STATE MEDICAID COST SAVING STRATEGIES

To assist our clients in identifying options to better manage their Medicaid dollars, Navigant Consulting is tracking Medicaid initiatives that states across the country have considered, planned or implemented in response to increasing health care costs. This document provides a summary of our monthly research, which includes literature reviews of both local and national press media. Cost containment initiatives are categorized as follows:

• Eligibility Reductions • Pharmacy • Provider Rate Reductions • Provider Tax • Recipient Cost-Sharing • Service Reductions • Fraud and Abuse Detection • Long-Term Care • Service Delivery Systems • State Taxes • Miscellaneous

The table is meant only to provide a brief overview of state initiatives identified through monthly literature reviews. Navigant Consulting has not verified the information with the individual states or conducted research to determine the outcome of each proposed initiative. Navigant Consulting is available to gather additional details on any of these initiatives upon request.

November 2008 Page 1 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

1. Arizona Shortened the eligibility - Arizona shortened the length of the eligibility period for childless adults, Not reported. period for certain requiring redeterminations every six months rather than every year. State populations. officials estimate the change will reduce enrollment by 4,500 enrollees.

December 2008 Page 2 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

2. California Proposing program eligibility - Governor Arnold Schwarzenegger has released a revised SFY 2009 budget that - Changes related to the cuts for public health includes additional cuts to public health programs beyond those originally Medi-Cal income programs proposed in the preliminary budget that the California Legislature approved in threshold and the rule February. reinstatement are estimated to save $31 - The new budget includes $1.04 billion in cuts to the State’s social services million. programs. The following cuts are related to eligibility for public health programs: - Changes related to limiting eligibility for • Reducing the Medi-Cal income eligibility threshold to 61 percent of the immigrants to specific Federal poverty level (FPL) for a two-income household services are estimated • Reinstating a previous rule that a family's primary wage earner could work to save $111 million. no more than 100 hours per month to be eligible for coverage • Limiting eligibility for low-income documented immigrants who are residents (and who have been in the United States for five years or less) to services only related to emergency care, pregnancy, nursing home stays or breast and cervical cancer treatment. - To implement the additional cuts, the California Legislature needs to approve the budget by a two-thirds majority vote. - A report issued by a coalition of State healthcare associations indicates that the cuts could result in an additional one million uninsured residents, bringing the total number of uninsured residents to 7.5 million. - The final revised SFY 2009 budget passed by the Legislature and signed by the Governor in SFY 2008 did not include the changes specified above. The budget does, however, require eligibility for children to be re-determined every six months, rather than every year. - To address a mid-year SFY 2009 budget shortfall of almost $42 million, Gov. Schwarzenegger is proposing to decrease income eligibility levels for parents from 100 percent of FPL to 72 percent of FPL, and redetermine eligibility of qualifying immigrants on a month-to-month basis. - For more information, see the Considering service reductions for selected Medicaid recipient populations item in this matrix. (Last updated December 2008) December 2008 Page 3 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

3. Delaware Delaying implementation of - The Delaware Joint Finance Committee has approved a proposal to temporarily Estimated to save a new Medicaid buy-in delay the implementation of a new Medicaid buy-in program for individuals with $928,600.in SFY 2009. program. disabilities who work. - The implementation was originally scheduled for July 2008. The Joint Finance Committee voted to delay the implementation until April 2009. The Delaware General Assembly is currently considering the proposal as part of the SFY 2009 budget. - The delay is part of an attempt to resolve an anticipated $217 million budget shortfall in SFY 2009. (Last updated May 2008)

4. Florida Considering reducing - The Agency for Health Care Administration (AHCA), as part of a budget process Not reported. Medicaid eligibility. exercise in which Gov. Crist asked state agencies to identify potential spending reductions totaling 10 percent of their budgets, is considering: • Eliminating coverage for 19 and 20 year-olds. • Reducing eligibility for pregnant women from 185 percent of FPL to 150 percent of FPL. An estimated 6,800 women would be affected. - For more information about reductions identified by AHCA, see the Considering reducing provider reimbursement rates and Considering eliminating certain optional services items in this matrix.

December 2008 Page 4 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

5. Maine Proposing to cap the number - Governor Baldacci planned to cap the number of childless adults enrolled in the Estimated to save $38 of childless adults. Medicaid program at 19,600. Gov. Baldacci implemented funding cuts to more million for all funding than two dozen state agencies, including Medicaid, under his own jurisdiction cuts; the cost savings for because the Legislature was not in session. The cuts were intended to address a the proposed enrollment $95 million budget shortfall. fee is provided to the left. ⁻ The Maine Legislature approved, and Governor Baldacci signed, an interim 2008-2009 budget on March 31, 2008 that did not include a provision to cap the number of childless adults. The Department of Health and Human Services has not indicated if it intends to pursue the cap through other means. The budget did include a provision to change the pharmacy benefit for childless adults; for more information, see the Proposing to Change the Pharmacy Benefit for Childless Adults item in this matrix. (Last updated March 2008)

6. Michigan Proposing to eliminate - The Michigan Senate passed legislation to eliminate Medicaid coverage for Not reported Medicaid coverage for 19 individuals who are 19 and 20 years old. The House of Representatives must and 20 year-olds. still consider the measure. - The Michigan Legislature developed a tentative budget agreement in June 2008 that did not include these proposed changes to Medicaid eligibility. (Last updated June 2008)

7. Nevada Proposing to cap Medicaid - Governor Gibbons has proposed to cap Medicaid enrollment in the State. Not reported. enrollment. - The proposal is part of Gov. Gibbon’s proposal to cut 4.5 percent “across the board” for all state programs to address a $440 million budget shortfall. - The Governor and Nevada legislators agreed to a plan on April 9, 2008 that cuts state funding by $349 million through delay of capital improvement projects, expenditure of reserve funds and changes to selected programs. The State reported no operating budgets were cut. The status of the proposal to cap Medicaid enrollment is unclear. (Last updated March 2007)

December 2008 Page 5 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

8. Rhode Island Proposing to reduce or - As part of both his State Fiscal Year (SFY) 2008 supplemental budget proposal Eliminating benefits for eliminate eligibility for and SFY 2009 budget proposal, Governor Carcieri has proposed to eliminate undocumented children is selected populations. benefits for undocumented children, which are paid for with 100 percent state estimated to save $4 funds. million; the eligibility reduction for adults is - Gov. Carcieri has also proposed to reduce Medicaid eligibility for adults from estimated to save $10.9 185 percent of FPL to 133 percent of FPL. million. - The Rhode Island Legislature is currently holding Department hearings regarding the 2009 budget. Gov. Carcieri has not issued any press releases regarding the supplemental 2008 budget or the 2009 budget since the original announcement in February 2008. - The Rhode Island Legislature approved a SFY 2009 budget in June 2008 that includes some Medicaid program cuts. (Last updated June 2008)

December 2008 Page 6 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

9. South Carolina Reducing Medicaid ⁻ As part of an effort to save almost $77 million in state funds, the South Carolina Estimated to save $1.5 eligibility. Department of Health and Human Services is implementing the following cuts million to $2.3 million, related to Medicaid eligibility: excluding the savings associated with the breast • Reducing the amount of time for transitional Medicaid assistance from two and cervical cancer years to one year (estimated to save $6 million). program eligibility, • Revising income eligibility rules to count Social Security Income. which were not reported. • Changing the method for counting recipient income at application determination and redetermination (estimated to save $2.3 million). • Cutting the income disregard for individuals who are aged, blind or disabled from $50 to $20. • Requiring women to be screened through the State’s network of physicians to qualify for the breast and cervical cancer treatment program and increasing the minimum age of eligibility for the program from 18 to 40. ⁻ For more information on South Carolina cost containment initiatives, see the Implementing program administration efficiencies item on this matrix. (Last updated December 2008)

December 2008 Page 7 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

10. Utah Considering cuts to Medicaid ⁻ Utah Department of Health officials are considering one or more of the following Eliminating the optional eligibility. Medicaid eligibility cuts: buy-in program is estimated to save $9.5 • Eliminating an optional Medicaid buy-in program. million; savings from other • Increasing the Medicaid eligibility income and asset limits for pregnant proposed cuts were not women. reported. • Reducing eligibility levels for aged, blind and disabled individuals from 100 percent of the FPL to 75 percent. ⁻ All State agencies are preparing budget cut recommendations at the request of both Governor Jon Huntsman and the Utah Legislature, who have requested across the board budget cuts of 7 percent and 15 percent, respectively. ⁻ For more information on other Utah cost containment initiatives, see the Considering cutting Medicaid prescription dispensing fees and Eliminating Medicaid coverage of certain services for adults items on this matrix. (Last updated December 2008)

11. Virginia Proposing to limit Medicaid ⁻ In his biennial state budget released in December 2008, Virginia Governor Part of approximately $418 enrollment to implement Timothy Kaine has proposed to cap some Medicaid services which will “limit million in Medicaid cuts. state budget cuts. new enrollment growth”. ⁻ For more information on other Virginia cost containment initiatives, see the Considering provider rate cuts to implement state budget cuts item on this matrix. (Last updated December 2008)

December 2008 Page 8 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Eligibility Reductions

12. Washington Considering restrictions to ⁻ As part of a goal to reduce Medicaid spending by 15 percent over the next two Not reported. Medicaid eligibility. years, Washington is considering restricting Medicaid eligibility. ⁻ Doug Porter, the Washington Medicaid director, reported that reducing Medicaid eligibility would be a measure of last resort. ⁻ Washington lawmakers have projected a state budget deficit of $5.7 billion. A State Department of Social and Health Services official confirmed that the agency is considering limiting Medicaid eligibility as one way to comply with the Governor’s request to prepare for “deep” budget cuts, estimated at approximately $500 million in Medicaid cuts. ⁻ For more information, see the Considering reducing physician payments, Considering reducing new Medicaid services and the Cutting state funds to address a budget shortfall items in this matrix. (Last updated December 2008)

December 2008 Page 9 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Pharmacy

13. Indiana Considering a pharmacy - Indiana is considering carving out its pharmacy benefit from its managed care Estimated to save $40 carve-out. delivery system. million. - Currently, managed care organizations (MCOs) provide coverage for pharmacy services, in addition to other medical services, to Medicaid MCO enrollees. Indiana is considering using the State’s purchasing power to purchase prescription drugs and deliver them to managed care enrollees through the fee- for-service delivery system; the remainder of enrollees’ care would continue to be delivered by MCOs. (Last updated December 2008)

14. Louisiana Considering reducing - Governor Bobby Jindal is proposing to reduce the number of prescriptions Estimated to save $7.5 pharmacy limits. Medicaid enrollees can receive in a month from eight to five. Children under million. age 21, pregnant women and individuals living in nursing homes or group homes for the developmentally disabled would be exempt from the limits. (Last updated December 2008)

15. Massachusetts Requiring the purchase of - Governor Patrick has introduced a plan to increase drug utilization management Estimated to save $9.5 more generic drugs for and require the purchase of more generic drugs for the Medicaid program, as million in State funds, and Medicaid recipients. appropriate. an additional $9.5 million in Federal Medicaid funds. (Last updated March 2008)

16. Maine Proposing to change the ⁻ The Maine Legislature approved, and Governor Baldacci signed, an interim The estimated savings for pharmacy benefit for 2008-2009 budget on March 31, 2008 that included a provision to “change” the eliminating prescription childless adults. pharmacy benefit for childless adults. The Department of Health and Human drug coverage for childless Services did not specify the precise changes for the program. adults has ranged from $3.5 million to $7 million ⁻ The Maine Legislature is also considering requiring greater use of generic drugs in State funds. in the Medicaid program. Requiring greater use of (Last updated March 2008) generic drugs is estimated to save $3.5 million.

December 2008 Page 10 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Pharmacy

17. New York Proposing pharmacy cost - Governor David Paterson’s 2009-2010 budget proposes the following pharmacy- Estimated to save $25.5 saving initiatives. related cuts: million; part of a series of cuts that aims to save • Expand the Medicaid preferred drug list $699.7 million in 2009- • Reduce reimbursements for pharmacies by one percent 2010 and $623.4 million in 2010-2011. - For more information on Gov. Paterson’s FY 2010 budget, see the Proposing to cut Medicaid provider reimbursement rates, Considering changes to assessments, Considering budget cuts for Medicaid, and “Rightsizing” state agencies items in this matrix.. (Last updated December 2008)

18. Nevada Considered the purchase of ⁻ The Nevada Legislature rejected legislation to require Medicaid recipients to use Estimated to save $1.1 more generic drugs for generic drugs for psychotic disorders, organ transplant care, diabetes and million per year. Medicaid recipients. HIV/AIDS. (Last updated July 2008)

19. Ohio Requiring pre-authorization ⁻ The Ohio Joint Committee on Agency Rule Review implemented an Estimated to save $6 of certain mental health administrative rule that requires pre-authorization for seven drugs used to treat million annually. drugs. bipolar disorder, schizophrenia and other mental health conditions. (Last updated August 2008)

December 2008 Page 11 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Pharmacy

20. Pennsylvania Proposed to administer in- ⁻ Pennsylvania Governor Ed Rendell proposed to shift the administration of the Estimated to save house prescription drug prescription drug benefit by Medicaid managed care plans to the Department of approximately $95 million coverage for Medicaid Public Welfare. annually. managed care recipients. ⁻ Through the program, the Commonwealth expected to: • Enhance services • Simplify requirements for medical providers • Establish a single statewide list of preferred drugs and a list of procedures to submit claims and request prior authorization of certain medications • Allow managed care plans to have "real-time" access to the Commonwealth’s pharmacy claims data and use the data to validate that patients receive the most appropriate medications for their conditions ⁻ The Commonwealth currently administers pharmacy benefits for 800,000 other Medicaid recipients in rural areas. Gov. Rendell’s plan proposes to administer benefits in urban areas where recipients are enrolled in managed care programs. Drug costs in these urban areas are $800 million annually. Currently, seven managed care organizations provide drugs to these recipients. ⁻ The Commonwealth anticipated achieving a majority of the plan’s cost savings by negotiating larger rebates from drug manufacturers. An actuarial study commissioned by Gov. Rendell’s office found that the Commonwealth could receive a rebate of $20.36 per prescription, whereas the managed care companies would receive $2.93. ⁻ The Commonwealth reports that 20 other states have implemented a change similar to the proposed program for some or all of Medicaid drugs. (Continued on next page)

