HIDING THE BALL: The Trump Administration’s Section 1115 Medicaid Waiver Policy has Entered a New and Dangerous Phase

Section 1115 Medicaid waivers have been the tool of choice for the Trump Administration and CMS Administrator Verma’s efforts to mold Medicaid to their wishes since Congress failed to do so in 2017. Unfortunately, their wishes include allowing states to erect barriers to coverage (such as work requirements, raising costs for beneficiaries) and a recent offer to allow states to make a cornucopia of cuts in exchange for accepting a restrictive cap on federal funding. Last month, CMS Administrator Verma released new guidance (euphemistically called the “Healthy Adult Opportunity” or HAO), which encourages states to block grant or cap their Medicaid programs – in exchange they can have added “flexibility” to limit benefits, raise cost-sharing for beneficiaries, and limit consumer protections for those enrolled in Medicaid managed care etc.[1]

There are many reasons to be concerned about this guidance, but one issue that has flown generally under the radar is the significant rollback of public notice and transparency rules. The Affordable Care Act included significant public notice and comment requirements for Section 1115 waivers – and these provisions have proved to be very important. The public notice rules were included after numerous instances of important policy changes to Medicaid being made out of the public’s eye – perhaps the most egregious being then President George W. Bush approving his brother Governor Jeb Bush’s major Florida Medicaid waiver in just eight business days.

It doesn’t take a political rocket scientist to figure out that making cuts to health care is more easily accomplished with as little public attention as possible. As slide 10 in this CMS presentation about the HAO guidance titled “Simplified Process for Changes” notes:

“CMS will offer flexibility to states to manage their programs with reduced need for further federal approval for administrative and programmatic changes.”

In other words, CMS is moving towards a system where a state receives a global waiver approval, and may seek broad flexibility on an issue such as benefit limits or increases in premiums and/or cost-sharing[2], and then a few years down the road – when the cap on federal funding kicks in and the state needs to make cuts – go ahead and make harmful changes to beneficiaries, cuts in provider payments etc. without further public comment. CMS goes on to say that the state will have to provide advance public notice of any change (and share that notice with CMS) but notably does not include the word “comment.”

This change was presaged by Utah’s request in its “fallback waiver” to receive a similar blank check to make significant changes to its Primary Care Network demonstration without further notification to CMS.

A coincidence? Me thinks not. Public comments have formed an essential part of the administrative record in successful litigation challenging HHS approval of the Arkansas, New Hampshire and Kentucky waivers. And as I blogged about last week, the appellate court highlighted the need to pay attention to what reasoned public commenters have to say. Also, to state the obvious again, it is a lot easier to cut people’s health care when you hide the ball.

There are other troubling signs about transparency coming under attack. Just last week Indiana requested a ten-year extension of its current Medicaid expansion waiver, which includes numerous harmful provisions such as work requirements, premiums, lockouts etc. Never mind that the statute explicitly states that renewals should be three years for statewide demonstration projects (1115(f)(6). While five-year extensions have been seen before and are allowable in some cases, ten years is an absurd and dangerous request. Indiana’s waiver includes work requirements and premiums – both of which have already been shown to reduce coverage. We don’t need to take 10 years (or even one!) to learn that again.

The GAO has written numerous reports over the years about the need for more transparency in the waiver process- not less. (Here is the most recent from 2019.) However, CMS is moving in the opposite direction – and at the same time is offering up the core mission of the Medicaid program to be waived. This is a very scary combination.

[1] Given that the courts have stepped in to stop the executive overreach of the work requirements waivers, the legality of this guidance is surely in question but only time will tell.

[2] Cost-sharing waivers are authorized under a different section of the Medicaid statute (1916(f)) and have a much higher bar to be included as part of a demonstration which makes the guidance’s approach to this important issue very troubling. The guidance appears to open the door to waiving any and all of the beneficiary protections that exist today as long as overall cost-sharing doesn’t exceed a 5% cap. But that is the subject for another blog.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.