TRENDS IN MEDICAID WAIVERS

Judith SolomonCenter on Budget and Policy Priorities

Families USA ConferenceJanuary 26, 2006

Key Considerations in Dealing with Waivers

• Process– Transparency– Public Input

• Financing – Cap on federal funds– Per capita caps– Global Caps

• Content – Waiver trends– Why a waiver??

Waiver Trends

• “Consumer direction”• Defined contributions instead of defined

benefits• Personal health accounts• Incentive accounts• Delegation of authority to private entities• Increased cost-sharing and reduced benefits• “Targeted” benefits• Long-term care waivers

“Consumer Direction”• Health Savings Accounts and High

Deductible Health Plans for Medicaid• Increases cost sharing and risk for

beneficiaries• Based on untested assumptions

– Increased cost-sharing will promote “personal responsibility” and decrease utilization of “unnecessary care”

– Health plans will design attractive packages of services in order to compete for beneficiaries

“Consumer Direction”

• Relies on infrastructure that does not currently exist to support choices – Face-to-face enrollment counseling– On-line information regarding plans and

providers, including cost and quality comparisons

• Misplaced reliance on beneficiary satisfaction with “cash and counseling” demonstrations

Defined Contributions Instead Of Defined Benefits

• FL and SC• Beneficiaries provided with “premiums” to purchase

coverage from health plans • Can “Opt-out” of Medicaid by using premiums for

employer-sponsored health insurance – No wrap-around coverage or protection from increased cost-

sharing

• Presumes premiums can be risk adjusted to meet needs of different groups– Questionable given unpredictability of health care expenses– State’s goal of saving money and budget neutrality

requirements may result in inadequate premiums

Personal Health Accounts

• SC • Funds would be deposited in accounts and

used to purchase health care services• Medicaid would cover inpatient care and

preventive services• If funds depleted, beneficiary would have to

pay for care until next deposit or until spent $250 out of pocket

• Similar to “Health Opportunity Accounts” in House reconciliation bill

“Incentive” Accounts

• FL, WV, KY• Funds put in accounts based on

“healthy” behaviors• Can be used for co-payments and other

non-covered health care expenses• Can keep all or some portion when

eligibility ends– FL and SC claim this feature as an

“expansion” of coverage

Delegation of authority to private plans

• SC and FL• Plans given unprecedented authority to

determine what benefits they will cover for adults as well as the amount, duration and scope of covered benefits

• Yet risk for plans limited– (FL) Annual maximum benefit limits for adults

and option to have state cover catastrophic care

– (SC) Reinsurance

Increased cost-sharing and reduced benefits

• KY, SC and authorized in VT waiver

• No attempt to meet special waiver standards for cost-sharing

• Numerous “soft” limits on benefits even for children (e.g. 4 prescriptions per month in KY)

Targeted Benefits

• WV, ID, FL, SC, KY

• Different benefit packages for different groups (e.g. “well elderly” in WV)

• Lack of clarity regarding how individuals are classified and re-classified

• Packages determined by health plans in FL and SC

Long-term care waivers

• VT and KY

• “Rebalancing” long-term care by creating entitlement to home and community based services for some beneficiaries

• To limit costs, some individuals who previously could get nursing home care can be put on waiting list for services

Conclusion

• Waivers rely on untested and faulty assumptions

• Add complexity and new administrative structures to program that will increase costs

• Budget neutrality requirements, drive to reduce state spending, and increased administrative costs will likely result in decreased benefits and increased costs for beneficiaries

For more information:

STILL RISKY BUSINESS: SOUTH CAROLINA’S REVISED MEDICAID WAIVER PROPOSAL http://www.cbpp.org/1-11-06health.pdfHEALTH OPPORTUNITY ACCOUNTS FOR LOW-INCOME MEDICAID BENEFICIARIES: A Risky Approachhttp://www.cbpp.org/10-26-05health.pdfTHE FALLACY OF USING CASH AND COUNSELING TO SUPPORT PROPOSALSTO CONVERT MEDICAID TO VOUCHERS OR HEALTH SAVINGS ACCOUNTShttp://www.cbpp.org/12-21-05health.pdf