1. Wisconsin’s Experience in
Slowing Cost Growth In
Medicaid
Medicaid Managed Care Conference
Curtis Cunningham, Deputy Director
Bureau of Fiscal Management
Wisconsin Department of Health Services
September 28, 2010

2. Agenda
Impetus for Rate Reform
Rate Reform Approach
Rate Reform Process
Highlights from Rate Reform Version 1.0
Rate Reform Version 2.0 and Beyond
Lessons Learned
Wisconsin Department of Health Services 2

3. Rate Reform Overview
The Medicaid program was required to find $625 million (all funds) in savings
(2009 Act 28) as a result of the 2009-11 State Budget Deficit.
Rather than achieving these savings by doing across-the-board cuts, DHS
decided to take the opportunity to find real reform opportunities in the Medicaid
program.
DHS’s Rate Reform approach includes:
A comprehensive examination of how MA purchases specific health care services
Identification of areas where true reform can be achieved in Medicaid and the program
can achieve savings
Goal – to utilize the creativity of stakeholders to help identify ways to make Medicaid
more efficient without harming the program. We invited all the provider and advocate
groups to participate. Everyone had a seat at the table.
Wisconsin’s Rate Reform Project is Now
Our Process for Continuous Quality
Improvement and Program Reform.
3Wisconsin Department of Health Services

4. What Wisconsin could do to meet the
legislative mandate to reduce Medicaid
spending by $600 million AF
Across-the-board rate cuts of approximately 5.5% over
the biennium; 19% if applied only to non-institutional
services
Sweeping reductions in benefits and services. Samples
of submitted ideas included:
Eliminating oral health coverage for BC+ Benchmark plan
Expanding use of provider assessments
Ending the expansion of Family Care
Eliminating SeniorCare
Dramatically increasing co-payments for expansion populations
4Wisconsin Department of Health Services

5. ARRA Restrictions
Mandatory covered service requirements
Governor’s Priorities
Guiding Principles
Context of Rate Reform:
5Wisconsin Department of Health Services

6. The American Reinvestment & Recovery
Act (ARRA) prohibits the imposition of
stricter eligibility standards.
Wisconsin risks losing $1.2 billion in federal
funding.
ARRA funding is up for a 6-month continuation;
however, this funding comes with no guarantees
and eventually will end.
ARRA Restrictions
6Wisconsin Department of Health Services

7. The Federal Government requires that states cover:
Inpatient hospital services (other than IMD services)
Outpatient care and ambulatory services of RHCs and FQHCs
Laboratory and X-ray services
Nursing facility services (other than an IMD) for individuals 21 or
older
Early and periodic screening, diagnosis and treatment (EPSDT) for
individuals who are eligible under the plan and are under age 21
Family planning services and supplies
Physicians' services and the medical services of dentists
Pregnancy-related services, including treatment of conditions
which may complicate the pregnancy or threaten the safe delivery
of the fetus, until 60 days after delivery
Nurse midwife and nurse practitioner services in states where they
are licensed
Medicare cost-sharing for dual-eligible beneficiaries
Mandatory Services
7Wisconsin Department of Health Services

8. Wisconsin should continue to be a national leader in
access to basic, affordable health care coverage
We need to build on our achievements in providing
healthcare coverage
Budget savings will not be accomplished through stricter
eligibility standards or reductions in benefits
The state will have to trim back reimbursement rates for
services such as medical care
Governor’s Priorities
8Wisconsin Department of Health Services

9. Identify savings to reach targeted reduction levels
Look for both short-term solutions and long-term
systemic changes
Ensure that no one provider group is singled out for rate
reductions
Ensure access to care for MA patients
Align payments with value rather than volume
Build on previous MA quality improvement efforts
including managed care P4P initiative
Implement care management/coordination strategies
Focus on high-intensity services
Cost containment now about “continuous improvement”
Guiding Principals
9Wisconsin Department of Health Services

10. Very public process.
200 stakeholders participating in multiple meetings.
On-line survey tool.
Process generated over 500 ideas.
Rate Reform Version 1.0 was completed June 2009.
State is now implementing the plan.
Process was well received.
Key was everyone was at the table and understood that
something had to be done. Status quo was not an option.
So well in fact that we hope to continue into the future.
This is the way we should do business!
Framework for Project
10Wisconsin Department of Health Services