December 2008 Page 12 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Pharmacy

Pennsylvania ⁻ Managed care officials are opposed to the proposal and claim that it would (Continued) decrease the options for recipients. Republican lawmakers in the Commonwealth have introduced legislation to prevent the Department of Public Welfare from administering the pharmacy benefits program for recipients enrolled in the managed care program. ⁻ The Pennsylvania Legislature did not approve the proposal. (Last updated July 2008)

21. Pennsylvania Requiring prior authorization - The Pennsylvania Department of Public Welfare added early refills of Estimate to save for early refills of prescription drugs to the Commonwealth’s list of Medicaid services requiring approximately $2.5 prescription drugs. prior authorization. million. (Last updated August 2008)

22. South Carolina Proposing to reduce a ⁻ The South Carolina Department of Health and Human Services is proposing to Part of $61 million in pharmacy subsidy program. reduce a pharmacy subsidy program for elderly Medicaid recipients. The Department cuts. Department is proposing to cut the subsidy from 95 percent to 10 percent of the prescription price. ⁻ The change is expected to impact 35,000 elderly Medicaid recipients for whom the program currently pays 95 percent of prescription drug costs. Recipients could now pay as much as $1,400 for prescription drugs. ⁻ The Department’s proposed cuts are subject to change, based on opportunities for federal Medicaid assistance. ⁻ For more information, see the Proposing to reduce selected services item on this matrix. (Last updated December 2008)

23. South Carolina Requiring the purchase of - Governor Sanford has proposed a plan to require the purchase of more generic Estimated to save more generic drugs for drugs for the Medicaid program. approximately $16 million. Medicaid recipients. (Last updated February 2008)

December 2008 Page 13 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Pharmacy

24. South Carolina Implementing pharmacy - To implement a three percent cut in agency funding, the South Carolina Estimated to save $3 limits. Department of Health and Human Services is reducing the number of pills that million in State funds. Medicaid recipients receive in their monthly prescriptions from 34 to 31, and In total, the entire agency also reducing the maximum number of prescriptions recipients may receive. three percent reduction is - For additional changes related to the three percent agency funding reduction, see estimated to save $28.5 Eliminating teen pregnancy prevention services and Reducing reimbursement million in State funds and rates items in this matrix. an additional $61.5 million in Federal matching funds. (Last updated September 2008)

25. Utah Considering cutting ⁻ Utah Department of Health officials are considering cutting the pharmacist Not reported. Medicaid prescription dispensing fee for Medicaid prescriptions. dispensing fees. ⁻ All State agencies are preparing budget cut recommendations at the request of both Governor Jon Huntsman and the Utah Legislature, who have requested across the board budget cuts of seven percent and 15 percent, respectively. ⁻ For more information on other Utah cost containment initiatives, see the Considering cuts to Medicaid eligibility and Eliminating Medicaid coverage of certain services for adults items on this matrix. (Last updated December 2008)

December 2008 Page 14 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

26. California Reduced Medicaid provider - Governor Schwarzenegger proposed a 10 percent reduction in physician The 10 percent reduction reimbursement rates. reimbursement rates to help address a budget shortfall projected to be more than in reimbursement rates is

$14.5 billion by the end of SFY 2009. The Legislature approved this reduction estimated to save $544 in February as part of efforts to address the SFY 2008 budget. In August 2008, a million in SFY 2008. U.S. District Judge issued a preliminary injunction temporarily reversing the 10 percent cut. The injunction is expected to be retroactive to July 2008. • San Francisco Mayor Gavin Newsom has threatened to sue the State over the 10 percent reduction in physician reimbursement rates; he believes that, if the rates are reduced, physicians will stop treating Medicaid patients and those patients will seek care in hospital emergency departments. • The California Medical Association has filed a lawsuit in the Ninth U.S. Circuit Court to block the reimbursement rate cuts, which are scheduled to take effect July 1, 2008. The lawsuit further alleges that the Department of Health Care Services did not conduct annual audits to determine if the Medicaid program meets the Federal requirement for recipients to have access to care. In early July, the court ruled to block the rate reductions for one month, but based on the State’s appeal, the rates were reinstated. • Physicians and dentists filed a separate lawsuit regarding the rate reductions in Los Angeles, where the judge ruled the case must instead be resolved in the state Legislature or through a Federal court. The providers plan to file an emergency appeal in Federal court. - The SFY 2009 finalized in September 2008 included the 10 percent reduction in Medicaid provider payments, which will be in effect until March 1, 2009, after which, smaller reductions will continue. - To address a mid-year budget shortfall of almost $42 billion, Gov. Schwarzenegger is proposing to reduce reimbursement for public hospitals. (Last updated December 2008)

December 2008 Page 15 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

27. Florida Reducing rates for Medicaid - Florida legislators are considering a bill that, among other changes, proposes to - The original SFY providers. reduce reimbursement rates for hospitals, nursing homes and managed care 2008 budget is plans. For more information, see the Florida Considering increasing counties’ estimated to save financial responsibility… item under the Miscellaneous section of this matrix. approximately $380 million. - The Florida Legislature approved a budget with $164.5 million in cuts to nursing home providers, and $223.8 million to other providers, effective January 2008. - The SFY 2009 budget includes - The Florida Senate approved a bill to eliminate cost of living increases for approximately $508 hospitals, nursing homes, county health departments and ICF/MRs for SFY million in Medicaid 2009. provider rate cuts. - The Florida House of Representatives considered reducing Medicaid - The elimination of reimbursement for county health departments by 39 percent and hospital and cost of living increases nursing home reimbursement by 10 percent in SFY 2009. In exchange for the for providers is rate reductions, nursing homes would have been relieved of the existing statutory estimated to save $340 requirement to provide at least 2.9 hours of nursing care daily to each resident. million in State and - The Florida Legislature passed a SFY 2009 budget that includes the following Federal funds. cuts to Medicaid provider rates: - The reduction in • Nursing home reimbursement reduced 6.5 percent ($164 million). pharmacy reimbursement • Inpatient and outpatient hospital reimbursement cut more than 7.3 percent identified by AHCA ($190 million) is expected to save • HMO reimbursement rates reduced by 6.5 percent ($145 million). $43 million. • County health department Medicaid reimbursement rates cut by 6.5 percent (9.3 million). - In response to Gov. Crist’s request that state agencies identify potential spending reductions totaling 10 percent of their budgets, AHCA is considering reducing additional reductions in provider reimbursement rates including rates for hospitals, nursing homes, clinics and pharmacies. For more information about reductions identified by AHCA, see the Considering reducing Medicaid eligibility and Considering eliminating certain optional services items in this matrix. (Last updated December 2008)

December 2008 Page 16 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

28. Georgia Considering delaying ⁻ The Georgia Department of Community Health plans to delay providing a Not reported. provider reimbursement Medicaid rate increase to healthcare providers until July 2010. increases. (Last updated October 2008)

29. Idaho Reducing Medicaid provider - The Idaho Department of Public Welfare is reducing Medicaid provider The provider rate rates. reimbursement rates as part of implementation of a four percent spending reductions are estimated to reduction, ordered by Gov. Butch Otter for the current fiscal year. The save $35.2 million. Department reports provider rate reductions will achieve almost 90 percent of the required reduction. - Gov. Otter indicated agencies should be prepared to continue this reduction as well as face an additional six percent cut in SFY 2010. - Although the reduction is effective on January 1, 2009, the Legislature will review the changes when it reconvenes in mid-January and may accept or reject them. - For more information, see the Limiting therapy and rehabilitation services item in this matrix. (Last updated December 2008)

30. Indiana Considering Medicaid ⁻ Indiana is considering “holding back” five percent of Medicaid provider Holding back provider provider rate changes and reimbursement rates as part of an effort to reduce spending. Although the State rates is estimated to save reductions. does not propose to permanently reduce reimbursement rates, providers would $100 million. not receive up to five percent of their scheduled payments in FY 2010. The The nursing home rate Family and Social Services Administration indicated the holdback would be restructuring is expected to employed only as a last resort. save $15 million. ⁻ Indiana is also considering structuring nursing home reimbursement rates based on quality. Highly ranked nursing homes will receive rate increases and poorly performing homes will face decreases. (Last updated December 2008)

December 2008 Page 17 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

31. Illinois Considering Medicaid ⁻ Illinois Governor Rod Blagojevich has proposed Medicaid provider More than $600 million in provider rate reductions. reimbursement reductions as a means of cutting $600 million from the Illinois cuts intended to address a Medicaid program in SFY 2009. $2 billion anticipated budget shortfall for SFY ⁻ The Illinois Legislature is considering ways to achieve the $600 million in cuts 2009. to healthcare programs, and if Medicaid provider reimbursement rates should be cut. (Last updated June 2008)

December 2008 Page 18 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

32. Louisiana Considering Medicaid ⁻ The Louisiana Department of Health and Hospitals has proposed the following The initial proposals provider rate reductions. Medicaid provider rate reductions: were estimated to save $183 million, $52 million • Hospital inpatient services – $38 million of which are State general • Nursing homes – $38.6 million funds. • Pharmaceutical products and services – $38.1 million Estimates for subsequent proposals were not • Community-based services – $19.8 million reported. • Outpatient services at hospitals – $11.4 million • Community-based services for the elderly and disabled adults – $2.4 million • Hospice services – $2.2 million • Emergency ambulance transportation – $1.7 million • Home health services – $1.6 million ⁻ State lawmakers asked all agencies to cut their operating budgets by five percent to reduce the SFY 2009 operating budget. ⁻ The Louisiana Legislature approved a SFY 2009 budget in June 2008 that is more than $50 million short of Gov. Jindal’s original budget request. By September, the projected shortfall rose to $81 million. ⁻ In October 2008, the Secretary announced that, due to lower enrollee utilization of services as a result of Hurricanes Gustav and Ike, the Medicaid program had a $100 million surplus, rather than a shortfall. However, in December, Gov. Jindal reported that, due to a mid-year budget shortfall, reductions would be necessary. Gov. Jindal proposed to: • Reduce hospital reimbursement by 3.5 percent. • Eliminate nursing home reimbursement for empty beds. ⁻ The Joint Budget Committee must approve the reductions before they can be implemented. (Last updated December 2008)

December 2008 Page 19 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

33. Maine Reducing certain long-term ⁻ Maine reduced its “bed-hold” reimbursement rate to assisted living facilities, Not reported. care reimbursement rates. which is paid to hold open the bed when a facility resident is temporarily admitted to another facility (e.g., hospital or nursing home). The State reduced the rate from $95 per day to $25 per day, and limited coverage to 30 days per calendar year. (Last updated December 2008)

34. Maine Proposing to reduce ⁻ Maine’s Commissioner of Health and Human Services announced that the State Originally estimated to reimbursement rates. will release a plan to reduce reimbursement rates for selected Medicaid save $141 million. providers. The reduction in mental ⁻ The Maine Legislature approved, and Governor Baldacci signed, an interim health and substance abuse 2008-2009 budget on March 31, 2008 that included a cut in reimbursement rates services is estimated to for some Medicaid outpatient mental health and substance abuse services. The save $1 million annually. Department of Health and Human Services’ has indicated that the rates were The proposed hospital “aligned,” but has not quantified the reduction in the selected rates. reimbursement rate ⁻ As part of his supplemental budget proposal, Gov. Baldacci is proposing to reduction is expected to reduce hospital reimbursement rates. save $33 million. (Last updated March 2008)

35. Maine Proposing to reduce ⁻ Maine is considering reducing Medicaid reimbursement to hospital-affiliated Estimated to save $7 reimbursement for certain physicians. million. physicians. ⁻ Reductions would align reimbursement for hospital-affiliated physicians with that for physicians in private practice. ⁻ The Maine Legislature approved, and Governor Baldacci signed, an interim 2008-2009 budget on March 31, 2008 that did not include a reduction in physician reimbursement rates. The Department of Health and Human Services’ has not indicated if it intends to pursue future rate reductions. (Last updated March 2008)

December 2008 Page 20 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

36. Maryland Implementing selected ⁻ Maryland considered several provider rate reductions to: The proposed nursing provider payment reductions. home funding reduction • Medicaid provider reimbursement. was estimated to save $4.3 • Nursing home funding ― The State proposed a 1.2 percent reduction. million, and the change to the hospital payment • Hospital payments ― The State proposed to shorten the period of time for methodology was which the State will reimburse hospitals for Medicaid recipients. estimated to save $17.2 million. ⁻ In October 2008, the Maryland Board of Public Works approved mid-year reductions that included: Estimates for the reductions approved in • Reductions in payments to nursing homes equal to approximately $6 per October were not reported. day. • Reductions in a planned provider rate increase for services for people with disabilities from 2.7 percent to 2.0 percent. • Partial rollbacks in other planned provider rate increases. (Last updated October 2008)

37. Massachusetts Considering restructuring - Governor Patrick included a “Value and Cost-Based Purchasing” initiative in his Estimated to save $105 reimbursement rates for SFY 2009 budget proposal. million in State funds, and Medicaid physicians and an additional $98 million - The initiative included “fair and efficient” reimbursement for providers, hospitals. in Federal funds. eliminating special earmarks and quality improvement measures. (Last updated March 2008)

38. Massachusetts Considering reducing - To implement a $293 million reduction in the Medicaid budget, Massachusetts is Not reported. reimbursement rates to considering reducing reimbursement rates to Medicaid providers and tightening providers. enforcement of eligibility rules. (Last updated October 2008)

