Compendium of Budget Information for the 2014 General Session
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Medicaid is a joint federal/state entitlement service consisting of three programs that provide health care to selected low-income populations: (1) a health insurance program for low-income parents (mostly mothers) and children; (2) a long-term care program for the elderly; and (3) a services program to people with disabilities. Overall, Medicaid is an "optional" program, one that a state can elect to offer; however, if a state offers the program, it must abide by strict federal regulations. It also becomes an entitlement program for qualified individuals; that is, anyone who meets specific eligibility criteria is "entitled" to Medicaid services. The federal government establishes and monitors certain requirements concerning funding, and establishes standards for quality and scope of medical services. Medicaid includes requirements to provide certain services and to serve specific populations. States may expand their program to cover additional "optional" services and/or "optional" populations. In addition, states have some flexibility in determining certain aspects of their own programs in the areas of eligibility, reimbursement rates, benefits, and service delivery. As long as services meet State and federal standards, the federal government will provide a match for all State money spent on Medicaid. The match is known as the Federal Medical Assistance Percentage (FMAP). The entire Medicaid program is based upon an approved contract with the federal government, known as the State Plan. The federal government must approve all changes and/or amendments to the State Plan. If the State were to provide a service without federal approval, then the State would pay 100% of the costs rather than the usual federal match.
Most providers for Medicaid must meet Medicare provider requirements to receive reimbursement for serving Medicaid clients. Additionally, they must accept Medicaid reimbursement as payment in full. The provider may charge the patient for services not covered by Medicaid only when the provider has advised the patient in advance that Medicaid does not cover the services and the patient has agreed in writing to pay for the services. Medicaid does not pay for any services not considered medically necessary.
The client's Medicaid Identification Card will state when a co-pay is required and for what type of service. Pregnant women and children are not subject to the co-pay requirement. The provider is responsible to collect the co-pay at the time of service or bill the client. The total amount paid to the provider reflects the amount of the client's co-pay. For a list of co-pays by service please visit http://health.utah.gov/umb/forms/pdf/adultcomp.pdf.
There are currently 57 services included in the entire Medicaid Program. Of these, inpatient hospital, outpatient hospital, intermediate care facilities for individuals with intellectual disabilities, long-term care, physician, dental, pharmacy, and health maintenance organizations make up approximately 60 percent of all Medicaid expenditures. Medicaid services in Utah are in two budgetary line items: Medicaid Mandatory Services and Medicaid Optional Services. The line dividing mandatory and optional services is occasionally blurred by the fact that some optional services are mandatory for specific populations or in specific settings. For example, the federal government requires more services for children and pregnant women. Additionally, clients in institutionalized settings receive a wider range of services. The State's flexibility includes federal waivers that allow some latitude in program implementation, as well as to offer some additional optional services. A brief description of each service is found in a list of defined terms.
Mandatory services in the Medicaid Program come from decisions by the federal government regarding required services. These include: inpatient and outpatient hospital, physician services, skilled and intermediate care nursing facilities, medical transportation, home health, nurse midwife, pregnancy-related services, lab and radiology, kidney dialysis, Early Periodic Screening Diagnosis and Treatment, and special reimbursement to community and rural health centers. The federal government requires the State to pay Medicare premiums and co-insurance deductibles for aged, blind, and disabled persons with incomes up to 100 percent of the Federal Poverty Level. Additionally, the State pays for Medicare premiums for qualifying individuals with incomes up to 120 percent of the Federal Poverty Level.
There are nine budget programs within the Medicaid Mandatory Services line item, which include: Inpatient Hospital, Contracted Health Plans, Nursing Home, Outpatient Hospital, Physician Services, Other Mandatory Services, Crossover Services, Medical Supplies, and State-run Primary Care Case Management.
The Early Periodic Screening Diagnosis and Treatment Program, called Child Health Evaluation and Care in Utah, is a mandatory federal program which requires the State to screen all Medicaid children up to age 21 at scheduled intervals. The mandate includes providing all medically necessary services, such as organ transplants or any other service needed, regardless of cost or if it is normally covered by Medicaid. Utah's 12 local health departments provide the federally-required education and outreach for this program.
The State has designated five major population groupings that may receive health care from the Medicaid Program. These include: (1) aged - the elderly or disabled who receive federal Supplemental Security Income (SSI) and persons in nursing facilities (grouped together as aged), (2) blind and disabled individuals, (3) children who receive Temporary Assistance for Needy Families (TANF) benefits, or are in the Foster Care program, (4) TANF adults with dependent children, and (5) pregnant women. Each of these groups is discussed in more detail later in this section.
