Numbers Crunched: CHIP Helps Close Health Insurance Gap

Since creation of the Children’s Health Insurance Program (CHIP) in 1997, the number of uninsured children has fallen nationally from 10.7 million (15 percent of all children) to 6.6 million (9 percent of all children), according to a 50-state examination conducted by The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation. The report analyzes spending and enrollment data for CHIP programs in all 50 states plus the District of Columbia, and found wide variation in implementation among the states. It also considered the impact of the Patient Protection and Affordable Care Act (ACA) (P.L 111-148) on CHIP funding.

CHIP

CHIP is jointly funded by federal and state funds. In total, CHIP covers 8.1 million children in the United States. Federal contributions toward CHIP in each state are capped; states have two years to spend the federal funds allotted to them, otherwise the funds can be distributed to other states. States are given flexibility in structuring their programs and spending designated dollars, which allows for wide variation in how states have chosen to extend health insurance coverage to uninsured children. States must offer benefits above a federally-defined minimum, but may impose cost sharing or cap their CHIP enrollment.

States have three options for administering CHIP services: as an expansion to the state’s Medicaid program; separately from the state’s Medicaid program; or a combination of Medicaid expansion and separate CHIP program that cover different populations with separate eligibility criteria. All states have the option to cover specific populations of low-income individuals other than children; 200,000 such individuals are enrolled in CHIP overall.

Report Findings

The report found that CHIP is a relatively small program for states with regard to spending. State-funded CHIP spending amounted to 0.3 percent of revenue from states’ own sources in 2012; in comparison, Medicaid averaged 16 percent. From 2005 to 2012, CHIP spending experienced an inflation-adjusted compound annual growth rate of 5.5 percent, double that of overall national health expenditures; during that time period, enrollment in CHIP grew 32 percent. Overall numbers can be misleading, however. State spending in Arizona decreased by 27.2 percent, in part due to the state’s decision to freeze CHIP enrollment; conversely, New Mexico’s spending increased by 27.2 percent. There is also a wide variety in spending per child, ranging from under $1,000 in five states to over $2,000 in six states and the District of Columbia.

The ACA included CHIP-related provisions that will impact the program. The law funds CHIP through 2015; it will increase the federal match rate by up to 23 percent in October 2015—the federal share of CHIP funding due to this increase will average 93 percent. As a result, the report predicts that state spending on CHIP will be dramatically reduced or possibly eliminated in some states. The ACA also streamlines eligibility determinations for CHIP, and allows states to expand their CHIP programs to include children of low-income state employees. The report believes that because of these changes, the ACA will have a significant effect on CHIP.

Highlight on Georgia: Residents Favor Medicaid Expansion, Still Oppose ACA

Although certain implementation of the Patient Protection and Affordable Care Act (ACA) has been set in motion over the past year, a survey undertaken by the Healthcare Georgia Foundation observed Georgia residents’ division of support for the ACA with 42 percent approving and 46 percent disapproving of it. The survey of 400 adults also found that more than 70 percent of Georgia residents believe that there has been no difference in their access to health care and quality of services over the past year, which saw the full rollout of the ACA. Generally, the Georgia residents’ disapproval of the ACA stemmed from the key provision related to penalties for not purchasing health insurance. Conversely, there was noted support for the ACA’s prohibition of health insurers denying individuals coverage for pre-existing health conditions and the requirement for insurers to cover some preventative care services at no cost to the patient.

Regarding ACA implementation, the state of Georgia made two key policy determinations: (1) no to expansion of Medicaid and (2) no to offering a state marketplace for health insurance. The survey found that 90 percent of Georgia residents believe that Medicaid was important for healthcare in Georgia, with 75 percent finding that Medicaid was very important. Not surprisingly then, 60 percent of surveyed Georgia residents expressed their disapproval of the state’s decision not to expand Medicaid. In contrast, Georgia residents were evenly split on the state’s decision not to  offer a state marketplace for insurance, with 44 percent approving and 44 percent disapproving.

In August, Gallup reported that states with the largest declines in uninsured rates from 2013 to mid-year 2014 expanded Medicaid and established a state-based marketplace exchange or federal partnership. These states reduced their uninsured rates three times more than states that did not implement these mechanisms. For instance, the state with the largest reduction, Arkansas, saw a 10.1 percent decline in its number of uninsured residents, from 22.5 percent to 12.4 percent. In contrast, Georgia saw its uninsured percentage only drop 2.2 percent from 22.4 percent to 20.2 percent.

However, Georgia is unlikely to take up Medicaid expansion in the foreseeable future.  Georgia lawmakers did not expand Medicaid during the 2014 legislative session, instead passing legislation (HB 990) that prohibited Medicaid expansion without prior legislative approval. The governor and other state officials opposed to Medicaid expansion cite added costs to the state, with estimates of more than $2 billion over 10 years.

The Georgia Budget and Policy Institute (GBPI), factoring in new state revenues that the expansion would trigger, puts the figure much lower, at an estimated net expansion cost of about $350 million over the same time frame. In September, the GBPI had argued that almost 50,000 uninsured Georgia residents in a 10-county region could get guaranteed health coverage if the state accepted new federal money to expand Medicaid eligibility. The number of uninsured residents covered would be the third largest number of residents in any of Georgia’s 12 state-designated regions. Without Medicaid expansion, many uninsured Georgia residents with income below the federal poverty level will remain stuck in a coverage gap, according to the GBPI, as their income is above Georgia’s current Medicaid threshold, yet too low to qualify for new federal insurance subsidies. The institute noted that throughout the state, more than 400,000 uninsured adult residents fell into the coverage gap.