December 2008 Page 21 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

39. Nevada Canceling a planned provider - The Nevada Division of Health Care Financing and Policy is canceling a planned Estimated to save $17.2 rate increase. rate increase for Medicaid physicians. million originally budgeted for provider rate increases. - The Division is implementing this change to address a Medicaid budget shortfall in Fiscal Year 2008 budget due to an unbudgeted increase in the number of Medicaid recipients. The Fiscal Year 2008 budget included funds for approximately 163,000 recipients, but 187,000 are enrolled in the program to date. (Last updated July 2008)

40. Nevada Reducing hospital and - The Nevada Division of Health Care Financing is proposing to reduce hospital The initial reduction in obstetrical services reimbursement by five percent in the upcoming year. hospital reimbursement reimbursement. was estimated to save $5.8 - If passed, the reduction would be the second consecutive reimbursement cut. million in State funds. The Division already implemented a five percent hospital reimbursement cut in Hospitals estimate a total the current year to comply with a 3.3 percent across-the-board spending loss of revenue (including reduction ordered by Gov. Jim Gibbons. Federal funds) of $19 - The Division will also roll back a 28 percent increase for obstetric services, million. which had been added in 2002, and is further considering eliminating payments for graduate medical education. - The rate cuts for inpatient hospital services are expected to take effect in January 2009. - Charles Duarte, Nevada Health Financing and Policy Administrator, said that the State is considering decreasing rates by an additional 14 percent in 2010. (Last updated November 2008)

December 2008 Page 22 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

41. New Reducing rates for nursing ⁻ The New Hampshire Department of Health and Human Services plans to Estimated to save $3.7 Hampshire home providers. decrease the reimbursement rates for nursing home providers by, on average, million in State, County five percent per recipient, per day. and Federal funds. ⁻ The Department reported three main reasons for the reductions: • Patient contributions for nursing home care have fallen. • Claims related to services provided in the prior year were paid out of the current year’s budget at a higher rate than expected due to a billing error. • Rates paid during the first part of the fiscal year were too high, in some cases. State law requires the rates to be recalculated every six months. ⁻ The new reimbursement rates were effective February 2008. (Last updated March 2008)

42. New Reduced hospital ⁻ Governor Lynch proposed, and the Legislature passed, emergency state budget Estimated to save $7 Hampshire reimbursement rates. cuts that include a reduction in Medicaid hospital reimbursement. million in state funds and an additional $7 million in ⁻ The State has asked hospitals to develop a plan to implement the reductions. Federal matching funds. (Last updated February 2008)

43. New Proposing to cut hospital ⁻ New Hampshire lawmakers have proposed cutting Medicaid hospital provider Estimated to save $30 Hampshire provider rates. rates to address the State’s 2008-2009 $250 million budget shortfall. million. ⁻ The proposal exempts 13 critical access hospitals with fewer than 25 beds from the cuts. (Last updated November 2008)

December 2008 Page 23 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

44. New Jersey Proposing to reduce hospital ⁻ Governor Corzine’s proposed budget for SFY 2009 includes a 14 percent cut in Not reported; initiative is reimbursement rates. hospital funding. part of a plan to cut $2.7 million from the State ⁻ The New Jersey Hospital Association estimates the rate cut could result in 26 budget. hospitals losing all state funding, and 37 hospitals receiving reduced funding. ⁻ The New Jersey Legislature approved, and Gov. Corzine signed, a SFY 2009 budget that includes the reduction to hospital reimbursement rates. (Last updated June 2008)

December 2008 Page 24 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

45. New York Denying Medicaid payments ⁻ New York has instituted a new policy to deny payments for medical errors and Not reported. for medical errors. care related to avoidable patient complications, defined in the Medicare program as “never events.” ⁻ The State has identified 14 never events for Medicaid reimbursement: • Surgery performed on the wrong body part • Surgery performed on the wrong patient • Wrong surgical procedure on a patient • Foreign object inadvertently left in patient after surgery • Medication error • Air embolism • Blood incompatibility • Patient disability from electric shock • Patient disability from use of contaminated drugs • Patient disability from wrong function of a device • Incidents whereby a line designated for oxygen intended for patient is wrong item or contaminated • Patient disability from burns • Patient disability from use of restraints or bedrails • Patient disability from failure to identify and treat hyperbilirubinemia (bilirubin in blood) in newborns (Continued on next page)

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Provider Rate Reductions

New York Denying Medicaid payments ⁻ The new policy is effective October 2008. Participating Medicaid hospitals will for medical errors. be required to report if any of the conditions related to the 14 never events were (Continued) present on admission to the hospital or if they occurred after admission. Medicaid will use that information to determine if the program will reimburse the provider for the cost of treating the recipient’s condition. ⁻ Medicare previously announced plans to stop paying for care that involved never events in October 2007. (Last updated June 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

46. New York Proposing to reduce ⁻ New York has considered several proposals to reduce provider reimbursement The initial budgets passed reimbursement rates. rates. by the Legislature included total estimated saving of ⁻ Former Governor Spitzer had proposed reductions in nursing home rates, a $127 million in 2008-2009 “rebase” of the hospital reimbursement formula and a reduction in annual and $347 million in 2009- inflation increases to providers. 2010. ⁻ The New York legislature and Governor Paterson reached a budget deal that The reductions associated included a reduction in Medicaid/healthcare expenditures of $127 million in with Gov. Paterson’s 2008-2009 and $347 million in 2009-2010. revised budget are part of a series of cuts that ⁻ Specific reductions for 2008-2009 included: aim to save $699.7 • Revision of Medicaid trend factor methodologies ($18 million). million in 2009-2010 and $623.4 million in 2010- • Purchasing diabetic supply at a discount ($1.9 million). 2011. • Reducing the Medicaid Managed Care and Family Health Plus state premiums paid to insurers by 1.45 percent and the premiums paid to managed long term care insurers by 1.0 percent ($41 million). • Eliminating the cost of living adjustment for early intervention providers who deliver non-Medicaid services ($16.7 million). • Eliminating supplemental grants to public nursing homes that are no longer necessary because of increased Federal and state reimbursements from alternative funding sources ($25 million).

(Continued)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

47. New York - Governor David Paterson’s revised 2009-2010 budget proposes the following (Continued) cuts to Medicaid provider rates: • Eliminating inflation trend factor for provider rates • Cut hospital and clinic reimbursement by $590 million • Cut nursing home reimbursement by $256 million - For more information on Gov. Paterson’s proposed FY 2010 budget, see. the Considering changes to assessments, Considering budget cuts for Medicaid, “Rightsizing” state agencies, and Proposing pharmacy cost saving initiatives items in this matrix. (Last updated December 2008)

48. New York Proposing to cut nursing ⁻ Governor David Paterson is considering a plan to reduce nursing home funding Not reported. home rates. by 10 percent over a 16-month period. (Last updated November 2008)

49. North Carolina Proposing to reduce the ⁻ North Carolina Governor Mike Easley has introduced a budget that proposes Estimated to save $42 amount of scheduled $400 million in cuts to the state budget, including a reduction to the amount of million. provider rate increases. scheduled Medicaid provider rate increases. ⁻ The North Carolina House and Senate have both approved budget proposals with different plans for reducing the Medicaid provider inflationary increases. No final budget has been reported. (Last updated June 2008)

50. Ohio Freezing rates for hospital ⁻ Ohio has imposed a freeze on Medicaid reimbursement rates for hospital Estimated to save $55 providers. providers from January 1, 2008 through December 31, 2009. million. ⁻ The freeze will indefinitely stop a planned 3.2 percent rate increase originally scheduled to take effect on January 1, 2008. (Last updated March 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

51. Pennsylvania Proposing a freeze on ⁻ As part of his proposed SFY 2008-2009 budget, Governor Rendell proposed to Not reported. nursing home reimbursement freeze Medicaid reimbursement rates for nursing homes for one year. Nursing rates. homes are expected to face reductions of more than $1 million per facility, per year. The budget ultimately provided a one percent increase in the reimbursement rates. ⁻ Gov. Rendell proposes to direct the money to other eldercare programs in the Commonwealth. ⁻ Pennsylvania is ranked third in the United States in terms of the number of residents over the age of 85. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

52. Rhode Island Considering payment ⁻ The Department of Human Services has proposed to reduce the reimbursement Delaying the inflationary reductions for hospitals and rates for hospitals and nursing home providers. increase originally nursing homes. scheduled for the nursing ⁻ The Department proposed the following options for reducing reimbursement: home rates is estimated to • Reducing nursing home reimbursement rates for 26 of the 87 nursing homes save $1.9 million in State in the State. Per diem rates would be reduced by approximately $15 per day. funds and $2.1 million in Federal matching funds; • Cutting $16.8 million from community hospitals by raising licensing fees lowering the nursing home and restructuring reimbursement structures. labor reimbursement is estimated to save $2.4 • Eliminating cost-of-living adjustments for 86 nursing homes in an effort to million in State funds. “induce approximately four of the smaller nursing homes ... to exit the Medicaid program.” ⁻ Governor Carcieri released a spending plan that includes the following proposed cuts: • Delaying the inflationary increase originally scheduled for the nursing home rates. • Lowering the reimbursement rate for costs related to nursing home labor. ⁻ For other Department of Human Services spending recommendations, see the Rhode Island Considering imposing co-payments item in the Recipient Cost Sharing section of this matrix. ⁻ The Rhode Island Legislature approved a SFY 2009 budget in June 2008 that includes some Medicaid program cuts. (Last updated June 2008)

53. South Carolina Denying Medicaid payments ⁻ South Carolina’s Medicaid program plans to implement a policy to deny Not reported for medical errors. payment to providers for medical errors. (Last updated August 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

54. South Carolina Proposing to reduce ⁻ To implement a three percent cut in agency funding, the South Carolina Estimated to save $4.8 reimbursement rates. Department of Health and Human Services proposed to reduce its Medicaid million in State funds. physician reimbursement rates. Reimbursement for standard physician services In total, the entire agency will be reduced from 86 percent of Medicare payments to 84 percent; pediatric three percent reduction is subspecialty payments will be reduced from 118 percent of Medicare payments estimated to save $28.5 to 98 percent. million in State funds and ⁻ The Legislature prohibited the Department from implementing the proposed an additional $61.5 million provider reimbursement rate reductions; Gov. Sanford is deciding whether to in Federal matching funds. veto that prohibition. ⁻ For additional changes related to the three percent agency funding reduction, see Eliminating teen pregnancy prevention services and Implementing pharmacy limits items in this matrix. (Last updated October 2008)

55. Tennessee Considering reducing - TennCare’s program commissioner, Darin Gordon, is considering recommending Not reported. provider rates. Medicaid provider rate cuts if the State runs a budget shortfall in 2009-2010. - Commissioner Gordon has predicted a Medicaid budget shortfall because he estimates that 30,000 more individuals could enroll in Medicaid as the economy worsens. The 2009-2010 TennCare budget has not increased from the budget in 2008-2009. - Governor Phil Bredesen is considering asking the Tennessee Legislature for more time to present his budget proposal, until the State has more information about the timing and amount of a federal relief package. Gov. Bredesen said that federal funding could reduce his planned 15 percent cuts by as much as half. - For more information, see the Considering restricting provider visits and Proposing to reduce provider payments for durable medical equipment items in this matrix. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

56. Tennessee Proposing to reduce provider ⁻ TennCare, the Tennessee Medicaid agency, is considering reducing provider The overall TennCare payments for durable payments for durable medical equipment in an effort to implement a $44 million budget reduction totaled medical equipment. budget reduction. $44 million. ⁻ Governor Phil Bredesen is considering asking the Tennessee Legislature for more time to present his budget proposal, until the state has more information about the timing and amount of a federal relief package. Gov. Bredesen said that federal funding could reduce his planned 15 percent cuts by as much as half. ⁻ For more information, see the Considering reducing provider rates and Considering restricting provider visits items in this matrix. (Last updated December 2008)

57. Virginia Considering provider rate - Virginia legislators are considering Medicaid provider reimbursement rate cuts Not reported. cuts to implement state to address a $2.5 billion budget shortfall. budget cuts. - In his biennial state budget released in December 2008, Virginia Governor Timothy Kaine proposed to freeze or reduce Medicaid provider rates as a means of cutting the Medicaid budget. - For more information on other Virginia cost containment initiatives in the budget, see the Proposing to limit Medicaid enrollment to implement state budget cuts item in this matrix. (Last updated November 2008)

58. Virginia Considered freezing hospital ⁻ Governor Kaine has proposed to freeze Medicaid reimbursement rates for The hospital rate freeze and nursing home rates. hospitals and nursing homes by eliminating the standard annual inflation was estimated to save $51 increase. million; the nursing home rate freeze was estimated ⁻ The Virginia House and Senate have both approved different spending plans, and to save $25 million. are now working to reconcile the two budgets. The status of the rate freeze has not been reported. (Last updated June 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Rate Reductions

59. Washington Considering reducing ⁻ Governor Chris Gregoire's proposed budget for 2009-2011 proposes the Not reported. Medicaid provider payments. following provider rate cuts: • Reduce hospital reimbursement rates by four percent • Reduce nursing home reimbursement rates by five percent. ⁻ The cuts are part of the State’s goal to reduce Medicaid spending by 15 percent over the next two years. The State is also considering rolling back last year’s 48 percent increase in pediatrician payments. ⁻ Washington lawmakers have projected a state budget deficit of $5.7 billion. The Governor requested approximately $500 million in Medicaid cuts. ⁻ For more information, see the Considering restrictions to Medicaid eligibility, Considering reducing new Medicaid services and the Cutting state funds to address a budget shortfall items in this matrix. (Last updated December 2008)

December 2008 Page 33 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Provider Tax

60. Delaware Proposing a hospital provider - The Delaware Legislature is considering a proposal to implement a provider tax Expected to generate $30 tax to offset cuts in State on hospital revenue. million in Federal general funds. matching funds; - The State expects for providers to recoup the hospital tax money through lawmakers plan to reduce increased Medicaid reimbursement rates. expenditures of State - Legislators could not agree to the terms for the provider tax, so the State’s general funds by $15 legislative budget writing committee instead passed a provision that requires the million. Budget Office, the Controller General and the Department Of Health and Social Services to report on the feasibility of a provider tax by December 2008. (Last updated June 2008)

