Medicaid Waiver TOOLKIT State Solutions. National Impact. • Medicaid Waiver Toolkit Prepared and edited by Naomi Lopez Bauman of The Goldwater Institute, Rea Hederman of The Buckeye Institute, and Lindsay Boyd Killen of The Mackinac Center for Public Policy, on behalf of the State Policy Network Healthcare Working Group Medicaid Waiver Toolkit TABLE OF CONTENTS Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Reform Ideas Included in This Toolkit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. Seek Work Requirements for Able-Bodied Medicaid Recipients. . . . . . . . . . . . . . . . . . . . . 8 2. Press to Freeze and Cap Your State Medicaid Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3. Re-determine Eligibility for Medicaid Recipients. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4. Embrace Direct Primary Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5. Incentivize Fiscal Responsibility Through Health Savings Accounts (HSAs). . . . . . . . . . . . 15 6. Impose Lockout Periods for Failure to Pay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 7. Impose Time or Cost Limits for Enrollment on Medicaid. . . . . . . . . . . . . . . . . . . . . . . . . . . 19 8. Incentivize Lower-Cost Surgical Options: Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 9. Reform Retroactive Eligibility for Medicaid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 10. Recognize and Encourage Telehealth Medicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 11. Consider Medicaid Queues and Charity Days to Address Provider Shortage. . . . . . . . . 27 12. Increase Medicaid Benefit Flexibility to Focus on Truly Vulnerable. . . . . . . . . . . . . . . . . 29 13. Introduce Wellness Incentives with a Health Savings Account. . . . . . . . . . . . . . . . . . . . . 30 14. Seek Exemption from Maintenance of Effort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 15. Consider Allowance for Provider-Covered Transportation . . . . . . . . . . . . . . . . . . . . . . . . 33 16. Create “Skin in the Game” for Able Medicaid Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . 35 17. Copays for Unnecessary ER Visits and Missed Appointments . . . . . . . . . . . . . . . . . . . . . 39 18. Blend and Braid Funding Streams from Multiple Programs. . . . . . . . . . . . . . . . . . . . . . . 39 19. Explore a More Immediate Consumer-Driven Model in Non-Expansion States. . . . . . . 41 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 • 20. Permit Practice of Balanced Billing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Executive Summary Despite the transfer of power in Washington, meet the spectrum of diverse needs of their Med- many states remain understandably frustrat- icaid population. We wish to empower all states ed that so-called Washington solutions to the to advance the next wave of innovative solutions mounting healthcare crisis remain elusive and to Medicaid’s challenges—solutions that focus on largely inadequate in their scope. While there improving quality, accessibility, and outcomes in may be cause for hope that more flexibility may be coming the most cost-effective manner. States, as adminis- from a new administration, states must realize what opportu- trators of the program, are in the best position to nities already exist to begin immediately reclaiming control of assess the unique needs of their respective Medic- their healthcare marketplaces. aid-eligible populations and to drive reforms that result in better health outcomes.” Whether or not “Obamacare” stays or goes, this toolkit outlines twenty reforms that states can begin seeking immediate- This new approach is as critical as it is welcome. The Medicaid ly to flex their muscles against Washington’s bureaucratic red program was originally supposed to provide healthcare services tape. By taking advantage of opportunities that already exist to the poor and disadvantaged. Today, the program has grown and demanding even greater flexibility through the process, far beyond that original mandate with negative implications for states can innovate with more affordable, accessible, mar- recipients, healthcare providers, policymakers, and taxpayers. ket-driven healthcare solutions whether or not Washington Medicaid now accounts for more than one-quarter of state passes reforms dismantling Obamacare. The reforms envision budgets (when counting federal and state funding) compared a Medicaid program that has resources to help the truly needy to 11 percent in 1988. This trend is unsustainable as Medic- and has transitioned healthy adults into the workforce where aid threatens to squeeze out spending for other state priorities they can live better. such as education and transportation. WHY NOW IS THE TIME TO USE WAIVERS This signal from HHS encouraging state innovation in the Medicaid program, is a historic opportunity for states to reimagine In March 2017, Secretary of Health and Human Services (HHS) Medicaid. Keeping in mind that legislative action aimed at re- Tom Price and Administrator of the Centers for Medicare and pealing or replacing the Affordable Care Act (ACA) could soon Medicaid Services (CMS) Seema Verna co-signed a letter to the provide additional opportunities; now is the time for states to nation’s governors. It called for federal-state collaboration in begin crafting new approaches for delivering higher-quality encouraging states to redesign their Medicaid programs. In the care to our most vulnerable while at the same time effectively letter, they stated: allocating taxpayers’ hard-earned dollars. “Today, we commit to ushering in a new era for The proposed Medicaid reforms in this healthcare policy tool- the federal and state Medicaid partnership where kit provide lawmakers and policy groups with a starting point states have more freedom to design programs that to begin proposals for reforming the program. While this Medicaid Waiver Toolkit • 5 toolkit is based on potential Section 1115 waivers and state States already have some discretion in how they implement plan amendments that states can now submit to HHS, these their Medicaid programs. In some cases, states may only need approaches can also be used as a framework for identifying to submit a state plan amendment, which describes how the statutory barriers to state flexibility under the proposed Block state will administer its program. Grant Funding and Per Capita Cap proposals being considered in Washington. This toolkit will focus primarily on these two implementation vehicles and is not intended to provide an exhaustive list of In Section 1902 of the Social Security Act, states may seek possible ways to improve the program in every state. It is a to modify statutory requirements of the Medicaid program starting point to encourage states to look at ideas that have thought a Section 1115 waiver. The HHS Secretary has enor- been submitted in past years and take the opportunity to tai- mous discretion over how and when these requirements can lor their Medicaid program to their state’s unique needs and be waived or modified. populations. The current administration could provide more a more favorable response to many of the waiver applications that were denied in the previous administration. 6 • State Policy Network Reform Ideas Included in This Toolkit Possible reforms for consideration include: TIER 1 REFORMS • Work Requirements and Activities • Enrollment Freezes & Caps • Eligibility Redetermination • Direct Primary Care • Health Savings Vehicles TIER 2 REFORMS • Lock-Out Periods • Lifetime Time Limits • Incentivize Lower Cost Surgical Options • Eliminate Retroactive Eligibility • Telehealth Medicine OTHER REFORMS • Medicaid Queues and Charity Days • Benefit Flexibility • Wellness Incentives • Maintenance of Effort • Use of Lower-Cost Transportation Options • Premiums • Copays for Missed Appointments and Unnecessary ER Visits • Blend Funding Streams • Consumer Driven Models • Balance Billing Medicaid Waiver Toolkit • 7 1. Seek Work Requirements for Able-Bodied Medicaid Recipients This work disincentive creates a “welfare cliff” which discour- One in seven Medicaid recipients is an able-bodied adult above the poverty level who will lose 100 percent of their benefits if they increase their income by even $1. Bottom line? The current system is rigged to discourage work—and it works. The Solution: States should take advantage of potentially newly granted flexibility from Washington to seek a waiver from this current approach and institute work requirements for able-bodied adults as a condition for their receipt of Medicaid benefits. ages individuals from seeking additional work and earnings. Instead of serving as a safety net, the program has become a poverty trap that can discourage additional work, promotion, or transfer to a better opportunity for participants. THE SOLUTION States need tools that give them more discretion in prioritizing spending and directing it toward the highest priorities, including the most vulnerable Medicaid recipients. But the Medicaid expansion funding formula may encourage states to cut spending and services on the most vulnerable in times of budget crises. For example, a state would need to cut about $2 in Medicaid spending on the traditional Medicaid population to save $1 of state spending. But because the federal government is picking up most of the tab for the expansion population, a state would need to cut up to $10 in Medicaid spending on the expansion THE PROBLEM population to save $1 in state spending. The Medicaid program was originally designed to provide a Multiple states have previously sought to impose work require- safety net of healthcare services for the poor and disadvan- ments on able-bodied Medicaid recipients. Unfortunately, the taged in society. Today, the program goes far beyond that. Of Centers for Medicare and Medicaid Services (CMS) has never the 73 million people currently enrolled in the program, about approved a waiver application that would make work a condi- one in seven is an able-bodied adult above the poverty level. tion of Medicaid eligibility. These individuals lose 100 percent of their Medicaid benefits once their incomes rise above the income eligibility threshold IMPLEMENTATION VEHICLE (138 percent of poverty). In other words, if they earn 139 per- States may seek a Section 1115 waiver authority under Sec- cent of the poverty level, they lose all Medicaid benefits. tion 1902(a)(10)(A) of the Social Security Act to seek to impose work requirements for “able-bodied adults.” 