Department of Community Health: FY 2006 budget reductions

DEPARTMENT OF COMMUNITY HEALTH FY2006 Budget Reductions

FY06 Budget Reductions by Cost Driver - Govenor's Recommendations

Eligibility 16%
Scope 5%

Admin 0%

Utilization 15%
Cost Sharing 0%

Cost Settlements 35%

Price 29%

FY06 Budget Reductions by Provider Type - Govenor's Recommendations

Cost Settlements 39%

All 17%
Dental 1%

IP/OP Hospitals 17%

Transportation 1%
Physician 2%

Pharmacy 12%

Nursing Home 11%
Waiver Program 0%

Department of Community Health

Proposed Reductions to Medicaid and PeachCare for Kids

Gov

FY2006

State Funds

# # Item

Total Funds @105% @100% @97%

Utilization

1 5 Implement disease and case management to improve medical

$ 39.3 $ 15.5 $ 15.5 $ 15.5

management for the aged, blind, and disabled populations.

2 6 Require prior authorization for more than four brand prescriptions per $

-

$

-$

-$

-

month.

3 7 Require prior authorization for high cost radiology services.

$

7.6 $

3.0 $

3.0 $

3.0

4 Base Implement pre-certification for hospital admissions for children. Yes - $

6.9 $

2.6 $

2.6 $

2.6

Reduce base ($2.9 million).

5 Base Strictly enforce orthodontic policies for children. Yes- Reduce base $

4.8 $

1.8 $

1.8 $

1.8

($1.8)

6 8 Expand the emergency room utilization control pilot program to

$

5.1 $

2.0 $

2.0 $

2.0

additional hospitals.

7 Base Pursue a more aggressive lock-in program for drugs subject to

$

2.5 $

1.0 $

1.0 $

1.0

abuse. Yes - Reduce base ($1.0)

8 9 Set a fixed expenditure cap for home and community based services $

2.6 $

-$

1.0 $

1.0

provided in the Independent Care Waiver programs. Yes - Redirect

funds to add slots for ICWP.

subtotal Utilization

$ 25.9 $ 26.9 $ 26.9

Governor Recommeded

$

15.5

$

-

$

3.0

Base - #1

Base - #2

$

2.0

Base - #3 Yes-Redirect

$

20.5

Cost Avoidance

9

Charge premiums for children ages 1 to 5 participating in the

$ 16.3 $

PeachCare for Kids program.

10 10 Charge premiums for Katie Beckett children. Charge $200 per

$

3.8 $

month for those who earn over $100,000. ($270,000)

subtotal Cost Avoidance

$

-$ -$ -$

4.2 $ -$ 4.2 $

4.2 $

-

1.5 Yes - cut incl. In

base

5.7 $

-

Price

11

End supplemental payments to hospitals for neonatal programs.

$ 14.0 $

5.5 $

5.5 $

5.5 $

-

12 13 Reduce the percentage applied to supplemental outlier payments $

5.9 $

2.3 $

2.3 $

2.3 $

2.3

from 90% to 85.6% for inpatient hospital reimbursement.

13 15 Rebase DRG's and move to a more current grouper. Adjust to

Yes

Yes

ensure budget neutrality.

14

Reduce nursing home reimbursement by adjusting cost center

$ 50.9 $ 12.4 $ 20.1 $ 20.1 $

-

standards, growth allowance, hospital-based differentials, and

efficiency add-ons.

15 17 Reduce Nursing home reimbursement by reducing the growth

$ 24.5 $

9.6 $

9.6 $

9.6 $

9.6

allowance to offset the reduction in expected nursing home provider

fees.

16

Reduce reimbursement to nursing homes for residents participating $

-

$

-$

-$

-$

-

in hospice

17 18 Require Medicare cost avoidance for nursing home care.

$

0.9 $

0.3 $

0.3 $

0.3 $

0.3

18 19 Utilize FY2003 cost reports to determine nursing home

Yes

Yes

reimbursement. Adjust to ensure budget neutrality.Governor

recommendation includes funding see adjustment below. (4.3)

19 14 Reduce facility fees paid for free-standing hospital-based clinics by $

4.1 $

1.6 $

1.6 $

1.6 $

1.6

basing reimbursement on two times the fixed amount of facility fees

paid to physicians.

20 12 Reduce the cap applied to outpatient hospital reimbursement (based $

6.6 $

2.5 $

2.5 $

2.6 $

2.5

on the average inpatient payment per claim.)

21 16 Explore alternative reimbursement methodologies for outpatient

Yes

Yes

hospital services.

22 21 Increase the average wholesale price discount from 11% to 14% for $ 13.4 $

5.2 $

5.2 $

5.2 $

5.2

pharmacy prescriptions.

23 23 Eliminate the dispensing fee incentive paid for dispensing generic $

4.8 $

1.9 $

1.9 $

1.9 $

1.9

drugs.

24 22 Require mininmum bids on discount off AMP for next round of

$ 10.2 $

3.9 $

3.9 $

4.0 $

3.9

supplemental rebates.

25 20 Apply 14% discount to AWP for injectable drugs provided in a

$

3.4 $

1.3 $

1.3 $

1.3 $

1.3

physician's office.

26

Reduce reimbursement for all categories of services by 3% except $ 60.7 $ 23.6 $

-$

-$

-

for hospital, nursing home, and pharmacy services.

27

Require prior authorization of prescriptions for non-perferred drugs $ 25.5 $

-$

9.8 $

9.9 $

-

where previously the prescription was considered grandfathered for

supplemental drug rebate implementation.

28 11 Reimburse ambulatory surgical services provided in outpatient

$ 39.4 $

- $ 14.8 $ 14.8 $

14.8

hospital settings based on two times the rates paid to ambulatory

surgical centers.

29

Reduce reimbursement for all categories of services by 5% except $ 106.5 $

- $ 41.5 $ 40.2 $

-

for hospital, nursing home, and pharmacy services.

subtotal Price

$ 70.1 $ 120.3 $ 119.3 $

43.4

1/27/2005

Page 2

Gov # # Item

Department of Community Health Proposed Reductions to Medicaid and PeachCare for Kids
FY2006
Total Funds @105%

State Funds @100% @97%

Governor Recommeded

Cost Settlements

30 Base Complete prior year cost settlements for outpatient hospital services. $ 101.6 $ 39.1 $ 39.1 $ 39.2

Base - #4

Yes - Reduces benefit base ($39.1 million)

31 3 Reimburse outpatient hospital services based on interim rates set to $ 50.9 $ 19.6 $ 19.6 $ 19.7 $

19.7

85.6% of cost.

subtotal Cost Settlement

$ 58.7 $ 58.7 $ 58.9 $

19.7

Scope

32 6 Require prior authorization for prescription drugs where an

$ 15.0 $

5.9 $

5.9 $

5.9 $

5.8

equivalent over the counter drug is available.

33

End coverage for preventative maintenance drugs for members who $

5.5 $

2.2 $

2.2 $

2.2 $

-

elect hospice care.

34

Eliminate optional adult dental services.

$ 18.3 $

7.9 $

7.8 $

7.2 $

-

35

Eliminate optional adult orthotics and prosthetics.

$

3.9 $

1.5 $

1.5 $

1.5 $

-

36

Eliminate optional adult podiatry services.

$

2.9 $

1.1 $

1.1 $

1.1 $

-

37 4 Change the PeachCare for Kids program to provide the same scope $ 69.2 $

- $ 19.0 $ 19.1 Yes - cut incl. In

of services as the State Health Benefit Plan. Governor - Implement

base.

Texas Dental Model.

38

Eliminate non-emergency transportation for adults.

$

-

$

-$

-$

-$

-

39

Eliminate emergency ambulance services for adults.

$

-

$

-$

-$

-$

-

40

Eliminate the hospice program.

$ 26.3 $

-$

- $ 10.4 $

-

subtotal Scope

$ 18.6 $ 37.5 $ 47.4 $

5.8

Eligibility

41 Base Strictly enforce income requirements for participation in the

$ 12.5 $

3.5 $

3.5 $

3.5

PeachCare for Kids program. Yes - Reduce base ($3.5)

42 Base Ensure level of care requirements are met for all long term care

$

6.0 $

2.4 $

2.4 $

2.4

programs where applicable. Yes - Reduce base ($2.4)

43 Base Perform clinical reviews to validate demand for emergency medical $

7.6 $

3.0 $

3.0 $

3.0

assistance for undocumented aliens. Yes - Reduce base ($3.0)

Base - #5 Base - #6 Base - #7

44

Verify continuation of active cancer treatment for women in the

$

3.6 $

breast and cervical cancer program.

45 Base Reflect a FY 2005 change made to consider promissory notes as $

1.6 $

income in nursing home eligiblilty determination. Yes - Reduce base

($631,040).

46

Limit PeachCare for Kids enrollment in January 05.

$ 10.2 $

47

Eliminate presumptive eligibility for pregnant women.

$

-

$

48

Restrict coverage to 185% of the federal poverty level for pregnant $ 12.5 $

women and children; no spenddown allowed.

49

Restrict coverage to 185% of the federal poverty level for PeachCare $ 26.7 $

for Kids. Law change for Board to set eligibility standards.

1.0 $ 0.6 $
-$ -$ -$ -$

1.0 $ 0.6 $
2.8 $ -$ -$ 7.4 $

1.0 $ 0.6

Base - #8

2.8 $

-

-$

-

4.9 $

-

7.4 $

-

50

Eliminate spenddown programs for non-categorical members who $

have incomes over the Medicaid income limits.

51

Reduce coverage for aged, blind, and disabled members with

$

incomes greater than two-times SSI.

52

Eliminate the breast and cervical cancer program.

$

subtotal Eligibility

Administration

53 25 Consolidate population-based programs to more appropriately align $

agency business functions.

54 26 Transfer funding for the Marcus Institute to the Department of

$

Human Resources.

55 27 Eliminate funding for the Folic Acid initiative.

$

56

Eliminate funding for the Georgia Partnership for Caring.

$

57

Eliminate funding for the Georgia Rural Health Association ($30K). $

Governor recommends -- NO

subtotal Administration

Total *** See Governor's Yes -- Reduce from Base Items

Target

Surplus/(Deficit)

Adjustments for Governor's Yes to Base Benefits

Governor increase in rates for Nursing Homes ($4.3 mil) and

Ambulance ($1.1mil)

Total Governor's Recommended Reductions

Surplus/ (Deficit) ** State fund increase for DCH

82.7 62.6 21.8
0.4 0.2 0.2 0.1 0.0

$

-$

- $ 32.6 $

$

-$

- $ 25.0 $

$

-$

-$

6.0 $

$ 10.5 $ 20.7 $ 89.2 $

$

0.4 $

0.4 $

0.4 $

$

0.2 $

0.2 $

0.2 $

$

0.2 $

0.2 $

0.2 $

$

0.1 $

0.1 $

0.1 $

$

0.0 $

0.0 $

0.0 $

$

0.8 $

0.8 $

0.8 $

$ 184.7 $ 269.2 $ 348.3 $

$ 182.1 $ 279.1 $ 337.2 $

$

2.6 $ (9.9) $ 11.1 $

$

$

$ $

-
-
-
0.4
0.2
0.2 -
0.7 90.1 279.1 (189.0) 58.2 (5.4)
142.9 (136.2)

1/27/2005

Page 3

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reimburse outpatient hospital services based on interim rates set to 85.6% of cost.