61. Georgia Considering a hospital - Gov. Sonny Perdue is considering implementing a fee on hospital revenues. The Not reported. provider tax. State would use money generated from the fee for Medicaid costs and the State’s trauma network. (Last updated December 2008)

62. Illinois Reauthorized a hospital - The Illinois Legislature reauthorized a hospital provider tax for SFY 2009. Expected to generate $640 provider tax. million annually in Federal - The amount of the provider tax is estimated to reimburse hospitals for almost 90 matching funds for five percent for their Medicaid costs. This is an increase compared to the 64 percent years. reimbursement that hospitals received before the tax was first enacted in 2004. (Last updated June 2008)

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No. State Initiative Highlights Actual or Expected Savings

Provider Tax

63. Mississippi Proposed to tax hospital - Governor Barbour proposed including a tax on Medicaid private hospital Gov. Barbour’s proposal is providers. providers in his upcoming budget proposal. Public hospitals are already subject estimated to save $45 to the tax. Medicaid officials believe they can implement the tax without million in SFY 2008 and Legislative authority. Hospitals have challenged the legality of the proposed tax $90 million in SFY 2009. plan, but a County judge ruled the court has no jurisdiction to decide the legality The proposal under of the proposed tax until the plan receives approval from CMS. consideration by the - The Mississippi Medicaid program is facing a $92 million deficit for SFY 2008, Legislature would generate and a projected deficit of $168 million for SFY 2009. $90 million in State funds, which would be matched - The Mississippi Legislature is also considering a hospital assessment, which by an estimated $270 would be used to draw down additional Federal Medicaid matching monies. million in Federal Hospitals that pay the assessment would receive higher Medicaid reimbursement Medicaid funds. rates. - The Mississippi House passed a budget that did not include the hospital tax. The Mississippi Senate considered the budget bill (HB17; SB2013). Gov. Barbour has pledged to veto a budget bill if passed without inclusion of a hospital tax. Gov. Barbour also said that, if the Legislature does not approve the hospital tax, he will cut the Medicaid budget for hospital providers by “millions of dollars.” Gov. Barbour wants to eliminate $365 million from the Medicaid program, starting in July 2008. - Both chambers of the Legislature were called into special session to pass a budget, however, the Mississippi Legislature did not agree on a final budget, so the tax was reconsidered in July 2008 when the Legislature reconvened. - The Mississippi Legislature did not approve the provider tax. A state court considered the plan for a provider tax and ruled that hospital taxes or fees paid to hospitals could only be set by the state Legislature, and not the governor. (Continued on next page)

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No. State Initiative Highlights Actual or Expected Savings

Provider Tax

64. Mississippi - Because the hospital tax was not approved, Gov. Barbour introduced a plan to (Continued) cut the Medicaid program by $375 million, effective July 1, 2008. In response, the healthcare providers requested a legislative hearing regarding the cuts, and Mississippi Medicaid Director said that the Department will not implement the proposed cuts. - The Legislature is scheduled to reconvene in August 2008 for a special session. - In September, Gov. Barbour reported that the State would not need to cut the Medicaid program or implement a hospital tax, because it would receive $92 million in unexpected Federal Medicaid payments as a result of a payment error in 2003. The additional Federal funds are expected to eliminate the current fiscal year’s Medicaid shortfall. - Gov. Barbour reportedly will again propose a hospital tax as part of his SFY 2010 budget proposal. (Last updated December 2008)

65. Wisconsin Proposing to tax hospital - As part of budget negotiations for SFY 2009, the Wisconsin Legislature is Originally estimated to providers. considering a 0.7 percent tax on hospital revenue. save $400 million over two years, matched with over - The Senate passed the tax in March 2008; the measure must still be considered $450 million in Federal by the Assembly. Medicaid funds. - The provider tax did not pass in the 2008 session, however, Gov. Doyle plans to The new proposal is introduce new legislation for a provider tax in the 2009 session. estimated to generate $200 (Last updated November 2008) million annually.

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No. State Initiative Highlights Actual or Expected Savings

Recipient Cost-Sharing

66. Maine Approving plans to - The Maine Legislature approved, and Governor Baldacci signed, an interim The enrollment fee is implement cost sharing. 2008-2009 budget on March 31, 2008 that included two provisions related to expected to save $48,000. cost sharing: The premium for the Katie Beckett program is • Requiring adult Medicaid recipients with incomes between 150 percent and expected to save $555,000. 200 percent of FPL to pay a $25 annual enrollment fee. • Requiring premiums for individuals enrolled in Medicaid through the Katie Beckett eligibility pathway (Medicaid eligibility for children who would qualify for Medicaid if they were institutionalized). (Last updated March 2008)

67. New Jersey Considered imposing cost - Governor Corzine’s proposed budget for SFY 2009 imposes the following new Estimated to have sharing for Medicaid co-payments for Medicaid recipients: $6 per each emergency room visits that is generated $550,000 for recipients. not a true emergency; and $2 per prescription. Emergency department co- emergency department payments would be capped at $12 per month, and pharmacy-related co-payments copayments and $7 million will be capped at $10 per month. for pharmacy-related co- payments. - The co-payment requirements would affect an estimated 650,000 of the State’s one million Medicaid enrollees. Most of the individuals affected have incomes under 200 percent of FPL, because enrollees with higher incomes are already subject to co-payment requirements. Dual eligibles would be exempt. - New Jersey Republican lawmakers drafted a budget proposal that restores some of the “unfair cuts” in Gov. Corzine’s proposed budget. For more information, see the Proposing to reduce charity care item in this matrix. - The New Jersey Legislature approved, and Gov. Corzine signed, a SFY 2009 budget that did not include the cost sharing provision. (Last updated June 2008)

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No. State Initiative Highlights Actual or Expected Savings

Recipient Cost-Sharing

68. Vermont Considering premium - Governor Douglas proposed, as part of his SFY 2009 budget, to increase Not reported. increases. premiums paid by many Medicaid recipients. Premiums had been reduced last year, and the proposal returns the premiums to their previous amounts. - A bipartisan proposal by the House Appropriations Committee also includes increased premiums for Medicaid recipients, but the increase is estimated to be approximately half as much as that proposed by Gov. Douglas. (Last updated March 2008)

December 2008 Page 38 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Service Reductions

69. Alabama Considering service - The Alabama Legislature is considering a proposal to include service reductions Savings were reported for reductions for some for some Medicaid recipients in the 2009 State budget. only some initiatives. Medicaid recipients. Commissioner Steckel - An Alabama legislative committee is considering the proposal, and has not reports the following provided any specific information regarding the reductions. savings estimates: - Alabama Medicaid Commissioner Carol Herrmann Steckel announced that the - Elimination of generic agency’s proposed SFY 2009 budget would include the following cost savings: and over-the-counter • Eliminating of coverage for generic and over-the-counter cold medications cold medications: for adults $1.4 million • Discontinuing a new artificial limbs program that the Legislature added last - Hemophilia blood year product reimbursement • Suspending the addition of 505 more slots in the State’s Elderly and restructuring: $1.4 Disabled waiver program million • Ceasing coverage of a fifth brand name drug per month (without this - Management of anti- coverage that was added last year, Alabama Medicaid covers four brand psychotic medication name drugs per month) utilization: $2.8 • Revising payment methodologies for hemophilia blood products million - Medical necessity • Increasing utilization management of anti-psychotic medications documentation for • Requiring providers to document medical necessity for brand name drugs if brand name drugs: generic equivalents are available $500,000 (Last updated March 2008)

70. Arkansas Delaying a program to ⁻ Arkansas lawmakers are considering delaying the implementation of a new Estimated to save a portion provide dental services. program designed to provide dental services to adult Medicaid recipients. of the $2.7 million required to annually run ⁻ The State has already delayed the program once because of financial concerns. the program. (Last updated November 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

71. California Considering service ⁻ Governor Schwarzenegger originally proposed to eliminate dental care coverage Not reported. reductions for selected for adult Medicaid recipients as part of his plan to address a $15.2 million budget Medicaid recipient shortfall for SFY 2009. populations. • Analysts have estimated that the change will impact three million Medicaid recipients, and will result in a loss of $155 million in Federal matching funds. • Critics of the plan hypothesize that the cuts could decrease the number of children receiving dental benefits and also increase the number of emergency room visits related to dental services. ⁻ In the new SFY 2009 budget, Gov. Schwarzenegger proposed to further reduce services by restricting in-home supportive services for seniors and people with disabilities, and limiting aides for household tasks to only the recipients with the most severe impairments. The cuts would affect about 84,000 people, or about one-fifth of program recipients. ⁻ To address a mid-year SFY 2009 budget shortfall of almost $42 billion, Gov. Schwarzenegger is proposing to eliminate dental, optometry and psychology services for adult enrollees. ⁻ For more information, see the Proposing program eligibility cuts for public health programs item in this matrix. (Last updated December 2008)

72. Florida Considering eliminating ⁻ In response to Gov. Crist’s request that state agencies identify potential spending Not reported. certain optional services. reductions totaling 10 percent of their budgets, AHCA is considering eliminating optional services such as hospice and coverage for eyeglasses and hearing aids. ⁻ For more information about reductions identified by AHCA, see the Considering reducing provider reimbursement rates and Considering reducing Medicaid eligibility items in this matrix. (Last updated December 2008)

December 2008 Page 40 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Service Reductions

73. Florida Considering service ⁻ The Florida House of Representatives is considering the following reductions: The elimination of hearing reductions for some aid, dentures and glasses Medicaid recipients. • Eliminating Medicaid coverage of hearing aids, dentures and glasses for coverage is estimated to adults (estimated to affect 146,000 adults) save $14 million in States • Eliminating hospice coverage (estimated to affect 8,000 enrollees) funds. • Eliminating coverage of transplant-related hospitalization costs (estimated to Other savings were not affect 20,000 enrollees) reported. • Eliminating the diagnosis and treatment of cleft lips and palates (estimated to affect 2,300 children) (Last updated March 2008)

74. Idaho Limiting therapy and ⁻ Idaho is establishing the following reductions in service limits for Medicaid Not reported. rehabilitation services. enrollees: • Therapy hours, from 30 hours per week to 22 hours per week. • Psychosocial rehabilitation hours, from 20 hours per week to 10 hours per week. • Certain mental health therapies, from 36 hours per week to 12 hours per week. ⁻ The Department of Health and Welfare is implementing the reductions to achieve a four percent budget reduction ordered by Gov. Otter. Gov. Otter also indicated agencies should be prepared to continue this reduction and face an additional six percent cut in SYF 2010. ⁻ Although the reduction is effective on January 1, 2009, the Legislature will review the changes when it reconvenes in mid-January and may accept or reject them. ⁻ For more information, see the Reducing Medicaid provider rates item in this matrix. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

75. Louisiana Considered eliminating ⁻ The Louisiana Department of Health and Hospitals considered multiple options The reductions being selected programs and to cut the Departments’ operating budget by five percent to comply with State considered by the reducing selected services. lawmakers’ plans to reduce the budget by $250 million in SFY 2009. The Department of Health and Louisiana Health Department reports spending on personal care programs has Hospitals are estimated to grown from $30 million in 2004 to a projected $192 million for SFY 2008. save almost $70 million as part of an $86 million ⁻ Three options to reduce Department spending on healthcare services are: overall Department budget • Eliminating a community-based services program for individuals with cut. developmental disabilities Estimated savings as a • Reducing by one day the length of time for a charity hospital stay result of the home- and community-based services • Eliminating the adult health day program in New Orleans reductions were not reported. ⁻ The Louisiana Legislature considered bills that include cuts to two health programs that are designed to provide home- and community-based services for elderly recipients and recipients with developmental disabilities. • HB1273 proposes to develop cost control mechanisms for both programs by January 2009. The bill was approved by the Louisiana House of Representatives and is currently being considered by the Senate. • HB914 proposes to revise the legislative rule regarding the State funding of waivers related to home- and community-based services. The Louisiana House is currently considering this bill. ⁻ The Louisiana Legislature approved a SFY 2009 budget in June 2008 that is more than $50 million short of Gov. Jindal’s original budget request. By law, the Louisiana Department of Health and Hospitals Secretary must submit a report to the state Legislature outlining a plan for addressing the projected budget shortfall. Officials expect this report to be released in August or September. ⁻ In October 2008, the Secretary announced that, due to lower utilization of services caused by Hurricanes Gustav and Ike, the Medicaid program had a $100 million surplus, and therefore proposed reductions are not necessary in the current State fiscal year. (Last updated October 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

76. Maine Proposing to reduce services. ⁻ Maine’s Commissioner of Health and Human Services announced that the State Originally estimated to will release a plan to reduce services over the next 17 months to reduce costs. save $186 million in total; estimated reductions for ⁻ The Maine Legislature approved, and Governor Baldacci signed, an interim each Medicaid service are 2008-2009 budget on March 31, 2008 that included the following service provided in the previous reductions: column. • Eliminating a program called Intensive Community Integration (estimated to save $1.2 million) • Eliminating day treatment at all but two State facilities (estimated to save $625,000) • Reducing the number of case managers for children receiving mental health and child welfare services (estimated to save $500,000) • Consolidating adult and child mental health crisis services by April 1, 2009 (estimated to save $330,000) • Unbundling services for therapeutic foster care and eliminating some previously bundled services (estimated to save $1.8 million) • Reviewing community support and residential services used for persons with developmental disabilities (estimated to save $3.5 million) • Converting ICF/MR facilities to group homes (estimated to save $332,000) • Reducing spending for durable medical goods (estimated to save $825,000) • Reducing spending for podiatric services (estimated to save $232,000) (Last updated March 2008)

77. Massachusetts Implementing a waiting list - Massachusetts is implementing a waiting list for home care services for elderly Estimated to save $4 for home care services. and disabled Medicaid enrollees. million. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

