Gauging Effectiveness of Medicaid Waivers in Spotlight’s Glare

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By Victoria Pelham

Medicaid waivers are in the hot seat as congressional pressure mounts to ensure more transparency on how well they actually work.

The state Section 1115 demonstrations make up about one-third of the $550 billion safety-net health insurance program’s spending, according to the Government Accountability Office. And the Trump administration has placed a premium on the tool, promising a streamlined approval process for states and increased flexibility, as well as approving first-ever requirements in Indiana and Kentucky to tie Medicaid eligibility to work and community engagement.

The hotly contested waivers have sparked a National Health Law Program lawsuit and an intense debate over whether the changes move Medicaid beneficiaries toward self-sufficiency and better health outcomes or simply increase barriers to care that jeopardize the most vulnerable.

That effectiveness may be difficult to gauge though, if current measurement standards continue. The GAO found that a lack of thorough, timely, and public waiver evaluations means government officials “don’t fully know” if the state research programs are having the intended effects of curbing spending or boosting care. The government watchdog is pressing for more transparency.

“We’re just not gaining the knowledge from the research that is the justification for the exercise of 1115 power,” Sara Rosenbaum, a health policy and law professor at George Washington University, told Bloomberg Law. Rosenbaum formerly chaired the congressional advisory Medicaid and CHIP Payment and Access Commission.

Possible Government Action?

The waivers are used to test theories about the benefits of forgoing normal Medicaid regulations. If successful, health officials can then take the changes to Congress to become law, Rosenbaum said.

For example, state Medicaid waivers were used over the past two decades to implement family planning services but the services have since largely been deemed viable and no longer require a Centers for Medicare & Medicaid Services waiver.

Rosenbaum doesn’t expect Congress to act on the GAO’s push for clearer and public Section 1115 evaluations. But she does believe the nonpartisan advice could sway Trump administration officials.

“I certainly think we may find more attention paid by the administration to evaluation and to ensuring that evaluation is an integral part of the demonstration—before it ever gets underway and results are published,” she said.

Lawmakers Push for Accountability

“Timely, independent, and transparent Medicaid waiver evaluations are key” to making sure Medicaid is meeting its goals for its millions of patients, the Senate Finance Committee’s ranking Democrat, Ron Wyden (D-Ore.), told Bloomberg Law in a statement.

“In light of recent steps by the Trump Administration to promote and approve harmful waivers that violate the letter and intent of Medicaid, it’s even more important to gather and release data on the negative impact these types of policies have on vulnerable families,” he said.

Wyden and the House Energy and Commerce Committee’s ranking Democrat, Rep. Frank Pallone Jr. (D-N.J.), asked the watchdog in January to review the “public transparency of major changes” the CMS had approved, noting the program’s role in covering more than 74 million people.

The lawmakers pushed for details on the CMS’s policies and procedures for evaluating the waivers throughout the demonstration projects, sharing of state data on the effects of proposed changes, state and federal documentation for evaluation and incorporating public feedback into a waiver’s approval, and transparency of all waiver and waiver amendment approvals.

A House committee aide told Bloomberg Law that stronger, data-driven waiver assessments would home in on effective state Medicaid practices and boost accountability over Medicaid spending for beneficiaries, and taxpayers.

Many states also used Medicaid waivers to expand their Medicaid programs under Obamacare.

This watchdog review came in response to a request from Senate Finance Chairman Orrin Hatch (R-Utah), separate from the Pallone-Wyden request, and is based on 2015 data, according to a Finance Committee staff member.

“While states need flexibility to administer their Medicaid programs, taxpayers should have the confidence that their federal dollars are spent on programs that work—especially since nearly one-third of Medicaid operates through waivers,” Hatch told Bloomberg Law in a statement.

The GAO findings “illustrates the need for robust Medicaid data and improved evaluations that focus on outcomes and provide lessons for future spending,” he said.

Future Medicaid Tests

The GAO in its report noted gaps in waiver evaluations from Arizona, Arkansas, and Massachusetts that included leaving out some measures of access and quality in a managed long-term care demonstration, not deciding whether quality incentive payments had affected care or cost, and not looking at a “key” idea that using Medicaid dollars to buy private insurance would boost continuity of coverage.

The watchdog partially blamed the CMS for requiring evaluation reports only after the demonstrations had expired, instead of at the end of each three- to five-year waiver. The report also found the agency had “taken a number of steps... to improve the quality,” including proposing in 2017 to change that due date to the end of each demonstration cycle for all waivers.

The Trump administration hasn’t finalized those changes.

The CMS also has said it will allow more limited evaluations in certain cases, like a “longstanding or noncomplex waiver.”

The government watchdog wants the agency to produce new written rules for implementing agency policy on state final evaluation reports, written criteria for when CMS will allow the looser evaluation standards, and public release of findings from demonstration evaluations (both interim and final) with standards for “timely release.” Without that public release, they’re “missing opportunities” to inform larger Medicaid policy discussions, the report said.

Officials Revising Evaluation Policy

A Medicaid agency spokesman told Bloomberg Law the CMS had improved monitoring of the demonstrations and that the agency is working on processes and procedures to implement the changes consistently and strictly define longstanding waivers that the agency would deem successful.

Rosenbaum said the pressure could extend to the types of designs a state uses to test Medicaid waivers’ effectiveness going forward.

The demonstrations should take into consideration whether a mandate can actually be implemented, if counties are being exempted, or whether a third party is often paying a Medicaid beneficiary’s required premiums to decide the effects of imposing them, she said. Indiana’s waiver, for example, requires cost sharing.

Twenty-four Medicaid waivers are pending across 23 states, according to the Kaiser Family Foundation.

Many of them contain politically conservative elements such as cost sharing, work requirements, and lockout periods.

To contact the reporter on this story: Victoria Pelham in Washington at

To contact the editor responsible for this story: Brian Broderick at

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