The Trump administration released a proposed rule aimed at increasing transparency around state supplemental payments in the Medicaid program on Tuesday.
The three core aims of the rule are to improve reporting on supplemental payments, clarify Medicaid financing definitions, and curb “questionable financing mechanisms.”
Medicaid makes up roughly 30% of total state budgets.
To ensure that the program remains sustainable for future beneficiaries, the federal government must make certain that program dollars are actually spent on patient care, said Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma during a plenary speech at the National Association of Medicaid Directors (NAMD) Fall Conference.
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Importantly, the agency currently doesn’t have access to “timely and adequate” state Medicaid payment data to allow proper oversight of the program, a CMS fact sheet noted.
“We’ve seen a proliferation of payment arrangements that mask or circumvent the rules,” Verma said.
“Shady recycling schemes drive up taxpayer costs and pervert the system, by shifting resources away from higher value settings,” she added.
While the Medicaid statute allows local governments to spend local tax dollars on the state’s portion of Medicaid payments, that framework has been “abused,” Verma said.
States frequently make additional payments to providers that are higher than the typical reimbursement for billed services, a CMS press release explained, which noted an increase in supplemental payments from 9.4% in fiscal year 2010 to 17.5% in fiscal year 2017.
In addition, states sometimes use high-risk financing mechanisms such as intergovernmental fund transfers, certified public expenditures, and provider taxes and donations that channel additional payments to institutions without any clear improvements in patient outcomes, according to the release.
The new rule provides a “comprehensive overhaul” of the agency’s regulations focused on ensuring transparency in provider payments, including a requirement that states verify how they finance their portion of supplemental payments. Specifically, the rule would require states to submit “provider-level information” on Medicaid supplemental payments.
As the press release detailed, “the proposed rule would provide clearer guidance on the law to states and other stakeholders, help close regulatory loopholes, and improve reporting to help CMS ensure that states fund their share of payments to providers through only permissible sources and with methodologies that comport with statutory requirements and align with Medicaid program goals.”
In essence, the rule would “shine a light” on practices inconsistent with the statute, reduce government distortion, and “even the playing field.”
“The government should not be placing its thumb on the scale,” said Verma.
No New State Innovation Model (SIM) Grants
Verma also spoke about another change.
“[G]oing forward there will be no new SIM grants, no more open-ended one-off district waivers. We must move forward with a more unified cohesive approach, across payers, across CMS, and across states,” she said.
The agency will release guidance “later this year” to help states transition toward value-based payment in Medicaid and will also issue more guidance regarding ways states can target social determinants through a value-based framework.
And in the context of dual beneficiaries, Verma also touted new Center for Medicare and Medicaid Innovation (CMMI) models including its Direct Contracting and Primary Care First models, which let practices take on either full or partial risk for Medicare Beneficiaries.
She encouraged states to “lean into” such models to avoid simply shifting payments from Medicare to Medicaid.
Medicaid’s open-ended insurance structure has made it the number one or number two budget item for most states, Verma said.
Some states have taken an interest in pursuing alternative financing models such as block grants and per-capita cap approaches through 1115 Medicaid waivers. She said such states are willing to make the tradeoff between accountability for outcomes and increased flexibility and budget certainty.
CMS is “encouraged by this interest” and will soon issue guidance that outlines opportunities to test new approaches to new healthcare delivery and financing models “for certain optional adult populations.”
The “Medicaid Value and Accountability Demonstration” will maintain beneficiary protections while coupling them with “vigorous accountability for outcomes” and allow “unprecedented flexibilities” in terms of running the program, as well as the chance to receive shared savings that can be reinvested into the program.
Verma said that the administration has so far approved 10 proposals for states to pursue “community engagement” or work requirements in their Medicaid programs and that 10 more are under review.
She argued that critics of the requirements miss the point of public assistance.
“[T]he aim of public assistance programs is ‘not only to relieve the symptoms of poverty, but to cure it and above all prevent it,'” Verma said, quoting President Lyndon B. Johnson, whom she described as the “father” of Medicaid.
“And if we are serious about improving health outcomes than we must address the social determinants of health and in the case of our able-bodied adults, help them live happier, healthier lives … a life that knows the dignity of a job,” she said. “A Medicaid program that locks people into poverty begins to look less like a safety net and more like a trap.”
Verma also staunchly defended Arkansas’ attempt to enact work requirements.
In January, the Center for Budget and Policy Priorities reported that close to 17,000 people had lost Medicaid coverage in the 6 months following Arkansas’ decision to implement Medicaid work requirements, and in March, a federal judge struck down the policy stating that it impeded access to healthcare.
Verma argued that the program didn’t have enough time to work out implementation issues and to discern its true long-term impact. She also pointed out that only one-third of beneficiaries who lost coverage in Arkansas have re-enrolled in Medicaid.
“Where did they go? I think that’s an important question. Are they simply living without coverage by choice or have they found other options?” she said.
“We cannot allow those who prefer the status quo to weaponize the legal system against state innovation,” Verma said to muted applause.
She theorized that critics of work requirements oppose any form of “personal responsibility” that could help prepare beneficiaries to transition to private healthcare.
“I believe their goal is to use the legal system without any input from the people to manipulate Medicaid into the prototype of a single-minded, single-payer nirvana, a utopia of open-ended government-run healthcare.”
Verma said its her mission to fight this agenda and help states preserve the right for states to tailor their programs to the needs of their own residents, cultures, and values.
Source: Medpage Today