Medicaid Basics

Medicaid, also called HUSKY in Connecticut, covered 1.3 million people in 2022, one in three state residents, with a comprehensive set of covered benefits. Enrollment is expected to drop starting in 2023 as the COVID public health emergency ends. Medicaid eligibility is limited based on income and, for some members, assets. Medicaid is jointly funded by federal and state governments. The state operates the program within wide parameters set at the federal level.

Medicaid costs are stable since the state moved away from private managed care plans in 2012. Connecticut Medicaid spending is rising more slowly than the total state budget or health benefits for state employees. Payment rates to providers in Connecticut Medicaid are above the US average. Administrative costs in Connecticut’s Medicaid program are well below other states and below private insurance plans. Hospitals consume the largest share of Connecticut’s Medicaid spending and are the largest contributor to increasing costs. Per member spending is far higher for seniors and people with disabilities who make up 10% of enrollment but use 38% of spending.

Medicaid Deeper Dive

Who qualifies for CT Medicaid/HUSKY?

Eligibility for Connecticut Medicaid is limited by income. Eligibility income levels are set by each state based on the poverty level set by the federal government. Some Medicaid categories also include an asset limit. Countable assets include cash, stocks, bonds, investments, IRAs, promissory notes, credit union, savings, checking accounts, and real estate in which one does not reside. Monthly eligibility levels and annual levels change each year in March. Connecticut’s Medicaid eligibility levels are relatively generous compared to other states.

How is Medicaid different from Medicare?

Medicare and Medicaid are related programs but with important differences.

What services are covered?

CT Medicaid covers a wide range of healthcare services. Under law, CT Medicaid covers all medically necessary services for children under age 21. In Connecticut, Medicaid members are not charged for any Medicaid services.

• Preventive care
• Doctor visits
• Family planning 
• Maternity care
• Nursing home care
• Home health care
• Hospital stays
• Hospital outpatient care
• Medical devices
• Home Health Care
• Hospice services
• X-rays and lab tests
• Vision care
• Emergency care
• Dental care
• Mental health and substance abuse treatment
• Prescription medications
• Emergency transportation
• Non-emergency transportation to health care appointments

Who runs Medicaid?

Medicaid programs are run by states, within broad federal rules from the federal government. The Centers for Medicare and Medicaid Services (CMS) is the federal agency that governs Medicaid. Each state must designate a single state agency that administers their Medicaid program; in Connecticut, that agency is the Department of Social Services (DSS).

States can apply to CMS to change policies in their programs. State plan amendments cover smaller changes to existing programs such as covering new services or expanding eligibility. State Plan Amendments are allowed to increase costs.

Waivers for exemptions from federal Medicaid rules allow states to make large changes to policies such as imposing work requirements, but they must be cost-neutral and demonstrate effectiveness over time.

What does the program cost?

As in Connecticut’s population overall, Medicaid’s costs for seniors and people with disabilities is higher than for families and childless adults. In the last quarter of 2020, one in ten Medicaid members were seniors and people with disabilities, but their medical costs were 38% of the total. In contrast, children and parents were 57% of members but cost just 29% of the budget. Childless adults were both one in three members and used one third of the resources.

Connecticut’s Medicaid program funding is stable and growing slower than other states since switching from managed care organizations in 2012 to focus on care management. Connecticut Medicaid spending has remained steady while enrollment has expanded significantly, according to the state’s 2023 financial report. However, hospital spending increases could erode that progress in controlling costs.

Per member spending in Connecticut’s Medicaid program dropped significantly in 2013, 2014 and 2015, after switching from managed care to patient-centered medical homes. Since then, per member spending has slowly increased. However, at $8,405 Connecticut Medicaid per member costs have kept in step with other states. According to the federal Centers for Medicare and Medicaid Services, in 2019 Connecticut ranked 27^th highest in per member costs, just below the US median, down from 19^th the year before. When COVID hit, healthcare spending dropped, as it did across the US. Per member spending increased in 2022, but was still below pre-COVID levels.

