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Medicaid expansion: Health and Welfare committees hear update, prepare to make recommendation

LAURA GUIDO - Jan 23, 2023

BOISE — Five years after Idaho voters approved Medicaid expansion, it’s time for state lawmakers to evaluate the change.

Members of the House and Senate Health and Welfare Committees on Monday heard from Idaho Division of Medicaid Administrator Juliet Charron, who said the program has cost more than anticipated — especially because of the pandemic — but estimates the state would spend more money if the expansion were not in place.

Both the House and Senate committees will draft letters of recommendation to the Legislature as to “whether the expansion should remain in effect,” according to state code.

Republican leaders have said that this session they have big concerns over the program’s growing costs. At a legislative preview earlier this month, House Speaker Mike Moyle said, “If we do not get this Medicaid animal in control, it’s going to have an impact on education and other places.”

Medicaid expansion opened the program to adults without disabilities who make too much to qualify for traditional Medicaid health coverage, but not enough to qualify for subsidies on the state’s health care exchange set up by the Affordable Care Act.

Charron provided real examples of some of the people the program covers, including Sandpoint couple Jessica and Patrick. Patrick works full time and Jessica is a caregiver for their daughter with disabilities. They were uninsured prior to Medicaid expansion, Charron said.

For fiscal year 2024, the division of Medicaid is requesting around $67.4 million from the state general fund for the Medicaid expansion program.

There are approximately 145,000 participants in the program as of this month. Enrollment has been higher since March 2020, because during the pandemic a public health emergency required continuous enrollment, which means states could not remove participants from Medicaid while the emergency was declared unless they moved out of state, asked to be removed or died.

This requirement will end April 1.

Starting Feb. 1, the department will begin sending notices to individuals who may be ineligible, and staff has flagged around 67,000 expansion participants who may fall into this category and could be removed from the program, Charron said. A total of 151,000 people in all Medicaid programs have been identified as likely to be ineligible. The process of removing these ineligible individuals is expected to take about six months.

House Majority Leader Rep. Megan Blanksma, R-Hammett, asked if the division would be pursuing a recuperation of funds from ineligible individuals who were left on Medicaid during the public emergency.

Charron said the division cannot clawback those funds.

The general fund request for Medicaid expansion in fiscal year 2024 is less than fiscal year 2023 general fund expenditures, which came to about $68 million. However, total spending on the program is expected to increase, but for federal and dedicated expenditures.

The program is anticipating using $803 million in federal funds for the program, according to Charron’s request. Fiscal year 2023 federal spending on the program totaled around $778 million. For every dollar spent in the program, 90 cents comes from the federal government, Charron said.

The agency is requesting $20.9 million in dedicated funding for the program, up from $17.5 million in fiscal year 2023.

Charron said that without Medicaid expansion, the state would need to boost spending for behavioral health department’s crisis centers, local indigent patients, and hospitalizations and substance use disorder services within the Department of Corrections. An analysis of costs without Medicaid expansion estimates the state would spend more than $77.7 million in total, Charron said.

If those who were covered under Medicaid expansion lost their coverage, Charron said, they may experience gaps in care. This could create financial pressures on providers serving this population, lead to a lack of preventive care or access to potentially life-saving treatment, such as chemo-therapy.

House Minority Leader Rep. Ilana Rubel, D-Boise, emphasized during Monday’s meeting that the department is estimating a $10 million saving to the state by keeping Medicaid expansion.

Others present questioned the increase in total spending in the program, asking why costs would increase if it’s expected around 67,000 people will be removed from it. Charron said that most of the increased costs come from requirements around supplemental payments to hospitals, called the upper payment limit, and an update to the fee schedule.

The upper payment limit supports Medicaid-participating hospitals by paying the difference between what Medicaid paid and what Medicare would have paid; this is paid for with federal and dedicated funds, Charron said.

Per Idaho code, the state is required to align its fee schedule or Medicaid reimbursement rates at or as a percentage of Medicare.

“So those updates are made over time,” Charron said. “Now, this can result actually in rates going down, but over the last few years, we’ve seen rates go up. And inflation is also considered in that calculation.”

Other contributors to the rising costs are expensive drugs, such as for treatment of cancer and psoriasis, Charron said. Behavioral health care also also been more costly than anticipated; In fiscal year 22, 24% of expansion participants had a primary diagnosis of a serious mental illness. A fast-growing population and inpatient care for COVID-19 patients also significantly contributed to its costs.

In fiscal year 22, $225 million was spent on pharmacy costs and $165 million on inpatient hospital services.

The agency has begun a number of actions to attempt to contain costs, she said. This includes connecting new participants with a primary care provider in an attempt to prevent more serious and costly health outcomes down the line.

Additionally, the Division of Financial Management contracted with a consultant to make cost containment recommendations for all populations in Idaho served by Medicaid, she said. This consultant produced a preliminary report in December with recommendations that the agency is currently reviewing, and the consultant will release a final report in April with longer-term action recommendations.

Sen. Carl Bjerke, R-Coeur d’ Alene, asked if there are optional programs that could be removed to cut additional costs.

Charron noted that general fund costs have gone down from the previous fiscal year, but will continue to look for further actions.

Some of the cost-saving measures the report recommends include reducing in-state pay-to-cost ratio of hospital reimbursement for inpatient stays and eliminating the adult dental benefit.

Both committee chairs said they will start work on drafting their letter of recommendation for the program at their meetings tomorrow; House Health and Welfare meets at 9 a.m. and the Senate committee meets at 3 p.m.

They have until Jan. 31 to make their recommendations.

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