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Report from New York State: What Is Ahead for Medicaid and Medicare?



November 30th, 2012

GrantWatch Blog invited this staffer from the Health Foundation for Western and Central New York to report on two community forums it held earlier this month in Buffalo and Syracuse.

With the presidential election over and major provisions of the Affordable Care Act (ACA) going into effect just about a year from now, what does the future hold for Medicaid and Medicare?

More than 200 health care professionals wanted to know. “The Road Ahead for New York,” events hosted by the Health Foundation for Western and Central New York on November 13 and 14, brought New York State Medicaid Director Jason A. Helgerson and Medicare Rights Center President Joe Baker to Buffalo and Syracuse to share information with both audiences on the current state of Medicaid and Medicare, upcoming changes to the two programs, and how these changes will affect  attendees at the events, their organizations, and the people they serve.

The Health Foundation has a history of hosting community speaker events to help communities plan for their future health and health care. These events are designed to provide members of the community with the most up-to-date, accurate information about what’s going on in their region, as well as to spark a discussion about new ways to think about the challenges they’re facing in health and health care in their own backyards.  Growing in popularity, these events can be used as a model by other foundations to build health capacity in their communities, we believe.  

New York’s Medicaid program spends the most in the nation—$54 billion each year to cover approximately 4.89 million people. However, state spending has not translated into high-quality care; the state’s health system ranks twenty-first overall in the nation and ranks the lowest of all states in avoidable hospital use.  

To fundamentally reshape the program, a Medicaid Redesign Team, which included Health Foundation President Ann F. Monroe, was appointed by New York State Gov. Andrew Cuomo (D). Through the team’s work, which happened in two phases, it has created a national model for health care delivery.  

The first phase started with a listening tour around the state and ended with a list of seventy-eight recommendations that saved the state $2.2 billion in its 2011–2012 budget. Not only did the Empire State save money, but savings to the federal government were enough to keep the national growth rate in Medicaid from going up. These are not one-time savings—it’s estimated that these reforms could save the federal government $17 billion over the next five years.  

In the second phase, the Medicaid Redesign Team developed a comprehensive multiyear action plan that Helgerson believes is not only the most sweeping Medicaid reform plan in New York State history but is also the most comprehensive reform strategy in the nation. Tied closely to successful implementation of the Affordable Care Act, the multiyear action plan embraces the Centers for Medicare and Medicaid Services’ “triple aim” of improving care, improving health, and reducing costs.  

One of the biggest challenges of this plan is how to phase out the inefficient fee-for-service system that leads to a lot of unnecessary care and costs, and, in its place, put in a payment system based on coordinated, high-quality care, believed to lead to improved health outcomes for patients. As the state moves in this direction, models for testing are being implemented.  

The state is also creating Medicaid Health Homes, which are special care coordination organizations designed to keep most complex and high-cost patients from falling through the cracks of a fractured system.  

To truly improve the health of New York residents, other shifts have to occur, though. Access to electronic health records has to be expanded so providers can share information in real time, across care settings. We can no longer ignore the effect that social determinants of health (poverty, joblessness, chronic homelessness, race/ethnicity, and so forth) and health disparities have on individuals. And there must be a focus on evidence-based care that works and is cost effective. By shifting its focus, the state can improve health outcomes for its residents and achieve substantial savings at the same time.

New York has already met some of its early objectives and has begun implementing systemic reforms. But to fully implement the plan, New York needs the federal government to approve a waiver amendment that will allow the state to reinvest $10 billion of the $17 billion the federal government will save over the next five years as a result of the state’s redesign. If the state gets federal approval, it could achieve the full vision of the ACA and the Medicaid Redesign Team. But with the so-called fiscal cliff approaching, the biggest threat is federal budget cuts to Medicaid and Medicare.