11. All-Provider Kick-Off Call (3/23/09)
Round 1 Advisory Group Meetings (4/2/09-4/17/09)
Over 200 advisory group participants
Web survey to 30,000 portal users
Generated over 500 ideas
Highest volume of ideas for Pharmacy, LTC & PA-related
changes
Package Development (4/20/09-7/1/10)
Balanced approach across all providers
State Budget Impact Need: SFY10-11 savings; target has grown
Round 2 Advisory Group Meetings (7/15/10-7/22/10)
Implement Recommendations (begin 8/1/10)
Rate Reform Project Overview
11Wisconsin Department of Health Services

12. Ideas analyzed and
prioritized based on:
Short & long term impact
Current spend & potential
savings
Benefit considerations
Policy impacts
Regulatory parameters
Contract changes
Reviewed and triaged
each idea internally
Developed list of short-
term savings ideas for
2009-11 biennium
Template completed
for each idea
Idea Analysis and Development
12Wisconsin Department of Health Services

13. Original Target (March 2009): Governor’s SFY 10-11 Budget
$140 million GPR $415 million AF
-------------------------------------------------------------------------------
Revised Target (May 2009): Joint Finance Committee
$191 million GPR $581 million AF
------------------------------------------------------------------------------
Final Target (June 2009): Conference Committee
$205 million GPR $625 million AF
-------------------------------------------------------------------------------
Separate Savings Items:
Hospital assessment
$300 million GPR (over three fiscal years)
Increase in hospital assessment
$93 million GPR (over three fiscal years)
New ambulatory surgical center assessment
$21 million GPR (2009-11 biennium)
Increase in nursing home assessment
$23 million GPR (2009-11 biennium)
Savings Target
13Wisconsin Department of Health Services

14. SE Wisconsin Managed Care RFP – New focus on quality.
Reimburse Physicians based on cost effectiveness.
Create an incentive for nursing homes to avoid preventable adverse
health conditions (e.g. pressure ulcers) or other alternative.
100 Day Supply requirement for specified maintenance drugs/early
refill limits.
Reimburse C-Sections at Same Rate As Vaginal Deliveries, Unless
C-Section is Medically Necessary.
Care Management contract for high cost Fee-For-Service members.
More aggressive approach to MAC pricing/Balanced with additional
payments for enhanced pharmaceutical care.
Reform the way Critical Access Hospitals are paid.
Adopt APC approach for outpatient payments.
Highlights of Specific Proposals
14Wisconsin Department of Health Services

15. On track to save $633 million (all funds) as
required by the 2009-11 state budget.
Initially explored 72 items, though some have
been eliminated or consolidated.
32 of the remaining 56 ideas have been
implemented to date.
These 32 ideas are projected to save $277.8
million (all funds) over the biennium.
Rate Reform Version 1.0 has
been a success!
15Wisconsin Department of Health Services

16. However, Medicaid program grows during
difficult economic times.
Demand for Medicaid services exceeds current funding.
Continually looking for more efficiencies and
enhancements to the program.
Result = Wisconsin Medicaid Rate Reform 2.0.
Continuous Quality Improvement
& Rate Reform
16Wisconsin Department of Health Services

17. RATE REFORM VERSION 2.0
DRAFT PACKAGE

18. Rate Reform 2.0
Package Summary
Rate Reform 2.0 is much smaller than version 1.0
We did not hit our target of $100M GPR
Total Preliminary Savings Estimate:
$39,779,668 (AF)
Focus is on:
Program Improvement
Medicare Alignment
Focus is not on:
Items needing legislation changes
Total Number of Recommended Ideas: 36
18Wisconsin Department of Health Services

19. Jan
.
Ongoing
Jul.Jun
.
MayApr
.
Mar.Feb.
1/26
Kick-Off
Meeting
2/19 – 3/9
Meetings with
4 Stakeholder
Groups
Brief the
Secretary’s
Office
Implementations
Begin*
7/1
Final
Package
Modify
Package
Brief the
Legislature
DRAFT Final
Package to
Stakeholders
at Meeting
Brief the
Governor’s
Office
*Note: Some initiatives require State Plan language changes. Implementation
start dates will be impacted by these changes.
Rate Reform 2.0 Timeline
19Wisconsin Department of Health Services