78. Nevada Canceling plans for a new - The Nevada Division of Health Care Financing and Policy is canceling a planned Not reported. program to treat traumatic program to treat traumatic brain injuries. The program had not yet been brain injuries. implemented, but was originally planned for Fiscal Year 2008. - The Division is implementing this change to address a Medicaid budget shortfall in the Fiscal Year 2008 budget due to an unbudgeted increase in the number of Medicaid recipients. The Fiscal Year 2008 budget included funds for approximately 163,000 recipients, but 187,000 are enrolled to date. (Last updated July 2008)

79. Nevada Reducing selected personal ⁻ Nevada plans to implement the following service reductions: Part of an overall $57 care and vision services. million cut in the Nevada • Decrease the maximum time allowed for services related to bathing, Department of Health and grooming and dressing recipients to 60 minutes (before more than 2 hours Human Services funding. were allowed). • Eliminate other personal assistant services. • Eliminate selected ocular services for adults. In addition, Medicaid recipients over the age of 21 will now be required to pay out-of-pocket for glasses, frames and spectacles. (Last updated August 2008)

80. New Jersey Proposing to reduce charity ⁻ New Jersey Governor Corzine has proposed to cut $143 million in charity care Not reported. care. from the 2009 Medicaid budget. ⁻ New Jersey Republican lawmakers are drafting a budget proposal that restores some of the “unfair cuts” in Gov. Corzine’s proposed budget. Analysts say that this may include a revision to the original cost sharing provisions and charity care cuts. For more information, see the Considering imposing cost sharing for Medicaid recipients item in this matrix. (Last updated June 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

81. New York Considering limiting home ⁻ New York Medicaid is considering limiting the number of home attendant hours Not reported. attendant services. that Medicaid may reimburse. (Last updated December 2007)

82. Ohio Reducing Medicaid benefits ⁻ Ohio is reducing Medicaid benefits for children with autism and other Not reported. for children with some disabilities. disabilities. ⁻ The adopted rule change will eliminate reimbursement for certain services provided to children who are developmentally delayed, nonverbal and aggressive. The current rate for these services is $92 per hour, and some children receive an average of 35 to 40 hours of services. ⁻ The State reported the rule change was necessary to comply with proposed Federal requirements for rehabilitative services and to allow more available funds for the State’s Medicaid expansions. ⁻ The changes will go into effect July 1, 2008. (Last updated March 2007)

83. Oregon Proposing to reduce dental ⁻ The Oregon Department of Human Services is proposing to limit dental services The reduction in dental and vision services for and eliminate vision coverage for adults enrolled in the Oregon Health Plan. benefits is expected to save adults. $4.2 million in SFY 2009; ⁻ The proposal is part of a budget process exercise, in which the Department has the reduction in vision been tasked with identifying possible cuts and reducing spending by 10 percent. services is expected to save (Last updated October 2008) $4.8 million.

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

84. South Carolina Proposing to reduce selected ⁻ The South Carolina Department of Health and Human Services is proposing to: Part of $61 million in services. Department cuts. • Reduce dental services, vision services, mental health counseling and breast and cervical cancer screenings. The reductions to HIV patients are expected to • Eliminate a program to provide services to HIV patients. save $40,000 and the • Eliminate hospice services and nutritional supplements. elimination of the hospice benefit is expected to save • Reduce home-delivered meals from 14 per week to seven per week and home $2 million in State funds. health nurse visits from 75 per year to 50 per year. • Stop building wheelchair ramps for enrollees. ⁻ The Department’s proposed cuts are subject to change, based on opportunities for federal Medicaid assistance. ⁻ For more information, see the Proposing to eliminate a pharmacy subsidy program item on this matrix. (Last updated December 2008)

85. South Carolina Eliminating teen pregnancy ⁻ To implement a three percent cut in agency funding, the South Carolina Estimated to save prevention services. Department of Health and Human Services is eliminating Medicaid Adolescent $400,000 in State funds. Pregnancy Prevention Services, which includes $400,000 in annual funding for In total, the entire agency services to children ages 10 to 19. The service cut will be effective in December three percent reduction is 2008. estimated to save $28.5 ⁻ For additional changes related to the three percent agency funding reduction, see million in State funds and Reducing reimbursement rates and Implementing pharmacy limits items in this an additional $61.5 million matrix. in Federal matching funds. (Last updated September 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

86. Tennessee Limited home health and ⁻ Effective mid-September, Tennessee limited Medicaid home health and in-home Expected to save $88 private duty nursing services. private duty nursing services to 35 hours per week. million in State Fiscal Year 2009. ⁻ The State estimates the change will affect fewer than 1,000 of the 10,800 Medicaid recipients using the services. The weekly limits will not apply to children and adults who use a ventilator for more than 12 hours a day or have a tracheotomy and require nursing services. (Last updated September 2008)

87. Tennessee Considering restricting - TennCare’s program commissioner, Darin Gordon, is considering recommending Not reported. provider visits. restrictions in physician visits and hospital care for Medicaid recipients if the state runs a budget shortfall in 2009-2010. - Commissioner Gordon has predicted a Medicaid budget shortfall because he estimates that 30,000 more individuals could enroll in Medicaid as the economy worsens. The 2009-2010 TennCare budget has not increased from the budget in 2008-2009. - Governor Phil Bredesen is considering asking the Tennessee Legislature for more time to present his budget proposal, until the State has more information about the timing and amount of a federal relief package. Gov. Bredesen said that federal funding could reduce his planned 15 percent cuts by as much as half. - For more information, see the Considering reducing provider rates and Proposing to reduce provider payments for durable medical equipment item in this matrix. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Reductions

88. Utah Eliminating Medicaid ⁻ The Utah Department of Health is considering eliminating unspecified Eliminating vision and coverage of certain services optional services for adults. dental benefits is estimated for adults. to save $2.8 million. ⁻ All State agencies are preparing budget cut recommendations at the request of both Governor Jon Huntsman and the Utah Legislature, who have The emergency budget requested across the board budget cuts of seven percent and 15 percent, reductions are estimated to respectively. save $16 million in State funds and $23 million in ⁻ For more information about other recent Utah cost containment initiatives, Federal funds. see the Considering cuts to Medicaid eligibility and Considering cutting Medicaid prescription dispensing fees items on this matrix. ⁻ Previously, the Utah Legislature had considered eliminating vision and dental benefits for adult Medicaid recipients. ⁻ Five years ago, the Legislature eliminated vision and dental coverage; the coverage was restored in 2007. ⁻ The initial budget passed by the Legislature did not include the provision to eliminate vision and dental services. During a subsequent emergency budget session in September, the Legislature eliminated vision, physical therapy, speech therapy and chiropractic care. The Health Department estimates 19,000 enrollees will be affected by the service reductions. (Last updated December 2008)

89. Vermont Proposing to eliminate ⁻ Vermont lawmakers are considering eliminating coverage of chiropractic Not reported. coverage of chiropractic services for Medicaid recipients to address a $37 million deficit in the State’s services. 2009 budget. (Last updated December 2008)

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Service Reductions

90. Washington Considering reducing ⁻ As part of a goal to reduce Medicaid spending by 15 percent over the next two Not reported. Medicaid services. years, Washington is considering reducing new Medicaid services such as interpreters and eliminating dental services for adults. ⁻ Washington lawmakers have projected a state budget deficit of $5.7 billion. A State Department of Social and Health Services official confirmed that the agency is considering reducing Medicaid services as one way to comply with the governor’s request to prepare for “deep” budget cuts, estimated at approximately $500 million in Medicaid cuts. ⁻ For more information, see the Considering restrictions to Medicaid eligibility, Considering reducing physician payments and Cutting state funds to address a budget shortfall items in this matrix. (Last updated December 2008)

December 2008 Page 49 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Fraud and Abuse Detection1

91. Alabama Pursued a lawsuit regarding - Alabama filed a lawsuit against 70 pharmaceutical companies in 2005 based on - $81 million from fraud in pharmaceutical claims that the State overpaid for pharmaceutical drugs from the years of 1991 to GlaxoSmithKline drugs prices. 2005. The results of the lawsuit thus far include: - $33 million from • The case against GlaxoSmithKline and Novartis was the second lawsuit to go Novartis to trial. The State alleged that GlaxoSmithKline and Novartis did not offer - $160 million from the State the lowest prices that the companies offered to pharmacists for the AstraZeneca drugs Advair (GlaxoSmithKline) and Diovana and Tekturna (Novartis). The jury found in favor of the State and awarded compensatory damages. - $2 million from Ethex Corp. • A jury ordered AstraZeneca to pay the State compensatory and punitive damages totaling $215 million. A judge later reduced this amount to $160 - $2 million from million. Takeda Pharmaceuticals North • GlaxoSmithKline, Novartis and AstraZeneca have appealed their verdicts to America, Inc. the Alabama Supreme Court. - $4.75 million from • The State has settled with Bristol Myers Squibb; Ethex Corp; Takeda Dey, LP Pharmaceuticals North America, Inc.; Dey, LP; Roxanne Laboratories; Bayer Pharmaceuticals; and Amgen, Inc./Immunex. - $9.5 million from Roxanne Laboratories - $3.5 million from Amgen, Inc. /Immunex - $2 million from Bayer Pharmaceuticals - $11 million from (Last updated December 2008) Bristol Myers Squibb

1 Note that some “initiatives” listed in the Fraud and Abuse Detection section are not necessarily “cost containment” initiatives, but are highlighted as they may result in states recovering millions of dollars in overpayments and/or damages.

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No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

92. Florida and Receiving revised refunds - WellCare will issue refunds to the Illinois and Florida Medicaid programs WellCare is expected to Illinois from a managed care because WellCare did not meet minimum service requirements for the states’ pay $46.5 million in contractor as the result of a managed care programs. Under its contractual agreements, WellCare is required refunds. Additional fines fraud investigation. to spend a minimum percentage of health care premiums on medical and mental or fees have not been health benefits, or refund the excess funds to the payer. reported. - WellCare estimates that it understated the amount of refunds owed to Illinois and Florida Medicaid programs, as well as the Florida SCHIP program. - The Federal government conducted a raid of WellCare headquarters in October 2007, after which time, WellCare formed a special internal committee to conduct a company accounting audit. (Last updated July 2008)

93. Florida, Settling a lawsuit regarding - Walgreens agreed to pay a total of $9.9 million to Florida, Massachusetts, The settlement resulted in Massachusetts, False Claims Act allegations. Michigan, Minnesota and the Federal Government as part of a settlement related $9.9 million paid to the Michigan, to improper Medicaid billing. four states and the Federal Minnesota and Government. Of this - Two Walgreens pharmacists filed a lawsuit against Walgreens under the False the Federal amount, $1.44 million will Claims Act, which allows private individuals to allege fraud on behalf of the Government be paid to the pharmacists Federal government; the individuals are entitled to a share of the recovered who filed the lawsuit under funds. the False Claims Act. - The lawsuit alleged that Walgreens billed individuals who were enrolled in Medicaid premium assistance programs the difference between the insurance payment and what Medicaid would have paid if the individuals had been enrolled in the standard Medicaid program. (Last updated September 2008)

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No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

94. Illinois and Settling a lawsuit regarding - Illinois settled a lawsuit with Amerigroup Corporation regarding False Claims Precise settlement amount Federal False Claims Act allegations. Act allegations that the State originally brought in 2002. to be determined. Government - This settlement is for an appeal that Amerigroup Corporation filed in 2006, after the company was found guilty of filing more than 18,000 false Medicaid claims and $144 million in damages and $190 million in civil fines was awarded to Illinois and the Federal government. - As a condition of the settlement, Amerigroup Corporation admits to no wrongdoing. (Last updated July 2008)

95. Indiana Settling a lawsuit against a - The Indiana Attorney General has settled a 2004 lawsuit against a Walgreens Estimated to recoup almost Walgreens pharmacy in the pharmacy in the State. The suit alleged that the pharmacy submitted nearly 500 $400,000. State. false claims for 25 patients whose Medicaid prescription benefits were restricted because of suspected drug abuse. - After the Attorney General originally filed the lawsuit in 2004, the Medicaid Fraud Control unit uncovered another 4,946 false claims at 124 Walgreens stores across Indiana. - Walgreens admitted no fault in the settlement but agreed to pay Indiana $337,050 in penalties and $44,800 in investigative costs. (Last updated May 2008)

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No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

96. Indiana Modifying long-term care - Indiana is modifying the rules for its long-term care program with the goal of Not reported. eligibility requirements to reducing Medicaid fraud. The modifications include: reduce fraud. • Extending the “look-back” period for asset transfers from three years to five years, which is required under the Federal Deficit Reduction Act of 2005. • Penalizing asset transfers that were made for less than market value. • Limiting eligibility for residents who give their money to charity or who pay family members for care without a formal contract. (Last updated September 2008)

97. Kansas Bringing a lawsuit against - The Kansas Attorney General has filed lawsuits against 30 different Not reported. drug manufacturers under pharmaceutical manufacturers. allegations of fraudulent - The lawsuit alleges the companies fraudulently reported Average Wholesale reporting. Price and other price indicators on which the State paid for drugs. (Last updated November 2008)

98. North Carolina Settled litigation with a - North Carolina has settled a lawsuit against Dominion Healthcare, a mental Settlement awards $1.7 contractor. health services provider. million to the State. - The lawsuit alleged that Dominion Healthcare improperly billed Medicaid for services, or improperly provided services to Medicaid recipients. The State conducted a financial review and audit after receiving numerous complaints. (Last updated November 2008)

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No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

99. New York Modifying the Medicaid - After a State Comptroller’s audit uncovered $3.6 million in Medicaid payments The modifications related claims system to detect for patients who were deceased, New York modified its Medicaid management to deceased enrollees were inappropriate claims. software to better identify improper claims, including checking claim data estimated to save a total against Social Security data to determine whether Medicaid enrollees have died. $14 million as of March 2008. - A separate audit identified $1.27 million in improper payments for HIV drug resistance testing claims. Current Medicaid policy allows for three tests per Savings related to HIV recipient per year, but the audit identified numerous instances in which providers drug resistance testing billed for more than the allowable tests. The Department of Health reports it is were not reported. modifying its software to appropriately identify improper claims.

