STATES PLAN TO USE MEDICAID 1115 WAIVERS TO WAIVE KEY PROVISIONS OF THE PROGRAM

The repeal of the Affordable Care Act with its existing provisions for Medicaid did not materialize at the national level in 2017; nevertheless, states are looking into reform independently by way of Medicaid 1115 waivers. These waivers concentrate on priorities within the states and allow local governments the flexibility to test coverage models that do not reflect program rules of the federal government.

Medicaid 1115 waivers provide states the opportunity to waive key provisions of federal law. The changes made possible by Section 1115 waivers are not as dramatic as those included in the failed bills-- for instance, states cannot use these waivers to fully restructure Medicaid under block grants or per capita caps, neither can the federal government use them to take away federal reimbursements for Medicaid expansion-- yet they are still significant.

In an attempt to "support states helping Medicaid beneficiaries improve well-being and achieve self-sufficiency", CMS released new guidance for waivers that imposed work requirements on January 11, 2018. Along with work requirements, states are also looking into provisions such as eligibility time limits, drug testing, and premiums. Because of this, these waivers are controversial and have brought up policy issues throughout the country.

At the moment, a number of states have submitted waivers for approval from the federal government. Here is some of the highlighting waiver activity within the states.

NEW HAMPSHIRE'S MEDICAID 1115 WAIVER FOR WORK REQUIREMENTS

New Hampshire was the fourth state to be permitted by the Trump administration for Medicaid work requirements. Under the state's Medicaid 1115 waiver, able-bodied adults will either need to work, develop job skills, or be involved in community service in order to receive premium assistance and program benefits from the state's Medicaid expansion.

Chief of CMS, Seema Verma congratulated the state and pointed out, "the Trump Administration has helped create one of the strongest job markets in our nation's history and we want to make sure able-bodied, working-age adults receive the necessary skills to join our growing workforce."

Governor Chris Sununu (R-- NH) said, "Work requirements help lift able-bodied individuals out of poverty by empowering them with the dignity of work and self-reliability while also allowing states to control the costs of their Medicaid programs."

Critics of the waiver are concerned that its ramifications will not support the original goals of the Medicaid program. A number of Democratic lawmakers are in opposition to the work requirements, strongly believing that they undermine access to the healthcare program. Supporters of the waiver see it as means of safeguarding the program's sustainability. They assert that Medicaid should be reserved for the country's most vulnerable and low-income individuals and families.

KANSAS IS DENIED 1115 WAIVER FOR LIFETIME LIMITS

Support for Medicaid expansion in Kansas came to a halt in February despite efforts from the Senate Public Health and Welfare Committee and House Democrats. Kansas Governor, Sam Brownback (R) vetoed the bill. Had it been approved, an estimated 150,000 residents would have been eligible.

While expansion failed, Kansas is one of five states, including Utah, Maine, Arizona, and Wisconsin, to ask for lifetime limits from CMS. This would have made it possible for the state to restrict coverage to three years/36 months for some of its recipients. CMS has declined the request making Kansas the first of the five states requesting lifetime limits to be denied.

Verma defended the decision saying, "we seek to create a pathway out of poverty, but we also understand that people's circumstances change, and we must ensure that our programs are sustainable and available to them when they need and qualify for them."

MEDICAID REFORM IN KENTUCKY 

Kentucky was the very first state to get approval from CMS for an 1115 waiver (January 12, 2017). The waiver will implement work requirements, monthly premiums for low-income parents and expansion adults, dis-enrollment and coverage lockouts, the elimination of retroactive eligibility, the addition of deductible and incentive accounts, and waiving non-emergency medical transportation.

Kentucky's governor, Matt Bevin (R), plans to start the overhaul of the state's Medicaid program on July 1, 2018. It will begin in Campbell County and reach across the state over a period of six months. These changes will predominantly affect able-bodied beneficiaries with incomes up to 138% of the federal poverty level that obtained coverage during the program's expansion in 2014. Due to the overhaul, it's approximated that Kentucky and the federal government will save $2.2 billion over five years. Additionally, the Center On Budget and Policy Priorities expects that over the duration there will be a 15 percent drop in adult Medicaid enrollment.

On January 24, sixteen Kentucky Medicaid beneficiaries took legal action and sued the federal government over the waivers provisions. The group sees the Trump administration's approval as a violation of several federal laws and a threat to the lives of tens of thousands of low-income families.

