#1SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID South Carolina Department of Health and Human Services House Ways & Means Committee / HHS Subcommittee FY2023-24 Budget Request Robert Kerr Agency Director Jan. 24, 2023#2Agency Attendees Robert Kerr, Director Eunice Medina, Chief of Staff • Jenny Stirling, Director of Legislative Affairs . Brad Livingston, Chief Financial Officer SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 2#3South Carolina Medicaid Program Overview SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 3#4Medicaid Enrollment: South Carolina Population . Full benefit membership: Approximately 1.3 million Population Children Disabled Adults Other Adults Elderly *Data as of Sept. 30, 2022 Recipients 739,00 134,000 333,000 87,000 ● ● Approximately 60% of Medicaid members are age 0 to 18 Approximately 60% of South Carolina children are on Medicaid • Medicaid pays for approximately 60% of all births • Approximately 75% are enrolled in a managed care organization Limited benefit membership: 271,000 SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 4#5Asymmetric Resource Utilization ENROLLMENT Elderly: 6.8% Disabled Adults: 11.8% EXPENDITURES Elderly: 16.2% Other Adults: 20.8% Disabled Adults: 33.5% Children: 60.6% SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID Other Adults: 17.6% Children: 32.7% 5#6SCDHHS General Fund Appropriation as Percentage of the Total State General Fund Appropriation 22.0% 20.0% 18.0% 18.0% 17.2% 16.8% 16.8% 16.8% 16.5% 16.6% 16.6% 16.2% 16.2% 16.0% 15.4% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 17.7% 2.0% 0.0% FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY2023 SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 6#7Enrollment 1,350,000 1,200,000 1,050,000 900,000 750,000 600,000 450,000 300,000 150,000 Agency Information: Expenditure and Enrollment Trend $9,000,000,000 $8,000,000,000 $7,000,000,000 $6,000,000,000 $5,000,000,000 $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 SFY17 SFY 18 SFY19 SFY 20 SFY21 SFY22 Expenditures Year End Full Benefit Enrollment SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 7 Expenditures#864.88% 12.12% 7.82% SCDHHS Revenue 5.57% 4.65% 3.78% 0.41% 0.77% 0.13% 0.25% 0.34% General Funds Recurring $1,427,275,397 Certified Public Expendiure (CPE) $122,536,512 ■Miscellaneous $9,047,609 TPL $2,829,669 Hospital Tax $266,588,588 Cigarette Tax $102,243,510 MIAA $7,537,900 Tobacco Master Settlement Agreement (MSA) $1,040,014 Inter-Governmental Transfer (IGT) $171,945,564 Pharmacy Rebates $83,042,318 County Taxes $5,515,307 SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 8 0.05%#9FY 2021-22 Year End Category State Expenditures Medical Assistance: Coordinated Care $856,819,317 Federal Expenditures $2,939,837,414 $3,796,656,731 Total Expenditures % of Total 44.3% Medical Assistance: Fee-For-Service Long Term Care State Agencies (Fee-For-Service) Medicare Premiums Medical Contracts General Administration $451,593,631 $1,496,954,331 $1,948,547,962 22.8% $230,939,225 $811,439,447 $1,042,378,672 12.2% $182,470,914 $694,643,915 $877,114,829 10.2% $194,585,448 $244,382,826 $438,968,274 5.1% $162,247,745 $180,488,709 $342,736,454 4.0% $50,777,920 $2,163,622,421 $66,725,177 $6,400,283,598 $117,503,098 1.4% $8,563,906,019 • • "State agencies" is comprised mainly of SC Department of Disabilities & Special Needs (SCDDSN), SC Department of Mental Health (SCDMH), SC Department of Education (SCDOE), and SC Department of Health and Environmental Control (SC DHEC) Medicaid currently accounts for approximately 90% of SCDDSN budget and approximately 25% of SCDMH budget During the public health emergency (PHE), SCDHHS received temporary additional federal match impacting the funding ratio for the above SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 9#10FY 2023-24 Budget Request SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 10#111 2 3 Decision Package # Summary of Budget Requests Decision Package Description General Funds Annualization for FMAP State increase and Medicare increases Maintenance of Effort Annualization Increases in Medicaid Reimbursement and Coverage to Maintain Access to Services Represents annualization related to changes directed by the federal government under the Medicaid program. Includes $67,923,000 resulting from a decrease in the Federal Medical Assistance Percentage (FMAP), $37,000,000 in Medicare premium increases and $12,100,000 in reimbursement methodology changes. Represents the maintenance of effort required to continue the current service and reimbursement levels to Medicaid enrollees. Annualization includes inflationary provider reimbursement pressures, estimated enrollment increases and utilization increases. Reimbursement changes that the agency recommends implementing to maintain healthy outcomes and access to care for South Carolina's Medicaid members. Targeted provider rate increases include the Home and Community Based provider network, Pediatric Dental services, Autism Spectrum Disorder services, DAODAS services, the Optional State Supplementation Program and Anesthesiology services $117,023,000 $42,100,000 $36,787,500 • 90% of general fund recurring request is to maintain