New Administration, New Approach to Medicaid Waivers?

1:30 – 1:35 p.m. Welcome and Introductions

• Karl Eisenhower,
  The Alliance for Health Reform

1:35 – 2:15 p.m. Presentations

• Matt Salo
  National Association of Medicaid Directors
• Cindy Mann
  Manatt Health
• John McCarthy
  Speire Healthcare Strategies
• Jake Harper
  Side Effects Public Media and WFYI

2:15 – 2:45 p.m. Question and Answer Session

This webinar is a project of the Alliance for Health Reform and the National Institute for Health Care Management (NIHCM) Foundation, in collaboration with the Association of Health Care Journalists

Please note: Due to technical problems, this transcript only includes the first half of our Sept. 14, 2017, webinar. It is an unedited transcript. Please refer to the video to confirm exact quotes. Karl Eisenhower: Good afternoon and welcome. We are glad you could join us today. My name is Karl Eisenhower. I am the communications director for the Alliance for Health Policy. There has been a lot of attention focused this year on potential legislative changes that would affect Medicaid and other parts of our health system, but it’s important to understand the existing log is the centers for Medicare and Medicaid services, the authority to grant states a large degree of flexibility in how they run their Medicaid programs. So today, we are going to talk about Section 1115 Medicaid demonstrate waivers. Each administration takes its own approach to assessing waiver requests and the Trump administration has told states to expect more freedom to design program that meet the spectrum of diverse needs of their Medicaid population. What that means and what we can expect as attention shifts away from Capitol Hill and to CMS in the state capitols is the topic of our conversation today. Today’s webinar is a project of the Alliance for Health Policy and the National Institute for Health Care Management Foundation in collaboration with the Association of Health Care Journalists. We appreciate the support of our partners at the NIHCM Foundation and AHCJ. We are very fortunate to have a panel today who can help us all better understand Medicaid waivers. Our panel includes Matt Salo, who is the executive director at the National Association of Medicaid Directors. Cindy Mann, a partner at Manatt Health and formerly the director of the Center for Medicaid and Chip Services under the Obama administration. John McCarthy is a founding partner at Speire Healthcare Strategies and a former Medicaid director in Ohio under the Kasich administration. He also was the Medicaid director for the District of Columbia. Jake Harper is a reporter at Side Effects Public Medicaid and WFYI in Indianapolis. Before we get started, a little housekeeping. On the right hand side of your screen, you will see a floating toolbar with an orange arrow. The orange arrow allows you to open and close that toolbar. If you open it up, you will be able to adjust your audio settings. You can also access downloadable versions of today’s presentations and submit questions for the Q&A portion of our webinar. There are additional materials for this webinar that you can access on our website. Our website is allhealthpolicy.org. Finally, if you are new to this topic or the topics of health policy, we want to make sure you know about the Alliance’s sourcebook on the essentials of health policy. The Sourcebook was compiled with support from the NICHM Foundation for which we are very grateful. It provides background and current data on key issues including Medicaid. Our first speaker is Matt Salo. As I said, he’s the executive director of the National Association of Medicaid Directors. He will give you an overview of how Medicaid waivers work and why they are important to states. Matt, give me one moment. I will pull up your presentation. Matt Salo: All right, well fantastic. Thanks a lot, Karl, and thanks to everyone who is joining us on this webinar today. I am always thrilled when there is a robust audience, people who want to learn more about Medicaid and all of the aspects of it. We are very proud of the program that my members operate. I represent the Medicaid directors in each of the 56 states and territories. Anything that we can do to make the Medicaid program and knowing more about the Medicaid program more accessible to either the journalists or policy makers or the general public, always thrilled to be a part of it. So before I dive in with what should be a background framing of the issue of Medicaid waivers, I do want to at least just point out to say that we still have a couple weeks left in September, which means that the curtains, if you will on possible congressional activity around some of these issues is not yet quite over. So but with that, let me frame this a little bit and then tee it up for our other expert panelists. So hopefully, you all know Medicaid is a program that’s been around for a little more than 60 years and it is essentially the healthcare safety net in this country. It is very large. We cover more than 74 million Americans and very, very complex. We do a variety of very, very different things covering more than half the births in the country all the way to the majority of long term care services in this country. The one thing that I always want to make sure that I stress is that I represent all of the states and territories. They are all very, very different, but the thing, the thread that binds them all is the desire, the