- Improving the transparency of Medicaid and CHIP financing;
- Optimizing State Medicaid Agency Contracts;
- Medicare Savings Programs: enrollment trends; and
- Medicaid demographic data collection.
The report was released on June 11, 2024, and can be found here.
MACPAC RECOMMENDS IMPROVING THE TRANSPARENCY OF MEDICAID AND CHIP FINANCING
Medicaid and the Children’s Health Insurance Program (CHIP) are both funded jointly by States and the federal government, which provides matching funds to states based on their Federal Medical Assistance Percentages (FMAP). There are a variety of ways that states can fund the non-federal share of spending, including general funds, heath care specific taxes, and intergovernmental transfers, in which other public entities, such as municipal or county governments, transfer money to the Medicaid program[1]. Transparency around state funding sources is lacking, hindering analysis of Medicaid payments. While states are required to answer five questions[2] about their financing methods when making reimbursement changes to their state plan, including describing the mechanism used by to provide the state share of funding, the answers to these questions are not publicly available. Data on state-level financing is weak; states are required to submit information on provider taxes through Centers for Medicare & Medicaid Services (CMS) Form 64.11, but this information is often incomplete. There are no reporting requirements at the provider level, making it difficult to analyze net payments to providers.
To address these concerns, commissioners voted on recommendations to improve financing transparency, aligned with the Commission’s longstanding view that Medicaid payment policy analyses require complete Medicaid payment data as well as data on the costs of financing the non-federal share. Recommendations build on previous Commission recommendations by including reporting of all types of Medicaid financing across settings of care and including additional state-level financing information.
The formal recommendations are as follows:
Recommendation 1.1: In order to improve transparency and enable analyses of net Medicaid payments, Congress should amend Section 1903(d)(6) of the Social Security Act to require states to submit an annual, comprehensive report on their Medicaid financing methods and the amounts of the non-federal share of Medicaid spending derived from specific providers. The report should include:
- a description of the methods used to finance the non-federal share of Medicaid payments, including the parameters of any health care-related taxes;
- a state-level summary of the amounts of Medicaid spending derived from each source of non-federal share, including state general funds, health care-related taxes, intergovernmental transfers, and certified public expenditures; and,
- a provider-level database of the costs of financing the non-federal share of Medicaid spending, including administrative fees and other costs that are not used to finance payments to the provider contributing the non-federal share.
This report should be made publicly available in a format that enables analysis.
Recommendation 1.2: In order to provide complete and consistent information on the financing of Medicaid and the State Children’s Health Insurance Program (CHIP), Congress should amend Section 2107(e) of the Social Security Act (the Act) to apply the Medicaid financing transparency requirements of Section 1903(d)(6) of the Act to CHIP.
MACPAC conducted interviews of 17 national experts, state officials, federal official, and provider associations between September 2023 and January 2024 to gain insight into barriers to improving Medicaid financing transparency. Six themes were identified:
- Mistrust about CMS’s use of additional financing data and concerns that CMS would use additional data to reconsider previously approved financing arrangements, though MACPAC found that many stakeholders would be willing to publicly share additional information on Medicaid financing methods if the purpose and added value were clear;
- Limited comprehensive tracking on current state financing methods;
- Incomplete reporting of state-level financing amounts, including unreliable and incomplete data, lack of enforcement, and differences in definitions and reporting periods that may lead to reporting discrepancies;
- Difficulties ascribing financial sources to specific payments, given variation across states and data collection challenges; and
- Issues tracking financing and payments within health system.
The Commission plans to monitor trends in federal Medicaid spending and financing. MACPAC is not able to fully examine the effects of potential policies until additional state- and provider-level financing data are available.
MACPAC RECOMMENDS STRATEGIES FOR OPTIMIZING STATE MEDICAID AGENCY CONTRACTS FOR IMPROVED DUAL ELIGIBILITY PROGRAMMING
During the recent MACPAC meeting cycle, the Commission conducted research and deliberated on strategies to enhance care coordination for individuals who are dually eligible for Medicare and Medicaid. Integrated care aims to coordinate Medicaid and Medicare services more effectively and is offered through various specialized plans.
Medicare Advantage (MA) Dual Eligible Special Needs Plans (D-SNPs) are the primary source of integrated coverage for dually eligible beneficiaries. D-SNPs are available in three types: Coordination-Only (CO D-SNPs), which primarily coordinate services without covering Medicaid benefits; Highly Integrated (HIDE SNPs), which include coverage for some Medicaid services such as long-term services and supports (LTSS) or behavioral health; and Fully Integrated (FIDE SNPs), which provide comprehensive coverage of both Medicaid and Medicare benefits. Federal law establishes minimum requirements for how D-SNPs coordinate and cover Medicaid benefits, but states can add further requirements to enhance integration through the State Medicaid Agency Contracts (SMACs). D-SNPs must sign a SMAC to operate within a state, allowing state Medicaid agencies to have significant influence over the care that D-SNPs provide. Due to each state having its own contracts and regulatory authority, the implementation of SMACs provisions varies significantly, with some states utilizing their contracting authority more effectively than others.
