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MEDI-CAL COST SHARING MODEL

TECHNICAL REPORT AND USER GUIDE

PREPARED FOR THE CALIFORNIA HEALTHCARE FOUNDATION

AND THE CALIFORNIA ENDOWMENT

JUNE 13, 2005

Page i

Table of Contents I. Introduction .................................................................................................................1

II. Data Sources ...............................................................................................................6

III. Population Description ...............................................................................................8

Eligibility Category...................................................................................................................8

Age Bands...............................................................................................................................9

Income Level Relative to Federal Poverty Guidelines (FPL)...................................................9

IV. Medical Service Categories and Service Units.......................................................11

V. Savings Model Overview ..........................................................................................12

VI. Benefit Design ...........................................................................................................16

Worksheet 1 – Plan Options ...................................................................................................16

Worksheet 2 – Description of Copay Levels ..........................................................................17

Worksheet 3 – Benefit Plan Exclusions .................................................................................19

Worksheet 4 – Annual Out-of-Pocket Maximum ....................................................................21

Worksheet 5 – Monthly Premium ...........................................................................................22

VII. Model Assumptions ..................................................................................................23

Worksheet 6 – Decrease in Enrollment due to Premiums (for each eligible group)................23

Worksheet 7 – Utilization Savings Assumptions Due to Copayments ....................................25

Worksheet 8 – Additional Utilization Savings Due to Corollary Effects...................................28

Worksheet 9 – Additional Utilization and Cost Due to Substitution Effects.............................33

Worksheet 10 – Add Back Percentages .................................................................................34

VIII. Impact Estimates.......................................................................................................35

Worksheet 11a – Percentage Savings by Aid Category .........................................................35

Worksheet 11b – Percentage Savings Detail by Service Category ........................................35

Worksheet 11c – Percentage Savings Detail Summary by Income Level ..............................36

Worksheet 11d – Percentage Savings Detail Summary .........................................................36

Worksheet 11e – Total Fee for Service and Managed Care Program Savings ......................37

Worksheet 12 – Annualized Units / 1000 Savings ..................................................................38

Worksheet 13 – Percentage of Population Exceeding Out-of-Pocket Maximum ....................39

Page ii

List of Figures and Tables

Figure 1: 2003 Current Population Survey: Income Distribution of the Public Assistance Population ..............................................................................................................................10

Table 1: Units for Medical Service ...........................................................................................11

Table 2: Default Assumptions - Percent Decrease in Enrollment ............................................24

Table 3: Default Assumptions - Percent Reduction in Utilization Due to Direct Effect of Copayment Before Adjustment for Income Sensitivity ..........................................................26

Table 4: Default Assumptions – Income Sensitivity to Cost Sharing Requirements ................28

Table 5: Default Assumptions - Corollary Effects.....................................................................29

Table 6: Default Assumptions - Services With No Corollary Effects Estimated .......................30

Table 7: Default Assumptions - Services With No Corollary Savings ......................................30

Table 8: Default Assumptions - Substitution Effects ................................................................33

Table 9: Savings and Cost Components..................................................................................35

Appendices ......................................................................................................................38

Appendix A: Review of the Literature on Premium and Cost Sharing Requirements .............39

Appendix B.1: Eligibility – Aid Code Crosswalk .......................................................................52

Appendix B.2: Aid Code Descriptions ......................................................................................53

Appendix C.1: Service Type – DHS Vendor Code Crosswalk .................................................69

Appendix C.2: DHS Vendor Code List .....................................................................................71

Appendix D: Distribution of the Pregnant Women Population by Aid Code ............................74

Appendix E: Technical Advisory Group Participants................................................................78

I. Introduction

Background In January of 2004, Governor Schwarzenegger announced plans to restructure the California Medicaid Program, known as Medi-Cal. The $30 billion annual publicly funded health care program provides services to over 6.7 million low-income children, families, seniors and disabled Californians. Approximately 50% of the annual expenditure is state dollars; between 1999 and 2004, the Medi-Cal State General Fund (GF) expenditures grew by 41%. This growth was driven by a 32% increase in enrollment, due in part to program expansion, (1.7 million new beneficiaries) that resulted in an increase of $3 billion in state expenditures for Medi-Cal over the five year period. To ensure health care access and control the increase in the portion of the GF devoted to Medi-Cal in the proposed budget for FY 2004-2005, Governor Schwarzenegger announced his intention to submit a Federal waiver to redesign Medi-Cal to contain costs in a manner that would not result in deep cuts in eligibility or benefits. Among the options under consideration is to create tiered benefits, in which the set of covered benefits and cost sharing requirements would vary among program participants.

Purpose

With funding from the California HealthCare Foundation and The California Endowment, PricewaterhouseCoopers has developed a model to estimate the change in aggregate program enrollment, utilization, and expenditures resulting from various cost sharing requirements and benefit plans for California’s Medicaid beneficiaries covered by Title XIX of the Social Security Act. The Medi-Cal Cost Sharing Financial Model can include up to five different benefit designs at one time, including those with no copayments or premiums. This model also expands beyond many estimation models by incorporating assumptions regarding both the direct and indirect impact of premium and copayments on demand for services. The model contains default assumptions regarding the effect of a range of benefit designs. The default assumptions can be modified by PwC to test other assumptions, conduct a sensitivity analysis, or create a range of estimates.

This model was developed from June through December 2004, prior to the announcement of a formal proposal from the Schwarzenegger Administration on January 10, 2005. As such, the model was developed based on benefit design and cost sharing options discussed by the Administration at a meeting of the Medi-Cal Redesign Benefits and Cost Sharing Workgroup held in the Spring of 2004. The model design also reflects extensive feedback from the Technical Advisory Group (TAG) created for this project (TAG members are listed in Appendix D).

This Technical Report and User Guide is intended to provide insight into how the estimates derived from this model are produced, including key features and assumptions, an appreciation for the difficulty of producing precise estimates, and an understanding of the model limitations. A goal of the California HealthCare Foundation and The California Endowment is to ensure that

the model design is as transparent as possible. Appendix A provides findings from a focused review of the literature that describes the results of cost sharing requirements on low-income populations.

As part of PwC’s contract with the two foundations, PwC will use the model to estimate the effect of the cost sharing changes proposed by the Governor, and of any leading proposals that emerge as part of the legislative debate. These results will be presented in a separate document. Requests for modeling alternative benefit design changes or assumptions are welcomed and should be directed to Chris Perrone at the California HealthCare Foundation.

Model Overview

The general parameters that have been built into the model include:

• Plan Options: Up to five different plan designs can be modeled at one time.

• Covered Populations: Each plan option permits selection of Medicaid eligibility and age categories that would receive the given plan option. The model allows separate evaluation for fourteen different aid categories, each segmented into Children Under 21 and Adults Age 21 and Over. Each group is further stratified into four income levels measured relative to the Federal Poverty Level (FPL).

• Benefit Design – Covered Services: The model includes benefits that are mandated by Federal statutes, regulations, and policies. Each plan design permits inclusion or exclusion of covered benefits that are optional under Federal requirements but currently are included in the California Medicaid State Plan.

• Benefit Design – Cost Sharing: Each plan design permits exemption or application of premiums and beneficiary copayments for major categories of covered services. The model allows for different levels of copayment but does not include coinsurance as a type of point-of-service cost sharing. It also incorporates an out-of-pocket maximum for copayments.

The model allows the user to input assumptions related to benefit package and medical service options, exempt and non-exempt populations, premiums and copayments, and price elasticity of demand relative to income. It applies these assumptions to historical fee-for-service cost and utilization data to calculate the estimated savings. Managed care experience data was not available for this analysis; some results may be readily generalized to the managed care population, while others are not.

For example, to model a package for the Medically Needy – Families group that has a $10 monthly premium, a $2 copayment on physician office visits, and excludes genetic disease testing, the user enters these parameters in a benefit plan. Using the default assumptions, the

model calculates the direct cost savings due to adding a premium for this eligibility group. The model also estimates the direct and indirect impact of the copayment as a cost savings per physician office visit, utilization savings from averted physician office visits, changes in utilization of specialist services due to corollary effects, and savings from excluding genetic disease testing. Total net savings are calculated and expressed as a percentage of the current Medi-Cal FFS spending for that eligibility group.

Model Limitations

The Medi-Cal Cost Sharing Financial Model has several limitations, including the following:

• The model is designed to provide an order of magnitude understanding of the effect of various benefit design options for policy-making purposes. This model calculates a point estimate savings value for a given benefit design. However, these savings estimates should be considered to exist within a range of potential savings. A more detailed analysis would be required of any specific proposal to produce estimates of sufficient precision to be used in budgeting.

• The model uses Medi-Cal fee-for-service paid claims data (from EDS, the Medi-Cal fiscal intermediary) from calendar years 2002 and 2003. Results are expressed in percentage terms rather than in units (e.g., dollars, number of visits). Use of fee-for-service data means that the results of the model related to the effect of copayments may not translate directly to the managed care population. Specifically, the effects of premium requirements on participation rates can be expected to be the same for managed care and fee-for-service enrollees. Because of differences in the manner in which health care is delivered in managed care plans, the effect of copays may be somewhat different. Additionally, savings to the state associated with copayments for managed care enrollees will occur only if managed care payment rates are reduced to reflect the difference in the actuarial value of the benefit resulting from the imposition of copayments. Although we believe the results are generalizable, care should be taken in extrapolating the results of the model to the entire Medi-Cal population.

• The base data has not been trended to the current budget period. Consequently, to the extent changes in costs or utilization have occurred differentially either by service category or eligibility category, the aggregate savings estimates may be distorted. Detailed results are provided at the service category and eligibility category level; these results can be weighted by current budget amounts for each item to produce a more accurate total budget effect.

• Although some information is available regarding the impact of premiums on enrollment among low-income populations, by comparison there is relatively little empirical evidence regarding the impact of copayments on these same populations. The default assumptions used in this model reflect analysis based on the experiences of 8 million commercial lives, generally enrolled in employer-sponsored benefit plans, from the PwC Actuarial Medical Pricing Model, adjusted where appropriate based on the limited research literature.

The PwC Actuarial Medical Pricing Model (AMPM) relies on the experience of a working, insured population, and provides information on the effect of cost sharing on premium requirements for the standard range of medical services for an employed population.

Information regarding the effect of cost sharing on long term care services in not available from the PwC AMPM, and no cost savings are assumed for these services. Because long term care services are very high cost, nominal amounts of copayments or premium requirements would not be expected to affect their utilization.

Similarly, information regarding the effect of cost sharing on the use of comprehensive mental health services (similar to those that are covered by Short-Doyle funds) is not available from the PwC AMPM. Cost sharing for mental health services may affect the use of more comprehensive services; the source data for the model does not include these comprehensive mental health service claims, so their costs and any impact of these costs due to cost sharing cannot be modeled here.

• The model’s cost savings estimates are limited to the impact of program changes on enrollment, utilization, and expenditures on the Medi-Cal program for the services reflected in the base data. Although the model presents detailed savings by general service categories, it does not estimate the impact of changes on specific providers, such as safety net hospitals, community clinics, or specialists. Additionally, the model produces a first year effect, and is not designed to show multi-year effects. Savings and/or costs of changing the benefit design may grow over time, or may be delayed to later years.

• The model does not measure or estimate the effect of program changes on the health status of beneficiaries, medical outcomes, morbidity or mortality as a consequence of foregone service(s). Neither does it estimate the effect of potential program changes on the demand for health care services by low-income populations that may no longer participate in Medi-Cal There is significant literature showing that the lack of insurance affects health status. There is less evidence that point-of-service copayments have a direct effect on health status. Such effects are likely to be observed over an extended period of time rather than as a first year effect.

• Although the model was created to allow for a variety of benefit designs, it was not possible to account for every potential proposal due to data or other resource constraints. For example:

The unit of analysis in the model is the individual; the available data do not support analysis of families as a unit. Consequently, benefit designs that limit the amount of cost sharing by family rather than by individual cannot be directly modeled. The savings estimates will therefore be overstated under those types of benefit designs, since a portion of families would be assumed to reach the maximum cost sharing

level. The effect of family limits would be greatest for the “Families” eligibility categories. Within other eligible groups entire families seldom enroll in Medi-Cal.

When beneficiaries switch between eligibility groups, their out-of-pocket expenditures are not carried over into the new group. Benefit designs that limit cost sharing by person for a given time period will overstate potential savings by a small amount.

Data on Short-Doyle Mental Health expenditures and Dental expenditures are not part of the model. Consequently, the effects of any program modifications that may affect coverage of these services cannot be evaluated. These data do not run through the primary Medi-Cal fee-for-service fiscal intermediary’s system, and consequently were not readily available.

Periods of retroactive eligibility cannot be identified in the data. Because retroactive eligibility is expected to continue, some portion of savings that would otherwise result from the application of premium and cost sharing requirements will be offset. The model provides estimates of the effect of retaining retroactive eligibility, but a precise calculation cannot be made.

The effect of changes in financing associated with the implementation of Medicare Part D are not accounted for in the model; it is unclear how the implementation will unfold, and any effect has not yet been determined.

For individuals with a share-of-cost requirement, only claims that are paid by Medi-Cal are included in the base data. Cost sharing that brings the individual’s implied income down to the share-of-cost threshold is not reflected in the data or the model. Because the model is designed to estimate changes in Medi-Cal costs, these additional payments made by the recipients do not enter into the calculations.

The model is not structured to allow for limits on the number or dollar value of covered services. For services included in the base data, separate ad hoc analyses would be required to test these types of proposals.

In the following sections, we describe the data sources for the calculations in the model, the process for entering assumptions and benefit design parameters, and the model output.

II. Data Sources

The model uses data provided by the Medical Statistics Section of the California Department of Health Services. We obtained a 10% random sample of Medi-Cal eligibles and the fee for service claims from the fiscal intermediary for these enrollees paid through the California Department of Health Services claims systems. After processing the data, we determined that approximately half of the eligibles in the sample received the majority of their Medi-Cal benefits through a Medi-Cal Managed Care plan. Because we did not have complete utilization and expenditure data for the managed care enrollees, we removed these beneficiaries and their claims from our sample. The remaining data constitute a 5% random sample of fee-for-service (FFS) beneficiaries and their claims.

Two full calendar years (2002 and 2003) of reported medical services and eligibility records were extracted. Claims data included all medical services processed on the major EDS Paid Claims system operated on behalf of DHS, such as hospital, physician, lab and radiology and pharmacy. Claims processed on other systems and by other agencies, including dental, California Children’s Services and county-based mental health services, are not included.

The data was processed by eligibility group/demographics and major service categories. A general description of these categories follows:

(1) Eligibility Group/Demographics: The Medi-Cal population was classified by eligibility group, age band, and income level relative to the Federal Poverty Level (FPL).

The eligibility data included detailed aid codes to classify recipients into eligibility groups. Claims data was used to determine which individuals within these aid codes were institutionalized or pregnant based on appropriate diagnosis and procedure codes.

The age of the Medi-Cal recipients was determined from the birthdates in the eligibility file matched to the date of service on the claim. If a recipient’s age on the date of service is less than 21, the recipient is considered a child. Beginning on the date of his/her 21st birthday, the recipient is considered an adult.

The Medical Statistics Section of DHS does not maintain or have access to income data and it is not included on the eligibility file. Therefore, a combination of methods was used to assign income relative to FPL. Income is a criteria for certain aid categories, and this permitted assignment to a FPL. For other aid groups, income level was assigned based on research conducted by DHS and information taken from the Current Population Survey. This methodology is described in the section on population descriptions.

The eligibility data was summarized to yield member months of enrollment by eligibility group, age band and income level during the two year historical data period.

(2) Major Service Category: The claims were classified by major service group within each population eligibility category, age and income level.

The DHS claims adjudication process adds a vendor code that corresponds to the definitions of services that are used for state budgeting and can be linked to categories of mandatory and optional medical services under the Medi-Cal program. Claims were then aggregated into four major categories (Physician Services, Inpatient Hospital, Outpatient Hospital and Pharmacy) and 11 additional service categories.1

Some vendor service categories were further subset using the primary and secondary diagnosis codes and procedure codes on the claims. These include Physician Services – ESPDT, Physician Services – Maternity, Physician Services – Psych, Physician Services – Specialist, Inpatient Hospital – Maternity, Inpatient Hospital – Psych, Inpatient Hospital – Medical/Surgical, Outpatient – ER, Pharmacy – Family Planning, Laboratory Facility/Pathology, Outpatient – Other, DME/Supplies, Transportation – ER, and Transportation – Non ER.

Within outpatient pharmacy, drug claims were classified as brand, generic, family planning, and over-the-counter (OTC). The classifications were based on the National Drug Code Directory.

Claims service categories were summarized by number of units of service and paid amounts. This information was retained to permit the model user to select the services that would be subject to copayments and to facilitate a calculation of the number of individuals who would be subject to such copayments and those who would exceed an out-of-pocket maximum.

Periods of retroactive enrollment cannot be identified in the data. Payments for claims of enrollees retroactively enrolled would impact the absolute dollar savings and number of enrollees affected by the benefit plan provisions. Therefore, summaries in the model present percentage values rather than absolute dollar savings or the number of enrollees affected. The premium impact calculation results are expressed as a percentage of the most recent (December 2003) Medi-Cal FFS data.

