12 days to go, the Trump administration approved a long-conservative goal on Friday: to issue a state’s Medicaid funding as a block grant with a spending cap.
The structural experiment in Tennessee, which would go into effect after legislative approval, would take 10 years. Block grants to Medicaid were a priority for Seema Verma, the administrator of the Centers for Medicare and Medicaid Services and a former advisor who helped states write exemption requests.
“We tried to get some of the successes that we thought were some of the positive things about block grants that people have been talking about for years,” Ms. Verma said. “And we tried to address some of the criticisms.”
Patient advocates in Tennessee, concerned that the new structure would result in poor people losing access to health care, are planning a lawsuit, and the Biden administration will almost certainly try to reverse this if they get the Department of Health and takes over human services.
But over the past week the Trump administration has tried to slow the reverse of its Medicaid experiments. Traditionally, such exemptions are agreements between HHS and states that can be severed with minimal effort. But Ms. Verma has sent letters to Medicaid state directors asking them “as soon as possible” to sign new contracts outlining more detailed procedures for terminating exemptions. Under the terms of the contract, the federal agency undertakes not to terminate a waiver with less than nine months’ notice.
“It’s so obvious,” said Joan Alker, executive director of the Georgetown Center for Children and Families. “She’s trying to handcuff the Biden administration.”
Ms Verma said the treaties are a way to ensure that exceptions are only revoked if they are harmful. “We want to make sure that people don’t get into office and end waivers on a political whim,” she said.
The waiver allows Tennessee, one of a dozen states that have not adopted the Medicaid extension under Obamacare, to abandon the normal structure of the Medicaid program. In this structure, the federal government lays down detailed rules about who must be covered and what services are offered to them in exchange for an indefinite obligation to pay part of the bills of Medicaid patients. Tennessee would be given new freedom to change what services its program covers, but its funding would be capped on a formula each year.
When Tennessee spends less than the block grant amount, 55 percent of the savings can be spent on a wide range of health-related services. If it spends more, the difference must be made up with government funds. The waiver places some restrictions on the aspects of the program that can be changed and would allow the spending cap to be increased as more people are enrolled with Medicaid, as would normally be the case in an economic downturn.
A key area of flexibility in the exemption concerns prescription drugs. In general, Medicaid has to cover a wide variety of medications, but is guaranteed to pay the lowest price of any US buyer. Tennessee is allowed to renegotiate prices with drug companies and may decline drug coverage if it considers prices too high. Massachusetts filed a waiver requesting a similar agency without a broader block grant, and that was denied.
In Tennessee, doctors and hospital groups, among others, have criticized the proposal. “The vast majority of comments CMS received were against Tennessee’s proposed demonstration,” the approval document said.
Governor Bill Lee, a Republican, described the program as a “legacy achievement”.
“We have shown that partnership is a better model than dependency,” he told reporters.
Waiver statements were a core part of Ms. Verma’s tenure with the Medicaid agency. In addition to the Tennessee Block Grant Waiver, she has approved Medicaid’s work requirements for certain adults in 12 states. Federal courts have repeatedly repealed these exemptions, and few of them are in force.
Michele Johnson, executive director of the Tennessee Justice Center, a legal aid group that helps poor Tennesseans, said she was trying to encourage lawmakers to oppose the waiver. A block grant she has always turned down fits particularly well with a public health crisis where health spending could accelerate in unusual ways. “The only way this makes sense is for the Trump administration to burn everything down on the way to the door,” she said.
She also noted a history of challenges the state faced in running its more traditional Medicaid program. “It is hard to imagine that a state would be less suitable for a block grant than ours,” she said.
Sheryl Gay Stolberg contributed to the coverage.