Cassville lawmaker’s bill poses changes on how Medicaid is financed

March 07--JEFFERSON CITY, Mo. -- With the governor making cuts to balance the Missouri budget, Sen. David Sater, R-Cassville, was looking for a way to shake up one of the biggest drains on the state's finances: Medicaid.

His bill, slated to be discussed by the full Senate this week, would ask the Department of Social Services to apply for a "global health waiver" that would allow the state to make changes to the state's Medicaid program, MO HealthNet, without going through the Centers of Medicare and Medicaid Services' "lengthy" approval process.

"This is a global waiver, which means we would go in and redo everything," Sater said, adding it would untie the state's hands.

If the waiver was granted by the CMS, MO HealthNet would not be funded through ongoing, unlimited reimbursement of services but rather through a set amount of funds based on the number of enrollees, known as per capita block grants. The state would still have to match some of the funds, Sater said. Currently, for every dollar the state spends on Medicaid, the federal government matches it with $1.72.

During a recession that drives Medicaid enrollment, states would have to find a way to make up for the difference if the block grant runs out, which could lead to the use of more state funding or cuts to services, according to the nonprofit advocacy organization Missouri Budget Project. Right now, the state pays for 17 percent of Medicaid spending; the federal government and a provider tax, namely paid by hospitals, pay for rest.

Last budget year, the state spent about $1.35 billion on MO HealthNet. According to the CMS, participation in the entitlement program, mainly by children through Children's Health Insurance Program, jumped about 16 percent from August 2013 to December 2016. Though several states chose to expand Medicaid to receive more federal funding made available through the Affordable Care Act, Missouri did not loosen its eligibility requirements.

"(The cost) will continue to go up unless we do something," Sater said. "If we spend more money on Medicaid, we have to get it from somewhere, and this year it looks like higher education."

Gov. Eric Greitens withheld $146 million from this year's budget and has recommended about $572 million in cuts for next year's budget. Higher education took the biggest hit. A budget recommendation to cut in-home health care funding to 21,000 elderly and disabled Medicaid recipients to save the state $50 million was reversed by Greitens after it was initially proposed.

Sater said that by having a global health waiver, the state could shift more funds to programs that need it -- such as specialists like dentists -- and then save money by cutting other programs, such as in-home care that pays relatives to assist Medicaid patients.

"I just want the freedom for us to go in and make the program better without having to go to CMS for approval every time," Sater said.

State-run Medicaid programs have to apply for a waiver, through Section 1115 of the Social Security Act, to make changes to their programs. Once approved, the waiver usually only needs to be renewed every five years, according to the Kaiser Commission on Medicaid and the Uninsured. Several states were granted Section 1115 waivers to expand Medicaid coverage once the Affordable Care Act passed.

The idea of the flexibility a global health waiver would provide first drew support in the Missouri Hospital Association, according to Dave Dillon, its vice president of media relations. The association said it wants to implement some of the innovations in the Medicaid program, such as finding ways to better care for "super-utilizers" so that they don't have to make as many hospital visits. Innovations would be driven through big data and modeling, Dillon said.

However, as Sater changed his bill to mandate a block grant system, the association dropped its support. It has lobbied for an expansion for Medicaid, and less resources for hospitals to train and invest in better care would lead to bigger costs in the long run, Dillon said. Also, possible changes to eligibility requirements might not necessarily mean a drop in state spending.

"Those high-value people, no matter what happens, will likely still be in the system," Dillon said, adding that effective health care is the one of the best ways to diminish costs.

Most importantly, the health care landscape is "in flux," Dillon said. The Missouri Hospital Association has found that if the Affordable Care Act is repealed, 252,000 Missourians would lose coverage and hospitals could lose up to $9 billion over 10 years. Southwest Missouri hospitals could see a $1.3 billion loss in the same time period.

"We may be hours, weeks, and months away from a repeal (of the Affordable Care Act)," Dillon said.

Almost as if to emphasize his point, Republicans in the U.S. House introduced draft legislation to replace the Affordable Care Act an hour after Dillon's words. Initial reporting said the new plan would shift funding toward set grants based on enrollees, according to The Associated Press.

The results of states with similar financing structures, such as the ones in Vermont and Rhode Island, can't be relied on if the fundamentals of health care are shifted with new congressional mandates, Dillon said.

Sater said the introduction of federal legislation does not impede his desire to see state legislation passed.

"The (application) is probably going to take at least two years," he said. "Because of the severity of our financial situation, I want to be leading instead of following on this."

Bottom line

"All this bill does is just tell the Department of Social Services that we want a waiver so that our hands won't be tied, and we can formulate a Medicaid program that's best for citizens," Sen. David Sater, R-Cassville, said.

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