1 See description of Worksheet 2, “Exclusions by Optional Vendor Category,” page 17.

III. Population Description

Eligibility Category The Medi-Cal population is summarized into 14 eligibility categories in the model. The categories separate the population by mandatory and optional aid category, major aid category grouping, Medicare eligibility, and institutional status. The categorization relied primarily on the detailed aid category designation and was reviewed by staff at the California Department of Health Services. The categories are:

Pregnant Women2 Restricted Benefit/Share of Cost Income Eligible – Institutionalized – Dual Income Eligible – Institutionalized – Non Dual Income Eligible – Families Income Eligible – SSI-Dual Income Eligible – SSI-Non Dual Medically Indigent Medically Needy – Institutionalized – Dual Medically Needy – Institutionalized – Non Dual Medically Needy – Families Medically Needy – SSI-Dual Medically Needy – SSI-Non Dual Other

These categories include the mandatory Income Eligible and the optional Medically Needy groups as defined in Title XIX of the Federal Social Security Act or in Medicaid statutes, regulations, and policies. For the Aged and Disabled population, groups have been partitioned into Dual Medicare-Medicaid recipients and Medicaid-only recipients because of differences in how services are paid by Medi-Cal (Medi-Cal pays only the difference between the Medicare and Medi-Cal payment amounts for these individuals). The institutionalized population is similarly separated into Dual Medicare-Medicaid recipients and Medicaid-only recipients. An assumption of the model is that the population within each group will have similar medical service utilization patterns and that these differ across eligibility groupings.

Any categories of aid in which beneficiaries are required to pay a share of cost are grouped into the “Restricted Benefit” group. A crosswalk of the aid groups and the detailed eligibility category used in the model is presented in Appendix B.1: Eligibility Code Crosswalk. This also includes a description of the aid codes provided by the California Department of Health Services-Medical Care Statistics Section is included in Appendix B.2: Aid Code Descriptions.

2 Pregnant women are identified based on their medical diagnosis and do not track directly to eligibility categories. Appendix D provides a description of the Aid codes from which the Pregnant Women were identified.

Age Bands Each eligibility group is subdivided into children under the age of 21 and adults age 21 and over. Child and adult status are determined by calculating the age on the date of service compared to the date of birth on the eligibility file. Although the model does not prevent the user from selecting non-exempt benefit plans for the age-under 21 subgroups, federal law currently prohibits cost sharing for children.

Income Level Relative to Federal Poverty Level Each eligibility group is divided into four income levels that are presented as a percentage relative to the Federal Poverty Level (FPL).

The four Income Groups are:

1) Up to 50% of FPL (or 75% of FPL for Maintenance of Need).

2) 51% (or above Maintenance Need) up to 100% of FPL, or below the SSI/SSP income level3

3) 101% -150% of FPL

4) 151% of FPL & Over

Beneficiaries were assigned to an income group using one of two methods.

Method 1: Classified Based on Aid Category. Some aid categories are limited to beneficiaries within certain income bands. For example, the maintenance of need population has strict income qualifications at or below 75% of FPL. In the data set, the following aid codes had beneficiaries categorized as part of the maintenance of need population and are included in Income Group 1:

5F – Omnibus Budget Reconciliation Act (OBRA)-No Income or Undocumented Pregnant Women

5N – OBRA-No Income or Undocumented Pregnant Women (Formerly 5F) 14 – Aged Medically Needy 24 – Blind Medically Needy 34 – Aid to Families with Dependent Children 58 – This population has an income at 75% of FPL or below 64 – Disabled Medically Needy 82 – Medically Indigent Child 86 – Medically Indigent with a Confirmed Pregnancy

3 SSI/SSP = Supplemental Security Income/State Supplemental Program, and allows and income up to approximate1y 130% of FPL.

2003 Current Population Survey: Income Distribution of the Medi-Cal Population

0%

10%

20%

30%

40%

50%

60%

50% FPL andUnder

51% - 100% FPL 101% - 150%FPL

151% FPL andOver

Income Level % of FPL

% D

istr

ibut

ion

Children; Age Under 21 Adults; Age 21 & Over

Similarly, the following aid categories use income criteria of 100% or 133% FPL and are grouped in Income Group 3.

5M – 100% FPL OBRA Child (Formerly 7C) 7A – 100% FPL Child Citizen 7C – 100% FPL OBRA Child 72 – 133 % FPL Citizen/Permanent Resident Alien/PRUCOL Alien 74 – 133% FPL Undocumented/Temporary VISA 8N – 133% FPL Undocumented Child with Excess Property 8R – 133% FPL Child Citizen with Excess Property 8T – 100% FPL Undocumented Child with Excess Property

The following aid categories are defined as above SSI/SSP and are grouped in income Groups 3 and 4 as described under Method 2.

16 – Aged – Pickle Eligible 18 – Aged – IHSS 26 – Blind – Pickle Eligible 28 – Blind – IHSS 66 – Disabled – Pickle Eligible 28 – Disabled – IHSS

Method 2: Distributed Based on Survey Data. Assignment of the remaining Medi-Cal population into Income Groups relied on information supplied by DHS and an analysis of income and insurance coverage from the California sample of the Current Population Survey (CPS). The CPS reported income and participation in public assistance programs and Medicaid. For Medi-Cal aid codes associated with public assistance, the CPS public assistance income levels were used to distribute the population. The CPS survey results for the public assistance population in California are shown in Figure 1. For Medi-Cal aid codes that are not associated with public assistance, the CPS income levels associated with Medicaid only coverage were used to assign the population.

Figure 1

PwC calculations based on California component of the 2003 Current Population Survey.

IV. Medical Service Categories and Service Units

The medical services identified from the claims data were grouped using DHS vendor service codes. The vendor codes are combined into four major service categories and 11 more specialized service categories. The four major categories are Physician Services, Inpatient Hospital, Outpatient Hospital (including Emergency Department), and Outpatient Pharmacy. Each of these, except outpatient pharmacy, is a mandatory Medicaid benefit. The 11 other service categories are vendor codes that primarily represent optional Medicaid benefits, but in some cases, such as DME and other, may include mandatory vendor codes. Definitions of the vendor codes were provided by staff of the Medi-Cal Statistics Section of the California Department of Health Services. The relationship between vendor codes and mandatory/optional Medi-Cal benefits is illustrated in Appendix C.1 and C.2 which includes the Service Type – DHS Vendor Code Cross Walk and the DHS Vendor Code List, respectively.

Service categories are summarized by dollar paid amounts and units of service. The service units are necessary for the model calculations to apply copayments and estimate changes in utilization. Table 1 presents the unit of measurement for each of the fifteen medical service categories.

Table 1 Units for Medical Service

Medical Service Category Unit of Service 1. Physician Services-Evaluation and Management (E&M), Early and

Periodic Screening, Diagnosis, and Treatment (EPSDT), Maternity, Specialist, Psychiatry

per provider per day

2. Inpatient Hospital-Medical/Surgical (Med/Surg), Maternity, Psych per admission 3. Outpatient-Emergency Room (ER), Other per provider per day 4. Pharmacy-Brand, Generic, Family Planning, Over-the-Counter

(OTC) per script filled

5. DME/Supplies (Durable Medical Equipment) per unit 6. Path/Lab (Pathology) per provider per day 7. Transportation per emergency trip 8. Professional Therapies per provider per day 9. Other Prof – Non-Therapies per provider per day 10. LTC-ICF/SNF/Rehab (Long Term Care-Immediate Care

Facility/Skilled Nursing Facility/Rehabilitation) per admission

11. Other LTC per admission 12. Mental Health per provider per day 13. Vision per provider per day 14. Waiver4 per provider per day

15. Other Services per provider per day

4 Waiver services are described in Worksheet 3 on page 19.

V. Savings Model Overview

The savings model consists of ten input worksheets and six output worksheets, which are divided into three categories.

• Benefit Design (Worksheets 1-5): These worksheets are interactive and allow the user to enter plan designs and population and benefit assumptions.

• Model Assumptions (Worksheets 6-10). These worksheets use default assumptions built into the model, but also allow the user to override the default assumptions. Fields that can be modified by the user are shown with colored font and white background.

• Impact Estimates (Worksheets 11a-13): These worksheets provide the results from the calculations based on the assumptions and are protected from user modification. Those fields that are fixed are shaded yellow.

The remainder of this section provides a summary of each worksheet. Detailed descriptions of each worksheet are provided in the following sections.

Benefit Design The benefit design is summarized in Worksheets 1 to 5. All of these worksheets allow the user to input population and service specifications.

Worksheet 1 – Plan Options: Worksheet 1 allows the user to design a benefit plan for each eligibility category by age and income level. Up to five combinations of benefit plans can be entered at one time - Plan A, Plan B, Plan C, Plan D, and “Exempt”. Each plan has a page in Worksheet 1 and is linked to parameters that are set by the worksheets that follow. These linked worksheets are:

Copayments (Worksheet 2) Covered benefits (Worksheet 3) Out-of-pocket maximums (Worksheet 4) Premiums (Worksheet 5)

Each of these worksheets allows user input.

Worksheet 2 –Copayment Levels: Worksheet 2 allows the user to input copayment amounts for different medical service categories. There is a box under each of the 11 service categories to indicate whether or not a copayment is to be applied, and under the Apply Copay indicator there are separate boxes to enter the copayment amount. If a service is exempt from copayment, zero dollars ($0.00) should be entered as the copayment amount. A separate page of Worksheet 2 is provided for each Plan Option.

Worksheet 3 – Benefit Plan Exclusions: Worksheet 3 allows the user to exclude optional benefits for each plan benefit. The benefits are optional according to the Federal Social Security Act, or Medicaid statutes, regulations, and policies. Mandated benefits, which include physician and hospital services, cannot be excluded and do not appear on this worksheet. Similar to Worksheet 2, there is a separate page of Worksheet 3 for each Plan Option.

Worksheet 4 – Annual Out-of-Pocket Maximums: Worksheet 4 allows the user to enter out-of-pocket maximum levels for individuals. Out-of-pocket maximums are calculated based on the sum of copayments for a person under a given plan option. The worksheet is designed so that individuals who are exempt from copayments are also acknowledged to need no out-of-pocket maximum. Consequently, the OOP field is shaded for these groups. The user is to enter OOP maximum amounts in the white fields. Worksheet 4 is one page that applies to all the Plan Options.

Worksheet 5 – Monthly Premiums: Worksheet 5 allows the user to enter monthly premiums for individuals. The model does not accept a family level premium. Individuals who are exempt from premiums, as they are user defined in Worksheet 1, are shown as the shaded category fields. The user can enter monthly premium amounts in the white fields. The single page of Worksheet 5 applies to all the Plan Options.

Model Assumptions The model assumptions are summarized in Worksheets 6 to 10. For the worksheet and the exhibits, the user may default to the assumptions that are built into the model or may override the default assumptions.

Worksheet 6 – Decrease in Enrollment Due to Premiums: Worksheet 6 displays information on the percentage change in enrollment due to a premium by aid category, age group, and income level. This worksheet allows the user to override the default assumptions.

Worksheet 7 – Utilization Savings Assumptions Due to Copays: Worksheet 7 displays information on the direct percentage change in utilization due to copayment for a medical service. There is a separate chart and table by income level for each of the major service categories that might be subject to copayments. This worksheet also includes a sensitivity factor, or multiplier, which reflects the difference in expected utilization change of the target population relative to that of a commercial population (e.g., a factor of 1.0 reflects an assumption that there is no difference between the target population and a commercial population in their sensitivities to copayments). This worksheet allows the user to override the default sensitivity factor and maximum percentage utilization savings.

Worksheet 8 – Additional Utilization Savings Due to Corollary Effects: Worksheet 8 displays information on the percentage change in indirect utilization due to a copayment on a medical service. Worksheet 8 calculations are based on calculations from Worksheet 7 – Utilization Assumptions and do not allow any user input.

Worksheet 9 – Utilization Changes Due to Substitution Effects: Worksheet 9 displays information on the percentage change in utilization due to substitution of medical services. This exhibit allows the user to enter assumption(s) or to use the assumptions built into the model.

Worksheet 10 – Add-Back Percentages: Worksheet 10 displays information on the percentage change in direct utilization due to re-enrollment or retroactivity eligibility. This incorporates the assumption that people who disenrolled voluntarily or involuntarily may reapply or become eligible if medical services are necessary. Inpatient hospital services are assumed to be added back for the disenrolled population. This worksheet allows the user to enter assumptions or to use the assumptions built into the model.

Impact Estimates Worksheets 11a-d are outputs of the model and present estimates based on calculations that are done using the Benefit Design and Model Assumptions that are entered in Worksheets 1 to 10. These worksheets can not be modified by the user, but values will change as a result of changes in user selection of the Benefit Design and Model Assumptions.

Worksheet 11a – Percentage Savings by Eligibility Category: Worksheet 11a displays a summary of the percentage of cost savings by eligibility and age group. These percentages reflect:

Cost savings per unit of service Enrollment savings due to premiums Savings due to premium payment Direct utilization savings due to copayments Utilization savings from copayments due to corollary effects Savings from benefit exclusions Savings from the out-of-pocket maximums Total savings

Worksheet 11b – Percentage Savings by Service Category: Worksheet 11b displays a summary of the percentage in cost savings by medical service categories and age group. This worksheet displays similar information as Worksheet 11a.

Worksheet 11c – Percentage Savings Detail: Worksheet 11c displays a summary of the percentage cost savings and expenditures by medical service category, eligibility, age group, and income levels.

Worksheet 11d – Percentage Savings Detail (without income levels): Worksheet 11d displays a summary of the percentage of cost savings and expenditures by medical service category, eligibility, and age group. This detailed output does not present the percentage savings by income level. This exhibit displays similar information as Worksheet 11c.

Worksheet 11e – Total Fee for Service and Managed Care Program Savings: Worksheet 11e displays a summary of percentage dollar savings by delivery system and age group.

Worksheet 12 – Annualized Units / 1000 Savings: Worksheet 12 displays a summary of percentage unit savings by medical category, eligibility, income level, and age group.

Worksheet 13 – Percentage of Population Exceeding Out-of-Pocket (OOP) Maximum: Worksheet 13 displays a summary of the percentage of the members in each eligibility category who exceed their OOP maximum as designated in Worksheet 4. Similar to Worksheet 1, the population is grouped by eligibility, age group, and income level.

VI. Benefit Design

Worksheet 1 – Plan Options The plan options assigned to the Medi-Cal eligible population determine which assumptions are applied in the calculations. To assist policymakers in assessing the effect of possible changes in the benefit design of the Medi-Cal program, beneficiaries are grouped into eligibility categories, age groups, and income strata as previously described. The user assigns one of up to five plan options to each group.

For each of the 112 population groupings, there is a drop down menu of plan options. There are five plan options, Plan A, Plan B, Plan C, Plan D, or “EXEMPT”. The “EXEMPT” option exempts an eligible population from copayments. That group of people is not subject to an out-of-pocket (OOP) maximum, since no out-of-pocket payments would be made; however the model permits those eligibility groups to be subject to a monthly premium.

The user may select the same plan for several population groups.

To exempt all eligibility groups within an income level and age group, the user can click on the exempt buttons on the bottom of the worksheet.

Medi-Cal Cost SharingFinancial ModelingWorksheet 1. Description of Population

Children; Age Under 21 Adults; Age 21 and Over

Eligibility CategoryMaintenance Need or 50% FPL & Under

Above Maintenance Need to 100%

FPL

101% - 150% FPL

151% FPL & Over

Maintenance Need or 50% FPL & Under


FPL

101% - 150% FPL

151% FPL & Over

Pregnant Women 1 1 1 1 1 1 1 1Restricted Benefit 1 1 1 1 1 1 1 1Income Eligible - Institutionalized - Dual 1 1 1 1 1 1 1 1Income Eligible - Institutionalized - Non Dual 1 1 1 1 1 1 1 1Income Eligible - Families 1 1 2 2 1 1 2 2

Income Eligible - SSI-Dual 1 1 3 3 1 1 3 3

Income Eligilbe - SSI-Non Dual 1 1 3 3 1 1 3 3

Medically Indigent 1 1 1 1 1 1 1 1

Medically Needy - Institutionalized - Dual 1 1 1 1 1 1 1 1

Medically Needy - Institutionalized - Non Dual 1 1 1 1 1 1 1 1

Medically Needy - Families 1 1 3 3 1 1 4 4

Medically Needy - SSI-Dual 1 1 1 1 1 1 1 1

Medically Needy - SSI-Non Dual 1 1 3 3 1 1 3 3

Other 1 1 4 4 1 1 4 4

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Plan A

Plan B

Plan B

Exempt

Plan B

Exempt

Plan B

Plan C

Exempt

Plan A

Plan B

Plan B

Exempt

Plan B

Exempt

Plan B

Plan C

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Plan A

Plan B

Plan B

Exempt

Plan C

Exempt

Plan B

Plan C

Exempt

Plan A

Plan B

Plan B

Exempt

Plan C

Exempt

Plan B

Plan C

Exempt All Children100% FPL & Under

Exempt All Children101% FPL & Over

Exempt All Adults100% FPL & Under

Exempt All Adults101% FPL & Over

Repopulate w ith Original Plan Design Specifications

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt Exempt Exempt Exempt Exempt Exempt Exempt Exempt

Worksheet 2 – Description of Copay Levels (for Plans A, B, C, and D) The user may apply point-of-service copayments to each medical service category and may enter a specified amount for each service. Copayments are applied to each unit of medical service as defined in Table 1. Copayment amounts are linked to a specific plan option and may vary across four plan options, Plan A, Plan B, Plan C and Plan D. The fifth plan option that is modeled, the Exempt plan, does not allow for copayments and does not have a separate worksheet.

If the user does not wish to apply a copayment to a particular service, the user should either uncheck the “Apply Copay” box or enter a $0 amount in the copayment amount field.

In the “EXEMPT” plan as shown on Worksheet 1 – Plan Options, all copayments are locked at $0.

The user can use the toggle buttons “Go to Benefit X” to view each plan’s copayments.

