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CMS Channeling Teddy Roosevelt on 1115 Waiver Renewals and Medicaid Expansions

CMS Channeling Teddy Roosevelt On 1115 Waiver Renewals And Medicaid Expansions

Teddy Roosevelt was famous for saying, “Speak softly and carry a big stick; you will go far.” Well, the Centers for Medicare and Medicaid Services (CMS) are learning from the early 20th century Republican president as it seeks to cajole certain states to expand Medicaid during waiver renewal discussions.

At last count, 32 states have expanded Medicaid coverage in line (for the most part) with what was anticipated under the Affordable Care Act (ACA), while 19 states (largely those in the Deep South, certain Plains States, and a handful of Rocky Mountain States) have remained recalcitrant.

While Roosevelt’s mantra pertained to his efforts to promote American supremacy around the world, CMS is using the 1115 Research and Demonstration waiver as its “big stick” when meeting with states on Medicaid. Many states rely on the 1115 Research and Demonstration waiver to run their Medicaid programs. These waivers allow states to experiment in different ways to furnish care as opposed to the regular Medicaid rules. It allows states to vary benefits and eligibility as well as apply innovation in the area of service delivery and managed care. Secondly, many of these states rely on the waiver to establish rather free-wielding disproportionate share hospital (DSH) or uncompensated care pools to compensate hospitals for taking care of the uninsured or for under-reimbursement in the Medicaid system.

These pools were borne of honest efforts to prop up charity hospitals that took care of uninsured populations. Over time, however, these systems became perverse, with ever-growing funding actually beating down efforts to reduce hospital bed days and expand managed care and prevention efforts. The pools, too, have become a baneful political machine, with hospital executives lining the campaign pockets of state lawmakers (Democrats and Republicans alike) to stop efforts to reform the system.

Since the passage of the ACA, CMS has lived and breathed the success of Obamacare, but it has been stymied by the fact that a good share of states have refused to expand Medicaid to the anticipated 133% of the federal poverty limit (FPL) for all residents. This has created huge coverage gaps, where people of higher incomes (over 100% of FPL) have access to the subsidized Exchanges, but those poorer but over Medicaid thresholds remain uninsured. Nearly 3 million people fall into the coverage gap due to the Medicaid “non-expansions” in the 19 states. Over two-thirds reside in Texas and Florida (They each have about 1.2 million impacted, with Georgia and North Carolina having 700,000 and 600,000, respectively.) Regardless of one’s view of Obamacare in general, it is hard not to be sympathetic to the plight of these individuals and the fundamental inequities. In some ways, the disparities between states have only grown since the passage of Obamacare.

Because the political wounds of Obamacare were still fresh when many state waivers came up for renewal, CMS had to tread lightly (“speak softly”). CMS, too, is not immune to the hospital lobby. Thus, states largely were able to continue to obtain generous DSH and uncompensated allotments with only minor concessions. But in the closing days of the Obama administration, CMS seems to be ramping up the heat on states that have not expanded coverage.

Recently, Tennessee received a minimal two-month expansion of its 1115 waiver as CMS and the state Medicaid agency continue to hammer out a successor agreement. With 350,000 residents in the coverage gap, Tennessee represents the fifth largest of the non-expansion states and CMS would like to see movement there as it awaits discussions with the two largest states (Florida is up in mid-2017 and Texas’ 15-month extension will end in December 2017).

By its nature, waivers are not vehicles by which CMS can force states to legislate expansions. However, CMS can place such strict parameters on the waiver, including phasing out uncompensated care dollars, that it can force its will.

As Strategic Insights has argued many times before, the answer is simple. Given the fact that residents can take advantage of Exchange subsidies at 100% of FPL or greater, CMS should tacitly endorse Medicaid expansions in these 19 states to 100% of FPL. A precedent exists: Wisconsin is one state that has this model, having adopted it prior to the passage of Obamacare. The only nuance is that the state does not receive the expanded funding under Obamacare that other states do.

So rather than using Teddy’s big stick, it should rather whisper in states’ ears and let them know it is willing to compromise and allow states to obtain commensurate additional funding.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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