Digging into Ohio Medicaid’s SFY16 Report

This month, the Ohio Department of Medicaid (ODM) submitted its Annual Report to the governor. The document, which has been released each year since State Fiscal Year (SFY) 2014, provides an overview of the initiatives (and the related messaging) behind some of the work of ODM. As we wait for the final budget from Governor Kasich’s administration, and as we contemplate what that may mean for the Medicaid program, I thought it would be good to dig a bit deeper into this report to garner some insights.

From the get-go, the Kasich Administration has had an entrepreneurial approach to its work in Medicaid and health care. With the creation of the Office of Health Transformation (OHT) and the structural realignment of Medicaid to a cabinet-level department, Columbus was telling stakeholders that things were changing. In fact, in one of its foundational documents outlining its principles, OHT described its work as “forward-thinking” and “solutions-oriented,” highlighting innovation as a core principle. When looking at this latest report, then, we see these principles embedded in the policy throughout, and we can see this underlying structure as the basis for the department’s work not only in the upcoming budget, but for years to come.

First, let’s think about the number of State Plan Amendments (SPAs) submitted to Center for Medicare and Medicaid Services (CMS). In each of these, we see changes to payment structures built around quality (e.g. nursing facility reimbursements), the simplification of eligibility categories (e.g. the elimination of the stand-alone family planning group), and the redesign of beneficiary categories through the disability determination redesign program. Interestingly, while a scant three sentences were used to describe the Healthy Ohio Waiver, it should be noted that personal responsibility is not only a principle highlighted by OHT and embedded in ODM’s mission, but it is also a likely focus of the General Assembly with the potential failure of the Health Ohio 1115 waiver application.

Let’s also take a moment to consider some of the trends represented in this report and the considerations in analyzing their implications, and suggest a few things to watch:

Privatization Nearly 80 percent of all Medicaid beneficiaries are enrolled with a Managed Care Organization (MCO). This will continue to grow as behavioral health is carved-in as a MCO-delivered benefit. Efforts to manage the contracts of MCOs has been increasing, and the pressure to incentivize quality has been growing through the use of set-aside incentive dollars (only 26 percent was awarded in calendar year 2014) and the requirement of risk-based contracts. There is also the contractually obligated areas of focus for the plans which include targets such as infant mortality, chronic disease, and behavioral health that are complemented by the reporting of quality achievement through the use of “report cards.”

Ohio’s MCO tax is also no longer federally compliant, meaning the relationship between the plans and the state may fundamentally change or, in the very least, be an area for some interested budget machinations.

  • Recontracting of MCOs (“reprocurement”)
  • Additional “carve-ins”
  • Managed Care Organization sales tax
  • Risk-based contracting
  • The influence of the Managed Care Rule
Eligibility Integration & Simplification Ohio’s benefit management system (“Ohio Benefits”) streamlines determination processes and reduces the number of human interactions. Ohio Benefits is also leveraging a new Enterprise Document Management System (EDMS) which allows county governments to share case information. These two efforts are just representative examples of other endeavors by ODM (and the administration generally) to better manage its business processes to be more efficient. This work also complements the work of the Office of Human Services Innovation to better coordinate all county-level case management to see “across systems” and that of the Healthier Buckeye Councils.

In addition to integration, ODM continues to look at the ways to refine its Long Term Services and Support (LTSS) system through its waivers and coordination with Area Agencies on Aging. Most notably, this includes the Home and Community Based Services (HCBS) Transition Plan, which was required, and approved, by the federal government.

  • The “digitialization” of case management
  • Integration of public benefit management
  • The role of caseworkers, county and contracted
  • The implementation of the HCBS Transition
  • Continued integration of Waivers
Data, Audits, and Value Ohio Medicaid has been leveraging its purchase power to change the fundamentals of the care delivery system through a number of initiatives that not only enhance the process of paying for value, but paying accurately. This includes the work on episodes, the over 15,000 incentive payments made for electronic health records, the soon-to-be statewide adoption of patient-centered medical homes, and the coordination between contracted audit firms, ODM, and other state players like the attorney general to reduce fraud, abuse, and waste.
  • Increasing use of episodes
  • Sustained emphasis on audits with greater reliance on electronic means

Lastly, I wanted to highlight one chart in regard to Medicaid spending within the report itself:










Oftentimes, we hear the phrase coined by the late U.S. Senator George Voinovich that Medicaid is the “Pac-Man” of the state budget—an idea based on the concept that, due to its size, Medicaid is consuming more and more state resources relative to other areas of need like education or infrastructure, resulting in a pie chart that makes Medicaid look like the famous arcade game character. What the chart above demonstrates, however, is how little state GRF resources actually contribute in terms of overall spending in Medicaid. In fact, when we look at a number of initiatives being spearheaded in the area of value (State Innovation Model), primary care, information technology, etc., the state has benefitted tremendously from federal funding and the policies which support it. That, combined with an improving economy in Ohio, and the reduction in rates to managed care, has led to a $1.3 billion underspend for the program, which means it will be incredibly unlikely ODM will need to access any Health & Human Services Fund dollars.

The impact of privatization should not be understated. One can see this with the majority of the Medicaid population enrolled in MCOs and the overhead of ODM comprising less than 2 percent of total Medicaid expenditures. It makes sense, then, that as MCOs garner more influence in the actual financial health of Medicaid, ODM would be interested in reporting their performance and tying more of its contracts to achieving outcomes (report cards, episodes, etc.). And this brings me to last point which, while only briefly mentioned in ODM’s report, may have the greatest effect: the influence of the Managed Care Rule, which I have written about here. Given these trends, and the regulatory mandate from the federal government, the rule’s implementation is a likely focus for ODM so they may not only remain in compliance with federal law, but so they may also engineer their MCO program in a way that best adheres to its interests after this final budget process for the Kasich Administration.