Theresa Sachs
Technical Director,
Center for Medicaid and State Operations
Centers for Medicare and Medicaid Services
United States Department of Health and Human Services
Theresa Sachs, Technical Director for Center for Medicaid and State Operations Centers for Medicare and Medicaid Services of U.S. Department of HHS
Good afternoon everybody and thanks for your time and attention. I'm going to be spending some time today talking about some of the new Medicaid and SCHIP waiver activity that we are now working on and pursuing in our part of the Centers for Medicare and Medicaid Services. Just to give a picture of sort of where we are in the organization, within CMS there is the Center for Medicaid and State Operations that deals with Medicaid and SCHIP programs and some other things as well, and within that center there's the Family and Children's Health Program Group and that's where I work; the type of waivers that I work on that tend to be the state-wide comprehensive Medicaid and SCHIP waivers are under our purview.
I have been working, I guess for the past year, is when we started working on the Health Insurance Flexibility and Accountability, or HIFA, waivers that you've heard some talk about and what I'm hoping that you'll take away from this presentation today is a good general idea of what the initiative is all about as seen through some of the proposals that we're looking at right now. What I'd like to do is talk about some of the proposals. I have some handouts going out that give a summary of the activity to date, the approved waivers, the waivers that are under consideration.
I'm hoping that another thing that you'll take away from this is some food for thought about some things that you might want to go back to your state and look at in terms of things that might fall under the HIFA guidelines or HIFA priorities if you're thinking along those directions. If all the calls I get from states are any indication, this is something that states are very interested in. I almost feel like I would really get people's attention if I started my presentations by saying "I'm going to tell you how to fix your Medicaid program" but that would probably be an exaggeration but I do think quite seriously that within this initiative we have some really new things that states can do and they seem to be so far very well received.
The other handout that has been distributed is a FAX sheet on the Utah demonstration. I wanted to include that because I know that there's been a lot of interest in Utah. When I was told what you all wanted to hear about today I was told that you wanted to hear what's going on with the HIFA demonstrations; what is attractive or appealing to the states about this initiative and also some information about Utah. So Utah is sort of a separate initiative from the HIFA demonstrations but I did want to include some information because obviously there's a relationship just in terms of flexibility and states thinking about doing some different things.
What I'd like to do to start out with is walk through the waivers that we have approved to date just to give you a picture of what we've been looking at. Before I jump into the waivers that are approved, just a few words on what it is about HIFA that I think is new and different and what states seem to be very interested in. The Secretary and the President made some announcements last August about the HIFA initiative, really signaling that we would be entertaining some new flexibility and wanting to work differently with our state partners in looking at the programs and allowing the states to redesign their programs. Some of the features about this particular waiver approach and remember that when we talk about waivers and waiver authority, we're really talking about a provision in the law that allows the Secretary to waive or sort of take away certain provisions of the statute, to enable states to do things that are different from what's ordinarily permitted under the statute. So this is all sort of under the heading of waiver activity. It's flexibility with a statute.
The things about this initiative that are new and that the Secretary, and I know the President are very much interested in pursuing, are that we are allowing states with this waiver authority to do some redesign of their benefit packages for the Medicaid population within certain parameters. We have said that for mandatory Medicaid populations you can't make adjustments to the benefit package but aside from the mandatory populations, this waiver authority gives a state the tools to make some adjustments. Some states have come in and said we would like to expand coverage and cover more people but perhaps rather than giving the entire Medicaid benefit package, we would like to offer something that looks more like the commercial insurance that a working adult would typically have.
It also permits the state to make changes that are more targeted. Under the Medicaid statute, ordinarily if a state wants to cut back on a benefit package by, for example, eliminating a service that is optional under the statute, the only way to do that without a waiver is called a State Plan Amendment and if you're doing a State Plan Amendment you have to do the same thing to everybody in your program basically. So the waiver authority gives a more targeted way for states to say okay, for this certain group, we'd like to make some changes; we want to leave this group alone because we feel that this group is more vulnerable. So this is what allows us to do that. We have to step outside of the statute and use waiver authority to do that.