Current Medi-Cal FFS copayments are not reflected in the model because the payment and collection is voluntary. However, payments to providers, where copayments are required, are

Medi-Cal Cost SharingFinancial ModelingWorksheet 2. Description Of Copay LevelsBenefit Plan A

Plan A

Physician Services Inpatient Hospital Outpatient Pharmacy

E&M $2.00 Maternity $0.00 Med/Surgical $20.00 ER $20.00 Brand $4.00EPSDT $0.00 Specialist $4.00 Maternity $0.00 Other $4.00 Generic $2.00

Psych $4.00 Psych $10.00 Family Planning $0.00OTC $2.00

DME / Supplies Path / Lab Transportation Professional Therapies Other Prof - Non-Therapies

Per Unit $5.00 Per Service $5.00 Per Service $2.00 Per Unit $5.00 Per Admit $5.00

LTC-ICF/SNF/Rehab Other LTC Mental Health Vision Waiver

Per Unit $5.00 Per Unit $5.00 Per Service $5.00 Per Visit $5.00 Per Unit $5.00

Other Services

Per Unit $5.00

Go to Benefit Plan B

Apply Copay Apply Copay Apply Copay Apply Copay

Apply CopayApply CopayApply CopayApply CopayApply Copay

Apply Copay Apply Copay Apply Copay Apply Copay

Go to Benefit Plan C

Go to Benefit Plan D

Go to Optional ServicesCovered by Benefit Plan A

Apply Copay

Apply Copay

Physician Services

E&M $2.00 Maternity $0.00EPSDT $0.00 Specialist $4.00

Psych $4.00

Apply Copay

Physician Services

E&M $2.00 Maternity $0.00EPSDT $0.00 Specialist $4.00

Psych $4.00

Apply Copay

Go to Benefit Plan B

Go to Benefit Plan C

Go to Benefit Plan D

automatically reduced. Thus, the cost per unit is adjusted to reflect the copayment requirement, but no utilization adjustment is assumed.

The model does not include coinsurance percentage as a cost sharing option. The user may model coinsurance by entering an equivalent dollar amount in the copayment field.

By default, each benefit plan covers a set of mandatory and optional services. For each plan option the user may specify that none, some, or all of the optional services are included on Worksheet 3. The user can click on the “Go to Optional Services Covered by Benefit Plan X” button, which will bring up the specific plan’s optional services worksheet.

Go to Optional ServicesCovered by Benefit Plan A

Worksheet 3 – Benefit Plan Exclusions (for Plans A, B, C, and D)

Medi-Cal Cost SharingFinancial ModelingWorksheet 3. Exclusions by DHS Optional Vendor CategoryPlan A

Main Service Category DHS Vendor Category Main Service Category DHS Vendor Category

Professional Services Mental Health

Vision

Other Professional Waiver(Non-Therapies)

Other Services

Pharmacy

Long Term Care

DME / Supplies

026a - Brand

026b - Medical Supplies

041 - Blood Bank

045 - Hearing Aid Dispenser

Durable Medical Equipment

030 - Chiropractor

047 - ICF / DD

080 - Nursing Facility

059 - County Hosp - Rehab Facility

069 - Cmmty Hosp - Rehab Facility

079 - Independent Rehab Facility

083 - Pediatric Subacute Rehab

032 - Podiatrist

033 - Acupuncturist

034 - Physical Therapist

035 - Occupational Therapist

036 - Speech Therapist

037 - Audiologist

005 - Nurse Midwife

007 - Certd Pediatric Nurse Pract

008 - Certd Family Nurse Pract

009 - Respiratory Care Pract

013 - Nurse Anethetist

031 - Psychologist

038 - Prosthetist

039 - Orthotist

054 - County Hosp - Short/Doyle

064 - Cmmty Hosp - Short/Doyle

074 - County MH Hosp - Short/Doyle

011 - Fabricating Optical Lab

012 - Optometric Group

028 - Optometrist

029 - Dispensing Optician

001 - Adult Day Healthcare Center

073 - AIDS Waiver Svcs

081 - MSSP Waiver Svcs

002 - Medicare Crossover Provider

004 - Genetic Disease Testing

040 - Other Provider

055 - Local Education Agency

082 - EPSDT Supplemental Svcs

Family Planning

026a - Generic

026a - Family Planning

026a - Over the Counter

071 - Adult Day Healthcare Center

Section 1905(a) of Title XIX of the Social Security Act mandates States to provide certain medical and health benefits to Medicaid recipients. Mandatory benefits are included in the medical service categories and can not be removed. The user can modify the Medi-Cal optional benefits that are currently covered under the State Medicaid Plan.

Optional benefits currently covered under Medi-Cal are included in each plan unless the user specifically excludes them by checking the box on the worksheet. For example, vision is

an optional benefit under Medi-Cal. If the user wants to include an “Optometrist” and

Vision 011 - Fabricating Optical Lab

012 - Optometric Group

028 - Optometrist

029 - Dispensing Optician

“Optometric Group” as a covered benefit and exclude the “Fabricating Optical/Lab” and “Dispensing Optician,” then the user checks the boxes labeled with “011” and “029”, the vendor codes that reflect the Fabricating Optical/Lab and Dispensing Optician exclusions.

To include all optional benefits in a benefit plan, the user can click on the “Include All Plan X Vendor Categories” button to remove any checks in the boxes.

Optional benefits are grouped under the medical service categories. If a copayment is applied to the category, the included optional benefit will be subject to that copayment. To

view the copayment amount, the user can click on the “Go Back To Plan X Copay Options” to toggle between Worksheet 2 – Description of Copay Levels and Worksheet 3 – Benefit Plan Exclusions.

Include All Plan AVendor Categories

Include All Plan AVendor Categories

Worksheet 4 – Annual Out-of-Pocket Maximum The user may enter an annual out-of-pocket (OOP) maximum amount for each eligible population. OOP maximums reflect the total amount of copayments that can be

collected across all services covered in the benefit plan. If the beneficiary uses an excluded service, the cost is not applied to his or her OOP maximum. For example, if a beneficiary’s plan does not cover genetic screening and he or she chooses to get a screen, then the individual’s OOP costs in the model remains unchanged. For those who are eligible for both Medicaid and Medicare, their personal out-of-pocket expenditures for services covered by Medicare are not counted towards Medi-Cal OOP maximum.

If the eligibility group has an “EXEMPT” plan as shown on Worksheet 1 – Plan Options, then the OOP fields will be shaded yellow and locked to prevent user input because they do not have copayments or an OOP maximum.

If the entry is left blank, recipients in that group will have no limit on their OOP expenses. If a $0 amount is entered, recipients will not be subject to cost sharing.

During the course of the one year analysis period, individuals may switch between eligibility categories. For example, 8 weeks after an eligible in the Pregnant Women category delivers, she will no longer be in the Pregnant Women group, and may then be classified into another eligibility category. When recipients switch between eligibility groups their out-of-pocket pocket expenditures are NOT carried over into the new group. Their copayment expenditures begin to accumulate towards any OOP maximum which is

Medi-Cal Cost SharingFinancial ModelingDescription of PopulationWorksheet 4. Annual Out-of-Pocket Maximum




FPL

101% - 150% FPL

151% FPL & Over



FPL

101% - 150% FPL

151% FPL & Over

Pregnant Women

Restricted Benefit

Income Eligible - Institutionalized - Dual

Income Eligible - Institutionalized - Non Dual

Income Eligible - Families $250 $500 $250 $500

Income Eligible - SSI-Dual $250 $500 $250 $500

Income Eligilbe - SSI-Non Dual $250 $500 $250 $500

Medically Indigent

Medically Needy - Institutionalized - Dual

Medically Needy - Institutionalized - Non Dual

Medically Needy - Families $250 $500 $250 $500

Medically Needy - SSI-Dual

Medically Needy - SSI-Non Dual $250 $500 $250 $500

Other $250 $500 $250 $500

effective for the new eligibility group. This is a constraint of the model and does not necessarily mirror how the out-of-pocket maximum might actually be administered.

Worksheet 5 – Monthly Premium

The user may enter a monthly premium amount for each eligible population. If the eligible population has an “EXEMPT” copayment designation as shown on Worksheet 1 – Plan Options, the person may still be subject to a monthly premium.

If the entry is left blank or a $0 amount is entered, individuals are not subject to monthly premiums. Due to data constraints on identifying family members, the premium unit is the individual, not the family unit.

Medi-Cal Cost SharingFinancial ModelingDescription of PopulationWorksheet 5. Monthly Premiums




FPL

101% - 150% FPL

151% FPL & Over



FPL

101% - 150% FPL

151% FPL & Over

Pregnant Women

Restricted Benefit



Income Eligible - Families $7 $15 $7 $15

Income Eligible - SSI-Dual $7 $15 $7 $15

Income Eligilbe - SSI-Non Dual $7 $15 $7 $15

Medically Indigent



Medically Needy - Families $7 $15 $7 $15


Medically Needy - SSI-Non Dual $7 $15 $7 $15

Other $7 $15 $7 $15

VII. Model Assumptions

Worksheet 6 – Decrease in Enrollment Due to Premiums Premiums are collected every month for populations subject to premiums who remain in the Medi-Cal program. Premium requirements are assumed to result in a decrease in enrollment. The user may override the default assumptions and input an estimated percent decrease in enrollment due to premiums for each eligible group.

The default assumptions are summarized in Table 2 for five different premium levels. (These are examples; the model permits the user to input any monthly premium amounts up to $50.) These assumptions are based on research on the effect of the imposition of a health insurance premium for low-income populations, which indicates that participation declines as the premium consumes an increasing share of income. In general, it appears that up to 50% of the low-income populations may disenroll or drop coverage as the monthly premium approaches 3% of income. Disenrollment rates as high as 75% to 80% have been reported as the premium approaches 5% of income.5 The recent introduction and/or increase in premium in the Oregon Health Plan produced sharp decreases in participation, however, these results may not be directly applicable to the California Medi-Cal program because the premium was imposed on a Medicaid expansion population, many of whom are childless low-income adults, all with income under 100% of poverty. Should Medi-Cal impose premiums on the lowest income population some of the experience of Oregon may be instructive, but the unique characteristics of the

5 Specific references are cited in Appendix A, Review of Literature on Premium and Cost Sharing.

Medi-Cal Cost SharingFinancial ModelingDescription of PopulationWorksheet 6. Decrease in Enrollment; Due to Premiums




FPL

101% - 150% FPL

151% FPL & Over



FPL

101% - 150% FPL

151% FPL & Over

Pregnant Women

Restricted Benefit



Income Eligible - Families 5.00% 10.00% 5.00% 10.00%

Income Eligible - SSI-Dual 5.00% 10.00% 5.00% 10.00%

Income Eligilbe - SSI-Non Dual 5.00% 10.00% 5.00% 10.00%

Medically Indigent



Medically Needy - Families 5.00% 10.00% 5.00% 10.00%


Medically Needy - SSI-Non Dual 5.00% 10.00% 5.00% 10.00%

Other 5.00% 10.00% 5.00% 10.00%

Oregon Health Plan may not be generalizable to the California Medi-Cal program. The model also incorporates the experience of several other states that expanded their Medicaid programs or developed subsidized health insurance programs and required premium contributions, including Washington, Minnesota, Hawaii and Tennessee.

Table 2

Default Assumptions - Percent Decrease in Enrollment

Premium Amount


Up to 100% FPL

101-150% FPL

Above 150% FPL

$5 25% 15% 7% 4%

$10 44% 25% 15% 8%

$15 60% 30% 25% 15%

$20 80% 44% 35% 25%

$50 98% 65% 60% 44%

Note: Premium sensitivity assumptions are developed based on results of demonstration projects in Washington, Minnesota and Hawaii and recent enforcement of premium requirements in the Oregon Health Plan

The current Medi-Cal enrollment processes allow for retroactive enrollment. Individuals opting out of the program due to premium requirements can reenroll if they have a need for services. Under existing administrative rules, this could result in retroactive coverage of health care services. The model accounts for retroactive enrollment by including assumptions for the percentage of services that will not be saved due to disenrollment. In other words, because individuals with high need for expensive medical services can obtain coverage for those services retroactively, we assume that all hospital costs currently being covered will continue even if a portion of enrollees drop out. Some associated costs, such as physician services and prescription drugs, would also be covered retroactively for these individuals. Consequently, any savings initially assumed as a consequence of collecting premiums (and thereby reducing enrollment), are adjusted for the cost of inpatient hospital services. Additionally, approximately 15% of the savings associated with prescription drugs and physician services are assumed to be offset due to retroactive enrollment. No savings are assumed for long-term care services due to the imposition of premium requirements.

The reduction in savings resulting from the effects of retroactive enrollment is identified in Worksheet 10, Add-Back Percentages. Because of the Add-Back, the Medi-Cal program will not achieve 100% savings of the health care costs of those who disenroll. The model does not incorporate an adjustment for health status resulting from delayed use of health care services. However, such an impact could be modeled by assigning add-back percentages above 100%.

This offset in disenrollment savings is applied to yield a net change in Worksheet 11a to 11e.

Worksheet 7 – Utilization Savings Assumptions Due to Copayments Worksheet 7 presents the percent decrease in medical service utilization that result from the specified copayment amounts.

The underlying assumptions of changes in utilization are based on a PwC actuarial medical pricing model. The actuarial medical pricing model is based on the experience of 8 million commercial active HMO lives. The utilization assumptions in the pricing model are consistent with a typical commercial population, which is employed, and is assumed to have an average income in the range of 250% to 400% of FPL. Sensitivity analysis was performed to estimate copayment-induced utilization changes. Enrollees may be individuals or members of families, but all analyses are performed on an individual basis.

Utilization changes are expected for physician services, emergency room visit, pharmacy (brand and generic), durable medical equipment, such as wheelchairs, crutches, etc., and mental health services. All other services showed an insignificant utilization response to implementation of copayments. Some services, such as long-term care, comprehensive mental health, and dental services are not reflected in the PwC actuarial pricing model, and a utilization effect for these services cannot be measured from this source. The model is also limited in the range of benefit designs that can be modeled directly. For example, commercial plan designs with very low levels of cost sharing (e.g., under $5 for physician visits or $25 for emergency room visits) are uncommon. To allow for modeling of lower levels of cost sharing, we interpolated the results of the available data based on actuarial assumptions.

The Actuarial Pricing Model measures actual differences in utilization of services based on variation in plan design. Consequently, for the population underlying the model, the utilization changes are assumed to be valid. A similar natural experiment for the Medicaid population does not exist, as only nominal cost sharing has been used in Medicaid programs. We believe that the results from the Actuarial Medical Pricing Model provide a reasonable starting point for estimating the effects of imposing cost sharing requirements on a Medicaid population.

Worksheet 7 includes a chart and output table showing the utilization impact for each of the affected service categories. A summary of the default values for the utilization effects of copayments is shown in Table 3. The sampled copayments are based on values typically used in commercial health benefit plans, and vary by type of service.

Table 3

Default Assumptions - Percent Reduction in Utilization Due to Direct Effect of Copayment Before

Adjustment for Income Sensitivity Copay $$ Physician Inpatient –

ER Drugs – Generic

Drugs – Brand

DME** Mental Health

0 0.0 0.0 0.0 0.0 0.0 0.0

1 1.1* 0.1* 4.4* 0.1* 0.8* 0.2*

3 3.3* 0.3* 13.3* 0.3* 2.5* 0.7*

5 5.5 0.5* 22.2* 0.6* 4.2* 1.2*

10 9.1 1.0* 44.3 1.1 8.3* 2.4

15 13.6 1.5* 60.4 5.0 12.5* 4.8

20 16.4 2.0* 73.7 7.7 16.7 7.1

25 18.2 2.5 79.8 11.9 22.1* 9.5

30 3.3* 82.8* 18.6* 27.5* 12.0

40 4.8 88.7* 32.1* 34.7**

50 7.1 94.5 45.5 37.3**

75 9.5 44.0**

100 14.3 55.0**

200

* Values obtained using linear interpolation between modeled copay amounts

** Specified copay amounts for DME are $35, $85 and $175, respectively

The assumptions used herein are consistent with the research literature on the effect of copayments on utilization, which is summarized in Appendix A. In general, this research indicates that copayments often lead to a reduction in demand and delay in seeking care. We note that many of these studies are relatively old, were not conducted with a

Physician Services

Decrease in Utilization

Copay CommercialM-N or 50%

FPL & UnderAbove M-N to

100% FPL101% - 150%

FPL151% FPL &

Over$0.00 0.0% 0.0% 0.0% 0.0% 0.0%

$5.00 5.5% 12.3% 10.4% 7.9% 6.1%

$10.00 9.1% 20.5% 17.3% 13.2% 10.2%

$15.00 13.6% 30.7% 25.9% 19.8% 15.3%

$20.00 16.4% 36.8% 31.1% 23.7% 18.4%

$25.00 18.2% 41.0% 34.6% 26.4% 20.5%

Sensitivity to Commercial 2.250 1.900 1.450 1.125Savings Threshold 50.0% 50.0% 50.0% 50.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00

M-N or 50% FPL & Under Above M-N to 100% FPL101% - 150% FPL 151% FPL & Over

Medicaid population, or looked at changes in specific services, such as eye exam, pap smear or dental care, rather than the broader categories of service that are incorporated into this model. More recent studies of the impact of copayments on prescription drugs in Medicaid populations indicate that small copayments lead to reduction in utilization. Studies of commercially insured populations also indicate a substantial shift in utilization when tiered generic-brand and formulary linked copayments are introduced.6

6 Specific references are cited in Appendix A, Review of Literature on Premium and Cost Sharing.

The RAND Health Insurance Experiment (HIE), the only randomized controlled experiment designed to study the effect of various cost sharing arrangements on the utilization and cost of care, found that base level utilization varied by income level, but the aggregate response to copayments did not significantly vary by income level. Additionally, once a person sought care, the amount and intensity of services did not vary by level of cost sharing. An HIE study that examined the use of services associated with specific diagnoses found that coinsurance was more likely to deter care for the low-income population, especially low-income children. However, for both high and low-income populations, the reduced utilization was similar for services identified as Highly Effective and Rarely Effective.

