A MEDICAID MODEL THAT INCLUDES WORK REQUIREMENTS, PREMIUMS, TIME LIMITS & DRUG TESTING

In 2017 the GOP and Trump Administration made a number of attempts to reform Medicaid by trying to repeal the Affordable Care Act (ACA) and enforce federal spending caps for the Medicaid program. Although these initiatives were not successful, the future of the Medicaid program is still vulnerable to administrative actions from CMS. It is evident that this administration has a very different vision for the future of Medicaid than its predecessor.

A report performed by the Henry J Kaiser Family Foundation highlights Medicaid's changing landscape. For example, states that grew their Medicaid programs under the ACA such as Kentucky, Indiana, Arkansas, Arizona, and New Hampshire are additionally pursuing work requirements and other conditions for beneficiaries. In addition, some states that did not adopt expansion under the Obama administration, like Virginia, are now taking it into consideration under the condition that work requirements are put into effect.

HOW THIS NEW MEDICAID MODEL IMPACTS THE STATES

The new vision for the Medicaid program is a stark contrast to that of the ACA's. The Kaiser Family Foundation predicts that the work requirements and additional restrictions will affect about 24.5 million people including non-elderly and non-disabled adults. As a result, childless adults are at the greatest risk of losing coverage. In spite of the large population that will be affected by new conditional requirements, it is important to keep in mind that the work requirements and restrictions will not affect the majority of those participating in the program. For instance, children, elderly, disabled, and pregnant enrollees make up more than half of Medicaid enrollees and are either exempt from such laws or covered by federal law.

The work requirements and other conditions are a sign that states entertaining these waivers are making use of them as a method to reduce costs by reversing Medicaid expansion or introducing downsized programs. Medicaid professionals see this as a significant threat and inconsistent with how waivers have been used traditionally. The executive director of Georgetown University's Center for Children and Families, Joan Alker, sees them as a way to simply cut coverage. According to Alker, "Under any previous administration, waivers have not been used to devise ways to cut coverage."

The state of Kentucky, led by Governor, Steve Beshear (D), was amongst the states that had expanded its Medicaid program under the ACA, increasing coverage to an additional 350,000 enrollees. According to Gallup, the state saw a significant drop in its uninsured rates between 2013 and 2016 from 20.4% to 7.8%. Regardless of the increase in eligibility the newly elected Kentucky Governor, Matt Bevin (R), did not agree with the expansion. He believes that the program is for the most vulnerable people and the work requirement works to protect the program and its services. In August 2016, Governor Bevin put forth a new plan that included work requirements to HHS.

According to Kentucky.gov, "the submission of this waiver is the result of many months of extensive research, planning and time spent traveling the state listening to Kentuckians," said Gov. Bevin. "Kentucky HEALTH will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner that ensures better health outcomes for recipients." Shortly after the New Year, CMS approved Kentucky's Section 1115 demonstration waiver, Kentucky Helping to Engage and Achieve Long-Term Health aka "KY HEALTH." Health Law Policy Matters has documented what this will mean for the state and notes that the full implementation is expected to begin in July of 2018.

After a 5-year period, The Commonwealth Fund predicts that enrollment rates would drop nearly 15 percent. This figure consists of enrollees made eligible from the expansion and traditional enrollment. According to Governor Bevin, those 100,000 people would need to receive insurance coverage from an employer or through a private provider. This may be challenging since KFF has reported that 60% of adults on Medicaid are currently working.

Health professionals, including Cindy Mann of Manatt Health, are worried about the direction Medicaid is headed. They believe that the repercussions of work requirements are not being taken into account. Mann stated, "the people who policymakers and the public would want to protect, with medical conditions, barriers to employment, they're going to be exempt. But the system isn't geared to get these people out of harm's way. It's the people who are least able to gather the paperwork required that will get caught in the cracks and will lose their coverage."

The debate over Medicaid comes down to two competing philosophies. Republicans claim that the program has expanded beyond its initial objective, thereby endangering its capacity to provide coverage and services to the most vulnerable. They argue that work requirements and conditional restrictions are aimed at those individuals for whom the program was never intended; furthermore, the conditions for enrollment are designed to help people become independent from Medicaid. Democrats view the approval of 1115 waivers as a way to simply cut coverage since attempts to reform the program in 2017 were a failure. Democrats argue that Medicaid is intended to provide insurance and not to encourage employment. Cutting costs and reducing coverage only prevents the program from performing its primary mission. As legislators debate, some states have already received approval for their work requirement waivers. It seems, that this is only the start and its very likely that more states will follow suit.