Another thing that the HIFA initiative allows states to do is make some adjustments in cost sharing and in the same sense that I indicated that for benefit package there are parameters, there are also parameters around cost sharing. For your mandatory populations you still have to adhere to the nominal cost sharing that's provided for in the statute and the regulation. For children above the mandatory levels, like the Title XXI children and any optional Medicaid children that you're covering, you're limited to 5% of the family income. But then for adults and particularly expansion populations that you can only cover under your program through a waiver, we haven't set outer limits. We want to look at what the states are proposing sort of on a case-by-case basis. But that's something else that this initiative allows.
Another feature of this initiative is the ability to use unspent SCHIP or Title XXI, that's the State Children's Health Insurance Program allotment for expansion populations through a waiver. Many states have indicated to us that they have substantial unspent allotments that they would like to use. They feel that that money is sitting there and could be covering the uninsured and this is a way through this waiver authority that that's possible.
Another feature, and this is a very important one, I know to the Administration is the ability to use in a more flexible way and sort of the priority to use, the requirement to use, where it is available, employer sponsored insurance; particularly for adults and expansion populations. There's a feeling that when we expand coverage and cover more people in public programs, perhaps there's a risk that we are crowding out private coverage or inducing people to drop private coverage. So this feature of the HIFA initiative is an attempt to kind of address that and to use that also to make the public dollars go further and to keep the connection to the work place that we feel is very important. So that's kind of an overview of some of the features and priorities of the initiative.
I'd like to spend some time talking about the proposals that we've approved and the proposals that are currently under review, to give you some idea of some of the things that states have proposed. We issued sort of broad guidance that gave some very general parameters and, in the real world in which you all operate, states may want to do things that are slightly different from that guidance or drilled down to more detail in some of the policy issues. So I do think it's interesting to hear what the different states are proposing. I want to give my general caveat that I always give when I talk about proposals that are under review and that is that obviously I'm not in a position to give an agency position one way or the another on any of these proposals. They are under review; we are in negotiations with the states and I'm sure you understand how that goes.
So moving to the approved waivers and this is in one of the handouts that went around, right now we have two waivers that are approved; Arizona, which was approved last December and California, which followed close behind in January. Both of these waivers expand coverage using unspent SCHIP allocation. In the case of Arizona, there would also be Medicaid funding, if necessary, if the allocation isn't enough to cover the target population. In Arizona there are childless adults, not otherwise eligible for Medicaid with incomes up to 100% of the federal poverty level and parents of Medicaid and SCHIP children up to 200%. Now these are our new groups that were not covered previously. Arizona actually had received permission from us but had not yet implemented by the time that the HIFA initiative was announced to cover the childless adults population and when they saw the advantages that the HIFA initiative would offer them, they came in and said we'd like to amend our proposal and they added an additional expansion beyond the childless adults.
I spoke previously about the ability under HIFA to make benefit and cost sharing adjustments. Actually in the two states that are approved so far there were no adjustments made to generate any of the funding for these waivers so I just want to point that out. Also something that these two waivers have in common is that rather than a full blown employer sponsored insurance or premium assistance program where, remember I eluded to the real importance of sort of coordinating with employer sponsored insurance, these waivers had come in very shortly after we had announced the initiative and the states were not in a position to go right into a full blown program but they both are conducting feasibility studies aimed at determining whether for their population and their employer market it makes sense for them to have those programs.
I think in future demonstration proposals we definitely want to see the ESI or Employer Sponsored Insurance component, but I think we also recognize that when you announce a new initiative and you have all of your priorities, that's fine but states haven't had time to pass legislation to do the things that they need to do and I think that we wanted to work with the states to accommodate their needs within our priorities as well.
