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This week, our In Focus section reviews the projected healthcare expenditure and enrollment data from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary, published June 14, 2023. The Office of the Actuary provides annual updates to historical and projected National Health Expenditure data on Medicare, Medicaid, CHIP, and other public insurance programs, as well as commercial healthcare insurance.
CMS projects that the average annual growth for national healthcare spending from now through 2031 will be 5.4 percent. CMS estimated that the number of insured individuals in the United States was projected to reach a high of 92.3 percent in 2022 and would decrease to 90.5 percent by 2031. CMS projects 93.6 million Medicaid and CHIP members will account for more than $1.2 trillion in annual spending in 2031 and that 76.4 million Medicare beneficiaries will account for more than $1.8 trillion in expenditures that year. A summary of other key takeaways from the actuarial report follows.
Approximately 92 million people were enrolled in Medicaid and CHIP programs in 2021. Enrollment is projected to have reached a high of 97.6 million in 2022 and is expected to fall between 2023 and 2026 because of Medicaid redeterminations. CMS projects the largest loss in 2024, with 8 million people leaving Medicaid and CHIP that year alone. By 2026, enrollment is projected to hit a low of 89.7 million and start to rise back up in the subsequent years until reaching 93.6 million enrollees in 2031.
Table 1. Historical and Projected Medicaid/CHIP Enrollment (in Millions)
Figure 1. Historical and Projected Medicaid/CHIP Enrollment (in Millions)
Medicare enrollment is projected to continue growing steadily. CMS estimates that Medicare beneficiaries totaled 63.6 million in 2022. By 2031, Medicare enrollment is expected to climb to 76.4 million.
Medicaid expenditures are expected to grow by 5 percent on average in 2022−2031. In 2022, the Medicaid annual growth rate was projected to be −2.1 percent. Following the public health emergency unwinding, average expenditure growth would pick up to 5.6 percent in 2025−2031.
CMS estimated that total Medicaid and CHIP annual spending in 2022 was $828.4 million; by 2031, it is projected to hit $1.2 trillion. For context, private health insurance is projected to reach nearly $2.1 trillion in 2031.
Table 2. Historical and Projected Medicaid/CHIP Expenditures (in Billions)
Figure 2. Historical and Projected Medicaid/CHIP Expenditures (in Billions)
Medicare spending is projected to grow to more than $1.8 trillion in 2031 from $944.2 million in 2022. During this time, average annual expenditure growth is projected to be 7.5 percent. In 2022, spending growth dropped to 4.8 percent compared with 8.4 percent in 2021 because fee-for-service beneficiaries were using fewer emergency department services and as a result of reinstated payment rate cuts associated with the Medicare Sequester Relief Act of 2022.
Medicaid Expenditure Projections by Category
CMS provides a historical and projected breakdown of expenditures by category for Medicaid only (CHIP is bundled with Department of Defense and other public spending). Table 3 summarizes the projected change in annual expenditures for several categories of services and other expenditures. It also shows each category’s percentage contribution to total Medicaid expenditures and the compounded annual growth rate (CAGR) in 2021−2031 for each category of spending. Hospital spending, personal care/residential/other, and physician/clinical expenditures are projected to continue to be the largest contributors to overall Medicaid expenditures, together equaling approximately 65 percent of total expenditures in 2021 and a projected 66 percent in 2031.
Table 3. Historical and Projected Medicaid-Only Expenditures by Category, 2021-2031 (in Billions)
This week, our In Focus section highlights a Health Affairs Forefront post, “To Treat Residents With OUD, Nursing Facilities Must Improve Practices and Reduce Stigma,” published June 8, 2023. Health Management Associates (HMA) consultants Dina Besirevic, Kamala Greene Genece, Debbi Witham, David F. Polakoff, and Barry J. Jacobs wrote the article.
The HMA colleagues note that two recent healthcare industry trends are converging to change the admission criteria and clinical practices that some skilled nursing facilities (SNFs) use. Driving one movement is the opioid epidemic in which increased prevalence of fentanyl and its medical complications are spurring the need for posthospital discharge SNF admissions. The other stems from the low occupancy rates in many SNFs since the pandemic. As a result, more SNFs are considering filling beds by admitting individuals with opioid use disorder (OUD) for the first time.
