Missouri Department of Social Services PREDECISIONAL
Rapid Response Review – Assessment of Missouri Medicaid Program
4
year based on changes in operating costs. Accordingly, the payment methods used offer few
incentives for providers to contain costs. A significant proportion of Missouri Medicaid acute
care expenditures is associated with potentially avoidable exacerbations and complications
(PECs) and inefficiencies in the choice of provider, site, or treatment. In addition, Missouri
Medicaid is unique in making “add-on payments” to hospitals for services provided by Missouri
hospitals to non-Missouri residents. Potential initiatives to improve incentives and reduce costs
include adjusting rate setting methodologies, moving to value-based payment models, and
investing in the rural and safety net heath care infrastructure, including primary care and
behavioral health. In total, the gross impact of Acute Care initiatives could range anywhere from
$250 million to $500 million, depending on choices made by the state.
Long-Term Services and Supports. Missouri spent ~$2.9 billion in SFY2018 on long-term
services and supports (LTSS) for approximately 106,000 Medicaid participants accessing these
services. LTSS in Missouri consist of institutional services (e.g., nursing homes for frail elderly,
intermediate care facilities for individuals with intellectual disabilities), and home and
community-based services (both residential and non-residential) covered by the Medicaid State
Plan and nine waivers. Nursing facilities are reimbursed using a cost-based, facility-level per
diem methodology without adjustments for acuity, quality, or outcomes, and home and
community-based services (HCBS) are reimbursed on a fee-for-service basis. LTSS in Missouri
are administered by Missouri Medicaid in conjunction with the Department of Health and Senior
Services (DHSS) and the Department of Mental Health (DMH), each of which administers
HCBS waivers and conducts assessments to determine access to LTSS. The assessment
process currently in use by DHSS uses decades-old standards and, as such, may not
consistently determine institutional level of care accurately. Potential initiatives include
incorporating an acuity adjustment into the nursing home reimbursement methodology,
completing and expanding upon revisions currently underway for the state's assessment
algorithms, more directly applying assessment results in the care planning process, and
improving the consistency of the prior authorization approval process for personal care services.
In total, the gross potential impact across LTSS initiatives ranges from $90 million to $275
million, depending on choices made by the state.
Pharmacy. Missouri spent ~$1.5 billion in SFY2018 on pharmaceutical products. This spending
is inclusive of all participants as the state carves pharmacy benefits out of its MCO
arrangements. The state utilizes a preferred drug list and receives statutory and supplemental
rebates to help control costs. The basis for drug ingredient cost reimbursement was recently
updated, and Missouri is in the process of updating dispensing fees. Missouri rebate
performance is below the average for other states, potentially due to expansive grandfathering.
While the state uses a broad range of approaches to ensure appropriate utilization, there is an
opportunity to expand it to other high-cost drug classes such as oncology, hemophilia, and IVIG.
Potential initiatives include limiting grandfathering, implementing additional utilization
management, joining a purchasing consortium to increase supplemental rebate capture,
requiring NDC submission on claims for non-J-code HCPCS drugs, and applying for a value-
based contracting waiver from CMS. In total, the gross potential impact across Pharmacy
initiatives ranges from $35 million to $60 million, depending on choices made by the state.
Program Integrity. Program integrity functions within the state Medicaid agency center serve to:
prevent fraud, waste, and abuse; ensure proper participant enrollment and identify third-party
resources to pay for medical claims. Numerous divisions within the state help accomplish these
goals; however, the separation of divisions leads to siloed data and communication. Potential
initiatives include expanding adoption of best practices from the National Correct Coding
Initiative, updating certain medical and reimbursement policies to prevent improper payments,