We currently have four HIFA demonstration proposals under review and they're all moving through the system. The states that have proposed waivers and I'll go through them just in chronological order are Illinois, Maine, Michigan and New Mexico, and the handout does have some details about those proposals, I'll go through them, one by one.
The Illinois proposal which we received in the middle of February does include an expansion and I should also, I really neglected to mention at the beginning of my presentation that one of the priorities of the HIFA initiative is to expand coverage to the uninsured. So all of the proposals that we are looking at so far do have coverage expansions. Some of the proposals and I'm jumping ahead a little bit to my section where I want to talk about things that you might want to think about in your states, but some of the proposals do involve taking a program that is currently state funded, getting federal match for that program, but then using the match to cover more people. So at the end of the day we're not just replacing a state dollar with a federal dollar, we are actually covering more people. So I want to make sure I make that clear.
The Illinois proposal, which again we received in February, talks about an eligibility expansion to parents of Medicaid and SCHIP kids up to 185% of the federal poverty level. These again are some uninsured individuals and some who may be insured through a state funded program that we would match if we approve this proposal.
Also there's an expansion to pregnant women beyond the current coverage levels between 185% and 200% of poverty. The proposal included some eligibility streamlining provisions. Employer sponsored insurance is definitely a part of this proposal as a distinction from the previously approved waivers where we were looking at feasibility studies. The funding for the new coverage is unspent SCHIP allocation and the proposal is currently under review.
The next proposal, again going in chronological order that we received, was from the state of Maine and you'll notice as I go through underscoring my previous point about the Administration issues general guidance but every state has sort of like their own twist on it obviously because states have different priorities. You will definitely see as I walk through these that each state has really a slightly different approach, a slightly different twist. In the case of Maine, rather than using unspent SCHIP allocation, Maine is interested in tapping into some of the DHHS allocation that they've not been spending. So they presented a proposal where they said we're very interested in expanding coverage; it's a straight expansion, not a state funded program; childless adults who are not otherwise eligible for Medicaid because of a disability or some other condition, with incomes up to 125% of the poverty level. Again, the state would not be similarly to Arizona and California wouldn't be making any changes in benefits or cost sharing but would be tapping into their unspent DHHS allocation.
DHHS, I want to spend a moment talking about DHHS. When we have approved expansions, eligibility expansions using Section 11/15 authority in the past, some states have redirected part of their DHHS allocation to cover the uninsured. So what we've done is we've looked at what they have been spending on DHHS and the state has come to us and said well part of it we want to sort of move away from funding DHHS and instead cover the uninsured. Maine is proposing to do something very different than that. They're proposing to take a portion of their DHHS allocation that they historically have not been spending and direct it toward covering the uninsured and we're in the process of considering that proposal.
Maine also would have an Employer Sponsored Insurance component to the extent that it's available. I guess the state has indicated that they are not certain within that income band how many people would have access to Employer Sponsored Insurance but they're willing to use it where it's available.
Moving to the next state, Michigan, which we received the first of March. Michigan again, is an expansion and is what I call kind of a hybrid funding approach. They want to use unspent SCHIP allocation. They also are interested in using Medicaid funding from some different adjustments that they would like to make. Their expansion population would consist of parents with incomes up to 100% of the poverty level and childless adults, at least up to 35% of poverty with the option, on a county by county basis, to expand up to 100% and they feel that most if not all of the counties would phase in coverage and put up part of the match during the duration of the demonstration.
Michigan also proposed to use demonstration authority to take a Medicaid optional group of individuals, it's a spend-down group or a medically needy group, where people have to incur medical expenses and then become eligible. Rather than having them in the state plan as a spend-down group, the state has proposed a similar group with a higher income limit where you wouldn't have to spend down in the demonstration with a slightly different benefit package. So that's where part of the savings would come from.