Georgia’s decision not to expand Medicaid has played a role in how residents access healthcare services. Forty-two percent of respondents in the Healthcare Georgia Foundation survey reported that they wanted to seek care for a health-related issue, but chose not to for some reason, including cost, distance to doctor’s office or time spent. Cost was cited as a major reason by 68 percent of these respondents. In part, this focus on cost not surprisingly results in the survey finding a majority of residents favoring Medicaid expansion.

 

 

 

 

Kusserow on Compliance: Hospital President Convicted of $158 Million Medicare Fraud

It is not often a hospital CEO is convicted of felony charges. This is the case in Houston, where a federal jury convicted Earnest Gibson III, the former president of Riverside General Hospital (Riverside) of conspiracy to commit health care fraud; conspiracy to commit money laundering; and conspiracy to pay kickbacks, as well as related counts of paying and receiving illegal kickbacks. Other members of the conspiracy included his son, Earnest Gibson IV, the operator of one of Riverside’s satellite locations, and Regina Askew, a group home owner. Robert Crane, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks. Ten defendants have now been convicted in connection with the fraud scheme involving false claims for mental health treatment. The scheme submitted $158 million in claims to Medicare for partial hospitalization program (PHP) services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided. The proceeds from the health care fraud were used to promote the scheme by paying kickbacks to patient recruiters and owners of group homes in exchange for sending Medicare beneficiaries to the hospital’s PHPs.

The Department of Justice noted that the conspiracy “systematically defrauded Medicare, treating mentally ill and disabled Americans like chits to be traded and cashed out to pad their own pockets. For over six years, the Gibsons and their co-conspirators stuck taxpayers with millions in hospital bills, purportedly for intensive psychiatric treatment. But the ‘treatment’ was a sham—some patients just watched television all day, others had dementia and couldn’t understand the therapy they supposedly received, and other patients never even went to the hospital at all”.

Evidence presented at trial indicated the defendants caused the submission of false and fraudulent claims for PHP services to Medicare through the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness. Medicare beneficiaries for whom Riverside and its satellite locations billed Medicare for PHP services did not qualify for or need PHP services. Moreover, they rarely saw a psychiatrist and did not receive intensive psychiatric treatment. In fact, some of the Medicare beneficiaries were suffering from Alzheimer’s and could not actively participate in any treatment even if they actually qualified to receive PHP services. Furthermore, kickbacks were paid to patient recruiters and to owners and operators of group care homes, in exchange for those individuals delivering ineligible Medicare beneficiaries to the hospital’s PHPs. Patient recruiters were also paid in exchange for delivering ineligible Medicare beneficiaries to the specific PHP.

Riverside General Hospital, a psychiatric hospital with 88 beds, is a historic institution in Houston. It was the subject of adverse action last August when they were forced to surrender its substance abuse treatment license. It has been speculated that the very survival of the hospital is questionable.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Lawmakers Launch Warning to HHS Regarding Skyrocketing Generic Drug Prices

A letter urging the federal government to address “staggering increases” in the cost of generic drugs was sent to HHS Secretary Sylvia Burwell by Senator Bernie Sanders (I-Vt.) and Representative Elijah E. Cummings (D-Md.). The letter asks for the assistance of HHS in addressing significant and rapid increases in generic drug prices, which the lawmakers say are negatively affecting Medicare, Medicaid, hospitals, nursing homes, and individuals across the country. The letter warns action must be taken immediately to protect access to historically affordable generic drugs that countless Americans rely on.

Rising Prices

According to the letter, the Healthcare Supply Chain Association (HSCA) recently revealed that certain drugs have undergone enormous increases in prices. For example, a bottle of 100 2mg pills of the asthma drug albuterol sulfate was available October 2013 for $11, whereas, by April 2014, the cost of the same bottle had risen to $434. Over that same period of time, a bottle of 500 100mg tablets of the antibiotic doxycycline hyclate rose from $20 to $1,849. According to the lawmakers’ letter, the HSCA has documented at least eight generic drugs that have seen price increases of more than 400 percent between October 2013 and April 2014.

Impact

To demonstrate the impact of the rising prices, the letter points to 1,500 stories that Senator Sanders and Representative Cummings received from individuals in the two week time period that they spent investigating the issue. Additionally, the letter points to the impact that the price hikes are having on industry. The letter gives the example of a recent report, which indicated that two Walgreens executives were let go for underestimating the cost of generic drug price increases by $1 billion.

Request

In light of the price increases, the letter requests that HHS provide lawmakers with the National Average Drug Acquisition Cost data maintained by CMS, so that the lawmakers can attempt to better understand and address the price increase trends. The letter also inquires as to the steps that HHS is taking to combat the price increases, the authority that HHS has to address the problem, and whether legislative action is required. In addition to writing to HHS, the lawmakers sent letters to 14 different generic drug manufacturers to ask why the prices those manufacturers are charging for generic drugs have increased so significantly in such a brief period of time.