State Medicaid Programs Look to Future, Despite Uncertainty

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Victoria Pelham

State Medicaid directors say they have been held back amid deep health-care uncertainty in recent months. But even though no fundamental reforms went through at the federal level, states are still planning strategies for the new fiscal year to improve the safety-net health insurance program on their own, from boosting long-term services and better coordinating care to fighting back against the deadly opioid epidemic.

“[We’re at a] fulcrum point where we’ve made a lot of progress, but we want to have the resources and wherewithal to build on that,” Kate McEvoy, director of the health services division at the Connecticut Department of Social Services, said at a Kaiser Family Foundation briefing.

Program leaders reported in a 50-state survey released by the group Oct. 19 on efforts to move toward more quality-driven models within Medicaid, such as integrating physical and behavioral health, growing managed care, and increasing use of accountable care organizations. They also saw the opioid crisis as a key priority for Medicaid in fiscal 2018, with several states looking to cover residential substance abuse care.

“It’s an [all-encompassing] effort to essentially say to the entirety of the health-care system that it’s time to change the business model,” Matt Salo, head of the National Association of Medicaid Directors, told Bloomberg Law.

Obamacare repeal-and-replace debates, which included drastic changes to cap Medicaid’s federal financing, hit a standstill at the end of September, when Republicans failed to pass a plan. But efforts to change the program could continue through Section 1115 state waivers under consideration, which would add in beneficiary cost-sharing and work requirements, or future proposals. GOP lawmakers seeking to overhaul the $550 billion-and-growing program have complained about the sustainability of its costs. Medicaid’s federal price tag is expected to reach $624 billion by 2026, according to Congressional Budget Office projections.

Addressing Medicaid’s Cost Drivers

A separate companion Oct. 19 Kaiser Family Foundation report showed Medicaid enrollment growth declined while spending growth remained “stable” in fiscal 2017. But states expected that spending to jump in fiscal 2018 by 5.2 percent, citing expensive prescription drugs and increased payments for some providers.

Senate lawmakers Oct. 18 approved a budget resolution amendment from Finance Committee Chairman Orrin Hatch (R-Utah) that would create a reserve fund for future bills to “strengthen and improve Medicaid,” according to a committee statement. The measure was approved 89-9.

“Put simply, we need to address the fiscal challenges facing [Medicare and Medicaid] if we’re going to preserve them for future generations,” Hatch said on the Senate floor, according to the statement.

“We’re trying to focus on the issues really driving cost,” Salo said of state-level overhaul efforts.

That includes focusing on those groups who represent a small fraction of beneficiaries but eat up large chunks of the spending, such as people in need of long-term services and supports, those battling both mental health and substance abuse disorders, the opioid crisis as a whole, and people who qualify for both Medicaid and Medicare safety nets.

There isn’t a single one-size-fits-all solution, Salo added.

“States are trying to say we need to be doing something very, very different than we have traditionally,” he said.

In long-term care, every state is growing community-based services in fiscal 2018, according to the Kaiser report. The majority are using home and community-based services waivers or state plan amendments, but others are also looking to grow their Programs of All-Inclusive Care for the Elderly, which offer coordinated noninstitutionalized care to vulnerable seniors. And 17 states in fiscal 2018 are realigning incentives into managed care long-term services and supports.

Wisconsin sees long-term care as an ongoing challenge placing financial strain on the state’s Medicaid program, the state’s Medicaid director, Michael Heifetz, said at the KFF briefing.

“Demographics are not going in the right direction for us,” Heifetz said. The state doesn’t have much growth and most seniors who retire stay in-state, he said.

Managed Care Quality

Care delivery and managed care quality are other areas Medicaid programs are closely eyeing.

Nearly every state that has adopted a managed care system had a quality initiative in place in fiscal 2017, according to the Kaiser survey findings. Eleven states were planning to implement more efforts on this in fiscal 2018, such as financial benefits or penalties to providers centered on health outcomes and required data collection and reporting.

And almost half of states are staging new efforts to overhaul Medicaid’s delivery system through things like health homes, ACOs, and patient-centered medical homes.

Connecticut’s McEvoy said addressing the whole person and socioeconomic factors that affect health, like transportation, food security, or housing, would lead to better outcomes and lower costs and is a crucial part of her state’s strategy.

Heifetz said his state needs to “push managed care [companies] a little more aggressively on the quality and metrics side” and to create more “far-reaching” metrics within care coordination.

Continued Uncertainty

Salo said state Medicaid programs have been in a “perpetual” place of worrying for the past year over sweeping health-care plans like Affordable Care Act repeal-and-replace, per-enrollee caps on federal Medicaid spending, or what will happen to the Medicaid expansion.

Meanwhile, the move toward value-based care that Medicaid is trying to take is comprehensive and difficult to undertake, he said.

“There’s no question states need a steady partner at the federal level to be able to really accomplish this well,” he added.

“When states don’t really know what the near future—to say nothing of distant future—looks like, it definitely slows the pace of some of those efforts down,” Salo said.

And those questions could continue for quite some time. It’s unclear if the debate will return later in 2018 or 2019.

“But what that means is states are going to have to acknowledge there is going to be this new factor of some level of uncertainty as to the federal future and work within it,” Salo said.

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

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

For More Information

The 50-state survey is at

The companion report on growth in Medicaid enrollment is at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law