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5 women and children utilizing eligibility methodology called Modified Adjusted Gross Income (MAGI).

Health care inflation for services tends to be higher than inflation of non-health care items, such as the consumer price index. Health care inflation results from increased utilization of more expensive services such as new drugs, devices or procedures. In general the Hawaii Medicaid program has been able to keep inflation low and the major cost driver has been due to increased enrollment. Over the past 4 years enrollment has increased approximately 22%. The following table provides the enrollment and expenditures.

SFY 2012 SFY 2013 SFY 2014 SFY 2015 Total Expenditures $1,580,549,010 $1,895,933,438 $2,030,231,193 $2,242,529,381 General Funds $774,151,967 $906,243,996 $912,512,932 $875,930,348 Federal Funds $806,697,043 $989,689,442 $1,117,718,261 $1,366,599,033 Beneficiaries 283,041 292,423 325,510 337,398

The hospital and long term care sustainability fees programs were implemented in SFY 2013 and have provided these facilities with new revenue. The hospitals are assessed a provider fee and, in return, receive additional reimbursements since inception of the program to help cover losses for care provided to the underinsured and uninsured. The Department retains a portion of the fees collected and is used by the Division to increase and improve services for Medicaid program recipients.

Effective January 1, 2015, the MQD combined the QUEST and QExA into one program called QUEST Integration (QI). Under one program, QUEST Integration has helped to reduce the administrative burden for health plans, providers and the State, while streamlining the application process and access to care for applicants and recipients. Health care services provided under the capitated health care plans have demonstrated a more predictable and slower rate of expenditure growth while establishing contractual accountability by the health plans and providers.

With additional positions to conduct increased program integrity activities, the MQD has implemented new federally required contracts to assist with identification and recovery of overpayments. While the MQD has more work to do in this area, it has identified $158,168 as potential overpayments through review of claims payment reports. For the past two State fiscal years, MQD received $214,908 in repayments. The Program Integrity staff continue to work with the Medicaid Fraud Control Unit of the Department of Attorney General for referral of cases for investigation and potential legal action.

The implementation of the new eligibility system, Kauhale On-Line Eligibility Assistance (KOLEA) in 2014 has allowed increased efficiency by automating many of the functions previously performed manually. With KOLEA, the MQD has been able to process applications and annual renewals with an enrollment of 350,358 individuals under Medicaid as of June, 2016. Further enhancements to KOLEA will allow the MQD to move toward a paperless work environment,