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Interesting Trends Revealed in 50-State Medicaid Budget Survey

Results of the KFF annual survey of state Medicaid directors reveal some fascinating trends in Medicaid service delivery and benefit coverage. Read on for a summary of the highlights we find most noteworthy.

Background

As a preliminary matter, many of the trends KFF identifies and that we highlight below are no doubt a result of the Covid-19 pandemic. The pandemic triggered a public health emergency and economic crisis that resulted in increased Medicaid enrollment, service offerings, and flexibility in service delivery, along with a heightened awareness of disparities in access to care and health outcomes.   

Telehealth

Perhaps no health care trend is more indicative of the impact of the pandemic on services than the lightning quick emergence of services provided via telehealth. Though state Medicaid programs were moving toward reimbursement for services provided via telehealth before the pandemic, coverage and reimbursement policies were varied and slow to progress. The onset of the pandemic prompted a significantly increased need for health care services, along with a safe environment in which to receive services. To meet these demands, state Medicaid agencies used emergency authorities to expand telehealth coverage, including expanding the range of services that can be delivered via telehealth; establishing reimbursement parity with face-to-face visits; permitting various telehealth modalities (e.g., audio-only telephone communication); and increasing the provider types that may be reimbursed for telehealth services. The wild popularity – and efficacy – of telehealth services has led many state Medicaid agencies to pledge to keep new-found flexibilities, which are good for patients and providers alike.

Forty-six states responded to the KFF survey. Nearly every state that responded (41 states) currently permits coverage for services delivered using audio-visual or audio-only telehealth. Five states permit service delivery via audio-visual coverage but not audio-only. Advocates of decreasing disparities in access to services argue for coverage of telehealth services by both audio-visual and audio-only modalities, in order to capture the greatest number of people, including those who do not have access to broadband and those who live in areas of the country experiencing provider shortages.

Pharmacy

Spending on prescription drugs accounts for roughly 10% of all health care spending in the US. Moreover, in 2017, the vast majority of spending on prescription drugs (82%) was incurred by private health insurance (42%), Medicaid (10%), and Medicare (30%), while only 14% was paid by patients out-of-pocket. The bottom line is that prescription drug spending is of great interest to payors, including state Medicaid agencies.

State Medicaid programs are challenged to control spending on prescription drugs, while also ensuring Medicaid-managed care plans are not getting fat off of the US drug pricing system. Structurally, many states administer their Medicaid pharmacy benefit through managed care organizations (MCOs) and/or pharmacy benefit managers (PBMs) that take on administrative and clinical functions for the Medicaid pharmacy benefit.

Medicaid departments are also keen to control costs on the pharmacy benefit, and they use a variety of tactics to do so. For example, Medicaid agencies use preferred drug lists (PDLs) to encourage providers to prescribe certain drugs over others. This tool allows the Medicaid agency to manage drug utilization and to force providers to prescribe lower cost drugs or drugs with a supplemental rebate for the Medicaid agency. Additionally, many state Medicaid programs now carve the prescription drug benefit into managed care because Medicaid agencies can now claim rebates on drugs provided through managed care organizations. Lastly, states increasingly utilize PBMs to help administer the pharmacy benefit and, more specifically, to administer cost savings tactics, including negotiating supplemental rebates and informing decisions surrounding the PDL. PBMs have increasingly come under fire for reimbursing pharmacies much less than the PBM is reimbursed by MCOs and pocketing the difference or “spread”. In 2018, Ohio’s Auditor of State concluded that PBMs cost the state Medicaid program almost $225 million through this practice of “spread pricing” in managed care. Ohio and other states are more intentionally examining their use of PBMs and imposing greater oversight over them.

Social Determinants of Health

Before the Covid-19 pandemic, state Medicaid agencies had begun to develop creative solutions to address social determinants of health – factors including socioeconomic status, education, neighborhood and physical environment, access to health care, and others – understanding that these considerations significantly affect health outcomes. The pandemic itself demonstrated that health outcomes do, in fact, vary depending on race and social determinants of health.