passion and commitment to reorient the U.S. healthcare system to achieve better care and lower costs and to make sure that Medicaid is there in a sustainable way for the populations we serve. What’s really important, though, is that the Medicaid statute, which is now more than 50 years old, while it has been evolving slightly over time and certainly a lot would be Affordable Care Act, much of the underlying law really is no longer relevant to the way that healthcare has evolved and developed over the past number of years. So therefore, that really leads us into a situation where in order to be nimble, in order to be forward thinking and driving positive reform forward, many states really end up having to do something called a waiver of various provisions of that statute. So give me the next slide. Basically, what states use waivers to do is a variety of things, some of which are very small and very common sense such as the ability to do managed care or the ability to provide home or community based alternatives to nursing homes. But waivers can be used to do a variety of things, again, some of which are very small. Some of which are very large. Some of which are complicated. Others aren’t. Some of which are politically controversial. Others are not. In general, waivers should be budget neutral to the federal government and should further the goal of the Medicaid program. Now both of those seem relatively straightforward and common sense, but as I am sure we will get into later, those are actually more complex and interesting than you might think. We will get into more of that later. I would certainly note that every state uses waivers and most states use many, many, many of them. So next slide. Just a couple of examples here. I know you want to talk mostly about the Section 1115 research and demonstration waivers. There are a couple of different others. There is practically an alphabet soup of different types of waivers that states can get. We want to focus mostly on the big 1115. I would just kind of note that at the bottom here the larger the reform, the more complex of the type of negotiation, the higher up the political food chain these discussions tend to go. States that are pursuing big picture reform waivers generally have, bring the governor, into negotiations with the secretary of HHS, the Office of Management and Budget, and the White House. So these are discussions and conversations that happen at the highest possible level. A couple of notes just on waivers in recent years, in the Obama administration, we saw a number of very, very politically and geographically diverse states, Texas, California, and New York, give big waivers called DSRIP or delivery system reform incentive payment waives. Basically, it tends to infuse money into the system to facilitate rapid and sustainable change in delivery systems and the push towards value based care. There have also been fairly high profile efforts by states like Indiana and Arkansas to do alternative approaches to the Medicaid expansion that was a part of the Affordable Care Act. Indiana using kind of a health savings account type of approach. Arkansas using something called the private option which is sort of a combination of Medicaid and the private exchanges. Then we would also note that there were a number of waiver ideas and approaches suggested by states that were rejected by the Obama administration including those that talked about work requirements for Medicaid beneficiaries, lifetime limits of Medicaid coverage, and other types of things that kind of broadly go into the category of personal responsibility. So that kind of gets us to today and a little bit of what’s happening now. I would say what I think we would look to see for a lot of the states out there, states that had proposed ideas under the previous administration and were denied will be moving forward with similar or more expanded approaches or requests to this, to the Trump administration, as we have heard from CMS administrator Seema Verma, there is very much a desire in the new administration to be the administration that says yes to a lot of different state innovations. I know that John and others are going to talk much more about this, so I don’t want to go into too much in depth there. So next slide. I was just going to put this out here in what I hope is a very non-controversial and non-political way that our association, the collective group of Medicaid directors who also talked a lot about waiver reforms because one of the things that we want to see is innovations that have worked and have proven to have worked and in many cases we got waivers that have been in existence for decades, ten, 20, 30 years in some states. We need to find a way to make those permanent, make those parts of the baseline of the Medicaid program. So that can really allow us to focus our collective state and federal and stakeholder energy on really thinking through new innovations and things that would enable us to embrace the direction that healthcare is going. Kind of the final point there is really healthcare reform and innovation is a very, very fluid thing. The types of things that states were innovating with five, ten years ago, were unheard of 50 years ago. The things that will be innovated five or ten years from now might well be unheard of today. We need a process that works and that can be nimble to allow Medicaid to stay relevant in our efforts to improve the healthcare