States mull Med­i­caid block grants as ACA re­peal, changes loom

Modern Healthcare - - NEWS - By Shelby Liv­ingston

Health­care ad­vo­cacy groups say a bill in the Mis­souri Se­nate that seeks to trans­form Med­i­caid into a block grant pro­gram would cut nec­es­sary fund­ing for health­care ser­vices for Mis­souri’s most vul­ner­a­ble cit­i­zens. But Repub­li­can sup­port­ers say it would give the state more flex­i­bil­ity and help it con­trol run­away spend­ing.

The same de­bate is play­ing out on a na­tional stage. GOP law­mak­ers, in­clud­ing Pres­i­dent Don­ald Trump, have em­braced Med­i­caid block grants as a so­lu­tion to grow­ing costs. As Med­i­caid re­form looks more and more like a po­ten­tial re­al­ity, states are be­gin­ning to ques­tion if it’s wise to forgo some fed­eral fund­ing in ex­change for more con­trol. “It’s a bal­anc­ing act,” said Deb­o­rah Bachrach, a part­ner at Manatt Health and former Med­i­caid di­rec­tor of New York. “Is the flex­i­bil­ity so great that it’s worth giv­ing up fed­eral dol­lars?”

Mis­souri Re­pub­li­cans aren’t wait­ing around for the fed­eral gov­ern­ment to make a move. The leg­is­la­tion, Se­nate Bill 28, would di­rect Mis­souri’s so­cial ser­vices depart­ment to seek a global waiver from HHS to trans­form the state’s Med­i­caid into a block grant pro­gram, which would be fed­er­ally capped and ad­justed for in­fla­tion, state gross do­mes­tic prod­uct, pop­u­la­tion growth and other fac­tors.

A Se­nate com­mit­tee heard tes­ti­mony on the bill ear­lier this month and will soon vote to bring it to the Se­nate floor. At least two other com­pan­ion bills have been filed in the House. Mis­souri Sen. David Sater, a Repub­li­can who spon­sored the bill, ar­gued that a block grant would bring per­sonal ac­count­abil­ity and re­spon­si­bil­ity to Mis­souri’s Med­i­caid pro­gram.

But health and con­sumer ad­vo­cacy groups that tes­ti­fied against the leg­is­la­tion fear it would force fund­ing cuts for es­sen­tial ser­vices pro­vided to 800,000 low-in­come and dis­abled peo­ple cov­ered by MO HealthNet. Mis­souri is one of the 19 states that didn’t ex­pand Med­i­caid un­der the Af­ford­able Care Act. The Mis­souri Coali­tion for Com­mu­nity Be­hav­ioral Health­care, Men­tal Health Amer­ica of East­ern Mis­souri, the Mis­souri Health Ad­vo­cacy Al­liance and the Mis­souri AARP were among the 10 groups and one dis­abil­ity ad­vo­cate that tes­ti­fied against the leg­is­la­tion.

The bill found an un­likely sup­porter in the Mis­souri Hospi­tal As­so­ci­a­tion, which rep­re­sents 145 hos­pi­tals in the state. Spokesman Dave Dil­lon said it tes­ti­fied in fa­vor out of sup­port for find­ing a way to re­duce costs and bet­ter man­age care for a few “su­pe­ruti­liz­ers” who are driv­ing those costs. Mis­souri is fac­ing a bud­get short­fall of $350 mil­lion and Med­i­caid ac­counts for a ma­jor chunk of the state’s ex­penses, he said.

Mis­souri’s Barnes-Jewish Hospi­tal, SSM Health and St. Luke’s Health Sys­tem ei­ther de­clined or did not re­spond to re­quests for com­ment. Mo­saic Life Care said it’s too soon to know what po­si­tion it will take on the bill.

“I think it’s a so­lu­tion look­ing for a prob­lem,” said Sid­ney Wat­son, a St. Louis Univer­sity health­care law pro­fes­sor who tes­ti­fied against the bill. Most of the changes the state wants to make can be ac­com­plished with­out mov­ing to a block grant, she said, and the cuts would likely be dra­matic.

