What the Medicaid flexibility fight is really about

Mississippi Gov. Haley Barbour has been a key player in pushing for more Medicaid flexibility. (ROGELIO V. SOLIS)

Mississippi Gov. Haley Barbour came to Washington yesterday to discuss the Republican Governors Association new paper on Medicaid reform. The paper includes 31 policy proposals for reforming the program, which you can read here.

The policy proposals are not groundbreaking. Some have been proposed before; some exist in the Medicaid program already (I’ll get to that in a minute). Rather, the sense that I got from an hour-long briefing with Barbour is that the Medicaid debate isn’t much of a debate about Medicaid policy at all. It’s a debate over Medicaid process.

Barbour readily admitted that a number of the changes they suggest are doable right now if states get “federal permission to do them.” Take Solution #9 from the Republican Governors Association: “Allow states to invest in alternative programs that reduce hospital emergency visits and other community-based programs to reduce hospitalizations.” A list of how states are already doing this is available here.

There’s also Solution #21: “Provide states the option of rewarding individuals who participate in health promotion or disease prevention activities.” That’s happening, too: HHS recently finished taking applications for a new Medicaid Incentives for Prevention of Chronic Diseases pilot program.

Solution #27: “Engage in shared savings arrangements for dual eligible members when the state can demonstrate the Medicare program reduced costs as a result of an action by a state Medicaid program.” A demonstration project in North Carolina is doing just this.

Even one of the most contentious parts of health reform comes with at least some amount of flexibility. The reform law’s maintenance of effort provision bars states from cutting back their Medicaid population in advance of the program’s expansion in 2014. It also has a waiver provision, which allows states to pursue an exemption if facing a budget deficit. Both Arizona and Kansas have applied, with Arizona getting a sign-off on the changes that Gov. Jan Brewer wanted to make.

A lot of what Republican governors want to do, they can do and have done. What’s vexing, however, is that the federal government must sign off on nearly all of these kinds of changes. Sometimes, the federal government says no and with little explanation.

Louisiana’s Health and Hospitals Department director Bruce Greenstein vented yesterday that “States are forced to go through a process which is time-consuming, and subject to a degree of arbitrariness. It’s uncertain. That’s one of the fatal flaws of the Medicaid program today.”

This gripe with waivers is a bipartisan one: The National Governor’s Association recently called “delays of months and even years in the approval of state plans ... unacceptable.” Forbes’ Avik Roy recently pointed to a particularly vexing situation in Illinois, which hasn’t been able to implement some pretty simple and common-sense changes.

When I asked Barbour to give me an example of how the waiver process was broken, he pointed to a care coordination project his state was working on. Mississippi asked for a waiver more than a year before it would go into effect. A few months later, they learned that it would be approved — but then, later down the line, found out the payment structure they proposed didn’t get the blessing. Ultimately, though, “it got worked out,” Barbour said. Mississippi has since moved forward with the project.

The point, he says, is that “We should not have to come to Washington on bended knee and kowtow for waivers to do these kinds of things.”

But it’s hard to say that the Obama administration has stonewalled state efforts to shape their Medicaid programs. Of the 458 Medicaid waivers currently in operation, 350 of them were either created or modified within the past two years. The Government Accountability Office has actually argued, in repeated reports, that the federal government does not scrutinize closely enough the Medicaid waiver requests it receives. Many of those waivers, while not a total solution for Republican governors, have gotten them slightly closer to the Medicaid program they’d like to see.