Innovations in Medicaid 1

Innovations in MedicaidHOW STATES ARE USING MEDICAID WAIVERS TO IMPROVE ACCESS, ENGAGEMENT AND HEALTH

Presented by RAM Technologies, Inc.

2Innovations in Medicaid

EXPERIMENTS IN HEALTHCARE DELIVERY AND REIMBURSEMENT 1-4 As administrators and stewards of Medicaid dollars,

state programs oversee healthcare for some 68 million Americans.

This role means state leaders know all too well the burdens of high

cost and uneven quality that plague America’s health system today.

However, these challenges have bred innovation and state-level

experimentation in healthcare benefit design and delivery through

the CMS State Innovation Models Initiative (SIM). The ultimate goals

are to develop a more sustainable, higher-quality healthcare system

that delivers better care at a manageable cost.

Amendments to the Social Security Act allow HHS to waive specific

provisions of Medicaid and the Children’s Health Insurance Program,

and these have been the primary vehicle for recent experimentation.

Under these waivers, states can use federal funds to explore novel

healthcare delivery and reimbursement models, and some have

done so aggressively.

States have used waivers to expand healthcare coverage,

add benefits, require cost sharing, extend coverage during

an emergency and transform how healthcare is delivered

and reimbursed. As the new administration promotes flexibility,

and healthcare costs continue to challenge states and other

stakeholders, this experimentation is likely to continue, health plans

may find their own programs serving as models, and solutions

should ultimately emerge.

33 Innovations in Medicaid

SNAPSHOTS OF INNOVATION 4-14

Most states participating in the SIM program have taken a value-

based approach to reform, implementing patient-centered

medical homes and accountable or coordinated care organizations

that focus on primary care and prevention. Often these programs

emphasize improving care and reducing costs for high-risk,

high-cost subpopulations – groups whose care poses a variety

of challenges across the healthcare system. States also recognize

that payment reform can drive value-based care delivery

so they are collaborating with multiple payers to test different

models. These include monthly payments per patient, shared

savings, shared risk, bundled or episodic payments, partial or global

capitation and bonus payments. Regardless of the approach,

many states are readjusting their waiver programs as performance

data becomes more readily available.

SECTION 1915

Section 1915 waivers allow states to implement voluntary

or mandatory managed care enrollment policies for Medicaid

beneficiaries. This can be done statewide or in specific geographic

regions. These waivers also permit coverage of home - and

community-based services for beneficiaries with brain injuries

or developmental or intellectual disabilities, as well as the elderly

MEDICAID WAIVERS AVAILABLE UNDER THE SOCIAL SECURITY ACT 2

Medicaid waivers are referred to by the section of the Social Security Act that allows them:

• Section 1115 allows demonstration projects

for Medicaid eligibility, benefits, delivery

systems and payment

• Section 1915(a) allows implementation

of voluntary managed care models

• Section 1915(b) allows compulsory managed

care models

• Section 1915(c) allows expanded coverage

of home- and community-based services

» intellectual and developmental disability

(including autism); elderly and disabled;

medically fragile and palliative care;

brain injury; mental illness; chronic illness

4Innovations in Medicaid

and disabled. Waivers also cover transitional care, and some

cover palliative and hospice care. While Section 1915 waivers

allow for experimentation and focus on some key tenets of value,

much of the recent innovation involves Section 1115 waivers.

SECTION 1115

As of September 2017, 33 states had 41 approved Section 1115

waivers, not including family planning or CHIP-only waivers.

Section 1115 is the primary vehicle for expanding Medicaid

eligibility with Affordable Care Act funds under relaxed rules,

and a number of states have taken advantage of this flexibility.

Arkansas was the first state to expand Medicaid eligibility under

the ACA using a Section 1115 waiver, which allowed the state

to use federal funds to subsidize private health insurance

for newly eligible beneficiaries – this has been dubbed

the so-called private option. Arizona, Indiana, Iowa, Michigan,

Montana and New Hampshire also have approved Section 1115

waivers for Medicaid expansion, though Arizona’s waiver applies

to the entire Medicaid program. These waivers allow states

to use federal funds for insurance premiums, impose premiums

and cost-sharing, mandate contributions to health savings accounts

and offer incentives for healthy behaviors.

Rhode Island has been operating Medicaid as a modified block

grant program through an 1115 waiver since 2009. The state’s Global

Consumer Choice Compact Medicaid Waiver allows mandatory

enrollment in managed care for all beneficiaries without third-party

coverage, modified eligibility standards, higher cost sharing

and advanced provider payment models. Meanwhile, Oregon’s

5Innovations in Medicaid

State innovation waivers go

hand-in-hand with private payer

efforts to reform healthcare delivery

and reimbursement.

entire Medicaid program is based on a managed care model

administered by private-sector health plans or physician groups.

Care is delivered by coordinated care organizations and paid

for under full-risk, capitated contracts.

States are also increasingly interested in Section 1115 waivers

as opioid abuse spirals out of control. Mental health care

and addiction treatment facilities are ineligible for federal Medicaid

funds if they have more than 16 beds, but nearly a dozen states

have obtained or applied for waivers from this rule, and CMS

has encouraged more to do so. Treatment options have expanded

as a result, not only for Medicaid beneficiaries but also for

the privately insured.

WHERE PRIVATE PAYERS FIT IN 15-16 State innovation waivers go hand-in-hand with private payer efforts

to reform healthcare delivery and reimbursement. Health plans’

own experimentation has yielded models for states and will likely

continue to do so: CMS has indicated interest in aligning Medicaid

more closely with commercial insurance. States are considering

adding cost-sharing and other benefit design features of private

plans, as well as work requirements and other reforms to manage

costs, boost engagement and more. Because many state programs

are themselves administered by private payers, health plans

will need to explore and account for how these changes could

affect membership.

