Medicaid

In a new letter to the nation’s governors, President Obama’s top health official is trying to dampen calls from states for the federal government to loosen Medicaid requirements.

The letter, from Health and Human Services Secretary Kathleen Sebelius, comes a week after Arizona Gov. Jan Brewer (R) requested a waiver from the healthcare reform law’s Medicaid requirements as her state grapples with a massive budget deficit. Sebelius said her department is reviewing whether she has the authority to waive so-called “maintenance of effort” Medicaid requirements, but she stressed that states have other options for reducing Medicaid costs while avoiding enrollment cuts.

Sebelius said department leadership will be available to meet with governors and their staffs to discuss plans to achieve Medicaid savings.

The letter points out that states have the leeway to make changes to optional programs and services, such as prescription drugs, dental services and speech therapy, and they may require individuals to bear more of the costs.
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There is "no simple answer" for Medicaid funding problems plaguing the states as they grapple with massive budget deficits, the Medicare chief said Thursday afternoon.

With a majority of the states asking the federal government to ease Medicaid requirements, Centers for Medicare and Medicaid Services Administrator Don Berwick said his agency is engaged with the states to find funding solutions "while protecting beneficiaries."

"Everyone in the room knows there's no simple answer," Berwick said to the annual conference of the pro-healthcare reform group Families USA. "What we can commit to is a process."

Earlier this week, Arizona Gov. Jan Brewer (R) asked the feds for an exemption from a reform law provision requiring states to maintain their Medicaid eligibility levels until new state-run health insurance exchanges open in 2014. Brewer said the state was seeking to reduce eligibility for about 280,000 individuals.

The House has just approved a resolution instructing four committees to work on alternatives to last year's healthcare law. The measure, H.R. 9, was approved by a 253-175 vote, a wider margin than Wednesday's 245-189 vote to repeal the healthcare law.

Fourteen House Democrats voted for the resolution: Reps. Jason Altmire (Pa.), John Barrow (Ga.), Dan Boren (Okla.), Corrine Brown (Fla.), Ben Chandler (Ky.), Mark Critz (Pa.), Tim Holden (Pa.), Larry Kissell (N.C.), Lipinski (Ill.), Jim Matheson (Utah), Mike McIntyre (N.C.), Collin Peterson (Minn.), Mike Ross (Ark.), and Heath Shuler (N.C.).

The mostly partisan vote came amid Democratic complaints that the resolution is simply an instruction to work on alternatives, and is not an actual healthcare plan. That, coupled with yesterday's repeal vote, has Democrats worried that Republicans were quick to repeal last year's law but will be slow to come up with alternatives.

H.R. 9 was approved with an amendment that also asks committees to come up with a permanent solution to the Medicare physician reimbursement rate (see post immediately below).

Updated at 11:45 a.m.

More than half of U.S. states allowed more people to get on Medicaid in 2010 or made it easier for them to enroll, according to a new report, helping to prevent a steep increase in the number of uninsured Americans during the economic recession.

The report from the Kaiser Family Foundation credits the 2009 Recovery Act and last year's healthcare reform law for providing more funding to states while preventing them from dropping people from the rolls. Partly as a result, 14 states made it easier to enroll into Medicaid or the Children's Health Insurance Program (CHIP), while 13 expanded eligibility.

"This striking stability in public programs," says a summary of the report, "can be directly attributed to the federal government's decision both to provide temporary Medicaid fiscal relief to states through June 2011, and to require states to maintain their Medicaid and CHIP eligibility rules and enrollment procedures until broader health reform goes into effect."

The report warns, however, that states have a ways to go in terms of adopting technological improvements necessary to deal with the massive expansion of the Medicaid program called for under Democrats' healthcare reform law. By 2014, states will be required to cover people up to 133 percent of the federal poverty level.

