CMS Unveils Medicaid Block Grant Proposal
On Jan. 30, the Centers for Medicare & Medicaid Services (CMS) released a guidance that could result in a drastic
shift in the way portions of state Medicaid programs are funded. Under the guidance,
CMS outlined terms it would use for approving
voluntary state waiver
applications for demonstration programs that would use block grant funding to
provide coverage for limited adult Medicaid populations who are not disabled,
not in long-term care or not eligible under a state plan.
Regular readers of the ADEA Advocate may recall that block grants are an arrangement between
states and the federal government under which the federal government provides
a fixed amount of annual funding to administer a state-run program. Medicaid is
currently funded without fixed limits as an entitlement program under which the
federal government pays a percentage of the state’s Medicaid costs based on
per-capita income. In exchange for receiving a fixed amount of funds, states would
be granted greater flexibility in administering the program.
Dubbed the Healthy Adult Opportunity (HAO), Trump administration officials are touting the new guidance
as an opportunity for states to rein in costs and design innovative approaches
to delivering health care. A demonstration approved under HAO guidance would be
required to provide essential
health benefits that apply under the Affordable Care Act, and would
also be required to meet additional
standards intended to protect beneficiaries. Among the possible changes
that could result in cost savings would be the ability to design formularies for
prescription drugs. States may also be permitted to implement new enrollment criteria
for covered populations, such as work requirements, new income standards for eligibility,
and premiums and cost-sharing arrangements that would be capped at 5% of a beneficiary’s
income. If a state is able to save federal funding, CMS would permit the state
to reinvest a portion of the savings back into the state’s Medicaid program.
The guidance also encourages states to reexamine laws that limit a provider’s
scope of practice or that impose “unnecessarily restrictive supervisory requirements.”
All states approved under the HAO would be expected to review these recommendations,
and CMS will prioritize applications that demonstrate a state has or is taking
steps to address “state barriers to competition.”
Congressional Democrats have criticized
block grants and have stated they will result in restricted enrollment,
cuts to provider reimbursement, and limited
eligibility. It’s also unclear
if CMS has the authority to alter federal funding for Medicaid. Waivers
approved under the program will also likely be challenged in courts on the grounds
that they do not further the goals of the Medicaid program, a requirement for
all waivers granted by CMS for demonstration projects.
Several states have already shown interest in receiving Medicaid funding through
a block grant. Near the end of 2019, Tennessee
submitted a waiver request, asking that all of the state’s Medicaid funding be
provided through a block grant. Alaska
commissioned a study of block grants, and lawmakers in Georgia, Oklahoma and Utah
have also shown an interest in the funding structure.
ADEA AGR will continue to monitor and provide updates as more develops.