HEALTHY INDIANA 2.0 CLAMPS DOWN ON ENROLLMENT AND ELIGIBILITY

CMS signed off on the amended extension of Healthy Indiana 2.0 on February 1. Initially, the state's waiver expanded the program under the Affordable Care Act (ACA) from February 2015 through January 2018 by changing the states pre-ACA limited coverage expansion waiver, Healthy Indiana Program 1.0. While other state's waivers focus on adults enrolled during expansion, Indiana's also includes changes to the terms of coverage for non-expansion adults. This encompasses low-income parents as well as those eligible for transitional medical assistance.

Healthy Indiana Program 2.0 features provisions such as: raising premiums by 50% for tobacco using members beginning the second year of enrollment, eligibility work requirements for most adults in 2019, dis-enrollment and coverage lockouts, introducing a tiered premium structure, and restricting transitional medical assistance eligibility to between 139% and 185% of the federal poverty level.

While there are a number of exemptions in place to help beneficiaries secure and keep coverage, the launch of these provisions will definitely alter program eligibility. Now that the state has received approval for their provisions, Indiana confronts the task of implementing them.

ARIZONA'S FOUR 1115 WAIVERS UNDER REVIEW 

Arizona is looking to update and reform their Medicaid program, Arizona Health Care Cost Containment System (AHCCCS). Currently, the state has pending Medicaid 1115 waivers with CMS. The amendments include a retroactive eligibility request, an Institution for Mental Disease (IMD) waiver, work requirements, and an uncompensated care payment model.

Originally, Arizona also requested for approval of a 5-year lifetime time limit on Medicaid enrollment. However, this was recently taken out from the state's requests after CMS turned down Kansas's similar request for a 3-year time limit. No other state at this time has lifetime limits. In regards to the decision to delay the lifetime limit request, Deputy Director of AHCCCS, Jami Snyder said, "We have removed the lifetime limit from the waiver request, really for the purpose of expediting approval of the work requirements request." Right now, Arizona is still in discussions with CMS.

Regardless of the federal government's inability to reform Medicaid, states are now taking action to do it themselves through submitting 1115 waiver requests to CMS. Around the nation, local governments are now taking into consideration provisions such as work requirements, drug testing, lifetime limits, and premiums. A few states have received approval while others are encountering strong resistance. While reform through Medicaid 1115 waivers is supported by many state legislators, the way in which they are carried out will be vital to ensuring the future of the Medicaid program.

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A MEDICAID EXPANSION ROUND-UP

Throughout the 2016 Presidential campaign and not long after entering office, President Trump was set on repealing the ACA's provisions for Medicaid expansion. As a matter of fact, President Trump and the supervisor of The Centers for Medicare and Medicaid Services (CMS), Seema Verma, are presently considering waivers to the Medicaid program that the prior administration rejected. In spite of the Trump administrations unsuccessful efforts to reform Medicaid on the federal level, a number of states are making attempts to expand their programs. Below is a summary of states in varying stages of expansion discussions.

STATES CONSIDERING MEDICAID EXPANSION

Nebraska: Within the past six years, any attempts to expand Nebraska's Medicaid program have failed as a result of Republican leadership. Republican Governors, Pete Ricketts and his predecessor Dave Heineman both argued that the state could not afford to expand Medicaid. Additionally, they think that expanding Medicaid would favor able-bodied citizens instead of low-income residents, for whom the program was designed.

Nonetheless, that may all shift this November at the voting booths. Currently, there are a number of healthcare associations and advocacy groups in the process of collecting signatures from locals to secure a proposal under the Insure the Good Life Petition. Having noticed the success of Maine's ballot initiative, supporters in Nebraska are building up confidence that they will produce a similar result. In order for the proposal to be included on the ballot, a total of 85,000 signatures from registered voters are needed by July 6, 2018. According to Insure the Good Life coordinators, people have been receptive to the idea of expanding Medicaid.

Idaho: Even with resistance from the Republican-leaning legislature, Idaho activists are seeking to expand their Medicaid program to 78,000 residents under the ACA using a ballot initiative. Expanding the program would serve to cover Idahoans who fall into a coverage gap because they make too much money to be eligible for Medicaid but not enough to be given subsidized health insurance in the exchange.

In order to get on the November 6th ballot, advocacy groups had to secure at least 56,192 signatures from 18 districts around the state by May 1, 2018. The advocacy groups filed the signatures before the deadline and claim they have the required threshold needed to land a place on November's ballot. At this point, the signatures will need to be verified by county clerks before June 30th, in order for the expansion proposal to be voted on.

