Title of Regulation: 12VAC30-60. Standards Established and Methods Used to Assure High Quality Care (adding 12VAC30-60-500).

Statutory Authority: §§32.1-324 and 32.1-325 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comments: Public comments may be submitted until November 14, 2008.

Agency Contact: Meredith Lee, Health Care Services Division, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone (804) 786-5040, FAX (804) 786-1680, or email meredith.lee@dmas.virginia.gov.

Basis: Section 32.1-325 of the Code of Virginia grants to the Board of Medical Assistance Services the authority to administer and amend the Plan for Medical Assistance. Section 32.1-324 of the Code of Virginia authorizes the director of DMAS to administer and amend the Plan for Medical Assistance according to the board's requirements. The Medicaid authority as established by §1902 (a) of the Social Security Act (42 USC §1396a) provides governing authority for payments for services.

This action was also mandated by the 2006 Appropriation Act, Items 302 CC and GG. In Chapter 847 of the 2007 Acts of Assembly, Item 302 FFF required DMAS to add chronic obstructive pulmonary disease (COPD) to the conditions already covered under the DMAS Disease Management program.

Purpose: The Commonwealth of Virginia seeks to offer a voluntary alternative benefits package that combines traditional Medicaid services with new, comprehensive disease management (DM) services. This initiative will be established under authority granted by the Deficit Reduction Act of 2005, P.L. 109-171, State Flexibility in Benefits Packages. This option provides states with the opportunity to offer an alternative benefits package to beneficiaries without regard to comparability (42 CFR 440.240) and certain other traditional Medicaid requirements.

The DM program offered through the alternative benefits package is called Healthy Returns^SM. Healthy Returns^SM targets chronic care conditions in both children and adults. It provides DM services statewide to Medicaid clients eligible for Title XIX Medicaid fee-for-service. The program provides services on an "opt-in" basis so individuals eligible for the program must proactively enroll to receive DM services. The goal of this program is to improve a patient’s ability to manage his condition(s) and thereby improve his health and quality of life.

Substance: The section of the State Plan for Medical Assistance that is affected by this action is Attachment 3.1-C; Standards Established and Methods used to Assure High Quality Care: Alternate Benefits for Disease Management (12VAC30-60).

The alternative benefits disease management program is described in a new regulatory section, 12VAC30-60-500. The alternative benefits package that includes Healthy Returns^SM DM services will be offered to all Medicaid and Medicaid expansion enrollees who meet the criteria for Healthy Returns^SM with the exception of:

1. Individuals enrolled in managed care organizations (managed care organizations already provide these same DM services to their beneficiaries);

2. Individuals enrolled in Medicare and Medicaid (dual eligibles);

3. Individuals who live in institutional settings (such as nursing homes); and

4. Individuals who have third-party insurance.

The Virginia program will also include individuals who receive home- and community-based 1915(c) waiver services. Virginia currently has seven home- and community-based services waiver programs.

Virginia’s chronic condition alternative benefits program is designed to meet the following objectives:

1. Identification, evaluation, and management of disease state(s) specified in the contract;

2. Adherence to national evidence-based disease management practice guidelines in order to improve participants’ health status;

3. Integration of preventive care into the clinical management tool;

4. Overall reduction of acute medical expenditures, on average, for the population of participants served;

5. Reduction in hospital admissions and nonemergent emergency department use;

6. Coordination and reduction of inappropriate medication;

7. Increased participant and provider education and participant self-management skills;

8. Measured indication of participant and provider satisfaction with program;

9. Coordination of participant care including establishment of coordination between providers, the participant, and the community; and

10. Regular reporting of clinical outcome measures, profiles of participants and providers, and Medicaid health care expenditures of participants.

Previous emergency regulations provided that any qualifying individual in fee-for-service who was determined to have asthma and diabetes could participate in this program and also provided that qualifying individuals 21 years and older having coronary artery disease (CAD), congestive heart failure (CHF), and chronic obstructive pulmonary disease (COPD) were eligible for the Healthy Returns^SM program. In this proposed regulation, the language "for individuals age 21 and over" has been changed to read "for individuals age 18 and over" to modify the provisions that any fee-for-service individual 18 years or older having CAD, CHF, or COPD may elect to participate in this program.