system. Next slide. That’s it for me. A couple points for us if you want to find out more about what the Medicaid Directors are doing or thinking on these various issues. There is our website, our Twitter handle, and information on our fall conference, which I would encourage everyone to attend. So thank you for having me. Karl Eisenhower: Matt, while I still have got you, you raised the fall conference. Is that something that is open to the media? Matt Salo: The fall conference is absolutely open to the media and we encourage the media to attend. Karl Eisenhower: Great, okay, well thank you. Our next speaker is Cindy Mann, who is a partner at Manatt Health and was formerly director for the Center for Medicaid and Chip Services under the Obama administration. Cindy, can you give me a moment to pull up your presentation. All right, Cindy, welcome. Cindy Mann: Okay, great. Glad to be here. Hello everybody. I, too, love a good crowd that likes to talk about Medicaid. So I am going to pick up from where Matt took off and talk a little bit about what has gone on in recent years and what’s pending now and likely some prospects for the future. So leave us with a little bit on the implications and questions going forward. So if you could go to the next slide or the first slide, please. Not to drown you in legal minutiae, but I wanted to just briefly talk about what is the legal authority that the secretary has to do waivers. So first, before I do that, I think we lost that slide, thank you. Before we do that, I want to highlight a point that Matt made. I think it was the bottom of this first line, which is a common refrain, which I totally agree with, which is if you see one Medicaid program, you have seen one Medicaid program. That’s sometimes because of waivers, but also because there really are a lot of opportunities under the 50 year old law that has been amended over time to shape the program in different ways according to states intra-political conditions, healthcare landscape. So waivers, some states we rely very heavily on waivers. Some states rely much less on waivers and still they are able to do a fair amount of their own design through the state plan process. Of course, there are limitations to that. So waiver authority is an important additional tool for states to rely on, to test some new ways of doing things. So a couple of things on this definition of the legal authority and this is just legal authority actually goes beyond the Medicaid program. It is more broadly in the Social Security Act and the two things I point to in the second bullet. These waivers are to be experimental pilots, demonstration projects. So they are designed under the statute anyway to test a hypothesis and get an evaluation, right. So you can imagine it would be a little bit strange in a program as large as the Medicaid program to simply give the secretary, any secretary, carte blanche authority to simply say well Congress says this and you can only spend your money doing it this way, but I am just going to let you do it otherwise. So it is really supposed to test new ways of doing this, innovations. I am going to come back to that later. Then the really big operative standard is also an aspect of bullet, which is that the proposals that the state makes to be approved by a secretary, it has to be found to be likely to assist in the promoting the objective of the program. So that’s a really broad authority. It’s not unlimited authority, but it’s a broad authority. Of course, every secretary that comes in, every administration that comes in will have somewhat different views about what fits into that boundary of promoting the objectives of the program. So if we can go to the next slide. Here is a review and Matt touched on this a bit, so I am not going to spend the time. Here is what we have got. If you look at the history of waivers for the last 30 years, you will see trends and the trends are driven sometimes by the predilections of the administration, the federal administration, but often really by the desires of the states as to what are they looking for, what’s on their minds, what are they trying to do? So over the last, well let’s say during the Obama administration, the four types of waivers that we saw predominantly are managed care waivers. You don’t have to do managed care through a waiver, some states prefer it for a variety of reasons. Most states are already doing managed care, some of them use waiver authority to bring in new populations, new services. The big area on this was bringing in long term care services. Typically states had not put under managed care. Increasingly they are trying to do that and to test that and see how that works for a more integrated delivery system. Matt mentioned also that there were delivery system reform waivers. These were often very big investments the federal government made to help states move their delivery system from the current state to the desired state. We now have 12 states that have these types of waivers. We also have some waivers, some of them were longstanding. Some of them were new during the last administration where states got the Medicaid dollars to do uncompensated care pool. Then we got, which would tend to be more of the high profile ones and where we see most of the activity at the moment, but I don’t know that that will be where it’s safe for the next four years is on coverage related waivers. As Matt said, most of the coverage related waiver