The Trump administration vehemently pushed back on major criticism of an initiative to get states to convert some Medicaid funding to a block grant, slamming comments as "fearmongering."
Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma wrote in an op-ed in The Washington Post defending the new Healthy Adult Opportunity (HAO) initiative rolled out last week. Patient advocate and provider groups said the initiative is a veiled attempt to weaken Medicaid.
Verma pushed back on criticism that the initiative would wind up cutting Medicaid funding to states.
“Let me be clear: Fearmongering notwithstanding, HAO does not cut Medicaid funding,” she wrote. “This optional demonstration continues federal funding to states based on their historical spending with a reasonable growth rate.”
Under the initiative, a state can apply to transform federal funding for a limited population into a block grant. The state would get a fixed amount to pay the healthcare needs for able-bodied adults on Medicaid. Pregnant women, children, the elderly and disabled would be exempt.
If the state goes over that fixed amount, they must pay any remaining costs.
Both payers and providers bashed the initiative’s cap on funding, saying it will inevitably lead to payment cuts or benefit losses.
“This uncertainty would leave people vulnerable to significant cuts in the event of a natural disaster, high-cost medical innovations, or an unanticipated event such as the recent outbreak of coronavirus,” said Margaret Murray, president of the nonprofit plan group Association for Community Affiliated Plans.
But Verma said in the op-ed that the initiative allows for adjustments in case of an economic downturn or a public health emergency.
She added that Medicaid funding is the largest or second-largest budget item for states.
“Under HAO, the administration is offering states the upfront flexibility to design a program that works for their state’s unique needs, rather than being constrained by top-down dictates from Washington,” she wrote.
Verma also highlighted that states have to maintain civil rights and quality guardrails. She added that the HAO only applies for working-age adults not eligible for disability “and for whom Medicaid coverage is optional—currently about 15 million people. The other 56 million beneficiaries will not be directly affected.”
However, the initiative does allow states to add certain eligibility requirements not allowed under current law, according to an analysis from the Kaiser Family Foundation.
States could require premiums for enrollees at any income level and any amount, impose work requirements and other criteria to qualify for coverage.
While a state would also still have to cover the same 10 categories of essential health benefits as under traditional Medicaid, the state would get more flexibility to determine the appropriate “amount, duration and scope of covered services,” Kaiser said.
Verma also gave a hint at the likely legal challenge to the initiative, claiming there are “those threatening to weaponize the legal system to preserve business as usual. This threat is little more than a thinly veiled attempt to intimidate governors into backing away from innovative solutions.”
CMS’ work requirement waivers have come under heavy legal scrutiny. A federal judge has shut down programs in Kentucky, Arkansas and New Hampshire. Indiana has also delayed implementation of its program due to a similar lawsuit.