1. Society of Insurance Research Conference:
The Business Opportunity that Health Reform created in
Medicaid Managed Care
November 16, 2010
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2. How to Get Excited about the Medicaid Opportunity
• Half of the formerly uninsured will be insured
through Medicaid
– Estimate of 15 of the 32 million newly
insured
• Medicaid will be 17% of the national insurance
market
– Individual commercial insured will be 10.7%
and Small Employer group will be 13%
• Medicaid and Individual commercial plans will be
linked in the exchange and through eligibility
– Today’s fully subsidized individual may be
tomorrow's Medicaid eligible
• States are looking for Medicaid Managed Care
plans to take the membership and the risk
• Provides additional patients and dollars for
delivery system initiatives around medical home,
ACO’s, and other care transformation
– Funds future R&D
Source: McKinsey and AHIP 2

3. Florida’s response to the Medicaid Opportunity
As costs rise, lawmakers eye HMOs
Posted on Sunday, 02.28.10
Some legislators are pushing to put the growing number of Medicaid
recipients into HMOs to save money, but others say the change might not
reduce costs.
BY MARC CAPUTO
Herald/Times Tallahassee Bureau
This is the year of big talk about healthcare. And potentially bigger profits for HMOs.
As Medicaid swells in cost and number of recipients, some Republican legislative leaders
are increasingly interested in putting more of the program's patients into HMOs,
giving the private companies more control over the state-federal program for the
poor.
Read more: http://www.miamiherald.com/2010/02/28/1505828/as-costs-rise-
lawmakers-eye-hmos.html?story_link=email_msg#ixzz13ZselGgU
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4. Medicaid Landscape and Definitions
Maintenance of Effort clause is the source of the state’s complaints
about budget impact
• Federal Poverty Level (FPL): 100% Federal Poverty Level is currently $10,830 for
the lower 48 states. Eligibility will be increased to 133% Federal Poverty Level which
is $14,404 for a single individual.
• Federal Matching Funds (FMAP): matching funds that the federal government
provides for every dollar spent by the state. On average, the federal government
covers 57% of funding.
• American Recovery and Investment Act Impact: Increased FMAP to states
from 50%-76% to 61%-84% through December 2010, 100% in 2014-2016 and then
phases down.
• Maintenance of Effort (MOE) clause: Effective 3/23/2010 when reform was
passed, states are prohibited from reducing Medicaid eligibility. As a result, states
can no longer use Medicaid eligibility as a lever to balance budgets.
• CHIP: Children’s Health Insurance Program extended to 2015 and for children up to
200% Federal Poverty Level.
• New eligibles: 13 million adults (2.9 million parents and 10.1 million non-custodial
adults).
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5. Medicaid Timeline
Below are the start and end dates that provide funding for new
opportunities
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Funding available
for Medicaid
Medical Homes
(90% FMAP for first
2 years)
Integrated Care Around Hospitalization
Demonstration
Grant Program for Chronic Disease Prevention
Pediatric Accountable Care Demonstration Project
FMAP bonus for new Home Community-Based
Services (options start in 2010)
PCP's paid 100%
Medicare with
100% Federal Match
Reduction DSH payments for hospitals
Federal Matching funds phase to 90% by
2020
100% Federal Matching Funds
to states (FMAP)
State Option to expand Medicaid
coverage to 133% FPL Mandatory expansion of Medicaid coverage to 133% FPL
Source: AHIP 5

6. Expansion Opportunity by State
Opportunity combination of existing eligibility and state population
State New Medicaid Eligibles
California, Texas, Florida 1 million+
Georgia, North Carolina, Illinois, Michigan,
Ohio, Pennsylvania
500,000-1 million
Washington, Missouri, Louisiana, Indiana,
Tennessee, Alabama, South Carolina, Virginia,
New Jersey
300,000-500,000
Oregon, Nevada, Utah, Colorado, New Mexico,
Nebraska, Kansas, Oklahoma, Arkansas, Iowa,
Minnesota, Wisconsin, Kentucky, Mississippi,
West Virginia, Maryland, Connecticut
100,000-300,000
Idaho, Arizona, Wyoming, Montana, North
Dakota, South Dakota, New York, Delaware,
Massachusetts, Rhode Island, Vermont, New
Hampshire, Maine, Alaska, Hawaii
100,000 or less
Source: Ingenix Consulting/Lewin Group
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7. State-by-State Impact
Impact will vary based on state’s current eligibility requirements for
adults
Eligibility* State Impact
Limited coverage for adults:
Eligibility for parents is below
100% Federal Poverty Level
Alabama, Arkansas, Colorado, Florida,
Georgia, Idaho, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Michigan,
Mississippi, Missouri, Montana,
Nebraska, Nevada, New Hampshire,
New Mexico, North Carolina, North
Dakota, Ohio, Oklahoma, Oregon,
Pennsylvania, South Carolina, South
Dakota, Texas, Utah, Virginia,
Washington, West Virginia, Wyoming
• Decrease uninsured adults
by 48%-53%
• Increase in state spending
by 3%-3.6% from 2014-
2019
Broader coverage for Adults:
Parents at or greater than
100% FPL are eligible.
Childless adults are not
eligible.
California, Connecticut, DC, Illinois,
Maryland, Minnesota, New Jersey,
Rhode Island, Tennessee, Wisconsin
• Decrease uninsured adults
by 41%-45%
• Increase in state spending
by 1%-1.5% from 2014-
2019
Expansion states: currently all
adults up to 100% FPL
(parents and childless adults)
Arizona, Delaware, Hawaii,
Massachusetts, Maine, New York, and
Vermont
• Decrease uninsured adults
by 10%-15%
• Decrease in state spending
by 0%-2%
Source: Kaiser Family Foundation
* For Medicaid programs only. Does not include state-sponsored premium assistance programs for working adults or limited insurance programs in
Connecticut, DC, Indiana, Iowa, Maryland, Michigan, Minnesota, New Mexico Oregon, Pennsylvania, Utah, Washington, or Wisconsin since these
are outside of the scope of reform 7