Trump, House Speaker Paul Ryan and HHS sec­re­tary nom­i­nee Tom Price have all pro­posed giv­ing states a fixed pot of money to run their Med­i­caid pro­grams, while also cut­ting to­tal spend­ing. Out of $9.6 bil­lion in Med­i­caid spend­ing in Mis­souri last year, $6.1 bil­lion flowed from the fed­eral gov­ern­ment.

But the ap­peal of hav­ing full con­trol over that money may fade. “Gov­er­nors are look­ing at it closely, and even those who ini­tially em­braced it are dig­ging deeper into what does it mean for my state?” Bachrach said. “From a gover­nor’s per­spec­tive, right away (it means) less fed­eral dol­lars.”

That rev­e­la­tion is alarm­ing law­mak­ers. In Vir­ginia, both the Gen­eral As­sem­bly Re­pub­li­cans who op­pose the ACA and the ad­min­is­tra­tion of Demo­crat Gov. Terry McAuliffe, a sup­porter of the health­care law, agreed last week that block-grant­ing the state’s Med­i­caid pro­gram would put the state at a se­vere dis­ad­van­tage in fund­ing health ser­vices.

Chip Kahn, pres­i­dent and CEO of the Fed­er­a­tion of Amer­i­can Hos­pi­tals, said in De­cem­ber that it would be dif­fi­cult for hos­pi­tals to sup­port the ap­proach be­cause it would mean Med­i­caid would be well-funded in some states and un­der­funded in oth­ers.

The fed­eral gov­ern­ment pays states a cer­tain per­cent­age of states’ Med­i­caid

ex­pen­di­tures based on cri­te­ria like per capita in­come. A block grant would cap the fed­eral con­tri­bu­tion. If some­thing un­ex­pected oc­curs, like a dis­ease out­break or an eco­nomic down­turn, and the Med­i­caid en­roll­ment jumps, fed­eral dol­lars wouldn’t ex­pand to ac­com­mo­date the rise in costs.

In 2015, Med­i­caid ac­counted for 28.2% of to­tal state spend­ing in fis­cal 2015—the largest com­po­nent, ac­cord­ing to the Na­tional As­so­ci­a­tion of State Bud­get Of­fi­cers. Com­bined state and fed­eral Med­i­caid spend­ing was up 9.7% in 2015, to­tal­ing $545.1 bil­lion.

Mov­ing Med­i­caid to a block

grant model would pose thorny ques­tions for law­mak­ers, Bachrach said. If the fed­eral con­tri­bu­tion is fixed to a year like 2016, the 31 states that ex­panded Med­i­caid un­der the ACA and sub­se­quently re­ceived more fed­eral dol­lars would be at an ad­van­tage over those that didn’t. If a state that didn’t ex­pand Med­i­caid later de­cides it wants to, fed­eral fund­ing won’t ex­pand to cover the state’s newly el­i­gi­ble mem­bers. And with fewer Med­i­caid dol­lars to go around, stake­hold­ers would be jock­ey­ing for fund­ing. Gov­er­nors will find that the nurs­ing homes are fight­ing the hos­pi­tals, which are fight­ing the men­tal health agen­cies.

Still, some say the fears are un­founded. “The idea of a block grant doesn’t in it­self pre­sume you are cut­ting it,” said Stu­art But­ler, a se­nior fel­low at the Brook­ings In­sti­tu­tion. “Part of the idea is to en­able a state like Mis­souri to mix the (fed­eral) money dif­fer­ently.”

But so far, most fed­eral pro­pos­als that in­clude the model would cut Med­i­caid sig­nif­i­cantly, count­ing on the ef­fi­ciency achieved by states to gen­er­ate a wind­fall in sav­ings. The Cen­ter on Bud­get and Pol­icy Pri­or­i­ties de­ter­mined that Price’s bud­get plan that in­cluded Med­i­caid block grants would cut fund­ing to the pro­gram by $2.1 tril­lion over 10 years.

“If there is enough money there, block-grant­ing in and of it­self is not pub­lic en­emy No. 1,” said Blake Lawrence, di­rec­tor of pol­icy and leg­isla­tive af­fairs at ad­vo­cacy group Mis­souri Health Ad­vo­cacy Al­liance, which tes­ti­fied against the Mis­souri bill. But, he added, “Peo­ple don’t un­der­stand, when that money is out, there’s no money left for any­body.”

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