activity over the last period of time was when states came in and said I’m interested in expanding Medicaid, but I don’t want to do it through the State Plan Authority. I want to put some new policies in place. He pointed out in Indiana is one of the states that did that. So this is where we are seeing most of the energy right now, but not necessarily limited to the expansion population. States are taking some of the waiver authority that was granted previously and stretching it or trying to stretch it. That is an area where the Obama administration may not have gone along with the full request. Also, we have some states that are applying these kinds of concepts to the traditional Medicaid population, not just to the expansion group. So if you go to the next slide, it gives you a sense of where some of the flexibility, as well as some of the guardrails were for these kinds of expansion related coverage waivers. Again, every administration will be interested in granting flexibility or at least say they are. Every administration will come up with their set of guardrails. So let me give you a couple of examples here. One is let’s look at premiums. Lots of interest in states to do premiums as they were thinking about expanding coverage. That makes sense. States were not necessarily used to going up to 138 percent of the poverty line. As they did that, there was the greater interest in thinking about where do premiums fit into the Medicaid program, which has traditionally been other than kids, people with much lower income levels. What the Obama administration approved were, like I said, yes you can do premiums, but let’s limit how much they are. So it’s two percent of household income, which is parallel to what the exchange would charge at the 100 percent of poverty level. Also, importantly, in terms of what might be the process for going forward or their policies going forward, is that the Obama administration said let’s test how these premiums work and let’s not cut people off for non-payment if their income is below 100 percent. So they allowed premiums below 100 percent of poverty, but they could not allow a state to eliminate coverage for somebody who didn’t pay. States dealt with that guardrail in different ways. A couple of states said fine, it will be a debt to the state. The state can collect that debt through tax intercepts and other mechanisms, but the coverage would continue. Other states like Indiana put people into a less robust benefit plan if they didn’t make the premium contribution. So we are going to see a lot of states testing those guardrails both on the amount of the premiums that are going to be charged, but probably principally on the issue of conditioning eligibility for coverage for poor people on the payment of those premiums. As Matt mentioned, let me jump down to the slide on work requirements. So the Obama administration does not grant out waiver requests. There were a couple did not grant waiver requests for—no, if you go back to the last slide please. So the Obama administration didn’t allow a state to say you will lose your healthcare coverage if you don’t participate in work or training or education requirements, but did allow states, in fact states don’t need a waiver to do this, to encourage connections and referrals to those kinds of services. Those are going to be big issues going forward. As Matt mentioned also, there was a some controversy about an innovation that the Obama administration did approve which is to allow states and the first state that did this was Arkansas to enroll Medicaid eligible people into qualified health plans into the marketplace plans, the plans doing business on the marketplace. They still got Medicaid protection on cost sharing and benefits, but the delivery was through the marketplace plans. There was a lot of back and forth as to whether that was existing or advancing. A couple of states followed, Arkansas imposed that approach in their expansion programs as well. So if you go to the next slide, this gives you a sense of what’s pending. If you could go to the next slide please, thanks. What’s pending now before the administration. What this shows you is where a lot of the energy is among states. Also, if you note for Maine, Utah, and Wisconsin, the right part of the columns on this table is these are states that are beginning to take some of these policies that have been approved and implemented for the expansion population and think about seeking authorities to impose the new changes with respect to the non-expansion population, the so called traditional Medicaid group. So I want jump to the next slide and talk a little bit about evaluations. I’ve got some findings here from interim evaluations from Indiana waiver and the Iowa waiver. They both contain some really interesting findings that can help both Indiana and Iowa, and also inform waiver policy going forward. So there is a real tension here. I just want to point it out which is that these are new policies in the Medicaid program. In many cases, they are far reaching policies. Indiana not only has a premium, but has actually as lock out so that if you don’t pay your premium, you lose coverage and then you are locked out for six months if your incomes are above 100 percent poverty. We all want to see how are those premiums really being, how are people able to meet those premium requirements, does it work, does it not work, before we have lots of different policies around the