What Changes Are Coming to Medicaid in 2019?

The Trump Administration has received so many state Medicaid waiver proposals that its ability to process them has been overwhelmed, said a senior HHS official.

Oct. 16—Additional state expansions of Medicaid eligibility are among the expected developments coming next year to the program, according to a former federal leader of Medicaid.

Cindy Mann, formerly director of the Center for Medicaid under President Barack Obama, told insurers meeting in Washington, D.C., this week that she expected more states to join the 33 (and D.C.) that have approved eligibility for all residents earning up to 138 percent of the federal poverty level.

The group that already has chosen to expand eligibility under the Affordable Care Act (ACA) includes Virginia, where an expansion will go into effect in January; and Maine, where a voter referendum approved the expansion, but the governor has held it up over funding concerns.

Mann declined to name which states are most likely to expand Medicaid eligibility, but Idaho, Utah, and Nebraska all have ballot measures to approve full expansion.

Whether Medicaid programs potentially will be affected by another push to repeal and replace the ACA will depend on the outcome of the upcoming midterm election, Mann said. An ACA replacement bill, which would have sharply cut future Medicaid spending growth, was narrowly defeated in the Senate in 2017. 

Also in 2019, an expected slowdown will occur in efforts to address the social determinants of health (SDOH), which are non-healthcare factors that drive most health outcomes. The reason for the slowdown, Mann said, will be concerns by Medicaid insurers and states about the lack of data showing an ROI. But existing initiatives testing ways to address SDOH will continue.

As data from SDOH pilots roll in, better clarity may emerge next year to inform the ongoing debate on whether such efforts should focus on “high need, high cost” patients or broadly address an entire community’s health, Mann said.

“The debate is very much open about which way to go,” Mann said.

Jim Dolstad, vice president of Optum Advisory Services, said his company has focused its longstanding programs to address SDOH on high-cost, high-utilization patients.

“We’ve seen ROI across many of our initiatives, which we have operated for years now,” Dolstad said.

Some Medicaid insurer experiments focusing on high-cost enrollees have found savings from SDOH initiatives, including through reduced emergency department use and hospital admissions, Mann said. However, health plans are concerned they will effectively be penalized in the form of lower capitated payments, due to the lower spending, when their state reauthorizes their contract in two years.

Organizations finding success with SDOH initiatives include Optima Health in Virginia. The insurer does a health risk assessment of all new enrollees that includes SDOH factors, to determine services that are are needed. One such service is pest extermination, based on findings of a strong link between roach infestations and child asthma attacks, said Catherine Brisland, MD, medical director of Optima.

Coming Regulatory Action

A major development next year could be another wave of newly approved Medicaid waivers, said Jim Parker, senior adviser to the secretary for health reform in the U.S. Department of Health and Human Services. Parker told insurers that the administration’s waiver review capacity has been swamped by state requests, which are coming in at a much higher than normal rate after the Trump administration in 2017 urged states to experiment more with Medicaid.

Most of those waivers aim to establish work—or other activity—requirements for Medicaid enrollees or to expand substance use treatment in response to the opioid epidemic, Parker said.

Also expected in the coming months is an updated Medicaid managed care rule from the Trump administration. However, Mann said she did not expect “a sweeping redo” of the Medicaid managed care rule that the Obama administration implemented in 2016.

“We’ve been reviewing that rule within the context of our priorities and principles since coming into office,” Parker said. Programmatically, he said, the administration seeks to streamline regulations, reduce federal regulatory barriers, support state flexibility, and empower local leadership.

Also expected in 2019 is a nationwide implementation of the Transformed Medicaid Statistical Information System (T-MSIS), a Medicaid and CHIP data system designed to provide CMS with information for oversight and performance evaluation. Nationwide rollout of T-MSIS was initially expected to occur by July 2014, following the earliest pilots in 2011.

Mann said states also could see unspecified changes in supplemental Medicaid payments, which comprise half of all fee-for-service federal funding, according to a June report by the Medicaid and CHIP Payment and Access Commission.

Uninsured Buy-In Option

Some states could launch a Medicaid buy-in program for the 19 million uninsured who earn more than 138 percent of the federal poverty level. That is most likely to occur in states that are rural, have adopted the ACA expansion, and lack many managed care plans, said John Holahan, a fellow at the Urban Institute.

“There has been a lot of talk about this, but not a whole lot of movement,” Holahan said in an interview.

Proposals have emerged in New Mexico and Nevada. If either successfully launches a Medicaid buy-in, that could spur other states to consider it, he said.

States could implement Medicaid buy-in options with ACA 1332 waivers and make them available as plans in the ACA individual marketplaces, where federal savings from cheaper Medicaid plans could be used by states to fund more subsidies. Alternatively, higher-income enrollees could buy into established Medicaid programs, but that carries financial risk for states and plans and risks alienating Medicaid plans that are uncomfortable with the financial risk from those enrollees.

“There are areas in the country where it could be quite valuable—but not most” places, Holahan said.

Another effect would be an overall reduction in provider revenue as more patients fall under Medicaid rates—unless states opted to increase their rates.

Doug Saunders, director of public policy for Anthem, said the insurer prefers that policymakers bolster the ACA marketplaces, including more subsidies for the young and healthy, rather than launching Medicaid buy-in programs. 

Saunders warned that a buy-in program could lead some providers to drop out of Medicaid—especially if their participation in the buy-in program was a requirement of their general Medicaid participation. Additionally, switching higher-income patients to lower-paying Medicaid could disrupt the “delicate balance” between provider revenue from public payers and from commercial insurers, he said.

ACA Marketplaces

A non-Medicaid change for 2019 will be a return of insurers to the ACA marketplaces. In contrast to steadily decreasing insurer participation rates since 2015, next year 24 new insurers will begin selling plans in the marketplaces and 29 existing insurers will increase the number of plans they sell, said Parker.

“So, in important ways the marketplace is stabilizing,” Parker said.

Parker credited the administration’s actions on loosening coverage requirements for helping the marketplaces, but he warned that the underlying design of the marketplaces will not allow for long-term stability.

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Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare