News

KFF Publishes Annual Medicaid Budget Survey Report for FY2024 and FY2025

• On October 23, the Kaiser Family Foundation (KFF) released its annual Medicaid budget survey report in collaboration with the Health Management Associates (HMA) and the National Association of Medicaid Directors (NAMD). The report provides information gleaned from surveying Medicaid officials in all 50 states and the District of Columbia on policies in place or implemented in FY2024 as well as policy changes that are planned for FY2025. Key themes from the report included increases in provider and managed care rates, enhancements to benefits and prescription drugs, advancing efforts to address social determinants of health and reduce health disparities, and administrative challenges that states face in operating Medicaid programs. Overall, state Medicaid programs saw enrollment and total spending decrease in FY2024 and expect decreases in FY2025. State Medicaid spending growth increased in FY2024 but is expected to slow in FY2025 (KFF, October 23).
• Provider Rates and Taxes
  • Most states reported increases in hospital FFS rates for both inpatient and outpatient services in FY2024, with additional states reporting planned increases for FY2025.
  • 37 out of 41 responding MCO states reported a state directed payment in place for hospital services and a majority reported that these were expected to increase as a percentage of total Medicaid hospital reimbursement in FY2025.
  • The most common FFS rate increases in FY2024 were for HCBS, outpatient BH clinicians, primary care, dentist, and lay professional (doulas, community health workers, peer support specialists) providers.
  • Within the last two years, 30 states have required a comparative rate analysis of FFS Medicaid payment rates to Medicare for at least one provider type.
• Delivery Systems
  • Nearly all managed care delivery system states use contracting requirements to address SDOH
    • Some states tie the minimum MLR requirements to community reinvestments
    • The top four categories of SDOH contracting requirements were:

1. 1. 1. 1. Screening for BH needs
         2. Screening for social needs
         3. Partnering with community-based organizations (CBOs)
         4. Providing enrollees with social services referrals

• • 25 states have already sought or plan to seek capitation rate adjustments. Only 12 have not and will not seek an adjustment, while 4 are undecided.

• Benefits and Pharmacy
  • 41 states reported that they added new or enhanced benefits in FY2024, with many planning enhancements in FY2025.
  • The most common categories of new or expanded benefits in FY2024 were:
    • Mental health and SUD services
    • Preventive services
    • Pregnancy and postpartum services
    • Dental services
    • Community Health Workers
  • Benefits planned for FY2025 include:
    • Mental health and SUD services
    • Pregnancy and postpartum
    • SDOH/Health-related social needs
  • 31 out of 42 states that contract with managed care organizations (MCOs) have pharmacy benefits generally carved in. 8 states have this benefit carved out. Three states – Kentucky, Mississippi, and Louisiana – have a hybrid model.
    • 21 states reported having a targeted carve out for one or more drugs or drug classes.
    • Half of states reported expanding, implementing, or planning value-based purchasing efforts for prescription drugs in FY2024 or FY2025.
  • 12 states cover GLP-1 drugs for obesity treatment
    • 4 states have coverage in place but do not provide coverage for obesity treatment
    • The states that have authorized this coverage reported several utilization controls such as prior authorization, BMI requirements, and step therapy
    • Cost was a major factor in states’ obesity drug coverage decision
• Administrative Challenges and Future Outlook
  • Many states reported challenges with workforce, system updates and maintenance, budgets, and reaching compliance with federal rules.
  • States largely identified mental health, re-entry services, and SUD as areas of top priority or opportunity.
    • More than a third mentioned LTSS and LTSS workforce challenges
  • Medicaid enrollment declined by 7.5% in FY2024 and is expected to decline by 4.4% in FY2025, primarily due to Medicaid unwinding.
  • Total spending growth in Medicaid was at 5.5% in FY2024 and is expected to decrease to 3.9% in FY2025.
    • State Medicaid officials noted the impact of unwinding on total Medicaid spending as well as several policies and situations that put pressure on costs such as continuous eligibility, total Medicaid eligible population growth, and higher health care needs of remaining enrollees.
  • State Medicaid spending growth increased by 19.2% in FY2024 but is expected to slow to 7.0% in FY2025.

CMS Publishes Modifications to Federal Insurance Exchange Operations for Plan Year 2025, Provides Updates on Eligibility

• On October 24, CMS released updates around how the federal exchange will operate in plan year 2025 and introduced revisions and updates relating to eligibility. The revamp of the healthcare.gov website aims to enhance clarity for enrollees regarding important deadlines and necessary actions for maintaining coverage. The site has been optimized for smartphone use, making it more accessible for users on mobile devices. Additionally, it now offers plans specifically tailored for individuals with chronic conditions and high-cost healthcare needs, featuring lower cost-sharing for certain services. Notably, Deferred Action for Childhood Arrivals (DACA) recipients will have the opportunity to access the exchange for the first time, becoming eligible for advanced premium tax credits and other cost-sharing reductions. Also, payers in both state and federal exchanges are now required to meet new standards regarding wait times for specific services. Insurers must ensure that at least 90% of enrollees can access behavioral health services within 10 business days, primary care appointments within 15 business days, and non-urgent specialty care appointments within 30 business days. Open enrollment for the federal exchange begins on November 1 and will run through January 15, 2025, providing individuals the opportunity to explore and enroll in health plans that best meet their needs (Health Payer Specialist, October 28).

Federal Regulation and Guidance

CMS Releases Respiratory Illness Reporting Guidance

• On October 22, CMS released final guidance for Medicare and Medicaid-participating hospitals to report data for respiratory illnesses. Included within these guidelines is the option to either submit daily data on a weekly basis or provide a “snapshot” that would collect data from one day and weekly totals for new admissions. CMS hopes the “snapshot” reporting model will allow hospitals to both balance the value of this data and mitigate administrative burden. CMS’s goal is to create a streamlined system for data reporting to aid in the tracking of respiratory illnesses and identifying weaknesses within care delivery. Beginning November 1, hospitals must submit weekly reports on not only respiratory illnesses but related data for infections, patient demographics, and hospital bed capacity. CMS will review compliance in 28-day cycles. Hospitals that fail to meet reporting guidelines will receive warning letters and continued failed compliance after 30 days can lead to eventual termination from the Medicare program (Inside Health Policy, October 24).