While hopes are high among advocates, implementation of expansion will fall on the governor and state lawmakers; additionally, they have the power to reverse voter-passed initiatives. Republican candidate, Rep. Raul Labrador will resist the expansion initiative if he is elected. According to Labrador," I think that they need to be informed about what Medicaid expansion would do for the state. If you look at every single state that has expanded Medicaid, they're spending more money than they expected to spend ... and that's taking away money from all the other needs."

Utah: Despite having the available federal funding and the states Republican Governor, Gary Herbert's (R - UT) support of Medicaid expansion, there has been enough resistance from the state legislature in Utah to prevent any expansion momentum. Advocates of expanding Medicaid in Utah pushed back by passing a ballot initiative similar to Maine's.

Aside from that, Governor Herbert also signed the HB472 bill. The bill seeks authorization from the federal government to expand his states Medicaid program to 100% of the federal poverty level (FPL) while also implementing work requirements in order to deal with the coverage gap. Expanding that states program to 100% of the FPL would extend coverage to 72,000 residents by 2020 instead of 150,000 under 138% FPL. If the bill successfully passes, Utah's out of pocket costs would be far less than if their program expanded to 138% FPL.

Arkansas submitted a similar plan that would have capped eligibility at poverty level instead of 138% of the FPL. CMS did not approve the request and it is not likely that CMS will endorse the governor's bill since the federal government has only approved these types of requests under the stipulation that states expand to 138% of the FPL.

While the governor's administration would like to receive approval for the bill, Utah voters will also have a chance to weigh in at the ballot boxes in November to fully expand Medicaid to the 138% FPL.

Virginia: In February, The Virginia House of Delegates voted and approved a budget accepting ACA Medicaid expansion in conjunction with work requirements for enrollees. However, Virginia's Senate budget did not incorporate arrangements for expansion. Due to the split support for Medicaid expansion, the Virginia legislature was unable to settle a budget. Consequently, the implementation of Medicaid expansion and Virginia's FY 2019 budget are currently deadlocked. It has been close to two months since Virginia's General Assembly adjourned without consensus.

On May 14th, the Senate met for a special session to discuss a spending plan and the Senate Finance Committee will proceed with work on the budget today. The entire Senate will reconvene on May 22. In order for Virginia to expand its Medicaid program, there will need to be a majority vote in both the House and Senate. If Virginia administrators cannot come to an agreement by June 30th, the state could experience its first government shutdown.

MAINE HAS ADOPTED MEDICAID EXPANSION BUT IS IN LEGISLATIVE DEADLOCK

Maine's Medicaid program, MainCare, was authorized for expansion last November through a ballot initiative. Voters advocated the expansion by 59%. Nevertheless, for 80,000 low-income residents who would have been eligible for coverage, the state missed the state plan amendment submission deadline to CMS (April 3, 2018). Maine's legislature is presently facing a deadlock due to Governor LePage's (R) resistance to expansion.

After the vote, the governor declared, "this fiscally irresponsible Medicaid expansion will be ruinous to Maine's budget."

Under the law, it is estimated that Maine would spend $55,000,000 annually on the program and the federal government would cover at least 90% of the cost of MainCare's new enrollees. LePage says that the cost of the expansion is twice the amount estimated by the state legislature and refuses to implement the plan unless his requirements are met.

LePage's stipulations consist of:

• That taxes will not increase
• Stabilization money funds won't be used
• The funding mechanism will be ongoing
• Waiting lists for the disabled and elderly are fulfilled before Medicaid eligibility expansion.

Due to Governor LePage's resistance, Maine Equal Justice Partners (MEJP) has submitted a lawsuit against DHHS for failure to act. MEJP argues that the administration is denying residents coverage that is required by law. They are afraid that an estimated 70,000 low-income residents seeking coverage will not be able to enroll by the next deadline, July 2, 2018. Maine's State Attorney General, Janet Mills, declined to represent the governor in the case. However, she did permit LePage's request to seek outside counsel for representation in the case.

The landscape of Medicaid is changing as reformists submit waivers and introduce work requirements. Additionally, Republican leadership across the country is resisting Medicaid expansion, strongly believing that it goes against the programs original objective. Despite the GOP's opposition, there is a significant amount of activity amongst expansion supporters to expand their state's Medicaid programs. Through ballot initiatives, voters are stepping out in front of their legislatures to voice their support for expansion at the polls this coming fall.

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THE SOARING COST OF DRUGS FOR THE MEDICAID PROGRAM

Last month, President Trump delayed introducing his plan to deal with the soaring costs of prescription drugs. Inspite of the delay, New York's Medicaid Drug Utilization Review Board (DURB) took it upon themselves to negotiate with drug companies. DURB voted in favor of decreasing the price its Medicaid program is willing to pay Vertex Pharmaceuticals for the company's cystic fibrosis drug.