Medicare

As worry over federal deficits grows, Medicare is another program in which savings are being eyed. According to the Congressional Budget Office (CBO), Medicare is now 16 percent of the federal budget—and increasing—and by 2030, the Medicare population is expected to reach 80 million. But, contrary to popular belief, Baker said, Medicare is not in crisis, and it’s not going away. There are financial issues that need to be addressed, but Baker stressed that we shouldn’t do something hasty that we will come to regret later–we still have time.

So what’s the real problem? High and steadily rising health care costs.

While the ACA takes measures to control costs and improve care in Medicare, such as reducing the number of overpayments to health plans and adding preventive care benefits, there are other proposals on the table that seek to cut costs further. These include offering vouchers to buy private insurance, raising the eligibility age from age sixty-five to sixty-seven, raising premiums for the wealthy, and restructuring Medicare cost-sharing and benefits. Another proposal is to eliminate first-dollar Medigap insurance coverage, which is sold by private companies and helps pay some of the health care costs that Medicare doesn’t cover, such as copayments and deductibles. Because Medigap plans often protect beneficiaries from having to pay anything out of pocket, individuals typically use more health care services, resulting in higher Medicare spending overall.

What’s the common theme? Not cost savings, but cost shifting to states, employers, and individuals—any payer but the federal government.

For example, Americans are living and working longer, so why not raise the eligibility age to age sixty-seven? It will “save” $113 billion over 10 years. True, federal spending would decrease, but private health insurance is more expensive, so total health care spending would increase by $5.7 billion.

Well, some would argue, wealthy recipients can certainly afford to pay more, can’t they? However, according to the U.S. Census Bureau, 50 percent of people on Medicare have an income of less than $22,000 and, according to a Henry J. Kaiser Family Foundation analysis of CMS data, beneficiaries at that income level are already spending 15 percent or more of their income on health care. To achieve meaningful savings, the government would have to increase premiums for middle-income beneficiaries, not just high-income ones.

Baker said a better way to cut costs is by doing things like having the federal government negotiate lower prices for prescription drugs and reducing payments for unneeded and over-used health services.

Medicare is ultimately about people, not policies, Baker said, so when thinking about proposals to reform this massive program, we need to think about what they look like not just at the conference table, but at the kitchen table.

Communication about Medicaid and Medicare Is Key

For both programs, particularly Medicaid, there are so many changes happening that it can be, and often is, confusing for both providers and consumers.

Though the audiences in both locations were knowledgeable about health care reform in general, many still had questions and concerns about specific issues, including the transition to Medicaid managed care, and how the state plans to support safety-net providers as well as increase the number of primary care physicians.

To change the way that health care is provided, we need to change how we pay for those services, the speakers said. There are provisions in the ACA that begin to do that for both Medicaid and Medicare, such as increasing primary care reimbursement rates for Medicaid. Also, by Medicaid transitioning from the fee-for-service system to managed care, which provides bundled payments, there will be a financial incentive to rely more on primary care. In addition, Baker said, maybe it’s time to have a discussion about whether there are other allied health professionals who are capable of providing basic care.

Others wanted to know how the state will share information—not only about coming changes, but about what innovations are happening statewide, so communities aren’t “reinventing the wheel” time and time again.

Communication is one of the biggest challenges, and thinking more broadly about how to share information is vital. That means not just sending letters, but using the web, holding events, and tapping into advocacy groups to share information. Because not only will communication make it easier for providers to prepare, react, and adjust to the coming changes, but also the more that providers understand what’s happening, the better prepared they will be to explain it to their colleagues and those they serve every day.

By hosting speaker series events like “The Road Ahead,” the Health Foundation of Western and Central New York has provided a forum to share information with the community and has started a continuing dialogue across systems in ways that might not happen otherwise.

Based on audience requests, the next Health Foundation–sponsored session will focus on New York’s health insurance exchange and how it will affect providers, employers, and families in the state. Watch our website for more information.

To view videos of the Buffalo and Syracuse events, go here.

 

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