Delivery of Care

Inaccurate numbers, analysis may undercut Medicaid working group

Claim that state spending on Medicaid services for elders is much higher than national average is not supported by data

Courtesy of the Rhode Island government website

Slide from the presentation made to the Working Group To Reinvent Medicaid on March 2.

By Richard Asinof
Posted 3/16/15
The careless use of numbers to promote an agenda on how to reform Medicaid spending is problematic for Gov. Gina Raimondo’s effort to reinvent Medicaid. If the working group is using flawed data, whatever solutions and cuts are agreed upon may only exacerbate the problem – which is related to the health care delivery system, not just Medicaid.
Who is responsible for preparing the messaging for the Raimondo administration? How much is being spent on the communications visuals? Are they being created by a private contractor? Why have the news media been so quiescent in accepting the numbers proposed by the Raimondo team as gospel? If the numbers are inaccurate and the analysis wrong, how does that change the mission of the working group?
Jon Duffy appears to be everywhere these days. The president of Duffy and Shanley serves on the working group to reinvent Medicaid; he is also the spokesman for the group led by lawyer James Skeffington that purchased the Pawtucket Red Sox and is promoting building a new stadium in Providence. Duffy served as chairman of the board of directors of the Greater Providence Chamber of Commerce; he also served as co-chair of the Raimondo transition team. Does Duffy need to register as a lobbyist with the Secretary of State? What exactly is his role in the Raimondo administration? Is he being paid for his services? Who oversees his portfolio? Whom does he report to? What is his exact title and what is his authority? Does he advise the press office on messaging and strategy? Is there a need for Duffy to be transparent about his potential conflicts of interest between his agency’s client list and his work on behalf of Raimondo?

PROVIDENCE – The newly proposed FY 2016 budget by Gov. Gina Raimondo includes $91 million in cuts to state Medicaid spending – with $45 million identified and another $46 million to be determined by a new working group. 

Among the proposed Medicaid cuts identified is an $18 million rate cut to nursing homes, according to LeadingAge RI. 

Another $5 million in cuts to nursing homes is targeted through value-based purchasing, undefined by the budget document, with the task given to the working group to wrestle with how to find the savings, according to Leading Age RI.

Translated, at least 25 percent – some $23 million – of the identified proposed Medicaid cuts come from nursing home facilities.

Yet, some of the basic facts being used by Gov. Gina Raimondo – to make her case that Medicaid spending in Rhode Island is much higher than the national average – are not accurate, according to sources.

Elizabeth Roberts, the secretary of the R.I. Executive Office of Health and Human Services, has been informed the numbers are inaccurate, according to members of the 27-person working group charged with reinventing Medicaid, who have shared that information with ConvergenceRI.

The questions are: will the alleged inaccurate information be corrected? Will any errors be admitted? Or, will the working group continue to shape new spending policies based upon what may be incorrect assumptions? And, will the issue get raised at the next meeting of the working group, scheduled for Monday, March 16, in Woonsocket?

Slide 5 of the PowerPoint presentation shown on March 2, at the first meeting of the new working group to reinvent Medicaid, made the case that Rhode Island spent significantly more per person on the elderly, some $26,760, compared to what the U.S. did, some $16,162, in FY 2013.

[That claim was repeated in Raimondo's state of the state address on March 12, saying that Rhode Island's Medicaid cost was "60 percent higher than the national average."] 

The conclusion that the Raimondo team apparently wanted us to draw is that Rhode Island is somehow deviant, overspending on Medicaid on the elderly, compared to the rest of the nation.

But the supposed $10,000 gap in spending – much like the supposed missile gap between the U.S. and Russia during the early 1960s – is an illusion. 

Instead, what the Raimondo team did was to take two numbers, calculated by totally different methods, based on different data inputs, and compare them, apples to bananas.

There is no apparent data to support the theory that Rhode Island’s Medicaid spending on the elderly is disproportionate to their needs, that it is disproportionate to Medicaid spending by other neighboring states, or that is wildly out of sync with the national average, according to sources.

And the news media, including everyone that’s reported on the story in print, on TV, on radio and online – has swallowed the accuracy of the data comparisons hook, line and sinker, without ever delving into the actual numbers.

Looking at the actual details
To begin to understand the problem with the way the Raimondo administration has worked the numbers, let’s stipulate to some basic facts.

In 2012, the number of enrollees in the Medicaid aged and disabled categories represented 26 percent of total enrollees, and accounted for 65 percent of spending, according to the CMS Office of the Actuary.

Those numbers are nearly identical to Rhode Island, according to the R.I. Executive Office of Health and Human Services 2012 calculations, which found that 25 percent of enrollees in Medicaid who were aged and disabled accounted for 64 percent of the spending.

Rhode Island’s numbers precisely parallel the national numbers.

Tracking the previous years
Then, let’s look at the numbers for the years 2008, 2009, 2010, and 2011, tracking the Medicaid spending per enrollee in the aged category, using data from a variety of sources.

What emerges is a trend that shows Rhode Island’s Medicaid spending on its elders first moved closer and closer to the national average, then dipped beneath the national average.

•  In 2008, Medicaid per enrollee spending for the aged category was $26,067 in Connecticut, and $21,574 in Rhode Island; while the national average was $17,609, according to the U.S. General Accounting Office.

•  In 2009, Medicaid per enrollee spending for the aged category was $24,761 in Connecticut, $18,228 in Massachusetts, $15,211 in Rhode Island, and the national average was $13,149, according to the Kaiser Family Foundation.

Between 2008 and 2009, Rhode Island’s spending had dropped. When adjusted by the CMS geographic wage index, the spending had dropped to about 8 percent above the national average.

