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States will be looking for relief, help with Medicaid
While opting out of Medicaid altogether doesn't seem to be a realistic option for states currently, Stan Rosenstein, MPA, principal advisor at Health Management Associates in Sacramento, CA, and former California Medicaid director, doesn't think the issue has gone away.
"States are going to be confronted with very bad budget situations that are likely not to be resolved in the short term," he says. This means that out of necessity, says Mr. Rosenstein, states are going to have to look at every option.
"I think states will wrestle with their Medicaid budgets for a number of years," he says. "Things are going to be in turmoil for awhile. States have the hurdle of the loss of the enhanced [Federal Medical Assistance Percentages]."
States will be looking to the Department of Health & Human Services (HHS) for various kinds of relief and assistance, says Mr. Rosenstein, and will likely challenge maintenance of effort requirements for their Medicaid programs.
States are under tremendous stress, says Mr. Rosenstein, because they have to balance their budgets when the economy has not yet recovered. "And Medicaid has to be part of any budget solution. It's too big not to be," he says. "There are no really great answers here."
What states can do, he says, is go to the federal government and ask for waivers to address their fiscal concerns. While the Patient Protection and Affordable Care Act (PPACA) is the law, Mr. Rosenstein says, "states can certainly challenge the law, and there are vehicles to do that. The federal government does have flexibility to waive the law with an 1115 waiver."
States are looking to get additional flexibility in their Medicaid programs, says Mr. Rosenstein, as California is doing by seeking a waiver for greater cost-sharing of copays. "The secretary of HHS has waiver authority. That is the way I see states doing this," he says.
Other than that, says Mr. Rosenstein, options for the short term are very limited. "If you save money for next year, that's good and it needs to be done. But it doesn't solve this year's budget problems," he says. "There are a limited number of areas that you can make changes."
For this reason, says Mr. Rosenstein, states may seek greater flexibility on cost sharing, limiting benefits, the requirement to provide Early Periodic Screening Diagnosis& Treatment services for children, or reimbursement rates. States may also seek to put limits or greater utilization controls on Medicaid benefits.
"States may seek a waiver to charge premiums, or reward good behavior and punish bad behavior," adds Mr. Rosenstein. "There are multiple variables that people can come up with to try to reduce state expenditures."
Making a point
Arizona was recently allowed to suspend Medicaid coverage for about 250,000 childless adults, notes Mark Trail, managing principal at Health Management Associates in Atlanta. However, this particular situation is unique, says Mr. Trail, and most states are not in the same position.
"The only reason Arizona is able to do that is because the group is above the federally mandated threshold," says Mr. Trail. "It wasn't done with a state plan amendment; it was done with a waiver. The waiver is expiring, and they are not compelled to have to redo that waiver exactly like it was."
For Georgia, the expansion will mean an additional 600,000 to 900,000 individuals on Medicaid, says Mr. Trail, depending on how many people actually enroll. "Most states were already pretty low in their thresholds," he explains. Georgia's Medicaid program covers families at about 50% of the Federal Poverty Level (FPL), he adds, and doesn't provide any coverage for single childless adults who are not disabled.
"As far as the minimum requirements are concerned, you have to either comply with them or get a waiver from the feds," says Mr. Trail. "But there are lots of things that feds can't waive. You don't get to waive the basic eligibility requirements."
Waivers are only possible in cases where states are asking not to cover expansion groups that were beyond the 133% of FPL, says Mr. Trail. "That doesn't mean a state wouldn't try to waive those basic requirements. Politics is a funny thing. They could try just to make a point," he says. "But I don't think they'd get very far."