Individuals aged 65 and over qualify for Medicaid if they qualify for SSI, which provides an income of approximately 77.6 percent of the Federal Poverty Level (FPL). They also qualify for food stamps. Many of the elderly also qualify for Medicare coverage. The Medicaid Program pays for the premiums and deductibles for those eligible under both programs. Medicare pays the actual medical cost for most of these people. Medicaid is also required to pay Medicare premiums, co-insurance, and deductibles for anyone qualifying for Medicare who has income up to 100 percent of FPL, but only has to pay Medicare premiums for those between 100 and 135 percent of FPL. Medicare has a 100 day limit for services in nursing care facilities. For eligible clients, Medicaid pays for the nursing care services after the expiration of Medicare benefits.
Medicaid also covers non-SSI aged people whose income does not exceed 100 percent of FPL. Aged people with income over 100 percent of FPL can spend down to the Medically Needy Income Limit (100% of FPL) to receive Medicaid.
Blind and Disabled
Persons with disabilities are eligible for services under the Medicaid Program. The criteria for disability require that a person be unable to participate in gainful activity for at least a year, or have a medical condition that will result in death. Among the disabilities covered are mental retardation, blindness, mental health, spinal injury, and AIDS. Income is limited to 100 percent of the Federal Poverty Level. There is an asset limit of $3,000 for families. The asset limit does not include a primary residence or a car. Eligible individuals also qualify for food stamps.
Aid to Families with Dependent Children (AFDC) was a joint federal-state program which provided financial assistance to families with children deprived of the support of at least one parent. In 1996, AFDC was replaced with block grants to the states and the Temporary Assistance to Needy Families (TANF). In general, people who meet AFDC eligibility criteria that were in effect on July 16, 1996 are eligible for Medicaid. Also, those people who qualify for a TANF grant may be eligible for Medicaid.
The Medically Needy Children program is for children who do not qualify for assistance under normal Family Medicaid because they still have the support of a parent. The family may spend down to become eligible. This is an optional group not required by the federal government. Many children previously eligible for the Medically Needy Children program have become eligible in the mandatory programs for children.
In addition to the previously mentioned TANF children, there are three groups of children covered under the Medicaid Program. These are: (1) medically needy children, (2) children up to age 18 with family income up to 133 percent of the Federal Poverty Level (FPL), and (3) children in subsidized adoptions.
There is no asset test for children applying for Medicaid.
Children in Foster Care are eligible for Medicaid coverage if they meet Medicaid Program requirements. The State is responsible for their medical care. Most children placed in foster care have histories of abuse or neglect. Often there are unresolved medical and mental health problems. Each year, a number of children come into the custody of the State and are placed for adoption. Some of these children have serious medical problems which makes them hard to place. In some of these cases, the State subsidizes the adoption. Some families receive a small stipend to assist in the cost of care for these children, and the State covers the child's medical care under Medicaid until the child is 18 years old. Children that age out of foster care, regardless of income and assets, receive Medicaid services until they turn 26 through the Independent Living Program, unless they are eligible for another Medicaid program.
The group referred to as TANF Adults includes those adults with dependent children who are either categorically or medically needy and meet the basic program requirements. Some of the individuals may need to "spend down" to obtain Medicaid services, which means that they must reduce their disposable income with payments to Medicaid or with medical bills which they have incurred.
There are two groups of people who qualify for Medicaid under the TANF Program. These include: (1) those in the basic program where a child lacks the support of one parent, and (2) those in two-parent families that qualify under the unemployed parent program. The majority of eligible families are deprived because of divorce, desertion, or unwed mothers. TANF families may also qualify for food stamps. Depending on family size, the TANF grant and food stamps provide an income between 62 and 74 percent of the Federal Poverty Level.
In addition to the basic Family Employment Program (FEP), there is also a program for unemployed two-parent families. This program provides cash assistance for seven months in any 13-month period. One parent in families in this program is required to work 32 hours a week (in an emergency work program) and spend at least 8 hours per week seeking regular employment. With the exception of the time limitation and work requirement, the criteria and benefits for the Family Employment Program - Two Parent are the same as those for the regular FEP. Federal law requires that the family be eligible for Medicaid for the full 12 months of the year. Besides those eligible through FEP cash assistance, there are several programs which provide transitional Medicaid coverage for periods of 4 months (for child support-related eligibles) or 24 months (for people who no longer receive cash assistance due to child support payments or earnings).