In many respects, this a positive development. The need for skilled nursing care, such as medication-assisted treatment (MAT), for individuals with OUD has never been greater. A March 23, 2023, US Drug Enforcement Administration public safety alert reported that recently analyzed fentanyl samples in 48 of the 50 states had been adulterated with xylazine, or “tranq,” a veterinary sedative added to prolong an opioid high. According to the Substance Abuse and Mental Health Services Administration (SAMHSA), extensive xylazine use commonly causes severe skin wounds requiring weeks of intravenous antibiotics and skilled wound care to prevent amputations. Providing well-managed post-acute care for these patients could lead to improved outcomes.
But admitting and treating individuals with OUD now poses multiple challenges for SNF staffs and administrators. Many of these healthcare workers lack training in OUD pharmacological and support care. Some have stigmatizing attitudes toward individuals with OUD. To address these concerns, SNFs across the country have developed different practice models. Examples include:
- Laguna Honda in San Francisco trains its staff to understand OUD, recognize the signs of resident opioid use, and work closely with nearby OUD providers to provide all OUD treatment.
- At Highbridge Woodycrest Center in the Bronx, NY, the storage and administration of MAT is managed by the SNF staff through a collaborative relationship with a community-based provider, Bronx Care Health System, which prescribes the medications and then delivers them to the facility.
- At other SNFs, SNF physicians and nurse practitioners prescribe buprenorphine with consultation as needed from community-based OUD providers.
HMA’s experts in OUD and SNFs are working collaboratively to assist SNFs interested in exploring the clinical, financial, and operational opportunities and challenges with this emerging line of business. For questions or inquiries, please contact Barry J. Jacobs.
This week, our In Focus checks in on the Medicaid unwinding work and key issues HMA experts are watching as more states resume their normal policies and processes for determining eligibility. A total of 19 states started disenrollments effective for April or May coverage, and 22 additional states plan to start ending coverage this month. States are scheduled to submit the next monthly report by June 8, 2023.
As explained in earlier In Focus articles, (here, here and here) federal COVID-19 relief laws allowed states to receive higher federal funding for Medicaid as long as the state did not terminate Medicaid coverage for anyone enrolled in Medicaid during the public health emergency (PHE). One result of the continuous coverage policy was sustained growth in Medicaid enrollment; more than 21 million additional individuals were continuously enrolled in Medicaid for up to three years between February 2020 and March 2023. In December 2022, Congress ended the Medicaid continuous coverage policy after March 31, 2023. States were allowed to begin processing redeterminations as early as February 2023 and start disenrolling ineligible individuals as early as April 2023.
Preparations for the Medicaid unwinding have been under way for well over two years. The Centers for Medicare & Medicaid Services (CMS), states, Medicaid health plans, providers, beneficiary advocates, and other interested stakeholders have been working to ensure that the policies, outreach, and assistance are in place to support this massive eligibility renewal and redetermination initiative.
What Do We Know… Or Not Know?
Most of the available forecasts project between 10-15 million enrollees will lose Medicaid coverage. The Health Management Associates (HMA) insurance mix model projects that more than 10 million of the approximately 90 million Medicaid enrollees are at risk for disenrollment. HMA’s model illustrates the variety in state approaches to managing the resumption of eligibility redeterminations as well as key insights related to the differential impact by Medicaid eligibility categories.
- Based on published information, the number of individuals who were disenrolled from Medicaid in April through May is likely to approach 500,000. In these early days of the unwinding period, HMA experts are closely reviewing the reports and engaging with key stakeholders in individual states. Several issues already are garnering more attention, such as the impact on child enrollment, churn and experiences in states using the extended reconsideration period flexibility, among others. Stakeholders will want to monitor how these and other program nuances evolve over the next year.
