The Trump administration is about to notify state governments that they will be allowed to convert their Medicaid programs into block grants, according to news reports that emerged on Wednesday.
POLITICO’s Dan Diamond reported on Wednesday that “The White House signed off on a long-developing plan to overhaul Medicaid by letting states shift some program funding to block grants,” quoting a senior administration official as saying that “The status quo is unacceptable. We have to give states some more flexibility.”
As Diamond wrote in his report, “The controversial plan — which CMS Administrator Seema Verma has developed for more than a year — targets Obamacare's Medicaid expansion, POLITICO scooped last week. HHS and CMS declined to comment on pending announcements. CMS is billing Thursday's event as ‘Transforming Medicaid: A New Opportunity for Better Health.’ POLITICO obtained a copy of the invitation sent to outside groups. The yet-to-be-announced plan is already being panned by advocates and researchers, worried about patients and providers seeing significant cuts,” he added. "A modest suggestion for a more accurate event title: Capped Federal Medicaid Funding: A Fiscal Straitjacket for States Leading to Fewer People Covered, Less Access to Needed Care & Poorer Health," tweeted Georgetown's Edwin Park.
Further, Diamond wrote, “The plan also has faced skepticism inside the administration, given that it could arm Trump's critics with more ammunition that he's attempting to cut health services in an election year. Meanwhile, officials acknowledge that it's guaranteed to be enmeshed in litigation. But it's also a win for [Administrator of the Centers for Medicare & Medicaid Seema] Verma, who just six weeks ago was fighting with HHS Secretary Alex Azar in a feud that put both of their jobs at risk. Barring some last-minute reversal, she'll oversee a significant step toward a long-held conservative goal: Capping Medicaid spending.”
Meanwhile, the Washington Post’s Amy Goldstein reported on Tuesday that “Top Trump administration health officials are inviting states to convert part of Medicaid into a block grant — a longtime conservative goal that Congress rejected more than two years ago. A letter to every state Medicaid director, to be dispatched on Thursday,” Goldstein wrote, “will offer the possibility of trading away an entitlement program that expands and contracts depending on how many poor people need the government health coverage. In exchange, for able-bodied adults in the program, states could apply to receive a fixed federal payment and freedom from many of the program’s rules, according to several individuals familiar with the plans.”
Further, Goldstein noted, “The offer represents the second—and boldest—step the Trump administration has taken to redefine the nation’s largest public insurance program, a cornerstone of the social safety net created as part of President Lyndon Johnson’s Great Society of the mid-1960s. It follows a guidance letter that Seema Verma, administrator of the federal Centers for Medicare and Medicaid Services, issued in January 2018, allowing states for the first time to compel poor Americans to work or prepare for jobs to qualify for Medicaid.”
Goldstein also wrote that “The work requirements triggered lawsuits by national and state-level groups opposed to those rules. Of 10 states CMS has approved to begin what advocates call ‘community engagement’ requirements, virtually all have been blocked in federal court or are on hold while the litigation goes through legal appeals. Proponents and critics alike expect that the block grant guidance also will also face court challenges. ‘Our legal team will be carefully assessing the enforcement and litigation options with respect to the guidance document,’ said Jane Perkins, legal director of the National Health Law Program, a Washington-based group working on behalf of low-income Americans and a main plaintiff in the work-requirement cases.”
Meanwhile, as early as January 19, the Wall Street Journal’s Stephanie Armour had written that “The impending release comes as a surprise after the Office of Management and Budget, which reviews regulatory actions, indicated in November that block-grant instructions had been withdrawn. Lawmakers and legal advisers speculated that the guidance may have been shelved or significantly delayed. Approving state waivers to change Medicaid funding to block grants would be among the administration’s most controversial moves to reshape Medicaid, a federal-state program that provides health coverage to one in five low-income Americans. Medicaid is the main source of long-term care coverage for Americans and is a guaranteed benefit, or entitlement, for eligible individuals.”
Even before the announcement had been made official, some provider groups were expressing deep concern. On Jan. 16, the American Society of Clinical Oncology (ASCO) released a position statement on the subject. "Block Grants in Medicaid & Their Impact on Cancer Care," “summarizing the Society's concerns about the potential negative impact that recent proposals to establish annual limits on federal funding for Medicaid--or block grants--could have on patients with cancer,” the organization offered. “The statement urges state and federal policymakers not to enact, apply for, or advance any proposals to establish block grants for Medicaid programs.
"A transition to block grants could transform Medicaid from a safety net program, designed to meet basic health needs for low-income Americans, to a program with funding limits that drive care rationing for the most vulnerable," said ASCO President Howard A. "Skip" Burris, III, MD, FACP, FASCO, in releasing the statement on Jan. 28. "ASCO supports Medicaid reform, but such efforts--whether at the national, state, or local levels--must allow individuals to have access to high-quality cancer care without interruption."
The ASCO statement noted that, “Under a block grant funding structure, states anticipate having more flexibility to change their Medicaid programs in ways that reduce its budgetary impact. ASCO is concerned, however, that such changes would limit access to care and services for beneficiaries. States currently have wide latitude to shape their Medicaid programs--but they must be in accordance with federal minimum standards.”
Further, ASCO noted, "Block grants could allow states to reinterpret or remove important federal guardrails and accountability measures such as: prohibitions against provider discrimination, beneficiary support systems, network adequacy standards, grievance and appeals processes, and program integrity safeguards, among others. ASCO has long supported efforts to expand and strengthen Medicaid in ways that may not be supported by states in a block grant funding structure."
The statement went on to state that "ASCO offers the following recommendations to state and federal policymakers regarding Medicaid block grants:
> Congress should not enact a block grant structure for the Medicaid program, either as an optional demonstration program or a permanent change to the program.
> CMS should not allow for states to apply for block grants through any of its existing regulatory authority and should not approve state waivers to establish block grants, enact lockout periods, lifetime limits, the elimination of retroactive eligibility or mandatory work requirements on beneficiaries.
> States should not seek waivers or other proposals that would establish federal block grant funding structures for their Medicaid programs, or otherwise seek to circumvent statutory obligations under the Social Security Act. Instead, states should seek to take advantage of full Medicaid program expansion."
This is a developing story. Healthcare Innovation will update readers as more information becomes available.