The report comes as many states are considering steep budget cuts to rein in deficits caused in part by the poor economy. While the costly state-federal Medicaid partnerships prohibit major changes to enrollment eligibility, several states have already cut provider reimbursement rates and certain benefits.

And two states, the report explains, made permissible coverage reductions before the new healthcare reform law went into effect: Arizona capped enrollment in its CHIP program and New Jersey stopped enrolling parents covered through a CHIP waiver.

Fifteen states were awarded $206 million in federal grants for expanding Medicaid enrollment of eligible children, the Medicare agency announced Monday afternoon.

The funding bonuses, included in the 2009 reauthorization of the Children’s Health Insurance Program (CHIP), require states to streamline their enrollment and renewal processes and significantly increase the number of children enrolled in Medicaid.

With $55 million, Alabama was the big winner, followed by Wisconsin ($23 million), Washington ($17.6 million), Oregon ($15 million) and Illinois ($15 million). In 2009, the Department of Health and Human Services awarded $75 million in CHIP bonuses to 10 states.

States are required to adopt five of eight measures to simplify the enrollment process, and they are reimbursed according to the number of children enrolled and the costs of enrolling the children. As states grapple with budget deficits, the states receiving the bonuses went "above and beyond the call of duty," said Medicaid Director Cindy Mann.
 
The remaining 2010 bonus winners were: Colorado ($13.7 million), Ohio ($12.4 million), Maryland ($10.5 million), Michigan ($9.3 million), New Jersey ($8.8 million), New Mexico ($8.6 million), Iowa ($6.7 million), Alaska ($4.4 million), Louisiana ($3.6 million) and Kansas ($2.6 million).

Eight states that shared $72 million in 2009 received bonuses again this year. Those states include Alaska, Alabama, Illinois, New Jersey, Michigan, New Mexico, Oregon and Washington.

The healthcare reform law’s new Medicaid drug rebate formula will provide more accurate reimbursements to pharmacists, according to a Government Accountability Office (GAO) report released Monday.

Medicaid programs receive federal matching funds for generic drug reimbursements up to a maximum amount — the federal upper limit (FUL). The FULs, designed to contain costs, historically were calculated as 150 percent of the lowest published price for generics.

The industry successfully sued to block implementation of a 2005 law that based the FUL formula on average manufacturer price (AMP) rather than compendia prices, which are typically higher than AMPs. Retail pharmacies argued that the new formula would not provide sufficient reimbursement to cover their costs for acquiring outpatient prescription drugs.

Under the reform law, the Centers for Medicare and Medicaid Services will determine FULs based on no less than 175 percent of the weighted AMP — which will be calculated according to utilization — rather than using an AMP based on the cheapest version of the drug.

The GAO report said the new formula also reduces overpayment for the drugs while still ensuring that pharmacists are reimbursed at fair rates.

“This is a great example of the important improvements made possible through the healthcare reform law,” said House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) in a statement. “The law averted massive payment cuts to pharmacists for generic drugs under Medicaid, and did so in a responsible way for taxpayers.”

Industry also hailed the GAO’s findings.

“GAO’s analysis confirms that the bipartisan provision included in the health reform law regarding Medicaid generic drug reimbursement strikes the right balance,” said National Community Pharmacists Association CEO Kathleen Jaeger. “The policy helps state and federal officials grappling with rising Medicaid costs, while preserving patient access and avoiding the draconian cuts that were previously enacted.”

The trade groups representing pharmacists and chain drug stores announced Tuesday that they've reached agreement with federal authorities on a motion to dismiss their lawsuit over Medicaid reimbursements.

The National Association of Chain Drug Stores and the National Community Pharmacists Association sued the Centers for Medicare and Medicaid Services in 2007 over a proposal to lower Medicaid reimbursements to pharmacists for dispensing generic drugs. A court that same year blocked the rule from being implemented, but the lawsuit had been lingering until now.

"Now that all of the issues raised in our ... lawsuit have been resolved," the groups said in a joint statement, "there is nothing left to challenge at this time and we are pleased to have reached agreement with CMS on a motion to dismiss the lawsuit."