- We do not yet have robust or consistent data from the states that have resumed their normal processes for determining eligibility. States must submit disenrollment reports to CMS each month, and CMS must publish this information. The states are not, however, required to publish this information on their website. While some states have chosen to publish the data or plan to do so, there is no consistent approach to the specific data states post. For example, while most states publishing a state data dashboard are sharing the number of renewals they are processing each month, only slightly more than half also are sharing the number of renewals resulting in coverage terminations.
CMS is not expected to publish the state data before the end of June. Once this information is available, the state unwinding reports may provide a more comprehensive and consistent picture of enrollment over the next year.
In addition, the total number of “procedural terminations” currently is difficult to determine. Lack of consistent public reporting creates gaps in the data about the number of individuals disenrolled because they did not provide a timely response to the state’s request for more information (or for other procedural reasons). As Medicaid stakeholders know, the procedural disenrollment number is critical because these individuals could still be eligible for the program.
- Early disenrollment numbers should be analyzed carefully and in the context of the state. As noted earlier, the full eligibility renewal and disenrollment reports are unavailable at this time. We do know, however, that the available data is best analyzed in the context of the state’s unwinding plan (e.g., how the state is sequencing its eligibility reviews). The sequencing, pace, staffing, messaging consistency, partner outreach and assistance, and other factors will result in variation in state experiences. States are actively analyzing the data as the information is released and considering course corrections that may be needed, which could affect enrollment.
- Ongoing federal and state collaboration is improving preparations and allowing partners to address concerns as they arise. CMS and states have been transparent about the magnitude of the Medicaid unwinding and the fact that challenges will be inevitable throughout this process. The experiences reported by the first tranche of states to begin their unwinding period reinforce those points. They also provide important lessons for states that are or will shortly resume normal eligibility operations.
What to Watch
HMA’s experts are working with states, Medicaid health plans and their partners, providers, and advocacy organizations to identify and implement solutions to some of the known challenges. We also are looking ahead to forthcoming data, qualitative input, and other important developments that may inform federal and state policies and operations beyond the unwinding period.
- Unwinding trends. Though it is too early to definitively identify trends, HMA experts are monitoring the early state data, and we are prepared to analyze the CMS reports once they are published. We anticipate the CMS published data could be more instructive regarding the impact of the unwinding on enrollment, including states or regions that could benefit from additional outreach and assistance strategies, disproportionate impacts on certain demographic groups, new flexibilities that states may want to consider, and steps that health plans, hospitals and health systems, providers, and other partners could advance.
- State operational plans. As of late May, CMS officials reported they have not asked any state Medicaid agency to develop a corrective action plan related to the unwinding; however, this does not mean that federal officials do not have concerns about the experiences and data being reported out of certain states. States, their business partners, and advocates will all benefit from monitoring shifts in state plans, potential future CMS resources and direction to states such as additional reporting or modifying eligibility processes.
- Coverage Program Transitions. Significant attention has been appropriately placed on the Medicaid disenrollment numbers. HMA experts also are closely watching for new data on the number of individuals who successfully transition and enroll in qualified health plans offered in the Health Insurance Marketplaces. In the short term, the Medicaid unwinding could have a notable impact on total enrollment in Marketplace plans as well as provider payer mix. This could affect longer-term policy, strategy, and operational decisions for officials at the federal and state levels, managed care organizations, providers, and other stakeholders. For example:
- Health insurers should assess the opportunity to participate in the Marketplace program. Other insurers may need to develop new strategies to remain competitive in the Marketplace.
- Providers have similar assessments to conduct related to changes in the number of uninsured people to whom they deliver care, as well as their payer mix and the Marketplace plan networks in which they participate.
- Policymakers may revisit Marketplace regulations and standards in response to enrollment growth, enrollee demographics, and acuity of enrollees in Marketplace plans.
Medicaid agencies, health plans, all types of Medicaid providers, and advocacy organizations should continue to analyze their immediate needs during the Medicaid unwinding. They should also be planning to identify and incorporate lessons from this transition period, as well as preparing for policy and operations changes in the post-unwinding environment.