(Last updated September 2008)

100. North Carolina Auditing payments for - The North Carolina State Auditor has determined that the State inappropriately Estimated to recoup as Medicaid mental health paid for $58.3 million in community support services through the Medicaid much as $58.3 million. services. program. The State Auditor alleges the total number of services could be as much as $400 million. - The findings were issued as part of the State Auditor’s overall review of State Medicaid payments for Medicaid mental health services. (Last updated July 2008)

101. South Carolina Posting Medicaid payment - The South Carolina Department of Health and Human Services is posting Not reported. information online. Medicaid payment information on a public website. The website shows total Medicaid payments to healthcare providers, along with the number of Medicaid recipients each provider saw. - Besides helping the Department to identify potential fraud and abuse, this initiative is part of Governor Mark Sanford’s overall charge to increase transparency in South Carolina government. (Last updated July 2008)

December 2008 Page 54 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

102. Texas Bringing a lawsuit alleging - Texas has filed a lawsuit against Janssen Pharmaceuticals, alleging the company Not reported. pharmacy-related fraud. employed fraudulent tactics to convince state officials to place one of its drugs, Risperdal, on the Medicaid preferred drug list. - The lawsuit claims Janssen provided the State with materials it said were scientific research but which were actually marketing materials underwritten by the company. Janssen is also accused of using other fraudulent methods including providing mental health officials with perks (such as trips and travel expenses) to encourage them to promote Risperdal to other states. (Last updated December 2008)

103. Multiple states Settled a lawsuit regarding - The Federal government and 13 states settled a lawsuit with the pharmaceutical The settlement resulted in Medicaid fraud related to off- company Cephalon regarding allegations the company improperly marketed off- $425 million paid to 13 label pharmaceutical label use of three of its medications. states and the Federal marketing. government. - Pennsylvania settled with Cephalon for $5.5 million. (Last updated November 2008)

104. Multiple states Settled a lawsuit regarding - The Federal government and 33 states settled a lawsuit with Pfizer regarding The settlement resulted in Medicaid fraud related to off- allegations the company improperly marketed off-label use of its COX-2 $60 million paid to 33 label pharmaceutical inhibitors Bextra and Celebrex. The Medicaid settlement is part of a larger states and the Federal marketing. agreement under which Pfizer will pay $894 million to settle 90 percent of the government. lawsuits related to Bextra and Celebrex, including personal injury and consumer fraud claims. - Pfizer also agreed to receive FDA approval before airing any future television advertisements. (Last updated October 2008)

December 2008 Page 55 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

105. Multiple states Settled a lawsuit regarding - Alaska filed a lawsuit against Eli Lilly regarding the side effects of Zyprexa, an The Alaska settlement prescription drug side effects. anti-psychotic drug. The State alleged that Eli Lilly concealed information about resulted in $15 million the increased risk of diabetes associated with Zyprexa, which led to increased paid to the State by Eli Medicaid payments for the disease. Lilly. - In October 2008, Eli Lilly, 32 states and the District of Columbia (D.C.) settled The settlement with 32 lawsuits regarding marketing Zyprexa for unapproved uses, which resulted in states and D.C. resulted in Medicaid costs related to side effects. Eli Lilly did not admit wrongdoing as part payments totaling $62 of the settlement, but agreed to follow ethical marketing guidelines for six years. million. Lawsuits from an additional eleven states were not part of the settlement and are still pending. - (Last updated October 2008)

106. Multiple states Settled a lawsuit regarding - Forty-three states settled a lawsuit with Bristol-Myers Squibb over allegations of The settlement resulted in Medicaid fraud and illegal Medicaid fraud and illegal kickbacks. $389 million paid by kickbacks. Bristol-Myers Squibb to 43 - The lawsuit alleged the drug company inflated prices for drugs sold to state states. Medicaid programs and also illegally paid physicians and pharmacists to use the company’s products. (Last updated July 2008)

107. Multiple states Settled a lawsuit regarding - Walgreens has settled a lawsuit that alleged the company switched prescriptions Forty-six states will share switching prescription drugs. for Ranitidine (an ulcer medicine), Fluoxetine (an antidepressant) and Eldepryl $16.4 million of the (a Parkinson’s drug) to more expensive capsules settlement money. - The settlement resulted in $35 million. Forty-six states will share $16.4 million of the settlement money. (Last updated June 2008)

December 2008 Page 56 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

1 Fraud and Abuse Detection

108. Multiple states Settled a lawsuit regarding - Twenty-three states, the District of Columbia and the Federal government settled The settlement resulted in prescription drug over a lawsuit with CVS Caremark related to Medicaid over billing for a generic the following amounts paid billing. antacid. by CVS Caremark: - The lawsuit alleged that CVS Caremark provided Medicaid recipients with - $21 million to the capsules, rather than tablets, which are the less expensive tablet form of the Federal government medication. Medicaid had established a maximum reimbursement rate for - $15.6 million to states tablets but not capsules. and the District of - Federal prosecutors estimated that substituting capsules for tablets resulted in Columbia over billing of up to 400 percent. - $800,000 for fees (Last updated March 2008) related to the lawsuit

December 2008 Page 57 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Long-Term Care

109. Missouri Considering increasing - Missouri voters will vote on Proposition B, a proposal to increase home- and Not reported. home-and community-based community-based services for the elderly and disabled. services. - Proposition B creates the Missouri Quality Homecare Council, which will facilitate pairing persons with disabilities with trained personal care aides who have passed background checks. The matching system is expected to increase the number of hours for which personal care aides can find work in a given day, and help negotiate wages and benefits for the personal care aides. (Last updated October 2008)

110. Ohio Increasing home- and - Ohio is shifting approximately 2,000 individuals from nursing homes to Not reported. community-based services community-based settings in an effort to reduce Medicaid long-term care costs. (Last updated October 2008)

111. Rhode Island Considering increasing - Governor Carcieri is proposing to increase the number of Medicaid long-term Reports of savings range home- and community-based care recipients receiving home- and community-based services. from $34 million to $67 services. million. - The proposal aims to reduce the nursing home population by 10 percent by encouraging the elderly and disabled to use home- and community-based services where possible. (Last updated February 2008)

112. Tennessee Encouraging the purchase of - Tennessee is allowing residents, when enrolling in Medicaid for long-term care Not reported. private long-term care benefits, to retain assets equal to the amount of qualifying long-term care insurance. insurance they have purchased. - The Long-Term Care Partnership, which Tennessee is implementing as option under the federal Deficit Reduction Act, is designed to reduce overall Medicaid long-term care costs by encouraging residents to purchase private long-term care insurance. (Last updated October 2008)

December 2008 Page 58 of 89 STATE MEDICAID COST SAVING STRATEGIES

No. State Initiative Highlights Actual or Expected Savings

Long-Term Care

113. Tennessee Considering increasing - Governor Bredesen is proposing to increase the number of Medicaid long-term Not reported. home- and community-based care recipients receiving home- and community-based services. services. (Last updated March 2008)

114. Texas Encouraging the purchase of - Texas is allowing residents, when enrolling in Medicaid for long-term care Not reported. private long-term care benefits, to retain assets equal to the amount of qualifying long-term care insurance. insurance they have purchased. - The policy, which Texas is implementing as an option under the federal Deficit Reduction Act, is designed to reduce overall Medicaid long-term care costs by encouraging residents to purchase private long-term care insurance. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Delivery Systems

115. Connecticut Considering privatizing - Mayor Bill Finch is considering privatizing two of Bridgeport’s school clinics to Not reported. school clinics. two private health care agencies. The two health care agencies can receive State and Federal Medicaid reimbursement for services, whereas the city-operated clinics cannot. (Last updated April 2008)

116. Florida Considering expanding - Florida legislators have proposed to expand a pilot managed care program from Not reported. managed care programs. one county to nine counties by 2010. - The Agency for Health Care Administration had previously indicated it would not propose program expansions after an initial report highlighted problems with pilot program. Since that time, however, the Agency’s new Secretary and other legislators have proposed and supported program expansions. In December 2008, the Agency proposed to expand the pilot program to 20 counties. (Last updated December 2008)

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Service Delivery Systems

117. Florida Implementing a new four- - Florida has implemented a new tiered classification system for Medicaid money Estimated to save $45 tiered classification system distributed to budgets for individuals with disabilities. Disbursements were million during the first for individuals with previously made on a case-by-case basis. year. disabilities. The new system classifies individuals in one of four tiers: • Tier 1: No cap – Most severe cases for those individuals who need services to avoid institutionalization or who present harm to themselves or other. • Tier 2: $55,000 cap – Individuals who live in group homes and receive a moderate level of assistance for daily hygiene and household duties. • Tier 3: $35,000 cap – Individuals who live in a group home and do not need much supervision. • Tier 4: $14,792 cap – Individuals who live at home with their families and whose needs are not as great. (Last updated August 2008)

118. Minnesota Considering cuts to the - Governor Tim Pawlenty has proposed $250 million in cuts to the State’s Medical Estimated to save $250 State’s Medical Assistance Assistance and other healthcare programs if State legislators do not accept his million. programs. plan to take the money from the Health Care Access Fund to balance the State budget. - Minnesota is currently facing a $936 million budget deficit. - The Health Care Access Fund subsidizes the State’s healthcare programs. (Last updated April 2008)

119. Louisiana Considering implementing - Gov. Bobby Jindal is proposing a pilot program in which the State would require Not reported. managed care for certain up to 380,000 Medicaid enrollees, including children, to enroll in managed care populations. programs. (Last updated October 2008)

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Service Delivery Systems

120. Nevada Considering implementing - As part of its first set of 11 recommendations, the Nevada Spending and The expected savings and managed care for certain Government Efficiency (SAGE) Commission recommended to Governor Jim revenue opportunities from populations. Gibbons implementing managed care for the Aged, Blind and Disabled Medicaid the SAGE Commission populations in two counties and expanding managed care to women and children recommendations total $81 in four rural counties. million in the first year and $500 million over five - The SAGE Commission also recommended analyzing how to use certain state years. Estimates for funds to leverage federal matching funds for the Medicaid and SCHIP programs. individual - The SAGE Commission was established by Gov. Gibbons to identify potential recommendations were not government savings, efficiencies and operational improvements. The provided. Commission expects to make new recommendations every three months for two years. (Last updated September 2008)

121. North Implementing a statewide - Governor Mike Easley plans to issue statewide “best practice guidelines” for Estimated to save millions Carolina plan to improve treatment for more effectively treating all patients with asthma, hypertension, diabetes, of dollars in medical costs; chronic health conditions. congestive heart failure and heart attack. precise dollar amount not reported. - A North Carolina task force of major health insurance providers, physicians and hospitals have agreed on the standardized set of guidelines for these conditions. Through the program, the State will also train care coordinators to track patients’ progress and provide help in scheduling appointments, taking medications and planning care, and to monitor health outcomes. - The State’s major health insurance companies have pledged support for the program. (Last updated April 2008)

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Service Delivery Systems

122. New York Considered managed care for - Former Governor Spitzer considered a proposal to implement mandatory Not reported. recipients with HIV or AIDS. managed care enrollment for Medicaid recipients with HIV or AIDS (“HIV Special Needs Plan”). - The State estimates approximately 65,000 Medicaid recipients with HIV or AIDS are not enrolled with a managed care plan. - Former Gov. Spitzer’s proposed SFY 2009 budget did not include mandatory enrollment in HIV Special Needs Plans. - New York State Medicaid Director Deborah Bachrach recommended that Medicaid recipients living in New York City with HIV or AIDS should be required to enroll in HMOs. The New York Department of Health is expected to issue a final decision in September. (Last updated August 2008)

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No. State Initiative Highlights Actual or Expected Savings

Service Delivery Systems

123. Pennsylvania Evaluating options for home- - Governor Ed Rendell and his staff are considering options for “rebalancing” the Not reported. and community-based Commonwealth’s system for caring for elderly and disabled Medical Assistance services. recipients so that roughly half of these populations will receive home- and community-based services in the home instead of in nursing homes - The Administration estimates this approach will help reduce Medical Assistance expenses. In the Commonwealth, a year of nursing home care averages $52,000 per person, per year, whereas a year of home- and community-based services averages $21,000. The Commonwealth’s budget for long-term care, more than $3 billion, is the second-highest in the nation. - The Pennsylvania Department of Public Welfare is seeking Federal approval for a program to implement an incentive program that encourages providers to: • Reduce the number of nursing home beds. • Increase home- and community-based services, independent living units and outpatient rehabilitation therapy. - The Commonwealth’s proposal builds on a plan originally enacted by the Department in 1996 to help county-owned nursing homes develop alternatives to institutional care. - The Commonwealth is considering funding providers through either increased reimbursement rates or lump-sum payments. The total costs of the program are expected to be budget-neutral. (Last updated June 2008)

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Service Delivery Systems

124. Utah Considering health savings - The Utah Legislature’s Health and Human Services Appropriations Not reported. accounts for Medicaid Subcommittee is considering: enrollees and other changes. • Allowing Medicaid recipients to use a Health Savings Account in lieu of traditional Medicaid benefits. The goal of the HSA would be to lower utilization of services. • Changing billing procedures to allow recipients to see and compare the costs of their services, with the goal of encouraging recipients to consider costs when making service decisions. • Expanding the medical home program, which uses primary care physicians to manage enrollee care, in part to increase cost-efficiency. (Last updated October 2008)

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State Taxes

125. Alabama Considering taxing gambling - The Alabama Legislature is considering sending a constitutional amendment An estimated $55 million to generate revenue. to voters to legalize electronic revenue at two dog tracks, and impose a new 20 per year, which could be percent tax on gross revenue from bingo. Existing electronic bingo games used to draw down $117 would not be subject to the tax. million in Federal Medicaid matching funds. - Revenue would be earmarked for the Medicaid program. - As of the end of March 2008, the bill was still under consideration by the Legislature. (Last updated March 2008)

126. California Considering increasing the - Governor Schwarzenegger had proposed a $1.50 per pack tobacco tax increase Not reported. tobacco tax. in January 2008 to fund the State’s proposed healthcare reform initiatives. The California Legislature did not approve the reform initiative, and California Assembly Speaker Fabian Nunez told the New York Times in April 2008 that opposition was due to the tax that was included in the legislation, saying “the tobacco industry basically killed it.” (Last updated April 2008)

