On Monday night, the Senate confirmed the nomination of Seema Verma to head the Centers for Medicare and Medicaid Services (CMS) by a 55-43 vote. Verma, as Say Ahhh! readers know, comes to CMS from Indiana where she worked for then-Gov. Mike Pence as a consultant on the state’s Healthy Indiana program.

As I expected, Verma and her boss Secretary Tom Price wasted no time announcing that they are open for business when it comes to Medicaid waivers, sending a letter to Governors late Tuesday within 24 hours of Verma’s arrival at CMS. The letter reiterates their philosophy that “States, as administrators of the program, are in the best position to assess the unique needs of their respective Medicaid-eligible populations and to drive reforms that result in better health outcomes.”

As I blogged about last week, state flexibility is not going to do the trick to implement Medicaid cuts, at least not benignly. Innovation at the state level is of course a good thing, but that can happen and does already under the current system, as our colleagues at the Center on Budget and Policy Priorities wrote about. No Governor is going to be able to wa(i)ve a magic wand and implement deep cuts in Medicaid without a lot of pain. And as the CBO analysis has laid bare, the House GOP plan to repeal ACA is not about innovation – it’s about deep cuts to Medicaid — to the tune of $880 billion over 10 years.

In any event, back to the letter – what are some of the main points?

• CMS intends to streamline the process by which states apply for state plan amendments (SPAs) and facilitate “fast-track” approval of waivers. CMS hints that its staff may expedite for approval anything that another state has already had approved. That is a big red flag for me because what if that provision hasn’t been working well in another state? Waivers are supposed to be demonstration projects that are evaluated before being replicated.
• CMS intends to conduct a full review of recently released managed care regulations. As our readers know, these rules are an important and overdue update to the world of Medicaid managed care so this raises another red flag. My colleague Tricia Brooks will soon blog about what is at stake here – and as she will note, this one will have to go through a rule-making procedure so it won’t quite happen overnight.
• No surprise here – CMS intends to “Support Innovative Approaches to Increase Employment and Community Engagement” – this issue is before CMS already with a request from Kentucky, and we can expect to see action here soon. The letter is actually a bit more vague on what CMS intends to do here, namely whether they will approve an explicit work requirement. We shall find out soon enough.
• CMS intends to encourage states to align Medicaid with private insurance, which may include promoting the use of premium assistance and keeping families together on the same plan. These are two of my favorite topics, as regular readers know, and lots of factual disconnects tend to occur in these areas. We will no doubt unpack these at a later date.
• In the interests of allegedly aligning with private insurance, CMS announced a number of possible benefit limitations and/or cost increases for Medicaid beneficiaries that they are open to, including “alternative benefit designs and cost-sharing models … with Health Savings Account-like features,” more premiums that can result in exclusion from the program if you don’t pay them, waiving the transportation benefit, raising ER copays for non-emergency use of the ER and allowing waivers of presumptive eligibility and retroactive eligibility.
• On the plus side, the letter does note that the budget neutrality requirements of waivers and the public input processes are important to maintain. Also, CMS talks about giving states more tools to address the opioid epidemic, which is helpful but is certainly reliant on a strong federal financing structure for Medicaid.

This leads me to the real key question: Will the Medicaid expansion still exist a few years from now and will deep cuts/caps to Medicaid included in the House GOP proposal be put in place? Many of the policy directions outlined in the letter to Governors have been circulating around in Verma’s work with states pursuing a conservative take on the ACA’s Medicaid expansion, like Healthy Indiana. But if expansion goes away, work requirements and other punitive measures would be irrelevant, unless there is interest in promoting work requirements for children or for seniors in nursing homes.

And if Medicaid’s financing structure is capped, all waivers will likely fall under that cap – over and above current budget neutrality requirements. So again, the likelihood that states can innovate and drive better outcomes is slim to none. But the likelihood that all states will be faced with very tough choices of where to cut is high. Let’s hope that that is not the path this flexibility initiative actually travels down.