Item 3

Effective Date: Funds Total: State:

7/1/2005 FY2006 $ 50,942,603 $ 19,663,855

% Reduction

N/A

Part I - Methodology/Rationale
Current : Pay 88% of operating costs for most hospitals (excluding critical access hospitals, state owned hospitals, and historically minority owned)
Proposed: Pay 85.6% of operating costs for most hospitals (excluding critical access hospitals, state owned hospitals, and historically minority owned)

Last Change: In July 2004 decreased rate to 88%.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

55.4%

411,722

57.3%

27,095

66.4%

133,362

46.1%

53,570

99.8%

171,815

43.4%

82,953

59.9%

880,517

Part IV - State Comparison



N/A

Part V - Administrative Requirements



N/A

Item 4

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Change the PeachCare for Kids Dental program to model the

same scope of services as the Texas Dental CHIP program.

Effective Date: Funds Total:
State:

7/1/2005 FY2006
Yes
Yes

Part I: Methodology/Rationale

% Reduction

N/A

Current: PeachCare benefit package is the same as Medicaid. Proposed: Model PeachCare benefit package after the Texas CHIP dental plan. Last Change: N/A

Part II: Member Impact

Part III: Benefit Revisions

Sub Program
Children MF Children Disabled Elderly Adults

Members Utilizing Service

Percent 0.0% 0.0% 0.0% 0.0% 0.0%

Total -

PeachCare Total Members

100.0% 13.0%

191,030 191,030

Dental Service Type
Adjunctive Services Diagnostic Services Endodontic Services Oral Surgery Services Orthodontic Services Periodontal Services

Example Services
emergency treatment, hospital call, behavior management oral evaluations
root canals
extractions, excisions, incisions braces gingivoplasty, periodontal scaling for bone loss

Current Proposed PCK

PCK Plan

Plan

not covered

limited to routine procedures
not covered limited to routine procedures

Preventive Services
Prosthodontic Services Radiograph Services Restorative Services

cleaning (prophylaxis), flouride, sealants, space management
dentures x-rays fillings, crowns, surface

limited to routine procedures not covered

Part IV: State Comparison
Alabama - State Medicaid benefit package Florida - MediKids is Medicaid look-alike and Healthy Kids is Commercial Benefit plan with Dental included Kentucky - State Employee benefit plan with additional services that bring it almost to Medicaid level without EPSDT and NET Mississippi - State Employee benefit plan with Dental included North Carolina - State Employee benefit plan with Dental included South Carolina - State Medicaid benefit plan
Part V: Administrative Requirements
Requires legislative approval Requires a State Plan amendment Will require major claims system changes

Department of Community Health

Item 5

FY2006 Budget Reduction Proposal

Effective Date: 7/1/2005

Item:

Implement disease and case management to improve medical management for the aged, blind, and disabled (ABD) populations.

Funds Total:

FY2006 $ 39,324,327

State:

$ 15,509,515

% Reduction*

3.8%

Part I - Methodology/Rationale

* Based on reduction of annual

chronic disease expense

Current : No comprehensive disease management programs are currently in place for Medicaid members.

DCH contracts case management services for high cost members in the SOURCE program.

Proposed: To implement a disease and case management program for chronically ill ABD members, in order to decrease inappropriate

utilization of services and improve member outcomes and quality of care.

Last Change: DCH has worked with area health education centers (AHEC) to disseminate best practice guidelines for the treatment of pediatric asthma; focusing on several counties in southwest Georgia.

Part II - Member Impact

Part III - Chronically Ill ABD Members Percent of Total Plan Costs

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Impacted

Percent

Total

0.0%

8.8%

4,146

30.6% 61,440

23.7% 27,580

0.0%

0.0%

6.3% 93,166

79.0%
21.0% Chronically Ill ABD Member Expenses Total Plan Expenses

Disease CHF Diabetes CAD Hypertension COPD Asthma Total % of Total Plan

Members

Expenses

12,976 26,537
8,955 30,082
8,539 6,077

$202,196,096 $312,919,660
$99,057,242 $270,674,129
$90,406,168 $54,079,640

93,166 $1,029,332,934

6.3%

21.0%

Note: Above members have one or more of the following chronic conditions: congestive heart failure (CHF), diabetes, coronary artery disease (CAD), hypertension, chronic obstructive pulmonary disease (COPD), and asthma.

Part IV - State Comparison
Disease management (DM) has been steadily growing in popularity among state Medicaid programs due to its potential to control costs while not restricting member access to care. The Centers for Medicare & Medicaid Services (CMS) urged states to adopt disease management programs in a February 2004 letter to Medicaid directors. Currently, at least 21 states have a DM program in place, while several others are in the process of development.

There are three major DM models: Pay individual providers (PIP)...DCH would contract with individual providers to perform DM services, and create a new category of service for billing. Enhanced primary care case management...DCH would pay PCCM providers an enhanced case management fee for providing DM services, in addition to their regular fee for service (FFS) reimbursement. Contract with a disease management organization...DCH would outsource DM to a "DMO" who typically puts their administrative fees at risk and guarantees a percentage in savings. DMOs make contact with eligible members and coordinate with care providers to ensure that evidence-based medicine is being employed and that chronically ill members understand what they need to do to improve their health and better manage their disease(s).

State FL
MS NC *TN WV WA TX *OH *WY

**Model DMO
DMO E-PCCM DMO PIP DMO DMO E-PCCM DMO

Scope CHF, diabetes, HIV/AIDS, end stage renal disease (ESRD), hemophilia; also have pharmacy-based DM for CHF, diabetes, hypertension and asthma diabetes, hypertension, asthma CHF, diabetes, asthma, attention deficit hyperactivity disorder CHF, diabetes, CAD, COPD, asthma diabetes CHF, diabetes, asthma, ESRD CHF, diabetes, CAD, COPD and asthma CHF, diabetes, CAD, hypertension, COPD, asthma multiple disease states (to be determined upon RFP award)

*Indicates state that is targeting DM efforts on similar member populations

**Corresponds to one of the three models described above

Part V - Administrative Requirements Requires State Plan Amendment Requires CMS Approval Requires significant Administrative costs; savings are reflective of Administrative fees

Item 6

Department of Community Health

Effective Date:

4/1/2005

FY2006 Budget Reduction Proposal

Funds

FY2006

Item:

Require prior authorization for prescription drugs where an equivalent over-the-counter drug is available.

Total: State:

$ 15,000,000 $ 5,820,055

% Reduction

1.1%

Part I - Methodology/Rationale
Current : Omeprazole 20mg (Proton Pump Inhibitor-PPI or GERD (Gastroesophageal Reflux Disease) medications) and Loratadine (NonSedating Antihistamine-NSA or allergy medications) are available in both OTC and prescription-only versions. These products have the same potency and efficacy. The current State Plan does not allow OTC coverage for either drug class.
Proposed: Move OTC omeprazole to coverage with a preferred copayment in addition to the current preferred agents and incorporate OTC omeprazole into the stepped edit approach when the supplemental bids for this class (Proton Pump Inhibitors) are up for review in December 2004, with an effective date of April 2005. Implement a stepped therapy approach for non-sedating antihistamine class drugs.
Last Change: N/A

Part II - Member Impact - Pharmacy Services

Part III - Member Utilization

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

97.6%

725,430

87.2%

41,184

81.7%

164,133

65.0%

75,500

100.0%

172,160

95.3%

182,043

92.5%

1,360,450

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

PPI Utilization

Patients Expenditures

3,620

$1,017,438

353

$135,996

24,426 $15,095,060

8,092

$4,920,700

6,040

$2,149,683

1,304

$441,987

43,835 $23,760,864

NSA Utilization

Patients

Expenditures

112,137

$8,934,505

1,224

$155,781

21,052

$1,880,486

3,672

$255,738

12,489

$723,455

40,538

$4,187,944

191,112 $16,137,908

Part IV - Prescription Cost GERD Products

$140 Cost per Rx

Alternative Cost per Rx

$120

$100

$80

$60

$40

$20

$Protonix Aciphex Prevacid Nexium Prevacid Prilosec

Part V - State Comparisons N/A

Allergy Products

$C9o5st per Rx

Alternative Cost per Rx

$80

$65

$50

$35

$20

$5

Rx 12 Claritin-DClaritin

D

24 RXAllegra

D

120

Zyrtec

D Allegra

30Allegra

60 Claritin

Rx Allegra

180

Zyrtec Clarinex

Part VI - Administrative Requirements Requires State Plan Amendment

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Require prior authorizations for high cost radiology services, excluding services performed in relation to an ER visit or an inpatient admission.

Part I - Methodology/Rationale
Current : No prior authorization required Proposed: Prior authorization required Last Change: N/A

Item 7

Effective Date:

7/1/2005

Funds

FY2006

Total:

$ 7,641,365

State:

$ 2,973,694

% Reduction

N/A

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

20.6%

153,161

6.0%

2,833

51.5%

103,497

47.6%

55,260

48.0%

82,643

18.3%

34,911

29.4%

432,305

Part IV - Expenditures by Place of Service 11.4%

Part III - Radiology Growth Rate by Fiscal Year

18.0% 16.0% 14.0% 12.0% 10.0%
8.0% 6.0% 4.0% 2.0% 0.0%
* Annualized

11.9% FY02

Part V - State Comparison N/A

14.5% FY03

16.5% FY04*

88.6% Outpatient Hospital Services Physician Services
Part VI - Administrative Requirements Requires State Plan Amendment Would require significant system changes Administrative fees required

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Expand the emergency room utilization control pilot program to additional hospitals.

Part I - Description of Service

Item 8

Effective Date:

1/1/2004

Funds

FY2006

Total:

$ 5,094,244

State:

$ 1,982,363

% Reduction*

0.7%

*Based on reduction of OP hospital

In CY 2002, the Department of Community Health paid $90.9 million in claims for emergency room services for members with 3 or more visits to the ER within a year.
DCH has implemented a targeted case management program primarily targeting members with 3 or more visits to the ER within a year, but will also provide intervention for other ER users who may be utilizing the ER inappropriately.
DCH is modeling its case management program after the existing efforts of Memorial Hospital in Savannah. The department has begun this effort in three counties on a pilot basis: Chatham, Floyd, and Hall counties.
Each hospital has a care coordinator to assess the need for intervention for Medicaid users of the ER. Intervention will include face-to-face counseling and possible referral to the member's primary care physician or other case management programs available for specific diseases or conditions (e.g., Asthma).
This is an interim effort to control the expenses related to high utilizers of the ER, pending more systemic Medicaid reform.

