Health Center Regulatory Issues, Health Center State Policy

The New Medicaid Landscape: How the Administration May Increase Flexibility for States

While it is unclear what changes Congress may make to the Medicaid program, even without further Congressional action, changes are coming to Medicaid.  The recent Senate confirmations of Health and Human Services Representative Tom Price as Secretary of Health and Human Services and Seema Verma as Administrator of the Centers for Medicare and Medicaid Services (CMS) suggest that, even without Congressional action, the new Administration will soon be granting states significantly greater flexibility to design their own programs using waivers than they have had to date.

While the Administration must enact the laws that Congress has passed and does not have the authority to create or pass laws, it does have the authority to grant waivers in the Medicaid and CHIP programs to states interested in pursuing new or innovative ways to deliver care in the state’s Medicaid program.    By way of background, in order to receive federal funding, there are certain federal requirements a state must include in its Medicaid program, including mandatory coverage of certain populations, services, and payments.  Through a waiver, states cannot seek to waive all of these federal requirements in Medicaid, but can seek waive certain requirements, which provides them with additional flexibility under the law.  Each must be approved by the CMS.

The most common form of Medicaid waiver today is the 1115 waiver, originally created to test experimental, pilot or demonstration projects, and which can focus on areas such as delivery system reform, behavioral health, and other services.  Each 1115 waiver must follow a transparency process, as directed by the Affordable Care Act.   Today, 33 states operate 41 different 1115 waivers that are used to test innovations such as delivery reforms, Medicaid expansion or new services.  To date, seven states (Arkansas, Arizona, Iowa, Indiana, Michigan, Montana, and New Hampshire) have used 1115 waivers for Medicaid expansion.  For an in-depth look at each of these waivers, see NACHC’s recent waiver update.

While the Administration’s health care plans are still being developed, we do know that Seema Verma will work to provide states additional flexibilities in Medicaid and CHIP.  If fact, in her previous work as health care consultant, she helped states design 1115 waivers, including the Healthy Indiana 2.0 waiver.   During her confirmation hearing with the Senate Finance Committee in February, she noted that “(a)ny state should have that flexibility to design a program that works better for the people that they are serving and they’re better positioned to make those decisions than we are in D.C.”

It is too soon to say what states will request under the new Administration, but we can look to the flexibilities states have requested in the past to get an understanding of what types of flexibilities states may seek going forward.  Of importance to health centers, it is worth noting that to date, no changes to FQHC provisions, including changes to PPS or FQHC services, have been approved by CMS. However, it will be important for Primary Care Associations and health centers to remain engaged in their state conversations to ensure that FQHC provisions remain intact.

The common trends in the flexibilities currently approved by CMS via an 1115 waiver include:

  • Premium Assistance Models: Under this approach, Medicaid funds are used to help an individual pay premiums for coverage purchased through the private market. There is much variation in this approach across the states; some states have required individuals to enroll in Qualified Health Plans (QHPs) in the Marketplaces to expand waivers, while others have used Employee Sponsored Insurance models.
  • Premiums or Monthly Contributions: States have requested to apply premiums to the expansion population, typically no more than 2 percent of a beneficiary’s income for those individuals that fall between 100-138% of Federal Poverty Level (FPL), to be used toward offsetting the cost of expansion. Some states that have chosen to use this model have also included “premium protections,” such as individual incentives or delays in premiums, to lessen the burden on beneficiaries.
  • Healthy Behavior Incentives: States have included incentives for healthy behaviors as a way to reduce premiums or copayments.
  • Waiving retroactive eligibility: States have waived retroactive eligibility, meaning that coverage starts on the date of the first premium payment, as opposed to the date of enrollment. States have also requested to bar individuals from re-enrolling if they are disenrolled for unpaid premiums.
  • Higher copayment amounts: While higher copayment amounts are not allowed via 1115 waivers, Indiana created a special demonstration via its waiver to look at allowing higher copayment amounts for non-emergency use of the emergency department for certain individuals.
  • Waiver of certain required benefits: Two states have received a waiver from the requirement to provide non-emergency medical transportation.

The table below provides an overview the currently approved flexibilities from CMS via 1115 expansion waivers.

Please note that the table includes provisions that states have requested and CMS has approved to date.  We do expect that states may seek new and additional flexibilities that have previously been denied but may be approved under the new Administration, such as:

  • Premiums for individuals with incomes under 100% of the FPL as a condition of eligibility;
  • Waiver of Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefits
  • Waiver of free choice of family planning provider
  • Work requirements or incentives as a condition of Medicaid eligibility

In fact, we have already seen movement on some of these provisions, including:

  • Arizona has announced it is considering a waiver that includes work requirements and a lifetime cap on eligibility
  • Indiana is seeking a renewal of Healthy Indiana 2.0, which is coming under question due to concerns with the evaluation data
  • Arkansas recently announced its plans to submit amendments to its Arkansas Works program, including limiting eligibility, applying work requirements, and reforming employee sponsored insurance.

As Seema Verma takes the reins at CMS, much remains uncertain.  But NACHC will continue to monitor the states’ waiver requests and the potential impact on FQHCs and their patients and work with Primary Care Associations and health centers to address any issues that may arise.