The federal government's aversion to lower drug prices for the Medicaid program is the main driver of rising costs. Private health insurance companies can make their own formularies and negotiate pricing. Medicaid has much more negotiating power because of its massive membership, but by rule, is limited from doing the same.

The Centers for Medicare & Medicaid Services (CMS) is projecting that prescription drug spending will be the fastest growing category of health spending over the next decade. CMS is well aware of the situation and according to the head of CMS, Seema Verma, "the bottom line is that insurance premiums have skyrocketed and there's a number of people that just can't afford to pay."

Pharmacy Benefits Consultants investigated wholesale drug prices from the beginning of 2017 to 2018 and found that "twenty prescription drugs saw their prices rise by more than 200%." Additionally, The Senate Homeland Security and Governmental Affairs Committee Minority (HSGAC) carried out a review and found that "prices for each of the 20 most-prescribed brand-name drugs for seniors have increased dramatically every year for the past five years." That rate is "approximately ten times higher than the average annual rate of inflation." Moreover, from 2012 to 2017, "twelve out of the 20 most commonly prescribed brand-name drugs for seniors had their prices increased by over 50 percent."

The Trump administration, CMS, and other government authorities are aggressively evaluating the situation and trying to find a remedy. One approach is proposed in Trump's 2019 budget plan. The recommendation is to put into place a pilot program that would permit state Medicaid programs to test drug formularies that would promote more competitive drug pricing.

MASSACHUSETTS MEDICAID: THE MEDICAL HUB AND HEALTHCARE LEADER

Medicaid's lack of ability to negotiate with drug companies is one factor leading to soaring drug prices. In Massachusetts alone, drug prices have doubled in the last 5 years. MassHealth's drug spending is extending the state's spending plan as drug costs have increased to over $2 billion a year. In response to the climbing costs, Massachusetts's Governor, Charlie Baker, has sent a waiver to the Trump administration to develop a selective drug formulary that would allow the state to negotiate pricing and remove ineffective medications. State officials are certain that by minimizing the quantity of drugs in the formulary and by limiting the amount of drug manufacturing companies who provide them, it will establish the negotiating power needed to decrease costs.

While health-care policy specialists and CMS back the plan, the state's proposition to eliminate drugs from the formulary could be problematic. Consumer groups assert that the people benefiting from the program may need a number of drugs for their conditions. Depending on what drugs administrators deem ineffective, patients could potentially lose access to needed care. Critics of the proposal suggest that it does nothing to deal with drug costs and it will in fact hurt people that rely on the program. In fact, there is a high possibility that drug companies will raise drug prices as their competition decreases.

Assuming the governor's plan is approved, MassHealth will need to develop an appeal process for doctors to prescribe drugs not present on the formulary so patients can access the medications they need. If states thinking about this model can show that patient's access to needed drugs is intact and their programs can save money, it may be a remedy to rising drug prices across the nation. At the moment, the president's 2019 budget would allow five states to try what Massachusetts is proposing.

NEW YORK'S SOLUTION TO AFFORDABLE MEDICAID DRUG PRICES

New York representatives also see the significance of having the option to negotiate drug prices. In an effort to deal with increasing drug costs, New York's state Medicaid program's DURB voted to enact a law that uses supplemental rebates to manage drug costs. The law focuses on drugs that are "priced disproportionately to their therapeutic benefits." When the state experiences a drug spending surge of 2.4% to 15.1%, DURB can ask for discounts to a more reasonable price.

The first test will be carried out with Vertex Pharmaceutical's cystic fibrosis drug, Orkambi. In the past, the drug cost $250,000 a year for patients, the proposed cost has been reduced to $83,000. That equates to a 67% discount.

On a global scale, pharmaceutical manufacturers seldom, if ever, consider demands for discounts. These companies believe that competition is the solution to regulating drug pricing. They argue that drugs like Orkambi have no competitors and that $250,000 yearly is reasonable. They also assert that high prices support their capacity to research and create new drugs. This claim does not ring true considering that nine out of the ten largest pharmaceutical manufacturers spend more on marketing than on developing new drugs.

Drug prices continuously rise and it is putting patients access to care in jeopardy. Consequently, government officials are making efforts to lower the costs and achieve fair prices. Ultimately, the existing reality of hyper-inflated drug prices cannot be maintained, not only for public programs like Medicaid and Medicare but for everyone.

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