To establish an understanding, MACPAC collaborated with Mathematica to review SMACs and determine how states leverage their authority. MACPAC discovered that many states have provisions such as mandatory care coordination, integrated resources for members, data sharing requirements, and initiatives to improve quality of care; yet the adoption and implementation of these requirements are uneven across states. When adopting these provisions, states often consider how contracts align with state goals, allow for seamless integration of care for beneficiaries, meet data and submission requirements, and use enforcement tools to monitor compliance. With each state emphasizing certain provisions and goals, D-SNPs widely vary in practice and outcomes. Mathematica’s findings highlight complexities involved in optimizing SMACs and dual eligibility programs.
Across the board, SMACs and D-SNP programs are facing persistent challenges surrounding staff capacity and data collection and utilization. States consistently cite a lack of staff capacity and expertise in Medicare as a significant barrier. Due to the intensive nature of the work and the struggle to allocate sufficient staff and time, the limited staff often find it challenging to understand both Medicare and Medicaid, as well as to interpret data and oversee compliance. This lack of expertise hinders their ability to effectively leverage SMACs and oversee D-SNPs–resulting in fragmented care for beneficiaries.
Similarly, states face challenges in collecting, integrating, and effectively utilizing Medicare Advantage (MA) encounter data. States recognize the value of data for monitoring D-SNP compliance and assessing quality of care; yet they struggle to integrate Medicare data system with state Medicaid data due to operational and technical barriers–compromising completeness and accuracy. Staff report that the data collected is primarily aimed at compliance and regulation, rather than focusing on the quality of care and associated outcomes. Based on this work, the Commission identified actions states and CMS can take to optimize SMACs and improve care outcomes for dual eligibility beneficiaries, outlined in the formal recommendations below:
Recommendation 2.1: State Medicaid agencies should use their contracting authority to require that Medicare Advantage (MA) Special Needs plans (D-SNPs) operating in their state regularly submit data on care coordination and Medicare Advantage encounters to monitor, oversee, and assure plans are coordinating beneficiary care according to state requirements. Along with this submission, states should describe how they will incorporate care coordination and utilize this data to advance programming and state goals. The collection of care coordination data and creation of a usage plan may ensure all dual beneficiaries receive the expected level of care, inform compliance, and increase quality of programming.
Recommendation 2.2: The Centers for Medicare & Medicaid Services should update guidance that supports states in their development of a strategy and tools to integrate care that is tailored to each state’s health coverage landscape. This guidance should also emphasize how states that contract with MA D-SNPs can use their state Medicaid agency to advance state policy goals. By providing federal individualized support, states can use their contracting authority to add value to dual eligibility programming while promoting state goals.
MACPAC will continue to consider how integrated care models can be better aligned administratively and financially and how dually eligible beneficiaries might receive a more streamlined integrated experience. The Commission will also monitor legislative efforts and regulations regarding integrated care.
COMMISSION DISCUSSES TRENDS IN ENROLLMENT IN MEDICARE SAVINGS PROGRAMS (MSP) AND RULES THAT HELP TO STREAMLINE THE ENROLLMENT PROCESS
There are four different MSPs that provide low-income Medicare beneficiaries with Medicaid coverage of their Medicare premiums and cost sharing: Qualified Medical Beneficiaries (QMB), Specified Low-income Medicare Beneficiaries (SLMB), Qualifying Individual Group (QI), and Qualified Disabled and Working Individual (QDWI) group (this group is left out of the enrollment analysis because of its small pool of eligible beneficiaries). Although each of these MSPs serve a different group of eligible beneficiaries and have different benefits, they are all considered dual-eligible programs, and the state receives their regular federal medical assistance percentage (FMAP) for the MSP expenditures[3].
MACPAC has previously examined MSP participation rates, in 2017, and found low overall participation. There was an estimated 53 percent participation rate in QMB and 32 percent participation rate in SLMB groups. MACPAC found that participants in the QMB group tended to be over age 65, white, in excellent or good health, and have minimal limitations in daily activities.
CMS has been working to streamline MSP enrollment through various rules and programs both at a state and federal level. States can expand MSP coverage, which some states have opted to do through Medicaid expansion under the Affordable Care Act; however, states are not able to make enrollment more restrictive than on a federal level. CMS has aimed to make MSPs more accessible by aligning MSP enrollment with Medicare Part D Low-income Subsidy (LIS) program enrollment guidelines. CMS has also attempted to align enrollment requirements for non-modified adjusted gross income (non-MAGI) populations and MAGI groups.
CMS is working to align the LIS and MSP eligibility guidelines because it streamlines the process for enrollment by allowing both programs to work from the same dataset to determine eligibility. In September 2023, CMS finalized part of the 2022 proposed rule on Medicaid eligibility and enrollment that require states use data from LIS applications to initiate MSP applications which further incentivizes states to align their enrollment with LIS enrollment to make the data easier to use. State compliance with the new provisions is extended to April 1, 2026.
