more than a year and half. Though officials could not say how many Medicaid subscribers they expect to lose through the process, MassHealth has budgeted for a gross savings of $400 million, or $210 million after federal reimbursement, based on historical averages.

Enrollees in MassHealth over the course of the next 10 months will receive letters in the mail asking them to reapply online, in-person or over the phone so that their eligibility for Medicaid can be reassessed. Subscribers will get two letters, and a total of 60 days, to respond before they are dropped from MassHealth coverage.
Sudders and Tsai said they are working with groups like Health Care for All to make the process run as smoothly as possible, and even those who do get dropped from coverage are welcome to reapply at any time.

For the most part, Baker's budget solutions at MassHealth did not change eligibility standards, reduce benefits or slash provider rates. The governor's proposal does call for eliminating coverage of chiropractor services for a savings of $300,000, and will also result in lower rates for nursing homes and senior care providers.
By postponing a review of the base costs of delivering nursing home care, health officials said nursing homes could effectively receive lower payments through MassHealth than they might have. The administration is also applying the newest actuarial tables to the Senior Care Option program, which provides both institutional and community-based services for the elderly, resulting in lower rates in fiscal 2016.

Other provider rates, including a 3.7 percent increase for managed care providers approved in October, have been preserved, Sudders and Tsai said.

While he didn't specify which cuts he was referring to, House Speaker Robert DeLeo on Thursday raised the MassHealth program when asked about reactions he has heard about Baker's budget proposal.

"I saw with the MassHealth [program] — and you know I talked also about the need to cut there as well, because of it eating up a good portion of our budget — but I'm also told that he'd made cuts relative to the elderly and the disabled which always, always will cause us to take a second look," DeLeo said.

Tara Gregorio, vice president of government relations at the Senior Care Association, said 70 percent of nursing home spending goes to hiring, wages and benefits for mostly low-wage workers. She said she hopes to discuss a cost-of-living rate adjustment with lawmakers as the budget process moves to the House.

"We are more than concerned about the financial situation of Massachusetts nursing homes in regard to the gap between what Medicaid pays and what it costs to provide quality care. According to national data, we are fourth worst in the country," Gregorio said.

Sudders and Tsai said MassHealth also plans to increase spending by $174 million to extend coverage for autism services to more than 10,000 children and to fund a full-year of adult dental benefits, including dentures and fillings. The increase also covers paid sick days for personal care attendants, as required by passage of a 2014 ballot question related to earned sick leave.

MassHealth also plans to tighten control over some prescriptions, including certain opioids, by restricting supplies to 14 days, rather than 30-day or 60-day prescriptions. In addition to limiting the potential for abuse, administrators hope to generate some savings from the decrease in drug costs.

Sudders noted that health officials had pulled together the governor's first state budget proposal while also crafting a midyear spending reduction bill to close an immediate $768 million deficit.

Moving forward, Sudders said she and Tsai will be looking at ways to restructure MassHealth to more closely resemble the commercial market, including the use of alternative payment methods, accountable care organizations and patient-centered medical homes. Officials will also be looking at strategies other states have been experimenting with as they try to control similar cost growth in Medicaid.

"A number of states have implemented co-pays so we're going to look at that experience. That might be something we look at for FY '17," Sudders said. Co-pays are restricted within Medicaid from being applied to many services, including emergency, mental health and substance abuse, and child services.

The Legislature last month denied Baker's request for authority to restructure some MassHealth services with an eye towards cutting costs.

"We felt they were sending us a message that they were not really interested at this point in time in those kinds of changes," Sudders said.

Starting possibly in April, Sudders said the administration plans to host a series of "community conversations" about MassHealth to engage stakeholders in a long-term solution, and acknowledged that other branches of government may take similar steps.

DeLeo on Tuesday said he would set a legislative commission to review the financial challenges facing managed care organizations, which serve 37 percent of the MassHealth population.

Adding to the growing list of expenses at MassHealth, administration officials said the cost of enrolling people in temporary Medicaid plans while the Health Connector rebuilt its online enrollment exchange totaled $560 million gross, or $280 million after federal reimbursements.

The Health Connector enrolled over 320,000 subscribers into temporary MassHealth plans last year after troubles with the online exchange website prevented many residents from signing up for new coverage under the Affordable Care Act. HHS officials on Thursday said 150,000 of those people ended up not enrolling in either MassHealth, or subsidized Connector coverage once the Connector was able to process applications.

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