6 Innovations in Medicaid

Private payers also can use their experience and data resources

to shape future state policy directions and care delivery

innovations. Plan leaders can assist state Medicaid directors

as they experiment with tools that have long been in use

in the private sector. They can also take state programs beyond

conventional insurance tools by mining data for the social

determinants of health that are prime targets for intervention

and working with states and healthcare providers to develop

effective interventions.

CHALLENGES AND OPPORTUNITIES 9, 15-17

Obtaining a Medicaid waiver is no easy task for states. The system

is complex, and the approval period is long. Ideological opposition

often poses hurdles, with some sides believing that standard

Medicaid is good enough and others arguing that cost sharing

and other requirements impede access to care. Beneficiaries

who churn in and out of the Medicaid system further complicate

planning and allocation of funds for payers and providers.

However, Medicaid waivers present an opportunity for states

to test ideas designed to improve care for vulnerable populations

while holding the line on costs, and the new administration

has expressed a desire to reduce complexity, boost flexibility

and support innovation at the state level. Many payers are already

heavily involved in the Medicaid space, and as the programs

continue to explore new ideas and draw from private-sector

innovations, the perspective of health plans is likely to become

increasingly important.

Medicaid waivers present an opportunity for states to test ideas designed to improve care for vulnerable populations.

7

References1. CMS. Medicaid managed care authorities. Retrieved from https://www.medicaid.gov/medicaid/managed-care/

authorities/index.html

2. CMS. Section 1115 demonstrations. Retrieved from https://www.medicaid.gov/medicaid/section-1115-demo/index.html

3. Hinton, E., Musumeci, M., Rudowitz, R. and Antonisse, L. (2017) Section 1115 Medicaid demonstration waivers: A look at the current landscape of approved and pending waivers. Kaiser Family Foundation. Retrieved from https://www.kff.org/medicaid/issue-brief/section-1115-medicaid-demonstration-waivers-a-look-at-the-current-landscape-of-approved-and-pending-waivers/

4. Van Vleet, A. and Paradise, J. (2014) The State Innovation Models (SIM) Program: An overview. Kaiser Family Foundation. Retrieved from https://www.kff.org/medicaid/fact-sheet/the-state-innovation-models-sim-program-an-overview/

5. Bencic, S. and Fontenot, K. (2014) The Medicaid boom and state budgets: How federal waivers are advancing state flexibility. Health Affairs Blog. Retrieved from http://www.healthaffairs.org/do/10.1377/hblog20140718.040221/full/

6. State Health Access Data Assistance Center. (2016) Study of the impact of the ACA implementation in Kentucky. University of Minnesota. Retrieved from http://www.shadac.org/sites/default/files/publications/SpecialIssueBrief-Section1115Waivers.pdf

7. Masters, C. (2017) Patients, health insurers challenge Iowa’s effort to privatize Medicaid. National Public Radio. Retrieved from http://www.npr.org/sections/health-shots/2017/10/07/555591770/patients-health-insurers-chal-lenge-iowas-effort-to-privatize-medicaid

8. Goldsmith, J. and Henderson, B. (2017) Oregon’s high-risk, high-reward gamble on Medicaid expansion. Health Affairs Blog. Retrieved from http://www.healthaffairs.org/do/10.1377/hblog20170110.058188/full/

9. Miller, E. A., Samuel, D., Allen, S., Trivedi, A. and Mor, V. (2013) Medicaid block grants: Lessons from Rhode Island’s global waiver. Robert Wood Johnson Foundation. Retrieved from http://www.shadac.org/sites/default/files/ publications/RI_Global_Waiver_Brief_FINAL.pdf

10. Lewin Group (2017) Healthy Indiana Plan 2.0: POWER Account contribution assessment. Retrieved from https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/in/Healthy-Indiana-Plan-2/in-healthy-indiana-plan-support-20-POWER-acct-cont-assesmnt-03312017.pdf

11. Migneault, J. (2017) Medicaid waiver adds more beds for drug addiction treatment. HealthPayer Intelligence, Retrieved from https://healthpayerintelligence.com/news/medicaid-waiver-adds-more-beds-for-drug- addiction-treatment

12. Solomon, J. (2016) Indiana Medicaid waiver evaluation shows why Kentucky’s Medicaid proposal shouldn’t be approved. Center on Budget and Policy Priorities. Retrieved from https://www.cbpp.org/research/health/ indiana-medicaid-waiver-evaluation-shows-why-kentuckys-medicaid-proposal-shouldnt-be

13. Wiexel, N. (2017) Trump officials approve Medicaid waivers for opioid treatment. The Hill. Retrieved from http://the-hill.com/policy/healthcare/medical-devices-and-prescription-drug-policy/358292-trump-administration-approves

14. Joseph, A. (2017) How Virginia dramatically expanded treatment options for addiction (and skirted federal law). STAT. Retrieved from https://www.statnews.com/2017/05/03/addiction-services-virginia-states/

15. Hardy, J. (2017) A new wave of opportunity for Medicaid innovation. Deloitte. Retrieved from https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/health-care-current-april11-2017.html

16. Hardy, J. (2017) Experiments with Medicaid work requirements could create opportunities, administrative hurdles for health plans. Deloitte, Retrieved from https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/health-care-current-august29-2017.html

17. American Action Forum. (2014) Breaking down barriers to Medicaid innovation: Rethinking Medicaid waiver approval. Retrieved from https://www.americanactionforum.org/research/breaking-down-barriers-to-medicaid- innovation-rethinking-medicaid-waiver-ap/

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