Trump Administration Tries Its Best to Knock Legs Out from Under Medicaid on the Way Out the Door

So far 2021 has been a really wild and difficult ride for me and millions of others in the U.S. with COVID-19 ravaging the nation, an armed insurrection here in DC, and an ongoing economic crisis leaving so many families in need. My mind has been struggling to absorb all that is happening so quickly. But some things became clear to me with respect to the comprehensive way in which the Trump-appointed leadership of the Department of Health and Human Services (HHS) (Secretary Azar) and Centers for Medicare and Medicaid Services (Administrator Verma) have sought to institutionalize their damaging changes to the Medicaid program – and do their best to throw sand in the gears to make it tougher for the incoming Administration to rebuild Medicaid and other health insurance programs.

As readers of SayAhhh! know, the Medicaid program is a federal-state partnership with Congress passing the laws and providing the funding, and HHS establishing the regulatory parameters and working with states to make it all happen. There are basically three buckets of tools the federal government has with respect to implementing the Medicaid statute. The first and most obvious way is through federal regulations. The second is through sub-regulatory guidance. And the third, unique to Medicaid and CHIP, is through Section 1115 demonstration authority. Efforts to send damaging waves of disruption to knock out all three legs of this stool are cresting now in the final days of Trump’s term.

First, on the regulatory front, this week the Trump Administration is finalizing a new regulation known as the “SUNSET” rule. My colleague Andy Schneider has blogged about this proposal, which was rushed out during last few months of 2020 with inadequate opportunity for public comment. In its final form, the rule requires HHS to review almost all of its regulations that are more than 10 years old and, if the rule significantly affects “small entities,” then decide whether to keep it or revise it.  If HHS doesn’t conduct the review, the regulation automatically expires.  The agency has five years to review thousands of regulations to avoid this default.  My colleague Andy Schneider described the rule as “a thinly-veiled effort to put the department in a procedural straight jacket and “JAM” up the works just in time for the onboarding of a new Administration.”

Secondly, following a Presidential Executive Order in 2019, HHS rushed out the inaptly named “Good Guidance” proposed regulations in August 2020 — when many in DC were on vacation—and made them final effective January 6.  This particular action was designed to take out the second leg of the stool of the department’s ability to operate Medicaid and CHIP – using sub-regulatory guidance (such as “Dear State Medicaid Director” letters, “Dear State Health Official” letters, Informational Bulletins, Frequently Asked Questions (FAQ’s) etc.) in addition to formal regulations in order to  provide direction to the states, providers, plans, and beneficiaries. The “Good Guidance” rule makes it easy to rescind existing guidance but much more cumbersome to issue new guidance. It also requires that all guidance declare that it does not have the force and effect of law and is not binding on the public “in any way.”

Completing the trifecta, on January 4th, CMS Administrator Verma made a transparent power grab to leave her imprint on Medicaid after she and Secretary Azar are gone by locking in discretionary Section 1115 Medicaid waivers.

As readers of SayAhhh! know, Section 1115 Medicaid demonstration policy has been a key strategy used by CMS during Administrator Verma’s tenure to advance her ideological and harmful objectives for the Medicaid program – such as Medicaid work requirements. And just last week CMS pushed out an eleventh-hour approval of a risky new Section 1115 approach for Tennessee’s Medicaid program.

Section 1115 waivers, of course, are granted at the discretion of the Secretary of HHS and must be used to promote the objectives of the Medicaid program. As I blogged about in December, standard Section 1115 “terms and conditions” that are in place allow the Biden Administration to unwind work requirement waivers relatively quickly. The letters were sent by Administrator Verma to all states that have a Section 1115 demonstration of some kind, which is most states.  The letters attempt to block the new Administration from terminating harmful waivers for a minimum of nine months. And the letters establish a lengthy process for states to contest the decision. States are urged to sign the agreement as soon as possible and return them to Administrator Verma directly. We’re expecting a few more eleventh hour Medicaid waiver approvals for Texas and Florida – states whose leaders will undoubtedly be happy to sign them.

So that’s how it looks from here in the waning days of the Trump Administration. It’s not pretty. Are there things the Biden Administration and Congress can do to reassemble the stool? Yes – more to come on this.

[Editor’s Note: The approval of ten-year Medicaid waivers for Florida and Texas were announced after this blog was published.]

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.