Medicaid Waivers

1. Medicaid Waivers Joan Alker Co-Executive Director Annual Conference July 19, 2012

2. Section 1115 Waivers • Permit states to use federal program funds (e.g., Medicaid & CHIP) in ways not otherwise permitted • Law says they must be “experimental, pilot, or demonstration project(s)” • that promote the objectives of the program • Broadest waiver authority

3. Why are they important for kids? • They can change the way Medicaid is financed; • They can change the way services are delivered; • States sometimes requests limits to EPSDT or increases in cost-sharing.

4. Enforcing Budget Neutrality • Budget neutrality is longstanding federal policy to ensure feds don’t spend more • In general, section 1115 waivers rely on per capita caps to enforce budget neutrality • State claims match for all people covered by the waiver but • Cannot claim more than amount permitted by the cap • Per person amount is agreed as part of the waiver (usually based on historical costs with a “trend rate”)

5. What is a Global Cap? • Global caps have been used in Vermont, Rhode Island, and Pharmacy Plus waivers during Bush years • Waiver sets overall cap on federal funding (not on a per person basis) • Similar in nature to a “block grant”

6. What are some recent trends? • Move to managed care for more vulnerable populations; • New cost-sharing and/or premiums (CA, FL, UT, WI) that have been turned down for kids • Limits around the edges on EPSDT • (19 and 20 yr olds approved in some states, Oregon list of services, other proposals rejected)

7. 1915 Waivers • Section1915(b) Managed Care Waivers: States can apply for waivers to provide services through managed care delivery systems or otherwise limit people’s choice of providers. • 1915(c) Home and Community-Based Services Waivers: States can apply for waivers to provide long-term care services in home and community settings rather than institutional settings. • ConcurrentSection 1915(b) and 1915(c) Waivers: States can apply to simultaneously implement two types of waivers to provide a continuum of services to the elderly and people with disabilities, as long as all Federal requirements for both programs are met. 

8. What flexibility exists already in Medicaid? • Significant delivery system reform possible • North Carolina PCCM model didn’t need a waiver • Most Medicaid beneficiaries can be required to enroll in managed care without a waiver as long as consumer protections are observed as in HealthWave • Dual eligibles, children on SSI or in foster care require an 1115 or 1915 waiver

9. Waiver Process: How Does it Work and What is Required?

10. Waiver Process • Closed negotiations between state and federal government • At federal level, Secretary of HHS makes the decision • Centers for Medicare and Medicaid Services (CMS) staffs the process for the Secretary • Office of Management and Budget (OMB) is typically deeply involved in negotiating financing terms • Not unusual for members of Congress to weigh in, but no formal process for their involvement

11. What are the Opportunities for Public Input? • Widespread concern about the lack of transparency in the process leads to a provision in the Affordable Care Act requiring new rules • These rules were just issued on Feb. 22, 2012 and became effective April 22nd, 2012 • State and federal governments must have a 30 day public notice and comment process

12. Waiver Pressure Points • CMS National Office • Office of the Secretary of HHS • White House/OMB • Congressional delegation • State legislators • State agency/Executive branch