Employer sponsored insurance also would be a part of the proposal. There's also a feature of Michigan that's unique to Michigan where a blind and disabled population that we refer to as the 16/19B population, would be eligible once they're on the program to stay on the program to a much higher income level. The purpose of that feature is to allow individuals with disabilities to work without fear of losing Medicaid coverage. The state does not actually think that additional people will become eligible, but that people who are eligible who choose not to be employed because they would lose Medicaid coverage would chose instead to be employed and the state wants to encourage that without threatening the loss of Medicaid eligibility. Again, this proposal is under review and as I indicated previously they would use SCHIP and Medicaid funding both.
The last proposal that we have under review right now, and then I'll talk a little bit about Utah because I did pass out the fact sheet, is from the state of New Mexico which we received in April; it's again, a straight eligibility expansion to parents and childless adults up to 200% of poverty. The state hasn't proposed any changes to their Medicaid program as part of the proposal that's before us. They have indicated however that there may be a Phase II Amendment that would come in later that may propose some changes.
New Mexico has taken the Employer Sponsored Insurance principle or priority of HIFA and come up with an approach that is somewhat new to us where rather than using Medicaid or SCHIP funds to buy someone into an existing Employer Sponsored Insurance policy that they have access to, rather the state would create a new product. They would work with MCO's to offer a benefit package, targeted toward employers who currently don't offer insurance to their employees. The state would pay for part of the premium. The employer would pay for a share and the expansion population, the uninsured adults, would pay for a share on a sliding scale according to income. So it's a unique approach and again we have it under review right now. The funding would be unspent SCHIP allocation.
I'd like to step away from the HIFA demonstrations just for a moment to talk a little bit about the Utah demonstration, which is getting ready to be implemented in July. We approved it in February. I get asked about it an awful lot because people do tend to think of it as part of the HIFA initiative. I think it's fair to certainly put it under the umbrella of sort of flexibility of the agency in looking at waiver proposals but it does differ from the HIFA initiative in a couple of important ways; one of which is I guess if you'd heard me say Employer Sponsored Insurance once today you've heard it about 10 times. There really isn't an ESI component to the Utah proposal and that's one thing that sets it apart from the HIFA initiative.
Another feature that sets it apart is that for part of the state's mandatory Medicaid population, they did propose to make and we did after some discussion and negotiation approve some changes in the benefit package for individuals who are mandatorily eligible for Medicaid. The demonstration also does involve an eligibility expansion to parents and childless adults not otherwise eligible up to 150% of poverty giving a primary care benefit package. There was replacement of an existing state program for the medically indigent who were not otherwise eligible for Medicaid. We replaced that program with this federal program covering more people. So that's an example of what I referred to about if there are state funded programs that a state is interested in getting federal matching for, that we look for some kind of an expansion beyond who was in that program before.
So that's a little bit about Utah. Before I stop and take questions because I am very interested in questions that you may have about this initiative, just a few things to think about and questions to ask yourself if you're interested in pursuing the initiative. For one thing, I think that states would be very well served to kind of look across their health programs overall and determine whether there are programs that the state is funding that you may want to expand in some way with federal matching. I know that this is a very difficult budget time and nothing about what I'm saying is meant to diminish that. In some ways working on this initiative I sort of feel like I've come around to my beginnings because before working in different capacities, on the federal level, I worked in county government in a state where we put up part of the match for Medicaid; I ran a county agency. This was in the late '80's and every conversation that we had about our budget really had to do with Medicaid and how Medicaid was driving everything. So I really want to underscore that we recognize the sort of critical times that states find themselves in now but if the inquiries that I continue to get from states on a daily basis are any indication, this initiative is something that states are thinking about despite the difficulties and in some respect because of the difficulties. I think that states understandably find themselves in need of looking at ways to reduce their budgets but are very reluctant to make wholesale across the board cuts that harm their most vulnerable beneficiary. So they're very interested in any kind of flexibility that allows them to sort of tailor where they would make changes. And that's what I think this initiative is all about. So those are some of the things I guess to think about. As I said I get calls all the time; we are always very happy to answer questions. We do have, I wish I had thought to put it on the handout, but we do have a mailbox set up to take inquiries about the initiative and it's just HIFA@CMS.HHS.GOV and we open that every day, open the notes and respond to them and set up lots of conference calls with states and other folks that are interested in hearing more about this. I think I would like to stop and ask if you have any questions.