Healthy Returns^SM may cover, but will not be limited to covering, the following conditions:

1. Asthma (all qualifying fee-for-service individuals);

2. Chronic obstructive pulmonary disease (individuals 18 years old and over)--The emergency regulations stated that all qualifying individuals in fee-for-service who have COPD and are aged 21 years or older, are eligible for the Healthy Returns^SM program. In this proposed regulation, for COPD, the language has been changed to "individuals age 18 and over" are eligible for the Healthy Returns^SM program;

3. Congestive heart failure (CHF) (individuals 18 years old and over)--The emergency regulations stated that all qualifying individuals in fee-for-service who have CHF and are aged 21 years or older, are eligible for the Healthy Returns^SM program. In this proposed regulation package, for CHF, the language has been changed to “individuals age 18 and over” are eligible for the Healthy Returns^SM program;

4. Coronary artery disease (CAD) (individuals 18 years old and over)--The emergency regulations stated that all qualifying individuals in fee-for-service who have CAD and are aged 21 years or older, are eligible for the Healthy Returns^SM program. In this proposed regulation, for CAD, the language has been changed to “individuals age 18 and over” are eligible for the Healthy Returns^SM program;

5. Diabetes (all qualifying fee-for-service individuals).

The Family Access to Medical Insurance Security (FAMIS) enrollees are shown as being excluded (12VAC 30-60-500(B)(2)(e)) in this additional benefit because they already receive this benefit under Title XXI (see 12 VAC 30-141-200).

Various technical edits and corrections have been made in this proposed stage over the previous emergency regulatory action to conform this new Virginia Administrative Code (VAC) section to the Registrar’s style and format requirements.

Issues: Increased preventive care and patient education increases participants’ ability to effectively manage chronic conditions and ultimately decrease the number of hospitalizations and inappropriate emergency room use. The goal of Healthy Returns^SM is to improve the health and quality of life for program participants. Participants with asthma, COPD, CHF, CAD, and diabetes stand to greatly benefit from the support, education, and interventions provided through disease management.

Since this is strictly an opt-in benefit, the regulatory action poses no disadvantages to the public or the Commonwealth.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to the legislative mandates¹, the Department of Medical Assistance Services proposes to establish a voluntary disease management program for Medicaid adult and children fee-for-service recipients with chronic care conditions. The proposed regulations have temporarily been in effect since January 2006 under emergency regulations.

Result of Analysis. There is insufficient data to accurately compare the magnitude of the benefits versus the costs.

Estimated Economic Impact. Pursuant to the legislative mandates¹, the Department of Medical Assistance Services (DMAS) proposes to establish a disease management (DM) program for Medicaid fee-for-service recipients with chronic care conditions. The proposed permanent DM program covers all adult and children enrolled in the Medicaid fee-for-service delivery model who have asthma or diabetes and individuals 18 years and older² who have coronary artery disease, congestive heart failure, and chronic obstructive pulmonary disease. The participation in the program is voluntary. The proposed DM program has been known in practice as Healthy Returns^SM program.

The purpose of a DM program is to improve the health status of the recipients with chronic diseases while reducing treatment costs. A DM program may improve health status by establishing a coordinated system of intervention and information sharing, encouraging healthcare providers to use proven practice guidelines, educating patients about their condition and how to avoid complications, and monitoring patient outcomes.³ Healthy Returns^SM program specifically focuses on preventive care, promotion of self-management, and appropriate use of medical services.⁴ According to DMAS, approximately 14,488 recipients were actively enrolled in the program as of November 2007.

Currently, Medicaid recipients enrolled in managed care organizations have access to DM programs through their managed care organizations. The proposed regulations make access to DM programs available for fee-for-service recipients.

The main expected benefits of the program are improving the status and the quality of health outcomes and preventing more expensive and serious medical services such as inpatient admissions and emergency visits. Based on the preliminary evaluation of one-year results, DMAS finds the program generally successful in improving health outcomes, but acknowledges improvement is needed in some areas.4 While reducing health care costs is also an important goal of the program, there is no available data to measure the amount of savings the program may have produced.

On the other hand, providing DM services to about 15,000 recipients requires significant resources. DMAS provides DM services through a contractor. The contractor received $2.3 million in Fiscal Year (FY) 2007 for DM services provided and the projected payments for the FY 2008 are $4.2 million.

Businesses and Entities Affected. The proposed DM program will directly affect one DM contractor and the participating enrollees. As of November 2007, approximately 14,488 recipients were voluntarily enrolled in the program. The program may also have indirect effects on certain health care providers. As discussed above, DM programs increase utilization of preventative care in order to reduce inpatient admissions and emergency room visits.

Localities Particularly Affected. The proposed regulations apply throughout the Commonwealth. However, localities where managed care is not available are expected to be affected more than others.

Projected Impact on Employment. The effect of proposed DM program on employment is ambiguous. On one hand the demand for labor is expected to increase due to administration of the program and preventative health care services. On the other hand, demand for labor is expected to decrease due to likely reduction in inpatient admissions and emergency room visits. The net effect on labor demand is uncertain.

Effects on the Use and Value of Private Property. The proposed regulations are expected to increase the asset value of the contractor due to increased revenues and the asset value of premeditative health care service provider while the asset value of inpatient and emergency services are expected to decrease.

Small Businesses: Costs and Other Effects. The proposed regulations do not have a direct effect on any small businesses. However, if some of the Medicaid inpatient and emergency services providers are small businesses, there may be a reduction in their revenues.

Small Businesses: Alternative Method that Minimizes Adverse Impact. In order to implement a DM program, a reduction in the use of inpatient and emergency services appear to be unavoidable.

