Medicaid waiver applications test new administration’s policies

If CMS approves Maine and Wisconsin’s proposed Section 1115 Medicaid waivers, it will be marking a departure from the Obama Administration’s stance against work requirements and other previously unapproved proposals. The Kaiser Family Foundation (KFF) examined provisions of state waivers that are unrelated to Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) Medicaid expansion, and opined that the Maine and Wisconsin proposals could result in a loss of coverage and higher costs for consumers. Both states’ proposals are open for public comment in the month of May; if approved, implementation could take place within six months.

Work requirements

The Obama Administration opposed the imposition of work requirements as a condition of the Medicaid program, finding that it did not promote health and access to care. However, HHS Secretary Price and CMS Administrator Varma recently issued a letter to state governors, stating, “The best way to improve the long-term health of low-income Americans is to empower them with skills and employment.” Verma also said that CMS would review Section 1115 waiver requests with an eye to encouraging “meritorious innovations that build on the human dignity that comes with training, employment and independence” (see Did CMS just sound the death knell for Medicaid expansion?, March 15, 2017).

Wisconsin’s plan would require childless adults ages 19 to 49 to work or participate in job training for 80 hours per month, but would allow exemptions for mental illness, receipt of Social Security Disability, and several other categories. Maine’s proposal would require traditional adults ages 19 to 64 to participate in paid employment or approved job training for 20 hours per week, volunteer 24 hours per month, enroll at least half-time at an academic institution, participate in combined work and education for 20 hours per week, receive unemployment benefits, or provide caregiver services for a non-dependent disabled person, but only if they are planning a career in that area. If approved, they would be the first approved work requirements in the nation. Wisconsin has also proposed drug screening, while Maine has proposed premiums higher than 2 percent of income in some cases. Both states proposed eligibility time limits. No such proposals have been approved in the past.

KFF concerned

KFF expressed concern that both states admitted that coverage would decrease as a result of the waivers and that costs would increase. It noted that CMS has traditionally required Section 1115 waivers to be budget neutral, resulting in post-waiver federal costs that do not exceed pre-waiver federal costs. It is also concerned that proposals that have been tested in other states, including health behavior programs, are overly complex, and that other provisions, such as a requirement that individuals pay a premium before coverage being, create barriers to access or result in loss of coverage.

Highlight on Maine: Able-bodied MaineCare recipients could be subject to more stringent requirements

“Able-bodied adults” would be subject to work/education requirements and a lifetime limit of five years under changes Mary Mayhew, director of the Maine Department of Health and Human Services, proposed to Maine’s Medicaid program, MaineCare. In a letter to HHS Secretary Tom Price, Mayhew said she would be seeking the changes in a forthcoming formal 1115 demonstration waiver request.

Mayhew’s letter comes at the heels of a referendum campaign to expand Medicaid in Maine at, according to Mayhew, a cost of $400 million over the next five years. A second motivation is the apparently sympathetic Trump Administration, which has proposed replacing Medicaid with block grants.

Mayhew said that the state has expanded its Medicaid program over decades, resulting in the use of hundreds of millions of state dollars “to turn Medicaid into an entitlement program for working-age, able-bodied adults.” MaineCare serves 270,000 individuals, just over 20 percent of Maine’s population, which, Mayhew said, represents a 22 percent reduction in enrollment since 2011.

Mayhew’s Medicaid proposals include the following:

  • work or education requirements for able-bodied adults in the Medicaid program, similar to the work requirements for Temporary Assistance for Needy Families (TANF) or Able-Bodied Adults Without Dependents (ABAWDs) in the Supplemental Nutrition Assistance Program (SNAP);
  • a five-year lifetime limitation on able-bodied adults’ eligibility for Medicaid;
  • limiting non-emergency transportation (NET) to situations where the underlying service to or from which individuals are being transported is a required Medicaid service and requiring them to access existing transportation resources before accessing NET;
  • requiring monthly premiums for adults who are able to earn income;
  • requiring monthly coinsurance of a set amount (approximately $20) for all members, cost-sharing of $20 for using the emergency department, and fees for missed appointments;
  • applying a reasonable asset test to Medicaid; and
  • waiver of the retroactive coverage of services incurred during the 90 days before Medicaid eligibility.


Highlight on Maine: Main CDC seeks to withhold outbreak information despite strong pushback

MaineHealth, the Maine Medical Association, Eastern Maine Health Systems, and other health care organizations opposed a proposed rule change by the Maine Center for Disease Control and Prevention (Maine CDC) that would allow the state agency discretion not to disclose the locations of infectious disease outbreaks. The rule change comes after two instances in recent years in which the agency refused to name the location of such outbreaks.

Maine CDC withholds information

In 2014, the Maine CDC was criticized for refusing to name the restaurant at which a hepatitis A outbreak occurred. In July 2015, the Portland Press Herald filed a lawsuit after the Maine CDC refused to disclose the locations of four chicken pox outbreaks over concerns that doing so would infringe on personal privacy.  The newspaper argued that, in releasing the location of the outbreaks, no individuals would be named. The lawsuit culminated in a settlement agreement in which the Maine CDC released the names of three schools and a day care facility where the outbreaks had occurred.