Although federal law prohibits Medicaid from paying for non-medical services, state Medicaid programs continue to develop opportunities to address social determinants of health. One popular tool is using contracts with Medicaid-managed care organizations to reach Medicaid beneficiaries where they are. Some examples include screening beneficiaries for behavioral health needs (31 states reported doing this in 2021), screening beneficiaries for social services needs (24 states), providing referrals to social services (28 states), and partnering with community-based organizations (27 states). Additionally, about half of states are working with their MCOs to address health disparities using data and quality measures. Eleven states are targeting disparities in race and ethnicity in maternal and child health, seven in behavioral health, six in Covid-19 outcomes and/or vaccination rates, and eight in other areas, including diabetes, asthma, and oral health.

Conclusion

It is clear based on the information reported by KFF that Medicaid programs are reacting in noticeable ways to the pandemic, and it is likely that some of these changes will affect healthcare for years to come.

For more information, please contact Healthcare and Hospital Law Member Daphne Kackloudis at dlkackloudis@bmdllc.com or (614) 940-4543.

Protections Under Federal and Ohio Law for Bona Fide Prospective Purchasers of Contaminated Property

Most industrial/commercial property developers are generally aware of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), often also referred to as “Superfund”. CERCLA, a United Stated federal law administered by the U.S. Environmental Protection Agency, was created, in part, because the U.S. Environmental Protection Agency recognized that environmental cleanup could help promote reuse or redevelopment of contaminated, potentially contaminated, and formerly contaminated properties, helping revitalize communities that may have been adversely affected by the presence of the contaminated properties. Commercial property developers should be aware that CERCLA provides for some important liability limitations for landowners that own contaminated property impacted by materials hazardous to the environment. It can also assist with landowners concerned about the potential liabilities stemming from the presence of contamination to which they have not contributed. In particular, CERCLA provides important liability limitations for landowners that qualify as (1) bona fide prospective purchasers (BFPPS), (2) contiguous property owners, or (3) innocent landowners.

Puerto Rico Is Open For Business

Puerto Rico has the highest vaccination in the nation. More than 73% of the total population is fully vaccinated. The U.S. national average is just over 57%. The ports opened in June 2020 and San Juan held it first live concert this past summer. It is important to remember that Puerto Rico is a U.S. territory and there is no need for visas, the banking systems is almost identical to the mainland and the Island uses the U.S. postal service and U.S. dollar as its currency. There are thousands of flights from the U.S. to Puerto Rico daily and all main airlines fly to the Island.

Ohio Medical Board Changes Telemedicine Rules

A SCMS News Article by Scott Sandrock.

The Rising Threat from Insiders – Get Your House in Order

As its name implies, an ‘Insider Threat’ originates inside an organization. An ‘insider’ is any person who has or had authorized access to or knowledge of an organization’s resources, including personnel, facilities, information, equipment, networks, and systems. ‘Insider threat’ can manifest from malicious, complacent, negligent or unintentional acts that negatively affect the integrity, confidentiality, and availability of the organization, its data, personnel, or facilities. Certainly, ‘Insider Threat’ can be an activity by a bad actor employee, but can also arise from an inadvertent or unknowing action inside an organization (such as an employee who unintentionally opens a phishing email or clicks on a malicious link).

In Cybersecurity– A Good Offense is the Best Defense

2021 has been a watershed moment for cybersecurity incidents as cybercrime has become a frequent headline and cyber criminals have thrived on unsuspecting and/or unprepared businesses and institutions. For example, the Solar Winds attack exposed sensitive data from top companies like Microsoft as well government agencies[1] and the Colonial Pipeline attack substantially disrupted the petroleum supply chain[2]. We have seen an almost 20% increase in data breaches and attacks since last year.