8 • State Policy Network POTENTIAL IMPACT OF REFORM ADDITIONAL RESOURCES A proposed work requirement shines a bright light on why Erik Randolph Consulting, “Summary of the Welfare Cliff Proj- the Medicaid expansion is, in some cases, counterproductive. ect” at http://www.erikrandolphconsulting.com/welfare-cliff/. States need the tools to ensure that limited resources are directed to the truly needy, operating as a temporary safety net Nic Horton and Jonathan Ingram, “Work Requirements Are for able-bodied adults. Working for Kansas Families” at https://thefga.org/wp-content/ uploads/2017/07/Work-Requirements-are-Working-for-Kan- Imposing work requirements for able-bodied adults as a condi- sas-Families.pdf. tion of eligibility will not only ensure that recipients continue to engage in productive work activities, it will also add protections for the most vulnerable who rely on the program. Medicaid Waiver Toolkit • 9 2. Press to Freeze and Cap Your State Medicaid Program The Medicaid freeze halts enrollment in the Medicaid program States are required to accept all eligible applicants for Medicaid and the consequence is an unsustainable growth of a program that states can no longer afford. The Solution: States should file waiver requests that press Washington for permission to freeze and cap enrollment to Medicaid at current levels. Such freezes and caps would slowly deflate the program as enrollees naturally cycle off and curtail ballooning costs. either permanently or for a specified period of time. As recipients find work and leave the program, the Medicaid rolls decrease. Medicaid freezes have been a valuable way to control a program that has grown too quickly. IMPLEMENTATION VEHICLE In 2011, Arizona allowed a Medicaid waiver to expire, and the expiration allowed the state to freeze the enrollment of the childless adult population in July 2011. As a result, the Arizona enrollment numbers drastically declined from almost 225,000 in the spring of 2011 to less than 68,000 by December 2013. HHS denied a waiver request to freeze enrollment for traditional Medicaid population. This waiver was for Section 1902(GG), which is the maintenance of effort enacted in the Affordable Care Act. THE PROBLEM In 2005, Maine started an experimental expansion of the Medicaid program for childless adults called Mainecare. Enrollment Medicaid is an entitlement program, meaning that someone surged, and Maine quickly froze enrollment. In nine months, can use the Medicaid program if they qualify for its coverage. enrollment in the program fell 40 percent. In 2012, Maine sub- States are required to accept all eligible recipients in the cur- mitted a waiver from the ACA Maintenance of Effort on the rent Medicaid program. grounds the state was running a deficit and Medicaid was not THE SOLUTION affordable. A Medicaid waiver that freezes or caps enrollment would After expanding their program to able-bodied, childless adults change Medicaid from an open-ended entitlement program to in 1994, Tennessee began disenrolling 170,000 from their ex- a program with a budget. The Obama administration said that pansion program in 2005 due to budget shortfalls. Economic waivers that sought to limit Medicaid enrollment would not be researchers attributed a sudden increase in employment to allowed. A Medicaid freeze would violate an applicable mainte- those individuals re-entering the workforce. nance of effort law as well. 10 • State Policy Network POTENTIAL IMPACT OF REFORM ly eliminate the expansion population and allow Medicaid to A Medicaid freeze would not harm current enrollees in the sys- again focus on the truly needy. tem, and it would re-emphasize private market alternatives. Many Medicaid recipients move in and out of the labor force ADDITIONAL RESOURCES and may not qualify for Medicaid for a period. This “churn” Jonathan Ingram, Nic Horton and Josh Archambault, “Welfare would mean that recipients would leave the Medicaid program to Work: How States Can Unwind “Obamacare” Expansion and and not return. This would encourage them to find alternative Restore the Working Class,” Forbes.com, December 3, 2014, healthcare through either private coverage or charitable insti- at https://www.forbes.com/sites/theapothecary/2014/12/03/ tutions. The rate of churn is significant, and one estimate is that welfare-to-work-how-states-can-unwind-obamacare-expan- almost all Medicaid expansion recipients would exit Medicaid sion-and-restore-the-working-class/#d4747ad302a2. for a short period of the next three years. This would effective- Medicaid Waiver Toolkit • 11 3. Re-determine Eligibility for Medicaid Recipients States are increasingly shifting more of their Medicaid popula- States often have lax and infrequent systems for ensuring that Medicaid beneficiaries do not become ineligible for reasons ranging from relocation to increases in income. This haphazard approach can result in millions of wasted taxpayer dollars. The Solution: States should revise their state plan amendments with CMS to include a more regular and diligent verification system to protect against waste, fraud and abuse. tions from a fee-for-services model, where the program pays for services used, to managed care, where the program pays a flat amount for each enrollee. That is why it is important for states to ensure that only eligible individuals participate in the program. It is a fact that there are ineligible people enrolled in Medicaid. While there are cases of intentional fraud, this situation frequently occurs for a variety of other reasons. For example, an enrollee may move out of state, obtain private health coverage, or may no longer be eligible due to income above the eligibility threshold. THE SOLUTION Federal law (42 CFR 431.10) requires that each state partici- THE PROBLEM pating in the Medicaid program submits a state plan to CMS, setting many of the operational and policy parameters of their When an ineligible person is not removed from the managed program. The state plan must include state-specific standards care rolls, the state is essentially throwing away taxpayer mon- for determining Medicaid eligibility. ey. Every dollar spent on an individual who is no longer eligible for the program—often not even living in the state or now cov- In 2012, Illinois lawmakers implemented the SMART Act (Save ered through other insurance—is a dollar diverted away from Medicaid Access and Resources Together) which required a sys- other state priorities and taxpayers’ wallets. tematic audit of Medicaid eligibility. They found that the Medicaid rolls contained more than 8,000 dead people and that The fiscal impact of the Medicaid expansion was already a con- 300,000 people no longer met the requirements for Medicaid cern in many states before the ACA became law. Now the dra- eligibility. matic increase in Medicaid rolls threatens to leave states stuck footing the bill for a larger-than-predicted number of enrollees IMPLEMENTATION VEHICLE with the prospect of doing so with fewer federal dollars in the A state may revise its eligibility verification plan by filing a state coming years should there be additional reforms and/or feder- plan amendment with CMS. al spending limits imposed on the Medicaid program. 12 • State Policy Network POTENTIAL IMPACT OF REFORM ADDITIONAL RESOURCES Waste and fraud squeeze out spending in other priority areas Jonathan Ingram, “Stop the Scam: How to Prevent Welfare while also diverting taxpayer resources away from the neediest Fraud in Your State,” The Foundation for Government Account- patients. State lawmakers should ensure that taxpayer dollars ability, April 2, 2015, at https://thefga.org/wp-content/up- are being spent wisely, ensuring that only those who are eligi- loads/2015/04/StoptheScam-PreventWelfareFraud-Paper-fi- ble are benefiting from the program. nal.pdf. Medicaid Waiver Toolkit • 13 4. Embrace Direct Primary Care THE SOLUTION Many Medicaid patients face long lines when receiving care or the complete lack of doctors willing to treat them due to diminishing federal reimbursements for provider costs. The consequence is a growing gap between the supply and demand of healthcare. Direct Primary Care (DPC) offers high-quality care for flat, low monthly costs making it both affordable and desirable for low-income patients and Medicaid beneficiaries. Medicaid can use innovations in healthcare delivery, like direct The Solution: States should integrate DPC into their Medicaid programs, allowing Medicaid to pay DPC networks directly for the care of Medicaid patients. would also need to allow DPC companies to be paid by Medic- primary care (DPC), to offer equal or better care for a lower price. In DPC, a patient pays a monthly fee directly to a provider in exchange for healthcare. The provider can then focus on medical care instead of worrying about billing or insurance companies. These savings can reduce the price of medical services by up to 20 percent. In some states, the Medicaid program can pay directly to a DPC provider network to allow Medicaid recipients to use DPC. IMPLEMENTATION VEHICLE Some states will need to change their laws to allow direct primary care providers to easily treat Medicaid recipients. States aid. Funding could go directly to the DPC provider either from the state or in partnership with an existing Medicaid provider. States should file a new State Plan Amendment to ensure federal approval for different payment rates to Medicaid providers. THE PROBLEM Traditional Medicaid is based on either the old fee for service ADDITIONAL RESOURCES DPC Frontier, “Medicaid—A Full Analysis” at http://www.dpcfrontier.com/Medicaid/. system or managed care. Most Medicaid programs do not take advantage of innovations in the delivery of healthcare that William N. Wu, Garrison Bliss, Erika B. Bliss, and Larry A. Green, lower overall costs. As a result, Medicaid recipients can have “A Direct Primary Care Medical Home: The Qliance Experi- trouble finding doctors or getting effective care due to low re- ence,” Health Affairs, May 2010, vol. 29, No. 5, pp. 959-962 at imbursement rates and lack of providers who accept Medicaid http://content.healthaffairs.org/content/29/5/959.full. patients. Meanwhile Medicaid costs continue to grow while straining state budgets. 14 • State Policy Network 5. Incentivize Fiscal Responsibility Through Health Savings Accounts (HSAs) enrollees have their money in their account. By “having skin in Medicaid beneficiaries sometimes overpay or use unnecessary services because they have few incentives to be cost-conscious. The Solution: Introducing Medicaid recipients to the same incentives of private coverage by encouraging (or requiring) contributions toward an HSA or allowing them to purchase private coverage with HSA dollars increases awareness of the costs of services and can help to ease transition from Medicaid to private plans. the game,” patients will have an additional incentive to find the most effective care. Indiana obtained a waiver that expanded Medicaid and established a health savings vehicle. CMS waived Section 1902(A)(10) (B) to facilitate the creation of the health savings vehicle, to allow bonus contributions to an account and to alter the mix of benefits. Kentucky’s proposed Medicaid plan would establish two saving vehicles. One of the savings programs could be used to purchase optional, additional benefits while the other account is used to pay for cost-sharing provisions such as deductibles. Kentucky would contribute toward the deductible account with half of the deductible balance being allowed to roll over into the optional benefits account. Kentucky will also pay money to the optional account if an enrollee performs certain healthy THE PROBLEM Medicaid encourages beneficiaries to use medical services they activities. In addition, Kentucky requested a waiver for 1902(A) (10)(B) to help create the savings vehicles. may not need. In a fee for service system, providers can have an IMPLEMENTATION VEHICLE incentive to provide more expensive services. Medicaid epito- States are using a Section 1115 waiver from the federal gov- mizes the problem of a healthcare system where neither the ernment to establish HSAs. A state should submit a waiver for patient nor provider has an incentive to find the most efficient Section 1902(a)(10)(B) to help create the account and for Sec- service. tion 1902(A)(14) to implement cost sharing and contributions. THE SOLUTION The contributions to the health savings vehicles are not considered premiums, but rather savings that are available for qual- State Medicaid programs can use HSAs—a tool that is already ified use by an enrollee. Some of the savings vehicles are de- available to the private sector. HSAs encourage savings for med- signed to facilitate the transition from a Medicaid program to ical needs and smarter health spending by account holders. private coverage, and funds in a savings vehicle could be used Several states have established forms of HSAs that use funds to pay for private health premiums. The Healthy Indiana plan from the Medicaid program. Many states require or encourage was innovative in its use of savings vehicles and led to similar enrollees to contribute to the savings account to ensure that plans in neighboring states. Medicaid Waiver Toolkit • 15 POTENTIAL IMPACT OF REFORM ADDITIONAL RESOURCES Private application of HSAs can lead to and has resulted in Seema Verma and Brian Neale, “Healthy Indiana 2.0 is Challeng- lower health spending. By adopting this reform, states could ing Medicaid Norms” http://healthaffairs.org/blog/2016/08/29/ see lower Medicaid expenditures, especially in Fee-For-Service healthy-indiana-2-0-is-challenging-medicaid-norms/. (FFS) states. As recipients build up health savings, it could be easier to transition them to private insurance coverage and Lewin Group, Inc., “Indiana Healthy Indiana Plan 2.0: Interim Eval- use the savings account to pay for a premium. These accounts uation Report” https://www.Medicaid.gov/Medicaid-CHIP-Pro- could also help reduce Medicaid enrollees and strengthen the gram-Information/By-Topics/Waivers/1115/downloads/in/ private market. Healthy-Indiana-Plan-2/in-healthy-indiana-plan-support-20-interim-evl-rpt-07062016.pdf. 16 • State Policy Network 6. Impose Lockout Periods for Failure to Pay for non-payment after 60 days. Several states have proposed Many states require Medicaid recipients to share some portion of the costs. However, few states have any enforcement mechanisms when recipients fail to pay their share of the costs. The Solution: States should include a maximum 90-day lockout period in waiver requests for non-payment or missed appointments (consistent with the maximum lockout period already permitted by the feds for the CHIP program). THE PROBLEM a lockout period, where Medicaid recipients are barred from benefits for a certain period or until they pay their share of costs. While there is no current lockout period in Medicaid, there is a lockout period for CHIP with a maximum of 90 days. A Medicaid waiver that institutes a lockout period would bring both programs into parity. Lockout periods would encourage Medicaid enrollees to pay their premiums. Research on existing lockout periods found that enrollees were aware of the potential to lose benefits for non-payment. Over three-fourths of Healthy Indiana enrollees were aware of the consequence for premium nonpayment. Recipients who are locked out due to non-payment can re-enroll if they meet certain requirements. Many states submitted waivers to the Obama administration that included lockout periods for either non-payment of premi- States have few ways to encourage Medicaid recipients to fol- ums or failure to follow other rules such as enrollment renew- low Medicaid rules. As a result, recipients are not penalized als. The administration rejected some of these waivers while when they miss medical appointments or fail to pay their share approving others in the context of Medicaid expansion. of costs. States need ways to encourage recipients to more effectively use the program and prevent waste. THE SOLUTION In 2016, Indiana submitted a waiver that would create a sixmonth lockout for able-body recipients who did not re-enroll in Healthy Indiana during the enrollment period. The state want- In the private sector, missed payments often result in the can- ed to institute this lockout period to simulate the private mar- cellation or suspension of a service or a good. A Medicaid lock- ket and prepare recipients for private coverage. CMS rejected out period would temporarily bar Medicaid recipients from that element of the waiver, noting that no lockout had ever Medicaid services as a result of missed payments. been allowed for things like missing enrollment deadlines. Indiana does have an income-based lockout approved that would More than half of states charge a type of premium for the Med- affect Medicaid recipients who miss premium payments. icaid benefit, and over 20 states will cancel Medicaid benefits Medicaid Waiver Toolkit • 17 Kentucky submitted a waiver that seeks to duplicate Indiana’s IMPLEMENTATION VEHICLE six-month lockout for failure to pay premiums over a sixty-day States would submit a Section 1115 waiver seeking to impose a period. Recipients who had a family income over 100 percent lockout period for failure to pay Medicaid premiums. of federal poverty level would be disenrolled and locked out of Medicaid for six months. Recipients in poverty would have POTENTIAL IMPACT OF REFORM restricted benefits. Locked out recipients can re-enroll if they Lockout periods would encourage Medicaid recipients to pay pay past due premiums, the current month’s premium, and at- their share of a medical payment in a timely fashion. It would tend a financial literacy class. The waiver is currently pending give them experience in handling payments in the private before CMS. sector and make the transition to private coverage easier. A lockout period can also help to ensure that recipients are not In 2015, Montana had a waiver approved that disenrolled recipients over 100 percent of federal poverty level for missed abusing the system and preserve Medicaid for the truly needy. premiums. Under the proposed waiver, recipients were locked ADDITIONAL RESOURCES out of the Medicaid program until they had paid their arrears Tricia Brooks, Sean Miskell, Samantha Artiga, Elizabeth Cor- or a lien was collected against their income tax liability. The nachione and Alexandra Gates, “Medicaid and CHIP Eligibility, waiver application specified that section 1902 (a)(8) would Enrollment, Renewal and Cost-Sharing Policies as of January be waived to allow disenrollments for non-payment. The final 2016: Findings from a 50-State Survey,” The Kaiser Commis- waiver modified the lock-out period to a ninety-day grace pe- sion on Medicaid and the Uninsured, January 2016 at http:// riod for non-payment and allowed re-enrollment at the end of files.kff.org/attachment/report-medicaid-and-chip-eligibility- a quarter. enrollment-renewal-and-cost-sharing-policies-as-of-january2016-findings-from-a-50-state-survey. 18 • State Policy Network 7. Impose Time or Cost Limits for Enrollment on Medicaid THE SOLUTION Medicaid recipients stand to lose thousands of dollars in benefits if they earn just one dollar above the income eligibility requirement for the program thus discouraging them from bettering their circumstances and encouraging them to stay dependent on state benefits. The Congressional Budget Office (CBO) examined the ACA’s ef- The Solution: States should submit a Section 1115 waiver to CMS seeking to impose limits to the costs a state can incur from an individual’s enrollment on Medicaid by limiting the number of years an individual can receive Medicaid, the total amount of dollars an individual receives, the total amount a state spends per person’s tenure on Medicaid, or other such reforms. the Medicaid program before there is a change in their bene- fects on the labor market and estimated that it will result in a reduction in the total hours of work almost entirely driven by workers choosing to work less. Establishing time limits on dependency programs prevents recipients from becoming dependent on the program and choosing to reduce their hours worked or dropping out of the labor force. A time limit is a restriction on how long a beneficiary can be on fit structure or they are no longer eligible for benefits. A lifetime time limit is how long a beneficiary can be on Medicaid in their working life. Waivers for a restriction on lifetime benefits have always applied to only able-bodied working age adults. Able-bodied working age adults will lose Medicaid eligibility if they exceed their lifetime limits. Lifetime benefit limits were a key piece of welfare reform that was enacted in a bipartisan fashion in 1996. Studies of welfare reform found that predictions of hardship and woe were inflated as recipients either found work or other forms of sup- THE PROBLEM Medicaid is a means-tested program that provides benefits to eligible recipients below a certain income level. Means-tested port. However, some lifetime benefit supporters are concerned that the time limit had limited impact on welfare recipients due to many loopholes in the welfare reform law. programs provide an economic incentive for beneficiaries to IMPLEMENTATION VEHICLE reduce work effort in order to maintain their benefits. Many A state would need to submit a Section 1115 waiver and CMS economic studies have found that beneficiaries do act ratio- would need to approve it before Medicaid time limits can be nally and work less when they receive means-tested benefits. implemented by a state. A waiver that includes time limits seeks to reduce this type of moral hazard by encouraging able-bodied beneficiaries to re- In recent years, many Medicaid waivers that have proposed turn to the workforce. time limits with a strict lifetime limit have been rejected. Medicaid Waiver Toolkit • 19 In 2016, the Obama administration rejected a waiver from Ar- POTENTIAL IMPACT OF REFORM izona that would have established a five-year lifetime benefit Time limits implemented with welfare reform have demon- limit for Medicaid recipients. Arizona did not want Medicaid strated mixed results and very few welfare recipients have ac- to increase dependency and adopted a lifetime limit similar to tually reached the end of their benefits. The impact of a Medic- welfare programs. That administration believed that time limits aid time limit will depend upon a limited number of exceptions do not contribute to healthy outcomes and are against the goal to the time limit rule. This reform should help increase labor of the Medicaid program. supply and productivity as Medicaid recipients will no longer have disincentives to work in order to remain in the Medicaid A 2008 Indiana waiver did not have a time limit but did have a dollar limit of $1 million. The more recent Healthy Indiana 2.0 did not have any time or dollar limits. program. ADDITIONAL RESOURCES Mary Farrell, Sarah Rich, Lesley Turner, David Seith and Dan In 2015, Michigan submitted a waiver that changed benefits for Bloom, “Welfare Time Limits: An Update on State Policies, Im- recipients who exceeded 48 months. These recipients would plementation and Effects on Families,” The Lewin Group and face either higher cost sharing of 7 percent or could receive a mdrc, April 2008 at subsidy to enroll in private coverage. A waiver of 7 percent cost http://www.mdrc.org/publication/update-state-welfare-time- sharing was needed since current law restricts cost sharing to limit-policies-and-their-effects-families. 5 percent. CMS and Michigan agreed to a modified waiver concept that significantly weakened the time limits. 20 • State Policy Network 8. Incentivize LowerCost Surgical Options: Hospitals beneficiaries to choose HOPDs by imposing copays on ASCs Medicaid and Medicare patients who opt for ambulatory surgery centers (ASCs) over costlier hospital outpatient departments(HOPDs) can save money for themselves and the programs. Despite this fact, many states set up the wrong incentive by charging copays for use of ASCs but not for HOPDs. The Solution: States operating fee-forservice Medicaid programs should eliminate copays for ASCs. All states should make ASCs preferred providers and require prior authorization for use of HOPDs. and not HOPDs. THE SOLUTION Given the cost savings that are already being realized by private insurers, the Medicare program, and employers, states should seek to incentivize the use of ASCs when available and appropriate for beneficiaries. As a first step to incentivizing the use of ASCs, states should re-examine their copayment structure for the use of hospitals and ASCs. States operating Medicaid fee-for-service (FFS) programs should begin by eliminating copays for the use of ASCs over HOPDs and imposing prior authorization requirements on the use of HOPDs. IMPLEMENTATION VEHICLE Many states already impose copays for ASCs and HOPDs and use prior authorization. These systems should be aligned to en- THE PROBLEM sure that ASCs are the preferred provider (when available and suitable for the patient). Ambulatory surgery centers (ASCs) are free-standing medical facilities that provide same-day surgical, preventive, and diag- States may impose copays that are below federal limits and use nostic procedures. They treat less-complicated medical cases prior authorization. To make changes to their current system, than those that require overnight stays and are typically best states may file a state plan amendment with CMS. performed in hospitals. ASCs also have a strong record of positive patient outcomes, high quality, and overall patient satis- POTENTIAL IMPACT OF REFORM faction—often at a fraction of the cost charged by hospitals. A 2013 study by researchers at the University of California, Today, Medicare-certified ASCs are in all 50 states Berkeley found that ASCs saved the Medicare program $7.5 billion between 2008 and 2011. The researchers also found Due to ASCs lower costs and high quality of care, employers that ASCs have the potential to save the program $57.6 billion and private insurance have been seeking ways to incentivize over the next decade. The same cost savings and health bene- patient selection of ASCs over hospitals for routine surgical fits from ASCs in the Medicare program should be available to procedures. However, many states still incentivize Medicaid states in the Medicaid program. Medicaid Waiver Toolkit • 21 ADDITIONAL RESOURCES Ambulatory Surgery Center Association with the University of California, Berkeley, “Medicare Cost Savings Tied to Ambulatory Surgery Centers,” September 10, 2013, at http://www.ascassociation.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=7b33b916-f3f1-42 e5-a646-35cc2f38fe4d&forceDialog=0. 22 • State Policy Network 9. Reform Retroactive Eligibility for Medicaid centive not to enroll in Medicaid if they have to pay a premium Providers and some individuals eligible for Medicaid can request retroactive coverage for unpaid medical claims for the three months prior to enrollment applications. Consequences include incentives for providers to push patients to Medicaid enrollment to ensure payment for past services and for individuals with copays to delay enrollment— knowing they will be covered—to keep from paying their fair share. The Solution: States should apply for a Section 1115 waiver to eliminate the three months of retroactive Medicaid eligibility. Additionally, states should also make benefits available only when individuals have begun contributing to their plan. since they can always be covered after they need medical care. THE SOLUTION Many states are moving toward cost sharing provisions. To make these Medicaid reforms work, states need Medicaid recipients to enroll prospectively. Several states either have received or are applying for waivers that would eliminate retroactive eligibility. Indiana’s waiver plan disallowed retroactive eligibility. Instead, benefits would commence when a potential recipient had enrolled in a Healthy Indiana plan. The state also wanted to disallow benefits until some enrollees had started to contribute to the savings plan. New Hampshire received a similar waiver for their premium assistance program. Arkansas also sought a waiver to eliminate retroactive eligibility. Arkansas wants to move enrollees from Medicaid to private coverage, and retroactive eligibility makes this transition harder since there is not a comparable eligibility requirement THE PROBLEM In some cases, Medicaid provides retroactive coverage for up to in private coverage. This waiver was conditionally approved by CMS in 2016. three months for beneficiaries. To receive benefits, a recipient must be eligible for Medicaid during the retroactive period. This creates two incentive problems. The first problem is that some providers will want to enroll people into Medicaid to ensure payments of procedures up to three months in the past. The second problem is that if a patient knows he can be covered after the fact that patient may have an incentive to delay en- With the goal of cost savings, this reform helps make some Medicaid behave more like its private market counterparts. rollment. This is particularly a problem with Medicaid programs that have cost-sharing provisions. A patient has an economic in- Medicaid Waiver Toolkit • 23 Kentucky made a similar waiver request where coverage would POTENTIAL IMPACT OF REFORM begin when a premium was paid instead of retroactive cov- With the goal of cost savings, this reform helps make some erage. Again, the goal is to align the Medicaid program with Medicaid behave more like its private market counterparts. private coverage that does not begin until the first premium It encourages potential Medicaid recipients to enroll in the is paid. program before they need coverage. If Medicaid recipients do IMPLEMENTATION VEHICLE States will need to apply for a Section 1115 waiver and have CMS approve the waiver. States wishing to change the period in not enroll, then they cannot accrue savings in a savings vehicle or use private coverage. Eliminating retroactive eligibility strengthens many other Medicaid reform ideas. which retroactive benefits are allowed will need to waive Sec- ADDITIONAL RESOURCES tion 1902(a)(34). Seema Verma and Brian Neale, “Healthy Indiana 2.0 Is Challenging Medicaid Norms,” Health Affairs Blog, August 29, 2016, http://healthaffairs.org/blog/2016/08/29/healthy-indiana-20-is-challenging-medicaid-norms/. 24 • State Policy Network 10. Recognize and Encourage Telehealth Medicine of telemedicine in its Medicaid program. There is still room Telehealth can help deliver high-quality, lower cost healthcare to those who may lack efficient access to care. However, many states are failing to unlock its full potential and integrate it more broadly into their systems. The Solution: States should reform regulations to permit the broad use of telemedicine, including eliminating scopeof-practice laws that have traditionally prevented telehealth from use in Medicaid programs and prohibitions against the practice of medicine across state lines. for growth where more states can use this innovation more broadly. Telemedicine allows health providers to see patients through electronic services. Providers can make a diagnosis and issue prescriptions. Costs of telemedicine services are lower than traditional medical care and can help lower overall costs and stabilize state budgets. Telemedicine  can allow  patients to see providers from their own homes—an especially important feature for rural and elderly​ patients who may need to travel great distances to see providers. Originally, many telemedicine services were restricted to rural Medicaid recipients but, over time, states have gradually increased the areas telemedicine providers can serve. IMPLEMENTATION VEHICLE States will need to examine their own laws to ensure healthcare regulations allow broad use of telemedicine. For example, some THE PROBLEM Many healthcare providers do not see Medicaid recipients due scope of practice laws may restrict Medicaid services from being offered via telemedicine. Other laws may bar medical providers from using telemedicine to practice across state lines. to low reimbursement rates. Additionally, many rural areas lack access to health providers. If a state takes advantage of telemedicine being cheaper than face-to-face coverage, the state will need to submit a differ- The federal government is now using distance to a healthcare ent State Plan Amendment (SPA) in order to pay a different provider as a way to monitor states’ Medicaid programs. States reimbursement amount. In the SPA, the state may also want need creative and efficient new solutions to provide healthcare to describe what coverage is available under the telemedicine to Medicaid recipients. services. THE SOLUTION A Section 1115 waiver may be necessary if a state is changing Telemedicine is a type of medical care where healthcare pro- some of the fundamental federal rules regarding Medicaid ser- viders are not physically present while providing medical ser- vices. There are examples of states, like Illinois, incorporating a vices to a patient. Almost every state now includes some form Section 1115 waiver with a SPA to expand telemedicine. Medicaid Waiver Toolkit • 25 ADDITIONAL RESOURCES Center for Connected Health Policy, “State Telehealth Laws and Medicaid Program Policies,” March 2016 at http://www. cchpca.org/sites/default/files/resources/50%20State%20 FINAL%20April%202016.pdf. Medicaid.gov, “Telemedicine,” at https://www.Medicaid.gov/ Medicaid/benefits/telemed/index.html. 26 • State Policy Network 11. Consider Medicaid Queues and Charity Days to Address Provider Shortage While low reimbursement is certainly an important factor in Increasingly, healthcare providers are choosing not to accept Medicaid patients due to diminishing reimbursement rates and missed appointments (among other reasons). Medicaid beneficiaries face long lines or a total dearth of Medicaid providers. The Solution: Rather than allowing medical providers to heavily restrict the amount of Medicaid patients they will treat, states should allow providers to set a limited number of dates and times during which they will see Medicaid patients. This solution limits providers’ financial liability while making caregivers more accessible to Medicaid patients. providers not accepting Medicaid patients, it is not the only one. A variety of other factors, such as missed appointments, also contribute to the shortage of providers. THE SOLUTION To increase access to healthcare providers, states should allow “Medicaid and charity care days” where providers could offer patients queued for service care under Medicaid. States could set parameters when this could be allowed, such as a limited number of days per week. While a handful of states require equal treatment between Medicaid beneficiaries and the general public as part of their administrative regulations or contractual provisions, there is no explicit federal requirement. In fact, states seem to have their interpretations of federal law and judicial holdings surrounding this issue. As a result, interpretations vary widely. Most Medicaid providers already restrict the number of THE PROBLEM Medicaid patients they treat. According to a Goldwater Institute legal analysis, “limiting the days or times for which A majority of states report difficulty in ensuring an adequate Medicaid beneficiaries may schedule appointments is far number of healthcare providers participate in their Med- less restrictive than only allowing a certain amount of Med- icaid programs. This finding has been confirmed, repeat- icaid patients overall. Therefore, although there may be po- edly, by the U.S. Government Accountability Office (GAO). tential violations of Title VI by restricting scheduling times, it seems more likely to pass the court’s scrutiny than not.” Not only is patient access far more limited under Medicaid than under private coverage, but Medicaid patients in some states Federal law (42 CFR 447.20) sets out state plan requirements may now be facing, even more difficulty in obtaining care as for providers, such as parameters and rules for Medicaid reim- Medicaid enrollment has dramatically increased while the bursement. number of providers has not. Medicaid Waiver Toolkit • 27 IMPLEMENTATION VEHICLE POTENTIAL IMPACT OF REFORM While Medicaid patient queueing has not yet been pursued, The Medicaid patient high “no-show” rate is a contributing fac- states should seek to revise their provider provisions to allow tor for physicians when limiting the number of Medicaid patients for it. As a first step, a state might limit this approach to medical that they are willing to treat (even if they participate in the pro- specialties where there is an acute shortage of Medicaid pro- gram). That is because a provider can lose the potential Medic- viders. A state plan amendment could accomplish this reform. aid payment, which is almost always well below private coverage reimbursement and sometimes below the actual cost of providing care. By allowing providers more (even if limited) flexibility in scheduling, this reform could increase the number of willing providers for medically underserved Medicaid populations. 28 • State Policy Network 12. Increase Medicaid Benefit Flexibility to Focus on Truly Vulnerable THE SOLUTION States are required to provide comparable benefits to a severely disabled enrollee as an able-bodied adult on Medicaid–resulting in an inability for states to focus on the truly needy and a poor allocation of resources. States should have the flexibility to determine the benefits and The Solution: In a Section 1115 waiver request, states should seek permission to adjust their menu of benefits offered to the optional Medicaid population to allow for a more customized approach to addressing actual healthcare needs. States will need to seek a Section 1115 waiver (1902(a)(10)(B)) services that are available to optional individuals. This frees up limited resources for those with the greatest medical needs and encourages innovation in a variety of plan benefit designs including consumer-driven approaches to coverage. IMPLEMENTATION VEHICLE to provide alternative benefit packages to their optional Medicaid populations. POTENTIAL IMPACT OF REFORM Allowing states to vary the Medicaid benefits package based on the recipient’s eligibility group, will provide states the flexibility—and incentives—to better tailor their Medicaid health THE PROBLEM benefit plans to the needs of varying populations. States are required to provide comparable services for both ADDITIONAL RESOURCES their mandatory and optional populations. This requirement Medicaid.gov, “List of Medicaid Eligibility Groups” at https://www. forces states to provide the same comprehensive benefits Medicaid.gov/medicaid-chip-program-information/by-top- package to a severely disabled Medicaid recipient as to an ics/waivers/1115/downloads/list-of-eligibility-groups.pdf. able-bodied adult. This requirement has the potential to misallocate resources by possibly limiting needed resources for the most medically vulnerable while providing nonessential benefits to others. In recent years, there have been more incidents of states placing developmentally disabled recipients on waiting lists for care. Realizing that some individuals in the optional Medicaid population have significant medical needs, this approach should focus on the able-bodied, optional beneficiaries. Medicaid Waiver Toolkit • 29 13. Introduce Wellness Incentives with a Health Savings Account vehicle that would include deposits from the previous year’s Traditionally, Medicaid patients have been insulated from understanding the true costs of care and lack exposure to managing popular private plan components such as wellness incentives. This experience could also make make it easier for them to smoothly transition to private coverage. The Solution: File a Section 1115 waiver to introduce a health savings account (HSAs) vehicle to beneficiaries, allowing funds to roll over from year-to-year with a sliding scale for premium contributions that could be spent on enhanced programs such as job and training activities, as well as cover copays and any fees for non-emergency use of the emergency room. THE PROBLEM deductible funds, sliding scale premium contributions, participation in disease management, community engagement, job training activities, and GED programs. Funds would be deducted from the account for inappropriate emergency room use and routine copays. The waiver proposal excludes some groups such as pregnant women, children, and the “medically frail.” IMPLEMENTATION VEHICLE Kentucky is applying for a Section 1115 waiver. The waiver is currently under consideration and could be approved or partially approved at any moment. POTENTIAL IMPACT OF REFORM Kentucky’s waiver is a strong example of reimagining the Medicaid program. This proposal, if approved, would take an important step toward infusing the Medicaid program with patient empowerment and consumer engagement as well as put it on a path toward long-term self-sufficiency. ADDITIONAL RESOURCES Kentucky Health demonstration proposal at http://chfs.ky.gov/ Too often, Medicaid recipients are disconnected from program NR/rdonlyres/69D38EB6-602F-4707-933C-80D5AAE907F7/0/ costs, incentives for wellness, and other obstacles that hinder KYHEALTHWaiverFINAL.pdf. their long-term self-sufficiency. THE SOLUTION A Medicaid version of the popular employee wellness incentive is now being considered in one state. Kentucky is proposing to establish My Rewards Account which would be a health savings 30 • State Policy Network 14. Seek Exemption from Maintenance of Effort rules have expired except for one concerning children under 19 “Maintenance of effort” requires states to set and maintain the same eligibility requirements for Medicaid over fixed periods of time. It is an inflexible rule that keeps states from capping enrollment or adjusting eligibility criteria to lower costs. The Solution: Include an exemption request from maintenance of effort in a Section 1115 waiver to CMS. in Medicaid and CHIP. THE SOLUTION States could use a waiver to avoid maintenance of effort to regain control of their eligibility requirements. This would allow states to manage their Medicaid enrollment population to protect recipients and the budget. Under maintenance of effort rules, states will not be able to innovate or make changes to the Medicaid program that could adjust the level of benefits. In 2011, 33 governors wrote a letter to the Obama administration asking for relief from the federal requirements. The Obama administration responded by saying the maintenance THE PROBLEM of effort would be not changed, and states would not receive the sought after flexibility. While some states tried to use the States are greatly restricted in setting eligibility rules for Medic- waiver process for relief, no state was successfully able to use aid enrollment, making it difficult to keep costs under control. a waiver to avoid the Obama administration maintenance of Maintenance of effort rules require that states keep their Med- effort restrictions. icaid eligibility requirements the same for a certain period. States are also barred from implementing a new enrollment or IMPLEMENTATION VEHICLE otherwise restricting the number of recipients. A state must seek a Section 1115 waiver from the federal government. Some states have used Section 1902 (GG) for their These requirements are instituted when the federal government is worried about states trying to reduce Medicaid rolls or waiver. changing rules regarding eligibility or cost sharing. The federal POTENTIAL IMPACT OF REFORM government has made federal funds to the states contingent A state would be able to make substantial changes to its Med- upon a state agreeing to the maintenance of effort. icaid program with regard to eligibility and cost sharing. This reform should be paired with other reforms that seek more The Obama administration implemented two laws with the significant, fundamental changes since maintenance of effort maintenance of effort rules. One was under the 2009 stimu- primarily deals with enrollment numbers. lus and the other with the Affordable Care Act. The Obama-era Medicaid Waiver Toolkit • 31 ADDITIONAL RESOURCES Centers for Medicare and Medicaid Services, Center for Medicaid, CHIP and Survey and Certification Director Cindy Mann, “Letter to State Medicaid Directors Re: Maintenance of Effort,” February 25, 2011, at https://www.Medicaid.gov/federal-policy-guidance/downloads/smd11001.pdf. Kaiser Commission on Medicaid and the Uninsured, “Understanding the Medicaid and CHIP Maintenance of Eligibility Requirements,” Key Facts, May 2012 at https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8204-02.pdf. 32 • State Policy Network 15. Consider Allowance for Provider-Covered Transportation Until recently, there had been concern that allowing healthcare Medicaid patients can have difficulty finding proper transportation to and from physician visits leading to millions of missed appointments each year and potentially higher cost treatment. Yet providers lack the flexibility to provide free transportation to address the issue due to bureaucratic restrictions. The Solution: While certain patients must already have non-emergency transportation costs covered by states, states should explore whether they will need to file a state plan amendment to expand this option for providers to offer to more Medicaid patients. providers to provide free transportation would be a violation of federal anti-kickback statutes. An HHS rule that went into effect in January 2017 exempts free and discounted rides that meet certain criteria from these laws. This HHS ruling that exempts some free rides from healthcare anti-kickback statutes is expected to increase the growth of on-demand ride-sharing for patients. The rule clarified that hospitals and clinics may offer free rides to patients and that such an offering would not violate federal law. THE SOLUTION According to the Community Transportation Association, 3.6 million Medicaid patients miss at least one appointment per year because of transportation problems. Some providers believe that missed appointments can contribute to delayed care which contributes to unnecessary hospitalizations and higher spending for those patients. The hope is that by providing transportation services, providers will be able to cut down on THE PROBLEM Medicaid patients, especially those with chronic conditions, missed appointments, eliminate unnecessary hospitalizations, and reduce overall healthcare spending. sometimes face transportation challenges that lead to no- IMPLEMENTATION VEHICLE shows and delay in care. Given the effect this has on patient States may need to file a state plan amendment to allow pro- well being and provider reimbursements, healthcare providers viders to offer this benefit. have sought to cover Medicaid patients’ transportation costs. POTENTIAL IMPACT OF REFORM While Medicaid does require states to provide non-emergen- Reliable transportation is frequently reported as a cause of cy transportation for some patients, these policies are direct- missed appointments which, for some patients, contributes ed toward eligible individuals that meet certain qualifications. to additional healthcare problems and costs. By allowing pro- Whether or not other healthcare providers could provide viders and health plans to cover patients’ transportation costs transportation was not clear. through low-cost alternatives, such as Uber and Lyft, the hope Medicaid Waiver Toolkit • 33 is that providers and health plans can more effectively manage ADDITIONAL RESOURCES patients’ care and contribute to better patient outcomes. Zhai Yun Tan, “Medical Providers Try Uber, Lyft for Patients with Few Transportation Options,” Kaiser Health News, August 17, Ascension, the nation’s largest non-profit health system with 2016, at http://khn.org/news/medical-providers-try-uber-ly- 2,500 care sites across the country, recently announced that it ft-for-patients-with-few-transportation-options/. is partnering with Lyft to provide non-emergency transportation to its most vulnerable patients. 