Strong opposition of proposed rule change

The proposed rule change would make it easier for the Maine CDC to withhold information about the location of outbreaks of communicable diseases. The Press Herald posited that the agency’s policy “runs counter to recommendations by public health experts, who say that knowing where outbreaks occur is beneficial to the public health because some people . . . are more susceptible to communicable diseases.” An attorney for the newspaper said that the proposal conflicts with state open records laws.

In addition to the Press Herald, organizations including MaineHealth, the Maine Medical Association, and Eastern Maine Health Systems submitted comments in opposition to the proposed change. According to the Press Herald, Dr. Jeffrey Aalberg, MaineHealth chief medical officer, said that the proposed change goes “beyond what is required” by a federal law that protects patient privacy. “The proposed rule would hinder our efforts to take critical public health action in the face of an imminent or possible public health threat. Lack of ready access to data regarding disease outbreaks, contaminated food or water, school or community immunization rates, or other significant events would prevent MaineHealth facilities and providers from delivering the level of care necessary to protect the health of our patients and communities, which include vulnerable populations like children and adults with serious chronic conditions,” he said.

If the Maine Attorney General’s Office evaluates the rule and finds it to be legal, it will go into effect four months after the comment period, which ended August 1, 2016.

Northeast co-op in precarious financial position after offering big salaries

Community Health Options (CHO), a health co-operative that serves customers in Maine and New Hampshire, is the latest co-op under intense scrutiny after experiencing significant financial difficulties. It was the only co-op on the health insurance marketplaces to show a profit in 2014, but its good fortune disappeared last year when CHO experienced a $31 million loss. A number of co-ops shut down in 2015, demonstrating the difficulty of executing the nonprofit health insurance model. CHO, however, may have only itself to blame after offering huge pay bumps to executives.

Why do co-ops fail?

The co-ops, also known as Consumer Oriented and Operated Plans, were supported by the administration as an alternative to private health insurers. They received funding through the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), which Nonprofit Quarterly believed led to many restrictions, such as marketing and advertising, that hampered the organizations’ ability to operate effectively in the market.

Other funding issues compounded the problem. For example, although the Kentucky Health Cooperative outperformed some state exchange competitors and had healthy enrollment, receiving a fraction of the expected risk corridor payment from CMS meant no more business as usual, according to Interim Kentucky Health Cooperative CEO Glenn Jennings. Risk corridor payments were created under the ACA to help insurers handle the costs of new enrollees with long-unmet health needs, who would likely cost more to cover. Insurers were to receive a payment if their operating losses were excessive. Kentucky Health Cooperative sought a $77 million payment, but CMS only covered $9.7 million. The co-op was unable to continue, with the closing announced in October 2015.

Kentucky’s co-op was not the only one hit. As of November 2015, a dozen co-ops had closed or had announced that they would not offer plans in the future. After Kentucky made the announcement, Tennesse’s Community Health Alliance followed suit. ColoradoHealthOp was next decertified from the exchange. In the same month, Oregon’s Health Republic Insurance, South Carolina’s Consumers Choice, Utah’s Arches Health Plan, and Arizona’s Meritus announced that they would cease operations. Consumers Mutual of Michigan held off until November 2 to announce that it was leaving the exchange, and two days later decided to wind down completely.

A big potential blow to Maine, New Hampshire

CHO is an important exchange presence in Maine and New Hampshire. The co-op is the single largest provider of individual health plans in Maine, with 71,500 members. New Hampshire offers a much smaller number of customers, at 12,700, but the co-op is only one of five companies in that state of offer individual ACA plans. It experienced a $31 million loss in December after being the only profitable co-op on the exchanges in 2014. CHO stopped taking new customers in December, and the Maine Bureau of Insurance is going to closely monitor performance on a monthly basis.

CHO had higher enrollment as well as higher claims costs than expected, ostensibly due to the many policyholders that were previously uninsured and had unmet medical needs. Maine customers are projected to see a large increase in premiums in the future to offset these costs. However, claims are not the only reason that the company’s financials were off in last year. Top executives saw their salaries more than doubled in the co-op’s first two years. For example, the combined incomes of the Chief Executive Officer (CEO) and Chief Operating Officer (COO) went from $311,642 to $715,819 between 2012 and 2014. Officials claimed that the CEO initiated a 10 percent reduction in his own salary and that the co-op has cut administrative expenses by $11 million. The CEO has expressed concern that publicizing pay cuts for executives will cause him to lose employees.

Although the company is setting aside $43 million to cover potential losses in 2016, this may not be enough. If the state of Maine determines that the co-op will be unable to properly serve its customers and forces CHO’s closure, consumers will be able to select new coverage under a special enrollment period.