Why CMS Refused Florida Medicaid “Reform” Waiver

A while back, we discussed intervention by state legislatures in Medicaid policy that conflict with federal requirements.  Once again, CMS has rejected two changes that a state legislature attempted to impose.

Last year, the Florida legislature passed two laws directing the Agency for Health Care Administration (AHCA), Florida’s Medicaid agency, to request approval for to changes to its existing Medicaid program and to a demonstration project. Under CSHB 7107, membership in a managed care organization (MCO) would be mandatory for nearly all Medicaid beneficiaries statewide. Individuals who were entitled to only limited benefits, such as family planning, treatment of breast or cervical cancer or emergency services, and children in pediatric extended care centers would not be required to join an MCO. The bill also required all members of Medicaid managed care plans to pay a $10 monthly premium. There were no exceptions to the premium requirement.

CSHB 7109 required AHCA to ask CMS for a waiver to require a $100 copayment from Medicaid recipients who obtain nonemergency services in the emergency room.

Section 1115 of the Social Security Act allows the HHS Secretary to waive statutory requirements to approve research and demonstration projects to test policies and innovations that might improve the Medicaid or Medicare programs. Many states have approved waivers, which you may find here. Florida had a Medicaid waiver to require managed care in certain counties.

The legislation told AHCA to submit whatever waivers or amendments were necessary. In other words, “Make it so.”

So AHCA submitted requests for three changes to its waiver:

(1) expanding mandatory managed care statewide;

(2) requiring the $10 monthly premium; and

(3) requiring the $100 copayment for nonemergency use of the emergency room.

What’s the problem? In its request, AHCA justified the premium as “nominal when considering the value of the benefit received” and promoting individual responsibility.

CMS denied the cost sharing waivers. The monthly premium violated the “maintenance of effort” (MOE) requirement imposed by the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). In order to keep its Medicaid funding, a state may not make it harder to qualify for Medicaid than it was on March 23, 2010, the date PPACA was enacted.  The requirement will end for adults when the health insurance exchange is operational; children’s eligibility can’t be tightened until 2019. In February, 2011, CMS had issued specific guidance on the application of the MOE requirement to premiums.  It was pretty clear – any group that was not required to pay premiums on March 23, 2010 cannot be required to pay them now.

The $100 copayment wasn’t affected by maintenance of effort, but it was inconsistent with the law. Social Security Act  Section 1916A, which grants states flexibility to add “alternative” cost sharing, provides that no one whose income is at or below the federal poverty level (FPL) may be required to pay premiums.  The premiums charged to a Medicaid-eligible family over 150 percent of FPL are limited to 10 percent of the income in excess of 150 percent. The total cost sharing required of all members of a family with income up to 150 percent of the FPL cannot exceed 5 percent of family income. If the family incurs any other cost sharing during the period (for the premium, for example) the copayment would have to be reduced.

CMS didn’t have to address other problems with the waiver requests. Section 1115 waivers  of cost sharing limits must involve research of a previously untested proposal. There must be a control group, protections for the beneficiaries’ health if they have to participate, and a maximum length of two years.  The premium requirement was justified as promoting individual responsibility. AHCA asked to test whether the $100 copayment would reduce nonemergency use of the emergency room, stating that the legislature found the $15 copayment wasn’t a sufficient deterrent.

There were other indications that the legislators who drafted the bill may not have been aware of essential Medicaid requirements. For example, the legislation gave medically needy beneficiaries a 90 day grace period to pay their premiums but did not do so for the lower-income beneficiaries. Medicaid law requires that lower income beneficiaries have benefits equal to higher income beneficiaries in the same eligibility group.

CHSB 7107 provided that the managed care  provisions would take precedence over other parts of the state Medicaid law. That would mean that beneficiaries who are legally exempt from  managed care and payment of premiums would have to do so.  But elsewhere, the same bill referred to exempt beneficiaries who could choose the managed care plan, including individuals in juvenile detention centers. Inmates aren’t eligible for Medicaid, but children in foster care are supposed to be exempt. Are wards of the state supposed to pay premiums?

Obviously legislators need to set policy, but they should be well informed about how to do so first.