country, that impose premiums either looking like Indiana’s or a steeper than Indiana’s or the pickup lock out. But at the same time, governors are eager to look at a waiver that is approved for another state that they are interested in and say I want one of those, too. If you granted it for state X, why not me? So that’s a reasonable desire from a governor’s point of view, but it points out some of the tensions around waivers which are supposed to be experimental and demonstration that need to get evaluated. At the same time, there is a lot of interest from different states to pick up some of the policies that have been granted to another state. So if you go to the next one, I just want to quickly touch on the other kinds of waivers, not the non-coverage waivers, but so called pool either for delivery system or for uncompensated care. I think we don’t really know where the administration is yet going on these waivers. The Obama administration really did invest a fair amount of dollars into these delivery system waivers. There are none yet that the administration has acted on. Texas will be the first one that comes up for renewal at the end of this calendar year. What the administration did do a few months ago over the summer is approve a renewal of Florida’s waiver that has an uncompensated care pool. It’s substantially increased the amount of dollars that it was making available to Florida for the uncompensated care pool. The pool jumped from $608 million a year to about now to $1.5 billion a year. All of the funds are not for the Medicaid program. They are for hospitals providing care for the uninsured and the hospitals are paying the non-federal share. So I think it’s likely to pique the interest of a number of other states and it will be interesting to see how the administration addresses that in other states as it prepares to provide that kind of funding across the country for other states that ask for it. So let me try and wrap up a little bit with posing some implications and questions for us all to consider as we close out, have questions and discussions on the webinar, but as we think about this issue going forward. What is the new flexibility that the administration is promising? What will it mean? Well, if you think about in the context of Medicaid expansion, which is still the law of the land that states can do the expansion, and there are 19 states that haven’t and 31 states that have, the question is will the new flexibility encourage some states that haven’t expanded to take up the Medicaid expansion, states that would have done it if they could get work requirements or they could do eligibility below 138 percent of poverty. Well, some more states come in. Or will the new flexibility be about rolling back the coverage that is now in place, either rolling back by income level or rolling back by just constraining eligibility in a different way. I think it is not really debatable that many of the—and the states themselves have identified this in their applications, but many of the eligibility and the coverage policies in the pending waivers will make it more difficult for people to get and to keep Medicaid coverage. Whether it’s the premiums or the work requirements or with proposing drug testing, time limits, those policies are inherently constraining policies. So we will see coverage be constrained, at least in those states in certain ways and how much it is constrained and whether it furthers the objective to the program and improves coverage overall. It depends a lot on how they get implemented and what the guardrails are. The new flexibility also though, and I think John is going to talk about this a bit, can encourage states to develop other kinds of waiver proposals. So the ones that are really pending now are kind of the idea that they had during the Obama administration, some of which got approved and some of which didn’t get approved. They are trying to stretch the limits of what was approved before and apply it to new populations. But there may be very different kinds of initiatives that states might want to think about and pick up the administration’s offer of greater flexibly. So I don’t think the sample of wavier proposals that we have see now is necessarily going to be what we see over time. If you want to go to the next and last slide, that would be great. So I think a big question before us is how will these kinds, particularly the coverage related waivers, but how will they affect delivery system transformation? This is and Matt alluded to this in his opening comments, this is really where states are focused. How do we make our delivery and our payment system better so that we are delivering better care and through some of those care improvements better coordination, integration of behavioral health and physical health, some really hard stuff that states are tackling. They are tackling it both to improve care and to think about how those improvements can reduce cost. To the extent that some of these new eligibility related requirements, premiums, work requirements, drug testing, and lock outs and so forth, increase churn, people come in and come out of the program and disrupt continuity of care, how will those changes affect state’s efforts to improve care and lower cost of care implement. I don’t think anybody is intending to undermine those efforts, but I think often the proposals for some of these eligibility and other matters come from one frame of reference and