Making Medicaid malleable
Governors seek relaxed rules to cover new groups, add some cost-sharing
By Jonathan Gardner
While Congress' main healthcare focus for 2001 has been reforming Medicare and covering seniors' prescription-drug costs, governors are renewing their traditional plea for more flexibility in managing Medicaid, but this time with a twist.
The National Governors Association wants the federal government to give states the right to offer coverage to populations not now covered by the joint federal-state program for poor and disabled people, but ask the new enrollees to share in the cost or accept fewer benefits.
Governors also want HCFA to ease its regulatory grip, including approving state Medicaid waivers more quickly.
The NGA initiative, spearheaded by Vermont Gov. Howard Dean and Tennessee Gov. Don Sundquist, makes hospital groups nervous because they fear a growing financial load from unpaid bills. Multistate hospital systems also fear a red-tape burden resulting from eligibility standards that differ from state to state.
But with about 15 former governors in the Senate, not to mention former governors occupying the White House and the HHS secretary post, the governors believe they have a good chance at accomplishing their goal of a less-restrictive Medicaid program. The Senate Finance Committee, which has jurisdiction over Medicaid, includes two former governors: Bob Graham (D-Fla.) and Jay Rockefeller (D-W.Va.).
"It's a natural (group with which) to find some common interest," Matt Salo, health legislation director with the NGA, said of the numerous governors with influence over Medicaid policy.
Congress' focus on tax cuts and education, even before tackling Medicare reform, however, may mean that the governors will have a long journey as they try to cut through the legislative thicket.
"We're having to put this on Congress' agenda," Salo said. "Medicaid reform wasn't on anybody's agenda."
The NGA is surveying governors on the proposal so it can refine it and present it formally to Congress.
At least for now, there is little evidence that any expansion of the $216 billion Medicaid program is set for legislative approval. The Senate Finance Committee has scaled back Medicaid oversight hearings for 2001 in favor of passing a Medicare restructuring proposal by August, a key priority of committee Chairman Charles Grassley (R-Iowa), a spokeswoman for the panel said. She added, however, that Medicaid reforms will be "very ripe" next year.
The House Energy and Commerce Committee, meanwhile, has been holding a series of hearings on potential reforms to HCFA, which could lead to some changes to Medicaid regulations. Although governors may welcome planned changes that would loosen rules on Medicaid waivers for managed-care plans or preventive-care mandates, the committee hasn't taken on broader questions of eligibility and benefits requiring changes in law.
Expanding the Medicaid population
The NGA's plan, drafted earlier this year during a meeting in Washington, proposes establishing three beneficiary categories (See chart).
In addition to the traditional core group of poor and disabled people, the program would be extended to less-poor people, who would be given benefits equal to the value of the services offered under a state children's health insurance program. However, the states would have the option of charging the new beneficiaries up to 5% of their families' incomes.
The program also would be amended to cover other vulnerable populations who might be covered in a limited way, for example through a catastrophic insurance plan, a preventive-care plan or a pharmacy benefit.
While lauding the proposal for expanding coverage for uninsured people, hospital groups see the biggest danger as allowing states to require beneficiary copayments or deductibles.
"We end up with the costs that people don't want to pay," said Edward Goodman, vice president of public policy with the VHA hospital alliance. "If you put these copays on a population that is unable to pay it or barely able to, they end up not paying it."
Though praising the governors for proposing Medicaid expansions, Ronald Pollack, executive director and vice president of the healthcare consumer group Families USA, also questioned the changes in benefits and cost-sharing requirements.
"Those things can result in harm to the low-income beneficiaries of these programs," he said.
Likewise, big hospital systems also might struggle with the proposal. Differing eligibility standards, as well as benefit packages and cost-sharing, will make it difficult to manage systems that have hospitals in numerous states.
"We look forward to working with the governors and the administration on any Medicaid reform proposal, especially to ensure that there is as much continuity (of regulations) between contiguous areas as possible," said Dan Boston, assistant vice president of legislation at the Federation of American Hospitals.
Even without a major change in the Medicaid statutes, the governors hope the Bush administration and Congress will be friendly to regulatory changes that will give states more administrative flexibility.
A major component of the NGA's Medicaid reform proposal is for HCFA to examine its regulatory policies to ensure that they don't interfere with state flexibility. It also asks that HCFA be required to act on states' Medicaid waiver requests within 45 days of receiving them or grant automatic approval if it can't.
The regulatory relief push conforms to HHS Secretary Tommy Thompson's early priority of focusing on how HCFA governs providers, states and beneficiaries under federal healthcare programs.
Indeed, Thompson has pledged to the governors that state waivers won't gather dust. At the NGA's February meeting in Washington, Thompson said: "You will no longer have to wait months, a year, or even longer to get action on a waiver request. No more frustrating delays, waiting to implement your innovative ideas. If I determine that the process is taking too long, I will take it upon myself to review the waiver." zxxx