QUESTION: When we did our CHIP program I was frustrated at that point that we couldn't use something; we had a dental and vision and we couldn't add dental and vision from children who had other insurance but yet still within our income line. Do you see any movement on that?
And that is because of the prohibition on using CHIP funds for individuals with other insurance, so you're looking at a population that you might consider underinsured. That falls a little bit outside the parameters of what we've talked about. I mean I think that would fall under the category of maybe something that is at a more detailed level than what we thought about. I mean it certainly would be something that a state could propose how we would respond to it, I couldn't say at this point. If it is going to be within the HIFA initiative, I would say that the proposal that you outlined would need to be sort of maybe part of something larger, a larger initiative that covers more people who don't have any insurance whatsoever. But feel free to call us and talk to us about it because clearly there is more flexibility than previously was the case.
QUESTION: [inaudible]
I want to be really clear and I guess I would leave sort of analysis and future conjecture to other people, but based on the proposals that we have under consideration today, every one of them would expand coverage to people who don't have insurance today. That includes the proposals that we've already approved. So to date we have been looking at expansions in every case. What will happen in the future, I don't know but what I can speak to is what we've been looking at so far.
QUESTION: Do you have goals or have you laid out to the states telling them in order for us to approve this waiver you have to do a, b, or c; you have to make sure your waiver covers this many people?
We haven't set numerical goals for how big does an expansion have to be to be an expansion. Clearly I think our emphasis has been on more than a nominal expansion. We really want to see a real increase in coverage. We have asked the states to set goals for their demonstrations. There is an application template; I should have mentioned that. One of the other features of this initiative is that we want to make it easier for states to submit proposals for these waivers. So there's an application template; it is on the web. There is a section where states are asked to set their goal for how many people they will cover and also to what extent they would reduce the rate of uninsurance in their state. Obviously measuring something like that can be problematic because there are so many mitigating factors beyond the HIFA initiative. There is what's going on with the employment market; the economy, etc., but the purpose of the initiative is really for there to be goals and for us to be able to report on progress toward those goals.
QUESTION: The expansion of all the waivers that have been approved and those that are waiting to be approved really does mean that the state is expanding their money also. Is that correct?
In some cases the state is getting matching for a program on which they've been spending 100% state dollars. But what we are requiring in these expansions is that there be a maintenance of effort; that at the end of the day we aren't just replacing a state dollar with a federal dollar. You know the state could potentially end up spending close to the same amount of money but we want more people covered.
QUESTION: How can the states spend no more money, cover more and still get ______ federal money?
Well in some instances, say there is a program that costs $100.00 and the state has been spending 100% of that and we come in with $50.00 federal dollars. They've reduced their dollars by 50 right there and then we can turn around and cover more people. Those $50.00 will pull down an additional $50.00 state dollars. You can actually cover more people and have more money in the system at the end of the day and that does not necessarily mean that it's a great deal more state money. I would really hesitate to stand here and say I can guarantee that a state won't spend anymore or that they can even spend less. What we're looking for is for the state's contribution with these expansions not to decrease. I think I would leave the technicalities of how the matching works and exactly how many state dollars they need to cover X number of people and pull down the federal dollars to people who are a lot smarter than I am.
QUESTION: These are programs that are just stated funded. They're not Medicaid or there's no federal match in any of these programs that these states are changing. I'm talking about additional dollars.
