Is This the End of Medicaid as We Know It?

In the January 11, 2018, letter published by the Centers for Medicare & Medicaid Services (CMS) giving the green light for states to pursue adding work requirements to their Section 1115 waiver programs, the Trump administration, through CMS, has looked to push the envelope as to how far they can modify the Medicaid program as we know it. Changes have not only included typical proposed structural changes, such as turning Medicaid into a block grant program, but new proposals are aimed at the very heart of what Medicaid means—and these proposed changes are being led by the states.

By utilizing the waiver process, the Trump administration is allowing states to potentially exceed the authority allowed under the waiver process with respect to the Social Security Act. Some of the major provisions being sought by states include the following:

Limits on Eligibility – Proposals limiting eligibility include work requirement provisions, lock-out provisions, drug testing, presumptive eligibility, retroactive coverage, and partial Medicaid expansion. While Indiana and Kentucky’s waivers have been approved and led the work requirement “frenzy”, at least 13 other states are considering similar measures, yet there is little evidence these provisions actually work. The work requirement provisions usually take the form of having “able-bodied” adults completing 20-40 hours of work activities, such as paid employment, volunteering, or approved job training and search activities. No additional federal funds will be made available to assist states in ensuring enrollees are compliant with these requirements.

Limits on enrollment – Four states (WI, AZ, KS, and UT) are considering measures such as enrollment time limits, lifetime limits, and enrollment caps. These measures include imposing a six-month lock-out penalty for individuals enrolled in Medicaid for 48 months and limiting the total number of months an individual can receive Medicaid over the course of their lifetime. The lifetime limits vary from 36 months to 60 months, depending on the state.

Benefit reductions – The Kentucky and Indiana waivers include provisions to eliminate coverage of non-emergency medical transportation. Massachusetts and Arizona are looking to limit covered pharmaceuticals to a closed formulary covering only one drug per therapeutic class. And Utah is looking to eliminate Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services.

Increased beneficiary costs – Kentucky and Indiana have provisions in their waivers that allow for emergency department copayments, and Indiana will charge monthly premiums for individuals with incomes from 0-150% of the federal poverty level (FPL).

The class action lawsuit, brought by 15 Kentuckians, filed in the District of Columbia alleging Kentucky’s recently approved Medicaid waiver violates the authority of the Secretary of the Department of Health & Human Services (HHS) under the Social Security Act, will go a long way in determining, indeed, whether states will be able to change Medicaid as we know it. And the state of Kentucky has filed a countersuit. The upcoming litigation will likely guide Medicaid’s future.




Gorman Health Group’s summary and analysis of the 2019 Advance Notice and Draft Call Letter for Medicare Advantage and Part D is now available. Download now

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