Another section of the 2022 proposed rule attempts to prevent Medicare coverage gaps by promoting equity between the non-MAGI and MAGI groups based on stability of income. States that have been working on implementing these new rules gave feedback that using LIS data for MSP enrollment is burdensome but that they are overall supportive of the recent rulemaking streamline MSP enrollment.
MACPAC contracted the Urban Institute to examine how monthly MSP enrollment trends from 2010-2021. The overall trends of enrollment have been positive and increasing with an average annual growth of 3 percent from 2010-2021.[4]
Most MSP enrollees were QMP plus enrollees, then the QI group, and finally the SLMB group. MACPAC hypothesizes that the income requirements drive this trend. Women were more likely to be enrolled as QMB plus since 60 percent of enrollees are women, and their growth rate was 3.2 percent compared to 2.2 percent among male enrollees. 62.5 percent of QMB plus enrollees were 65 years or older and 37.5 percent were younger than 65. Enrollment among 65+ enrollees in QMB plus steadily increased by about 3.4 percent but younger than 65 enrollees had a relatively flat enrollment growth at 1.3 percent. Only about 15 percent of QMB plus enrollees live in rural areas with the other 85 percent residing in urban settings. Enrollees living in rural areas increased by about 1 percent each year where urban enrollees increased by 3 percent.
MACPAC attributes a growth in MSP programs to various expansions of MSP eligibility and an increase in awareness and accessibility to these programs. Looking to further explain the enrollment trends, MACPAC wants to investigate the difference in trends between QMB only and groups with full benefits. MACPAC also wants to monitor states in their implementation of the new provisions set forth for the April 1, 2026, deadline to evaluate if they are meeting their goal of improving accessibility to MSPS through streamlining enrollment.
MACPAC REVIEWS DEMOGRAPHIC DATA COLLECTION AND ENCOURAGES STATES TO COLLECT THIS DATA TO ADDRESS HEALTH DISPARITIES
Medicaid data is necessary to understand beneficiary access to care, therefore, gaps in data can prevent stakeholders from addressing health disparities. This chapter builds upon the Commission’s previous health equity work in both the June 2022 and March 2023 reports to Congress. The June 2022 report to Congress examined how Medicaid can advance health equity, and in the March 2023 report to Congress, the Commission recommended updates to the race and ethnicity questions on the Medicaid application. In this report, the MACPAC reviewed the availability of demographic data to address health disparities in Medicaid beneficiaries. MACPAC specifically examined the demographic areas of primary language, limited English proficiency, sexual orientation and gender identity (SOGI), and disability data.
Demographic data provides insights into the experiences of historically marginalized populations. Therefore, MACPAC recommends that questions on these characteristics are included in federal or state surveys, or Medicaid applications. Once data is collected, it can be used to understand the experiences of beneficiaries. MACPAC has identified two main areas for demographic data collection:
- The Medicaid application should be updated to reflect this health equity work. Many states collect demographic data within the Medicaid application, however, some of these questions should be redesigned to expand the types of information collected on the application.
- High quality and comparable data are needed for state Medicaid programs and other stakeholders to understand the composition of their Medicaid populations. The quality of the data can greatly affect its usability. Therefore, some aspects that could affect the quality include whether data was self-reported, if the data was standardized using comparable questions, if the data is representative of the Medicaid population, whether the beneficiary circumstances have changed over time, and how the data is protected for beneficiaries’ privacy.
The Commission found that, currently, there are limitations with the Medicaid data being collected that prevent some populations from being included to better understand beneficiary care. Some of these limitations include:
- Gaps in data collected because there are not consistent measures. Some demographic data questions are included on federal and state forms or surveys, but State Medicaid programs are not required to collect demographic information. This inconsistency limits the data’s usefulness to federal and state agencies.
- No federal standardization of questions in surveys or applications. Therefore, when data is collected, often multiple definitions are used to identify people with the same characteristics, and questions and responses vary.
- Additionally, in federal surveys, small sample sizes limit the ability to report on individuals covered by Medicaid.
Despite these limitations, the Commission found that some states do use Medicaid demographic data for programmatic and research purposes. For example, language data is used to identify beneficiaries needing translated materials, and states have used demographic data to measure and address health disparities for research purposes. The Commission’s findings demonstrate that there is a need to improve existing data, but also that language, SOGI, and disability data are already available. MACPAC encourages the use of existing data to measure and address health disparities, despite its limitations, and encourages others to do the same.
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This Applied Policy® Summary was prepared by Emma Hammer with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at ehammer@appliedpolicy.com or at 202-558-5272.
[1] For a detailed description of non-federal funding mechanisms, see this resource from MACPAC.
[2] https://www.medicaid.gov/sites/default/files/2020-01/medicaid-funding-questions.pdf
[3] Table 3-1 on PDF page 87 of the report outlines MSP eligibility and benefits.
[4] Table 3-2 on PDF page 92 shows Medicare Savings Program enrollment from 2010 to 2021.