With 12 days to go, the Trump administration on Friday approved a long-standing conservative goal: to issue state Medicaid funding in the form of a capped block grant.
The structural experiment in Tennessee, which would become effective once approved by the state legislature, would last 10 years. Block grants for Medicaid have been a priority for Seema Verma, the administrator of the Centers for Medicare and Medicaid Services and a former consultant who has helped states draft waiver requests.
“What we’ve tried to do is take some of what we thought were some of the wins, some of the positive things about block grants that people have been talking about for years,” Ms. Verma said. “And we’ve tried to review and respond to some of the criticisms.”
Tennessee patient advocates, who fear the new structure will cause the poor to lose access to health care, say they are planning a court challenge, and the Biden administration will almost certainly seek to reverse it when it is will take over the Department of Health and Social Services. .
But last week the Trump administration tried to slow down the reversal of its Medicaid experiences. Traditionally, these waivers are agreements between the HHS and the states that can be broken with minimal hassle. But Ms. Verma has sent letters to state Medicaid directors, asking them to sign, “as soon as possible,” new contracts that detail more elaborate processes to end the waivers. Under the terms of the contract, the federal agency agrees not to end a waiver with less than nine months notice.
“It’s so blatant,” said Joan Alker, executive director of the Georgetown Center for Children and Families. “She’s trying to handcuff the Biden administration.”
Ms Verma said contracts were a way to ensure that waivers were only revoked if they were detrimental. “We want to make sure that people don’t take office and, on a political whim, end the waivers,” she said.
The waiver allows Tennessee, one of the twelve states that have not adopted the expansion of Medicaid under Obamacare, to abandon the normal structure of the Medicaid program. Within this structure, the federal government establishes detailed rules to determine who should be covered and what benefits they are offered in return for an unlimited commitment to pay a share of Medicaid patient bills. Tennessee would have new freedom to change the services covered by its program, but its annual funding would be capped according to a formula.
If Tennessee spends less than the block grant amount, it will be allowed to keep 55% of the savings to be spent on a wide range of “health” related services. If he spends more, the difference will have to be made up with public funds. The waiver sets certain limits on what aspects of the program can be changed and would allow the spending limit to increase if more people enrolled in Medicaid, as typically happens in times of economic downturn.
A key area of flexibility in the waiver concerns prescription drugs. Generally, Medicaid should cover a wide variety of drugs, but it is guaranteed to pay the lowest price of any buyer in the United States. Tennessee will be allowed to renegotiate prices with drug manufacturers and may refuse to cover drugs if it deems the prices too high. Massachusetts had submitted a waiver requesting a similar authority without a broader block grant, and it was denied.
In Tennessee, doctors and hospital groups, among others, have criticized the proposal. “The vast majority of comments received by CMS opposed the demonstration proposed by Tennessee,” notes the approval document.
Gov. Bill Lee, a Republican, called the program a “legacy.”
“We have shown that a partnership is a better model than dependency,” he told reporters.
The waivers were a centerpiece of Ms. Verma’s tenure at Medicaid. In addition to the Tennessee block grant waiver, it has approved Medicaid work requirements for certain adults in 12 states. Federal courts have repeatedly overturned these waivers, and few of them are in effect.
Michele Johnson, executive director of the Tennessee Justice Center, a legal aid group that helps poor Tennessians, said she was trying to encourage lawmakers to reject the waiver. A block grant, which she has consistently opposed, fits particularly poorly with a public health crisis, she said, in which health spending could accelerate in unusual ways. “The only way it makes sense is in the context of the Trump administration burning while walking out the door,” she said.
She also noted a history of challenges the state has faced in managing its more traditional Medicaid program. “It’s hard to imagine a state that would be more suited to a block grant than ours,” she said.
Sheryl Gay Stolberg contributed reporting.