•  In 2010, Medicaid spending per enrollee for elderly and disabled individuals was $20,800 in Connecticut, $17,357 in Massachusetts, $15,747 in Rhode Island, and the national average was $14,946, according to the Pew Charitable Trust.

When adjusted by the CMS geographic wage index, Rhode Island’s spending was lower than the national average; it was also lower than the spending by Massachusetts and Connecticut.

•  In 2011, Medicaid spending per enrolled for the aged category was $30,500 in Connecticut, $27,205 in Massachusetts, $16,999 in Rhode Island, and the national average was $17,552, according to the Kaiser Family Foundation.

Rhode Island’s spending was lower than the national average, and lower than Connecticut and Massachusetts, even before adjusting for the higher cost of labor in New England.

So, the question is: why would the Raimondo administration make the claim that Rhode Island spent some 65 percent more than the national average in 2013 on its per member spending for aged enrollees?

Comparing apples and grapefruits
The flaw in the Raimondo team’s calculation for 2013 Medicaid spending on the elderly appears to be a sleight of hand; it compares spending figures calculated by two different sources, using two different methods, without acknowledging the difference.

The higher number [$26,760] is from R.I. EOHHS; the lower number [$16,162] is a projected estimate from CMS.

There are many reasons why comparing the two numbers may be bad arithmetic:

•  CMS, Kaiser and Pew use Medicaid’s four eligibility categories – aged, disabled, children and adults; R.I. EOHHS uses a different set of categories – elders, adults with disabilities, children and families, and children with special health care needs.

•  There are many different ways to calculate “per enrollee” costs. Is what is known as Disproportionate Share Hospital payments, or DSH, included? And, if DSH payments are included, how are they distributed among eligible group categories?

•  Then there are questions about what factors are included when the calculations are done. Are patient co-pays included in the calculation? Are provider taxes used to offset spending in specific categories?

To be able to accurately compare the two numbers, you need to compare the methodologies used to calculate them, to make the process transparent.

The bottom line is that the numbers on Slide 5 set up a false dichotomy; they have created what’s known in the research biz as a false positive. The bigger question is: why screw around with the numbers?

Asking the right questions
There is a crisis in health care spending, not just Medicaid spending. The high costs are a result of an unsustainable health care delivery system, not the federal insurance program, Medicaid. The high cost of state spending under Medicaid is a symptom, not the root cause.

The Raimondo team’s slideshow targets utilization – as if the burden of Medicaid costs on state spending can be improved by better coordination of care, or by better use of health IT.

The Raimondo team’s slideshow also targets Medicaid spending on the elderly – as if there is something illogical with the fact that more resources are being spent on the oldest, sickest, frailest and poorest Rhode Islanders, as compared to younger, healthier Medicaid members.

No doubt there may be some “savings” that can be achieved.

But any long-term savings and improvement in health outcomes require a fundamental shift in health care priorities – and major changes in how money is invested in the health care delivery system.

To do that, it will require asking some fundamental, uncomfortable questions.

•  Is the amount of the state budget being devoted to Medicaid spending on the elderly a factor of being too generous, or rather, a symptom of a growing disparity in wealth and income? For seniors, the reality of Medicaid paying for nursing home care only kicks in when all of their other resources – their health insurance, their co-pays, their savings, and their homes – have been spent and exhausted. As a result, the health care delivery system functions more as a market, as a wealth extraction system, than a system of health.

•  What is meant by community-based support services? Many proponents argue that keeping elders in their own home, with wrap-around services, is a better care alternative than a long-term nursing facility. But, who will be responsible for coordinating the round-the-clock care required? The family of the patients? How much will it cost, and who will pay for it? Will it create the need for an army of trained nurses and CNAs? How much will they be paid? Will they be state employees? Will they have the right to unionize?

•  How do you evaluate the need for medical intervention? If a 90-year-old is having trouble swallowing, is it a sign that he needs the medical intervention of a feeding tube? Will that medical intervention improve his or her quality of life? Or will it cause additional medical problems? What are the costs of performing such a medical intervention? And, how often does the patient – and the patient’s family – have the gumption to tell the doctor that is recommending the feeding tube: no?

•  What are the metrics and outcomes achieved by Rhody Health Options, the $400-million-a-year investment in contracting with Neighborhood Health Plan of Rhode Island to promote savings in long-term care by nursing facilities?  The only numbers to date, from 2014 reports, show that fewer than 90 people have been moved back into the community. And, those numbers may reflect programs put into place before the implementation of Rhody Health Options. What is the status of the MOU with Medicare, considered a critical part of what’s known as the Integrated Care Initiative?

•  What is the current waiting list to get into an assisted care facility in Rhode Island? A long-term nursing facility? A rehabilitation facility? And, how much does it cost per month? The disparity of wealth and income in Rhode Island is most on display in these numbers. [There are law practices dedicated to preserving assets in trusts to prevent nursing homes from touching them; is there a way to quantify the value of those hidden assets?]

•  How do you promote having a conversation about end-of-life care with patients and their families, as a way to achieve better care outcomes and reduce costs? Only Care New England has put into place a system-wide conversation project. Rhode Island’s relatively low metric on hospice care – the amount of days a patient receives hospice care until his or her death – speaks volumes. How can the conversation project initiative be replicated on a statewide basis, and endorsed as a best practice by Medicaid?

•  How will the social, economic and environmental determinants of health be included in the discussion of systemic change to state Medicaid spending? Will the model of Health Equity Zones being developed in 11 communities in Rhode Island provide a better collaborative model for health in both outcomes and costs?


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