1

Washington Medicaid Study

Proposed Final ReportJoint Legislative Audit & Review Committee

January 7, 2004

Deborah Frazier and Eric Thomas

2

Study Goals

JLARC added study to its workplan at the October 2002 meeting

Initiated to better understand this driver of 30% of state appropriations

Chose to look at Medicaid comprehensively Relation to national perspective Understand how Medicaid is managed

3

DSHS Administers Medicaid

Report page 2

60%60% 40%40%

$12 billion 2003-05 Washington Medicaid Expenditures

Secretary, DSHSSecretary, DSHS

MedicalAssistance

Administration

Aging andDisability Services

Administration

ChiefInformation

Officer

Health andRehabilitationAdministration

ChiefFinancialOfficer

Children'sAdministration

ChiefAdministrative

Officer

EconomicServices

Administration

JuvenileRehabilitationAdministration

4

Medicaid Drives DSHS

96%$2.2b 91%

$1.2b

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Report page 11

DSHS Med. Aging Dev. Mental Sub. Children’s Juv. Econ. Admin. Asst. Dis. Health Abuse Rehab Svcs.

82%$1.0b

98%$7.1b

76%$12.0b

18%$42m

18%$167m 9%

$182m 6%$13 m

24%$56m

5

Washington Medicaid: Findings and Recommendations

Management Structure

Data

Forecasts and Managing Costs

DSHS and OFM Concur or Partially Concur with Recommendations

Report pages: 47-51

6

Key Findings: Management Structure

DSHS is managing a large, complex health system with a decentralized management structure

Structure poses challenges No single point of accountability for the

Medicaid program Non-compliance with federal reporting

requirements for the total Medicaid program No regular review of management

functions or program as a whole Cabinet meetings and other cross-organization

meetings

Report page: 47

7

Recommendation: Management Structure

DSHS should create a mechanism for management review

Report by April 2004 DSHS and OFM both partially concur

Misreading of recommendation Management review does not require change

in management structure Review does require assuring the effective

and efficient operation of the entire program

Report page: 47, 55-65

8

Key Findings: Data Systems

Multiple, aging data systems do not support a comprehensive approach to Legislative policy making or DSHS management of Washington Medicaid

An example of data problems is a required federal report that is 12 quarters in arrears

We have a chance, today, to address data issues: MMIS reprocurement

Report pages: 49-51

9

Recommendations: Data Systems

DSHS should become current on federal reporting

Report by April 2004

New MMIS should integrate data to support comprehensive Legislative policy making and DSHS management

Report by February 2004

Report pages: 49-51

10

Key Findings: Forecasting and Managing Costs

Rates for the home and community based programs are not consistent

Both managed by the Aging and Disability Services Administration

More structure and consistency to Aging’s rates

Review to determine if DD could use Aging’s rate methods

Report pages: 48-49, 67-81

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Recommendation: Forecasting and Managing Costs

DSHS report its progress ensuring consistent rates to the Legislature

Report by June 2004

Report pages: 48-49, 67-81

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Key Findings: Forecasts and Managing Costs

$5 billion of expenditures not rigorously scrutinized Includes nursing home care, home and

community based services for the elderly and disabled, and community care for mental health

Not all Medicaid programs are formally forecast

Report pages: 47-50

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Recommendation: Forecasting and Managing Costs (cont’d)

The Legislature should consider engaging a consultant to: Examine $5 billion in biennial expenditures to

evaluate cost containment efforts and identify other cost containment opportunities

Examine the program elements and data sources to assess the best techniques for forecasting future caseloads

Initial report due by November 2004 Final report due April 2005

Report pages: 47-50

14

Conclusions

JLARC’s decision to examine Washington Medicaid as one program yielded new insight into 30% of state appropriations Perspective - comparison to national program Comprehensive picture of DSHS management Community services rates inventory

Follow up in coming months