Part II - Member Profile of Use*

Members Children

# ER Visits

# Visits per Member

488,693

0.66

MF Children 35,939

0.76

Disabled

237,456

1.26

Elderly

59,157

0.65

Adults

198,275

1.15

PeachCare 77,766

0.41

Total # Visits

1,097,286

0.77

* Based on CY 2003 data.

Part IV - State Comparison N/A

Part III - ER Visits Rate/1,000 Eligibles 800

735.8

700

600

530.6

593.7

623.4 18.0%

5.0%

500

11.9%

400

300

200

100

0 *Annualized

FY 01

FY 02

FY 03*

FY 04*

Part V - Administrative Requirements Requires a contractual arrangement with hospitals participating in the initiative Expenses are jointly shared between the health system and DCH A cost benefit study is currently underway

Item 9

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Set a fixed expenditure cap for home and community based services provided in the Independent Care Waiver Program and redirect savings to add waiver slots.

Effective Date: Funds Total: State:
% Reduction

7/1/2005 FY2006
Yes Yes
N/A

Part I - Methodology/Rationale
Current : The state does not impose any per member per year expenditure caps for the Independent Care Waiver Program (ICWP). Proposed: The state will set a $50,000 annual per member expenditure cap for patients in the Independent Care Waiver Program. Last Change: Five additional slots in the FY2005 budget.

Part II - Member Impact

Sub Program

Members Utilizing Service

Percent

Total

Children

0.000%

MF Children

0.028%

13

Disabled

0.318%

640

Elderly

0.009%

10

Adults

0.000%

-

PeachCare

0.000%

-

Total Members*

0.045%

663

*Represent ICWP population in CY2003

Part III - Independent Care Waiver Utilization (ICWP)

ICWP (All Members)

Net Payments Members

Avg PMPY Proposed Cap

$ 22,557,738

609

$

37,041

ICWP (Members subject to cap)

$

8,445,469

116

$

72,806 $

*FY2003 and FY2004 claims are not complete and will be reprocessed by 12/01/04

50,000

Part IV - State Comparison
All southeastern border states offer a waiver program for members in the community with developmental disabilities, spinal cord, and traumatic brain injuries.

Part V - Administrative Requirements Requires CMS Waiver Requires System Changes

Item 10

Department of Community Health FY2006 Budget Reduction Proposal

Item:

Katie Beckett - Charge $200 monthly premium to families with annual incomes greater than $100,000

Effective Date: Funds Total: State:
% Reduction

Part I - Methodology/Rationale

The Department of Community Health proposes to require a monthly premium of $200 for families with annual incomes above $100,000. Katie Beckett families have incomes that exceed the limits to qualify for Medicaid as well as Supplemental Security Income. The waiver allows these families to receive services that are not covered by private insurance, in an effort to reduce their out of pocket expenses. The premium projections listed below assume Georgia Katie Beckett members have an income distribution similar to those participating in Arkansas' TEFRA Waiver Model.

7/1/2005 FY2006
Yes Yes
N/A

Part II - Member Impact

Annual Income Range

Members by Income Range

Low
$ $25,001 $50,001 $75,001 $100,001 $125,001 $150,001 $175,000 $200,001

High
$25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000
over

% in Income Range
15.97% 45.75% 25.59% 7.93% 2.38% 0.68% 0.79% 0.34% 0.57%

FY 2005 Members
997 2,857 1,598 495 149
42 49 21 36

FY 2006 Members
957 2,742 1,534 475 143
41 47 20 34

Premium Projections Annual Premium ($200/month) Kids/Families above $100,000* Annual Projected Premium Collections State Funds
*assumes 1 child per family

FY 2005 $2,400
297 $713,296 $283,713

FY 2006 $2,400
285 $684,764 $270,071

Part III - Financial Data
Measure # of Eligibles Net Payments Cost Per Member
Per Month

FY 2002 4,624
$30,558,495
$551

FY 2003 5,570
$36,083,430

Projected FY 2004
6,244 $39,607,792

Projected FY 2005
6,244 $40,645,959

$540

$529

$542

Projected FY 2006
5,993 $40,171,842
$559

Item 11

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reimburse ambulatory surgery services provided in an outpatient hospital setting based on two times the rate paid to ambulatory surgical centers.

Effective Date: Funds Total: State:

7/1/2005 FY2006 $ 39,400,000 $ 14,757,166

Part I - Methodology/Rationale
Current : Cost to charge ratio. Proposed: Fixed fee per procedure. Last Change: July 1, 2004 - cost to charge ratio changed from 90% to 85.6%.

% Reduction*

5.3%

*Based on reduction of OP hospital

Part II - Member Impact

Sub Program

Members Utilizing Service

Percent

Total

Children

2.3%

17,431

MF Children

2.4%

1,147

Disabled

2.8%

5,646

Elderly

2.0%

2,268

Adults

4.2%

7,274

PeachCare

1.8%

3,512

Total Members

2.5%

37,278

Part III - Analysis of Outpatient Payments DCH compared rates for ambulatory surgery services when those surgeries were performed in an outpatient hospital setting compared to the rates paid for the same services in an ambulatory surgical center.

% of Allowed Charges

Average Allowed per Procedure

ASC 14%

Provider Outpatient

Avg Allowed

$

1,856

All Other OP 86%

Ambulatory Surgical Center

487

Part IV - Most Common Units Utilized
Procedure Description
Create Eardrum Opening Remove Tonsils and Adenoids Upper GI Endoscopy, Biopsy Inject Spine L/S Laparoscopy, Tubal Cautery Diagnostic Colonoscopy Removal of Adenoids Circumcision (not newborn) Cataract Surg w IOL, 1 Stage Change Gastrostomy Tube % of Total

Avg Allowed Amt
Outpatient Ambulatory Hospital Surgical Center

Proposed % of Total by

Rate

Procedure

$ 1,260 $ $ 1,775 $ $ 1,196 $ $ 544 $ $ 2,294 $ $ 853 $ $ 1,661 $ $ 1,957 $ $ 2,400 $ $ 384 $

544 $ 1,069 512 $ 1,069 420 $ 936 284 $ 544 366 $ 1,069 422 $ 853 451 $ 1,322 292 $ 936 918 $ 1,725 292 $ 384

6.9% 7.3% 3.9% 0.9% 3.5% 1.2% 1.8% 2.0% 2.1% 0.3% 29.9%

Item 11 (Continued)

Department of Community Health

Effective Date:

FY2006 Budget Reduction Proposal

Funds

Item:

Reimburse ambulatory surgery services provided in an outpatient hospital setting based on two times the rate paid to ambulatory surgical centers.

Total: State:

7/1/2005 FY2006 $ 39,400,000 $ 14,757,166

% Reduction*

5.3%

*Based on reduction of OP hospital

Part V - State Comparison Reimbursement Methodology of Southeastern States: Mississippi - All outpatient hospital reimbursed at a percent of charges. Florida - All outpatient hospitals reimbursed on a per diem rate for each hospital. Tennessee - All outpatient hospital reimbursement based on the Medicare rates. Alabama - Outpatient surgical services on the ASC procedure list are reimbursed on a global rate for the entire claim.

Part VI - Administrative Requirements Requires State Plan Amendment Significant system changes

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reduce the cap applied to outpatient hospital reimbursement (based on the average inpatient payment per claim.)

Item 12

Effective Date: Funds Total: State:

7/1/2005 FY2006 $ 6,622,517 $ 2,556,301

% Reduction

0.9%

Part I - Methodology/Rationale Current : Reimbursement cannot exceed the average Diagnosis Related Group (DRG) case reimbursement.
Proposed: Reimbursement cannot exceed 85.6% of the average DRG case reimbursement. Last Change: The rate changed for inpatient hospital in July 2002.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

55.4%

411,722

57.3%

27,095

66.4%

133,362

46.1%

53,570

99.8%

171,815

43.4%

82,953

59.9%

880,517

Part IV - State Comparison



N/A

Part V - Administrative Requirements



N/A

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reduce the percentage applied to supplemental outlier payments from 90% to 85.6% for inpatient hospital reimbursement.

Item 13

Effective Date:

7/1/2005

Funds

FY2006

Total:

$ 5,858,380

State:

$ 2,296,506

% Reduction

0.4%

Part I - Methodology/Rationale Current : Pay 90% of operational costs of a claim for most hospitals (excluding specialty hospitals).
Proposed: Pay 85.6% of operational costs of a claim for all hospitals.

Last Change: Converted to 90% of operational costs as of July 1998.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

12.3%

91,079

10.6%

5,020

21.0%

42,147

19.2%

22,336

44.7%

76,985

1.7%

3,209

16.4%

240,776

Part IV - State Comparison



N/A

Part V - Administrative Requirements



Requires ACS (claims payment system) and Georgia Medical Care Foundation to change procedures.

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reduce facility fees paid for free-standing hospital-based clinics by basing reimbursement on two times the fixed amount of facility fees paid to physicians.

Item 14

Effective Date: Funds Total: State:

7/1/2005

FY2006

$

4,075,395

$

1,571,830

% Reduction

0.54%

Part I - Methodology/Rationale
Current : The facility costs for hospital based clinics are paid on a cost to charge ratio compared to a fixed fee for physician based office visits.
Proposed: When a hospital bills for a clinic visit on an outpatient hospital claim, set payment at twice the fixed amount of facility fees paid to physicians.
Last Change: FY2005 decreased the outpatient cost to charge ratio from 90% to 85.6%.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

55.4%

411,722

57.3%

27,095

66.4%

133,362

46.1%

53,570

99.8%

171,815

43.4%

82,953

59.9%

880,517

Part III - State Comparison Mississippi does not allow hospital-based clinics to bill facility fees on a UB-92 unless they are a teaching hospital with a resident-to-bed ratio of .25 or greater. Medicare is currently amending their hospital based physician clinic reimbursement methodology to align more closely with the rate paid for services rendered in free standing hospital based clinics.
Part IV - Administrative Requirements Requires Systems Change

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Rebase DRG's and move to a more current grouper. Adjust to ensure budget neutrality.

Effective Date: Funds Total: State:
% Reduction

Item 15
7/1/2005 FY2006
Yes Yes N/A

Part I - Methodology/Rationale Current : Using Champus (Tricare) Diagnosis Related Group (DRG) Grouper 16.
Proposed: Move to Champus (Tricare) DRG Grouper 22 and rebase the DRG weights for a January 2006 effective date. Last Change: Rates were rebased in July 2002. The DRG grouper was updated in October 1999.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

12.3%

91,079

10.6%

5,020

21.0%

42,147

19.2%

22,336

44.7%

76,985

1.7%

3,209

16.4%

240,776

Part IV - State Comparison



N/A

Part V - Administrative Requirements



Requires contract costs for consulting and technical assistance.

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Explore alternative reimbursement methodologies for outpatient hospital services.

Part I - Methodology/Rationale Current : Pay percent of charges and cost settle at the end of the year.
Proposed: Explore different reimbursement options. Last Change: N/A

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

55.4%

411,722

57.3%

27,095

66.4%

133,362

46.1%

53,570

99.8%

171,815

43.4%

82,953

59.9%

880,517

Part IV - State Comparison



N/A

Part V - Administrative Requirements



Requires contract costs for consulting and technical assistance.

