Price, Verma Push for Better State Control of Medicaid Programs

March 16, 2017 - As one of her first actions as CMS Administrator, Seema Verma collaborated with the Department of Health and Human Services (HHS) Secretary Tom Price to detail how the federal government plans to improve its state partnerships to enhance state control of Medicaid programs.

In the letter to state governors, Verma and Price addressed the important role that states have in ensuring their Medicaid programs offer high-quality care while reducing Medicaid spending. They wrote:

“Today, we commit to ushering in a new era for the federal and state Medicaid partnership where states have more freedom to design programs that meet the spectrum of diverse needs of their Medicaid population. We wish to empower all states to advance the next wave of innovative solutions to Medicaid’s challenges—solutions that focus on improving quality, accessibility, and outcomes in the most cost-effective manner. States, as administrators of the program, are in the best position to assess the unique needs of their respective Medicaid-eligible populations and to drive reforms that result in better health outcomes.”

States, however, have faced several challenges under the Affordable Care Act with realizing Medicaid goals, such as improving care quality, boosting healthcare accessibility and choices, and lowering Medicaid spending, they added.

One such obstacle is “rigid and outdated implementation and interpretation of federal rules and requirements.” The federal regulations draw state attention away from achieving Medicaid goals and the rules have not been updated to reflect recent research on factors that improve health outcomes, such as demographics, geographic locations, and health system variables.

READ MORE: Medicaid Challenges with Value-Based Care Payment Models

Another state challenge stems from Medicaid expansion projects. Through the projects, many states chose to extend coverage to more working-age adults without disabilities and dependent children and federal reimbursement rates went up for the expansion group.

As a result, Medicaid expansion implementation caused states to “deprioritize the most vulnerable populations.”

To eliminate barriers and empower states to achieve Medicaid program goals, Price and Verma outlined five key areas where they plan to boost state and federal government collaboration.

First, the federal healthcare leaders intend to enhance federal and state program management. As part of their improvement plan, CMS anticipates improving the State Plan Amendment approval process to make it “more transparent, efficient, and less burdensome.”

Medicaid State Plan Amendments are contracts between states and the federal government detailing how Medicaid and CHIP programs will run, including who will be covered, what services will be offered, provider claims reimbursement strategies, and administrative activities.

READ MORE: How Payers Should Prepare for Value-Based Reimbursement

The federal agency also aims to streamline and improve the process for waiver and demonstration project extension approvals. States use Medicaid waivers or launch demonstrations to develop non-traditional methods for implementing Medicaid programs, such as value-based reimbursement for providers or reinsurance programs to boost coverage.

CMS intends to develop an expedited extension approval process to ensure states continue with developing innovative Medicaid implementation projects. The federal agency also plans to create a more consistent waiver and demonstration evaluation process.

In addition, CMS anticipates performing a managed care regulation review to better represent high-priority beneficiary outcomes and state goals.

Second, HHS and CMS committed to supporting federal, state, and local initiatives that have been successful with helping eligible low-income adult beneficiaries improve their economic status through employment.

“The best way to improve the long-term health of low-income Americans is to empower them with skills and employment,” Price and Verma wrote. “It is our intent to use existing Section 1115 demonstration authority to review and approve meritorious innovations that build on the human dignity that comes with training, employment, and independence.”

READ MORE: Why State Medicaid Expansion May be Worthwhile for All

Verma implemented a similar demonstration in Indiana prior to her confirmation as the next CMS Administrator.  Under the Healthy Indiana Plan, the state offers workforce development programs to help beneficiaries obtain stable employment and transition away from public assistance.

Third, Price and Verma called on states to consider aligning Medicaid program design and benefit structures with those in commercial health insurance programs. States should implement some of the following Medicaid reforms:

• Alternative cost-sharing structures and benefit plan models, such as consumer-directed healthcare that incorporates some Health Savings Account features for beneficiaries at all income levels

• Easier enrollment in affordable employer-sponsored health coverage options

• Reasonable and enforceable premium or contribution requirements that also contain appropriate safeguards for high-risk beneficiary groups

• Waivers for non-emergency transportation benefit requirements

• More options for emergency room copayment design that promote non-emergency and primary care provider use for appropriate services

• Enrollment and eligibility waivers for processes that do not encourage continuous health coverage, like presumptive eligibility and retroactive coverage

• Efforts to allow families to be on the same health plan

With these Medicaid reforms, the federal healthcare leaders argued that the programs would help some eligible working-age beneficiaries transition to private health coverage, they argued.

Fourth, CMS plans to collaborate with states and other healthcare stakeholders to facilitate home and community-based services transformations.

HHS released a final rule in 2014 mandating Medicaid programs to support home and community-based healthcare settings. The rule also set out requirements for the alternative healthcare locations to ensure beneficiaries receive the same high-quality affordable care as they would in more traditional settings.

“In recognition of the significance of the reform efforts underway, CMS will work toward providing additional time for states to comply with the January 16, 2014, Home and Community-Based Services (HCBS) rule,” the recent letter stated. “Additionally, we will be examining ways in which we can improve engagement with states on the implementation of the HCBS rule, including greater state involved in the process of assessing compliance of specific settings.

Fifth, the healthcare leaders addressed the opioid epidemic. Both HHS and CMS committed to providing states with more tools to stop substance abuse. The federal agencies plan to partner with states to improve care for individuals with substance abuse disorders under their state Medicaid plans and the Medicaid Innovation Accelerator Program.

In addition, Price and Verma encouraged states to use managed care capitation payments for individuals with Institution for Mental Disease stays of 15 days of less within a month.

“We will continue to explore additional opportunities for states to provide a full continuum of care for people struggling with addiction and develop a more streamlined approach for Section 1115 substance abuse treatment demonstration opportunities,” stated the letter.

Price and Verma intend for the letter to state governors to open communication lines between states and the federal government. Through more collaboration and empowerment, the healthcare leaders expect to help states improve their programs and reduce Medicaid spending.