Medicaid Mania

[Greenbeard]

Looks like the debate's shifting ever so slightly toward Medicaid now. Medicaid flexibility's been getting quite a bit of attention these past two weeks.

Today we hear about dueling Republican Medicaid reform bills. The first is the standard block grant:

Leaders of the conservative Republican Study Committee will introduce legislation on Wednesday that gives states maximum flexibility to run the program as they see fit. The "State Health Flexibility Act" would combine Medicaid and the Children's Health Insurance Program (CHIP) into a single block grant, while reducing federal spending on the two programs by $1.8 trillion over 10 years by freezing spending at current levels.

The bill would allow states to determine eligibility, benefits, provider reimbursement rates and many other aspects of the program. That makes it incompatible with the healthcare reform law, which calls on the Medicaid programs of all 50 states to cover everyone up to 133 percent of the federal poverty level.

The second tries to add a little nuance in its variation on that theme:

Separately, Energy and Commerce member Bill Cassidy (R-La.) has been touting his own Medicaid reform proposal, which would replace the current open-ended federal matching rate system for states with a per patient, per month budget depending on the characteristics of each state's patient population. [...]

Unlike the RSC bill, Cassidy's proposal, which is still being developed, could work regardless of what happens to the healthcare reform law. He said that unlike a block grant, his proposal would have federal Medicaid money follow patients so that states would not be penalized if their populations change, such as after Hurricane Katrina when many Louisiana Medicaid patients sought refuge in Texas and other states.

Yet some former Republican governors are a bit wary of the block grant approach:

Block grants have an “inflammatory connotation,” said former Vermont Gov. Jim Douglas, who was in office from 2003 to 2011.

“My view is that there's an awful lot of room between the status quo and block grants in terms of greater flexibility and in terms of refining the partnership between the states and the federal government,” Douglas said. “What we agreed to in Vermont was a cap over five years that we would not exceed in exchange for more flexibility... That was very successful and continues to be, so I think there are ways to provide greater flexibility without going to a block grant.”

Former South Dakota Gov. Mike Rounds, who also served from 2003 to 2011, raised concerns that block grants may restrict states' funding without giving them enough flexibility to deal with the fallout.

“I think there is a possibility with a block grant that it could work,” he said, “but only if the authority to make changes went along with the block granting.”

Current Republican governor Scott Walker seems to have walked back his unqualified support for block grants, instead suggesting it should just be an option:

Separately, Republican Gov. Scott Walker – a key champion of his fellow Wisconsinite Ryan's block grant approach last year – told a trade publication last weekend that block granting should be an option for states, not a requirement as was the case in the 2012 House budget.

“Let us opt in or opt out,” Walker reportedly told Inside Health Policy while he was attending the National Governors Association winter meeting.

Meanwhile, the Bipartisan Policy Center has come out with some more modest proposals, mostly focusing on improving existing processes for states getting Medicaid waivers:

The report offers five recommendations for the administration to consider:

• CMS should establish and circulate a detailed and transparent process for state-federal budget neutrality negotiations and waiver evaluations. CMS should ensure that all relevant parties are engaged at the beginning of the waiver approval process, since multiple layers of approvals create an inefficient and duplicative process for states.
• Establish a mechanism for converting successful waivers into permanent or semi-permanent state innovations in the Medicaid program. Frequent waiver renewals are a burden on high performing state programs and an inefficient use of scarce state and federal resources.
• Develop State Plan Amendment templates for effective Medicaid strategies. CMS should equip states with tools to implement targeted program changes and to encourage the efficient dissemination of common sense reforms and best practices.
• CMS should design waiver templates that address time-sensitive and pertinent Medicaid challenges, supporting state efforts to quickly and effectively respond to changes in the marketplace attributable to provisions in the Affordable Care Act. CMS should standardize certain components of the waiver application process to provide states direction and reduce uncertainty as they look for creative and innovative ways to manage forthcoming changes in the Medicaid program. This will enable states to focus efforts on common challenges, such as addressing health care reform and dual eligibles, and promoting new payment methods and innovative care delivery models.
• HHS should make guidance and assistance provided to state leaders by the Medicaid State Technical Assistance Teams transparent and public on Medicaid.gov. Many states are dealing with similar issues, and state leaders would benefit from timely access to information that supports planning and decision making at the state level.

In related news, the current administration recently released some rules updating some of the features of the king-of-all-waivers, the 1115 waiver. Tim Jost explained over at the Health Affairs blog:

Medicaid waivers. The Medicaid regulation implements amendments to section 1115 of the Social Security Act, which allows HHS to waive certain requirements of Social Security Act programs, including Medicaid, to permit experimental, pilot, and demonstration projects. Section 1115 is a long-standing provision of the Social Security Act, and indeed antedates the Medicaid program. Its purpose is to allow states to demonstrate innovative approaches to taking care of the needs that the Social Security Act addresses.

As HHS implementation of section 1115 has evolved, however, the waiver process has been used by HHS (particularly in the Clinton and Bush administrations) to permit the states to implement Medicaid programs on a more or less permanent basis that deviate quite dramatically from statutory requirements, with little public involvement or accountability and with little if any research evaluation. Both in 2002 and 2007, the Government Accountability Office issued reports critical of the lack of public involvement in the 1115 waiver process.

In response, Congress adopted section 10201(i) of the ACA, which requires public notice and comment, including public hearings, at the state level, and further public notice and comment at the federal level, before waiver programs can be approved and renewed. Regular periodic reporting on and evaluation of 1115 waiver programs is also required.

Although the two regulations vary in their details (and the Medicaid 1115 regulation has many more details), they both take a similar approach. Both require detailed submissions specifying the legal requirements from which a waiver is sought and documenting compliance with waiver requirements. Both require public notice and opportunity for comment, including at least two public hearings, with an opportunity for web or telephonic participation for those who cannot physically attend a hearing. Public participation requirements must also be met for 1115 waiver extensions, as well as initial, applications.

Once HHS receives an 1115 or innovation waiver request, it must also seek and publish public comments. If an 1115 or state innovation waiver is approved, continued compliance with waiver requirements must be monitored. In particular, the state must hold a public forum within 6 months of approval and annually thereafter to solicit comments on implementation.

Section 1115 demonstration projects must also have an evaluation plan and must actually be evaluated—that is to say, they must actually be designed to conduct research, not just to escape federal statutory requirements. States must file regular reports on evaluation projects. HHS (and Treasury for 1332 waivers) can terminate waiver programs that fail to meet statutory requirements.

Lots of activity.