Right, and in some cases by the end of the demonstration, if they're doing a substantial expansion it's hard to get around spending additional state dollars. I think states are hopeful that at the end of the five-year demonstration perhaps things might look different. I do want to clarify thought that the additional people that are getting coverage or who would be getting coverage under these proposals, not every single one of them is already in a state funded program, only some of them would be. I guess the idea behind this is if you can leverage additional dollars both through coordinating with the private market and pulling in some of your state funded program, you can make some of the same dollars go further and cover more people.
QUESTION: I have two questions. One, I was going to ask about, following up on what you all were just discussing, budget neutrality. Is there a component in that within the waiver and that the federal government is ____________ new money or with the money before. The other part was if you could provide some insight, I don't know if you were in this discussion or similar discussions but looking at the Utah waiver, when would the demonstration population you're adding new people who don't have insurance already, the one's that are at 50%. However the cost sharing is greater than you've seen before in Medicaid. Does it get down to the discussion level of well we are covering more people but are we sure that these people are going to be able to use it. How far do you get down when you're talking to the states about; it's great and it covered ____________?
To talk about Utah first, there was a great deal of discussion about the cost sharing levels and there are requirements in the waiver around monitoring very closely if there are any impacts on access of the cost sharing. Utah's approach is cost sharing at the point of enrollment and that's a little bit different from some of the things that some states are interested in doing in effecting utilization by doing cost sharing at the point of service. I guess to answer your question the shortest way possible; yes, that's something that we talked about quite a bit and would expect to talk about with any state that would propose something like that. You also asked about budget neutrality and without getting into, people who know me know that I could go on and on in a very technical way on budget neutrality and I'll try not to do that, but just in the most global terms possible, the budget neutrality requirement does apply to HIFA demonstrations in the same way that it applies to other Section 11/15 demonstrations and the requirement is that the state can spend no more in federal funds with the demonstration than would be the case without the demonstration. But there are a couple of really important qualifiers to that. One is that in the case of unspent SCHIP allocation, the way we measure meeting that requirement is a comparison to the total allocation. So even if you weren't spending your entire SCHIP allocation you could spend it in a waiver. So that is an exception, what have you, to the way most people understand very strictly budget neutrality.
Another very important feature that is important to understand about budget neutrality is that if you're using, now leaving aside CHIP for a moment, if you're using Medicaid funding to provide coverage to a population, that you could have covered in your state plan if you had chosen to expand your state plan, we allow you to build the cost of that population into your base. So on the Medicaid side this with waiver, without waiver comparison is all about what's in the base. So we allow you to put some of your new populations in the base as if they had been there. So those are a couple of very real ways in which to illustrate that budget neutrality does not mean that there are no federal dollars on the table that weren't there before. I can certainly get into more detail. I don't know that that's really going to keep you awake at this hour of the day.
QUESTION: I guess I'm a little surprised that the waivers that you've talked about here in all cases talk about expansions at a time when states are really struggling with their Medicaid budgets. But I just want to try to comment on the lady's earlier question here. Are you anticipating a receipt of waiver requests that would be more in line with states helping to balance those Medicaid budgets?
Clearly I think that we probably will get some. I think that as states look at their situation and decide what they want to do moving forward we're going to get all kinds of different proposals. What will happen with those proposals, I don't know. From a state point of view I could understand very well a state making the argument that rather than make huge cuts in our program, we would like to make some adjustments but we don't want to do an expansion and when those proposals come in, if they come in, we will have to consider them very carefully.
QUESTION: I think when the President's Economic Stimulus Package was first proposed, it had some language in there that the FFP or the _____ would be held constant say for a year or two years, I don't remember exactly which. But that got pulled out of the stimulus package that was ultimately passed by the Congress. Do you foresee any chance that the federal participation formula, that it will be held constant for us because in North Dakota we're seeing over a 4 million dollar impact just based on the events of that formula for this year?
That is something unfortunately I can't really speak to. I know that states are very interested in that but I'm not involved in those discussions. So I don't have the answer to that.
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