Effective Date: Funds Total: State:
% Reduction

Item 16
7/1/2005 FY2006
Yes Yes N/A

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reduce nursing home reimbursement by reducing the growth allowance to offset the reduction in expected nursing home provider fees.

Part I - Methodology/Rationale Current : Use FY2002 cost reports to set rates with growth allowance of 6.16%
Proposed: Use FY2003 cost reports and reduce the growth allowance.

Last Change: N/A

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

0.0%

0.2%

117

6.9%

13,900

46.9%

54,449

0.0%

0.0%

4.7%

68,466

Part IV - State Comparison



N/A

Part V - Administrative Requirements



N/A

Item 17

Effective Date: Funds Total: State:

7/1/2005 FY2006 $ 24,524,047 $ 9,628,141

% Reduction

2.4%

Item 18

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Require Medicare cost avoidance for nursing home care.

Effective Date:

Funds

Total:

$

State:

$

7/1/2005 FY2006
858,795 338,709

% Reduction

0.1%

Part I - Methodology/Rationale
Current : There are several Long Term Care facilities that have not received Medicare certification and therefore are unable to bill Medicare for nursing home care expenses. In CY2003 many of these facilities had at least one dually eligible members that DCH could have cost avoided on.
Proposed: Require all Long Term Care facilities to become Medicare certified, thereby allowing Medicaid to cost avoid on Medicare eligible claims.
Last Change: N/A

Part II - Member Impact

Sub Program

Members Utilizing Service

Percent

Total

Children

0.0%

-

MF Children

0.0%

-

Disabled

0.0%

-

Elderly*

0.3%

354

Adults

0.0%

-

PeachCare

0.0%

-

Total Members

0.0%

354

* Members who meet all Medicare qualifying criteria.

Part IV - State Comparison N/A

Part V - Administrative Requirements Requires State Plan Amendment Requires Systems Change

Part III -To Qualify for Medicare Skilled Nursing Facility (all must be met)
1. Have Medicare Part A and days left in the Medicare benefit period to use.
2. Have a qualifying hospital stay of 3 consecutive days or more and must enter SNF within 30 days of leaving the hospital.
3. Require skilled nursing or rehabilitation care as ordered by a physician.
4. Services must be provided in a Medicare-certified SNF.
5. The services needed are related to a condition treated during a qualifying 3-day hospital stay or Medicare-covered SNF care.

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Utilize FY2003 cost reports to determine nursing home reimbursement. Adjust to ensure budget neutrality.

Part I - Methodology/Rationale Current : Using FY2002 cost reports to set provider rates.
Proposed: Use FY2003 cost reports to set provider rates. Last Change: Began using FY2002 cost reports in July 2003.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

0.0%

0.2%

117

6.9%

13,900

46.9%

54,449

0.0%

0.0%

4.7%

68,466

Part IV - State Comparison



N/A

Part V - Administrative Requirements



N/A

Item 19

Effective Date: Funds Total: State:

7/1/2005 FY2006 $ 10,921,334 $ 4,307,374

% Reduction

N/A

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Increase the average wholesale price (AWP) discount from 11% to 14% for injectibles provided through a physician's

office.

Part I - Methodology/Rationale
Current : AWP- 11%. Proposed: AWP- 14%. Last Change: Modified from AWP to AWP-11% in FY2005.

Item 20

Effective Date:

7/1/2005

Funds

FY2006

Total: State:

$ 3,400,000 $ 1,319,212

% Reduction

0.2%

Millions Alabama Florida Georgia Kentucky
Mississippi North
Carolina South
Carolina Tennessee

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

97.6%

725,430

87.2%

41,184

81.7%

164,133

65.0%

75,500

100.0%

172,160

95.3%

182,043

92.5%

1,360,450

Part IV - Annual Trend

$30.0

$25.0

$20.0

$15.0 $10.0

$10.1

$5.0

$0.0 FY 01

$16.5 FY 02

$22.5 FY 03

$24.8 FY 04

Part III - Top 10 Utilized Procedures in FY 2004

CPT Q0136 J0585 J1100 J0696 J1626 J2405 J9355 J1260 J3301 J0880

Procedure Non ESRD Epoetin Alpha Inj Botulinum Toxin A Per Unit Dexamethasone Sodium Phos Ceftriaxone Sodium Injection Granisetron HCl Injection Ondansetron HCl Injection Trastuzumab Dolasetron Mesylate Triamcinolone Acetonide Inj Darbepoetin Alfa Injection

# Units 169,164 71,637 70,902 65,373 21,220 16,664 14,929 13,222 11,939 10,986

Part V - State Comparison- Discount off Average Wholesale Price 0.00%

-2.00%

-4.00%

-6.00%

-8.00%

-10.00% -10.0%
-12.00%
-14.00%

-13.3%

-11.0% -12.0%

-10.0% -10.0%

-12.0%

-13.0%

Part VI - Administrative Requirements Requires State Plan Amendment

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Increase the average wholesale price (AWP) discount from 11% to 14% for injectibles provided through a physician's office.

Item 20 (continued)

Effective Date:

7/1/2005

Funds

FY2006

Total: State:

$ 3,400,000 $ 1,319,212

% Reduction

0.2%

Part VII - Drug Reference Table (See Table III)

CPT Q0136 J0585 J1100 J0696 J1626 J2405 J9355 J1260 J3301 J0880

Procedure End Stage Renal Disease Epoetin Alpha Injection Botulinum Toxin A Per Unit Dexamethasone Sodium Phos Ceftriaxone Sodium Injection Granisetron HCl Injection Ondansetron HCl Injection Trastuzumab Dolasetron Mesylate Triamcinolone Acetonide Inj Darbepoetin Alfa Injection

Brand Example

Treatment of

Procrit, Epogen Botox Deradon Procephin Kytril Zofran Herceptin Anzemet Kenalog Aranesp

Renal Disease Muscle Disorder Inflammation/Allegic response Antibiotic Nausea Nausea Breast Cancer Post-Operative Nausea Inflammation Anemia caused by Kidney Failure

Department of Community Health FY2006 Budget Reduction Proposal

Item:

Increase the average wholesale price (AWP) discount from 11% to 14% for pharmacy prescriptions.

Item 21

Effective Date:

7/1/2005

Funds

FY2006

Total:

$ 13,387,114

State:

$ 5,194,248

% Reduction

1.0%

Part I - Methodology/Rationale
Current : AWP- 11% or favored nations, whichever is lower (note: favored nations pricing allows DCH to obtain the lowest discount extended by the pharmacy to any other insurer).
Proposed: AWP- 14% or favored nations, whichever is lower. Last Change: Modified AWP from -10% to -11% in FY2005.

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

97.6%

725,430

87.2%

41,184

81.7%

164,133

65.0%

75,500

100.0%

172,160

95.3%

182,043

92.5%

1,360,450

$60.0 $50.0 $40.0 $30.0 $20.0 $10.0
$0.0

Part III - Cost per Prescription

$43.4

6.2%

$46.1

7.3%

$49.4

9.1%

$53.9

FY01

FY02

FY03

FY04

Alabama Florida Georgia
Kentucky Mississippi
North Carolina
South Carolina Tennessee

Part IV - State Comparison - Discount off Average Wholesale Price

0.00%

-2.00%

-4.00%

-6.00%

-8.00%

-10.00% -12.00%

-10.0%

-14.00%

-13.3%

-11.0%

-12.0%

-12.0%

-10.0%

-10.0% -13.0%

Part V - Administrative Requirements Requires State Plan Amendment

Item 22

Department of Community Health

Effective Date:

FY2006 Budget Reduction Proposal

Funds

Item:

Require minimum bids on discount off AMP (average manufacturer's price) for the next round of supplemental rebates.

Total: State:

7/1/2005 FY2006 $ 10,188,487 $ 3,954,273

% Reduction

0.7%

Part I - Methodology/Rationale

Current : The current discount off AMP from both CMS and Supplemental rebates amounts to approximately 20%.
Proposed: This proposal calls for the requirement of a minimum discount off AMP of 29.1% for any manufacturer's product to be evaluated for PDL placement without being subject to a prior authorization.
Last Change: N/A

Part II - Member Impact

Part III - Supplemental Rebates Product Categories

Sub Program

Members Utilizing Service

Percent

Total

Children MF Children Disabled Elderly

97.6% 87.2% 81.7% 65.0%

725,430 41,184
164,133 75,500

Adults

100.0%

172,160

PeachCare

95.3%

182,043

Total Members 92.5%

1,360,450

Product Categories on Supplemental Rebates

Dihydropyridine Calcium Channel Blockers Proton Pump Inhibitors Beta - Adrenergic Agents: Nebs Statins Lipotropics: Cai

Bone Ossification Agents
Cox II's Ace Inhibitors Ace Inhibitors With Diuretics Atypical Antipsychotics

Nasal Steroids

Macrolides

Angiotensin Receptor Blockers Angiotensin Receptor Blockers & Diuretics Nondihydropyridine Ccb'S Narcotics: Long Acting Antihyperkinesis Inhaled Corticosteroids
Nebulized Corticosteroids
SSRI'S Insulins

Quinolones
Cephalosporins
Erectile Dysfunction Beta Blockers Biguanide Combinations- Oral Antidiabetic Low Sedating Antihistamines Low Sedating Antihistamines/Decongestant Combinations New Generation Antidepressants Urinary Tract Antispasmodics

Part IV - Business Case for Change While the supplemental rebate program has been very effective in obtaining supplemental rebates from manufacturers, the goal it to gain even greater rebate dollars in exchange for preferred drug list placement. Florida has taken a similar approach, and the 29.1% is similar to the requirement in Florida. Under this measure, manufacturers will be required to submit a minimum of 29.1% discount off AMP. Manufacturers who choose not to submit a bid of 29.1% off AMP will not be listed as a preferred product and the medication will be subject to a prior authorization. DCH will reserve the right to allow a lesser bid if exclusion of the medication from the preferred drug list would clearly increase total utilization of other more costly Medicaid health care resources (hospitalizations, ER visits, laboratory costs, etc.).

Part V - State Comparison N/A

Part VI - Administrative Requirements Requires State Plan Amendment

Item 22 (continued)

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Require minimum bids on discount off AMP (average manufacturer's price) for the next round of supplemental rebates.