34 • State Policy Network 16. Create “Skin in the Game” for Able Medicaid Beneficiaries THE SOLUTION Medicaid beneficiaries are often insulated from the true costs of care, which breeds an under-appreciation that causes more non-emergent use of emergency rooms and frequent missed appointments that drive up costs to taxpayers. Without a waiver, states cannot charge a premium to Medic- The Solution: States should include a request to implement cost-sharing through nominal premiums for enrollees below 150 percent of the federal poverty line. Cost-sharing would encourage enrollees to take more ownership over their health outcomes and could be used to enforce other disciplinary components, such as lockout periods for failure to pay. transition people to private coverage. Premiums can also be aid enrollees below 150 percent of FPL. Some states have used the waiver process to implement premiums or a different cost sharing arrangement for Medicaid. Many of these premiums are voluntary and only used by recipients who wish to enroll in a different program like a health savings account (HSA). States use premiums to encourage recipients to enroll in nontraditional programs with the belief that these programs can help used to enforce some discipline in the program by pairing premiums with lockout periods for failure to pay. Several states that expanded Medicaid under the ACA enacted premiums, particularly for the expansion population. States argue that premiums encourage enrollees to take better care of their health because they have “skin in the game.” Premiums can also promote more savings by beneficiaries. CMS approved some restrictions on premiums such as a minimum grace period. THE PROBLEM Montana enacted some premiums when it expanded Medic- Medicaid recipients often do not fully value the services they aid. The state waived Section 19 (A)(17) and Section 19 (A)(14) receive because beneficiaries bear little of the cost. This con- to create a 2 percent premium for the expansion population. tributes to a relatively high rate of missed appointments. If pa- A 2 percent premium is comparable to the amount recipients tients share in the costs, they are more likely to obey guidelines might pay with a healthcare exchange subsidy. Montana also and rules. received permission to impose a lockout period for non-payment of premiums. Currently, states have limited ability to charge premiums to Medicaid recipients. Federal rules bar states from cost-sharing Arkansas’s “Arkansas works” waiver was approved and estab- plans, like premiums, for Medicaid recipients under 150 per- lished a premium for recipients over 100 percent FPL. Arkansas cent of the federal poverty level (FPL). also waived Section 19 (A)(14) to allow the implementation of Medicaid Waiver Toolkit • 35 premiums. The premium is for 2 percent of household income. POTENTIAL IMPACT OF REFORM Arkansas successfully argued that the premium encourages Premiums can decrease no-shows at healthcare providers, personal responsibility and with people using private coverage which can help lower costs. Some premiums are collected as there are fewer people quickly transitioning in and out of the enforced contributions to a savings account, which can be later Medicaid program. used for private coverage or non-covered benefits. Premiums also help prepare Medicaid recipients for private coverage by Indiana created a plan that established contributions to an giving them experience with traditional healthcare that re- HSA instead of premiums. Like other states, the contribution quires monthly premium payments. is 2 percent of household income. A key difference is that the contribution is savings, with enrollees eventually able to spend ADDITIONAL RESOURCES their contribution on approved health goods and services. Cur- Medicaid.gov, “Cost Sharing” at https://www.Medicaid.gov/ rent CMS Director Seema Verma is one of the key designers of Medicaid/cost-sharing/index.html. the Indiana plan and believes that it can fundamentally change the Medicaid program. IMPLEMENTATION VEHICLE States would need to have a Section 1115 Medicaid waiver approved by CMS in order to implement premium cost sharing for recipients below 150 percent of FPL or protected from cost sharing arrangements under current federal rules. 36 • State Policy Network 17. Copays for Unnecessary ER Visits and Missed Appointments Some providers estimate that up to half of their Medicaid ap- Some providers estimate that half of their Medicaid appointments are no-shows leading to an increasing numbers of doctors refusing Medicaid patients. Non-emergent use of emergency rooms is also on the rise. Both issues waste taxpayer dollars and reduce access to care. The Solution: States should file a Section 1115 waiver under Section 1916 of the Social Security Act to impose copays above the current federal limitations for missed appointments and non-emergent use of the emergency room. THE PROBLEM The Affordable Care Act (ACA) was supposed to reduce unnecessary emergency room (ER) visits through the expansion of private and Medicaid coverage. But instead of reducing these costly and often unnecessary visits, ER use by Medicaid patients has significantly increased. This seems to be holding true for nonemergency ailments or conditions that could have been prevented with primary care, as well as visits during both normal and after office hours. Meanwhile, the seemingly intractable problem of Medicaid patients not showing up for scheduled appointments remains. This problem is partially responsible for the low number of pro- pointments are no-shows. That leaves providers without reimbursement from Medicaid, which is already low and sometimes below the actual cost of providing that care, and means that left unchanged, the provider will be even less likely to accept new Medicaid patients. THE SOLUTION Arizona previously applied for a Section 1115 waiver to impose copays above federal limits for non-emergent ER use and fees for missed appointments on the Medicaid expansion population. In September 2016, CMS approved of copays above federal limits for non-emergent ER visits for childless adults with incomes The Affordable Care Act (ACA) was supposed to reduce unnecessary emergency room (ER) visits through the expansion of private and Medicaid coverage. But instead of reducing these costly and often unnecessary visits, ER use by Medicaid patients has significantly increased. viders able and willing to accept new Medicaid patients. Medicaid Waiver Toolkit • 37 from 100 to 138 percent of the Federal Poverty Line (FPL), POTENTIAL IMPACT OF REFORM but total cost sharing could not exceed 5 percent of the total While Medicaid patients do not have the financial means to household income. CMS rejected the request to impose fees pay the full cost of unnecessary ER visits and missed appoint- for missed appointments. ments, they should bear some financial responsibility for these situations. After all, taxpayers are footing the bill for these ser- States should ensure that they have a rate structure in place vices that not only increase program costs but are also impose that would incentivize patients to choose office visits for costs on providers and other patients who will have a more dif- non-emergent care instead of the ER. ficult time accessing care. IMPLEMENTATION VEHICLE ADDITIONAL RESOURCES States may seek a Section 1115 waiver authority under Section Kaiser Family Foundation, “Medicaid Benefits: Inpatient 1916 of the Social Security Act to seek to impose copays above Hospital Services, Other Than in an Institution for Men- federal limits for non-emergent ER use and fees for missed ap- tal  Diseases,” State Health Facts at http://kff.org/Medicaid/ pointments on the Medicaid expansion population. state-indicator/inpatient-hospital-services-other-than-in-an-institution-for-mental-diseases/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D. 38 • State Policy Network 18. Blend and Braid Funding Streams from Multiple Programs THE SOLUTION The ACA created duplication and inefficiency by adding yet another layer of bureaucracy to an already complicated pool of federal programs aimed at addressing healthcare needs. Section 3021 of the Affordable Care Act (ACA) amends the The Solution: State lawmakers should first audit their current healthcare programs to identify ineffective, inefficient, and duplicative programs. Beyond that, they may also apply for permission to host creative pilot programs under the 21st Century Cures Act’s Social Impact Partnerships and with the Centers for Medicare and Medicaid Innovation, which could test the exchange of benefit incentives between different welfare programs. the applicable titles while preserving or enhancing the quali- Social Security Act by adding Section 1115A to the law. This provision of the ACA establishes the Centers for Medicare and Medicaid Innovation (CMI). The purpose of the CMI is “to test innovative payment and service delivery models to reduce program expenditures under ty of care furnished to individuals under such titles.” In other words, the CMI is supposed to foster changes in the delivery of healthcare through experimentation and innovation primarily through the Medicare and Medicaid programs. IMPLEMENTATION VEHICLE Title XXV of the Cures Act includes Social Impact Partnership opportunities (“pay after  performance”). States may apply (once the RFP is issued) for a demonstration allowing SSI participants to substitute a work incentive benefit for a trust benefit. POTENTIAL IMPACT OF REFORM This approach has the potential to consolidate duplicative THE PROBLEM and overlapping bureaucracies and activities while improving healthcare quality and reducing taxpayers’ costs. By consol- Numerous duplicative and overlapping federal and state pro- idating multiple funding streams and disparate government grams aim to address the issue of healthcare. The ACA added efforts, more of every taxpayer dollar spent not only has the yet another layer of bureaucracy without requiring account- potential to reach the intended recipient; it has the potential ability or evaluating the current programs’ effectiveness. to give states more flexibility in how they address the needs of their unique and diverse communities. That is why state lawmakers should audit current healthcare programs with the goal of identifying ineffective, inefficient, and duplicative programs so that they can redirect resources to better address the needs of the poor and vulnerable. Medicaid Waiver Toolkit • 39 ADDITIONAL RESOURCES By consolidating multiple funding streams and disparate government efforts, more of every taxpayer dollar spent not only has the potential to reach the intended recipient; it has the potential to give states more flexibility in how they address the needs of their unique and diverse communities. 