The Texas health department chief shot down the Republican governor’s suggestion that it may cancel its Medicaid coverage, saying the state is “very dependent” on federal assistance for covering poor people, according to the Associated Press.

Gov. Rick Perry raised the possibility that Texas would opt out of Medicaid, which covers more than 3 million in his state, during a CNN interview last month when he claimed the new healthcare reform law would increase his state’s Medicaid obligation by $2.7 billion per year over the next decade.

However, Texas Health and Human Services Commissioner Tom Suehs said that talk of Texas opting out of the federal program has been blown out of proportion.

“What's getting lost is the need to reinvent Medicaid, not getting out of Medicaid," he told the AP.

A new state health department report this week reported that Medicaid accounts for 15 percent of personal healthcare spending in Texas, pays for more than half of all births and helps two-thirds of nursing home residents, the AP said.

The trade association representing Medicaid managed care plans is applauding the draft proposal from the president's deficit commission, a sharp break with other industry groups that have mostly lamented the proposed cuts to their slice of the pie. 

The commission's preliminary recommendations, released last week, contains "illustrative health care savings" including $11 billion in savings by placing people who are eligible for both Medicaid and Medicare into Medicaid managed care plans. The 8 million "dual eligible" beneficiaries who are on both programs — basically low-income seniors — have their care split between Medicare, responsible for their hospital and physician benefits, and Medicaid, responsible for long-term care benefits.

Less than 10 percent of dual-eligible spending is covered under coordinated care arrangements, and moving more seniors into coordinated-care settings is seen as a clear money-saver.

"As advocates for health plans that serve our nation’s most vulnerable populations, we realize the importance of controlling present deficit spending in order to ensure future access to high-quality care for everyone in our country," association President and CEO Thomas Johnson said in a statement. "We believe Medicaid health plans are part of the solution because the coordinated care provided by health plans achieves substantial savings."

A Republican-controlled House is unlikely to extend the enhanced Medicaid funding for states in last year's Recovery Act, the head of a nursing home trade association said Monday. A return to the initial federal share (known as FMAP) would be particularly painful for nursing homes and assisted living facilities, who rely on Medicaid to pay about two-thirds of their patients' bills.

"I just have a very hard time" seeing Republicans pass an FMAP bill, said Bruce Yarwood, president and CEO of the American Health Care Association.

Yarwood said the FMAP situation will force a discussion on long-term care, which he said was hardly addressed during the healthcare reform debate. As lawmakers respond to voters' concerns about the deficit and cut back on Medicaid and Medicare, a long-term care sector that relies on government spending to cover about 85 percent of its patients faces a crossroads.

"We stick out like a giant target because of the deficit problem," Yarwood said.

The healthcare reform law did create a voluntary contribution program known as the CLASS Act, but Yarwood said that while he hopes it works, it's still untested and few businesses have signed up so far to enroll their employees. And some Republicans want to repeal the provision out of concerns that it could turn into another entitlement program if beneficiaries' contributions can't cover its costs.

To address the industry's funding challenges, Yarwood said, AHCA has reached out to the Centers for Medicare and Medicaid Services and the Brookings Institution to create pilot programs where the federal government would reimburse providers based on the "condition, needs and characteristics of the patient rather than the post-acute care setting."

AHCA is also lobbying to get technical changes to Medicare payments in the physician payment bill that Congress will have to take up during the lame-duck session to prevent a 30 percent cut in Medicare payment rates. AHCA's other priority in that so-called "doc fix" bill will be passage of a year-long exemption from reimbursement caps on physical, speech/language pathology and occupational therapy services, which were capped at $1,860 each for 2010.

Yarwood added that, even if enhanced Medicaid funding is off the table next year, AHCA would still fight for a continuation of a provision in the Recovery Act requiring states pay most claims within 30 days.