One limitation of the RAND HIE was that the study size was too small to finely divide income groups to understand the impact of cost sharing on very low-income populations, such as the Medicaid population. The Low-income measure could be defined differently in the many studies published on the RAND HIE, For some studies Low-income was defined as the bottom 20 percent of the study’s income, which was below 100% FPL for a family, while other studies included all persons in families up to 200% FPL. Also, for each of the coinsurance plans, out-of-pocket maximums were limited to 5%, 10%, or 15% of family income and the amount could not exceed $1,000 in a year. Low-income families would be more likely to attain the out of pocket maximum and all subsequent care would be free.

We have developed default assumptions that consider the results of the HIE and the income sensitivity to premium requirements. Specifically, we have assumed that the effect of income on sensitivity to copayment requirements is approximately half as great as the effect of income on program participation levels with premium requirements. Because we have not identified research to support these assumptions, we have instead used our best estimate. Table 4 shows the default income sensitivity factors. These factors act as multipliers. In other words, if the user believes there will be a 50% greater utilization effect for this population compared to a commercially insured group, a value of 1.50 would be entered.

Table 4

Default Assumptions Income Sensitivity to Copayment Requirements

Maintenance Need or 50% FPL

& Under

Up to 100% FPL 101-150% FPL Above 150% FPL

2.250 1.450 1.250 1.125

The user may also impose limits to prevent utilization savings from exceeding a pre-defined threshold. The user enters his or her assumptions as a percentage of the total utilization under “Savings Threshold” for each income group. These caps are imposed so that utilization adjustments do not become unrealistically large when the base assumptions are modified. In other words, the user may impose a “natural limit” to the utilization effects. Because copayments cannot be enforced, higher copayments are not expected to show a linear relationship in reduced utilization.

Worksheet 8 – Additional Utilization Savings Due to Corollary Effects The application of copayment to a service may have a direct effect of decreasing utilization for that specific service. The same copayment may also change the utilization of a different service, what we term a corollary effect. For example, we expect that the application of copayment on physician services will decrease the utilization of primary care physician services. (These savings will be shown in Worksheet 7 – Utilization Savings Due to Copayment). A corollary effect of fewer primary care visits is likely to be fewer referrals to specialist services and fewer prescriptions.

Based on the output from the PwC Actuarial Medical Pricing Model and review of the literature, there appears to be no definitive assessment of the types of services that may show an indirect or corollary effect, or the size of the indirect utilization effect and the consequent savings.

The default corollary effect values in the model are based on effects reported in the literature and consensus discussions among PwC health care actuaries. Table 5 summarizes the primary service subject to copayment and the services that are assumed to show changes in utilization, either as a corollary or a substitution effect. The assumed corollary effect on all services, except outpatient pharmacy prescription drugs, is 25% of the estimated direct effect. The corollary effect on prescription drugs is 50% of the direct effect, except for copayments applied to transportation, which has a corollary effect estimated to be 25% for both brand and generic drugs.

Table 5 Default Assumptions - Corollary Effects

Service With Copay Corollary Effect: Indirect Impact on Services Physician – E&M Physician – Specialist

Physician – Psych Outpatient – Other Pharmacy – Brand Pharmacy – Generic Path/Lab Professional Therapies Transportation

Physician – EPSDT Pharmacy – Brand Pharmacy – Generic

Physician – Maternity Path/ Lab Physician – Specialist Outpatient – Other

Pharmacy – Brand Pharmacy – Generic DME/Supplies Path/Lab

Physician – Psych Pharmacy – Brand Pharmacy – Generic Path/Lab Professional Therapies

Outpatient – ER Pharmacy – Brand Pharmacy – Generic

Outpatient – Other Pharmacy – Brand Pharmacy – Generic

Transportation Physician – E&M Physician – Specialist Physician – Psych Outpatient – Other Pharmacy – Brand Pharmacy – Generic Path/ Lab

Mental Health Pharmacy – Brand Pharmacy - Generic

Table 6 lists services for which no corollary effect is assumed following the imposition of copayments on that service. In other words, when copays are applied to these services, there is no increase or decrease in savings on other services. Services listed in Table 6 are mutually exclusive from the services in the first column of Table 5.

Table 6 Default Assumptions - Services Subject to Copay

No Associated Corollary Effects Estimated

Inpatient – Med/Surg

Inpatient – Maternity

Inpatient – Psych

Pharmacy – Brand

Pharmacy – Generic

Pharmacy – Family Planning

Pharmacy – OTC

DME/Supplies

Path/Lab

Professional Therapies

Other Prof- Non Therapies

LTC – ICF/SNF/Rehab

Other LTC

Vision

Waiver

Other Services

Table 7 lists services where the default assumption is that there is no corollary impact when a copayment is imposed on any other service. This may be because there is either no corollary effect or the effect is too small to measure. Services listed in Table 7 are mutually exclusive from services listed in the second column of Table 5.

Table 7 Default Assumptions – Potential Corollary Services

No Corollary Effects Estimated Physician Services-EPSDT Physician Services-Maternity Inpatient – Med/Surg Inpatient – Maternity Inpatient – Psych Outpatient-ER

Pharmacy – Family Planning Pharmacy – OTC Other Prof- Non Therapies LTC – ICF/SNF/Rehab

Other LTC Mental Health Vision Waiver Other Services

Summary by Plan Option and Income The additional utilization savings due to corollary effects are summarized on Worksheet 8. This summary is the result of the separate calculations that are detailed in Summary by Plan and Income worksheets and shown in the last (Total Corollary Savings) row.

Summary by Plan, Income, and Medical Service The direct utilization savings attributable to copayments are reported in the diagonally shaded boxes on the Worksheet 7 – Utilization Savings Assumptions due to Copays. A copayment applied to the medical service category in the rows may also have corollary effects on the medical service categories listed across the columns.

The total corollary savings for each medical service is equal to the cumulative corollary savings from all categories of service.

Plan A - Under 50% FPL

Service Category to which Copay is Applied

Physician Services -

E&M


EPSDT

Physician Services - Maternity

Physician Services - Specialist


Psych

Inpatient Hospital -

Med / Surgical

Inpatient Hospital - Maternity


Psych

Physician Services - E&M 2.18% 0.00% 0.00% 25.00% 25.00% 0.00% 0.00% 0.00%Physician Services - EPSDT 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Physician Services - Maternity 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Physician Services - Specialist 0.00% 0.00% 0.00% 4.36% 0.00% 0.00% 0.00% 0.00%Physician Services - Psych 0.00% 0.00% 0.00% 0.00% 4.36% 0.00% 0.00% 0.00%Inpatient Hospital - Med / Surgical 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Inpatient Hospital - Maternity 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Inpatient Hospital - Psych 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Corollary Effect of a $2 copay on Physician – E&M has on Physician Services – Specialist utilization

Direct Effects

The worksheet is set up to accept corollary effects at a relatively detailed service category level. For example, the user may insert separate corollary effect values for the five separate categories of physician services (Evaluation and Management, EPSDT, Maternity, Specialist and Psych). However, the default assumptions do not assume that there is a corollary effect as a result of a new copayment on each of the physician and other covered Medi-Cal services.

For example, if recipients with an income under Medical Maintenance levels or 50% FPL pay a $2 copayment for Evaluation and Management (E&M) office visits, then E&M visits are anticipated to decline by 2.18%. The corollary effect on specialist visits from the E&M savings is 25%. A $2 copayment for E&M visits is therefore anticipated to reduce Physician – Specialist visits by 0.55% (2.18% × 25%).

The total corollary savings is the sum of the column percentages (in bold) multiplied by each service’s direct effect. For physician – specialist example, this would be:

25.00% × 2.18% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 4.36% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.45% + 0.00% × 8.86% + 0.00% × 0.00% + 0.00% × 8.86% + 0.00% × 4.63% + 0.00% × 0.00% + 25.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% + 0.00% × 0.00% = 0.55%

Plan A - Under 50% FPL

Service Category to which Copay is Applied


E&M


EPSDT

Physician Services - Maternity

Physician Services - Specialist


Psych


Med / Surgical

Inpatient Hospital - Maternity


PsychOutpatient -

ER

Physician Services - E&M 2.18% 0.00% 0.00% 25.00% 25.00% 0.00% 0.00% 0.00% 0.00%Physician Services - EPSDT 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Physician Services - Maternity 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Physician Services - Specialist 0.00% 0.00% 0.00% 4.36% 0.00% 0.00% 0.00% 0.00% 0.00%Physician Services - Psych 0.00% 0.00% 0.00% 0.00% 4.36% 0.00% 0.00% 0.00% 0.00%Inpatient Hospital - Med / Surgical 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Inpatient Hospital - Maternity 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Inpatient Hospital - Psych 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Outpatient - ER 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Outpatient - Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Pharmacy - Brand 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Pharmacy - Generic 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Pharmacy - Family Planning 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Pharmacy - OTC 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%DME / Supplies 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Path / Lab 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Transportation 25.00% 0.00% 0.00% 25.00% 25.00% 0.00% 0.00% 0.00% 0.00%Professional Therapies 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Other Prof - Non-Therapies 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%LTC-ICF/SNF/Rehab 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Other LTC 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Mental Health 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Vision 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Waiver 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Other Services 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Corollary Savings 0.00% 0.00% 0.00% 0.55% 0.55% 0.00% 0.00% 0.00% 0.00%

The user has the ability to overwrite the corollary savings assumptions by entering a value in the appropriate field.

Worksheet 9 – Additional Utilization and Cost Due to Substitution Effects While the introduction of a copayment for a service (or exclusion of a service) may have a direct effect of decreasing utilization for that specific service, the same copayment may also increase the utilization of a different service. Economists refer to these other affected services as a substitution effect. For example, if chiropractic services are subject to copayment, there may be a substitution effect seen as an increase in primary care or specialist physician visits. If a copayment is required for physician office visits and outpatient prescription drugs and people delay care, there may be an increase in utilization of emergency room services.

The method for calculating the substitution effect is identical to that of corollary services that is described in Worksheet 8 - Additional Utilization Savings Due to Corollary Effects.

The substitution effect values in the model are based largely on consensus discussions among PwC health care actuaries. For example, elimination of nearly any critical service category is expected to increase emergency room utilization. One example is the elimination of prescription drugs. While coverage of Prescription Drugs is optional under Medicaid rules, their elimination would likely result in a sufficient increase in costs in other services, over time, to practically eliminate any cost savings. Similarly, a reduction in the amount of primary care physician visits is assumed to result in an increase in Emergency Room utilization. Key substitution effect offsets are shown in Table 8.

Table 8 Default Assumptions - Substitution Effects

Service With Copay Substitution Effect: Indirect Impact on Services Physician – E&M Inpatient Hospital – Med/Surg

Outpatient –ER, Physician – Maternity Outpatient -ER Physician – Specialist Outpatient – ER

Outpatient – Other Pharmacy – Brand Pharmacy – Generic

Physician – Psych Outpatient – ER Pharmacy – Brand Pharmacy – Generic

Outpatient – ER Inpatient Hospital – Med/Surg Pharmacy – Brand Pharmacy – Generic

Table 8 Default Assumptions - Substitution Effects

Service With Copay Substitution Effect: Indirect Impact on Services Outpatient – Other Inpatient Hospital – Med/Surg

Inpatient Hospital - Psych Pharmacy – Brand Pharmacy – Generic

Professional Therapies Physician – E&M Prescription Drug Brand & Generic

Inpatient Hospital – Med/Surg Outpatient Hospital - ER

Substitution effects are expected to vary significantly based on the proposed benefit design. For example, a benefit design that requires copayments for a narrow range of services may see large substitution effects, which may be expected to offset nearly all projected savings. Benefit designs with a broad range of copayment requirements would have lower levels of substitution effects, since the enrollee will face copayment requirements regardless of the type of service used. Consequently, substitution effects must be carefully evaluated for each proposed benefit design.

Worksheet 10 – Add-Back Percentages Due to Imposition of Premium Worksheet 10 presents increases in utilization attributable to the re-enrollment of recipients with specific health care needs who re-enroll after dropping coverage if they require those services. It also reflects an adverse selection factor based on the expectation that individuals with the greatest need for services will not leave the program if a modest premium is required. The default assumptions do not incorporate an adjustment for health status resulting from delayed use of health care services. However, such an impact could be modeled by assigning add-back percentages above 100%.

In Worksheet 6 – Decrease in Enrollment Due to Premiums, the user specifies assumptions regarding the disenrollment of Medi-Cal beneficiaries as a result of premium. A portion of those who leave will re-enroll and continue to use health care services. Recipients have an incentive to re-enroll in Medi-Cal if their medical expenditure is greater than their premiums and cost sharing. Non-users and minimal users are assumed less likely to re-enroll. Because of reenrollment, the savings associated with disenrollment is less than 100% of the costs for those people.

The expected disenrollment value from Worksheet 6 is linked to the Worksheet 10 line labeled “% Excluded due to Premium.” The default assumption is that beneficiaries who disenroll will rejoin the Medi-Cal program or be retroactively enrolled if they require inpatient hospital services and there is no savings for that service. Therefore, cost

savings due to disenrollment is reduced by the percentage of cost for the population that is due to inpatient hospitalization. All long-term care costs are assumed to be retained.

The net impact of the premium disenrollment and the add-back is presented in Worksheet 11a - Percentage Savings by Eligibility category. The add-back savings adjustment and its impact on savings due to a decrease in enrollment will depend on the proportion of cost that is associated with the add-back services and assumptions regarding what proportion of the cost of a given add-back service is restored.

As in previous worksheets, the user may override the default factors with assumptions regarding what services and utilization may change upon re-enrollment.

VIII. Impact Estimates

Percentage Savings The Plan Option design impact on the Medi-Cal budget is expressed as a net total dollar savings that is converted to a percentage of Medi-Cal expenditures. This net total savings is the sum of savings and cost components listed in Table 9. The percentage savings are summarized by different categories are presented in the next set of worksheets.

Table 9 Savings and Cost Components

Savings Components Cost Components Savings per Unit of Service Utilization Cost Due to Substitutes Enrollment Savings Exceeding Out-of-Pocket Max Premium Savings Utilization Savings Due to Copays Utilization Savings Due to Corollary Effects Exclusion of Services

Worksheet 11a – Percentage Savings by Aid Category This worksheet presents the percentage savings by aid category, with separate estimates for children and adults.

Worksheet 11b – Percentage Savings Detail by Service Category This worksheet presents the percentage savings by medical service category, with separate estimates for children and adult..

Worksheet 11c – Percentage Savings Detail Summary by Income Level This worksheet presents the percentage savings by aid category, with separate estimates for children and adults, and the further breakdown by the four income levels.

Worksheet 11d – Percentage Savings Detail Summary This worksheet presents the percentage savings by aid category, with separate estimates for children and adults.

Worksheet 11e – Total Program Savings This worksheet presents the percentage savings by delivery system, with separate estimates for children and adults. Only in this instance, the model considers the premium impact and savings on the fee for service and managed care populations. The rest of the model uses a sample of the fee for service population to develop results.

Worksheet 12 – Annualized Units / 1000 Savings

Savings are also presented as changes in utilization per 1000 by medical service group. This statistic is calculated as the projected decrease in the number of units of service, divided by the number of member months for the category of aid, multiplied by 12,000. This calculation is repeated for each medical service group, eligibility category, age group, and income level.

Medi-Cal Cost SharingFinancial ModelingExhibit 9. Annualized Units / 1000 Savings

Percentage Decrease / (Increase)


Physician Services

Medical Maintenance or 50% FPL and Under

Above Maintenance Need - 100%

FPL

101% - 150% FPL

151% FPL and Over



FPL

101% - 150% FPL

151% FPL and Over

Pregnant Women 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Restricted Benefit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Income Eligible - Institutionalized - Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Income Eligible - Institutionalized - Non Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Income Eligible - Families 0.00% 0.00% 3.47% 3.47% 0.00% 0.00% 2.73% 2.73%Income Eligible - SSI-Dual 0.00% 0.00% 5.65% 5.65% 0.00% 0.00% 5.77% 5.77%Income Eligible - SSI-Non Dual 0.00% 0.00% 5.25% 5.25% 0.00% 0.00% 5.02% 5.02%Medically Indigent 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - Institutionalized - Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - Institutionalized - Non Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - Families 0.00% 0.00% 5.51% 5.51% 0.00% 0.00% 8.75% 8.75%Medically Needy - SSI-Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - SSI-Non Dual 0.00% 0.00% 4.66% 4.66% 0.00% 0.00% 5.17% 5.17%Other 0.00% 0.00% 7.90% 7.90% 0.00% 0.00% 8.61% 8.61%

0.00% 0.00% 3.67% 4.55% 0.00% 0.00% 4.43% 4.89%

Worksheet 13 – Percentage of Population Exceeding Out-of-Pocket Maximum For information purposes, the model calculates the percentage of the FFS Medi-Cal population that exceeded the applicable OOP threshold specified on Worksheet 4 – Annual Out-of-Pocket Maximums. Those people exceeding their OOP maximums will no longer make copayments on medical services. This reduces the estimated savings to Medi-Cal relative to savings when no OOP limits are established.

