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ANSWERING THE QUESTION ON ASSUMPTIONS IN THE AG EXPANSION REPORT Over the past couple of weeks, there has been

a question regarding assumptions used in the report on the feasibility of Medicaid Expansion produced by the Alexander Group AG!" Explanation of Baseline FMAP Assu ptions #uestion$ %n a memo to &atrick 'illard and %lene (enshaw of AA)&, analyst *athy Gifford of (ealth Management Associates said that the +MA& assumption was too low" ,he did a quick calculation and said that the AG )eport must have assumed a -./ +MA& rate, which could overstate state costs by as much as 0121 million for the 3aseline" Answer$ Ms" Gifford is incorrect" 'hat is apparently confusing her is one of two ad4ustments that were placed into the financial model that were intended to make the financial model less confusing to observers" 5he Alexander Group AG! was asked to make sure the total budget in the financial model matched the budgets for Maine6are ,ervices and administration" 3ecause the budget for Maine6are ,ervices includes items that do not receive +MA& but may receive other +ederal funds!, it is not possible to divide the total 3aseline budget by the federal funds to calculate the overall +MA& in the 3aseline, as Ms" Gifford attempted to do" 7ou must first subtract out the ad4ustment" 5he table below uses ,+7 8.98:9; as an example" %f you attempt to calculate the overall +MA& by dividing the total budget by the federal funds, you get -."-8/, which is similar to the results calculated by Ms" Gifford" (owever, after subtracting out the ad4ustment, you get an overall federal share of -;"-1/" %ncluding this ad4ustment in the financial model is not unreasonable" %f we had excluded the ad4ustment, legislators and others would have been asking the obvious question of why the total 3aseline is less than the budget numbers" Attached is a print:out of the M6 ,ervices budget by fund"! ,o either way, you have to account for the difference" 5he table below shows the 3aseline numbers for ,+7 8.9<:91, including the assumed +MA&s"
SF* 201 +1, Po&ulation 'rou&(E)&ense Baseline (Dollars in Millions): Traditional MaineCare Medicaid Savings Plan C"#P $oster C%ildren &C& Mandate C%ildren Private 'ro() 1!9% to 200% &d*inistration +t%er Total Baseline (Enrollment rounded to nearest 100) Enrollment Total Costs Federal Costs State Costs $ 882.6 $ !4.8 $ 11.! $ 0.9 $ 4.2 $ 29.5 $ 166.8 $ 1,130#2 FMAP

254,581 44,600 14,90 51 5,544

$ 2,295.5 $ 1,412.9 $ 90.4 $ 55. $ 42.1 $ !0. $ 2.5 $ 1.5 $ 15.6 $ 11.4 $ 129.! $ 99. $ 218.5 $ 51. 320, 00 $ 2,!"3#" $ 1,%%3#%

61.55% 61.55% !.09% 61.55% !.09% 61.56%

Additionally, it is important to know that the ad4ustment does not alter in any way the impact of the expansion" 5he ad4ustment is included in both the 3aseline and the Expansion ,cenario" 3ecause the impact of the expansion is calculated by subtracting the 3aseline from the Expansion ,cenario, the ad4ustment is netted out, having no influence on the cost of the expansion"