This is a periodic update the National Council will be providing on state Deficit Reduction Act (DRA) and waiver activity. If your state is in the process of discussing changes to its Medicaid program under the DRA or by a waiver, we would like to hear from you. Your experiences can help other National Council members, and the National Council can be a valuable resource as different reforms are considered. Please contact Tammy Seltzer for assistance or to report on activity.

On December 6, 2007, the Florida Agency for Health Care Administration (AHCA) announced that it would not recommend expansion of the state's Medicaid reform pilot project during the 2008 legislative session. They will, however, continue to monitor the pilot project in the five counties it is currently implemented in and will provide guidance and recommendations to the Governor and Legislature in the future.  This announcement came after federal criticism in the form of a GAO letter to HHS Secretary Leavitt was released in July, 2007 and an AHCA Inspector General Report released in September, 2007.  Both of these documents are discussed below.

Background
In October 2005, the U.S. Department of Health and Human Services (HHS) approved Florida's request for a 5-year Medicaid reform pilot project.  The project requires that certain Medicaid beneficiaries participate in the demonstration project and choose from several managed care plans.  By doing so, the demonstration project encourages the insurers, who are providing the managed care plans beneficiaries choose from, to compete with each other based on benefit packages.  If Medicaid beneficiaries do not want to participate in the demonstration project, they have the option of "opting out of Medicaid" and enrolling in employer-sponsored or individual health plans. These individuals receive a premium from the state to apply towards the cost of their employer-sponsored or individual health plans and are subject to the benefit limits of these plans. 

According to a GAO letter written to HHS Secretary Leavitt, HHS also waived certain requirements; namely, certain mandatory benefits and limits on beneficiary cost sharing requirements.  HHS waived a statutory requirement that a state plan must cover inpatient and outpatient hospital services, and laboratory and X-ray services for 'mandatory populations'-certain pregnant women and 'poverty-related children' .  Due to the waiver, Florida is able to limit benefits for newly-eligible beneficiaries within the demonstration project to emergency medical services and nursing home level of care up to 30 days, pending selection of a managed care plan. The waiver also permits the state not to provide these services to beneficiaries who opt for employer-based or private/individual insurance.

HHS also waived statutory requirements that limit the level of cost-sharing imposed on beneficiaries. For example, statute prohibits states from imposing cost-sharing requirements for a variety of services, including those provided to individuals under age 18 and pregnant women. The waiver also allows the state to permit employer-based and individual plans to require higher beneficiary cost-sharing than had this requirement not been waived.

More broadly, GAO cited concern about the legality of HHS waiving these requirements.  

In an independent AHCA Inspector General report to the Secretary of AHCA, highlighted concerns included:

• The expedited time frame of the Medicaid reform pilot project resulted in many of the challenges encountered to date and that agency staffing levels were inadequate for this reform effort. 
• Performance, cost, and quality data is not available to evaluate the cost-effectiveness of the reform project.
  
• Characteristics of Medicaid that existed prior to the demonstration project, such as limited access to speciality providers, continues to persist.
  
• For most plans and Provider Service Networks, preferred drug lists and/or specific drug coverage information is not accessible on-line or through customer service phone numbers.
  
• Beneficiary subpopulations-such as individuals with severe and persistent mental illness, face unique and serious challenges in adapting to managed care.
  

From the mental health providers' perspective, many reported concerns with payment issues, complicated pre-authorization processes, and the increased administrative burden on their financial viability. One provider especially noted frustration with having to endure the pre-authorization process for clinical best practices. Providers noted concern with consumers' ability to adapt to the managed care environment and limited benefits packages-namely, a weak prescription drug benefits-and consumers' ability to adapt to the managed care environment.  

Ultimately, the decision to expand this Medicaid reform pilot project will be made in the State Legislature.  

For further information on Florida's Medicaid Reform, please see the follow-up GAO report and Georgetown's Public Policy Institute.   