127. Florida Considering increasing the - Florida state legislators are considering a 50 cent per pack tobacco tax Not reported. tobacco tax. increase. The State’s current tobacco tax is 34 cents per pack, which is one of the lowest tobacco taxes in the United States. - State Republicans have indicated they will support the tax proposal. (Last updated November 2008)

128. Kentucky Considering increasing the - Gov. Steve Beshear proposed a $0.70 per pack increase in the cigarette tax. Not reported. tobacco tax. The Governor indicated as long as the tax increase passes, Medicaid programs would remain exempt from spending cuts. (Last updated December 2008)

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No. State Initiative Highlights Actual or Expected Savings

State Taxes

129. Maryland Increasing the tobacco tax. - The Maryland Legislature considered a bill to increase the State’s cigarette Estimates range from $7.2 taxes by 42 cents to $1 per pack. The current tax is $1.50 per pack. million to $207 million annually in additional - The State considered using the additional revenue to support widespread funds, with funds healthcare reform or to expand eligibility options for people with disabilities to diminishing in later years allow them to work full-time without losing their benefits. as more people quit - The State estimates that it spends $13.1 million annually to provide healthcare smoking. A tax increase to services for smokers. $2 per pack could generate $85 million in the first six - The Maryland House approved the legislation, but the legislation did not months. receive all necessary approvals and was ultimately rejected. - Maryland Governor O’Malley supports increasing the State’s tobacco tax to $2 per pack. However, he expressed concerns with using the tax to finance healthcare expansion, since the tax is inherently a declining source of revenue. He hoped the legislature would allocate additional tax revenues to first pay down the State’s budget deficit. - Governor O’Malley released new legislation proposing an increase of $1 per pack, and issued a new report that examines the effect of the proposed tax on youth smoking. - The Maryland General Assembly approved legislation to increase the tax, and Gov. O’Malley has signed the bill. The tax will be effective January 1, 2008. (Last updated December 2007)

130. Massachusetts Proposing to increase the - The Massachusetts Legislature is considering a proposal to increase the state Estimated to generate $175 tobacco tax. tobacco tax by $1 per pack to a total of $2.51 per pack. in additional revenue. - The revenue from this tax would be used to fund public healthcare programs. For more information, see the Massachusetts Requiring all residents to obtain health insurance item in the Healthcare Expansion matrix. - The Massachusetts Legislature approved the legislation. (Last updated July 2008)

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State Taxes

131. Maine Proposing to increase the - The Maine Legislature is considering a tobacco tax increase of 50 cents per Not reported. tobacco tax. pack to fund the DirigoChoice health insurance program, which provides subsidized health insurance to small businesses and individuals without insurance. - Governor Baldacci originally opposed the tax increase, but later pledged his support because the tax revenue will be used for DirigoChoice and the State budget is now balanced. - Health Policy Partners of Maine is lobbying legislators to increase the tobacco tax by $1 per pack, instead of the 50 cents per pack currently being considered. (Last updated April 2008)

132. Maine Proposing to standardize the - The Maine Legislature is considering modifying the assessment on health Not reported. current assessment on insurance companies that participate in the State’s DirigoChoice program. insurance claims. - Currently the assessment is calculated based on estimate savings to the health care system as a result of Maine’s health reform efforts. The insurer assessment is designed to recoup a portion of those savings and use them to fund DirigoChoice. The bill proposes to replace the variable assessment with a standard 1.8 percent assessment on claims. - Maine uses the funds from the assessment to fund DirigoChoice’s small business purchasing pool. (Last updated March 2008)

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State Taxes

133. Mississippi Proposed to increase the - The Mississippi Legislature considered a $1 increase to the State’s tobacco Original proposal was tobacco tax. tax. Revenues would have been redirected to the Medicaid program and other estimated to generate $174 programs. million to fund healthcare programs. - The tax increase was supported by the Mississippi Hospital Association as an alternative to the hospital bed tax proposed by Governor Haley Barbour. - The House passed the tobacco tax increase in early March 2008, but it did not receive a hearing in the Senate and, therefore, is not expected to be considered further during this legislative session. - In addition to the proposed cigarette tax increase, Mississippi legislators proposed to increase the alcohol sales taxes by one percent. - In May 2008, the Mississippi House rejected a separate bill that contained the proposed tobacco tax increase, along with a liquor tax increase. - These tax increases are part of several options that the State is considering to generate revenue to address a $100 million Medicaid budget shortfall. For more information, see the Mississippi Proposing to tax hospital providers item in this matrix. - Both chambers of the Legislature were called into special session to pass a budget in June 2008, however, the Mississippi Legislature did not agree on a final budget. The Legislature is scheduled to reconvene in August 2008 for a special session. - Gov. Haley Barbour indicated he will again propose to increase the tobacco tax when the Mississippi Legislature reconvenes in January 2009. Gov. Barbour is considering a range of proposals for increasing the tax; the lowest proposed increase is 24 cents per pack, and the highest proposed increase is 50 cents per pack. (Last updated November 2008)

134. Minnesota Considering a tobacco tax - Minnesota is considering a 75 cents per pack increase in the State’s tobacco Estimated to generate $300 increase. tax to address an estimated budget deficit of between $4.5 and 6.0 billion. million in new revenue. (Last updated December 2008)

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State Taxes

135. New York Considering changes to - Governor David Paterson’s 2009-2010 budget proposes to: Part of a budget that aims assessments. to save $699.7 million in • Increase the assessments against health insurance companies by $855 2009-2010 and $623.4 million. million in 2010-2011. • Levy an assessment on hospital inpatient revenue to generate $316.4 million. • Increase the annual fee on tobacco retailers’ sales to generate $18.5 million. • For more information on Gov. Paterson’s FY 2010 budget, see the Proposing to cut Medicaid provider reimbursement rates, Considering budget cuts for Medicaid, “Rightsizing” state agencies, and Proposing pharmacy cost saving initiatives items in this matrix. (Last updated December 2008)

136. New York Proposing to increase the - The New York Legislature approved a proposal to increase the state tobacco Estimated to generate $265 tobacco tax. tax by $1.25 per pack to $2.75 per pack. in additional revenue for the State General Fund. (Last updated April 2008)

137. Pennsylvania Considering an assessment - Pennsylvania is considering establishing an assessment on hospital patient Estimated to generate on hospitals. revenue in two counties. The monies generated by the assessment would be approximately $100 used to leverage Federal Medicaid matching funds. million in State funds. - The State and Federal funding would then be used to increase overall Medicaid payments for hospitals and other providers. Because the counties subject to the hospital assessment serve the largest proportion of Medicaid patients, State officials estimate that the taxed counties will receive the largest share of the increased reimbursement. (Last updated March 2008)

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State Taxes

138. South Carolina Proposed to increase the - South Carolina legislators considered a proposal to increase the State’s The expected revenue from tobacco tax. cigarette tax from seven cents a pack to 37 cents per pack. the 30 cent per pack increase was not reported - No increase was approved in 2007, however, the Covering Carolina Collaborative proposed reintroducing the tobacco tax increase to fund a state The 50 cent per pack health insurance expansion. increase is expected to generate $158.9 million. - Senator John Land introduced new legislation in the 2008 legislative session that proposed to increase the cigarette tax by 50 cents to 57 cents per pack. The funding would have been used to fund a Medicaid expansion that would cover 177,000 uninsured residents. - A Senate committee approved the legislation, and the full Senate will now consider the legislation. - Governor Mark Sanford called for any new tobacco tax to be offset by a different tax cut, preferably in the state income tax. - In May 2008, Gov. Sanford vetoed a tobacco tax increase bill because it did not include the second, offsetting tax cut as he requested. - State senators did not collect enough votes to override the Governor’s veto on this line item. Anti-smoking advocates have pledged to support the bill in the next session. - For the 2009 legislative session, several legislators have prefiled bills to raise the tobacco tax, at least one of which (filed by Rep. Lonnie Hosey) would use a portion of the funding for Medicaid programs. (Last updated December 2008)

139. Virginia Proposing to double the - Virginia Governor Timothy Kaine has proposed to increase the state tobacco Estimated to generate $148 tobacco tax. tax by 30 cents per pack to 60 cents per pack. million. - The Centers for Disease Control and Prevention estimates that cigarette smoking costs the State $400 million a year in Medicaid expenses. The State's current tobacco tax is the third lowest in the United States. (Last updated December 2008)

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140. Wisconsin Considering a tax on oil - Governor Jim Doyle is considering a new tax on oil companies as a means of Estimated to generate $390 companies. generating revenue to address a $5.4 billion budget shortfall. million. (Last updated November 2008)

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141. Arkansas Considering using capital - Gov. Mike Beebe is proposing to use funds that are currently set aside for Estimated to generate $80 funds for operating costs. capital purposes for operating expenses. million. - The State’s General Improvement Fund currently has a $310 million surplus. Gov. Beebe is proposing to use up to $80 million of that surplus as a “rainy day fund” for Medicaid and other expenses. (Last updated December 2008)

142. California Delaying payment of Medi- - California has put Medicaid claim reimbursements to healthcare institutions on Not applicable; State will Cal claims. hold until the Legislature passes a SFY 2009 budget. pay claims later in 2008 when the SFY 2009 budget - The State has spent all money from an emergency fund that it created to cover is approved. the reimbursements. - The hold will affect nursing homes, health care clinics, adult day centers and other health care institutions. Under California law, the State is required to continue reimbursing physicians, pharmacists and other providers who treat Medicaid recipients. - The Legislature passed and Gov. Schwarzenegger signed a budget in September 2008. The State Controller reported that payments would be released within 48 hours of the budget’s approval. (Last updated September 2008)

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143. District of Implemented a program to - The District has implemented “Street Calls,” a program that redirects residents Not reported. Columbia reduce non-emergent 911 who frequently call 911 for non-emergency health problems. Many of these calls. callers are Medicaid recipients. - Through the program, EMS workers visit the homes or recent address of the 30 most frequent 911 callers over the past 15 months. The EMS workers treat the callers or give health assessments and referrals, as needed. - The program director believes that the program will have “ripple effects” that will lead to Medicaid cost savings by averting potentially major health risks. The program is currently part of a $3.6 million budget initiative to improve emergency services. (Last updated May 2008)

144. District of Reforming the District’s - The District has implemented more stringent auditing processes to reform Not reported. Columbia Medicaid billing practices. Medicaid billing practices. (Last updated November 2008)

145. Delaware Considering options to - All Delaware state agencies have been asked to recommend budget cuts that The hospital closures are implement state budget cuts. will reduce the state budget by 15 percent. estimated to save $2.5 million the first year, and - State Secretary Vinci Maconi has suggested closing two state hospitals and $4 million annually creating state “floating holidays” to reduce overtime costs. thereafter. - Delaware agencies implemented an eight percent budget cut in the current The floating holidays state fiscal year. option is estimated to save (Last updated November 2008) almost $300,000.

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146. Iowa Implementing a 1.5 percent - Gov. Chet Culver issued an executive order implementing a 1.5 percent The 1.5 percent reduction across-the-board reduction. across-the-board reduction in state General Fund expenditures, including is estimated to save $91.4 Medicaid spending. Details on the implementation of the 1.5 percent million across all state Medicaid reduction are under development, but Senate Majority Leader agencies. Michael Gronstal indicated that the Legislature would try to avoid cutting services, but may freeze provider rates. (Last updated December 2008)

147. Florida Considering increasing - Gov. Charlie Crist has proposed to increase required county contributions for Estimated to generate $194 county long-term care Medicaid long-term care services. million. contributions. (Last updated December 2008)

148. Florida Considering merging - Florida is considering merging the regulation functions of AHCA with the Estimated to save $3.97 department functions for quality-assurance functions of the Department of Health to generate million. administrative efficiencies. administrative efficiencies. (Last updated December 2008)

149. Florida Proposing to reduce - The Agency for Persons with Disabilities is proposing to reduce payments to Not reported. payments to families caring families caring for disabled persons in their homes and capping payments to for the disabled. individuals with severe disabilities. - The proposal is in response to Governor Charlie Crist’s request that all state agencies provide a plan for reducing their budgets by 10 percent. (Last updated October 2008)

150. Florida Considering various - Florida Governor Charlie Crist has proposed two initiatives to increase state Not reported. initiatives to generate state revenue: increase the number of video game terminals in the state, and revenue. increase the sales tax for Internet sales. - Gov. Crist is currently considering comments on these initiatives. (Last updated November 2008)

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151. Georgia Considering a variety of cost - Georgia Governor Sonny Perdue has ordered State officials to consider options Not reported; the State is containment initiatives. for implementing a 3.5 percent budget reduction to the State Medicaid estimated to have a $600 program budget for SFY 2009. million shortfall for SFY 2008. - Gov. Perdue is also anticipating the State will need to reduce the Medicaid budget by four percent in State Fiscal Year 2010. For more information, see the Georgia Considering provider reimbursement increases item in this matrix. (Last updated July 2008)

152. Indiana Recouping money paid for - The State of Indiana is recouping money paid for services rendered by Estimated to recoup services rendered by providers who were listed on the U.S. Department of Health and Human $435,000. unapproved providers. Services “excluded individuals” list. - The State issued fines to 23 different providers, including hospitals. (Last updated November 2008)

153. Kentucky Considered cutting state - Governor Beshear had previously announced that his administration was Not reported. funds to address a budget considering Medicaid budget cuts of up to 12 percent to resolve a $600 million shortfall. budget shortfall. - Gov. Beshear’s proposed SFY 2009 budget did not identify any Medicaid- related budget reductions. (Last updated March 2008)

154. Kentucky Considering options to - Governor Steve Beshear has asked every state agency and public university to Not reported. implement state budget cuts. submit recommendations for implementing a four percent budget cut. - Gov. Beshear estimates the State will run a budget deficit of at least $500 million. (Last updated November 2008)

