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During the 2011 legislative session, GOP legislative leaders repeatedly called for the state to seek a waiver on Medicaid rules from the federal government. Both the Senate and House initially booked significant cost savings contingent on receiving such a waiver.

State pushes forward with Medicaid waiver

State Medicaid director David Godfrey hopes a federal waiver from Medicaid rules is in place by 2013. “A lot of those ideas were coming up to the surface during the last session, and we just thought this is a perfect vehicle and process,” he said. (Staff photo: Peter Bartz-Gallagher)

DHS officials have been quietly working on a plan to set aside federal rules governing state’s MA program

During the 2011 legislative session, GOP legislative leaders repeatedly called for the state to seek a waiver on Medicaid rules from the federal government. Both the Senate and House initially booked significant cost savings — $600 million and $300 million, respectively— contingent on receiving such a waiver in their health and human services finance bills.

Sen. David Hann, chairman of the Health and Human Services Committee, even traveled to Washington in hopes of persuading members of Minnesota’s congressional delegation to help lobby for a Medicaid waiver.

But Gov. Mark Dayton’s administration generally dismissed the proposed cost savings as unrealistic given that it would take months for the federal government to grant such a waiver (if it were even inclined to do so). Ultimately the budget deal that was negotiated last summer did not include any such savings. But the waiver proposal didn’t die. Although it received scant notice, the bill did include a directive for the Department of Human Services to move forward on seeking waivers from the federal government on Medicaid rules.

In the ensuing six months, DHS officials, led by state Medicaid director David Godfrey, have been quietly working on a proposal to submit to the Center for Medicare and Medicaid Services (CMS), the federal agency that would have to approve a waiver. The painstaking process has involved meetings with scores of stakeholders — from disability advocates to housing providers to insurance firms — to develop a blueprint for how the state’s Medicaid programs might be overhauled to make them more efficient and effective.

DHS report filed

Earlier this month DHS filed a report with the Legislature documenting the process so far. It’s the first significant step in what’s going to be a drawn-out process. If everything goes according to plan, the waiver would be in place ahead of the 2013 legislative session.

“A lot of those ideas were coming up to the surface during the last session, and we just thought this is a perfect vehicle and process,” Godfrey said. “You had the Legislature and the work of the agency itself coming together at just the right time to tackle this.”

Earlier this week Godfrey briefed Rep. Jim Abeler, chairman of the Health and Human Services Finance Committee, on the report. He has also met with Hann periodically to discuss the process. “I haven’t gotten any pushback, any sense from them that we’re heading in the wrong direction,” Godfrey said. “I’ll go and meet with any legislator that has a question about this. It’s really important to me that we’re as transparent with them as possible, that they trust our ability to go out and try to get this thing and hopefully give us that time to work on it between now and 2013.”

Abeler initially wanted to seek a global waiver that would essentially free Minnesota from any federal Medicaid rules and allow the state to operate its program as a block grant. But he is satisfied with the progress made in developing the waiver proposal. “You have to be realistic,” Abeler said. “I’m actually quite happy with it.”

But Abeler is also bewildered as to why it takes so long to receive a waiver from the federal government. “That’s the $64,000 question,” he said. “It’s just an example of how cumbersome the federal bureaucracy has gotten.”

Report offers few specifics

The 57-page report contains few specifics about how the state’s Medicaid program — known as Medical Assistance — would be altered if a waiver is granted. Instead there are primarily broad philosophical parameters that DHS will seek to incorporate as policy details are developed in the coming months. The sections on housing and work, for instance, direct that the state’s policies should “empower and encourage independence.”

“It’s general enough that’s it’s not going to cause too much angst,” said Patti Cullen, president and chief executive officer of Care Providers of Minnesota. “You can’t be against most of the concepts in this report.”

Cullen is eager to see details about how the proposed changes will affect who is eligible for programs and how costs will change. “Every time there has been a meeting, I have asked the question about the data,” she said.

Godfrey acknowledges that the proposal lacks details and could develop opposition as they are developed. “As we roll out more specifics, especially with long-term care, not everyone’s going to be happy with that,” he said. “They might seek some redress at the Legislature. I hope not. But ultimately when you’re rearranging benefits and deciding who has access to what, there’s going to be some folks perhaps who feel they’ve been left out or there are some negative consequences to them.”

There are a couple of specific changes in eligibility that were agreed to in last summer’s budget negotiations. DHS wants to add an asset test for single adults with incomes less than 75 percent of the federal poverty level, although no specifics are detailed. In addition, single adults who make more than 75 percent of the poverty threshold would need to be residents of the state for at least 180 days before becoming eligible for medical coverage.

But Godfrey isn’t optimistic that either change — both of which were pushed by GOP legislative leaders — will be approved by officials at CMS. That’s because the eligibility shifts flout maintenance-of-effort requirements included in the 2010 federal health care overhaul. “We’ll propose them anyway,” Godfrey said. “That’s something we committed to the Legislature [to do], and it’s in state law.”

Godfrey is also concerned that the state’s timeline for completing the waiver application might prove overly optimistic. DHS officials have been briefing Minnesota’s delegation about the process in hopes that they might be able to exert pressure on the federal bureaucracy to expedite the proposal. But Godfrey expresses optimism about the overall process. “Of all the terrible things that went on with the shutdown, and the stuff that passed that none of us really liked, this has been something that’s been much more of a positive thing to work on,” he said.

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