Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

Interesting Trends Revealed in 50-State Medicaid Budget Survey

Client Alert
November 3, 2021

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.

Healthcare and Hospital LawDaphne KackloudisMedicaid
Client Alert

UPDATE - SBA Releases Rules and Guidance for Second Round PPP Funding

January 7, 2021Late yesterday (January 6, 2021), the U.S. Small Business Administration released rules and guidance for businesses wishing to take part in the long awaited second round of Paycheck Protection Program (“PPP”) funding. As most businesses are aware, the rules governing PPP loans have been updated as part of The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (“Act”). The Act was just one section of the massive 2021 Consolidated Appropriations Act that was passed by Congress and signed into law by the President on December 27, 2020. To combat the ongoing disruptions caused by the COVID-19 pandemic, the Act generally provides (a) first time PPP loans for businesses that did not obtain a loan in the first instance, (b) PPP second draw loans for businesses that already obtained a loan but need additional funding, and (c) additional funding for businesses that returned their first PPP loan or did not get the full amount for which they qualified.Client Alert

UPDATE - Vaccine Policy Considerations for Employers

January 4, 2021If you read our post from November, you’re already an informed employer. This first post of 2021 is to share good news, give a few updates, and answer some other common questions. Q: What’s the Good News? First, the EEOC confirmed that employers may require employees receive the COVID-19 vaccine. Second, polling indicates that the number of Americans who said they will receive a vaccine has increased from around 63% to over 71%. The number of Americans who are strongly opposed to a vaccine is about 27%. Third, initial returns show that the efficacy rate for certain vaccines is as high as 95% for some at-risk recipients.Client Alert

Changes to FFCRA Paid Leave: Congress’ Revisions to Employment COVID-19 Leave Benefits Signals the Light is at the End of the Tunnel

December 28, 2020Late in the evening on December 27th, President Trump signed into law the government’s $900 billion COVID-19 relief package (the “Stimulus Bill”). Among other economic stimulus benefits, the Stimulus Bill contains the $600 stimulus checks that will be issued to eligible individuals as well as, relevantly, changes to the Families First Coronavirus Response Act (“FFCRA”). The FFCRA was implemented in April 2020 and provided benefits to individuals who missed work as a result of an actual or suspected COVID-19 illness or to care for a child when their school or childcare service was closed because of COVID-19. Importantly, the Stimulus Bill extends eligibility for employer payroll tax refunds for leave payments made to employees on or before March 31, 2021 under the FFCRA, signaling to the American people that Congress believes many of the employed public will be vaccinated by this time, the light at the end of the tunnel. However, the Stimulus Bill does contain a caveat that employers are no longer required to provide FFCRA leave benefits after December 31, 2020, but if they do, they will receive the payroll tax credits, up to the maximums provided in the FFCRA, for payments made prior to April 1, 2021. Below we provide a list of questions and answers we received to date following the passage of the Stimulus Bill. We expect the U.S. Department of Labor (“DOL”) to issue additional questions and answers as the Stimulus Bill is implemented, and we will update this Client Alert as these are received.Client Alert

Healthcare Speaker Programs: New OIG Alert

December 11, 2020In a rare Special Fraud Alert issued on November 16, 2020 (the “Alert”), the Office of Inspector General (“OIG”) urged companies who host speaker programs to reassess their programs in light of the “inherent risks” associated with these activities. The Alert reports that, in the last three years, drug and device companies have reported paying nearly $2 billion to health care professionals for speaker-related services.Client Alert

Value-Based Care Advances – CMS Issues New Final Rules for Stark and Anti-Kickback Statutes

December 11, 2020The Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) issued two highly anticipated (and quite extensive) Final Rules to reform the Stark Law and Anti-Kickback Statute (“AKS”) regulations. The Final Rules generally take effect on January 19, 2021. The Final Rules include new safe harbors for the AKS and new exemptions to the Stark Law to allow for greater flexibility. According to the HHS, the goal of updating both laws is to make it easier for providers to engage in care coordination and value-based care programs without running afoul of the statutes. Please note that this client alert could not cover the full extent of the Final Rule changes so please contact your BMD Healthcare attorney with questions.
Older posts
Newer posts