Seema Verma, Tom Price push states to try conservative Medicaid changes

The Trump administration’s two top federal health officials have wasted little time making it clear that they want to give states greater flexibility to redesign their Medicaid programs, paving the way for more conservative policies like work requirements and premium contributions.

“Today, we commit to ushering in a new era for the federal and state Medicaid partnership where states have more freedom to design programs that meet the spectrum of diverse needs of their Medicaid population,” Department of Health and Human Services Secretary Tom Price and newly confirmed Centers for Medicare & Medicaid Services Administrator Seema Verma wrote in a letter (PDF) sent to governors Tuesday.

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In the letter, they criticized the “rigid and outdated” application of federal rules that govern states’ Medicaid programs—saying they don’t properly account for regional differences—and argued that the expansion of Medicaid eligibility to able-bodied adults “was a clear departure from the core, historical mission of the program.”

In order to move toward what Verma and Price see as more effective management of the Medicaid program, they said their agencies will aim to fast-track the approval of waiver and demonstration project extensions. They will also be “more consistent” in evaluating and incorporating state applications for waivers or demonstrations that have been approved in other states.

CMS and HHS will use Section 1115 demonstration authority—which let states test and implement coverage approaches that do not meet federal rules—to review and approve state-led innovations that promote “training, employment and independence” among Medicaid beneficiaries, Verma and Price added.

Further, their agencies will consider state-led reforms that could include:

  • Alternative benefit plan designs and cost-sharing models
  • Premium or contribution requirements (with appropriate protections for high-risk populations)
  • More options to design copayments to encourage beneficiaries to seek options other than the emergency department for non-emergency care
  • Waivers of non-emergency transportation benefit requirements, waivers of procedures like presumptive eligibility and retroactive coverage
  • The facilitation of enrollment in employer-sponsored coverage options
  • Initiatives to “break down the barriers” preventing families from being on the same plan

Though it has approved some states’ waiver applications under Section 1332 of the Affordable Care Act, the Obama administration has rejected waiver requests that would implement a work requirement for Medicaid beneficiaries. However, it approved Indiana’s Medicaid redesign, which Verma helped construct. The Healthy Indiana Plan requires beneficiaries to contribute small amounts toward their monthly premiums.

Earlier this week, HHS sent a letter to governors indicating it was open to state innovation waiver proposals that include high-risk pools or state-operated reinsurance programs.