Real Estate Development Costs. There are no anticipated effects of the real estate development costs.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB’s best estimate of these economic impacts.

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¹ 2006 Appropriation Act, Items 302 CC and GG and the 2007 Acts of Assembly, Chapter 847, Item 302 FFF.

² The emergency regulations covers individuals 21 years and older who have coronary artery disease, congestive heart failure, and chronic obstructive pulmonary disease.

³ Rural Medicaid Disease Management: Afterthought or Strategic Aim? Report of a National Study, The Council of State Governments and Julia F. Costich, J.D., Ph.D., August 2007.

⁴ Virginia Medicaid Healthy Returns^SM Disease Management Program, Virginia Department of Medical Assistance Services, November 1, 2007.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: The Department of Medical Assistance Services has reviewed the economic impact analysis prepared by the Department of Planning and Budget regarding the regulations concerning Disease Management 12VAC30-60-500. The agency raises no issues with this analysis.

Summary:

The proposed amendments establish a voluntary alternative benefit package (known as the Healthy Returns^SM program) that combines traditional Medicaid services with comprehensive disease management (DM) services. Previous emergency regulations provided that (i) both adults and children in fee-for-service who are determined to have asthma and diabetes could participate in this program and (ii) individuals 21 years and older having coronary artery disease (CAD), congestive heart failure (CHF), and chronic obstructive pulmonary disease (COPD) were eligible for the Healthy Returns^SM program. The substantive change recommended in the proposed regulations is to drop the age limit of 21 years for CHF, CAD, and COPD to age 18 years and older.

12VAC30-60-500. Disease management services.

A. The Commonwealth elects to provide secretary-approved coverage as appropriate for the population served under §1937 of the Social Security Act (the Act). Virginia’s disease management program is designed to help patients better understand and manage their condition or conditions through prevention, education, lifestyle changes, and adherence to their physician-prescribed plans of care (POC). The purpose of the program is not to offer medical advice, but rather to support providers in reinforcing patients’ POCs.

B. Populations.

1. The Commonwealth shall provide the alternative benefit package to individuals who voluntarily enroll in the program (opt-in). Individuals shall be informed of the available benefit options prior to having the option to voluntarily enroll.

a. Opt-in alternative coverage will be offered to the following populations of Medicaid recipients:

(1) All individuals in fee-for-service who have asthma or diabetes.

(2) All individuals in fee-for-service age 18 and over who have congestive heart failure (CHF), coronary artery disease (CAD), or chronic obstructive pulmonary disease (COPD).

b. Individuals who choose to participate in the opt-in program shall maintain their eligibility for the regular Medicaid benefits at all times.

2. Persons excluded from this program shall be those:

a. Who have third-party insurance;

b. Who are enrolled in Medicaid managed care organizations;

c. Who reside in institutional settings;

d. Who are enrolled in both Medicare and Medicaid (dual eligibles); or

e. Who are children enrolled in Virginia’s Title XXI program, Family Access to Medical Insurance Security (FAMIS). Children enrolled in FAMIS receive disease management services through the FAMIS program pursuant to 12VAC30-141-200.

3. The Commonwealth shall inform each individual that such enrollment is voluntary, that such individual may opt out of such alternative benefit package at any time, and retain eligibility for the standard Medicaid program under the State Plan.

4. Individuals are to be encouraged to participate in the program through mailings and telephonic outreach by DMAS or the disease management program administrator.

C. Benchmark benefits. In addition to all regular Medicaid program benefits, the alternative benefit package includes at least the following disease management services:

1. Condition-specific education on an ongoing basis;

2. Access to a 24-hour nurse call line;

3. Regularly scheduled telephonic condition management, support and referrals (for individuals identified by DMAS as having more acute or intensive health care needs); and

4. Patient health activity monitoring and providing information feedback to primary care physicians to help facilitate changes to patients’ plans of care pursuant to the provision of disease management services (for individuals identified by DMAS as having more acute or intensive health care needs).

D. Geographical classification. Services under this alternative benefit package shall be available statewide.

E. Service delivery system. Alternative benefits shall be offered through a prepaid ambulatory health plan, under contract with the Commonwealth. All other Medicaid State Plan services shall be provided on a fee-for-service basis.

F. Additional assurances.

1. The Commonwealth assures that individuals shall have access, through benchmark coverage, benchmark-equivalent coverage, or otherwise, to rural health clinic services and federally qualified health center services as defined in §1905(a)(2) (B) and (C) of the Act.

2. The Commonwealth assures that payment for rural health clinic and federally qualified health clinic services shall be made in accordance with the requirements of §1902(bb) of the Act.

G. Cost effectiveness of plans. Benchmark or benchmark-equivalent coverage and any additional benefits are provided in accordance with economy and efficiency principles.

H. Compliance with the law. The Commonwealth shall continue to comply with all other provisions of the Social Security Act in the administration of the Commonwealth’s disease management program under this chapter.