HMA: What We’re Watching
On June 8, 2023, the Health Care Payment Learning & Action Network (LAN) will hold a virtual meeting focused on accountable primary care. The LAN — an initiative supported by the Centers for Medicare & Medicaid Services (CMS) Innovation Center — is a group of public and private health care leaders that provide thought leadership, strategic direction, and ongoing support to accelerate our care system’s adoption of alternative payment models (APMs). During the session, CMS Administrator Chiquita Brooks-LaSure and the Innovation Center’s Deputy Administrator and Director Liz Fowler will share their vision for accountable primary care.
Over the past several months CMS leaders have discussed their intent to accelerate the transition to value-based care and more accountable primary care. They have identified key principals and hinted at certain components of a potential new primary care model. Additionally, the Innovation Centers’ earlier strategy documents have highlighted the imperative to include payers beyond Medicare, importantly Medicaid and commercial insurers, in models to achieve person-centered accountable and equitable care.
This meeting is notable because the Innovation Center’s models can drive transformational shifts in health care delivery and payment across public and private payers at the system and practice levels. Providers, health systems, insurers, and other interested stakeholders will want to closely monitor the LAN discussion for more information about CMS’ evolving thinking and future opportunities related to a potential model for accountable primary care. HMA experts are available to work with health care organizations and stakeholders to interpret and respond to developments flowing from the LAN session.
LAN meeting registration and information is available here.
On May 31, the House passed H.R. 3746 – the Fiscal Responsibility Act of 2023, otherwise known as the “debt ceiling” bill, which increased the federal debt limit, established new discretionary spending limits, rescinded unused funds, and expanded work requirements for federal programs. It was passed by the Senate on June 1 and will soon be signed into law. What does all this have to do with healthcare workforce? Well, part of the rescindment plan comes from $28 billion in unused pandemic funding, with a substantial portion of those funds that were allocated for healthcare workforce efforts. This includes funds set to be used for mental health and substance use disorder training, grants to improve mental health and burnout in the healthcare workforce, and additional educational and training grants for promoting future workforce. Overall, part of $28 billion specifically includes removal of $1.7 billion from the Centers for Disease Control and Prevention (CDC) and $13.4 billion from the Department of Health and Human Services (DHHS), including $10.4 billion from public health and social services emergency funds.
So, what does this mean for the healthcare workforce? It means healthcare organizations will need to continue to optimize their current and future workforce plans, without additional funding that could provide some relief.
At Health Management Associates (HMA), our healthcare workforce experts have not only partnered with health system leaders to identify real-world solutions, we have directly experienced the same challenges, because our team includes physicians, nurses, advanced practice providers, and former health system operations and financial executives who share the same lived experiences.
HMA offers a number of workforce solutions to healthcare communities across the spectrum. We cannot fill all your staffing gaps tomorrow, however, we can give you an innovative, model-of-care plan designed to lower costs, increase revenue, and position organizations for long-term financial success and operational sustainability.
- An experienced team of health system leaders, bedside clinicians, and workforce subject matter experts with real-world experience and modern health care delivery solutions
- A thorough quantitative and qualitative assessment including:
- Workforce capacity, needs, and gap analysis.
- Leadership and governance structure evaluation.
- Key regulatory and policy gap analysis.
- Compensation and benefits review.
- Clinical and/or non-clinical workflow evaluation.
- Provider billing practices and quality metric capture.
- Provider and staff utilization analysis.
What organizations receive is:
- A customized, comprehensive phased implementation plan that:
- Improves cash flow and maximizes revenue.
- Reduces turnover, increases retention, and improves health system culture.
- Optimizes the ‘Model of Care’ delivery while still maintaining quality and safety.
- Provides solutions for long-term financial success and operational sustainability.
- Offers on-going executive and leader coaching services to help provide support through the change management process.
Today’s healthcare workforce challenges are unwavering, especially given the recent passage of the “debt ceiling” bill. From significant workforce shortages, to rising costs and competition, to decreasing employee engagement and burnout, today’s health systems face tremendous challenges. But by understanding workforce and health system needs and identifying gaps and inefficiencies, employers can fully utilize the employees they have to their highest potential and deliver care more effectively and efficiently. Here at HMA, our delivery system optimization team can help health care communities struggling with workforce challenges do just that.
Contact our healthcare delivery system experts, who can partner with your organization to design a custom workforce solution for you.
- Roxane Townsend MD, Managing Director, Delivery Systems
- Melinda Estep, Managing Director, Delivery Systems
- Jennifer M. Orozco, DMSc, PA-C, DFAAPA, Principal, Delivery Systems
This webinar has been postponed and will be rescheduled.
Health Management Associates (HMA) is offering a 3-part series of webinars looking at the effect of proposed regulations on delivery of opioid treatment services to the population facing addiction issues. In this third and final webinar, HMA consultants will highlight opportunities for state regulators to shape policy and regulation of SUD treatment.
New federal regulations encourage significant changes to how opioid treatment is provided, with the goal of expanding access and improving patient-centered care. State regulators will need to adapt their regulatory practices and work closely with Medicaid agencies and treatment providers so the new regulations can achieve their intended goals. This webinar will discuss how State Opioid Treatment Authorities (SOTAs), licensing entities, and state Medicaid agencies will need to work together to craft updated regulations, facility licensing, and reimbursement practices that advance person-centered care.
- New Regulatory Requirements – Overview of state rules around opioid treatment vs the new requirements.
- How to Improve SUD Treatment Access – Specific recommendations on statutory and regulatory changes that could lead to more patient centered treatment options.
- States Leading the Way – Examples from states that are leading the way to expand access and reduce stigma.
Other webinars in this series:
One of only two firms selected in all seven domains out of 46 vendors.
The California Department of Health Care Services (DHCS) has developed a multi-year initiative whose goal is to improve health outcomes and health care quality through broad delivery, payment, and program reforms known as California Advancing and Innovating Medi-Cal (CalAIM). This includes the introduction of new programs and changes to existing programs that will occur over the span of five years. CalAIM further expands upon prior initiatives, such as Whole Person Care, the Health Homes Program, and the Coordinated Care Initiative, and strives to integrate California’s delivery systems to better facilitate the overall Medi-Cal program.
With the rollout of these programs and the vast requirements associated with them, DHCS and California’s Medi-Cal managed care health plans are now tasked with the challenge of implementing CalAIM and enabling the participation of community providers and partners in these opportunities. To support these partners, DHCS developed a funding initiative, known as Providing Access and Transforming Health (PATH) to aid in strengthening capacity and infrastructure of Community Based Organizations, public hospitals, county agencies, and others to stand up CalAIM. This five-year, $1.85 billion initiative includes the creation of a virtual Technical Assistance (TA) Vendor Marketplace that organizations can use to request resources and support from approved vendors through services that are fully paid for by the State.
Health Management Associates (HMA) is recognized as a valued partner to Payers, Community Based Organizations, public hospitals, and county agencies and has deep expertise in CalAIM policy, operations and implementation. Recognized for our extensive capabilities in the field, HMA is one of only two firms out of 46 vendors that received State approval to serve as a technical assistance vendor on the PATH Technical Assistance (TA) Marketplace for all seven domains:
- Domain 1: Building Data Capacity: Data Collection, Management, Sharing, and Use
- Domain 2: Community Supports: Strengthening Services that Address the Social Drivers of Health
- Domain 3: Engaging in CalAIM Through Medi-Cal Managed Care
- Domain 4: Enhanced Care Management (ECM): Strengthening Care for ECM Population of Focus
- Domain 5: Promoting Health Equity
- Domain 6: Supporting Cross-Sector Partnerships
- Domain 7: Workforce
HMA also has expertise in and hands-on experience with addressing the unique challenges experienced by providers and partner agencies serving rural communities. Please visit the PATH Technical Assistance (TA) Marketplace to access TA resources that can help strengthen capacity to provide high quality Enhanced Care Management (ECM) and Community Supports services for Medi-Cal members.