Wisconsin and New Hampshire Receive Approval for Money Follows the Person Demonstrations

On October 5, the Centers for Medicare and Medicaid Services announced federal approval of the operational protocols for full implementation of Wisconsin and New Hampshire's Money Follows the Person (MFP) Rebalancing Demonstrations. Wisconsin's plan involves transitioning 1,262 individuals representing all disability groups. Although not a requirement of the MFP demonstration, Wisconsin will be including individuals with mental illness in their project.  New Hampshire plans on transitioning 339 individuals--287 elderly individuals with chronic illness, 47 with acquired brain disorders, and 5 children with chronic medical needs. New Hampshire plans on increasing the usage (by 10% every year) of person-centered planning into all of their long-term care home and community-based services with the ultimate goal of enhanced consumer choice.  Training will be provided to achieve this goal.  

Background
The MFP is a 5-year demonstration project authorized by the DRA of 2005 with an incremental appropriation of $1.75 billion between FY 2007-FY 2011. Thirty-one states have been awarded grants of various amounts. State projects vary significantly in scope. Participating states receive an enhanced Federal Match for key Medicaid services that facilitate the transition from institutions to the community.  States are then expected to reinvest savings due to the enhanced match into their long-term care systems to improve the quality of care over time.

In order to continue participation in the MFP program, states are required to achieve annual numeric benchmarks:
1) Increased State Medicaid support for home and community-based long-term care services.
2) Specify and meet a goal number of individuals transitioned into the community. 

Demonstrations states were also required to identify other benchmarks that would be used to measure the impact of the long-term care investment by the MFP program. Additionally, states must ensure that they are meeting the requirements of quality improvement and quality assurances regarding the health and welfare of participants in the demonstration project. 

The MFP demonstrations occur in two discrete phases: 1) States were granted immediate approval of a pre-implementation phase of up to 12 months. 2) Upon CMS approval of an operational protocol, States can fully implement their program and transition eligible participants. As of January 11, 2007, CMS had awarded 17 states Phase I approval. As of May 14, an additional 14 states received Phase II approval for full implementation. CMS expects to review all remaining demonstration operation protocols by May 1, 2008. 

Of states that are involved in the MFP demonstration project, the following is a list of those that include individuals with mental illness as a target population and the goal number of individuals with mental illness to be included in the program by the end of FY 2011 (based on a report from Mathematica Policy Research):

• Arkansas: 7
• California: 200
• Connecticut: 140
• District of Columbia: 100
• Delaware: 20
• Illinois: 735
• New York: 280
• North Carolina: 520
• Ohio: 61
  
• Pennsylvania: 183
• Texas: 160
• Washington: 60
• Wisconsin: 195

Texas Releases Proposal to Help Low-Income Residents Purchase Health Insurance

Recently, the Texas Department of Health and Human Services submitted a proposal to the federal government that would redistribute Medicaid funds for safety-net hospitals to help low-income residents purchase health insurance. The proposal would divert $246 million from hospitals to create the Health Opportunity Pool, which would provide sliding-scale subsidies to residents over the age of 19 so they may purchase private or employer-based insurance.  

Currently, Texas has about 5.5 million uninsured residents.  Initially, the program will target 480,000 uninsured parents and siblings of children currently enrolled in SCHIP.  

Background

In June, 2007, the Texas government created the foundation to transform the state health care system and reduce the number of uninsured.  The goals of this reform effort include better access to primary and preventive services, a focus on consumer choice, and increased flexibility in the state's ability to spend federal funds.  

The proposal submitted to the federal government says that benefit packages 'may include mental health and substance abuse services' (see pg. 17)-but does not require inclusion. It also says that the state must establish minimum standards and define a basic structure for the benefits to be offered; however, these issues are not elaborated on in the proposal.  Given that employer-based and private insurance typically does not provide rich mental health and addictions services, consumers and advocates are concerned about what mental health and addictions services will be accessible to those that need them.