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MANAGED MEDICAID MARKET IN 2018

Over the past year, the Trump administration and the GOP had a strong push to reverse the ACA in addition to reforming Medicaid. With the New Year in progress, it is very clear that the uncertainty in Medicaid's future is a reason for concern among Medicaid managed care organizations.

In 2017 the Senate and House both failed to reform the Federal Medical Assistance Percentages (FMAP) structure from fixed per capita allotments to block grants for states. President and CEO of Medicaid Health Plans of America, Jeff Myers, explained, "its kind of like being in a major gunfight when the gun smoke's all around you. It's still very cloudy and there are going to be lots of challenges this year, but I think 2017 kind of changed the nature of the debate." Legislators have "a very different perception of Medicaid. Trying to swing a hammer at it is not effective".

These bills aimed to get rid of enhanced FMAP funding for the program. The CBO foresees that the White House and GOP's efforts to restructure funding through the bills could have initiated massive reductions in federal expenses to Medicaid between $772 billion and $834 billion.

Myers recognizes that Medicaid is complicated and has a "meaningful impact on state budgets far beyond just treating their most disadvantaged citizens." Because of this, the probabilities are slim that Medicaid financing will experience fundamental restructuring from Congress.

Nonetheless, The Tax Cuts and Jobs Act of 2017 passed shortly before Christmas repeals the ACA requirement for purchasing health insurance coverage. According to the CBO, eliminating this mandate could possibly lead to millions of uninsured people between 2019 and 2027. The president of EBG Advisors, Bob Atlas, notes, "Medicaid is implicated because when people in fulfilling their obligations under the mandate go to sign up, many of them discover they are eligible for Medicaid and by law are steered in that direction. So, if fewer uninsured people are going through the enhanced process of seeking coverage, fewer are going to end up on Medicaid."

MEDICAID EXPANSION FOR MORE STATES 

In addition to enhanced FMAP funding, it is probable that more states will look to expand Medicaid. Maine for example, pushed a referendum through to grow the program but it was blocked by Governor LePage (R). He wants the state to fund their program before expansion is taken into consideration. On the other hand, VA Governor-elect Northam (D) is seeking to expand the program despite the opposition from state legislatures. Having said that, the move to expand the program is unresolved within the House of Delegates.

Bob Atlas, also pointed out that Medicaid budgets could be drastically strained from the new tax law. By restricting the deductibility of state and local income and property taxes, states with higher taxes will be pressured by taxpayers to lower them also.

MHPA stresses that behavioral health costs, drug spend, and long-term care cost are the primary factors that Congress must deal with in order to improve Medicaid spending. Presently, MHPA is completing a proposal for revisions to the Medicaid Drug Rebate Program. They are of the opinion that the program promotes improper pharmaceutical pricing incentives. Their objective is to design Medicaid drug pricing off of the Medicare Part D program.

POTENTIAL MEDICAID WORK REQUIREMENTS

Myers and Atlas are in agreement that states will aim to relieve financial pressures on the program by adjusting Medicaid enrollment via the Section 1115 demonstration waiver process. Atlas claims, "a number of Republican-led states are proposing to implement work requirements as a condition of eligibility for so-called nondisabled people." At this point, seven states have submitted such waivers to CMS. As a result, MCO's have sought partnerships with local agencies to join their recipients with employment opportunities. Atlas notes that apart from work requirements, measures to raise the frequency of eligibility recertification and to get rid of retroactive eligibility will trigger intense controversy in Medicaid enrollment. It is a legitimate possibility that these types of modifications will be met with lawsuits.

MEDICAID MANAGED CARE REGULATION REVISIONS

For now, Plans are anxious to see CMS's revisions to the Medicaid managed care rule from 2016. Last year, Seema Verma from CMS, committed to a, "full review of managed care regulations in order to prioritize beneficiary outcomes and state priorities."

According to Myers, "I think generally the questions we have are, if they're going to redo the managed care regs, are they making it easier for our state partners to provide data to CMS that's valuable to both, are they ensuring that there's no duplication of efforts so that plans aren't being asked for one more thing that people don't actually use, and then lastly, in any type of reform are they ensuring that the actuarial soundness requirements are met? Because if those aren't met, then services can't be provided."

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