Health Reform WK-EDGE States are pursuing novel changes with Medicaid waivers
Wednesday, January 3, 2018

States are pursuing novel changes with Medicaid waivers

By Bryant Storm, J.D.

Work requirements, drug screening and testing, eligibility time limits, and premiums with disenrollment penalties are among the novel Medicaid provisions pending before CMS as part of states’ Section 1115 Medicaid demonstration waivers. As of December 2017, there are 34 states with 42 approved waivers and 20 states with 22 pending waivers, according to a Kaiser Family Foundation Issue Brief.

Waivers. HHS grants waivers under Section 1115 of the Social Security Act (SSA) (42 U.S.C. § 1315) to allow states to test new approaches to Medicaid administration that differ from federal requirements. Waivers are granted when they are determined by the HHS Secretary to be an initiative that is an "experimental, pilot, or demonstration project . . . likely to assist in promoting the objectives of the program." An implied requirement of the Section 1115 waiver is that it remain budget neutral for the federal government. Waivers are usually granted for a five year period, with the ability to be extended for an additional three years. However, CMS announced, on November 6, 2017, that it will consider approving 10 year waiver extension requests for "routine, successful, non-complex" demonstrations.

Pending waivers. Current pending waiver requests include reforms directed at delivery systems, behavioral health, and targeted populations. Some states—Arkansas, Indiana, Kentucky, Maine, New Hampshire, Utah, and Wisconsin—are pursuing previously untested Medicaid provisions: work requirements. These pending waiver requests would require work as a condition of Medicaid eligibility for (depending on the state) adults in expansion or traditional Medicaid populations. Although the specifics differ among states, generally, the work requirement would require Medicaid beneficiaries to verify their participation, for a certain number of hours per week, in certain job related activities, including employment, job searching, or job training programs, in order to receive health coverage. The Trump Administration signaled, via a March 14, 2017 letter, its willingness to approve work requirement waiver requests (see Does Medicaid work with a work requirement?, March 29, 2017).

Approved waivers. CMS has approved waivers to expand coverage, alter deliver systems and modify benefits, cost sharing, and provider payments. Sixteen states use the waiver authority to reform Medicaid delivery systems, including Delivery System Reform Incentive Payment (DSRIP) initiatives, which allow states to support providers with federal funding linked to performance metrics.

ACA. Seven states—Arizona, Arkansas, Iowa, Indiana, Michigan, Montana, and New Hampshire—have relied on waivers to implement the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) Medicaid expansion. In many of these states, the waiver was used to expand Medicaid because political support could not otherwise be obtained for program expansion. The waivers allow some flexibility beyond the traditional ACA expansion, including the utilization of premium assistance models, the application of premiums that exceed federal requirements, and eliminations of certain ACA required benefits.

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