Effective Date: Funds Total: State:

7/1/2005 FY2006 $ 10,188,487 $ 3,954,273

Part VII - Drug Reference Table (See Table III) Product Categories on Supplemental Rebates Calcium Channel Blockers Proton Pump Inhibitors Beta - Adrenergic Agents: Nebs

Brand Example
Cardene, Cardizem CO, DynaCirc, Norvasc, Plendil Omeprazole, Esomeprazole, Lansoprazole, Aciphex, Prevacid,
Xopenex, Duoneb

% Reduction

0.7%

Treatment of High Blood Pressure (hypertension) Stomach Ulcers and Gastric Reflux Disease Asthma

Statins

Lipitor, Zocor, Pravachol

Cholesterol

Nasal Steroids
Angiotensin Receptor Blockers: ARBs Angiotensin Receptor Blockers & Diuretics: ARBs Micardis HCI, Benican HCI Narcotics: Long Acting

Flonase, Rhinocort Nasal Inhaler Cozaar, Diovan, Avapro, Atacand, Micardis, Teveten, Benicar Hyzaar
Avinza, Kadian, Oxycontin, Duragesic

Nasal and Sinus Disorders High Blood Pressure (hypertension) High Blood Pressure (hypertension) Chronic Pain

Antihyperkinesis Inhaled Corticosteroids SSRI'S

Strattera AeroBid, Asmacort, Beclovent, Pulmicort Respules, Qvar, Vanceril
Zoloft, Celexa, Paxil CR

ADD/ADHD Asthma Depression

Insulins

Novolin, Humulin, Lantus

Diabetes

Bone Ossification Agents

Fosamax, Actonel

Osteoprosis

Cox II's

Vioxx, Celebrex, Bextra

Arthritis/Inflammation

Ace Inhibitors

Mavic, Aceon

High Blood Pressure (hypertension)

Ace Inhibitors With Diuretics Atypical Antipsychotics Macrolides Quinolones Cephalosporins Erectile Dysfunction Beta Blockers Oral Antidiabetic Low Sedating Antihistamines Low Sedating Antihistamines/Decongestant Combinations New Generation Antidepressants Urinary Tract Antispasmodics

Uniretic, Accuretic

High Blood Pressure (hypertension)

Zyprexa, Risperdal, Abilsfy, Seroquel Mental Disorders

Zithromax, Biaxin

Antibotic

Cipro, Floxin
Ceclor, Cedax, Duricef, Omnicef, Vantin
Viagra, Levitra, Cialis

Antibotic Antibotic Male impotency

Levatol, Visken, Cartrol

High Blood Pressure (hypertension)

Starlix, Avandia, Prandin

Diabetes

Zyrtec, Clarinex

Allergy

Zyrtec D - 12 Hours, Claritin-D

Allergy

Effexor, Cymbalta Detrol LA, Ditropan XL

Depression Overactive Bladder

Item C23

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Eliminate the dispensing fee incentive paid for dispensing generic drugs.

Effective Date:

7/1/2005

Funds

FY2006

Total: State:

$ 4,839,531 $ 1,877,756

% Reduction Part I - Methodology/Rationale
Current : DCH pays a $0.50 dispensing fee incentive above and beyond the dispensing fee for branded medications. Proposed: Eliminate dispensing fee incentive. Last Change: May, 2002.

0.4%

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

97.6%

725,430

87.2%

41,184

81.7%

164,133

65.0%

75,500

100.0%

172,160

95.3%

182,043

92.5%

1,360,450

Part III - % of Generic and Multi-Source Drugs Dispensed by Fiscal Year

60.0% 50.0% 40.0% 30.0% 20.0% 10.0%
0.0%

47.3%

1.0%

Generic

49.3%

1.5%

Multi-Source 51.9%

1.2%

2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%

FY02 FY03 FY04

Part IV - Medicaid Prescriptions based on Drug Type

Single Source Brands 46.8%

Generic 51.9%

Multi-Source Brands 1.2%

The payment of an additional fee as an incentive to a pharmacist to dispense a generic drug is no longer necessary to promote the use of generic drugs for the following reasons:
Georgia has substantially expanded the use of the Maximum Allowable Cost (MAC) program over the past two years, making the dispensing of multi-source brands increasingly improbable. MAC sets a fixed cost, based on the lowest wholesale price for a drug, thereby making it unlikely a more expensive brand will be dispensed. Additionally, an increasing number of pharmacies are not stocking multi-source brands due to a higher inventory expense associated with these drugs. As a result, these pharmacies are much more likely to automatically dispense a generic drug because it is more likely to be in stock.

Part V - Business Case for Change Prior to implementation of the generic dispensing fee incentive in May 2002, 48% of the claims were for generic drugs. As of June 2004,
the generic dispensing rate was 51%. What movement has occurred is partly due to the subsequent availability of generics for highly utilized branded drugs (e.g. Prilosec). Within the last two years, four major brand drugs have converted to generic status as the drug's patent has expired: Claritin (allergy); Prilosec (anti-ulcer); Paxil (anti-depressant); and Prozac (anti-depressant). Given that the Medicaid program pays for a significant number of prescriptions of these drugs, their transfer to generic status has improved the percentage of generic drugs paid for by the Medicaid program. Additionally, DCH has an edit in place that will not allow a pharmacy to dispense a branded medication when a generic therapeutically equivalent (FDA A-rated) medication is available short of obtaining a prior authorization. Prior authorization requirements are very stringent.

Nevertheless, any pharmacy that dispenses a generic medication receives the additional $0.50 even if the physician wrote the prescription generically or the prescription allows the use of generics. Pharmacy providers are being given this "incentive" without regard to any level of action taken on the part of the pharmacist to switch a branded medication to a different medication that is available generically. There are no fields available through NCPDP and ESI claims processing systems to identify when a pharmacy providers claims to have called the physician and received an authorization to switch medications from a brand to another medication available generically. Since the generic incentive fee has not been an effective tool to drive generic utilization, we are recommending it's elimination.
Part VI - State Comparison
N/A
Part VII - Administrative Requirements
Requires State Plan Amendment

Item 24

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Consolidate population-based programs to more appropriately align agency business functions.

Item 25

Effective Date: Funds Total: State:

7/1/2005

FY2006

$

609,141

$

362,248

% Reduction

N/A

Part I - Methodology/Rationale
Current : The Department of Community Health supports population-based healthcare through the operation of the Office of Minority Health, the Office of Women's Health, and the Commission on Men's Health. These entities are responsible for developing strategies, polices and programs including community outreach and public/private partnerships to create awareness of the benefits of regular check-ups for early detection, preventive screenings, healthy lifestyle practices and disease management, and to eliminate discrepancies in health status between minority and non-minority populations in Georgia.
Proposed: Consolidate all population-based programs to more appropriately align agency business functions and achieve administrative efficiencies. This includes the reduction of eight positions.
Last Change: The Office of Women's Health was created in 1999 at the same time DCH was established as a department. The Commission on Men's Health was created in 2000. The Office of Minority Health was established in 1996 as part of the Department of Human Resources, and was transferred to DCH when the department was created in 1999.

Part II - Administrative Requirements N/A

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Transfer funding for the Marcus Institute to the Department of Human Resources.

Item 26

Effective Date: Funds Total: State:

7/1/2005

FY2006

$

150,000

$

150,000

% Reduction

N/A

Part I - Methodology/Rationale
Current : The Department of Community Health was appropriated funds in the FY2005 budget to contract with the Marcus Institute. The Marcus Institute offers comprehensive diagnosis, therapy and care management for a wide range of disabilities and learning problems. The funds are used to support the operations of the Institute.
Proposed: Transfer funding to the Department of Human resources to appropriately align agency business functions. DHR currently has a contract with the Marcus Institute.
Last Change: Funding for the Marcus Institute was first appropriated to DCH in FY2005.

Part II - Administrative Requirements None

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Eliminate funding for the Folic Acid initiative.

Item 27

Effective Date: Funds Total: State:

7/1/2005

FY2006

$

200,000

$

200,000

% Reduction

N/A

Part I - Methodology/Rationale
Current : The Georgia Folic Acid information awareness campaign is designed to increase the consumption of the vitamin folic acid prior to and during pregnancy to prevent birth defects. Information is targeted at women of childbearing age, primary care physicians, midlevel providers as well as working with the Family Health Branch of the DHR Division of Public Health.
Proposed: Eliminate funding for the program in the DCH budget. The program is not consistent with the agency's business functions.
Last Change:

Part II - Administrative Requirements N/A

Base Item 1

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Perform retrospective reviews on non-delivery related hospital admissions for children.

Effective Date: Funds Total: State:

7/1/2005 FY2006
Yes Yes

Part I - Methodology/Rationale

% Reduction*

N/A

*Based on reduction of Inpatient Hospital

Current : No pre-certifications are required for hospital admissions for children.
Proposed: Focused retrospective utilization review of physician admission patterns for all children (excluding newborns). Interqual criteria will be used for all retrospective reviews.
Last Change: DCH implemented a pre-certification requirement for adult hospital admissions in the early 1990's.

Part II - Member Impact

Part III - Admissions per 1,000 Children

Sub Program

Members Utilizing Service

Percent

Total

Children

6.5%

48,482

MF Children

13.9%

6,572

Disabled

0.0%

Elderly

0.0%

Adults

0.0%

PeachCare

1.8%

3,497

Total Members

4.0%

58,551

80

71

73

73

74

73

70 59
60

50

40

30

20

10

0 FY01

FY02

FY03*

FY04 FY05 proj FY06 proj

*Avg. FY2003 Net Pay per Admission: $5,603 **FY2004 Total Claims Paid: 33,464; Total Net Payments: $187,504,607 Notes: FY2003 and FY2004 claims are not complete and will be reprocessed by 12/01/04

Part IV - 2004 DRGs by net payment and claims paid (excluding deliveries and newborns)

(in Millions) Claims Paid

$18 $16

The Top 5 DRG's Constitute
$15.8 24% of all Net Payments

Bronchitis & Asthma

$14

Simple Pneumonia &

$12

Pleurisy

$9.0

$10

$7.8

Other Cardiothoracic

$8

$7.6

Proc

$6

$5.6

Craniotomy

$4

$2

Respiratory System

Diagnosis w Vent

$0

6,000 5,000 4,000 3,000 2,000 1,000
0

5,426

The Top 5 DRG's Constitute 43% of all Claims Paid
3,050
1,980 1,949 1,918

Bronchitis & Asthma
Simple Pneumonia & Pleurisy Esophag, Gastroent & Misc GI Dx Psychoses

Nutritional & Misc Metab Disord

Part V - State Comparison No other Southeastern states require pre-certification for hospital admissions for children. Retrospective review is unknown.
Part VI - Administrative Requirements Requires Systems Change Staffing - 2 RN FTEs @ $100,000; Total Funds = $200,000

Base Item 2

FY2006 Budget Reduction Proposal

Item:

Strictly enforce orthodontic policies for children.

Effective Date: Funds Total: State:

7/1/2004 FY2006
Yes Yes

Part I - Methodology/Rationale

% Reduction*

N/A

* Based on reduction of the children's dental program.

Current : The state's pediatric dental program offers medically necessary orthodontic services for members with cleft palates and other dentofacial anomalies. The treatment includes one previsit and 24-36 additional visits for orthodontic care. Current orthodontic treatment approval rate is 100%.
Proposed: The state utilized a more stringent application and policy compliance form to ensure children had the correct diagnosis before obtaining orthodontic care. The Georgia Medical Care Foundation also applied a new set of clinical guidelines to use when performing reviews.

