Medicaid Health Plans Join Criticism of Graham-Cassidy Bill

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By Victoria Pelham

Medicaid managed care plans are warning that the scale and timing of federal changes to Medicaid under the Graham-Cassidy bill would “dramatically” destabilize the program and threaten states’ ability to pay for care.

The health plans are joining other insurance industry interests in criticizing the health-care bill, sponsored by a group of Republican senators including Lindsey Graham (S.C.) and Bill Cassidy (La.), which could be voted on next week. Managed plans deliver care to almost three-quarters of Medicaid beneficiaries. The Senate Finance Committee plans to have a hearing on the measure Sept. 25, with a full Senate vote possible later in the week.

The measure would restructure Medicaid financing by replacing the open-ended federal match with a per-person budget, set based on costs for four populations and adjusted each year by the average price of medical care per group. That would begin in 2020. The proposal also seeks to end Obamacare’s enhanced matches for state Medicaid expansion beneficiaries and converts their financing into a block grant for states to administer.

The Medicaid Health Plans of America, in a Sept. 21 letter to Cassidy, warned that these caps go even deeper than the Senate’s Better Care Reconciliation Act—the GOP health bill that failed in the Senate this summer—and offer neither “adequate funding” for the program nor time to adjust.

Plans and states need at least three years and “preferably” five to make any transition smooth, the group said in faulting the two-year time frame.

The proposed per-enrollee ceilings are just “a starting point to a true discussion on comprehensive Medicaid reform,” held back by the too-short implementation timetable and too-small annual spending adjustment, the letter said.

Further, MHPA CEO Jeff Myers stressed that block grants don’t factor in future circumstances like state budgets during economic downturns, changes in health and demographics, and crises like hurricanes or the opioid epidemic.

This “ignores the complexity and purpose of the Medicaid program,” he wrote. The bill also punishes states that opted into the expansion, cutting funds and combining them into a block grant fund.

‘Uncertainty’ for Managed Care

In exchange for the spending ceilings, the Graham-Cassidy bill would give states more leeway to run Medicaid as each sees fit, skipping over “long and tedious” waiver processes and mandates, Bloomberg health-care analyst Brian Rye told Bloomberg BNA.

Medicaid managed care plans include Aetna, Anthem, Blue Shield of California, Centene, Cigna, Humana, Kaiser Permanente, Molina, UnitedHealthcare, and WellCare Health Plans.

“Any business community is probably not fond of uncertainty, and this is going to introduce a whole lot of uncertainty,” Rye said. “Instead of focusing lobbying efforts on Washington, D.C., you’re now going to have to pay attention to what happens in Topeka, Kansas... and Jackson, Mississippi,” Rye said.

Medicaid will become mostly a state function, he added.

“That’s a lot more complicated for them to deal with from a policy perspective,” he said.

Health plans also noted that the Medicaid expansion, which insured some 11 million Americans for the first time, promoted a more integrated, capitated approach to care that shifted state systems away from “fragmented and inefficient,” costly charity care models such as those covered by federal disproportionate share hospital dollars and other supplemental payments.

The Graham-Cassidy plan would be a “fundamental restructuring of the federal commitment to our nation’s poor,” Myers wrote.

Still, if the plan does go through, Rye said managed care plans could actually see a boon as “scrambling” state governments are faced with more responsibility and fewer dollars over the long term. That could increase demand for managed care, especially in states that opted out of Medicaid expansion that might have more to work with.

Directors Take Issue

Medicaid directors also took issue with parts of the Obamacare repeal bill, calling it “the largest intergovernmental transfer of financial risk from the federal government to the states in our country’s history” if the bill were to pass.

A Sept. 21 statement from the National Association of Medicaid Directors noted that Medicaid spending makes up about 25 percent of state budgets, so the proposed changes to federal spending on the program would affect every state.

Further, increased flexibility under the Graham-Cassidy plan wouldn’t overhaul Medicaid’s structure in a way that’s on par with the funding changes, NAMD said.

Directors support state innovation and efforts to improve Medicaid health outcomes, but these program tweaks could undermine that, they added.

They also echoed managed care plans in concerns about the bill’s timing.

Such large-scale overhauls to Medicaid would stick states with state planning and implementation tasks that can’t be “overstated,” such as infrastructure development, systems changes, and provider and managed care contracts.

This can’t be done in two years, “especially considering the apparent lack of federal funding in the bill to support these critical activities,” NAMD said. Additionally, the timing for the bill only leaves “a few legislative days left for the entire process to conclude,” leaving insufficient time for governors, Medicaid directors and other stakeholders to weigh in for the kind of “thoughtful deliberation necessary to ensure successful long-term reforms.”

If the Senate wants to pass this health-care bill under reconciliation, the deadline is the end of the fiscal year on Sept. 30.

NAMD also pointed out that the Graham-Cassidy plan wouldn’t have a full Congressional Budget Office score until after passage, calling that the “bare minimum.”

Future of the Plan

“A month ago almost everyone had given up and said health-care reform was dead,” Rye said, after the Senate plan failed. "[But] deadlines have a way of making Congress efficient... It’s sort of a now or never.”

Republicans are looking to fulfill campaign promises to repeal the Affordable Care Act and for a win that could garner political momentum, he said. There are some holdouts, however, on the Republican side, he said.

And Medicaid changes likely buoyed the Trump administration’s decision to appoint Seema Verma to head Medicaid, Rye added. Verma crafted Medicaid policy waivers for states like Indiana that required more personal responsibility elements from beneficiaries like cost sharing. Though the process has been “a lot more tedious and uncertain” than expected, Medicaid entitlement changes are still part of the Republican plan, he added.

Opposition like MHPA’s letters “are voices that are in there, but this has long been a Republican policy objective... to curtail entitlement spending.” They’ve probably always anticipated that response, he said.

Cassidy’s press office was not immediately available for comment.

But in a Sept. 13 statement on the bill’s introduction, the senator said it provided states with “resources and regulatory flexibility to innovate” and create systems that would boost coverage and cut premiums.

“This proposal removes the decisions from Washington and gives states significant latitude over how the dollars are used to best take care of the unique health care needs of the patients in each state,” the statement said.

On the other side, Sara Rosenbaum, a health policy professor with the George Washington University, called the bill a “tremendous blow” to Medicaid. Rosenbaum formerly chaired the Medicaid and CHIP Payment and Access Commission, which advises Congress on federal Medicaid policy.

The bill’s likelihood of passage is “hard to say because the bill is so much worse than the bill that came before—yet it appears to be advancing,” she told Bloomberg BNA. “So it seems that there is just such an overwhelming political push for the legislation that nobody really cares what its implications are, which is a very bad thing.”

Medicaid managed care plans said Sept. 21 they’re still open to Medicaid financing changes that address “well-founded” concerns about its cost growth.

Federal Medicaid spending is expected to reach $624 billion by 2026, according to the Congressional Budget Office.

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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