The prenatal/pregnancy program helps pregnant women receive prenatal care. The program covers the mother from the time of application to 60 days after the birth. A woman only needs to meet the eligibility requirements in any one month to be eligible for the balance of the pregnancy. Children born to women on this program are eligible for Medicaid (after the first 60 days) for the rest of the first year under the postnatal program.
Several chapters of the Utah Health Code in Title 26 of the Utah Code govern Medicaid Mandatory Services.
Because of the Department's budget reorganization in FY 2011, some of the detail between FY 2010 and FY 2011 nonlapsing balances does not tie out by line item. For analysis of current budget requests and discussion of issues related to this budget click here.
Inpatient Hospital means services that a hospital provides for the care and treatment of inpatients with disorders other than mental illness, under the direction of a physician. Medicaid covers inpatient visits at a hospital for most services without a prior authorization. Some services may require a prior authorization. Some imaging services require manual review for medical necessity after the service.
A hospital which accepts a Medicaid patient for treatment accepts the responsibility to make sure that the patient receives all medically necessary services from Medicaid providers. In reviewing claims for readmissions within 30 days for the same or similar principal diagnosis, the State may deny or combine the claim with the first admission.
Non-pregnant Medicaid adult clients have a $220 co-insurance payment for non-emergency inpatient hospital services. The most frequent claims for inpatient hospital service for Medicaid usually are for the care of newborns, delivery of babies, respiratory flu treatments, and tracheotomies.
Reimbursement rates for inpatient hospital services are online at http://health.utah.gov/medicaid/stplan/inpatient.htm.
Over two thirds of Utah Medicaid clients enroll with one of four 100% at risk contracted health plans: Select Access, Molina, Healthy U (University of Utah Hospitals and Clinics), or Health Choice. All four plans receive a per member per month payment for each Medicaid client in their program and assumes the risk of paying for all of the incurred costs. The negotiated care includes funding for administrative costs and profit. The plans are responsible to pay for all medical services except for the following:
Medicaid's aggregate payments to each plan may not exceed what Medicaid would have paid, in aggregate, for the same services via fee-for-service Medicaid claims. The administrative money received by the four plans cover the following: case management, disease management, Healthcare Effectiveness Data and Information Set reporting, quality improvement programs, performance improvement projects, quality committees, health needs assessments, utilization management, prior authorization, provider credentialing and re-credentialing, newsletters, and outreach.
In 2013 all plans serving the counties of Davis, Salt Lake, Utah, and Weber changed to accountable care organization contracts and were 100% at risk. This explains the large increase in funding beginning in FY 2013.
Medicaid clients must meet nursing facility level of care as described in Administrative Rule R414.502 to receive this service. Clients must meet two of the following three conditions: (1) require substantial physical assistance for activities of daily living, (2) certain level of dysfunction in cognition, and (3) a less structured setting cannot provide the level of care needed. Additionally, clients must pass a low asset test to qualify for this service. Clients with primary residences that have more than $500,000 in equity are ineligible for nursing home services. The asset test includes a "look back period" of five years to examine asset transfers to determine if an inappropriate transfer of assets took place. Any findings of improper transfers delay Medicaid qualification. Once a client qualifies for nursing home care, there is no limit on the time they receive that care for as long as they continue to qualify. Additionally, federal law mandates that clients receiving this service must receive all benefits prescribed by their supervising physician. The Medicare program has a 100 day annual limit for nursing home services. Medicare clients who also qualify for Medicaid would have any nursing home service days above 100 paid for by Medicaid as long as the client continues to meet the nursing facility level of care requirements of R414.502.
Medicaid nursing home clients may retain a fixed monthly amount for personal needs. For most individuals expected to stay longer than six months in long-term care the permitted allowance is $45 monthly. In most cases, the client's account balance cannot exceed $2,000 without risking a loss of Medicaid eligibility due to asset level requirements. Medicaid determines the amount of income the Medicaid client must pay to the facility in order to be eligible for Medicaid. This income is reduced from the Medicaid reimbursement paid to the facility.
The federal government's Centers for Medicare and Medicaid Services posts the results of nursing home inspections on their website. These surveys indicate the home's compliance with performance measure regulations.
Any individual working in a nursing facility as a nurse aide for more than four months on a full-time basis must have successfully completed a nurse aide training and/or competency evaluation program approved by the State.