Connecticut Medicaid is very efficient. Administrative burden in the program is 3-fold lower than for other state Medicaid programs and 4-fold lower than Connecticut commercial insurance plans. This is likely because, unlike other states, Connecticut Medicaid no longer uses private, for-profit insurers to run our program.

Where does Medicaid’s money go?

In 2022, Connecticut’s Medicaid program cost $7.9 billion. The state’s share of those costs was $2.5 billion or 32%; the federal government paid most of the costs at $5.3 billion or 68%. Between 2012 and 2022, the largest share of Medicaid spending and the largest contributor to increases was for hospital services, both inpatient and outpatient care. Hospital care reached 31% of total spending by 2022.

Medicaid is not the driver of rising state spending. Connecticut Medicaid costs have grown less quickly than state employee/retiree health benefit spending or the total General Fund.

The federal share of Connecticut Medicaid spending rose to 68% last year, up from 55% in 2014. Variations were due to the stepped reduction in the expansion population match rate under the Affordable Care Act and the COVID match increase in 2020.

Our state consistently spends less of our state budget on Medicaid than other states. Last year, Medicaid comprised 24% of Connecticut’s state budget compared to the 28% average for all states.

COVID has had a substantial impact on Medicaid and the rest of Connecticut’s health system. However, by the end of 2020, Medicaid spending was returning to pre-pandemic levels across sectors.

How is Connecticut’s Medicaid program structured?

Connecticut’s HUSKY program is in four parts for administrative purposes. Parts A, C, and D are under Medicaid and are entitlement programs. This means if someone qualifies for the program, the state must provide coverage. Eligibility for the Parts depends on income and age

HUSKY Part A includes pregnant women, children and their parents or caregivers.

Part C covers seniors and people with disabilities. Income eligibility varies based on where members live and includes an asset limit as well.

Part D covers childless adults. Part D was added to program in 2014 when CT chose to exercise our state option to expand Medicaid under the ACA.

HUSKY Part B is Connecticut’s Children’s Health Insurance Program (CHIP). Unlike Medicaid, federal funds for CHIP programs like HUSKY B are limited. If costs go over the federal limit, states must pay the full costs of coverage for recipients. Since 1997 when CHIP passed into law, Connecticut has never exceeded our federal funds limit. Also, unlike Medicaid, HUSKY Part B families must pay part of the costs of medical services, and some pay monthly premiums.

Who is covered by Connecticut’s Medicaid program?

Connecticut Medicaid covered 1,311,738 people in 2022, one in three state residents. Enrollment grew substantially when the state expanded Medicaid under the Affordable Care Act, and again during the COVID pandemic. During the pandemic many people qualified when they lost their jobs and their incomes dropped. In addition, the federal government increased Medicaid funding levels to states with the condition that states not remove anyone from the program during the pandemic. As the pandemic wanes, the Department of Social Services is reassessing Medicaid recipients’ eligibility in 2023 and the numbers are expected to decline.

There are slightly more females in CT Medicaid than males (53%, 47%). Adults under age 65 make up almost two in three Medicaid members (61%), while children are one in three (33%) and seniors are a much smaller proportion (6%).

While most Medicaid members are white, Connecticut Black and Hispanic residents are more likely to be covered in the program.

How much does CT Medicaid pay healthcare providers?

Connecticut Medicaid pays providers a fee for each service they provide. Providers can also earn more for providing patient-centered care coordination as a certified patient-centered medical home and for meeting quality benchmarks. Some providers can qualify for more payments under the PCMH Plus program.

On average, Connecticut’s Medicaid program pays providers 76% of Medicare rates for services. While this is lower than Medicare rates for the same services, it is above the US average at 72%. Medicare rates are often used to compare provider payment rates as they are set by CMS actuaries to cover reasonable costs for high-quality care adjusted for patient clinical severity, geographic differences, and other factors.

A provision of the Affordable Care Act temporarily increased primary care physician payment rates to equal Medicare. There is some evidence nationally that the fee bump increased access to care for members, and more providers accepting Medicaid patients. Connecticut was one of a few states that continued that rate increase, in full or in part, after federal funding ended.

