Health homes for chronically ill kids spark lame-duck battle

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(Story updated at 3 p.m. ET)A band of lawmakers and staff want to pass by year-end a controversial bill that would set up an optional health home program for kids with complex illnesses—and the federal government would pick up most of the Medicaid tab for states that want it.

But the Advancing Care for Exceptional Kids or ACE Kids Act—similar to the health home model implemented in Obamacare—has hit political snags in Congress over money, while an unlikely coalition of critics aren't sure they want it to become law. With children's hospitals urging lawmakers to act and the Medicaid managed-care industry pushing just as hard against it, the bill's fate in the crowded lame duck calendar is still unclear.

In the House, where the legislation passed unanimously out of the Energy and Commerce Committee this past September, Republicans and Democrats can't agree on how to cover the bill's cost—$300 million according to the latest Congressional Budget Office estimate. In the Senate, the Finance Committee has not yet vetted the bill or potential options to pay for it.

But the co-sponsors, Democratic Rep. Kathy Castor of Florida and retiring GOP Rep. Joe Barton of Texas, want it to move now, as does the bill's champion in the upper chamber, Sen. Chuck Grassley (R-Iowa).

"We are really trying," Castor said. "It would be wonderful news, especially at the holidays, to pass this. The hang-up is the pay-fors."

Yet she expressed optimism, noting the unanimous committee support and more than 100 bipartisan co-sponsors in the House.

"We're going back and forth on that, and we should be able to bring it in for the landing," she said.

A Democratic aide said Democrats want to move ACE Kids along with extensions of health workforce programs (the EMPOWER Act) and financial protections for elderly people in long-term care before the end of the year. Like Castor, the aide said the challenge is how to pay for it. "But we're trying to work it all out."

A GOP aide said Republicans want the same thing: to move the ACE Kids together with other bipartisan healthcare bills by Dec. 31.

Still there are other logistical questions, according to aides from both parties and chambers. Could one lame-duck health bill open the floodgates for other healthcare asks—such as a repeal of the medical device tax in the Affordable Care Act?

Castor noted that another option is to attach ACE Kids to one of the spending bills that must go by year-end to avert a government shutdown, which could also avert that scenario.

Under ACE Kids, the federal government would dole out 90% of the Medicaid costs for medically complex kids if their families shift them out of Medicaid fee for service or managed care and into the provider-coordinated health home.

To authorize these health homes, states would need to adopt a state plan amendment to waive requirements within the Medicaid law. The Children's Hospital Association—the muscle behind the legislation—estimates 300,000 to 500,000 kids could qualify.

The legislation, years in the making, has proved divisive in the Medicaid world from the start even though the concept early on secured wide bipartisan support from lawmakers.

The current proposal is a shadow of the original language, diluted after strong push-back not only from the Medicaid managed-care industry but also Medicaid policy experts, advocates and political aides.

It's still controversial, despite the recent unanimous Energy and Commerce Committee support: Medicaid plans that stand to lose an expensive group of patients remain staunchly opposed, and other non-industry analysts and advocates are lukewarm and still confused about what the legislation will actually do, as well as what the health home model will look like since the legislation is vague about the details.

Then there's a conservative flank of Republicans who view the policy as a camel's nose situation.

"One major concern is where does the expansion end?" a conservative GOP aide said. "It gets us started on a slippery slope of healthcare funding outside the original scope of Medicaid. Once any government program is started or extended, it is near impossible to stop."

Even though adoption of the program would be optional for states and families in the latest House bill, its critics assume the enhanced 90% federal Medicaid match for an expensive group of patients would motivate states to establish the model. A recent change limits the 90% match to the first fiscal year of the program, but some figure that would be extended.

And others aren't convinced the legislation justifies itself if Congress has to trim Medicaid money elsewhere.

"The place where we come down is not in outright opposition to ACE Kids, but I'm not sure that we see this as being a net positive over current law," Shawn Gremminger of the liberal advocacy group Families USA said.

Fixing the problem

The problem children's hospitals set out to resolve is very real, Gremminger added, because of how difficult it is for everyone involved to treat and care for children with multiple and chronic conditions. But he said the legislation is a complicated way to tackle tricky issues that could be dealt with head-on. These include the hitches in interstate provider networks for Medicaid and the often troubled relationships between different Medicaid programs when children have to cross state lines for treatment.

"You don't need a bill that's this big and targeted," Gremminger said. "You could do an interstate provider reimbursement bill that isn't specific to kids, and have the focus on this one issue, as opposed to reinventing the wheel."

Matt Salo, executive director of the National Association of Medicaid Directors, declined to weigh in for or against the bill, given the fluid nature of the negotiations. The group opposed the early versions but he said as long as the program offers extra federal funding to make it possible, is optional and "flexible enough to appeal to multiple states," Medicaid directors can work with it.

Like Gremminger, however, he added that he isn't quite sure of the bill's core purpose.

"What problem is it truly trying to solve, the scope of what is being changed to accomplish that purpose—is this for a relatively small number of kids with special needs that truly need interstate placement to get care at specialized centers of excellence?" Salo said. "Or is it 2 million or more kids, and how on earth do you define the parameters?"

What ACE could accomplish

Jim Kaufman of the Children's Hospital Association believes one of the most important elements is that it sets a "national definition" of kids with medical complexity and establishes in statute the need to coordinate care and shrink the burden on the kids' families as well as treatment costs.

"It's building on Medicaid statute that Medicaid directors are familiar with, and allowing them to target this group of kids," Kaufman said.

The staunchest opponents are Medicaid health plans: the debate has predictably tapped into the fraught push-pull between providers and insurers, as plans say the legislation doubles up on what they already do and that its strategy is to let providers out of managed care.

"It's providers trying to be managed-care organizations without the regulations," said Francis Rienzo, interim CEO of Medicaid Health Plans of America, referring to the specific standards insurers must meet.

Some providers have concerns: Top officials of Minnesota's specialty hospital for kids with disabilities, Gillette Children's Specialty Healthcare, wrote to the leaders of the Energy & Commerce health subcommittee shortly before the House committee approved its version. They said the bill puts hospitals, not the child, "at the center of care."

The Gillette letter articulates a concern other critics have with providers taking on risk. To save money, the health home's coordinating provider might limit a child's treatment to its internal physicians, the officials wrote.

Gillette asked to change language to specifically include specialty hospitals as eligible to manage a health home. The officials also argued if Congress builds a new, comprehensive system despite the dearth of data on the children it would care for, lawmakers could create unintended complications.

Kaufman has noted the latest version doesn't just favor children's hospitals and that many sorts of providers could assume responsibility for the health home. How it would work would be up to the state and the makeup of its medical communities.

In a statement to Modern Healthcare, Gillette declined to elaborate on specifics or express an opinion of the legislation.

"We have been working with congressional staff to ensure the needs of children and families are at the center of the bill and that access to specialty care and patient choice are protected for all children," Gillette said.

(The story has been updated to clarify that providers coordinating health homes must meet standard regulations, but different than those for managed care organizations.)

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