Reimbursement rates for nursing home services and calculation methodology are online at http://health.utah.gov/medicaid/stplan/longtermcare.htm. State law requires at a minimum that State-funded expenditures paid to nursing care facilities stay at June 2004 levels. There are quarterly adjustments to the rates paid to each nursing care facility based on the facility's average case mix (client severity). The Department of Health determines the nursing care rate based on three components:
Outpatient hospital services provided must be medically necessary and appropriate to diagnose or treat illness, disability or pain. Medicaid covers outpatient visits at a hospital for most services without a prior authorization. Some surgeries may require a prior authorization. Some examples of outpatient hospital services include blood transfusions, casts, emergency room visits, and outpatient surgeries.
Medicaid clients subject to co-pay requirements have a $3 co-payment for outpatient hospital services. Medicaid clients subject to co-pay requirements have a $6 co-payment for non-emergency use of the emergency room. Medicaid staff contact clients, who use the emergency room for non-emergency reasons, to connect them with a primary care provider and educate them on proper emergency room usage.
Medicare's Outpatient Prospective Payment System is the basis for outpatient hospital services reimbursement rates.
Medicaid clients, who are not in a managed care plan, may visit any willing physician provider to receive services. This includes any specialist physician. Medicaid clients must have a medical need for seeking physician services as Medicaid does not pay for annual wellness or preventive health visits. Most non-pregnant adults have a $3 co-pay per doctor's visit. Reimbursement rates for physician services are online at http://health.utah.gov/medicaid/stplan/physician.htm.
The following four nurse practitioners may bill Medicaid directly:
By federal law, Medicaid must be the payer of last resort behind any other insurers, including Medicare, who may have responsibility for payment. Additionally, federal law mandates that Medicaid reimburse providers up to the Medicaid level of reimbursement for services to clients with other insurance, whose insurance did not fully cover a Medicaid-covered service. On average, around 5% of Medicaid fee-for-service claims go to other insurances. The Federal Deficit Reduction Act of 2005 required insurers to verify insurance eligibility information for Medicaid clients. The database with this information is maintained by the Office of Recovery Services in the Department of Human Services.
In order to ensure medical appropriateness and/or unit limitations, some items require prior authorization. About half of all medical supplies require a prior authorization. Medicaid maintains a specific list of potentially approvable supplies for use in an emergency. After the emergency providers must submit claims to determine if the supply qualifies for reimbursement. Following are some items approved for possible reimbursement due to a medical emergency:
Medicaid pays for supplies based upon the lower amount of billed charges or the Medicaid fee schedule. There are over 250 medical supply companies enrolled to provide services in Utah to Medicaid clients. Reimbursement rates for medical supplies are online at http://health.utah.gov/medicaid/stplan/physician.htm.
The State pays about $0.70 total funds per member per month access fee for each client being served in the Intermountain Health Care system. The Department of Health processes the claims for services and pays providers directly using the Medicaid fee-for-service reimbursement schedule. The Intermountain Health Care system called Select Access serves about one third of all Medicaid clients. Once in the system, clients may only receive services at Intermountain Health Care facilities, but there is no active case management of the clients, except for pediatric nurses that provide some basic case management for children.
This program ended in 2013 when the state transitioned to accountable care organization contracts.
The current system processing and paying medical claims, the Medicaid Management Information System, started in 1983. A system that began operations in 1975 in Iowa is the basis for the current system. The system uses a programming language known as COBOL. New federal requirements continue to add to the system design requirements and add details to the information required for medical billing and reporting. As part of its FY 2010 Appropriations Request, the Department of Health estimated the total cost to replace the Medicaid Management Information System at $85 million ($11 million General Fund) over a three-year period. One option is to replace the system replacement incrementally by function.
Other Mandatory Services includes: Home Health Services, Rural Health Clinic, Federally Qualified Health Centers, Indian Health, Radiology, Laboratory, and Well Child Care (Early Periodic Screening, Diagnosis and Treatment Program). Detailed coverage information is in the Medicaid provider manuals.
Federally Qualified Health Centers - For specifically designated medical clinics that qualify as federally qualified health centers, Utah Medicaid must pay these clinics their full cost of providing Medicaid services. This is done through an annual adjustment at the end of each fiscal year and usually results in a payment that is higher than what Medicaid would normally pay. Utah has 10 federally qualified health centers.
The federal government pays 100% of the service costs for Indian Health Services. Utah has over 10 Indian Health/Tribal facilities. Medicaid pays these facilities an all-inclusive rate for everything except for physician inpatient services, which use the fee-for-service reimbursement schedule.
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COBI contains unaudited data as presented to the Legislature by state agencies at the time of publication. For audited financial data see the State of Utah's Comprehensive Annual Financial Reports.