How Much Money Is Spent On Medicaid

This week, our In Focus department reviews preliminary 2020 Medicaid spending data collected in the annual CMS-64 Medicaid expenditure report. Later submitting a Freedom of Information Human activity request to the Centers for Medicare & Medicaid Services (CMS), HMA received a draft version of the CMS-64 report that is based on preliminary estimates of Medicaid spending by state for federal fiscal year (FFY) 2020. Based on the preliminary estimates, Medicaid expenditures on medical services across all 50 states and six territories in FFY 2020 exceeded $649.4 billion, with over half of the full at present flowing through Medicaid managed care programs. In addition, total Medicaid spending on administrative services was $29.seven billion, bringing total program expenditures to $679.one billion.

Full Medicaid Managed Intendance Spending

Full Medicaid managed care spending (including the federal and state share) in FFY 2020 across all 50 states and six territories was $359.six billion, upward from $313.5 billion in FFY 2019. This effigy includes spending on comprehensive risk-based managed care programs as well as prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs refer to prepaid wellness plans that provide only certain services, such equally dental services or behavioral health intendance. Fee-based programs such as primary care case management (PCCM) models are not counted in this total. Below we highlight some key observations:

Total Medicaid managed care spending grew xiv.vii percent in FFY 2020. Previously, the charge per unit of growth was decelerating in each of the previous four years.
Managed care spending growth was is due in big part to the COVID-nineteen pandemic and the resulting higher Medicaid enrollment.
In terms of dollars, the increase from FFY 2019 to FFY 2020 was $46.1 billion compared to $6.eight billion from FFY 2018 to FFY 2019.
Medicaid managed intendance spending has increased at a rate of 14.seven percent compounded almanac growth charge per unit (CAGR) since FFY 2007, compared to a five.8 percent growth in full Medicaid spending.
Compared to FFY 2019, Medicaid managed intendance spending every bit a percentage of full Medicaid spending in FFY 2020 increased by 2.6 percentage points to 55.4 percent.

The data likewise shows how the state and federal share of Medicaid expenditures has changed over time, in part because states have picked upwardly a larger share of the cost of Medicaid expansion.

Every bit the table beneath indicates, 67.vi pct of FFY 2020 spending came from federal sources, which is ten.2 percentage points college than the pre-Medicaid expansion share in FFY 2013, and 3.0 percentage points college than FFY 2019.

State-specific Growth Trends

Forty-seven states and territories report managed intendance organization (MCO) spending on the CMS-64 study, including four states (Alabama, Alaska, North Carolina, and Oklahoma) that employ a PIHP/PAHP model exclusively. North Carolina and Oklahoma will be implementing a Medicaid managed care program in 2021. Of the remaining 43 states and territories that contract with gamble-based MCOs, boilerplate MCO spending in FFY 2020 increased fourteen.7 percent. On a percentage basis, Idaho experienced the highest significant year-over-year growth in Medicaid managed care spending at 75.ii percent, although the state's total spending is even so simply $515 million. Among states with more mature programs, New Hampshire experienced the fastest growth in FFY 2020 at 31.5 percent, which could be due in part to the Medicaid expansion population transition from the Exchange to the Medicaid managed care programme, followed by Washington at 30.6 percent, likely impacted by the land'due south cleave-in of behavioral health services in new regions in 2020. Additionally, all states were heavily impacted past COVID-xix.

The chart below provides additional detail on Medicaid managed care spending growth in states with risk-based managed care programs in FFY 2020. Simply three states reported year-over-yr declines in Medicaid managed care spending, compared to xviii states in FFY 2019 and 17 in FFY 2018.

Looking at year-over-year spending growth in dollar terms, New York experienced the largest increase in Medicaid managed care spending at $8 billion. Other states with pregnant year-over-yr spending increases in dollar terms included Pennsylvania ($6 billion), California ($two.9 billion) and Washington ($2.7 billion). The chart below illustrates the year over yr alter in spending across the 43 states with increases.

The pct of Medicaid expenditures directed through hazard-based Medicaid MCOs increased by more five percentage points in viii states from FFY 2019 to FFY 2020. The managed intendance spending penetration charge per unit rose 17.three percent points in Washington, eleven.vii percentage points in Pennsylvania, and 11.5 percentage points in Louisiana.

The tabular array beneath ranks the states and territories past the percentage of full Medicaid spending through Medicaid MCOs. Iowa reported the highest percentage at 96.seven percent, followed by Hawaii at 95.2 percent and Kansas at 93.6 percentage.

We note that in many states, there are certain payment mechanisms which may never exist directed through managed care such as supplemental funding sources for institutional providers and spending on retroactively eligible beneficiaries. Every bit a outcome, the maximum achievable penetration rate in each state will vary and may be below that achieved in other states. The Medicaid managed care spending penetration rate is greatly influenced by the degree to which states have implemented managed long-term services and supports (MLTSS) programs.

Non-MCO Expenditures

Despite the rapid growth in Medicaid managed care over the terminal ten years, program spending however represented simply over half of total Medicaid expenditures in FFY 2020. So where is the remaining fee-for-service (FFS) spending (approximately $290 billion) going? Get-go, as noted above, there are many states/territories with Medicaid managed intendance programs where certain beneficiaries or services are carved-out of the program, and these are typically associated with high-cost populations. The full amount of non-MCO spending in the 43 states with risk-based managed care in FFY 2020 was $248.half-dozen billion. Assuming an boilerplate "full penetration" of 85 percentage of total Medicaid spending, then HMA estimates that an additional $211.3 billion in current FFS spending could shift to a managed intendance model just in the states that already utilise managed care for a subset of services and/or beneficiaries.

Xv states/territories did non employ a comprehensive run a risk-based managed care model in FFY 2020. In general, the 15 states/territories that do not apply managed care today are smaller states, North Carolina being the largest at $14.8 billion of Medicaid spending in FFY 2020. Total Medicaid spending across all fifteen non-managed care states/territories was $47.5 billion. The 15 states/territories that did not use a hazard-based comprehensive Medicaid managed care model in FFY 2020 were Alabama, Alaska, American Samoa, Connecticut, Idaho, Guam, Maine, Montana, Northern Mariana Islands, North Carolina, Oklahoma, Southward Dakota, Vermont, Virgin Islands and Wyoming.

In terms of spending by service line, the largest remaining FFS category is abode and community-based services at $68.6 billion, which accounts for 23.seven pct of FFS spending. Inpatient hospital services stand for 22.6 pct of FFS spending at $65.5 billion.

While the CMS-64 report provides valuable detail past service line for all FFS expenditures, it does not capture how spending directed to Medicaid MCOs is allocated by category of service. Therefore, information technology is not possible to calculate full MCO spending by service line, a challenge that will only intensify every bit more than spending runs through MCOs.