Community health centers are paid differently than other providers and, generally, at substantially higher rates for the same services.

Ending managed care and implementing PCMHs

In response to extreme cost increases and poor quality performance, under a new administration, in 2012 Connecticut Medicaid ended their contracts with private managed care organizations that were paid a flat rate per member to provide care. The program moved to self-insurance by the state, where the state pays providers directly for services provided. The program is operated through an Administrative Services Organization, Community Health Network of Connecticut, with a focus on care coordination.

Simultaneously, the state began paying certified patient-centered medical home (PCMH) practices higher rates to coordinate care. PCMHs provide extended hours, coordinate care for patients, make appointments with specialists, follow up after ED and hospital admissions. PCMHs enable teams of providers to provide comprehensive care to patients and offer extra services as needed such as nutrition and behavioral healthcare. To receive the extra payments, PCMHs must be certified by an independent, national certification body using evidence-based standards. PCMHs track the health of their entire population of patients, anticipating and meeting their needs – medical and social. PCMHs have a well-documented record of improving access to high quality care, improving both patient and provider satisfaction, preventing health problems, and reducing overall healthcare costs. HUSKY’s PCMH program has continued to expand and improve care for patients over the last decade.

Since moving away from managed care organizations to care coordination, the state has saved billions of tax dollars while the quality of care, access, delivery of preventive care, and patient satisfaction have improved.

PCMH Plus

In 2017 DSS implemented PCMH Plus, using shared savings, a new payment model for Medicaid. Under shared savings, if health systems (ACOs) are able to lower the cost of their members’ care, they receive a bonus equal to half of those savings. PCMH Plus was also designed to reward quality improvement, even if it’s not accompanied by savings. DSS intended the program to “to improve HUSKY member’s overall health and assists with access to services like access to healthy food, transportation to appointments and assistance in finding community agencies that support housing or employment.” Advocates were concerned that the shared savings payment model creates incentives to deny appropriate care (underservice) and to shift less lucrative, difficult members out of the program (cherry picking), as has happened in other states and with managed care organizations in Connecticut’s past under similar incentives.

PCMH Plus’s first year report provides little evidence that the program had any impact on quality improvement or savings despite at least $1.3 million in net costs to the state. Every ACO, regardless of savings or quality performance, was rewarded with a payment. There does not appear to be a link between payments to ACOs and quality; the highest and lowest quality performing ACOs received the same size payment per member-months. Concerns were also raised that risk scores increased over the first year of the program compared to the control group. This suggests that either health systems gamed the system to collect larger shared savings payments and/or that the health status of members declined under the program.

Concerns were also raised that member notices alerting recipients that their providers would now benefit financially in reducing the costs of the care they received and their right to opt-out of the program were changed to remove all references to the changes in provider incentives.

How does care work for people on both Medicare and Medicaid?

In 2020, just over one in four (203,280) Connecticut Medicare enrollees had household incomes that also qualified for Medicaid, termed Medicare-Medicaid enrollees or dual eligibles. Connecticut’s rate at 28% of total Medicare enrollment was higher than the US rate of 19%.

 Medicaid pays some or all of the Medicare premiums and cost sharing for dually eligible members, depending on income. For lower income members, Connecticut  covers all Medicaid services including dental, vision, home and community-based services, mental health, and prescription drugs. Total costs of care are considerably higher for dual eligibles than for other enrollees. In 2019, Medicare spent $59.2 billion on dually eligible enrollees’ care while state Medicaid programs spent $63.0 billion. Higher costs are driven by long-term services and supports spending. In 2019 total per member costs for dually eligible Americans was 3.8-fold higher for those needing institutional long-term care.

Trends

• As the COVID pandemic has ended, Medicaid enrollment will begin to decline because DSS will reassess eligibility.
• As Connecticut is unique nationally in not using costly managed care organizations to run Medicaid, it is likely that our administrative costs will remain very low.
• Connecticut needs to stabilize physician and clinic spending which has grown far faster than membership.
• DSS is now exploring moving beyond PCMH Plus and changing the way primary care is paid for in Medicaid.

Updated November 1, 2023