current level of services SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 11#12Decision Package # Summary of Budget Requests (cont.) Decision Package Baby Net Program Description General Funds Represents enrollment growth in the Individuals with Disabilities Education Act (IDEA) Part C Program. $10,000,000 5 SC DDSN Appropriation Transfer Permanent general fund appropriation transfer from DDSN for ID/RD waiver service rates ($7 million) and additional waiver slots ($1.9 million) included in the 2022-23 Appropriation Act. 6 $8,900,000 SC DMH Appropriation Transfer Permanent general fund appropriation transfer from DMH for $5,700,000 matching funds for school based mental health counselors Total $220,510,500 • 90% of general fund recurring request is to maintain current level of services SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 12#13Budget Requests Decision Package #1 - Annualization for FMAP State increase and Medicare increases - $117,023,761 General Funds Represents annualization related to changes directed by the federal government under the Medicaid program. Includes $67,923,000 resulting from a decrease in the Federal Medical Assistance Percentage (FMAP), $37,000,000 in Medicare premium increases and $12,100,000 in reimbursement methodology changes. Decrease in FMAP Medicare Premium Increases Reimbursement Methodology Changes Total Annualization Decision Package SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID $67,923,000 $37,000,000 $12,100,000 $117,023,000 13#1472.00% Agency Information: Historical FMAP 71.58% 71.30% 71.22% 71.08% 71.00% 70.44% 70.32% 70.24% 70.430.57%0.64% 70.70%0.630.75% 70.58% 70.07% 69.95% 70.04% 70.00% 69.819.869.89% 69.79% 69.54% 69.34% 69.32% 69.00% 68.00% 67.00% 66.00% 65.00% 64.00% 63.00% 62.00% FY2000 FY2001 FY2002 SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 14 69.53%#15Agency Information: FMAP to Personal Income 83.10% 82.60% FY15 FY14 FMAP... FMAP... 82.10% 81.60% 81.10% 80.60% FY16 FMAP... 80.79% 80.82% SOUTH CAROLINA PER CAPITA INCOME AND FMAP FY17 FMAP... 81.37% FY18 83.03% FMAP... 83.00% 82.86% 82.20% FY19 FMAP... 82.57% 82.36% FY20 FMAP... FY22 FMAP... FY23 FMAR... 80.66% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Percent of SC to US Per Capita Income SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID FY21 FMAP 70.63% 72.00% 71.50% 71.00% 70.50% 81.80% 70.00% 69.50% FY24 FMAP... 69.00% FY2018 FY2019 FY2020 FY2021 15#16Budget Requests (cont.) Decision Package #2 - Maintenance of effort annualization - $42,100,000 General Funds • This package represents the annual amount necessary to keep the program operating in its current configuration. SCDHHS reviews population growth and realignment, utilization of services, provider billing behavior, inflationary provider reimbursement pressures and increases in the value of existing medical contracts held by the agency. Trends among these primary cost drivers comprise the majority of the agency's annual request for maintenance of effort funding. Psychiatric Residential Treatment Facilities (PRTFs) Community Long Term Care (CLTC) Census Growth School Based Mental Health Services General Maintenance of Effort Total SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID $6,200,000 $3,300,000 $3,800,000 $28,800,000 $42,100,000 16#17Budget Requests (cont.) Decision Package #3 - Service and Rate Changes - $36,787,500 General Funds • The agency is continuously evaluating provider rates across its provider network. Through this decision package, SCDHHS is planning to implement targeted provider rate increases. These changes are essential for maintaining healthy outcomes, as well as access to care, for Medicaid beneficiaries. Rate Increases for Home and Community Based Services (HCBS) Providers - Increase HCBS provider rates to support access to care for the approximately 36,450 members in the HCBS waiver programs $30,500,000 Pediatric Dental Services - Increase rates to improve access to quality and improve patient outcomes. This increase will bring South Carolina's Medicaid reimbursement rates closer to the current average of the American Dental Association's Usual, Customary and Reasonable rate and comparable to Georgia and North Carolina Medicaid rates. Autism Spectrum Disorder - Expand access to medically necessary services for Medicaid dependent children with autism by allowing existing services in a group setting $3,100,000 $1,400,000 $387,500 DAODAS - Increase to existing rates as well as addition of new medical related codes. Addition of new codes will allow County Authorities under DAODAS to provide care to their patients who are often medically compromised Community Residential Care Facility - Increase rates by $25 for Medicaid members who are in the Optional State Supplementation Program $900,000 Anesthesiology Services - Increase the Medicaid reimbursement rate closer to comparable states. South Carolina's rates are 6% lower than North Carolina, 1% lower than Georgia and 41% lower than PEBA $500,000 Total $36,787,500 SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 17#18Budget Requests (cont,) • • Decision Package #4 - Babynet Program - $10,000,000 General Funds • SCDHHS operates South Carolina's