8. New Medicaid Enrollees: Similarities and Differences
Medicaid enrollee characteristics have already started to shift
Current Enrollees New Enrollees
Average age is 30-50 Younger
More complicated chronic conditions Combination of lower utilizers of care and
complicated medical issues
Typically access care through the
Emergency Room
Have experience with using primary care
and managing chronic conditions
Typically unable to work due to FPL
threshold or other reasons
Working Poor
Children, TANF, pregnant women,
Medicare/ Medicaid Duals
Adults
50%-60% Mental Health Conditions
Ethnically and Culturally Diverse
Phone-based disease management will not be effective due to lack of consistent
phone number
Mobile and move often
Source: Health Plan Week, Atlantic Information Services, Sept 20, 2010 8

9. Health Plan Opportunity Assessment:
The questions a health plan needs to ask (and hopefully answer)
before entering or expanding
• What will the new class of eligibles be like in terms of utilization, how they access
services, and how they select a plan?
– Not like the current Medicaid population in terms of ER utilization
– Answers will vary by zip code
• Where will they come from?
– Formerly uninsured or formerly from commercial group?
• What will the State Medicaid Departments require to play?
– Participation in the Exchange
– Benefit requirements
– Managed care participation
– Speed of implementation and level of interest
• What are the products or benefits?
– Benefits are typically mandated
– Main decisions will be to partner or build in-house (Integration opportunity for
carved out benefits)
• How do I ensure provider capacity and the right providers to serve new eligibles?
– This requires another slide
Source: Ingenix
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10. Provider Partnerships
The Medicaid membership opportunity can provide an additional incentive
to invest in new financing partnerships that are likely future
methodologies
• Reimbursement models that reward phone and mid-level practitioner (nurse and
social worker) care and aren’t dependent on a physician visit
– Full Capitation
– Primary care capitation
– FFS with quality or other incentives
– Risk sharing model can help with any future MLR requirements
• Reimbursement model can drive creation of team-based care
– Nurse Case Management
– Panel managers for outreach and appointment scheduling
– Carriers can provide grants to encourage these models
• Tap into other models that health reform is funding
– Section 3022 of PPACA created Accountable Care Organizations (ACO’s)
– Funding for Medical Homes
• Risk Adjustment is a possible future funding mechanism
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11. Federally Qualified Health Centers (FQHC)
The role of the low income primary care infrastructure will grow and
possibly compete with private providers
• $11 billion available to double current FQHC capacity
– Currently 1,080 FQHC’s serve 17.2 million patients with 66 million visits annually.
This is expected to double
– Lessons from Massachusetts, build the primary care infrastructure before
expanding eligibility
• FQHC’s bill at cost for Medicaid visits
– Payment is FFS rate + wraparound payment for covered physician visit
– Medicaid is their best payer
• Formerly uninsured patients will become either Medicaid or subsidized individual
commercial insured
• Will start competing with private providers for patients with their expertise in chronic
and complex care management
– Build their own niche based on skills in culturally competent care, homeless,
migrant farm worker population, or other special areas
• Opportunities to contract for other lines of business such as Medicare Advantage,
SNP, or high utilizing commercial groups
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12. How to start an FQHC in your community
An option to buying Independent Physician Associations (IPA’s)
• Apply for grant with Bureau of Primary Health Care
• Locate a Medically Underserved Area (MUA)
• Provide required medical and enabling service including preventive, dental, case
management, behavioral health, radiology, lab, prenatal care, transportation,
interpretation, and medication
• Service available regardless of ability to pay and maintain certain percentage of
uninsured patients
• Annual reporting requirements
• Community Governance Board
– This is the most difficult requirement for large health care organization to comply
with
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13. Top 20 Managed Medicaid Companies by Enrollment
Enrollment is less consolidated than Medicare Advantage.
Company Enrollment Company Enrollment
United Healthcare 2,562,687 Aetna, Inc. 648,727
AMERIGROUP Community Care 1,604,741 Fallon Community Health Plan 617,000
WellPoint, Inc. 1,387,000 Blue Cross Blue Shield Tennessee 492,751
AmeriHealth Mercy/
Independence Blue Cross
1,360,100 Horizon Blue Cross Blue Shield 419,978
Molina Healthcare, Inc. 1,232,562 Fidelis Cares, Inc. 369,711
WellCare Group of Companies 1,164,000 Inland Empire Health Plan 356,297
Centene Corporation 1,074,433 Healthfirst, Inc. 355,024
HealthNet Inc. 878,000 CalOptima 344,982
LA Care Health Plan 754,907 MetroPlus Health Plan, Inc. 317,769
CareSource 737,415 MDWise 316,053
Source: Health Plan Week, Atlantic Information Services, Sept 20, 2010
Enrollment through end of 2009 13