OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ↓ (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-5378

AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE LEGISLATIVE PROGRAM REVIEW AND INVESTIGATIONS COMMITTEE CONCERNING MEDICAID-FUNDED EMERGENCY DEPARTMENT VISITS.

OFA Fiscal Note

State Impact:

Municipal Impact: None

Explanation

The bill's provisions are not anticipated to result in a fiscal impact to the Department of Children and Family Services (DCF) or the Department of Mental Health and Addiction Services (DMHAS). The bill will result in a fiscal impact to the Department of Social Services (DSS). In summary:

● Sections 1, and 3 through 5 may result in a savings to the state Medicaid program. A 1% reduction in annual emergency department expenditures is approximately $2.3 million. The actual amount of savings will depend on the extent to which the administrative services organization (ASO) is able to achieve savings beyond what is assumed in their contract, or for which intensive case management (ICM) has already achieved, see below for additional information.

● Section 2 does not result in a fiscal impact to DSS to include the name of a client's primary care physician on their Medicaid identification card.

● Section 6 will result in an indeterminate impact to the DSS, see below for additional information.

● Section 7 will result in a cost of up to $9.8 million to DSS to provide continuous eligibility for children in the HUSKY program, see below for additional detail.

● Sections 8 and 9 will result in a per capita cost of between $294 to $2,116 for each month a Medicaid client is enrolled longer than they otherwise would be under the current policy, see below for additional detail.

Additional Information:

Sections 1, and 3 through 5 require the DSS, DMHAS and DCF, through their contract with their administrative services organizations (ASO), to provide intensive case management (ICM) services to Medicaid clients, including those with behavioral health needs. ICM is already being utilized in the Medicaid population. To the extent that this bill results in additional clients being served by ICM or results in an impact on the mix of services being utilized by Medicaid clients, there may be savings to the state. As previously stated, a 1% reduction in total annual emergency department expenditures will result in a $2.3 million savings. The ASO ICM services in the bill are targeted at all Medicaid clients who might benefit from ICM, but particularly high utilizers of emergency departments. The bill requires various reporting and assessment requirements of the ASO which are not anticipated to result in a cost to the state Medicaid program.

Section 6 requires the DSS to establish a telemedicine demonstration project at a federally qualified health center by January 1, 2015 and report the degree to which the project should be expanded to other regions by July 1, 2015. There may be a fiscal impact to DSS for providing coverage for telemedicine under Medicaid, which is uncertain. The state's Medicaid program does not currently provide telemedicine services or have a telemedicine reimbursement policy. The impact will depend on 1) the extent to which Medicaid clients utilize telemedicine services and the cost differential between telemedicine and in-person services, 2) the impact of telemedicine on total overall utilization of services covered by Medicaid, and 3) client outcomes. ¹

Various case studies have suggested net health care savings from telemonitoring; primarily resulting from reduced hospital readmission, particularly for individuals with chronic diseases. It is important to note, it is uncertain from the following case studies what the upfront technology and personnel costs were and the time lag before a return on investment was realized through a reduction in overall health care costs.

Case 1: The Partners HealthCare program out of the Center for Connected Health did a study on their telehealth/telemonitoring program for individuals with cardiac disease and reported net savings over a seven year period of approximately $10 million for 1,265 patients (net savings per patient of $8,155).² The Partners' program savings were for participants predominately enrolled in public programs (e.g. Medicare, Medicaid and the state's safety net program).

Case 2: The Veterans Health Administration (VHA) started its telehealth program as a multisite pilot program and as of 2010 had over 300,000 lives in its Care Coordination/Home Telehealth Program.³ The VHA reported cumulative net benefits of $3 billion since the program's inception in 1990. Savings are attributable to a reduction in redundant services and improved quality and health outcomes. The VHA program provides biometric information to remote monitoring care coordinators for individuals with various conditions, including heart failure, diabetes and Post Traumatic Stress Disorder (PTSD). The VHA reports annual costs per patient of $1,600.

Section 7 of the bill requires that children enrolled in the HUSKY program remain continuously eligible for services for a period of not less than twelve months, which is expected to result in annual costs of up to $9.8 million.

In 2012, 86.5% of the children who were enrolled in the HUSKY program in January were still enrolled in the program at the end of the year, indicating that approximately 1.3% disenrolled per month.⁴ Approximately one-third of these are assumed to have disenrolled due to aging out of the program. It is further assumed that an additional one-third of these children would have disenrolled due to other factors unchanged by continuous eligibility, e.g. moving out of state, transitioning to private insurance, etc.. Therefore, based on a total enrollment of 290,000, approximately 1,200 children each month who would have otherwise lost coverage will maintain eligibility under the terms of the bill. Assuming an average of a three-month gap in coverage⁵ and an annual cost of $3,339 per child, increased Medicaid and HUSKY B costs of $9.8 million would result.

Lastly, Sections 8 and 9 of the bill require that adults enrolled in the Medicaid program remain continuously eligible for services for a period of not less than twelve months, which is expected to result in a per capita cost of between $294 to $2,116 for each month the client is enrolled longer than they otherwise would be under the current policy. Data similar to that for children was not available for the adult population, which currently serves approximately 360,631 clients.

It should be noted that the Commissioner of the DSS testified that it is the Department's intent to delay the processing of Medicaid renewals for most HUSKY A and B households until 2015, and to move to a passive renewal process after that time. If this policy is implemented as intended, it is likely that most of the disenrollments assumed above for children will not occur, thereby reducing or eliminating most of the costs of a statutory continuous eligibility policy. The same is assumed to be true for HUSKY C and D population. In addition, the Centers for Medicaid and Medicare Services have reported a push towards continuous eligibility at the federal level. ⁶

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.