One of the many questions I have asked myself since passage of the Patient Protection and Affordable Care Act is what the role of Section 1115 waivers will be come 2014 when the major provisions of PPACA are implemented. In the past, Section 1115 waivers have sometimes been used to expand coverage to groups previously not eligible for Medicaid (think childless adults) and/or to change the delivery system and benefits package (usually limits that Medicaid doesn’t allow). The state of Utah, for example, is using a Section 1115 waiver to establish its Primary Care Network or “PCN” program which offers a very limited benefits package (no inpatient or specialist care) to childless adults and parents not otherwise eligible for Medicaid. States also used CHIP waivers to cover parents and other adults with extra CHIP funds, but Congress shut that down when CHIPRA was reauthorized. In general, the federal Secretary of Health and Human Services has broad discretion to waive provisions of the Medicaid law, although how broad that discretion is has been a matter of dispute.
PPACA does not change the provisions of Section 1115 (with a few notable exceptions I will talk about it in a minute) so states will still have the option to come in and request that many provisions of the Medicaid law be waived. But will they do so given the new environment in 2014 when states must cover all adults below 133%FPL, will receive a very favorable matching rateto do so and will have new flexibility with respect to the benefits package? Will states that are currently expressing resistance to features of the new law look to waivers as a way to get around them??? That is a key question which it is hard to predict the answer to.
One option states looking for flexibility in the new world may consider, but that is not a waiver, was included in the bill by Sen. Cantwell (D-WA) and developed to accommodate the continuation of a program like the state of Washington’s Basic Health Plan. These provisions are found in Section 1331 of the new law and allow states to receive 95% of the federal premium tax credits that would have flowed to eligible individuals in their state between 133-200%FPL and who are not eligible for Medicaid. States must then contract with more than one plan to offer a benefits package that is at least good as the essential health benefits package offered in the exchange and with cost-sharing that is no higher than cost-sharing required under a “platinum” plan (for people under 150%FPL) and no higher than cost-sharing in a “gold” plan for people between 150-200% FPL. Since states are subject to a maintenance of effort requirement for children until 2019, this option would only apply to adults in most states where kids today are covered at 200%FPL or above. But one question is whether a state might seek a waiver of that provision to allow families to be covered together through a Basic Health program such as that contemplated by Section 1331 of PPACA. This might have some benefits such as covering families together and possibly charging a higher percentage of the costs to the feds. However important questions would have to be examined on the benefits and cost-sharing side to make sure that kids still had comparable coverage.
Another new feature of PPACA is Section 1332, which establishes a new Waiver for State Innovation. This provision, championed by Sen. Wyden (D-OR) does establish new waiver authority that is broader than Section 1115 authority and would allow states to waive the provisions of the new law related to exchanges, benefits and cost-sharing protections A state could apply for this new waiver through a new coordinated process with a Section 1115 Medicaid and/or CHIP waiver. Coverage provided must be at least as comprehensive and cost-sharing must be at least as affordable as it would have been under the exchanges.
This new waiver awaits more detail in guidance, but one critical note is that it is not a tool available to states until plan years beginning January 1, 2017. So this will not be an option for states to bypass the main features of health reform before it even gets started.
Much of the current waiver activity is about renewing existing waivers (typically three years which will bring some states right to 2014) and/or extending managed care to people with disabilities. But please let us know if you hear about any new major waiver ideas your state is contemplating. This one bears watching.
Tune in for Part 2 which will focus on the new rules we are expecting on public participation in the waiver process.
