Springfield News Leader: Rebuilding Missouri’s Medicaid system could cut costs but increase uncertainty

Will Schmitt , [email protected] 6:02 a.m. CT Jan. 14, 2017
JEFFERSON CITY — Missouri could rebuild its Medicaid system with passage of a bill that aims to soothe the state’s budget woes. But the move could decrease options for those enrolled in the entitlement program.

The proposal, known as Senate Bill 28, was heard by the Senate’s Seniors, Families and Children Committee on Tuesday. Filed by committee chair Sen. David Sater, the bill would require the state Department of Social Services to ask the federal government for a “global waiver” for the MO HealthNet Program — the state’s version of Medicaid.

The waiver would allow Missouri to rebuild Medicaid, opting out of the traditional system in which states must match funding provided by the federal government.

As of October, one out of every six Missourians was enrolled in either Medicaid or the Children’s Health Insurance Program, according to the federal Centers for Medicare and Medicaid Services.

Missouri is facing a budget crunch, and Medicaid is a large and growing user of the state’s money. More than a third of Missouri’s $27 billion budget goes to Medicaid, and costs are expected to grow. Missouri gets a match from the federal government for its Medicaid spending: For every dollar the state spends on Medicaid, the U.S. spends about $1.72, according to the Kaiser Family Foundation.

Sater’s bill aims to replace this system of matching dollars with a block-grant program that would essentially entail the federal government cutting Missouri a check for Medicaid expenses. This would still require some state funding, but this method would constitute a limited match and cap how much money Missouri must spend.

In Sater’s remarks to fellow committee members, he characterized his bill as a way to save money. The Cassville Republican said changing political winds were part of the reason he thought his bill might be successful, as President-elect Donald Trump and congressional Republicans agree on repealing and replacing the Affordable Care Act, also known as Obamacare.

It’s unclear how much money might be saved by rebuilding Medicaid in Missouri. Sater said most money was spent by “high utilizers” who racked up ER trips and saw multiple doctors. He also said “innovation” would be able to save the state money.

Questioning by Sen. Jill Schupp, a St. Louis County Democrat and committee member, prompted Sater to acknowledge that not all parts of the current MO HealthNet program are bad.

“This will just give the state of Missouri the opportunity to do this innovation to make this program more efficient,” Sater said.

When Schupp pressed him on what he meant by “innovation,” Sater said he had some “ideas in mind” but did not say what.

In an interview with the News-Leader on Thursday, Sater said those innovative ideas were still being developed in conjunction with the Department of Social Services, which will “be coming up with ideas to make the program more efficient.” He cited as one example the possibility of basing provider fees on health outcomes.

“If you’ve got a diabetic that’s doing better because the doctor is doing better, the doctor should be reimbursed with more money because you’re increasing health care outcomes and saving money,” Sater said. “… The devil will be in the details, I know, and it’s going to be a while until we can work out those details.”

Case study: Rhode Island

Whether Missouri could win federal approval for such a change is another question. Sater and some of the bill’s opponents agree there is precedent for a state’s use of a global waiver: Rhode Island, which had its waiver approved in January 2009. It was the only state to volunteer following a call from George W. Bush’s administration, and waiver negotiations were accelerated during the last year of Bush’s second term, according to researchers at the University of Massachusetts Boston.

The small Northeastern state had a Republican governor who pushed for the waiver as a way to do away with the required state match and thus cut costs. Similar fears of a ballooning Medicaid budget are evident in Missouri.

Sater told the News-Leader that cutting Medicaid costs might be necessary to preserve funding for higher education.

A 2013 study by the State Health Access Data Assistance Center (SHADAC) — run by the University of Minnesota and funded by the Robert Wood Johnson Foundation — looks at the pros and cons of switching to a block grant system and uses Rhode Island as a case study. When it switched, Rhode Island’s Medicaid program cost $800 million (almost a quarter of the Ocean State’s budget) and more than 20 percent of the state’s population was enrolled.

Proponents of block grants say state governments are better positioned to operate and experiment with Medicaid programs than the federal government and that block grants allow the federal government more certainty in knowing how much it spends annually, according to SHADAC.