Last Change: N/A

Part II - Member Impact

Sub Program
Children

Members Utilizing Service

Percent 43.5%

Total 323,159

MF Children

37.8%

17,866

Disabled

0.0%

-

Elderly

0.0%

-

Adults

0.0%

-

PeachCare

67.8%

129,608

Total Members 32.0%

470,633

Part III - Orthodontic Treatment Utilization

Fiscal Year
FY2001

# of Members

Payments

Avg Pay / Member

249 $ 469,846 $

1,887

FY2002

914 $ 1,809,664 $

1,980

FY2003

2,587 $ 5,330,263 $

2,060

FY2004

3,289 $ 6,888,667 $

2,094

*FY2003 and FY2004 claims are not complete and will be reprocessed by 12/01/04

Part IV - State Comparison All southeastern border states cover pediatric orthodontic services with varying policies.
Part V - Administrative Requirements GMCF prior authorization staffing

Base Item 3

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Pursue a more aggressive lock-in program for drugs subject to abuse.

Effective Date: Funds Total: State:
% Reduction

7/1/2005 FY2006
Yes Yes
N/A

Part I - Methodology/Rationale
Current : Patients identified by surveillance reviews are locked into a physician and pharmacy provider who are the exclusive providers for the patient.
Proposed: Implement a more aggressive approach to identify potential abusers and hire more Program Integrity staff to oversee the lock-in program.
Last Change: N/A

Part II - Member Impact

Sub Program

Members Utilizing Service

Percent

Total

Children

97.6%

725,430

MF Children Disabled Elderly Adults PeachCare Total Members

87.2% 81.7% 65.0% 100.0% 95.3% 92.5%

41,184 164,133
75,500 172,160 182,043 1,360,450

Part III - Drugs Most Frequently Abused:

Product Category Hydrocodone/APAP Carisoprodol Alprazolam Diazepam Tylenol/Codeine

Brand Name

Treatment of

Vicodine Soma Xanax

Pain Relief
Relief of painful muscoloskeletal conditions Panic disorders

Valium

Anxiety disorders

Tylenol/Codeine Pain relief

Part IV - State Comparison N/A
Part V - Administrative Requirements Program Integrity will need to hire two full time employees: a pharmacist (salary: $80,000) and a pharmacy technician (salary: $25,000 to $28,000).

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Complete prior year cost settlements for outpatient hospital services.

Part I - Methodology/Rationale Current : Have been unable to complete cost settlements since fiscal agent system conversion.
Proposed: Catch up on one and a half year backlog of cost settlements during FY2006

Effective Date: Funds Total: State:
% Reduction

Base Item 4
7/1/2005 FY2006
Yes Yes N/A

Last Change: N/A

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

55.4%

411,722

57.3%

27,095

66.4%

133,362

46.1%

53,570

99.8%

171,815

43.4%

82,953

59.9%

880,517

Part IV - State Comparison N/A


Part V - Administrative Requirements



N/A

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Strictly enforce income requirements for participation in the PeachCare for Kids program.

Effective Date: Funds Total: State:
% Reduction

Part I: Methodology/Rationale
Current: Income verification is only performed when a PeachCare application comes in through DFCS caseworker. Proposed: Increase efforts to validate PeachCare applicant income. Last Change: N/A

Base Item 5
7/1/2005 FY2006
Yes Yes N/A

Part II: Proposal Description

Option A:

Perform data matching audits, using comprehensive income verification, on a monthly basis for a sample or entire population. Require follow up with documentation on discrepant cases

Part III - Most Common Services Utilized by Net Payment

13.4% 7.8%

22.6%

Option B:

Perform data matching via DOL or private vendor wage data on every PeachCare application received by PSI/DHACS and/or DFCS

Option C:

Require documentation of income (i.e. paycheck stubs) from all new and renewing applicants

17.7%

18.9%

19.5%

Pharmacy Dental Physician Services Outpatient Hospital Inpatient Hospital All Other

Part IV: State Comparison

State Alabama Florida Kentucky Mississippi North Carolina South Carolina Tennessee

Type of Income Verification income documentation income documentation income documentation self-declaration with wage data matching income documentation income documentation income documentation

Part V: Administrative Requirements

Would potentially require state plan amendment
Would require PeachCare enrollment system programming changes
Options A & B would require some additional staff (either DCH or PSI) to perform follow up functions on applicants with discrepant incomes

Option C would require a significant increase in additional staff (PSI) to perform eligibility determination and follow up functions

Department of Community Health FY2006 Budget Reduction Proposal

Item:

Ensure level of care requirements are met for all long term care programs.

Part I - Methodology/Rationale
Current : Nursing home level of care is determined by multiple entities and may not be uniformely applied.
Proposed: Ensure all entities determining level of care uniformely apply level of care requirements. Last Change: N/A

Effective Date: Funds Total: State:
% Reduction

Base Item 6
7/1/2005 FY2006
Yes Yes N/A

Part II - Member Impact

Part III - Waiver Expense as a Percent of Total Expense

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

0.0%

-

14.1%

6,677

1.7%

3,378

4.9%

5,727

0.0%

-

0.0%

-

1.1%

15,782

5.6% 94.4%

Waiver Expense

Total Plan Expense

Note: For some eligibles, meeting level of care criteria qualifies the member for Medicaid, whereas they would have not otherwise been eligible.
Part IV - State Comparison All states are required to follow Code of Federal Regulations (CFR) when assessing members for institutional or institutional-related care.

Part V- Administrative Requirments N/A

Base Item 7

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Perform clinical reviews to validate demand for emergency medical assistance for undocumented aliens.

Effective Date: Funds Total: State:
% Reduction

7/1/2005 FY2006
Yes Yes
N/A

Part I - Methodology/Rationale
Current : Undocumented aliens are seen by providers who submit a DMA Form 526 to the Department of Family and Children Services athorizing length of eligibility under the emergency medical assistance program. Length of eligibility can be up to three months and after that, another Form 526 must be submitted to renew eligibility. During the eligibility span, a member may receive any covered services.
Proposed: Perform clinical reviews to validate demand for emergency medical assistance for undocumented aliens.
Last Change: N/A

Part II - Member Impact

Part III - Most Common Services by Net Payment

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members *

Members Utilizing Service

Percent

Total

0.3%

2,405

0.0%

7

0.2%

444

0.4%

475

11.4%

19,546

0.0%

-

1.4%

21,047

* Total members represents average monthly eligibles. Eligibility is determined monthly and thus the unique count of patients in a year can be greater than the average monthly enrollment.

1.6% 4.4% 3.9% 8.5%
17.3%

Part IV - Emergency Medical Assistance Expenditures by Diagnosis Related Group

Deliveries only All other

64.4%

Inpatient Hospital
Physician
Outpatient Hospital Nurse Midwifery
Pharmacy
All Other

$70.0

$60.0

$50.0

$14.5

(in Millions)

$40.0

$30.0 $20.0

$39.2

$10.0

$0.0 FY02
Part V - State Comparison
N/A

$16.4 $48.6 FY03

$12.8 $45.6 FY04

Part VI - Administrative Requirements Requires State Plan Amendment

Base Item 8

Department of Community Health

FY2006 Budget Reduction Proposal

Item:

Reflect an FY2005 change made to consider promissory notes as income in NH elbibility determination.

Effective Date: Funds Total: State:
% Reduction

7/1/2005 FY2006
Yes Yes
N/A

Part I - Methodology/Rationale
Current : The face value of promissory notes is not counted as an asset in determining nursing home eligibility. The income produced by these notes is counted.
Proposed: Count the face value of all promissory notes toward the resource limit in determining eligibility. Last Change: N/A

Part II - Member Impact

Sub Program
Children MF Children Disabled Elderly Adults PeachCare Total Members

Members Utilizing Service

Percent

Total

-

0.0%

55

-

-

-

-

0.0%

55

Part III - State Comparison Most states count the face value of promissory notes in the determination of eligibility.

Part IV - Administrative Requirements
State Plan Amendment Changes to the SUCCESS computer system

Medicaid Eligibility Adults and Children
(CY2003)

Annual Income % of Federal (family size = 3) Poverty
Level

$36,008 $30,681 $28,376 $20,301 $15,264 $6,088

over 235% 235% FPL
200% FPL
185% FPL
133% FPL
100% FPL
Standard of Need

Presumptive Eligibility1
Presumptive Eligibility1
Eligibles: 6,600
Payments: $4.9 M

Spend Down for Medically Needy Pregnant Women/Children4
Eligibles: 1 Payments: $ 7,000

RSM2
RSM2 Eligibles:
8,000 Payments:
$59 M

Medicaid or

PeachCare for Kids PeachCare for Kids

PeachCare for Kids5

Eligibles: 11,000
Payments: $29.3 M

Eligibles: 54,300
Payments: $67.5 M

Eligibles: 135,900 Payments: $178.6 M

RSM2

Newborn

Eligibles: 43,600
Payments: $345 M

Eligibles: 79,000
Payments: $358.5 M

RSM2

Eligibles: 167,000 Payments: $207.6 M

RSM2 Eligibles: 232,400 Payments: $305.2 M

Low Income Medicaid (LIM)6 Eligibles: 309,000 Payments:$701.5 M

Transitional Medical Assistance (TMA)7

Breast and Cervical Cancer Medicaid State Plan Option8

Emergency Medical Aliens Adults and Children9

Eligibles: 58,200
Payments: $102.8 M

Eligibles: 1,700
Payments: $ 27 M

Eligibles: 3,380
Payments: $ 83.4 M

Pregnant Women

Pregnant Women3

Infants up to Age 15

Children 1-5

1 Services restricted - no inpatient hospital or delivery 2 Right From The Start Medicaid, coverage for pregnant women also covers newborn child
3 Coverage for pregnant women limited to time of pregnancy and 60 days postpartum 4 Spend down to medically needy level income limit of $507/month for a family of 3
5 For infants not born to pregnant women eligible for Medicaid coverage at the time of birth up to 200% of FPL. 6 Includes adoption supplement and foster care children 7 Covers children & parents who lose LIM due to earnings (limited to one year) 8 Must meet breast/cervical cancer screening requirement, be uninsured, and under 65 years old
9 Includes EMA eligibles that appear in other aid categories as well as being flagged as EMA.

Childr 6 - 18

Parents

Parents & ChildrenTransitional Medicaid

Breast and Cervical Cancer

Emergency Medical Aliens

Legend Mandatory Optional FY 2005 Eligibility Cut

Master Profile - All Revisions - Govenor Recommended-final2.xls 1/27/2005

Medicaid Eligibility Elderly, Disabled Adults, and Medically Fragile Children
(CY2003)

Annual Income % of SSI1

$19,872

300%

Medically Needy in NH2
Eligibles: 1,700
Payments: $38.3 M

Annual Income % of FPL8 (family size = 2)

$13,248

200%

$6,624

100%

Medically Needy2
Eligibles: 6,200
Payments: $ 82.7 M

Nursing Home3
Eligibles: 26,900
Payments: $927.7 M

Community Care Services
Program Waiver 3
Elderly & Functionally
Impaired
Eligibles: 6,100
Payments: $80.7 M

Independent Care Waiver
Program3
Severely Physically Disabled 21-64 years old
Eligibles: 280
Payments: $13.6 M

Mental Retardation
Waiver Program/ Community Habilitation and Social Services Program3
Diagnosis of Mental
Retardation or Developmental
Disability
Eligibles: 1,200
Payments: $35.2 M

Model Waiver3
Medically Fragile
Children under 21 who are respirator or oxygen dependent
Eligibles: 400
Payments: $31.5 M

Hospice4 Terminally Ill Services limited to Hospice
Eligibles: 570
Payments: $10.2 M

SSI1,6,7

Eligibles: 231,000

Payments: $ 1,889 M

Katie Beckett Deeming Waiver 3
Eligibles: 5,900
Payments: $33 M

Qualified Individuals - 1
(QI-1)5
Specified Low Income
Beneficiary (SLMB)
Qualified Medicare Beneficiary
(QMB)
Eligibles: 44,900
Payments: $30.8 M

135% 120% 100%

$16,362 $14,544 $12,484

Elderly, and Disabled not NH Eligible

Elderly and Disabled NH Eligible

1 SSI - Supplemental Security Income 2 Spenddown required to medically needy level 3 Nursing Home level of care required 4 Services waiver only, this population becomes eligible via other eligibility groups or waivers
5 Mandatory but limited to state allotment 6 Includes former SSI recipients who remain eligible under Public Laws and Nursing Home SSIs
7 Former SSI Children

Hospice

Medically Fragile Children

Q-Track Medicare Beneficiaries

Legend Mandatory Optional Optional, but would transition to nursing home w/o the waivered services FY 2005 Eligibility Cut

Master Profile - All Revisions - Govenor Recommended-final2.xls 1/27/2005

Medicaid and PeachCare CY 2003 Expenditures
Mandatory and Optional Services
Optional Services DMA Children 8%
Pharmacy (DCH) 19%

Optional Services (DCH) 4%
Optional Services (Other Agencies)
6%
Mandatory Services (Other Agencies) 2%

Mandatory Services (DCH) 61%

Mandatory Services State Funds in Department of Community Health Budget

Benefit Inpatient Hospital Care Skilled Nursing Facilities (SNF) Physician Services Outpatient Hospital Care Intermediate Care Facilities (ICF) EPSDT Durable Medical Equipment Independent Laboratory Nurse Practitioner Nurse Mid Wife Home Health Federally Qualified Health Centers Physician Assistant Services Intermediate Care for the Mentally Retarded (ICFMR) Hospital Based Rural Health Centers Free Standing Rural Health Centers

CY 2003 Expenditures $1,115,635,580 $716,355,597 $636,143,503 $618,085,244 $152,968,537 $46,258,959 $36,651,841 $25,565,942 $17,329,529 $13,526,535 $11,393,881 $9,346,080 $8,210,751 $5,918,505 $4,376,178 $4,153,545

Nursing Facility-based Mental Health services (PASARR) Family Planning Unknown Category of Service Oral Surgery Chiropractic (Medicare only) Rehabilitative Therapy (Medicare only) Physical Therapy (Medicare only) Licensed Clinical Social Work Speech Therapy (Medicare only) Subtotal - Mandatory Benefits

$2,908,161 $2,633,939
$382,355 $164,828
$38,257 $24,810 $21,917 $16,048
$664 $3,428,111,188

Mandatory Services

Benefit

CY 2003 Expenditures

State-owned ICFMR (DHR) State-owned SNF (DHR) State-owned ICF (DHR) Subtotal - Mandatory Benefits
Total - All Mandatory Benefits

$99,096,759 $25,356,388
$1,960,427 $126,413,575
$3,554,524,763

Optional Services State Funds in Department of Community Health Budget

Benefit Pharmacy Children's Dental Children Intervention Services Dialysis Services - Technical Hospice Independent Care Waiver Program Psychology SOURCE Case Management Emergency Ambulance Georgia Better Health Care Adult Dental Optometric Pharmacy DME Supplier Orthotics and Prosthetics Ambulatory Surgical Centers GAPP In-Home Private Duty Nuring

CY 2003 All Other CY 2003 DMA Children

Expenditures

Expenditures

$777,833,354.79

$257,318,384.15

$52,360,522.02

$122,583,027.94

$3,769,014.77

$46,812,858.31

$29,388,461.83

$285,928.62

$28,525,351.13

$661,334.33

$24,961,213.66

$488,386.68

$4,174,232.05

$19,438,127.82

$22,994,430.53

$383,980.08

$15,846,188.05

$5,762,641.50

$7,988,953.40

$12,101,130.00

$17,249,050.47

$47,379.63

$4,637,346.42

$6,737,059.88

$8,025,905.38

$2,572,232.01

$4,510,253.66

$5,028,880.09

$4,374,625.33

$3,623,952.74

$38,884.00

$7,733,301.89

Model Waiver Program Dedicated Case Management Services Early Intervention Program Perinatal Case Management Podiatry Emergency Air Ambulance Dialysis Services - Professional Pregnancy Related Services Hospital Beds used for SNF services Adults with AIDS Case Management
GAAP Medically Fragile Daycare Childbirth Education Subtotal - Optional Benefits

$0.00 $5,604,004.37
$41,451.50 $4,234,381.86 $3,260,004.31
$234,001.52 $1,201,238.90
$892,356.36 $443,063.38 $246,098.00
$0.00 $13,677.00 $1,022,848,064.69

$7,064,967.97 $469,000.00
$4,390,751.58 $194,877.94 $651,785.95
$1,095,788.79 $20,345.72
$124,504.95 $406.00
$1,839.00
$53,200.00 $1,263.75
$505,647,337

Optional Services State Funds in Other Agencies' Budgets

Benefit Mental Retardation Waiver Program (DHR) Community Mental Health Services (DHR) Therapeutic Residential Intervention Services (DHR)
Community Care Services Program (DHR) Community Habilitation and Support Services (DHR) Child Protective Services Case Management (DHR) School-based Children's Intervention Services (DOE) At Risk of Incarceration Case Management (DJJ) Diagnostic, Screening, and Prevention Services (DHR) Adult Protective Services Case Management (DHR) Children at Risk Targeted Case Management (DHR) Subtotal - Optional Benefits

CY 2003 All Other CY 2003 DMA Children

Expenditures

Expenditures

$116,986,664 $56,055,115 $176,124

$5,962,844 $36,556,266 $89,304,880

$85,485,062

$1,183,075

$43,747,713

$4,313,404

$45,563

$36,323,944

$1,517,300 $98,853

$11,184,383 $7,223,088

$2,106,205 $3,335,280

$2,794,933 $99,255

$33,539 $309,587,418

$2,532,085 $197,478,157

Total - All Optional Benefits

$1,332,435,482

$703,125,495

CY 2003 Total Expenditures

Georgia Medicaid CY 2003

Benefits

Children
Mandatory Optional
40%

796,416,72M4 andatory 528,016,05O0ptional
60%

CY 2003 Total Expenditures
Top 5 Optional Benefits 1 300 Pharmacy 2 450 Hlth Chk Dental Pgm - under 21 3 870 Therapeutic Residential Interv 4 764 Child Protective Services 5 440 Community Mental Health Svcs

$1,324,432,774
2003 Expenditures $191,465,485 $116,120,583 $73,058,771 $34,090,538 $27,528,163

Medically Fragile Children

Mandatory Optional

177,330,47M0andatory 175,109,44O5ptional

50%

50%

CY 2003 Total Expenditures

$352,439,915

Top 5 Optional Benefits 1 300 Pharmacy 2 840 Childrens Intervention Svc 3 870 Therapeutic Residential Interv 4 440 Community Mental Health Svcs 5 971 GAPP In-home Priv Duty Nursing

2003 Expenditures $65,852,899 $29,681,781 $16,246,109 $9,028,103 $7,162,549

Disabled Adults
Mandatory Optional
46%

Mandatory 988,701,142 829,127,66O1ptional
54%

CY 2003 Total Expenditures

$1,817,828,803

Top 5 Optional Benefits 1 300 Pharmacy 2 680 Mental Retardation Waiver Pgm 3 440 Community Mental Health Svcs 4 681 Comm Habilitation and Support 5 590 Community Care Services

2003 Expenditures $464,003,293 $116,231,304 $44,325,986 $43,408,309 $37,628,509

Elderly 24%
Mandatory Optional
Adults 15%
Mandatory Optional

Mandatory 784,885,167Optional 254,648,009
76% Mandatory
686,181,582Optional 122,147,096
85%

CY 2003 Total Expenditures
Top 5 Optional Benefits 1 300 Pharmacy 2 590 Community Care Services 3 690 Hospice 4 930 Source 5 720 Dialysis Services - Technical

$1,039,533,176
2003 Expenditures $174,310,154 $47,842,907 $14,177,677 $6,564,675 $2,820,504

CY 2003 Total Expenditures

$808,328,678

Top 5 Optional Benefits

2003 Expenditures

1 300 Pharmacy

$83,597,522

2 460 Adult Dental Program

$9,117,468

3 440 Community Mental Health Svcs

$7,485,109

4 370 Emergency Ground Ambulance Svc

$4,306,315

5 761 Perinatal Targeted Case Mgmt

$4,191,492

CY 2002 Total Expenditures

Georgia PeachCare CY 2003

Benefits

Children
Mandatory Optional
51%

121,009,68M6andatory 126,512,71O6ptional
49%

CY 2003 Total Expenditures

$247,522,402

Top 5 Optional Benefits 1 300 Pharmacy 2 450 Hlth Chk Dental Pgm - under 21 3 570 Psychological Services 4 440 Community Mental Health Svcs 5 840 Childrens Intervention Svc

2002 Expenditures $55,922,387 $48,330,758 $3,967,354 $3,858,584 $3,474,322

Georgia Medicaid and PeachCare

CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures State Share of Expenditures Federal Share of Expenditures Average PMPM

$5,590,085,749 $2,197,071,821 $3,393,013,927
$325.02

Average Monthly Enrollment Outpatient ER visits per 1,000 Members* Inpatient Hospital Admissions per 1,000 Members

1,433,251 765.6 196.6

12% 6%

Eligibility by Major Program

13%

53%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13% 3%

PeachCare Children

Payments by Major Program

4% 14%
19%

24% 6%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

33%

PeachCare Children

Category Inpatient Hospital Pharmacy Long Term Care** Physicians Services Outpatient Hospital Dental All Other
Total

Expenditures by Major Categories of Service

CY 02 Expenditures $970,748,589 $860,824,148 $939,688,838 $586,585,384 $527,070,513 $155,924,720 $971,944,431

CY 03 Expenditures $1,115,962,601 $1,045,886,594 $1,001,656,214 $636,451,138 $618,342,489 $192,347,925 $979,438,789

$5,012,786,623

$5,590,085,749

18% 3% 11%
11%

20% 19%
18%

Inpatient Hospital Pharmacy Long Term Care** Physicians Services Outpatient Hospital Dental All Other

* ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. ** Includes private and state run skilled nursing facilities and intermediate care facilities. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004

Medicaid covers children:

Georgia Medicaid Children

Under 1 with family income that is no more than 185% of the federal poverty level

Under 6 with family income that is no more than 133% of the federal poverty level

Under 19 with family income that is no more than 100% of the federal poverty level

Under 1 whose Mothers were Medicaid eligible when the child was born

In foster care

With special needs whose parents are receiving a special adoption supplement

Under 1 whose Mothers were Medicaid eligible when the child was born

Whose family income is over the limit but who have enough unpaid/incurred medical expenses to "spend down" the excess income and meet the income limit (Medically Needy)

Georgia Medicaid Children

CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures State Share of Expenditures Federal Share of Expenditures Average PMPM

$1,324,432,774 $527,256,687 $797,176,086 $148.55

Average Monthly Enrollment Outpatient ER visits per 1,000 Members* Inpatient Hospital Admissions per 1,000 Members

742,996 657.7 132.7

Eligibility by Major Program

13% 12% 6%

53%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13% 3%

PeachCare Children

Payments by Major Program

4% 14%
19%

24% 6%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

33%

PeachCare Children

Category Inpatient Hospital Physician Pharmacy Outpatient Hospital Dental All Other
Total

Expenditures by Major Categories of Service

CY 02 Expenditures $323,373,291 $202,374,583 $141,490,993 $160,640,020 $94,294,438 $273,932,602

CY 03 Expenditures $317,182,812 $217,712,397 $193,170,367 $189,257,553 $116,129,713 $290,979,932

$1,196,105,927

$1,324,432,774

22%

24%

9% 14%

15%

16%

Inpatient Hospital Physician Pharmacy Outpatient Hospital Dental All Other

* ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004

Georgia Medicaid Medically Fragile and Disabled Children
Medicaid covers medically fragile children who:

Receive SSI (Supplemental Security Income)

Lost their SSI because of the federal 1996 change in disability requirements but Georgia continues to

cover.

Are chronically ill and whose parents have income or resources that make the children ineligible for SSI.



These children must need a nursing home level of care but have good home care that costs less.

Qualify for other Medicaid categories and require special medical services because of the severity of



their condition

Georgia Medicaid Medically Fragile and Disabled Children

CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures State Share of Expenditures Federal Share of Expenditures Average PMPM

$352,439,915 $140,306,330 $212,133,585
$621.55

Average Monthly Enrollment Outpatient ER visits per 1,000 Members* Inpatient Hospital Admissions per 1,000 Members

47,253 760.6 174.2

12% 6%

Eligibility by Major Program

13%

53%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13%

PeachCare Children

3%

14% 19%

Payments by Major Program

4%

Medicaid Children

24% 6%

Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

33%

PeachCare Children

Expenditures by Major Categories of Service

Category Inpatient Hospital Pharmacy Interventional Services** Outpatient Hospital Physician Long Term Care*** All Other
Total

CY 02 Expenditures $61,623,289 $49,721,722 $68,913,611 $33,004,293 $25,541,580 $9,437,440 $49,117,588
$297,359,523

CY 03 Expenditures $82,703,210 $66,720,249 $62,259,750 $39,232,635 $33,041,094 $7,011,786 $61,471,192
$352,439,915

17% 2% 9%

11%

18%

24% 19%

Inpatient Hospital Pharmacy Interventional Services** Outpatient Hospital Physician Long Term Care*** All Other

* ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. ** Includes waiver programs, children intervention services, community care program, PASARR, SOURCE, etc. Could be understated due to claims payment system issues. *** Includes private and state run skilled nursing facilities and intermediate care facilities. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004

Georgia Medicaid Disabled Adults
Medicaid covers disabled adults (under 65) who: Receive Supplemental Security Income (SSI) Lost their SSI coverage but keep their Medicaid coverage because of federal legislation Reside in the nursing home and meet the nursing home income and resource standards Need a nursing home level of care but can be cared for in the community with special home and

community based services Are terminally ill
Are entitled to Medicare and meet the income standards. These individuals receive help with their

Medicare premiums, co-payments and deductibles only. Whose family income is over the limit but who have enough unpaid/incurred medical expenses to "spend

down" the excess income and meet the income limit (Medically Needy) Are uninsured women under 65 and have a diagnosis of breast or cervical cancer

Georgia Medicaid Disabled Adults
CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures

$1,817,828,803 Average Monthly Enrollment*

State Share of Expenditures

$723,677,646 Outpatient ER visits per 1,000 Members**

Federal Share of Expenditures

$1,094,151,156 Inpatient Hospital Admissions per 1,000 Members

Average PMPM

$803.38

188,560 1,259.3
340.8

12% 6%

Eligibility by Major Program

13%

53%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13%

3%

PeachCare Children

Payments by Major Program

4% 14%
19%

24% 6%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

PeachCare Children

33%

Category Pharmacy Inpatient Hospital Long Term Care*** Interventional Services**** Outpatient Hospital Physician All Other
Total

Expenditures by Major Categories of Service

CY 02 Expenditures $391,442,665 $298,141,059 $279,025,498 $212,505,394 $155,030,727 $127,656,062 $178,895,146

CY 03 Expenditures $469,263,589 $362,616,170 $285,561,836 $280,183,071 $175,045,042 $131,085,948 $114,073,146

$1,642,696,551

6% 7%

26%

10%

15% 16%

20%

$1,817,828,803
Pharmacy Inpatient Hospital Long Term Care*** Interventional Services**** Outpatient Hospital Physician All Other

* Excludes SLMB and QI-1 eligibles as Medicaid only pays Medicare premiums for these categories. ** ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. *** Includes private and state run skilled nursing facilities and intermediate care facilities. **** Includes waiver programs, children intervention services, community care program, PASARR, SOURCE, etc. Could be understated due to claims payment system issues. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004

Georgia Medicaid Elderly
Medicaid covers the elderly (65 and older) who: Receive Supplemental Security Income (SSI) Lost their SSI coverage but keep their Medicaid coverage because of federal legislation Reside in the nursing home and meet the nursing home income and resource standards Need a nursing home level of care but can be cared for in the community with special home and

community based services Are terminally ill
Are entitled to Medicare and meet the income standards. These individuals receive help with their

Medicare premiums, co-payments and deductibles only. Whose family income is over the limit but who have enough unpaid/incurred medical expenses to

"spend down" the excess income and meet the income limit (Medically Needy)

Georgia Medicaid Elderly

CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures State Share of Expenditures Federal Share of Expenditures Average PMPM

$1,039,533,176 $413,838,157 $625,695,019 $949.32

Average Monthly Enrollment Outpatient ER visits per 1,000 Members** Inpatient Hospital Admissions per 1,000 Members

91,253 648.3 287.4

Eligibility by Major Program

13% 12% 6%

53%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13% 3%

PeachCare Children

Payments by Major Program

4% 14%
19%

24% 6%

Medicaid Children
Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

33%

PeachCare Children

Category Long Term Care*** Pharmacy Inpatient Hospital Physician Outpatient Hospital All Other
Total

Expenditures by Major Categories of Service

CY 02 Expenditures $650,871,352 $170,524,317 $35,487,894 $24,550,341 $18,484,885 $107,921,641
$1,007,840,430

CY 03 Expenditures $708,957,822 $175,037,068 $33,633,402 $16,521,190 $17,836,460 $87,547,234
$1,039,533,176

8% 2%2% 3% 17%

Long Term Care*** Pharmacy Inpatient Hospital Physician Outpatient Hospital
68%
All Other

* Excludes SLMB and QI-1 eligibles as Medicaid only pays Medicare premiums for these categories. ** ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. *** Includes private and state run skilled nursing facilities and intermediate care facilities. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004

Georgia Medicaid Adults
Medicaid covers the following adults: Pregnant women whose family income is less than 235% of the federal poverty level ($35,880 annual

income for a family of three)
Pregnant women whose family income is over the limit but who have enough unpaid/incurred medical expenses to "spend down" the excess income and meet the income limit (Medically Needy)
Parents in families who have very low income

Parents in families who have lost their Medicaid eligibility due to increases in wages or child support

Georgia Medicaid Adults

CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures State Share of Expenditures Federal Share of Expenditures Average PMPM

$808,328,678 $321,795,647 $486,533,031
$391.27

Average Monthly Enrollment Outpatient ER visits per 1,000 Members* Inpatient Hospital Admissions per 1,000 Members

172,160 1,151.7
469.6

12% 6%

Eligibility by Major Program

13%

Medicaid Children

53%

Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13% 3%

PeachCare Children

14% 19%

Payments by Major Program

4%

Medicaid Children

24%

Medicaid Medically Fragile Children

Medicaid Disabled Adults

Medicaid Elderly 6%

Medicaid Adults

33%

PeachCare Children

Category Inpatient Hospital Physician Outpatient Hospital Pharmacy Dental All Other
Total

Expenditures by Major Categories of Service

CY 02 Expenditures $235,404,227 $166,255,760 $123,142,112 $65,151,558 $9,645,272 $62,203,138

CY 03 Expenditures $300,137,532 $190,972,965 $152,870,572 $85,085,646 $13,044,192 $66,217,772

$661,802,067

$808,328,678

8% 2% 11%

19%

24%

36%

Inpatient Hospital Physician Outpatient Hospital Pharmacy Dental All Other

* ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004

PeachCare covers children:

Georgia PeachCare for Kids

Under 19 who have family income that is less than 235% of the federal poverty level, who are not eligible for Medicaid or any other health insurance plan and who cannot be covered by the State Health Benefit
Plan.

Georgia PeachCare for Kids

CY 2003 (services incurred 1/2003 through 12/2003 and paid through 5/2004)

Total Expenditures State Share of Expenditures Federal Share of Expenditures Average PMPM

$247,522,402 $70,197,353
$177,325,049 $107.98

Average Monthly Enrollment Outpatient ER visits per 1,000 Members* Inpatient Hospital Admissions per 1,000 Members

191,030 407.1 18.6

Eligibility by Major Program

13%

Medicaid Children

12% 6%

53%

Medicaid Medically Fragile Children Medicaid Disabled Adults Medicaid Elderly
Medicaid Adults

13% 3%

PeachCare Children

Payments by Major Program

4%

Medicaid Children

14%

24%

Medicaid Medically Fragile Children
Medicaid Disabled Adults
Medicaid Elderly

19%

6%

Medicaid Adults

PeachCare Children

33%

Expenditures by Major Categories of Service

Category Pharmacy Dental Physician Outpatient Hospital Inpatient Hospital All Other
Total

CY 02 Expenditures $42,492,893 $39,495,385 $40,207,058 $36,768,476 $16,718,829 $31,299,485

$206,982,125

13% 8%

22%

18% 19%

20%

CY 03 Expenditures $56,472,956 $48,330,758 $46,809,910 $43,842,983 $19,362,454 $32,703,342
$247,522,402
Pharmacy Dental Physician Outpatient Hospital Inpatient Hospital All Other

* ER Visits include both outpatient ER visits and ER visits resulting in an inpatient stay. Data prepared by the GA DCH DSS Analysis Unit, 7/12/2004