The CMS Administrator Talks to Medicaid Directors About Humility in Government

Portrait of a displeased young girl gesturing thumbs down at the

Two years ago, CMS Administrator Seema Verma gave a major policy address to the  National Association of Medicaid Directors (NAMD) at which she outlined her agenda for Medicaid.  She invoked Hubert Humphrey and Lyndon Johnson on the moral imperative of meeting the needs of the poor.  She promised to give states more flexibility by, among other things, approving “proposals that promote community engagement activities” and rolling back “burdensome regulations that the federal government has imposed on the states.”  To accompany this “new era of flexibility” she called for a “new era of accountability,” announcing a state-by-state Medicaid and CHIP Scorecard.  And finally, she emphasized the need for what she framed as program integrity: “we will work with you to ensure that…our eligibility determinations are accurate and consistent with federal policies.”

The Administrator returned to NAMD last week to give another major address.  So how’s it been going?  And where is it going?

On the quote front, Lyndon Johnson made the cut again, but Hubert Humphrey was bounced in favor of Mahatma Gandhi: “The true measure of any society can be found in how it treats its most vulnerable members.”  Unassailable and, given the Administrator’s reluctance to hit the pause button on the Arkansas work requirements waiver even though more than 18,000 adults had lost their health insurance, more than a little ironic.

The Administrator also announced that CMS is “initiating a new era of humility on the part of the federal government.”  In her view, humility is necessary to avoid more  “massive missteps” by “government” such as Obamacare and Medicare “price setting.” She may be the Administrator of one of the most powerful agencies in the federal government, but she is not a fan.

On flexibility:  The Administrator noted that she had approved “10 community engagement programs”—generally known as work requirement waivers—and that 10 more proposals are under review.  She did not acknowledge that a federal court judge had invalidated three of these approvals—Arkansas, Kentucky (twice), and New Hampshire; that Arizona and Indiana had suspended their approved work requirements; and that, as a result of the off-year elections the previous week, Kentucky and Virginia were likely to withdraw their work requirement approvals.  Which leaves exactly one work requirement waiver—Michigan’s—operational at this point.

One out of nine approved, one out of twenty proposed.  That seems like cause for at least a little humility.  But in the face of this track record, the Administrator elected to attack the beneficiaries who had the temerity to challenge the waiver approvals in federal court, accusing them of “weaponize[ing] the legal system against state innovation” through “under-handed tactics.”  The notion that a basic purpose of the federal courts is to ensure that the Executive Branch stays within its constitutional and statutory guardrails—you know, checks and balances—seems not to have registered.

The Administrator also promised that states would “soon see guidance from us that lays out initial opportunities to test new approach to delivery and financing care for certain optional adult populations.”  In all probability, this promised “Medicaid Value and Accountability Demonstration” is code for encouraging states to apply for a block grant. The Administrator dangled the potential for “shared savings” if the states use the “unprecedented flexibilities” they will enjoy to cut their Medicaid spending.  There’s just one problem:  only Congress has the authority to convert Medicaid into a block grant.  Since Congress has elected not to do so (most recently in 2017, before the Administrator’s first speech to NAMD), it seems odd for an agency committed to “humility” to usurp Congressional prerogatives.

The Administrator did not discuss the “rollback of burdensome regulations”—i.e, the Access Rule and the Managed Care Rule—that she had promised two years ago.  True, CMS has proposed weakening the Managed Care Rule and repealing the Access Rule altogether, but the agency has taken no final actions.  So far, that would be zero, nada, zip for two.

On accountability:  The Administrator announced the launch of a new version of the Medicaid and CHIP Scorecard, which contains, among other things, “CMS processing times in areas like managed care rate review and 1115 demonstration approvals.”  The Scorecard does not present the number of 1115 waivers vacated by the federal courts, or the number of beneficiaries who have lost Medicaid coverage due to implementation of section 1115 waivers, or even the number of beneficiaries who, as a result of work requirements, are now enrolled in employer-sponsored coverage.  It does, however, present the number of waiver proposals approved within 6 months of submission (12 out of 27 in 2018).

On program integrity:  The Administrator stressed the importance of “limiting precious Medicaid dollars to those who qualify.”  She indicated that the results of the most recent Payment Error Rate Measurement (PERM) results for improper payments in eligibility, fee-for-service, and managed care would be released shortly   but allowed  that the results for eligibility determinations were “deeply concerning.” She promised to “take action” by “overhauling our regulations to tighten the standards for eligibility verification and ensure…that states conduct timely redeterminations…”.  Put another way, the new frontier in Medicaid is imposing red tape—one might call it “administrative burden”—on applicants and beneficiaries in order to drive down enrollment.  Think of it as “patients under paperwork.”

To her credit, the Administrator made clear that she found “recent reports noting an increase in the number of uninsured children so concerning.”  The seminal report, authored by my colleagues Joan Alker and Lauren Roygardner, found that between 2016 and 2018, the number of uninsured children in the U.S. increased by 400,000, despite a strong economy.   Coverage loss was greatest among white children and Latino children, among young children under 6, and among children in families with incomes between 138 and 250 percent of poverty.  Another colleague, Tricia Brooks, recently reported that in the 18-month period from December 2017 (right after the Administrator’s first address to NAMD) through June 2019 the number of children enrolled in Medicaid and CHIP fell by about almost 1.1 million.

In short, Census Bureau survey data and CMS administrative data are both pointing in the wrong direction.  If, to borrow her speechwriter’s phrase, there is a “screeching of the canary in the coal mine,” this is it.

The Administrator’s response?  She did not promise to post data on terminations of children’s coverage due to red tape on the State Administrative Accountability pillar of the CMS Scorecard.  Nor did she promise to use the Scorecard to identify the steps each state is taking to reverse the recent declines in Medicaid and CHIP coverage among children. To the contrary, she announced new regulations that will likely mean even more red tape for both children and adults—all, as noted, in the name of “program integrity.”

In all humility, the federal government can do better.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.