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Medicaid Reform Beyond the AHCA

While we continue to monitor Congressional efforts to repeal and replace the ACA, we are also monitoring CMS’s efforts to implement the administration’s Medicaid program goals without Congressional action.  The future of the Medicaid program depends not only on the final outcome of a repeal and replace bill, but also on the Secretary Price’s and CMS Administrator Verma’s strategy and vision for the program. In two recent Letters to Governors from Secretary Price and Administrator Verma, we see how some legislative provisions from the AHCA that are still the subject of debate could be implemented despite the lack of legislative action.

Section 1332 Waivers

On March 13, 2017, Secretary Price sent a Letter to Governors encouraging states to apply for Section 1332 waivers, which allow states to avoid certain ACA provisions, including eliminating the individual and employer mandates, changing the subsidies structure, waiving exchange coverage provisions, and combining and coordinating 1332 waivers with Medicaid 1115 waivers to alter coverage arrangements across Medicaid and the Marketplace for low income individuals. Section 1332 waivers nevertheless have guardrails that require deficit neutrality, coverage of a comparable number of individuals, and coverage and affordability standards equivalent to that under the ACA. Secretary Price and CMS Administrator Verma are now in charge of implementing these guidelines and determining if proposed waivers meet these requirements. The March 13th letter demonstrates that Secretary Price is green-lighting states to use Section 1332 waivers that did not exist under the Obama Administration.

Other Policies for the “Able-Bodied” Population

Secretary Price’s letter was followed by a joint Letter to Governors sent by Secretary Price and CMS Administrator Verma focusing on their shared vision for the future of the Medicaid program. This second letter promotes adoption of Medicaid work requirements, health care savings accounts, Medicaid cost sharing and premiums, and waiving of non-emergency medical transportation (NEMT) as potential policies for the “abled-bodied” Medicaid population.  The letter should not come as a surprise given that Medicaid expansion proposals and waivers crafted by CMS Administrator Verma prior to leading CMS included such features in some fashion.  Additionally, certain state Medicaid programs already address several of these provisions.

As reported by the Medicaid and CHIP Payment and Access Commission (MACPAC), Arkansas, Arizona, Iowa, Indiana, Missouri, and Montana have premiums and cost-sharing requirements within their respective expansion waivers, and the Indiana waiver also requires expansion enrollees to contribute to a health savings account.  States have framed these requirements as a method for getting Medicaid beneficiaries invested in their own health outcomes and utilization and as a method to save the state money.

As detailed in another MACPAC publication, Indiana and Iowa have also received approval from CMS to waive the NEMT benefit for the expansion group, and Arkansas waived NEMT for the new adult group receiving employer sponsor insurance premium assistance. These states conducted analyses of the effects of waiving NEMT on access to care.  Indiana found that waiving NEMT for the expansion group had no significant impact on access to care and concluded that similar transportation problems can occur regardless of access to the benefit. However, advocates raised concerns about the scope of the evaluation, including the fact that it is too narrow because it focused only on missed appointments and did not account for failure to schedule an appointment due to lack of transportation.

Other provisions proposed in the Letter to Governors, such as tying work requirements to Medicaid eligibility, were non-starters under the Obama Administration and currently do not exist within the Medicaid program.  As noted in by the Kaiser Family Foundation, tour states (Arizona, Indiana, Kentucky, and Pennsylvania) formally submitted waiver requests that would have required work as a condition of eligibility, but CMS has not yet approved any of these requests.  However, with Administrator Verma at the helm of CMS, that could change.

While Congress is currently considering whether to include some of these policies in a House repeal and replace bill, it is important to remember that these policies can be put in place without legislative action.

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