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155. Louisiana Considering various changes - Gov. Bobby Jindal’s mid-year SFY 2009 budget adjustment proposes to Not reported. to impact service utilization. change inpatient institutional admissions and length of stay criteria to meet current clinical standards of care. The budget also proposes to implement prior authorization for certain outpatient procedures. (Last updated December 2008)

156. Louisiana Implementing e-prescribing. - Louisiana is launching an electronic system for Medicaid prescription The initiative is expected medications. Physicians will be able to issue prescriptions from their to cost $1.2 million for computer or personal mobile device. The hand-held electronic device can initial implementation and allow physicians to access the Medicaid formulary, patient history and drug save $4.8 million annually. information. - The system will be provided to the 500 physicians who have the highest percentage of Medicaid prescriptions. (Last updated March 2008)

157. Illinois Considering cuts to address a - Illinois Governor Rod Blagojevich has estimated a $2 billion budget shortfall Estimated Medicaid cuts budget shortfall. for the next state budget. State officials are considering a variety of cuts to have not been reported. address the shortfall. - In addition, the State has an estimated $4 billion backlog in unpaid Medicaid claims, due to a cash flow shortage in the state. Gov. Blagojevich is proposing to address the cash flow shortage through short-term borrowing. (Last updated November 2008)

158. Maine Delaying payment of - Maine has put $39.6 million in Medicaid claim reimbursements on hold, due Not applicable; State will Medicaid claims due to to a shortfall in the SFY 2008 Medicaid budget. pay claims in July 2008. inadequate funds. - The State attributes the shortfall to an unexpected increase in Medicaid claims during May and June of 2008. - The State plans to pay the claims in July 2008, when the SFY 2009 funds will be available. (Last updated June 2008)

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159. Michigan Considering a private group’s - Detroit Renaissance, a private organization, has proposed that Michigan Not reported. proposal for Medicaid cost eliminate Medicaid eligibility for certain optional categories such as caregivers containment. of Medicaid-enrolled children. This recommendation is one of several proposals the group submitted to the State regarding the budget. Other proposed cost containment measures include reducing provider payments, increasing recipient copayments and reducing services. - The Detroit Renaissance’s organizational mission is to accelerate the Detroit area’s economic growth. (Last updated September 2008)

160. Nevada Considered various Medicaid - Governor Gibbons is considering a number of cost containment measures for Not reported. cost containment options. the State’s Medicaid program, including. • Increasing audits of doctor and hospital claims. • Reclaiming assets of deceased Medicaid recipients, pursuant to the Deficit Reduction Act of 2005. • Increasing options for long-term care. • Redesigning the State’s dental benefits. - Gov. Gibbons has directed various Nevada agencies, including Medicaid, to develop plans for five percent budget cuts that will reduce the State budget by $184 million. Governor Gibbons claims that the State is facing the prospect of declining tax revenues in future years. - The Governor and Nevada legislators agreed to a plan on April 9, 2008 that cuts state funding by $349 million through delay of capital improvement projects, expenditure of reserve funds and changes to selected programs. The State reported no operating budgets were cut. (Last updated March 2008)

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161. New Jersey Considering a variety of cost - Governor Corzine is considering a report from the Government Efficiency and Not reported. containment initiatives. Reform Commission that makes recommendations for cutting costs for government worker and retiree health programs and the Medicaid program. See the New Jersey Considering imposing cost sharing for Medicaid recipients item under the Recipient Cost Sharing section for details on Gov. Corzine’s SFY 2009 budget proposal. (Last updated June 2008)

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162. New Jersey Auditing Medicaid eligibility - The New Jersey Office of the State Auditor conducted an audit of State health Not reported. and medical equipment programs and found that: monitoring functions. • More than 800 people in NJFamily Care exceeded the income requirements for the program. • The NJFamily Care program did not adequately verify income. • New Jersey Medicaid did not monitor all medical equipment providers, and the State spent $2.1 million for equipment that another provider should have covered. - According to the Office of the State Auditor, the State does not have immediate plans to pursue criminal cases related to these errors, but the State does plan to strengthen “weaknesses” in the current processes. - New Jersey Senator Barbara Buono has introduced legislation that imposes more stringent guidelines for eligibility verification processes and requires other New Jersey departments to increase internal auditing and oversight of the State’s health programs. (Last updated April 2008)

163. New Mexico Considering options to slow - New Mexico Governor Richardson is considering options to slow the State’s Not reported. enrollment growth. growth in Medicaid enrollment. The State experienced a surge in enrollment in November 2007 (275,000 children and 143,000 adults). - Among other proposals to slow the growth, the State plans to discontinue outreach efforts to low-income families. If the growth is not sufficiently curtailed, officials will consider spending reductions through provider reimbursement cuts or service reductions. (Last updated April 2008)

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164. New York Considering limiting - Former Governor Spitzer’s administration indicated that, using its selective Not reported. Medicaid reimbursement to contracting authority, it would limit Medicaid reimbursement for bariatric selected hospitals for surgery in New York City to five hospitals. bariatric surgery. - Former Gov. Spitzer cited quality and cost as the main reasons for the limitations. - Hospitals report that, without Medicaid reimbursement for the procedures, they would likely not be able to maintain their bariatric surgery programs. (Last updated March 2008)

165. New York Considering budget cuts for - New York Governor David Paterson indicated his 2009-2010 budget will Part of a series of cuts Medicaid. include cuts aimed to slow the growth in Medicaid spending. Gov. Paterson’s that aims to save $699.7 proposed cuts will reduce spending growth from two percent to one percent. million in 2009-2010 and $623.4 million in 2010- - The State expects Medicaid enrollment to increase in 2009, which will further 2011. increase the Medicaid budget by as much as 10 percent. - In addition to the Medicaid cuts, the State will also cut the budget by delaying salary payments and freezing rates for state workers. A report indicated Gov. Paterson has not yet considered laying off state employees. - Gov. Paterson introduced New York’s 2010 budget to the Legislature in December 2008, five weeks before it was due. The budget calls for $3.5 billion in cost savings for Medicaid and other health care programs, but still assumes a growth in Medicaid enrollment of 3.8 percent. For more information on Gov. Paterson’s FY 2010 budget, see the Proposing to cut Medicaid provider reimbursement rates, Considering changes to assessments, “Rightsizing” state agencies, and Proposing pharmacy cost saving initiatives items in this matrix. (Last updated December 2008)

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166. New York “Rightsizing” state agencies. - Governor David Paterson’s 2009-2010 budget proposes to merge the office of Part of a series of cuts that the Medicaid Inspector General with the Office of the Welfare Inspector aims to save $699.7 General. million in 2009-2010 and $623.4 million in 2010- - This executive budget change is part of an initiative to streamline or 2011. “rightsize” state government by “eliminating duplicative services, consolidating overlapping state agencies, closing underutilized facilities, lowering the cost and size of the state workforce and consolidating back-office operations.” - The proposed budget recommends eliminating, merging or integrating seven state agencies with existing agencies. - For more information on Gov. Paterson’s FY 2010 budget, see the Proposing to cut Medicaid provider reimbursement rates, Considering changes to assessments, Considering budget cuts for Medicaid, and Proposing pharmacy cost saving initiatives items in this matrix. (Last updated December 2008)

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167. New York Conducted an audit of - New York Comptroller Thomas DiNapoli conducted an audit of Medicaid Not reported; recovery Medicaid claims. claims in 2007, and concluded that $55 million in claims were fraudulent. plan for claims not discussed. - The Comptroller recommended a series of policy changes for the Health Department to implement while the Controller’s office recommends claim system programming changes aimed to reduce the incidence of fraud. (Last updated December 2008)

168. Ohio Conducting an audit of State - Ohio has conducted an audit of all State spending, and determined that the Expected to recover a spending. Ohio Department of Job and Family Services overpaid Medicaid providers by portion of the $1.5 million as much as $6.1 million. subject to recovery. - Upon review, the Department believes that only $1.5 million of the total amount is subject to recovery. (Last updated June 2008)

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169. Ohio Cutting state funds to address - Governor Strickland has issued budget cuts to all state agencies to address a Originally estimated to a budget shortfall. budget shortfall estimated to be between $733 million and $1.9 billion by the save $67 million. end of fiscal year 2009. December 2008 budget - The budget cuts include a $67 million reduction in funds for the Department of cuts are estimated to save Jobs and Family Services, the agency that administers the Medicaid program. $640 million. - Gov. Strickland originally said that most cuts will be addressed through cost savings, management strategies, program cuts, job cuts and operating efficiencies. - In May 2008, the Ohio Department of Jobs and Family Services announced that the State is eliminating 554 jobs to comply with Gov. Strickland’s request to reduce agency spending. The Department does not have immediate plans to cut services to recipients. - The eliminated jobs represent approximately 14 percent of the Department’s staff. Under the plan, 180 positions will be eliminated, 254 vacancies will not be filled and 120 employees are expected to take an early retirement offer. (Continued on next page)

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170. Ohio - Gov. Strickland originally indicated he would order more budget cuts in (Continued) early 2009, however, by mid-December 2008, Ohio’s budget outlook was “substantially worse” and Gov. Strickland announced more reductions earlier than expected. • Gov. Strickland ordered a 5.75 percent state spending reduction, which will generate $640 million. • The Ohio Department of Jobs and Family Services is cutting $31 million from the budget; preliminary reports indicated that these cuts would likely be “administrative” cuts. • Ohio Medicaid Director, John Corlett, is also considering cuts recommended by the Ohio State Auditor. The State Auditor claims that, had the State implemented the recommended cuts two years ago (when they were originally proposed), they would have yielded a $300 million cost savings. Examples of the recommended cuts include: increasing generic drug prescriptions and making changes to the Medicaid Information Technology System. • Gov. Strickland’s revised budget assumes a six percent increase in the federal share of Medicaid spending in 2009, so more budget cuts might be required if the federal funding is not available. (Last updated December 2008)

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171. Pennsylvania Creating a new program to - The Pennsylvania Department of Public Welfare has announced a new Not reported. reduce preventable hospital program to stop Medicaid payment for medical care that involves preventable errors. hospital errors. The policy also prohibits hospitals from charging patients for these errors. - The Commonwealth will examine all Medicaid claims for any of 27 identified errors called “never events.” - The policy is effective January 14, 2008. The policy does not apply to care provided under Medicaid managed care arrangements, however, the Commonwealth expects Medicaid managed care companies to adopt similar policies. (Last updated January 2008)

172. Rhode Island Reviewing policies for use of - Rhode Island is reviewing several of the State’s policies to provide state- Not reported. Federal funds. subsidized bus passes to RIte Care recipients, in response to Federal scrutiny. - For more than 10 years, the State has provided bus passes to recipients. For SFY 2008, the State anticipated spending $14 million in Medicaid dollars to provide 27,000 bus passes. - The Federal Inspector General has issued a draft finding of noncompliance, but has not yet indicated if financial penalties or remuneration will apply. - This Federal finding is part of a larger review of the State’s welfare program. (Last updated January 2008)

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173. South Carolina Implementing program ⁻ As part of an effort to save $61 million in state funds, the South Carolina The reductions in administration efficiencies. Department of Health and Human Services: contractor spending and disease prevention grants • Eliminated 100 jobs. were estimated to save • Instituted a hiring freeze. $1.5 to $2.3 million. • Furloughed employees for three days. ⁻ Earlier in the year, the Department was also required to reduce spending by $77 million in state funds. The Department: • Reduced the amount it pays contractors for services. • Cut grants that support local disease prevention efforts (estimated to save $1 million). ⁻ For more information, see the Reducing Medicaid eligibility item on this matrix. (Last updated December 2008)

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174. Utah Implementing a program to - The Utah Department of Health, Bureau of Managed Health Care is Not reported. reduce unnecessary implementing a program to reduce unnecessary emergency room visits among emergency room visits. Medicaid recipients. - Through the program, the State will identify incidents when recipients had non-emergent visits to the emergency room. A State employee will call these recipients and provide educational information about appropriate use of a hospital emergency room. The employee will also help the recipient understand how to seek non-emergent care from other providers or community health centers. - The State will fund this new program through a $503,000 Federal grant awarded under the Deficit Reduction Act of 2005. The Federal government awarded 20 such grants to different states for the purpose of helping recipients obtain non-emergency care. (Last updated June 2008)

175. Virginia Considering administrative - Governor Tim Kaine is proposing to employ administrative efficiencies in the Not reported. efficiencies to avoid service Medicaid program to address the Commonwealth’s almost $1 billion shortfall reductions. without reducing services to enrollees. (Last updated October 2008)

176. Washington Cutting state funds to address - Governor Christine Gregoire and staff have been developing the State’s next Originally estimated to cut a budget shortfall. two-year budget to include at least $5.7 billion in total cuts. The Governor’s $130 million to address a Office is considering $130 million in cuts to Medicaid and related healthcare projected $2.7 billion

programs. budget shortfall.

- Gov. Gregoire will release the next budget in January 2009. - For more information, see the Considering reducing physician payments and Considering reducing new Medicaid services items in this matrix. In addition to these proposed cuts, the Department of Social and Health Services is also considering a reduction in force through employee layoffs. (Last updated November 2008)

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177. Wisconsin Considering a variety of cost - All Wisconsin agencies have until November 2008 to achieve $270 million in Not reported; the State is containment initiatives. budget cuts to address the State’s anticipated budget shortfall for the 2007 to estimated to have a $131 2009 biennium budget. million Medicaid shortfall for the SFY 2007 to 2009 - Wisconsin Governor Jim Doyle does not want to cut health services provided biennium budget. to Medicaid recipients. Officials at the Department of Health Services have stated that they will look instead for administrative efficiencies, like not filling vacant jobs. Gov. Doyle announced in November 2008 that the State plans to not fill 3,500 state jobs and eliminate employee bonuses to achieve savings using these administrative efficiencies. - Gov. Doyle also plans to cut all agency budgets by 2.5 percent in the coming year. (Last updated November 2008)

178. Multiple states Requesting increased federal - Forty state governors met with President-elect Obama to request additional Varies by state. assistance. federal assistance to pay for state Medicaid costs. (Last updated November 2008)

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