Medicaid Updates: Regulations, Guidance and Litigation

The last several weeks saw a number of Medicaid policy-related developments. In our round-up below, we share key takeaways from each.

Centers for Medicare and Medicaid Services Block Grant Guidance

As we shared in our newsletter last month, CMS recently released a State Medicaid Director Letter with long-awaited guidance on Medicaid block grants. Earlier this month, in a follow-up to that breaking news alert, we posted a fact sheet outlining the Healthy Adult Opportunity (HAO) guidance.

The guidance provides that, in exchange for receiving block grant funding—limited to an annual aggregate cap or a per-capita cap that takes into account enrollment changes, rather than funding dependent on program cost—states are entitled to additional flexibilities relative to eligibility, benefits, cost sharing and program administration. State Medicaid Managed Care programs would also be subject to less federal oversight, and states with HAO waivers may have the opportunity to share in federal savings. The guidance also provides that, under these waivers, states may make ongoing “program adjustments” without the need for further prior approval.

HAO waivers would be provided under Section 1115(a) of the Social Security Act and apply specifically to Medicaid-eligible adults under age 65 who are not covered under their state plan (e.g., whose coverage is not based on a disability or the need for long-term care services and supports). This includes the ACA “expansion” population, as well as any parents, caretakers and pregnant women that a state chooses to cover above minimum income levels.  Like other Section 1115 Medicaid Waivers, waiver approval will be case-specific and granted if CMS determines that a state’s requested design and flexibilities support the goals of the demonstration and are likely to promote the objectives of the Medicaid program.

PCG’s fact sheet delves into key areas of the new guidance that states should be aware of as they consider this new opportunity. Click here to view it.

States Weigh in on Proposed Medicaid Fiscal Accountability Rule

Late last year, HPN shared an analysis and fact sheet regarding CMS’s proposed Medicaid Fiscal Accountability Rule. Though comments on the proposed rule were due in January, states continue to raise red flags regarding its potential impact.

As detailed in our fact sheet, the rule seeks to increase federal oversight over Medicaid supplemental payments, including those financed through Certified Public Expenditures, Disproportionate Share Hospital Payments, financing through healthcare-related taxes, and general program financing. While CMS contends that the rule would help strengthen the Medicaid program by ensuring federal dollars are being spent to support patient care, governors from across the political spectrum warn that the changes could cause states to make cuts to their Medicaid programs. Medicaid providers are also raising the alarm about the rule’s ramifications.

CMS says that it has received nearly 4,000 comments on the proposal. Health Policy News will continue monitoring its development and share updates with our readers as they are released.

CMS Releases a Proposed Rule on the Preadmissions Screening and Resident Review (PASRR) Program

Just last week, CMS issued yet another Medicaid rule, this one related to the PASRR program. The PASRR program seeks to ensure that individuals are not inappropriately placed in nursing facilities for long-term care by requiring that Medicaid-certified nursing facilities:

  • Evaluate individuals for serious mental issues and / intellectual disabilities;
  • Ensure individuals are placed in the most appropriate setting (community, nursing facility or acute care); and
  • Provide individuals with the services they need.

The new rule aims to modernize the program’s requirements. In addition to incorporating statutory changes, the rule includes updates related to the diagnosis of mental illness and intellectual disabilities and seeks to streamline administrative requirements on state PASRR programs. Comments on the proposed rule are due on April 20, 2020.

Appeals Court Issues Another Ruling Against the Arkansas Work Requirement

Also this month, the United State Court of Appeals for the D.C. Circuit issued its decision in the Gresham v Azar case challenging Arkansas’ work requirement for Medicaid eligibility. With a number of states pursuing work requirements with encouragement from CMS, as well as extensive reporting on the coverage attrition that resulted from Arkansas implementing a work requirement, all eyes have been on related lawsuits.

In a unanimous opinion, the three-judge panel affirmed the District Court ruling against the work requirement, finding CMS’s approval of it arbitrary and capricious—based on CMS’s lack of consideration for the impact on Medicaid’s core objective of insuring eligible individuals.

While notable, this decision does not make work requirements invalid as a matter of law; instead, it speaks to the process of waiver approval. CMS must now decide if it will seek a review of the case by the full D.C. Circuit or appeal to the Supreme Court. While CMS’s next steps remain undecided, the President’s proposed 2021 budget seeks to amend the Social Security Act to institute a federal work requirement.

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