40 • State Policy Network Amy Clary and Trish Riley, “Braiding and Blending Funding Streams to Meet the Health-Related Social Needs of Low-Income Persons: Considerations for State Health Policymakers,” National Academy for State Health Policy, February 2016. 19. Explore a More Immediate Consumer-Driven Model in Non-Expansion States But as evidence mounts about the lack of quality care and ac- Non-expansion states are poised to pivot more quickly toward consumer-driven reforms and take advantage of the new administration’s demonstrated eagerness to fund state-based efforts to support low-income access to care. The Trump administration’s funding of Florida’s Low Income Pool (LIP) should inspire confidence in other states looking for assistance in advancing innovative solutions at home. The Solution: States (like Kansas, Tennessee, and Texas) that previously maintained low income pools, should examine whether to revamp these programs—a significantly less costly approach when compared to funding individuals through Medicaid. This tactic can free up state dollars to be reinvested into indigent care or directed toward community health facilities. cess under the Medicaid program and the potential budget shortfalls some states may face as the result of taking the socalled “free” federal money, states and the new administration may be looking for alternative options. THE SOLUTION The federal government recently granted the state of Florida funding for its Low Income Pool (LIP). The program began as a demonstration pilot program in 2006 and morphed into a backstop to pay for the uninsured. Fast-forwarding to today, the Trump administration has provided Florida, a non-expansion state, an infusion of money for this program. This signals the new administration’s willingness to support state efforts to support low-income healthcare outside of the Medicaid expansion. The reality for states is that the Medicaid program is expensive and does not deliver high-quality and accessible care. For the same money that is spent on an expansion participant, the participant could have received primary care plus hospital care and still had extra money left over to deposit in a health savings account, to pay for indigent care, or to direct toward community healthcare facilities. THE PROBLEM IMPLEMENTATION VEHICLE State policymakers that did not expand Medicaid under the Kansas, Tennessee, and Texas are already well-positioned to ACA have paid a high political price. Their leaders have faced replicate this approach. These three states plus Florida are sharp criticisms and stinging political attacks for not expanding the four non-expansion states that previously participated in in their state. the demonstration. These states could move forward with revamping their healthcare safety net using a significant portion of funds that would not be subject to Medicaid program rules. Medicaid Waiver Toolkit • 41 POTENTIAL IMPACT OF REFORM ADDITIONAL RESOURCES The ACA never addressed the important issues of healthcare Florida Agency for Healthcare Administration, “Low Income costs or  access. Rather than attempt to expand a Medicaid Pool Background,” at http://www.fdhc.state.fl.us/Medicaid/ program to fit Washington dictates, these select states should Finance/finance/LIP-DSH/LIP/background.shtml. seek to redesign their healthcare safety net into an innovative, consumer-driven program that aims to transition enrollees into Avik Roy, “Florida’s Innovative, Consumer-Driven Replace- private coverage. ment for “Obamacare’s Medicaid Expansion,” Forbes.com, April 12, 2013, at https://www.forbes.com/sites/theapothecary/2013/04/12/floridas-innovative-consumer-driven-replacement-for-obamacares-medicaid-expansion/#4d7900b64d98. 42 • State Policy Network 20. Permit Practice of Balanced Billing Act. Research finds that the majority of states limit provider Medicaid reimbursement rates barely reach two-thirds of the amount providers get from the private market, creating a disincentive for them to continue seeing Medicaid patients and leading to diminished access to care. The Solution: States should file a state plan amendment and waiver (ensuring no state statutes need to be addressed) from payment limitations to providers for Medicaid and Medicare enrollees, allowing patients the choice of “making up the difference” by paying providers on top of the reimbursement for the difference in cost of care. reimbursement for their state and the federal government also limits provider reimbursement at the national level. The federal government established an upper payment limit (UPL) for Medicaid fee for service providers, where Medicaid cannot exceed Medicare prices. THE SOLUTION Balance billing is a payment method where the patient makes up the balance between the prescribed rate and the billed rate. Current law makes it illegal for Medicaid and Medicare providers to accept payment other than government billed rates for Medicare services; having a direct impact on those individuals who qualify for both Medicare and Medicaid (often referred to as “dual eligibles”). This restriction on balance billing has been in place for decades as an attempt to control cost in health entitlement programs. But states may have far more discretion in determining payment methods and amounts for their Medicaid-only populations. No states are currently seeking such waivers. THE PROBLEM There have been arguments from free market policy groups that balance billing should be pursued for Medicaid beneficia- According to a 2014 report by the Government Accountability ries. If a patient wants to pay more to a preferred provider, they Office, Medicaid pays between one-fourth and two-thirds the should have that right instead of having to abide by govern- amount of the private sector in fee for service. Medicaid man- ment price controls. aged care pays a third to two-thirds less than the private sector. Lower reimbursement rates are a major reason why Medicaid recipients can have problems finding medical providers. POTENTIAL IMPACT OF REFORM States would need to file a state plan amendment and a Section 1115 waiver from the federal government to exceed the upper Survey results show that healthcare providers are less inter- payment limits. For many states, balance billing is also illegal ested in taking new Medicaid patients even as the number of under state law. States would have to change state laws, if ap- Medicaid enrollees has increased under the Affordable Care plicable, to be able to implement a balance bill waiver properly. Medicaid Waiver Toolkit • 43 POTENTIAL IMPACT OF REFORM A waiver for balance billing could allow patients to have more access to doctors. It is likely that health providers would be willing to see more Medicaid patients as payments increase and they are able to receive immediate payment for a portion of their charges instead of waiting for the Medicaid reimbursement process. ADDITIONAL RESOURCES Deborah Bachrach, JD, “Medicaid Payment Reform: What Policymakers Need to Know About Federal Law,” Center for Healthcare Strategies Policy Brief, November 2010 at http:// www.chcs.org/media/CHCS_Payment_Reform_FINAL.pdf. 44 • State Policy Network Conclusion There is no need for states to wait on Washington to move forward with Medicaid reforms that improve patient access to care while reining in costs. As states begin to consider their options and next steps, they must be prepared to: 1. ACT NOW. The application process for a waiver can be extensive. States should begin working immediately. Stakeholder Outreach Planning & Analysis Enabling Authority, if Required Draft Application Public Comment Submit Application 2. THINK BIG. New leadership at HHS and CMS has indicated enthusiasm and support for state-based solutions to address healthcare needs. States should not shy away from seeking innovative, bold approaches that can increase quality of care while stewarding taxpayer resources. 3. APPLY. The HHS secretary cannot approve a waiver that is not requested by a state. States must examine every opportunity to press Washington for flexibility—whether by applying for Section 1115 and 1332 waivers or by looking at Social Security laws and state plan amendments. States that try innovative ideas and creative vehicles for reform can clear the path for others to follow in their footsteps. Medicaid Waiver Toolkit • 45 State Solutions. National Impact.