Medi-Cal Cost SharingFinancial ModelingExhibit 10. Percentage of Population Exceeding Out-of-Pocket Ma

Percentage Exceeding Out-of-Pocket Maximum


All Service Categories



FPL

101% - 150% FPL

151% FPL and Over



FPL

101% - 150% FPL

151% FPL and Over

Pregnant Women 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Restricted Benefit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Income Eligible - Institutionalized - Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Income Eligible - Institutionalized - Non Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Income Eligible - Families 0.00% 0.00% 0.07% 0.01% 0.00% 0.00% 0.00% 0.00%Income Eligible - SSI-Dual 0.00% 0.00% 0.83% 0.28% 0.00% 0.00% 27.66% 6.24%Income Eligible - SSI-Non Dual 0.00% 0.00% 1.37% 0.29% 0.00% 0.00% 18.38% 4.60%Medically Indigent 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - Institutionalized - Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - Institutionalized - Non Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - Families 0.00% 0.00% 0.18% 0.01% 0.00% 0.00% 3.68% 0.88%Medically Needy - SSI-Dual 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medically Needy - SSI-Non Dual 0.00% 0.00% 2.23% 0.42% 0.00% 0.00% 8.96% 1.81%Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 15.32% 6.29%

0.00% 0.00% 0.38% 0.11% 0.00% 0.00% 11.87% 3.00%

Appendices

Appendix A: Review of the Literature on Premium and Cost Sharing Requirements

This literature review is prepared to assist in developing assumptions regarding the response of low-income populations to cost sharing requirements. Cost sharing encompasses both premium requirements that enable program participation and point-of-service copayments or coinsurance. In the Medi-Cal Cost Sharing Model, an actuarial model is used as the basis of measuring rates of change in utilization of services as a result of copayments. That model is derived from a database representing 8 million commercially-insured lives. No such model exists for Medicaid and related populations (generally the population with an income of from 0% to 200% of the federal poverty level). Consequently, we have performed a focused literature review to identify appropriate sources of information regarding the likely effect of a range of program changes that might be proposed.

The review found few studies related to this topic, and many of the studies are dated. For example, the RAND health insurance study, which provides a detailed understanding of differences in behavior correlated with cost sharing, is more than 20 years old. The income levels studied and the cost sharing amounts considered in that study represent different amounts in real dollars today than at the time the study was undertaken. Additionally, the manner in which health care was delivered was very different in the 1970’s and early 1980’s than is the case today. Therefore, some of the available literature must be prudently reviewed. In addition, questions were raised about the possible change in health status of people in Medi-Cal who would disenroll or delay care if premiums and copayments were introduced. The effect of changes in health status is not incorporated into the model, but a summary of literature related to this issue is included.

Review of the Literature on Premium and Cost Sharing Requirements for Programs Targeted at Low-income Populations The following summary is the result of a focused literature search on the effect of cost sharing requirements on program participation and costs.

1) Effect of Premiums on Program Participation

Summary Finding #1: Low-income populations are sensitive to premium costs, and program participation may decline sharply as premiums consume an increasing share of income. • The greatest enrollment seems to occur when premiums are set at one or two

percent of the income of the target population. Enrollment falls as premiums increase above 4% or 5 % of family income.

• For the Medicaid expansion population enrolled in Oregon Health Plan 2, premiums were based upon an income with a sliding scale range from $6 (for those with incomes at or below 10% of FPL) to $20 per month (for those with incomes from 85% to 100% of FPL). When premium contribution requirements were increased and enforced, OHP saw a substantial decline in enrollment, from 100,000 in early 2002 to 50,000 in late 2003.1 For those with no income, 59% of people disenrolled, and enrollment stabilized at approximately 40% of the previous level. For those with incomes at 85%-100% of FPL, enrollment dropped by 44%.2 New enrollment dropped sharply. Oregon’s expansion program currently does not extend to individuals with income above 100% of the poverty level.

Oregon Health Plan Standard Enrollment Decline, by Income and Monthly Premium Requirement

42,009

3,312

18,617

9,09610,858

14,76817,395

1,777

9,935

5,398 6,172 6,537

0% FPL$6 PMPM

0-10% FPL$6 PMPM

10-50% FPL$9 PMPM

50-65% FPL$15 PMPM

65-85% FPL$18 PMPM

85-100% FPL$20 PMPM

59%24,614

46%1,535

47%8,692

40%3,698

43%4,686

44%8,231

Enr

ollm

ent

Average Enrollment in 2002 Average Enrollment in 2003

Decline in Enrollment

3, 4 Sources: Mann C, Artiga S. “The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon’s Medicaid Program.” Kaiser Family Foundation: Medicaid and the Uninsured. Issue paper, 2004 June. http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=368 McConnell J, Wallace N. Research Brief. Oregon Health Policy Research & Evaluation Collaborative. 2004 January. http://www.ohppr.state.or.us/OHREC%20welcome2_files/Reports%20and%20Briefs/ChangesinEnrollmentStandard.pdf

McConnell J, Wallace N. Research Brief. Oregon Health Policy Research & Evaluation Collaborative. 2004 January. http://www.ohppr.state.or.us/OHREC%20welcome2_files/Reports%20and%20Briefs/ChangesinEnrollmentStandard.pdf

• Program participation for Washington Basic Health Plan, Minnesota’s MinnesotaCare and Hawaii Quest declined from 57% to 18% as premiums rose from 1 % to 5% of family income.5 This study looked at programs in 1995. At that time, Hawaii’s Quest had a sliding scale premium starting at $13 for an individual and $53 for a family of four with income at 133% of FPL. Washington’s Basic Health Plan had a sliding scale premium starting at $10 for an individual and $20 for families with no income. MinnesotaCare had premiums also based on a sliding scale except children with family income below 150% of FPL paid a $4 flat premium per child per month. Families with no income paid $12 per month.

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Feb 03-Increased premiums

Total Enrollment (1,000)

Estimated Participation Function, Based on Three States, 1995

0%

20%

40%

60%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Premiums for Two as a % of Income

% P

artic

ipat

ion

Am

ong

Uni

nsur

ed

Washington Income Range is 25%-200% of FPLHawaii Income Range is 133-300% of FPLMinnesota Income Range is 100-275% of FPLModel Estimates

6 Source: Ku L, Coughlin T. “Sliding-Scale Premium Health Insurance Programs: Four States’ Experiences.” Inquiry. Vol.36: 471-480, Winter 1999/2000.

Premium Levels, Number of Uninsured and Estimated Participation in Hawaii, Minnesota, and Washington, 1995.

Income Range as % of Poverty

Median Premium for Two as % of

Income

Estimated number of

Uninsured*(in 1000s)

Estimated Participation as

% of Uninsured**

Hawaii QUEST - Early 1995133-149% 1.4% 4.6 42.0%150-174% 2.4% 4.7 46.9%175-199% 3.5% 3.0 45.3%200-224% 5.3% 2.6 32.7%225-250% 6.9% 3.4 10.5%250-274% 11.9% 1.4 10.4%275-300% 13.6% 2.1 2.8%

MinnesotaCare - Late 1995100-124% 2.4% 43.5 44.8%125-149% 3.1% 95.9 54.7%150-174% 3.8% 43.4 28.6%175-199% 4.8% 35.7 21.2%200-224% 5.9% 42.5 7.8%225-249% 7.4% 27.8 5.1%250-275% 8.8% 14.3 2.9%

Washington BHP - Late 199525-49% 3.2% 11.6 31.9%50-74% 1.9% 33.4 21.4%75-99% 3.1% 26.7 33.3%100-124% 3.0% 38.9 23.6%125-49% 3.7% 27.6 23.8%150-174% 4.4% 41.0 11.3%175-200% 5.1% 48.8 5.7%

* Based on data from the Current Population Survey (CPS).** Based on state data and CPS estimates. 7

Source: Ku L, Coughlin T. “Sliding-Scale Premium Health Insurance Programs: Four States’ Experiences.” Inquiry. Vol.36: 471-480, Winter 1999/2000.

• Massachusetts’ Medical Security Plan began to charge premiums ($20 per week for individual direct coverage plans and $30 per week for family plans), and enrollment declined by 34% to 48%.8

• Vermont’s VHAP witnessed a small decline in enrollment soon after new

premiums were effective in January 2004. Enrollment stabilized or rebounded within all levels of FPL, ≤150% FPL.9 (cf. Vermont Children’s Program has increased premium by 25%-46%.)

• A study in seven states found that 17% of parents with children enrolled in

SCHIP reported periodic trouble paying premiums. Of families who have left SCHIP but remain eligible, 50 percent reported difficulty paying premiums that exceeded $20 per month.10

Vermont Medicaid EnrollmentChildren's Programs with Premiums

0

2,000

4,000

6,000

8,000

10,000

12,000

Mar-03

Apr-03

May-03

Jun-03

Jul-03

Aug-03

Sep-03

Oct-03

Nov-03

Dec-03

Jan-04

Feb-04

Mar-04

Date

Enr

ollm

ent

Dr. Dynasaur (185%-225% FPL) $25 Per Household Per Month (PHPM)Underinsured Children (225%-300% FPL) $35 PHPMUninsured Children (225%-300% FPL) $70 PHPMTotal (Including VHAP 0%-185% of FPL)

Source: Kappel S. “Effects of Medicaid Premiums on Program Enrollment Preliminary Analysis.” 8 April 2004. http://www.leg.state.vt.us/jfo/Healthcare/Medicaid%20Premiums.pdf

Premium Introduced

Vermont Medicaid Premiums by Income Level

Income of % FPL Premium Unit

SCHIP 225-300% $70 PHPMUnderinsured Children 225-300% $35 PHPMDrDynasaur 185-225% $25 PHPMVHAP 150-185% $65 PMPM

100-150% $45 PMPM75-100% $35 PMPM50-75% $10 PMPM

VHAP Pharmacy 0-150% $13 PMPMVscript 150-175% $17 PMPMVscript Expanded 175-225% $35 PMPM

Source: Kappel S. “Effects of Medicaid Premiums on Program Enrollment Preliminary Analysis.” 8 April 2004. http://www.leg.state.vt.us/jfo/Healthcare/Medicaid%20Premiums.pdf

Summary Finding #2: Stricter premium collection policies combined with premium increases contribute to disenrollment.

• In April 2003, two months after the implementation of the premium increase,

Oregon Health Plan Standard re-enforced its administrative policy and disenrolled 16,000 people for nonpayment of premiums. Between May and October 2003, an additional 31,000 people were disenrolled for non payment.11

• TennCare failed to send out premium billing notices for several months after the Medicaid Section 1115 demonstration program started in 1994. When the state eventually back-billed for owed premiums, many participants were unable or unwilling to pay. TennCare dropped more than 80,000 participants for nonpayment in 1995.12

Summary Finding #3: Different participation rates for programs may be due to variations in the generosity of the benefit package offered by the program, as well as differences in premium requirements.

• In the study comparing Washington Basic Health Plan (BHP), Minnesota

MinnesotaCare, Hawaii QUEST and Tennessee TennCare, the Hawaii QUEST program had higher participation than expected while Washington had extremely low participation. However, this may be due to different benefit packages offered. Hawaii offered a full acute care benefit package to subsidy enrollees, although the numbers of services covered were limited. BHP enrollees receive a benefit package that required cost sharing, in contrast to the state’s Medicaid program.13

2) Effects of Copayments on Utilization

Summary Finding #4: Introduction of or increases in copayments reduce utilization. It is generally not possible to distinguish between reductions in necessary and unnecessary care.

• Low-income adults in cost sharing plans had only a 59% chance of receiving

care for acute conditions relative to those with no cost sharing.14 • A study that examined the use of services associated with specific diagnoses

found that coinsurance was more likely to deter care for the low-income population, especially low-income children. However, for both high and low-income populations, the reduced utilization was similar for services identified as Highly Effective and Rarely Effective.15

• Even small co-payments resulted in fewer physician visits and less preventive

care. Those with a $1 copay per service received fewer preventive services, especially immunization (45% decrease), Pap smears (21.5% decrease), and obstetrical care (58% decrease) compared to beneficiaries not subject to the copayment.16

• Use of prescription drugs by Medicaid beneficiaries is lower in states that

impose co-payments, even when these co-pays are small.17 For example, research Medicaid programs in South Carolina and Tennessee showed an 11% drop in prescriptions per patient per month following a $5 co-payment.18 Among commercial populations, imposing tiered benefits and charging higher copayments for brand name drugs results in a significant shift in utilization.19

• Low-income individuals with no cost sharing received an eye exam more than

other low-income populations with cost sharing, 78% vs. 59% respectively.20

Effect of Cost-Sharing on Vision Care for Low-Income Populations in RAND HIE

78%

59%

30%20%

No Cost Sharing Cost Sharing

In Cost-Sharing Plans

Perc

ent o

f pop

ulat

ion

that

rec

eive

d vi

sion

serv

ices

or

purc

hase

d le

nses

Received an Eye Exam Purchased Lenses

Lurie N, et al. “How Free Care Improved Vision in the Health Insurance Experiment.” American Journal of Public Health. Vol.70(5). May 1989.

• In the Oregon Health Plan 2, nearly a third of adults remaining in the program with premiums reported an unmet health care need due to cost sharing requirements or the elimination of coverage for certain benefits. Physicians described instances in which people avoided seeking necessary care because of costs.21

• In TennCare, one-fifth of participants subject to copayments reported they

were unable to make their copayments for prescriptions and about two-thirds reported going without a medication because of difficulty paying the copayment. This occurred despite a state policy prohibiting providers from denying care because of inability to meet the deductible or copayment.22

Summary Finding #5: There is limited research that demonstrates a utilization response with the introduction of copayments in a low-income population; there is less information regarding how the utilization response may differ across income levels.

• The RAND Health Insurance Experiment (HIE) examined different measures of the use of medical services across low, middle and high income groups. Inpatient utilization was lower in plans that required cost sharing, but this did not differ by income group. For professional and other outpatient services, the results relative to income were mixed. Overall, the aggregate differences in response to cost sharing did not differ significantly by income.23

• The RAND HIE reports that the differences in use of services by income group are due to a direct income effect and to an indirect effect from factors that are correlated with income. Overall, the direct income effect had the greatest impact. The probability of any use of medical services increases significantly with income; these income differences were greater in plans that required cost sharing compared to use of services in the free plan.

• One limitation of the RAND HIE was that the study size was too small to

finely divide income groups to understand the impact of cost sharing on very low-income populations, such as the Medicaid population. The total study size was 5,814 persons in 2,005 families in six sites whose utilization and medical cost was analyzed over the period 1974 to 1982. The Low-income measure could be defined differently in the many studies published on the RAND HIE. For some studies Low-income was defined as the bottom 20 percent of the study’s income, which was below 100% FPL for a family, while other studies included all persons in families up to 200%-FPL. Also, for each of the coinsurance plans, out-of-pocket maximums were limited to 5%, 10%, or 15% of family income and the amount could not exceed $1,000 in a year. Low-income families would be more likely to attain the out of pocket maximum and all subsequent care would be free.

3) Impact of Cost Sharing on Adverse Selection

Summary Finding #6: Introduction of premium and copayment requirements in Medicaid and Medicaid expansion programs may cause the subset of the population with lower risk and better health status to disenroll.24 • Washington’s Basic Health Plan did not find evidence of adverse selection or

differences in health status of those who bought into BHP. Note, however, that the pre-existing condition exclusion clause may have effectively mitigated the potential for adverse selection.

• Per capita costs for TennCare increased proportionate to the drop in

enrollment, resulting in no change in total expenditures. 4) Effects of Cost Sharing on State Expenditures

Summary Finding #7: There is some evidence that premium and copayments may not produce the expected savings for the State Medicaid program. • A $1 co-payment for physician visits appeared to decrease the demand for

ambulatory care by 8%. However, during the same time period, the demand for hospital inpatient services increased by 17% in the co-pay population. Imposition of the co-payments resulted in a 3% to 8% increase in overall Medicaid program costs during this time period.25

• The RAND HIE reported that outpatient only cost sharing reduces expenditures relative to free care, and also reduced inpatient use, but by an insignificant amount.26

• Oregon Health Plan 2’s premium collections declined due to a sharp

disenrollment of beneficiaries. OHP 2 enrollees who stayed in the program had higher per capita costs than those who disenrolled, after considering the simultaneous change in covered services.27

Summary Finding #8: Charging premiums adds administrative complexity that results in increased administration costs. To run a premium program, states need to develop procedures to notify applicants about their premium level, to bill them and to collect premiums. Also, states need to be able to terminate a person from the program for not paying their premium. • Tennessee’s TennCare encountered serious administrative problems in the

administration of premium requirements. Because of its mail application system, applicants often did not know how much their premiums would be until after they were enrolled in a program. The state failed to send out premium billing notices for several months. When the State tried to rectify this, some of the members were unable or unwilling to pay which led to substantial disenrollment.

• Because of administrative difficulties, federal judges have limited the ability of the TennCare program administrators to disenroll recipients who have not paid the required premium.

5) Effects of Insurance on Health Status

Summary Finding #9: Recent reviews of the literature by the Institute of Medicine and by Jack Hadley on the relationship of health insurance coverage and health status suggest that the uninsured receive fewer preventive, diagnostic and therapeutic health care services and may be more severely ill when diagnosed. This is generally true for studies that have examined insurance coverage and outcomes of specific diseases, general health status and mortality, and medical care use and mortality. It is less well understood what impact health insurance has on health status. While it is clear that health insurance results in substantial improvements in access to care (i.e., large increases in the likelihood of having a usual source of care, and close to a 100% increase in health care utilization), the magnitude of the effect of health insurance on health outcomes is less well established. 28

• The literature reviews conclude that lack of insurance leads to an increase of at least 25% in mortality rates, but the evidence upon which these conclusions are based is not strong.

• The lack of precise estimates of the effects of insurance on health is, in part, due to methodological difficulties in measuring health status, and, in part, to the difficulties of making causal inferences from observational studies. With the major exception of the RAND Health Insurance Experiment, and the partial exception of a few other quasi-experiments, most of the research on the effects of insurance on health compares the health status of insured and uninsured people at a point in time, while attempting to control for other differences between the insured and uninsured that might affect health outcomes.

• The existing research is quite persuasive in making the case that being uninsured negatively affects health status over the long run, but does not provide a means for quantifying the magnitude or timing of the effect.

• Many studies of the Medicaid population that show worse outcomes than privately insured are confounded by consideration that initial poor health status may increase the probability of Medicaid coverage, differences in state Medicaid program benefits and operation, and other differences in socioeconomic status between the two groups.

Summary Finding #10: The health status research reports limited findings related to health status and different types of insurance. There is almost no research on what impact different benefit packages for those with insurance has on health status. Therefore, the relationship between declines in health status and point-of-service cost sharing (copayments) is less well established.