Individuals with Disabilities Education Act (IDEA) Part C program, commonly referred to as "Babynet". Babynet is a federally required program that ensures services are available for children with developmental delays or disabilities at no costs to families for children from zero to three years of age. Pursuant to Executive Order 2016-20, lead agency responsibilities for Babynet were transitioned from First Steps to SCDHHS effective July 1, 2017. Enrollment growth has continued to outpace the federal funding mechanisms and the program is operating at budget deficit. SCDHHS requested an additional $3,900,000 from the Education Oversight Committee in September. The full deficit facing the Babynet program is approximately $10,000,000 in recurring state funds. Decision Package #5 -SCDDSN Appropriation Transfer - $8,900,000 General Funds SCDHHS and SCDDSN completed the transition of SCDDSN's waiver services to a fee for service (FFS) model on April 1, 2022. This general fund appropriation transfer from SCDDSN is for ID/RD waiver service rates ($7 million) and additional waiver slots ($1.9 million) included in the 2022-23 Appropriation Act and is cost neutral to the State. Decision Package #6 -SCDMH Appropriation Transfer - $5,700,000 General Funds Pursuant to Proviso 33.29 of the 2022-23 Appropriation Act, SCDMH was required to transfer the matching funds for school based mental health counselors to SCDHHS. This decision package will make the transfer of general fund appropriation permanent and is cost neutral to the State. SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 18#19BabyNet Program 5% Reimbursement & Service Coverage 10% MOE General Annualization 19% Distribution of Request Distribution of General Funds Request Other State Agencies - DDSN & DMH 9% Federally Mandated Annualization ■ MOE General Annualization ■ BabyNet Program ■ Other State Agencies - DDSN & DMH SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID Federally Mandated Annualization 57% ■Reimbursement & Service Coverage 19#20Budget Requests: Provisos Proviso 33.23: IDEA Part C Compliance Type of Change Amend Description A technical amendment to update the reporting date Strikes the reference to matching funds required by the Department of Mental Health, as request for permanent transfer made in Decision Package #6 33.29: Mental Health Counselors Delete 33.32: NOLA Program Delete Final report is due on June 30, 33.30: Reimagining Our Destiny Delete SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 2023, for the No One Left Alone, NOLA, community-based program Final report is due on June 30, 2023, for the HBCU's Reimagining our Destiny health study 20#21COVID-19 Expenditures • SCDHHS started receiving a temporary 6.2% FMAP increase under the Families First Coronavirus Response Act - Section 6008(b) by complying with the following: · • Meeting an eligibility "maintenance of effort" requirement Not terminating or reducing coverage for most individuals Continuing these efforts until the end of the month in which the PHE ends By the end of the PHE, enrollment projected to be approximately 283,225 enrollees higher Per federal guidelines, SCDHHS has 12 months to review and disenroll any beneficiaries no longer eligible The enhanced match ends the same quarter as the PHE ends meaning SCDHHS will carry higher enrollment and higher costs after the enhanced federal funding ends SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 21#22Cost Savings • • • • • Agency Cost Savings and General Fund Reduction Analysis: 3% - $54,854,198 For modeling purposes, the agency has identified three components of an overall package that could reduce General Fund expenditures by 3%: • Retract rate increases implemented in the last year effective January or July 2022, excluding the HCBS rate increases initially being supported by American Rescue Plan (ARP) funds - ($7,230,000) Cap Disproportionate Share Hospital (DSH) allotment to the FFY 2020 level - ($10,848,545) Curtail or eliminate optional contracts and grants supported without federal match to entities that provide or administer services for populations not covered by the Medicaid or the Children's Health Insurance Program (CHIP) - ($36,775,663 is necessary to meet the target amount, but the Department could eliminate approximately $55.1 million when provisos are included) Reductions in the first bullet would reverse the most recently funded provider rate increases implemented to support CRCFS and those that offer services for some behavioral health treatment, assessments, and evaluations Reductions in the second bullet would cap DSH allotment to a maximum of the FFY 2020 level The final bullet would cut the general funds appropriated to the Department that are passed through other state agencies and entities for noncovered populations including contracts currently funded through provisos Savings for 1% and 2% would be same cuts as above but at smaller amounts until target is reached SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID 22#23SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES Healthy Connections MEDICAID SOUTH CAROLINA E PARATI DUM SP SPIRO ANIMIS OP HELIOREM LAPSA COCAVIT 1776 OPIBUSQU SPES SPERO 23