But opponents say transforming Medicaid into a block grant program creates risk and uncertainty for states, “which would be on the hook for unanticipated Medicaid cost increases — such as those resulting from recession-related enrollment growth — after their block grant allocations are depleted,” SHADAC’s report says, adding that states might allow more wiggle room in their benefit standards, creating a “race to the bottom.”

Rhode Island’s waiver did not actually constitute a block grant, the report found, because the state still had to “spend the first dollar” and continued using a federal match program — capped at $12.1 billion over five years. While the waiver gave Rhode Island more flexibility in some areas, “block grants, on the other hand, would allow increased flexibility across the entire span of a state’s Medicaid program.” And Rhode Island’s waiver was for five years, whereas “block grants are generally permanent with no state option to revert back to regular Medicaid,” the report found.

Rhode Island did spend less money during the first two years after receiving its global waiver — about $66 million less — but those savings weren’t necessarily because of the waiver. And problems involved with the waiver included a lack of transparency during its development and insufficient state resources to implement the waiver and evaluate its progress, according to SHADAC.

“Like Medicaid block grants, however, Rhode Island’s Global Waiver was promoted as an efficient way to specifically target the needs of the state’s population,” the SHADAC report concludes. “Yet key informants reported that state officials have largely focused on relieving the burden on the state treasury with significant programmatic improvement remaining elusive.”

The UMass Boston report included similar conclusions about few details being released to the public prior to the waiver’s implementation and also cited a lack of resources.

A report by the Center on Budget and Policy Priorities also concludes that Rhode Island’s global waiver foray, which the state has decided to continue with a second five-year extension, was not an accurate representation of block-granting Medicaid.

“Those who tout the Rhode Island waiver as a model for other states have also exaggerated the state savings that Rhode Island secured under the waiver,” the second report says. “First, they have misleadingly counted savings to the state that resulted from the infusion of added federal Medicaid funding under the Recovery Act as though those savings were due to the Rhode Island waiver.

“Second, they have failed to acknowledge that the cost-containment measures which the state instituted under the waiver could have been instituted without capping Medicaid funding; other states can — and many have — instituted similar measures without a ‘global waiver’ like Rhode Island’s.”

Concerned opponents

Karen Burnell Ruff, director of public policy for the Southwest Center for Independent Living, which advocates for people with disabilities, cautioned against “rambunctious” lawmaking before the fate of health care law is determined at the federal level.

Ruff was concerned by Sater’s lack of specificity as well as the unfortunate possibility of Missouri running out of its block-grant funding. If that happens, Ruff wonders what would happen to people who still require care under Medicaid for which Missouri would not receive federal funding. “Is the state on the hook, or do we put them on a waiting list?”

It’s unclear whether there would be such a list. But if that ends up being the case, Ruff further asks: “Who prioritizes who’s most important at that time?”

“It is such a risk that right now would not be a time to be gambling with the people of Missouri that really rely on Medicaid with their health care needs,” she said.

Ruff counted 10 people who testified Tuesday against Sater’s bill. First among them was Sidney Watson, a St. Louis University law professor whose expertise includes teaching about Medicaid.

Watson said the bill unnecessarily “ties the state’s hands financially” and included unclear language. She and Ruff agree that Rhode Island’s global waiver experiment has not worked and said a global waiver program would limit the amount of money Missouri would receive in the event of unexpected surges in enrollment.

Also testifying was Wayne Lee, a self-proclaimed advocate for people with disabilities, who told the committee he once experienced 29 seizures in one day. “If this bill passes, it’s going to be very, very dangerous for those people.”

Lee said afterward he is covered by Medicaid and Medicare and fears that he’ll lose access to his neurologist if the bill passes. He also said that if Missouri’s health care was paid for in federal block grants, the state would end up setting limits on the amount of care it could provide.

“Once that’s used up, it’s over with,” Lee said. “You don’t get any more from the feds.”

The Senate committee has not yet voted on the bill. A companion bill has been filed in the House by Rep. Scott Fitzpatrick, a Shell Knob Republican and chair of the House Budget Committee, but that bill has not yet been referred to a committee.

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