• In the RAND HIE, no difference was found on 8 of 10 measures of health status between cost sharing and free health care groups. For low-income groups with high blood pressure, blood pressure was better controlled in the free care group. 29

End Notes

1 Mann C, Artiga S. “The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon’s Medicaid Program.” Kaiser Family Foundation: Medicaid and the Uninsured. Issue paper, 2004 June. http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=3681

2 Ibid.

3 Ibid,

4 McConnell J, Wallace N. Research Brief. Oregon Health Policy Research & Evaluation Collaborative. 2004 January. http://www.ohppr.state.or.us/OHREC%20welcome2_files/Reports%20and%20Briefs/ChangesinEnrollmentStandard.pdf

5 Ku L, Coughlin T. “Sliding-Scale Premium Health Insurance Programs: Four States’ Experiences.” Inquiry. Vol.36: 471-480, Winter 1999/2000,

6 Ibid.

7 Ibid.

8 Flagg S. School of Medicine, Tufts University, “An Analysis of the Medical Security Plan during the Summer of 2003.” (unpublished). Data on disenrollment from the Massachusetts Division of Employment and Training.

9 Kappel S. “Effects of Medicaid Premiums on Program Enrollment Preliminary Analysis.” 8 April 2004. http://www.leg.state.vt.us/jfo/Healthcare/Medicaid%20Premiums.pdf

10 Riley T, Pernice MP, Kannel S. “Why Eligible Children Lose or Leave SCHIP.” Portland, ME: National Academy of State Health Policy, February 2002.

11 Mann C, Artiga S. “The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon’s Medicaid Program.” Kaiser Family Foundation: Medicaid and the Uninsured. Issue paper, 2004 June. http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=36812

12 Ku L, Coughlin T. “The Use of Sliding Scale Premiums in Subsidized Insurance Programs.” Urban Institute Research Report. 1997 March 2001. http://www.urban.org/urlprint.cfm?ID=6201

13 Ibid.

14 Lohr K, Brook R, Kamberg C, Goldberg G, Leibowitz A, Keesey J, Rebousiin D, Newhouse J. “Effect of Cost sharing on Use of Medically Effective and Less Effective Care.” Medical Care. Vol.24(9): S31-38. 1986 September.

15 Lohr K, Brook R, Kamberg C, et al. “Use of Medical Care in the RAND Health Insurance Experiment, Diagnosis and Service Specific Analyses in A Randomized Controlled Trial”, contract report to U.S. Department of Health and Human Services. Contract 01-66-90, December 1986, as cited in Office of Technology Assessment. U.S. Congress, “Benefit Design in Health Care Reform: Background Paper – Patient Cost Sharing”, OTA-BP-H-112, September 1993.

16 Brian E, S. Gibbens. “California’s Medi-Cal Co-payment Experiment.” Medical Care. Vol.12: Supplemen,4-56, 1974.

17 Stuart, B, Zacker C. ”Who Bears the Burden of Medicaid Drug Co-Payment Policies?” Health Affairs. Vol.18(2):201-21. 1999 March/April.

18 Nelson AA, Reeder CE, Dicson WM. “The Effect of a Medicaid Drug Copayment program on the Utilization and Cost of Prescription Services.” Medical Care. 22(8):724-36. 1984 August.

19 Joyce GF, Escarce J, Solomon M, Goldman G. “Employer Drug Benefit Plans and Spending on Prescription Drugs.” Journal of the American Medical Association. Vol. 228(14): 1733-1739. October 9, 2002.

20 Lurie N, et al. “How Free Care Improved Vision in the Health Insurance Experiment.” American Journal of Public Health. Vol.70(5). May 1989.

21 Mann C, Artiga S. “The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon’s Medicaid Program.” Kaiser Family Foundation: Medicaid and the Uninsured. Issue paper. 2004 June. http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=36812

22 Bonnyman G. “Access to Care-September 1996.” Nashville, TN: Tennessee Justice Center. 1996.

23 Newhouse, J. P. and the Insurance Experiment Group. Free For All? Lessons from the RAND Health Insurance Experiment. RAND Corporation, 1993. Santa Monica, CA. Table 3.4, Page 46.

24 Ku L, Coughlin T. “The Use of Sliding Scale Premiums in Subsidized Insurance Programs.” Urban Institute Research Report. 1997 March 2001. http://www.urban.org/urlprint.cfm?ID=6201.

25 Helms J, Newhouse JP, Phelps CE. “Copayments and Demand for Medical Care: The California Medicaid Experience.” Bell Journal of Economics. Vol.9-192-208,1978.

26 Newhouse, J. P. and the Insurance Experiment Group. Free For All? Lessons from the RAND Health Insurance Experiment. RAND Corporation, 1993. Santa Monica, CA., Page 45.

27 Mann C, Artiga S. “The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon’s Medicaid Program.” Kaiser Family Foundation: Medicaid and the Uninsured. Issue paper. 2004 June. http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=36812

28 Institute of Medicine. Care Without Coverage: Too Little, Too Late. National Academy of Sciences, 2002. Appendix B. Primary Research Literature Review and Hadley, J. “Sicker and Pooer – The Consequences of Being Uninsured: A Review of the Research on the Relationship between Health Insurance, Medical Care Use, Health, Work, and Income.” Medical Care Research and Review Vol.60 No. 2 (Supplement to June 2002). pp 3S-75S.

29 Brook, R.H. et al. “Does Free Care Improve Adults Health? Results from a Randomized Controlled Trial. New England Journal of Medicine Vol 309( 1983), pp 392-433.

Appendix B.1: Eligibility – Aid Code Crosswalk

Revised from DHS

Aid Codes DHS Secondary Category DHS Primary Category Cost Saving Model Category81, 86, 87 MI Adult Medically Indigent+ Medically Indigent03, 04, 2A, 4A, 4K, 4M, 45, 5K, 7T, 82 MI Child

1G, 1H, 1X, 1Y, 13*, 14, 17 Aged Medically Needy+ MN SSI - Dual2G, 23*, 24, 27 Blind MN SSI - Non Dual6G, 6H, 6V, 6W, 6X, 6Y, 63*, 64, 65, 67, 8G Disabled MN SSI - Institutionalized - Dual

MN SSI - Institutionalized - Non Dual3N, 34, 37, 39, 5J, 5R, 5X, 54, 59, 6J, 6R, 7J Families MN Families

5M, 7A, 8R 100% Poverty Income Eligible Families72, 8P 133% Poverty47, 49, 5H, 79 200% Income Disr/Aid76

1E, 10, 12, 15, 16, 18 Aged Public Assistance Income Eligible SSI Dual2E, 20, 22, 25, 26, 28, 6A Blind Income Eligible SSI - Non Dual36, 6C, 6E, 6N, 6P, 60, 62, 66, 68 Disabled Income Eligible SSI - Institutionalized - Non Dual

Income Eligible SSI - Institutionalized - Non Dual

06, 3A, 3C, 3E, 3G, 3H, 3L, 3M, 3P, 3R, 3U, 3W, 30, 32, 33, 35, 38, 4C, 4F, 4G, 4P, 4R, 40, 42, 43, 46, 77, 78 Families Income Eligible Families

0A, 01, 02, 08 Refugees Other

0M, 0N, 0P Breast Cervical Cancer Treatment P Other

7F, 7G Presumptive Elig Other+ Restricted Benefit

7H TB Program Restricted Benefit

7M, 7N, 7P, 7R Minor Consent** Restricted Benefit

71, 73 Dialysis Special Treatment Programs Restricted Benefit

80 QMB-only Restricted Benefit

0R, 0T, 0U, 0V Breast Cervical Cancer Treatment P Restricted Benefit

1U Aged Medically Needy+ Restricted Benefit6U Disabled Medically Needy+

53 MI Adult Medically Indigent+ Restricted Benefit

3T, 3V, 5T, 5W, 5Y, 7K Families Medically Needy+ Restricted Benefit

5F, 55, 58 MN/MI Alien without SIS Restricted Benefit5G, 5N7C, 8T 100% Poverty Other+ Restricted Benefit74, 8N 133% Poverty Other+

07, 44, 48, 69, 70, 75, 76 200% Income Disr/Aid76 Other+ Restricted Benefit

Notes: Aid codes map to model categories, with the exception of the SSI Dual, Non-Dual, Pregnant Women, and Institutionalized categories. For Dual v. Non-Dual groups, additional identifying information were used to differentiate between those with and without Medicare coverage.For Pregnant Women, additional pregnancy-related diagnosis codes were used to identify Medi-Cal recipients with pregnant services.For the Institutionalized, additional institutionalized-related providers and claims were used to identify the Income Eligible and Medically Needy that utilized institutional services.

Appendix B.2 Aid Code Descriptions

Revised from Medical Care Statistics Section The following aid codes incorporated in the Med-Cal Redesign Cost Sharing Savings model identify the type of services for which different Medi-Cal recipients are currently eligible for. SOC stands for share of cost. Code Benefits SOC Program/Description Restricted Benefit 0R Restricted

Services No BCCTP – High Cost Other Health Coverage (OHC). Provides

payment of premiums, co-payments, deductibles and coverage for non-covered cancer-related services for all-age males and females, including undocumented aliens, who have been diagnosed with breast and/or cervical cancer. Breast-cancer-related services covered for 18 months. Cervical-cancer-related services covered for 24 months.

0T Restricted Services

No BCCTP – State. Provides 18 months of breast cancer treatments and 24 months of cervical cancers treatments for all-age males and females 65 years of age or older, regardless of citizenship, who have been diagnosed with breast and/or cervical cancer. Does not cover individuals with expensive, creditable insurance.

0U Restricted Services

No BCCTP – Undocumented Aliens. Provides emergency, pregnancy-related and Long Term Care (LTC) services to females younger than 65 years of age with unsatisfactory immigration status who have been diagnosed with breast and/or cervical cancer. Does not cover individuals with creditable insurance. State-only cancer treatment services are 18-months (breast) and 24-months (cervical).

0V Restricted Services

No Post-BCCTP – Provides limited-scope no SOC Medi-Cal emergency, pregnancy-related and LTC services for females younger than 65 years of age with unsatisfactory immigration status and without creditable health insurance coverage who have exhausted their 18-months (breast) or 24-months (cervical) period of cancer treatment coverage under aid code 0U.

07 Restricted to emergency services

No Asset Waiver Program. Infant – Undocumented/Non-immigrant Alien (but otherwise eligible). Provides emergency services only for infants up to age 1 year and continues beyond 1 year when inpatient status, which began before 1st birthday, continues and family income is between 185 percent and 200 percent of the Federal poverty level (State-only program).

1U Restricted to pregnancy and emergency services

No Restricted Federal Poverty Level – Aged (Restricted FPL-Aged). Provides emergency and pregnancy-related benefits (no SOC) to qualified aged individuals/couples who do not have satisfactory immigration status.

3T Restricted to pregnancy and emergency services

No Initial Transitional Medi-Cal (TMC) (FFP). Provides six months of emergency and pregnancy-related initial TMC benefits (no SOC) for aliens who do not have satisfactory immigration status (SIS) and have been discontinued from Section 1931(b) due to increased earnings from employment.

Code Benefits SOC Program/Description Restricted Benefit 3V Restricted

to pregnancy and emergency services

No Section 1931(b). Provides emergency and pregnancy-related benefits (no SOC) for aliens without SIS who meet the income, resources and deprivation requirements of the AFDC State Plan in effect July 16, 1996. (FFP for emergency services including labor and delivery. State-only for pregnancy-related services.)

44 Restricted to pregnancy-related services

No Income Disregard Program. Pregnant (FFP) – Covers United States Citizen/U.S. National and aliens with satisfactory immigration status including lawful Permanent Resident Aliens/Amnesty Aliens and PRUCOL Aliens. Provides family planning, pregnancy-related and postpartum services for any age female if family income is at or below 200 percent of the federal poverty level.


No Income Disregard Program. Pregnant – Covers aliens who do not have lawful Permanent Resident Alien, PRUCOL or Amnesty Alien status (including undocumented aliens), but who are otherwise eligible for Medi-Cal. Provides family planning, pregnancy-related and postpartum services for any age female, if family income is at or below 200 percent of the federal poverty level. Routine prenatal care is non-FFP. Labor, delivery and emergency prenatal care are FFP.

5F or 5N

Restricted to pregnancy and emergency services

Y/N OBRA Aliens. Covers pregnant alien women who do not have lawful Permanent Resident Alien, PRUCOL or Amnesty Alien status (including undocumented aliens), but who are otherwise eligible for Medi-Cal.


No Continuing TMC (FFP). Provides an additional six months of continuing emergency and pregnancy-related TMC benefits (no SOC) to qualifying aid code 3T recipients.

5W Restricted to pregnancy and emergency services

No Four Month Continuing (FFP). Provides four months of emergency and pregnancy-related benefits (no SOC) for aliens without SIS who are no longer eligible for Section 1931(b) due to the collection or increased collection of child/spousal support.

5Y Restricted to pregnancy and emergency services

No Second Year TMC (State-only program). Provides a second year of continuing emergency and pregnancy-related TMC benefits (no SOC) to aliens without satisfactory immigration status who have received benefits under aid code 5T and are 19 years of age or older.

53 Restricted to LTC and related services

Y/N Medically Indigent – LTC. Covers persons age 21 or older and under 65 years of age who are residing in a Nursing Facility Level A or B with or without SOC.

Code Benefits SOC Program/Description Restricted Benefit 55 Restricted


No Aid to Undocumented Aliens in LTC Not PRUCOL. Covers undocumented aliens in LTC not PRUCOL. LTC services: State-only funds; emergency and pregnancy-related services: State and federal funds. Recipients will remain in this aid code even if they leave LTC.

58 Restricted to pregnancy and emergency services

Y/N OBRA Aliens. Covers aliens who do not have lawful Permanent Resident Alien, PRUCOL or Amnesty Alien status (including undocumented aliens), but who are otherwise eligible for Medi-Cal.

6U Restricted to pregnancy and emergency services

No Restricted Federal Poverty Level – Disabled (Restricted FPL-Disabled) Provides emergency and pregnancy-related benefits (no SOC) to qualified disabled individuals/couples who do not have satisfactory immigration status.


No Income Disregard Program. Infant (FFP) – Undocumented/Nonimmigrant Alien (but otherwise eligible). Provides emergency services only for infants under 1 year of age and beyond 1 year when inpatient status, which began before 1st birthday, continues and family income is at or below 200 percent of the federal poverty level.

7C or 5M

Restricted to pregnancy and emergency services

No 100 Percent Program. Child – Undocumented/Nonimmigrant Status/[IRCA Amnesty Alien (Not ABD or Under 18)]. Covers emergency and pregnancy-related services to otherwise eligible children, ages 6 to 19 and beyond 19 when inpatient status begins before the 19th birthday and family income is at or below 100 percent of the federal poverty level.

7F Valid for pregnancy verification office visit

No Presumptive Eligibility (PE) – Pregnancy Verification (FFP). This option allows the Qualified Provider to make a determination of PE for outpatient prenatal care services based on preliminary income information. 7F is valid for pregnancy test, initial visit, and services associated with the initial visit. Persons placed in 7F have pregnancy test results that are negative.

7G Valid only for ambulatory prenatal care services

No Presumptive Eligibility (PE) – Ambulatory Prenatal Care Services (FFP). This option allows the Qualified Provider to make a determination of PE for outpatient prenatal care services based on preliminary income information. 7G is valid for Ambulatory Prenatal Care Services. Persons placed in 7G have pregnancy test results that are positive.

7H Valid only for TB-related outpatient services

No Medi-Cal Tuberculosis (TB) Program. Covers individuals who are TB-infected for TB-related outpatient services only.

Code Benefits SOC Program/Description Restricted Benefit 7K Restricted


No Continuous Eligibility for Children (CEC) program. Provides emergency and pregnancy-related benefits (no Share of Cost) to children up to 19 years of age who would otherwise lose their no Share of Cost Medi-Cal.

7M Valid for Minor Consent services

Y/N Minor Consent Program (Non-FFP). Covers minors aged 12 and under 21. Limited to services related to Sexually Transmitted Diseases, sexual assault, drug and alcohol abuse, and family planning.

7N Valid for Minor Consent services

No Minor Consent Program (FFP). Covers pregnant female minors under age 21. Limited to services related to pregnancy and family planning.

7P Valid for Minor Consent services

Y/N Minor Consent Program (Non-FFP). Covers minors age 12 and under 21. Limited to services related to Sexually Transmitted Diseases, sexual assault, drug and alcohol abuse, family planning, and outpatient mental health treatment.

7R Valid for Minor Consent services

Y/N Minor Consent Program (FFP). Covers minors under age 12. Limited to services related to family planning and sexual assault.


No Asset Waiver Program (Pregnant). United States Citizen, Permanent Resident Alien/PRUCOL Alien or Undocumented/Nonimmigrant Alien (but otherwise eligible). Provides family planning, pregnancy-related, and postpartum services under the State-only funded expansion of the Medi-Cal program for a pregnant woman having income between 185 percent and 200 percent of the federal poverty level (State-Only Program).

71 Restricted to dialysis and supplemental dialysis-related services

Y/N Medi-Cal Dialysis Only Program/Medi-Cal Dialysis Supplement Program (DP/DSP) (Non-FFP). Covers persons of any age who are eligible only for dialysis and related services.

73 Restricted to parenteral hyperali-mentation-related expenses

Y/N Medi-Cal TPN Only Program/Medi-Cal TPN Supplement Program Non-FFP). Covers persons of any age who are eligible for parenteral hyperalimentation and related services and persons of any age who are eligible under the Medically Needy or Medically Indigent Programs.


No 133 Percent Program (OBRA). Child Undocumented/ Nonimmigrant Alien (but otherwise eligible) (FFP). Provides emergency services only for children ages 1 up to 6 and beyond 6 years when inpatient status, which began before 6th birthday, continues and family income is at or below 133 percent of the federal poverty level.

Code Benefits SOC Program/Description Restricted Benefit 75 Restricted

to pregnancy- related services

No Asset Waiver Program (Pregnant). Provides family planning, pregnancy-related, and postpartum services for amnesty aliens under the State-only funded expansion of the Medi-Cal program for a pregnant woman having income between 185 percent and 200 percent of the federal poverty level (State-Only Program).

76 Restricted to 60-day postpartum services

No 60-Day Postpartum Program (FFP). Provides Medi-Cal at no SOC to women who, while pregnant, were eligible for, applied for, and received Medi-Cal benefits. They may continue to be eligible for all postpartum services and family planning. This coverage begins on the last day of pregnancy and ends the last day of the month in which the 60th day occurs.

8N Restricted to emergency services

No 133 Percent Program (OBRA). Child Undocumented/Nonimmigrant Alien (but otherwise eligible except for excess property) (FFP). Provides emergency services only for children ages 1 up to 6 and beyond 6 years when inpatient status, which began before 6th birthday, continues, and family income is at or below 133 percent of the federal poverty level.


No 100 Percent Program. Child – Undocumented/Nonimmigrant Status/(IRCA Amnesty Alien [with excess property]). Covers emergency and pregnancy-related services only to otherwise eligible children ages 6 to 19 and beyond 19 when inpatient status begins before the 19th birthday and family income is at or below 100 percent of the Federal poverty level.

80 Restricted to Medicare expenses

No Qualified Medicare Beneficiary (QMB). Provides payment of Medicare Part A premium and Part A and B coinsurance and deductibles for eligible low-income aged, blind or disabled individuals.

Code Benefits SOC Program/Description Income Eligible Families 3A Full No Safety Net – All Other Families, California Work Opportunity and

Responsibility to Kids (CalWORKs), Timed-Out, Child-Only Case. Provides for continued cash assistance and Medi-Cal coverage for children whose parents were discontinued from cash assistance and removed from the Assistance Unit (AU) due to reaching the CalWORKs 60-month time limit.

3C Full No Safety Net – Two-Parent Families, CalWORKs, Timed-Out, Child-Only Case. Provides continued cash assistance and Medi-Cal coverage for children whose parents were discontinued from cash assistance and removed from the AU due to reaching the CalWORKs 60-month time limit.

3E Full No CalWORKs Legal Immigrant – Family Group (FFP). Provides aid to families in which a child is deprived because of the absence, incapacity or death of either parent.

3G Full No AFDC-FG (State only) (non-FFP cash grant FFP for Medi-Cal eligibles). Provides aid to families in which a child is deprived because of the absence, incapacity or death of either parent, who does not meet all federal requirements, but State rules require the individual(s) be aided. This population is the same as aid code 32, except that they are exempt from the AFDC grant reductions on behalf of the Assistance Payments Demonstration Project/California Work Pays Demonstration Project.

3H Full No AFDC-FU (State only) (non-FFP cash grant FFP for Medi-Cal eligibles). Provides aid to pregnant women (before their last trimester) who meet the federal definition of an unemployed parent but are not eligible because there are no other children in the home. This population is the same as aid code 33, except that they are exempt from the AFDC grant reductions on behalf of the Assistance Payments Demonstration Project/California Work Pays Demonstration Project.

3L Full No CalWORKs Legal Immigrant – Family Group (FFP). Provides aid to families in which a child is deprived because of the absence, incapacity or death of either parent.

3M Full No CalWORKs Legal Immigrant – Unemployed (FFP). Provides aid to families in which a child is deprived because of the unemployment of a parent living in the home.

3P Full No AFDC Unemployed Parent (FFP cash) – Aid to Families in which a child is deprived because of the unemployment of a parent living in the home and the unemployed parent meets all federal AFDC eligibility requirements. This population is the same as aid code 35, except that they are exempt from the AFDC grant reductions on behalf of the Assistance Payments Demonstration Project/California Work Pays Demonstration Project.

3R Full No AFDC – Family Group (FFP) in which the child(ren) is deprived because of the absence, incapacity or death of either parent. This population is the same as aid code 30, except that they are exempt from the AFDC grant reductions on behalf of the Assistance Payments Demonstration Project/California Work Pays Demonstration Project.

Code Benefits SOC Program/Description Income Eligible Families 3U Full No CalWORKs Legal Immigrant – Unemployed (FFP). Provides aid to

families in which a child is deprived because of the unemployment of a parent living in the home.

3W Full No TANF–Timed out, mixed case (State-only program). Recipients who have reached their TANF 60-month time limit, remain eligible for CalWORKs and the family includes at least one non-federally eligible recipient.

30 Full No AFDC-FG (FFP). Provides aid to families with dependent children in a family group in which the child(ren) is deprived because of the absence, incapacity or death of either parent.

32 Full No TANF–Timed out. Recipients who have reached their TANF 60-month time limit and remain eligible for CalWORKs.

33 Full No AFDC – Unemployed Parent (State-only program) (non-FFP cash grant FFP for Medi-Cal eligibles). Provides aid to pregnant women (before their last trimester) who meet the federal definition of an unemployed parent but are not eligible because there are no other children in the home.

35 Full No AFDC-U (FFP cash). Provides aid to families in which a child is deprived because of unemployment of a parent living in the home, and the unemployed parent meets all federal AFDC eligibility requirements.

38 Full No Continuing Medi-Cal Eligibility (FFP). Edwards v. Kizer court order provides for uninterrupted, no SOC Medi-Cal benefits for families discontinued from CalWORKs until the family’s eligibility or ineligibility for Medi-Cal only has been determined and an appropriate Notice of Action sent.

4C Full No AFDC-FC Voluntarily Placed (Fed) (FFP). Provides financial assistance for those children who are in need of substitute parenting and who have been voluntarily placed in foster care.

4F Full No Kinship Guardianship Assistance Payment (Kin-GAP). Federal program for children in relative placement receiving cash assistance.

4G Full No Kin-GAP. State-only program for children in relative placement receiving cash assistance.

40 Full No AFDC-FC/Non-Fed (State FC). Provides financial assistance for those children who are in need of substitute parenting and who have been placed in foster care.

42 Full No AFDC-FC/Fed (FFP). Provides financial assistance for those children who are in need of substitute parenting and who have been placed in foster care.

47 Full No Income Disregard Program (FFP). Infant – United States Citizen, Permanent Resident Alien/PRUCOL Alien. Provides full Medi-Cal benefits to infants up to 1-year-old and continues beyond 1 year when inpatient status, which began before 1st birthday, continues and family income is at or below 200 percent of the federal poverty level.

7A Full No 100 Percent Program. Child (FFP) – United States Citizen, Lawful Permanent Resident/PRUCOL/(IRCA Amnesty Alien [ABD or Under 18]). Provides full benefits to otherwise eligible children, ages 6 to 19 and beyond 19 when inpatient status began before the 19th birthday and family income is at or below 100 percent of the federal poverty level.

Code Benefits SOC Program/Description Income Eligible Families 72 Full No 133 Percent Program. Child – United States Citizen, Permanent

Resident Alien/PRUCOL Alien (FFP). Provides full Medi-Cal benefits to children ages 1 up to 6 and beyond 6 years when inpatient status, which began before 6th birthday, continues and family income is at or below 133 percent of the federal poverty level.

8P Full No 133 Percent Program. Child – United States Citizen (with excess property), Permanent Resident Alien/PRUCOL Alien (FFP). Provides full-scope Medi-Cal benefits to children ages 1 up to 6 and beyond 6 years when inpatient status, which began before 6th birthday, continues, and family income is at or below 133 percent of the Federal poverty level.

8R Full No 100 Percent Program. Child (FFP) – United States Citizen (with excess property), Lawful Permanent Resident/PRUCOL/(IRCA Amnesty Alien [ABD or Under 18]). Provides full-scope benefits to otherwise eligible children, ages 6 to 19 and beyond 19 when inpatient status begins before the 19th birthday and family income is at or below 100 percent of the Federal poverty level.

79 Full No Asset Waiver Program (Infant). Provides full Medi-Cal benefits to infants up to 1 year, and beyond 1 year when inpatient status, which began before 1st birthday, continues and family income is between 185 percent and 200 percent of the federal poverty level (State-Only Program).

Code Benefits SOC Program/Description Income Eligible SSI – Institutionalized Dual, Institutionalized Non Dual, Dual, Non Dual 1E Full No Craig v. Bonta – Continued Eligibility for the Aged. Covers former

Supplemental Security Income/State Supplemental Payment (SSI/SSP) recipients, who are aged, until the county determines their Medi-Cal eligibility.

10 Full No SSI/SSP Aid to the Aged (FFP). A cash assistance program administered by the SSA, which pays a cash grant to needy persons 65 years of age or older.

16 Full No Aid to the Aged – Pickle Eligibles (FFP). Covers persons 65 years of age or older who were eligible for and receiving SSI/SSP and Title II benefits concurrently in any month since April 1977 and were subsequently discontinued from SSI/SSP but would be eligible to receive SSI/SSP if their Title II cost-of-living increases were disregarded. These persons are eligible for Medi-Cal benefits as public assistance recipients in accordance with the provisions in the Lynch v. Rank lawsuit.

18 Full No Aid to the Aged – IHSS (FFP). Covers aged IHSS cash recipients, 65 years of age or older, who are not eligible for SSI/SSP cash benefits.

2E Full No Craig v. Bonta – Continued Eligibility for the Blind. Covers former SSI/SSP recipients, who are blind, until the county determines their Medi-Cal eligibility.

20 Full No SSI/SSP Aid to the Blind (FFP). A cash assistance program, administered by the SSA, which pays a cash grant to needy blind persons of any age.

26 Full No Aid to the Blind – Pickle Eligibles (FFP). Covers persons who meet the federal criteria for blindness and are covered by the provisions of the Lynch v. Rank lawsuit. (See aid code 16 for definition of Pickle eligibles.)

28 Full No Aid to Blind – IHSS (FFP). Covers persons who meet the federal definition of blindness and are eligible for IHSS. (See aid code 18 for definition of eligibility for IHSS.)

36 Full No Aid to Disabled Widow/ers (FFP). Covers persons who began receiving Title II SSA before age 60 who were eligible for and receiving SSI/SSP and Title II benefits concurrently and were subsequently discontinued from SSI/SSP but would be eligible to receive SSI/SSP if their Title II disabled widow/ers reduction factor and subsequent COLAs were disregarded.

6A Full No Disabled Adult Child(ren) (DAC)/Blindness (FFP).

6C Full No Disabled Adult Child(ren) (DAC)/Disabled (FFP).

6E Full No Craig v. Bonta - Continued Eligibility for the Disabled. Covers former SSI/SSP recipients, who are disabled, until the county determines their Medi-Cal eligibility.

6N Full No Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)/No Longer Disabled Recipients (FFP). Former SSI disabled recipients (adults and children not in aid code 6R) who are appealing their cessation of SSI disability.

6P Full No PRWORA/No Longer Disabled Children (FFP). Covers children under age 18 who lost SSI cash benefits on or after July 1, 1997, due to PRWORA of 1996, which provides a stricter definition of disability for children.

Code Benefits SOC Program/Description Income Eligible SSI – Institutionalized Dual, Institutionalized Non Dual, Dual, Non Dual 60 Full No SSI/SSP Aid to the Disabled (FFP). A cash assistance program

administered by the SSA that pays a cash grant to needy persons who meet the federal definition of disability.

66 Full No Aid to the Disabled Pickle Eligibles (FFP). Covers persons who meet the federal definition of disability and are covered by the provisions of the Lynch v. Rank lawsuit. No age limit for this aid code.

68 Full No Aid to the Disabled IHSS (FFP). Covers persons who meet the federal definition of disability and are eligible for IHSS. (See aid codes 18 and 65 for definition of eligibility for IHSS.)

Code Benefits SOC Program/Description Medically Indigent 03 Full No Adoption Assistance Program (AAP) (FFP). A cash grant program to

facilitate the adoption of hard-to-place children who would require permanent foster care placement without such assistance.

04 Full No Adoption Assistance Program/Aid for Adoption of Children (AAP/AAC) (non-FFP). Covers cash grant children receiving Medi-Cal by virtue of eligibility to AAP/AAC benefits.

2A Full No Abandoned Baby Program. Provides full-scope benefits to children up to 3 months of age who were voluntarily surrendered within 72 hours of birth pursuant to the Safe Arms for Newborns Act.

4A Full No Adoption Assistance Program (AAP). Program for AAP children for whom there is a state-only AAP agreement between any state other than California and adoptive parent(s).

4K Full No Emergency Assistance (EA) Program (FFP). Covers juvenile probation cases placed in foster care.

4M Full No Former Foster Care Children (FFCC) 18 through 20 years of age. Provides full-scope Medi-Cal benefits to former foster care children who were receiving benefits on their 18th birthday in aid codes 40, 42, 45, 4C and 5K and who are under 21 years of age.

45 Full No Children Supported by Public Funds (FFP). Children whose needs are met in whole or in part by public funds other than AFDC-FC.

5K Full No Emergency Assistance (EA) Program (FFP). Covers child welfare cases placed in EA foster care.

7T Full No National School Lunch Program (NSLP) Express Enrollment. Children determined by their school to be eligible for express Medi-Cal enrollment after an evaluation of the NSLP application. Assembly Bill 59 (AB 59) Chapter 894 (Statutes of 2001) allows designated schools to share information from the NSLP with local Medi-Cal offices for the purpose of enrolling a child in Medi-Cal with no Share of Cost.

8E Full No Accelerated Enrollment. Provides immediate, temporary, fee-for-service, full-scope Medi-Cal benefits to children under the age of 19.

8W Full No CHDP Gateway Medi-Cal. Provides for the pre-enrollment of children into the Medi-Cal program who are screened as probable for no Share of Cost (SOC) Medi-Cal eligibility. Provides temporary full-scope Medi-Cal benefits with no SOC. The FFP for these benefits is available through Title XIX of the Social Security Act.

81 Full Y/N MI – Adults Aid Paid Pending (Non-FFP). Aid Paid Pending for persons over 21 but under 65, with or without SOC.

82 Full No MI – Person (FFP). Covers medically indigent persons under 21 who meet the eligibility requirements of medical indigence. Covers persons until the age of 22 who were in an institution for mental disease before age 21. Persons may continue to be eligible under aid code 82 until age 22 if they have filed for a State hearing.

83 Full Yes MI – Person SOC (FFP). Covers medically indigent persons under 21 who meet the eligibility requirements of medically indigent.

86 Full No MI – Confirmed Pregnancy (FFP). Covers persons aged 21 years or older, with confirmed pregnancy, who meet the eligibility requirements of medically indigent.

Code Benefits SOC Program/Description Medically Indigent 87 Full Yes MI – Confirmed Pregnancy (FFP). Covers persons aged 21 or older,

with confirmed pregnancy, who meet the eligibility requirements of medically indigent but are not eligible for 185 percent/200 percent or the MN programs.

Code Benefits SOC Program/Description Medically Needy Families 3N Full No AFDC – Mandatory Coverage Group Section 1931(b) (FFP). Section

1931 requires Medi-Cal be provided to low-income families who meet the requirements of the Aid to Families with Dependent Children (AFDC) State Plan in effect July 16, 1996.

34 Full No AFDC-MN (FFP). Covers families with deprivation of parental care or support who do not wish or are not eligible for a cash grant but are eligible for Medi-Cal only.

37 Full Yes AFDC-MN (FFP). Covers families with deprivation of parental care or support who do not wish or are not eligible for a cash grant, but are eligible for Medi-Cal only. SOC required of the beneficiaries.

39 Full No Initial Transitional Medi-Cal (TMC) – Six Months Continuing Eligibility (FFP). Provides coverage to certain clients subsequent to CalWORKs cash grant or Section 1931(b) program discontinuance due to increased earnings or increased hours of employment.

5J Restricted to pregnancy-related and emergency services

No Pending Disability Program. Covers recipients whose linkage has to be re-determined under Senate Bill 87 (SB 87) requirements. Services restricted due to unsatisfactory immigration status. Recipients have a potential new linkage of disability with no SOC.

5R Restricted to pregnancy-related and emergency services

Yes Pending Disability Program. Covers recipients whose linkage has to be re-determined under SB 87 requirements. Services restricted due to unsatisfactory immigration status. Recipients have a potential new linkage of disability with an SOC.

5X Full No Second Year Transitional Medi-Cal (TMC). Provides a second year of full-scope (no SOC) TMC benefits for citizens and qualified aliens age 19 and older who have received six months of additional full-scope TMC benefits under aid code 59 and who continue to meet the requirements of additional TMC (State-only program).

54 Full No Four-Month Continuing Eligibility (FFP). Covers persons discontinued from CalWORKs or Section 1931(b) due to the increased collection of child/spousal support payments but eligible for Medi-Cal only.

59 Full No Additional TMC – Additional Six Months Continuing Eligibility (FFP). Covers persons discontinued from AFDC due to the expiration of the $30 plus 1/3 disregard, increased earnings or hours of employment, but eligible for Medi-Cal only, may receive this extension of TMC.

6J Full No SB 87 Pending Disability Program. Provides full-scope (no SOC) benefits to recipients 21 to 65 years of age, who have lost their non-disability linkage to Medi-Cal and are claiming disability. Medi-Cal coverage continues uninterrupted during the determination period.

6R Full Yes SB 87 Pending Disability Program. Provides full-scope SOC benefits to recipients 21 to 65 years of age, who have lost their non-disability linkage to Medi-Cal and are claiming disability. Medi-Cal coverage continues uninterrupted during the determination period.

7J Full No Continuous Eligibility for Children (CEC) program. Provides full-scope benefits to children up to 19 years of age who would otherwise lose their no Share of Cost Medi-Cal.

