GOP-led Medicaid expansion states test limits of CMS flexibility on waivers
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May 07, 2015 01:00 AM

GOP-led Medicaid expansion states test limits of CMS flexibility on waivers

Virgil Dickson
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    Michigan Gov. Rick Snyder

    Republican-led states that already expanded Medicaid now are coming back to the Obama administration with requests to move their expansion programs in more conservative directions, including higher cost-sharing for beneficiaries, work requirements, and coverage time limits. These moves may test the limits of the administration's flexibility and could lead to rollbacks in Medicaid expansion across the country.

    Ohio and Iowa are planning to seek changes in their Medicaid expansion waiver programs along the lines of waivers already approved by the CMS in states such as Indiana. But forthcoming waiver requests from Arizona and Michigan, which include new cost-sharing and work requirements for beneficiaries, are raising red flags for the administration. Even Republican supporters of these proposals acknowledge that the provisions are likely to discourage thousands of low-income people from signing up for Medicaid coverage.

    These moves come as Republican governors and lawmakers face growing political pressure from conservatives to either tighten their states' expansion programs to make them tougher on beneficiaries, or end them entirely. These new proposals are inspired by Indiana's conservative waiver program, approved by the CMS in January, which imposes premiums on beneficiaries with incomes below the federal poverty level if they choose enhanced coverage with dental and vision benefits. In addition, Indianans with incomes between 100% and 138% of poverty are locked out of coverage for six months if they miss premium payments.

    A CMS spokeswoman declined to comment on the emerging waiver proposals, saying no GOP-led expansion states so far have formally submitted any new waiver requests to the agency.

    In October, Arizona plans to submit a waiver proposal based on a new law requiring premium contributions for beneficiaries both above and below 100% of the federal poverty level, a job search requirement, and the termination of Medicaid benefits for “able-bodied adults” after they've received coverage for five years. Arizona's new Republican Gov. Doug Ducey, who opposed Medicaid expansion before becoming governor, signed the little-noticed law in March.

    The Obama administration so far has not given any states permission to impose premiums on people below the poverty line with the threat of cutting off their coverage. It has not approved any time limits for benefits. And it has rejected proposals for work requirements.

    Experts note that most people on Medicaid already are employed or are part of working households. The state has no plans to ask for people below poverty to lose coverage if they don't pay their premiums, but Arizona's Republican lawmakers, some of whom are challenging the constitutionality of former Republican Gov. Jan Brewer's Medicaid expansion in court, decided to seek both the work requirement and time limits anyway.

    “They want to keep it in front of the federal government as an issue,” said Monica Higuera Coury, assistant director of Office of Intergovernmental Relations at the Arizona Health Care Cost Containment System, which runs the state's Medicaid program.

    Advocates for the poor in Arizona are nervous. “Forcing someone to look for a job, or kicking them out of the program after five years undercuts the whole purpose of the program, which is to ensure access to healthcare,” said Ellen Katz, director of the Phoenix-based William E. Morris Institute for Justice.

    In Michigan, a 2013 law that allowed the state to expand Medicaid included a clause that the state must receive a waiver from the CMS by Dec. 31, 2015 that would boost premium contributions and other cost-sharing for Medicaid beneficiaries to as much as 7% of their income after they've been in the program for four years. Under the state law, if the CMS does not grant the waiver request, the state must terminate its Medicaid expansion, which has extended coverage to 600,000 Michiganders.

    Under the current expansion program, dubbed Healthy Michigan, beneficiaries with incomes between 100% and 138% of the federal poverty level pay 3% to 5% of their income for premiums and cost-sharing.

    The state law also says that low-income people who choose not to pay the higher premiums and thus have to leave the program could sign up for coverage through the federal insurance exchange.

    Steve Fitton, Michigan's Medicaid director, said the CMS has told the state that people with incomes between 100% and 138% of poverty in states that have expanded Medicaid do not qualify for subsidized coverage through the exchange. Federal agencies also cautioned that these low-income people can't afford to pay as much as 7% of their income for coverage. A single person at 138% of the poverty level has an income of about $16,000 a year; 7% of that is $1,120.

    A spokeswoman for the Michigan Department of Health and Human Services said the CMS has not formally responded to Michigan's inquiries but that the state's formal waiver proposal is not due until Sept. 1. “The first year of the Healthy Michigan Plan demonstrated the success of the program, and we will continue conversations with CMS to reach positive outcomes for our residents,” she said.

    Advocates for the poor in Michigan say they aren't thrilled about the proposed changes but that it's important to preserve the Medicaid expansion program. “Our greatest concern is that without CMS' approval of the second waiver, the program currently covering nearly 600,000 Michigan residents could go away,” said Kim Sibilsky, CEO of the Michigan Primary Care Association.

    She estimated that about 20,000 to 30,000 people might face cost-sharing as high as 7% of their incomes, while many beneficiaries could avoid the cost increase through meeting program criteria for healthy behaviors. “We strongly urge CMS to approve the waiver and allow this critical program to continue,” she added.

    In Ohio, the state House has proposed that Medicaid beneficiaries with incomes between 100% and 138% of poverty be required to put 2% of their income into health savings accounts or else lose coverage, similar to Indiana's waiver program. The House also proposed job search and training programs for beneficiaries. The proposal is now being considered by the state Senate. About 500,000 Ohioans have gotten coverage through the state's expanded Medicaid program.

    So far, the state has not contacted the CMS about the proposed changes. “We are waiting to see what is included,” said Sam Rossi, communications director at Ohio Department of Medicaid.

    Advocates for the poor are concerned about the proposed cost-sharing requirement. “Proposals that recommend cost-sharing, such as the one by the Ohio House, would most certainly disrupt continuity of care,” said Deanna Moore, a spokeswoman at the Center for Health Affairs, an organization that advocates on behalf of hospitals in Ohio. “We've seen in the literature that even surprisingly small cost-sharing requirements, like $5 per visit, can deter someone with a low income from seeking necessary care.”

    In Iowa, the state plans to seek federal permission to extend through 2016 its Medicaid waiver program policy of not paying for non-emergency transportation to health-related appointments, said Lindsay Buechel, a spokeswoman for the state's Medicaid agency. The current permission is set to expire July 31, 2015.

    The state plans to seek that permission despite survey findings collected on the state's behalf by the University of Iowa Public Policy Center showing that 20% of interviewed beneficiaries with incomes under the poverty level could cite at least one instance in which they did not have transportation to or from a healthcare visit. Nine percent said a lack of transportation could prevent them from getting a physical exam this year. Families USA, a liberal advocacy group, has urged the CMS not to approve state requests to deny coverage for non-emergency transportation.

    In Arkansas, new Republican Gov. Asa Hutchinson -- who has expressed ambivalence about the state's Medicaid expansion spearheaded by his Democratic predecessor -- has established a taskforce of state lawmakers to consider alternative ways of covering the state's Medicaid expansion population.

    Arkansas pioneered a more conservative Medicaid expansion model, using federal Medicaid expansion money to buy private plan coverage for beneficiaries through the federal insurance exchange. The state's expansion has been widely considered a success, and has contributed to Arkansas' previously high uninsured rate being cut in half. The state's current Medicaid expansion waiver expires at the end of 2016.

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