really make sure that we are keeping broadly about maybe some unintended consequences I think we will be important. I’ve already raised the issue of evaluations, but I think it’s a big question going forward. Will evaluations inform policy? Will the sort of stampede to get everything, of the waiver like the five other states have the same grant that overcome that. I think we all like to see a situation similar to what maybe similar to what Matt was referring to where when we have good, positive results from evaluations, let’s replicate that. Let’s make it really easy for states to move in those directions. At the same time, pay attention to either negative or troubling findings where if the policy needs to be abandoned but probably more likely tinkered with, so that the policy is put on a positive frame going forward. Finally, I will note for particularly, well I was going to say for the reporters, but for others on the call, is that some of the policies that are being considered I think will probably get challenged in court. To see whether or not those original statutory restrictions that identified in the original, early part of this presentation are these experimental, are they testing a hypothesis, and do they further the objectives of the program? There is a lot of discretion in the statute. I am not saying that the courts are going to necessarily constrain that authority, but I do think that we are likely to see some litigation on some of these waivers. So with that, let me turn it back over. Karl Eisenhower: Cindy, thank you. Our next speaker is John McCarthy. John is the founding partner at Speiro Healthcare Strategies. He is also the former Medicaid director in the state of Ohio under the Kasich administration. He was also the Medicaid director in the District of Columbia before that. So let me pull up your presentation, John. John, the floor is yours. John McCarthy: Thanks for having me and I wanted to say a couple of things before we jump into my presentation. When you are thinking about waivers, as Medicaid director, I got two 1115 waivers approved, one when I was in D.C. and one in Ohio. They were both early coverage waivers. I also got one rejected when I was in Ohio. I studied in Ohio, but mine was one of the ones that got turned in that they straight up said no to on that one. It wasn’t even a negotiation. It was just no we are not approving this waiver. So I have been on both sides of this issue. The other thing I wanted to make certain that everyone understands, especially the reporters, that when we are talking about waivers, you often hear people talk about like this waiver does this one thing. That’s usually not the case. It can be, but waivers are just a mechanism for a Medicaid program to do something innovative and Cindy’s chart was very good and it showed you all the different things that might be happening under a waiver. So some states that kind of see a 1115 waiver and under that, they just put all their new ideas, but in another state they might say I want to run three separate 1115 waivers. So it’s very important to know exactly what you are talking about when you are talking to a state. The waiver isn’t necessarily just a program. So the first slide, one of the things that I am going to be talking about is what have states been asking for. In a little bit, I am going to get into more why they are asking for these things. So you saw in Cindy’s chart, one of the things is elimination of retroactive eligibility. You might wonder why would a state do this. What is behind this? It’s pretty simple. States are looking for incentive for people to stay enrolled. So the thought behind is with the insurance mandate, hospitals and FQHC’s doing presumptive eligibility meaning when you walk in, they can enroll you presumptively if they think that you would be covered by Medicaid. Those costs would be covered. Then ultimately, hopefully, you go through the whole enrollment process and you are enrolled back to that day. Also eligibility often in many states starts at the beginning of the month. So from that, states are wondering well why would we have to go back three months. All that does is simply encourage people to not apply for Medicaid and not start getting the services they need. So that’s a view from that side. The other side of it is from providers and others, they are worried about loss and reimbursement, obviously, that they may not get paid for some of those things. Then for the individuals, there might be issues along the way of why they didn’t enroll or things that happened in that area. Next slide. Another one and Cindy touched on these is payment of monthly premiums. So what does this do? It provides an incentive to be involved in the purchase of your healthcare insurance. Also, one of the other things is smooths out the cliff in going into an exchange plan. One of the issues we did deal with in Ohio was when you are on Medicaid, your out of pocket costs are very, very small. Then you go into the exchange as you move, I you are in an expansion population is you go above an income of 138 percent, that’s the 133 plus the five percent disregard, then all of a sudden, your out of pocket expenses go up quite a bit. So it’s how do you smooth that out in that area? The other thing is that can be variable based on income, just so you understand. Many of the states are talking about these things like it’s a premium, often they are not just saying just one flat premium no