Republican Legislative Proposal Aims to Adopt Per Capita Cap for Medicaid
May 16, 2013 04:15 PM
On May 7, Representative Bill Cassidy, M.D. (R-LA) introduced the Medicaid Accountability and Care Act of 2013 (the MAC Act) - H.R. 1853. The bill calls for a modernization of Medicaid financing through controlled spending, an emphasis on value-based incentives, and fighting fraud.
Dr. Cassidy’s bill largely mirrors a Republican proposal to reform Medicaid entitled “Making Medicaid Work: Protect the Vulnerable, Offer Individualized Care, and Reduce Costs” (the Proposal). This Proposal was released on May 1, and co-authored by Representative Fred Upton (R-MI), Chairman of the House Energy and Commerce Committee, and Senator Orrin Hatch (R-UT), Ranking Member of the Senate Finance Committee. The stated goals of the Proposal are to “modernize the Medicaid program” by “equipping states to implement patient-centered reforms” and “imposing fiscal discipline in the program.”
Per Capita Cap
The key element of the Proposal is a per capita cap. Essentially, Congress would place per capita caps on the four major Medicaid beneficiary groups: aged, blind and disabled, children, and adults.
The total Medicaid allotment under this plan would be calculated by taking the number of enrollees in each of the groups, and multiplying them by the per capita amount for each of the groups, then adding these products together.
The per capita amount for each group would be based on state-specific-expenditure data. For a complete methodology of how the per capita amount is calculated, see page 14 here.
Some payments would be exempt from a per capita cap, and instead would be disbursed through separate funding streams. One such group includes payments to states for dual-eligibles, if their Medicaid expenses are limited to premiums and cost-sharing.
Existing Benefits for Disabled Maintained
The Proposal safeguards preserving benefits for the disabled, providing “a guaranteed protection of current law benefits” for this group.
Risk Corridors for Disabled Per Capita Amounts
That said, states that achieve greater efficiencies in using their Medicaid funds would be able to take advantage of a shared-savings and risk corridor model. This would also influence the state to avoid “unpredictable spending” on vulnerable populations like the disabled.
The Proposal would promote states offering premium assistance, so that beneficiaries could receive coverage similar to private insurance.
The Proposal would allow cost-sharing with less restrictions as it exists under current law, in order to promote greater value and combat over-utilization. States would be given significant latitude in developing enforcement mechanisms.
Alignment of Provider Incentives
Additionally, value-based payment models would align provider incentives, thereby increasing cooperation among specialties and settings. Namely, these providers include “hospitals, post-acute care providers, physicians, and other practitioners.”
Streamlining Section 1115 Waiver Process
Waiver Clock: The Proposal would streamline the Section 1115 waiver application process in order to promote greater efficiencies and innovative ideas from the states. Namely, the Proposal would establish strict deadlines for the federal government to respond to waiver requests: 60 days from application to send the state a final round of questions, and a final answer within 120 days of application. States would have the option to give the federal government 30-day incremental extensions in the event of “productive discussions.”
Waiver Reciprocity: Additionally, the Department of Health & Human Services (HHS) would be required to approve waivers that have been previously approved in other states, so long as the waivers met cost containment requirements.
Waiver Integrity Improvements: The CMS Office of the Actuary would be required to review and approve the budget neutrality component of the waiver applications.
Moderate Support for Existing Dual Eligible Efforts
This Proposal also supports the existing efforts to coordinate care for the dual eligibles. Specifically, payments for dual eligibles whose expenses are only cost-sharing and premiums will be exempt from a per capita cap. This is a small group compared to dual eligibles generally.
While the Proposal would transform Medicaid payment, many unknowns remain for home health providers. While the Proposal favors the alignment of provider incentives, home health providers are not explicitly mentioned as targeted providers. Home health services are also not specifically mentioned as services that would have a per capita cap.
While the Proposal explicitly guarantees that benefits for the disabled will not be cut, providers should be aware that the shared savings and risk corridor model will put increased pressure on them to enhance quality of care to the disabled population, as well as to reduce over-utilization. Stakeholders should be also aware of Congress’ bi-partisan effort to place greater emphasis on quality of care, and providers should redouble their efforts in this regard.
Other stakeholders, including the White House, disability and senior citizen advocacy groups, have expressed additional concerns. These groups have questioned if a per capita cap would shift cost burdens to the states, and limit federal contributions without achieving great positives.
Potential opportunities exist for home health providers with regard to premium assistance and waivers. Although it remains to be seen if home health services will be covered in the promoted premium assistance, premium assistance may translate to increased reimbursement that surpasses Medicaid rates. However, commercial plans may also negotiate lower rates than Medicaid, as done in the past, in order to achieve budget neutrality. Home health providers can also look forward to more reimbursement options as the Section 1115 Waiver process is streamlined.
NAHC is continuing to study the implications of a per capita cap on Medicaid and will continue to monitor the Proposal. Home health providers are encouraged to keep abreast of federal and state efforts to reform Medicaid, and to contact NAHC with any questions or concerns. NAHC urges home care and hospice advocates to ask their Members of Congress to protect access to home care and hospice for low income Medicaid beneficiaries by opposing proposals that would reduce federal Medicaid funding.
For a link to NAHC’s Legislative Action Network (LAN), as well as a link to NAHC’s Medicaid issue brief and talking points on NAHC’s LAN page, click here.
For a link to the MAC ACT, as well as a FAQ and overview, click here.
For a link to Making Medicaid Work, click here.