Code Benefits SOC Program/Description Medically Needy SSI – Institutionalized Dual, Institutionalized Non Dual, Dual, Non Dual 1H Full No Federal Poverty Level – Aged (FPL-Aged). Provides full-scope (no

SOC) Medi-Cal to qualified aged individuals/couples. 1X Full No Aid to the Aged – Multipurpose Senior Services Program (MSSP)

(FFP). Covers persons 65 years of age or older who are eligible for Medi-Cal inpatient care in a nursing facility. Provides an MSSP waiver with full-scope benefits, no SOC, for transitional and non-transitional services.

1Y Full Yes Aid to the Aged – MSSP (FFP). Covers persons 65 years of age or older who are eligible for Medi-Cal inpatient care in a nursing facility. Provides an MSSP waiver with full-scope benefits and SOC, for transitional and non-transitional services.

13 Full Y/N Aid to the Aged – LTC (FFP). Covers persons 65 years of age or older who are medically needy and in LTC status.

14 Full No Aid to the Aged – Medically Needy (FFP). Covers persons 65 years of age or older who do not wish or are not eligible for a cash grant, but are eligible for Medi-Cal only.

17 Full Yes Aid to the Aged – Medically Needy, SOC (FFP). Covers persons 65 years of age or older who do not wish or are not eligible for a cash grant, but are eligible for Medi-Cal only. SOC required.

23 Full Y/N Aid to the Blind – LTC Status (FFP). Covers persons who meet the federal criteria for blindness, are medically needy, and are in LTC status.

24 Full No Aid to the Blind – Medically Needy (FFP). Covers persons who meet the federal criteria for blindness who do not wish or are not eligible for a cash grant, but are eligible for Medi-Cal only.

27 Full Yes Aid to the Blind – Medically Needy, SOC (FFP). Covers persons who meet the federal criteria for blindness who do not wish or are not eligible for a cash grant, but are eligible for Medi-Cal only. SOC is required of the beneficiaries.

6G Full No 250 Percent Program Working Disabled. Provides full-scope Medi-Cal benefits to working disabled recipients who meet the requirements of the 250 Percent Program.

6H Full No Federal Poverty Level – Disabled (FPL-Disabled). Provides full-scope (no SOC) Medi-Cal to qualified disabled individuals/couples.

6V Full No Aid to the Disabled – DDS Waiver (FFP). Covers persons who qualify for the Department of Developmental Services (DDS) Regional Waiver.

6W Full Yes Aid to the Disabled – DDS Waiver (FFP). Covers persons who qualify for the DDS Regional Waiver.

6X Full No Medi-Cal In-Home Operations (IHO) Waiver with no SOC. Covers persons who qualify for the IHO waivers.

6Y Full Yes Medi-Cal In-Home Operations (IHO) Waiver with a SOC. Covers persons who qualify for the IHO waivers.

63 Full Y/N Aid to the Disabled – LTC Status (FFP). Covers persons who meet the federal definition of disability who are medically needy and in LTC status.

64 Full No Aid to the Disabled – Medically Needy (FFP). Covers persons who meet the federal definition of disability and do not wish or are not eligible for cash grant, but are eligible for Medi-Cal only.

Code Benefits SOC Program/Description Medically Needy SSI – Institutionalized Dual, Institutionalized Non Dual, Dual, Non Dual 65 Full Y/N Aid to the Disabled Substantial Gainful Activity/Aged, Blind, Disabled

– Medically Needy IHSS (non-FFP). Covers persons who (a) were once determined to be disabled in accordance with the provisions of the SSI/SSP program and were eligible for SSI/SSP but became ineligible because of engagement in substantial gainful activity as defined in Title XVI regulations. They must also continue to suffer from the physical or mental impairment that was the basis of the disability determination or (b) are aged, blind or disabled medically needy and have the costs of IHSS deducted from their monthly income.

67 Full Yes Aid to the Disabled – Medically Needy, SOC (FFP). (See aid code 64 for definition of Disabled – MN.) SOC is required of the recipients.

8G Full No Qualified Severely Impaired Working Individual Program Aid Code. Allows recipients of the Qualified Severely Impaired Working Individual Program to continue their Medi-Cal eligibility.

Code Benefits SOC Program/Description Other 0A Full No Refugee Cash Assistance (FFP). Includes unaccompanied children.

Covers all eligible refugees during their first eight months in the United States. Unaccompanied children are not subject to the eighth-month limitation provision. This population is the same as aid code 01, except that they are exempt from grant reductions on behalf of the Assistance Payments Demonstration Project/California Work Pays Demonstration Project.

0M Full No Breast and Cervical Cancer Treatment Program (BCCTP) – Accelerated Enrollment (AE). Provides temporary AE for full-scope, no Share of Cost (SOC) Medi-Cal for females younger than 65 years of age who have been diagnosed with breast and/or cervical cancer. Limited to two months.

0N Full No BCCTP – AE. Provides temporary AE for full-scope, no SOC Medi-Cal for females younger than 65 years of age who have been diagnosed with breast and/or cervical cancer. No time limit.

0P Full No BCCTP – Federal. Provides full-scope, no SOC Medi-Cal for females younger than 65 years of age who are diagnosed with breast and/or cervical cancer and are without creditable insurance coverage.

01 Full No Refugee Cash Assistance (FFP). Includes unaccompanied children. Covers all eligible refugees during their first eight months in the United States. Unaccompanied children are not subject to the eighth-month limitation provision.

02 Full Y/N Refugee Medical Assistance/Entrant Medical Assistance (FFP). Covers refugees and entrants who need Medi-Cal and who do not qualify for or want cash assistance.

08 Full No Entrant Cash Assistance (ECA) (FFP). Provides ECA benefits to Cuban/Haitian entrants, including unaccompanied children who are eligible, during their first eight months in the United States. (For entrants, the month begins with their date of parole.) Unaccompanied children are not subject to the eighth-month limitation provision.

Appendix C.1: Service Type – DHS Vendor Code Crosswalk

Using CA DHS Budget Information System Vendor Codes Revised from DHS

Main Service

Category PwC Service Buckets Mandatory /

Optional CA DHS

Vendor Codes

Physician Services E&M Mandatory 20, 22, 75, 77

EPSDT Mandatory (see note)

Maternity Mandatory (see note)

Specialist Mandatory (see note)

Psych Mandatory 70

Psych Optional 31

Inpatient Hospital Maternity Mandatory (see note)

Med/Surg Mandatory 50, 60

Psych Mandatory 63 (see note)

Outpatient ER Mandatory (see note)

Other Mandatory 52, 62, 49, 72, 58, 68, 78, 91

Pharmacy Brand Optional 26 (see note)

Generic Optional 26 (see note)

Family Planning Optional 26 (see note)

OTC Optional 26 (see note)

DME/Supplies DME/Supplies Optional (see note) 41, 45

DME/Supplies Optional (see note) 26 (see note)

DME/Supplies (from Physician Services) Mandatory (see note)

Laboratory Facility Pathology

Laboratory Facility/Pathology Mandatory 24, 19

Laboratory Facility/Pathology (from Outpatient) Mandatory (see note)

Transportation Emergency Mandatory 42 (see note)

Non-Emergency Mandatory 42 (see note)

Professional Therapies Therapies Optional 30, 32, 33, 34, 35, 36, 37

Other Professional (Non-Therapies) Non-Therapies Optional 05, 07, 08, 09, 13, 38, 39

Main Service Category PwC Service Buckets

Mandatory / Optional

CA DHS Vendor Codes

Long Term Care -Icf/Snf/Rehab LTC - ICF/SNF/Rehab Optional 47, 80, 59, 69, 79, 83

Other Long Term Care Other LTC Mandatory 06, 44

Mental Health Mental Health Optional 54, 64, 74

Vision Vision Optional 11, 12, 28, 29

Dental Dental Optional 27

Waiver Programs Waiver Programs Optional 01, 73, 81

Waiver Programs Mandatory 71

Other Services Other Services Optional 02, 04, 40, 55, 82

Family Planning (From Physician Services) Mandatory (see note)

Family Planning (From Outpatient) Mandatory (see note)

Notes: Vendor codes map to PwC Service Buckets. For those services with notes, claims information such as procedure and diagnosis codes were used. For Pharmacy, the National Drug Codes were used to differentiate Brand, Generic, Family Planning, and OTC. DME services are mandatory for Long-Term Care Eligible recipients.

Appendix C.2: DHS Vendor Code List

Using CA DHS Budget Information System Vendor Codes from DHS

VENDOR CODE CA DHS VENDOR CATEGORY

01 Adult Day Health Care Center

02 Medicare Crossover Provider Only

03 CCS/GHPP Program

04 Genetic Disease Testing

05 Nurse Midwife

06 Certified Hospice Service

07 Certified Pediatric Nurse Practitioner

08 Certified Family Nurse Practitioner

09 Respiratory Care Practitioner

10 Licensed Midwife

11 Fabricating Optical Lab

12 Optometric Group

13 Nurse Anesthetist

14 Expanded Access to Primary Care Program

19 Portable X-ray Lab

20 Physician

22 Physician Group

23 Clinical Lab (RHF only)

24 Clinical Lab

26 Pharmacist

27 Dentist

28 Optometrist

29 Dispensing Optician

30 Chiropractor


31 Psychologist

32 Podiatrist

33 Acupuncturist

34 Physical Therapist

35 Occupational Therapist

36 Speech Therapist

37 Audiologist

38 Prosthetist

39 Orthotist

40 Other Provider

41 Blood Bank

42 Medical Transportation

44 Home Health Agency

45 Hearing Aid Dispenser

47 Intermediate Care Fac

49 Birthing Center

50 County Hospital-Acute Inpatient

51 County Hospital-Extended Care

52 County Hospital-Outpatient - EXCLUDES LAB/XRAY

53 Breast Cancer Early Detection Program

54 County Hosp-Short Doyle

55 Local Education Agency

56 State Developmental Centers (formerly State Hosp-Developmentally Disabled)

57 State Hospital-Mentally Disabled

58 County Hospital-Hemodialysis Center

59 County Hospital-Rehab Facility

60 Community Hospital-Acute Inpatient


61 Community Hospital-Extended Care

62 Community Hospital-Outpatient - EXCLUDES LAB/XRAY

63 Mental Health Inpatient Consolidation

64 Short-Doyle Community Mental Health-Hosp Svs

68 Community Hospital-Renal Dialysis Center

69 Community Hospital-Rehab Facility

70 Acute Psychiatric Hospital

71 Home & Community Based Waiver Svs-IHMC, SNF, & Model Waivers

72 Surgicenter

73 AIDS Waiver Services

74 Short-Doyle Community Mental Health-Clinic Svs

75 Organized Outpatient Clinic

76 DDS Waiver Services

77 Rural Health Clinic/Federally Qualified Health Center/Indian Health Clinic

78 Community Hemodialysis Center

79 Independent Rehab Facility

80 Nursing Facility (formerly known as Skilled Nursing Facility)

81 MSSP Waiver Services

82 EPSDT Supplemental Services

83 Pediatric Subacute Rehab/Weaning

89 Personal Care Services (formerly In Home Supportive Svs)

90 Out of State

91 Outpatient Heroin Detoxification

92 Medi-Cal Targeted Case Management

93 DDS Targeted Case Management


94 Child Health and Disability Prevention Program (CHDP)

95 Short-Doyle Community Mental Health-Rehabilitation Treatment

Appendix D: Distribution of the Pregnant Women Population by Aid Code

Using DHS Medicaid Eligibility file. Distribution based on member months by a category for 2002 and 2003.

AID CODE DISTRIBUTION AMONG

PREGNANT WOMEN

3V-Continuing TMC (6 months)-Undoc. 22.74%

44-200% FPL Pregnant Citizen 15.67%

5F-OBRA Alien-Pregnant Woman 14.39%

48-200% FPL Pregnant OBRA 14.05%

3N-AFDC-MN-1931(B) Non CalWORKS 8.24%

58-OBRA Alien 5.28%

34-AFDC-MN 4.64%

30-CalWORKs-All Families 3.66%

7N-Minor Consent (under 21)-Pregnancy 2.90%

60-Disabled-SSI/SSP-Cash 1.85%

86-MI Confirmed Pregnancy 1.64%

82-MI Child 0.91%

35-CalWORKs-2 Parents-State Only 0.76%

76-Sixty day Postpartum 0.68%

38-Edwards v. Kizer 0.33%

42-AFDC-Foster Care/Federal 0.20%

37-AFDC-MN SOC 0.16%

7C-100% FPL OBRA Child 0.14%

4M-Foster Care-Continuing Medi-Cal 0.14%

39-Initial TMC (6 months) 0.13%

3T-Initial TMC - Undoc. 0.13%

8W-CHDP Gateway, Pre-enrollment for Medi-Cal ACCEL 0.10%


PREGNANT WOMEN

32-CalWORKs-All Families-State Only 0.10%

33-CalWORKs-Zero Parent-State Only 0.09%

40-AFDC-Foster Care/Non Federal 0.08%

8E-Accelerated at SPE for Children who appear eligible ACCCEL 0.08%

3R-CalWORKs-Zero Parent-Exempt 0.07%

3P-CalWORKs-All Families-Exempt 0.06%

7A-100% FPL Citizen Child 0.05%

64-Disabled-MN 0.05%

10-Aged-SSI/SSP-Cash 0.04%

6N-Former SSI No Longer Disabled 0.04%

87-MI Confirmed Pregnancy SOC 0.04%

20-Blind-SSI/SSP-Cash 0.04%

45-Foster Care (FC) 0.03%

13-Aged-LTC 0.03%

83-MI Child SOC 0.03%

59-Continuing TMC (6 months) 0.03%

7M-Minor Consent (12-21)-Restricted Svcs 0.03%

6H-Disabled-FPL Program 0.03%

5T-Continuing TMC-Undoc. 0.03%

8R-100% FPL Excess Property Child 0.03%

03-Adoption Assistance Prog-Federal 0.02%

4F-KinGAP Cash Assistance FFP 0.02%

47-200% FPL Infant Citizen 0.02%

14-Aged-MN 0.01%

3E-CalWORKs LI-AF-Mixed Cases 0.01%

4K-EA Foster Care-Probation 0.01%

6E-Disabled-Pending SB87 Redetermin. Craig v. Bonta 0.01%


PREGNANT WOMEN

5X-2nd year TMC (1 Yr) age >=19 0.01%

3U-CalWORKs LI-2P-Mixed Cases 0.01%

8T-100% FPL Excess Property Child-Undoc 0.01%

1H-Aged-FPL Program 0.01%

0N-BCCTP AE ACCEL 0.01%

7J-Contin. Eligibility for Children/Adults 0.01%

3L-CalWORKs LI-AF-St. Only 0.01%

5K-EA Foster Care-CWS-State Only 0.01%

5Y-2nd year TMC (1 Yr) age >=19-Undoc 0.01%

7P-Minor Consent (12-21)-Restricted Svcs 0.01%

02-Refugee/Entrant Medical Assistance 0.01%

6C-DAC Disabled 0.01%

04-AAP/AAC-Non Federal 0.01%

72-133% FPL Citizen/LPR/PRUCOL 0.01%

7H-Tuberculosis 0.01%

7K-Contin. Elig for Children/Adults-Undoc 0.01%

3A-CAAP-AFDC-FG 0.00%

01-Refugee Cash Assistance 0.00%

63-Disabled-LTC 0.00%

0U-BCCTP - Undocs, Limited Scope of Coverage 0.00%

68-Disabled-IHSS 0.00%

24-Blind-MN 0.00%

55-IRCA/OBRA PRUCOL LTC 0.00%

3M-CalWORKs LI-2P-St. Only 0.00%

49-185% FPL Pregnant IRCA 0.00%

18-Aged-IHSS 0.00%

3G-CalWORKs-ZP-Exempt-St. Only 0.00%


PREGNANT WOMEN

8P-133% FPL Excess Property Child 0.00%

54-Four Month Continuing 0.00%

16-Aged-Pickle Elig 0.00%

67-Disabled-MN SOC 0.00%

0R-BCCTP High Cost OHC, Limited Scope of Coverage 0.00%

66-Disabled-Pickle Elig 0.00%

74-133% FPL Undoc/Temporary Visa 0.00%

6G-250% Income Lvl Working Disabled 0.00%

1U-Aged-FPL Program-Undoc 0.00%

6V-DDS Waivers (No SOC) 0.00%

3W-TANF Timed-Out, Mixed Case (State) 0.00%

6U-Disabled-FPL Program-Undoc 0.00%

3H-CalWORKs-Zero Parent-Mixed 0.00%

3C-CAAP-AFDC-UP 0.00%

36-Disabled-COBRA-Widow/ers 0.00%

5H-IDP OBRA Pregnant-FPL Programs 0.00%

65-Disabled-SGA/ABD-MN (IHSS) 0.00%

53-MI-LTC 0.00%

8N-133% FPL Excess Prop Child-Undoc 0.00%

0P-BCCTP-Federally eligible persons 0.00%

Total 100.00%

Appendix E: Technical Advisory Group

TAG Member Organization Farra Bracht Legislative Analyst’s Office Robin Flagg California Medical Association Brad Gilbert, M.D. Inland Empire Health Plan Dana Goldman RAND Roger Dunstan Senate Health and Human Services Committee Marilyn Holle Protection and Advocacy Rick Kronick University of California, San Diego Manju Kulkarni National Health Law Program Dave Meadows HealthNet Edwin Park Center on Budget and Policy Priorities Tom Rice University of California, Los Angeles David Carroll California Association of Public Hospitals and Health Systems Seren Taylor Assembly Republican Fiscal Committee Kristen Testa The Children's Partnership Diane Van Maren Senate Budget and Fiscal Review Committee Catherine Teare Children Now Other Participants Maura Donovan Department of Health Services Sandra Shewry Department of Health Services Project Consultants Sandra Hunt PricewaterhouseCoopers Susan Maerki PricewaterhouseCoopers Project Funders Barbara Masters The California Endowment Chris Perrone California HealthCare Foundation

medi-cal cost sharing model technical report and user guide · model limitations the medi-cal cost...

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