20. Description
Projected Biennial
Savings*
Recoup double payments for Medicare cross-overs $858,000
Reduce paper mailings $55,000
Allow WIC Agencies to become Medicaid certified to do blood lead
testing
$0
Reform policy for enteral nutrition $200,000
Expand never events beyond Medicare requirements to all ,
Children's hospitals, and Critical Access Hospitals
$0
Rev Max: review income maintenance and child care programs in
Milwaukee county
$4,825,000
Avoid Medicaid payment for rental equipment in nursing homes that
is eligible for Medicare reimbursement
$497,407
APCs for Hospitals (Start collecting 7/10, start paying based on
APCs 1/11 or 7/11)
$0
*All Funds
Rate Reform 2.0 DRAFT Package
20Wisconsin Department of Health Services

21. Description
Projected Biennial
Savings*
PA for atypical antipsychotics prescribed by PCPs for children TBD
PA for growth hormone prescribed for children $200,000
Medicare/Medicaid analysis for radiology $4,200,000
Implement 3rd Party Identification and recovery processes to
maximize the recovery of funds from liable parties, including
casualty and subrogation cases.
$1,450,000
Use HMS's national eligibility database to ID commercial insurance
coverage upon application
TBD
Use Pharmacy and Rx Claim Audits to systematically audit client
retail pharmacy providers.
$5,000,000
Contain Costs through Clinical Editing (Bloodhound) TBD
Enhanced Medicare Reimbursement at State Mental Health
Institutes
TBD
Educate pharmacists and doctors on OTC coverage policy TBD
Rate Reform 2.0 DRAFT Package
21
*All Funds
Wisconsin Department of Health Services

22. Description
Projected Biennial
Savings*
Improve data-sharing for children in foster care $370,000
Develop a Health Care Fraud Prevention and Enforcement Action
Team (HEAT) for Home Health Services
TBD
Paper Claims Payment Reduction $700,000
Enroll Part B entitled into Medicare
$12,000,000
Examine whether state should do HMO subrogation or adjust HMO
rates (no COB or TPL)
TBD
Establish uniform residential rate-setting methodology in Family
Care
TBD
Maximize capture of Medicare, third party reimbursement and
casualty claims in Family Care
TBD
Review time studies that impact claiming to various DHS programs,
including FoodShare
TBD
Contract with UW for specialty pharmacy TBD
Rate Reform 2.0 DRAFT Package
22
*All Funds
Wisconsin Department of Health Services

23. Description
Projected Biennial
Savings*
Lab Fee settlements for HMOs TBD
Enhance DHCAA's current data exchanges with DWD and DOR for
state wage data and unemployment compensation data.
TBD
Modify Enrollment and Benefit booklets sent to Nursing Home
residents to use less paper
TBD
Investigate utilizing certain recycled/used DME (e.g., wheelchairs) TBD
Implement improved drug utilization controls $5,000,000
Increase dispensing fee to pharmacists for increasing generic fill
rates
$1,000,000
Use a group number to distinguish benefit plans $0
Claim portion of case management cost in Partnership program for
Medicare reimbursement (note: long term goal)
$2,000,000
Raise criteria for eligibility for bedhold payment $1,424,261
Rate Reform 2.0 DRAFT Package
23
*All Funds
Wisconsin Department of Health Services

24. Description
Projected Biennial
Savings*
Contract with Medicare Advantage Organizations for services to
dual eligible enrollees (SNPs)
TBD
National Health Care Reform: Require physicians to see patients in
person in order to receive Home Care services
TBD
National Health Care Reform: Allow children in hospice to continue
to receive treatment
TBD
National Health Care Reform: FFS members to have Primary Care
Provider under a Medical Home
$8,959,064
Rate Reform 2.0 DRAFT Package
24
*All Funds
Wisconsin Department of Health Services

25. Thanks to BadgerCare Plus, Wisconsin leads the nation
in health care access.
Budgets are about values and priorities. Governor Jim
Doyle has made health care access a priority during
good and challenging budget times.
Managing the budget effectively must include engaging
stakeholders and thinking creatively.
Legislative changes are difficult to accomplish
Fewer focus groups are easier to manage
Be aware of systems and staff limitations
In open process - be prepared for anything
Lessons Learned
25Wisconsin Department of Health Services

26. QUESTIONS?
curtis.cunningham@wisconsin.gov
(608) 250-5833
http://www.dhs.wisconsin.gov/medicaid/ratereform/
26Wisconsin Department of Health Services