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FOR IMMEDIATE RELEASEJanuary 30, 2020Contact: Carolyn Angus-Hornbucklechornbuckle@202-507-4089CMS Releases Medicaid Block Grant GuidanceThis morning, the Centers for Medicare and Medicaid Services (CMS or Agency) released long awaited Medicaid guidance which will assist states wishing to transition their Medicaid program from a pay as you go program, where a state and the federal government share program costs and allocate money as need arises, to a block grant program, where the state applies for a fixed amount of federal funding per year based on anticipated need. CMS released this guidance - the “Healthy Adult Opportunity” initiative - as a Dear State Medicaid Director (DSMD) letter. CMS Administrator Seema Verma announced the release and highlighted key details in a livestream event this morning. During that event Verma shared, “The Healthy Adult Opportunity represents an innovative and historic approach to surmounting Medicaid’s structural challenges. It provides rigorous protections for all Medicaid beneficiaries, and for the first time it aligns financial incentives to improve quality of care and health outcomes for Medicaid adults by giving states unprecedented flexibility to administer and design their programs to meet this population’s very unique needs. In exchange for this flexibility, states accept greater accountability for managing the program and demonstrating real results.”The Healthy Adult Opportunity (HAO) initiative will allow states to carry out demonstrations under section 1115(a)(2) of the Social Security Act (the Act) to utilize a block grant or per-capita cap financing model for a select segment of Medicaid recipients, namely - adults under age 65 who qualify for Medicaid on a basis other than disability or need for long-term care services and supports and who are not covered in the state plan, including individuals described in the new adult group at section 1902(a)(10)(A)(i)(VIII) of the Act and 42 CFR 435.119. Under this initiative, states will get additional flexibility to craft their Medicaid program, and make adjustments as they go without seeking additional approvals from CMS after the initial approval. The DSMD letter shares that states using the block grant or per cap model, meeting certain performance criteria, may also be eligible to share in program savings when spending is less than the capped amount.As part of this initiative, CMS will encourage states to apply for the flexibilities the agency has already approved in other demonstrations, including (but not limited to): the ability to pay for services to address determinants of health (i.e. - case management and housing supports); design of flexible premiums and cost sharing structures; community engagement requirements (i.e. – work requirements); the ability to make certain changes in benefits, premiums and copays during the demonstration without further amendment and approval from CMS; and the ability to change eligibility and enrollment processes (i.e. – retroactive eligibility). CMS will also encourage states to test new flexibilities, including (but not limited to): the ability to make changes in provider rates without further amendment and approval by CMS; the ability to adopt a closed formulary; and the opportunity to propose alternative approaches to comply with statutory managed care provisions even if they differ from current regulations. While implementation of this initiative holds the potential to substantially impact Tribes and American Indian and Alaska Native (AI/AN) people, the National Indian Health Board (NIHB) notes the specific mention of Tribal beneficiaries in both Verma’s remarks, as well as a section of the DSMD letter which outlines and underscores CMS’s expectation that states will continue to provide the legally required protections to Tribal and IHS eligible beneficiaries, IHS providers, and certain other Indian health providers. The DSMD letter also emphasizes that states pursuing block grant demonstrations will be expected to hold meaningful consultation with federally recognized Tribes located in their states.In addition to concerns around Tribal consultation and maintaining AI /AN protections, Tribal advocates anticipating the block grant initiative also have voiced concerns related to the process of determining the fixed amount of annual federal funding (the block grant or per cap amount), highlighting that a block grant or per cap scheme could result in a system that undermines the federal trust responsibility to Tribes if that system frustrates operation of the 100% federal match provided for Tribal Medicaid beneficiaries receiving services in the Indian health system or if it prevents or restricts payment for services for those beneficiaries.The CMS guidance addresses this concern by specifying these 100% federal match amounts will not be used for the block grant calculation. The DSMD letter states, “expenditures for services “received through” an IHS facility will be excluded from data used to set the base period cap.” The Agency further states that “100 percent FMAP …for services “received through” an IHS facility (including an IHS facility operated by an Indian tribe or tribal organization) will be available under an HAO demonstration just as it is available in the absence of an HAO demonstration.” While this section of the guidance provides some reassurance to Tribes, and removes the threat of many negative impacts, there remains the possibility that states running up to their capped amount may feel pressure to make changes in benefits, or eligibility, or enrollment to pare back costs. The guidance makes clear that states will be able to make some of these changes without further amendment and CMS approval. In this situation, states will be able to apply these cost cutting measures generally, including to Tribal Medicaid beneficiaries in the expansion population. For this reason, state-Tribal consultation remains a top priority in every stage of this process, from initial concept development, to HAO waiver application, to implementation plan, to evaluation of the initiative.NIHB will continue to track the issue and provide technical assistance to Tribal stakeholders.Currently funded as a joint venture between the federal government and the states, the federal government’s portion of a state’s Medicaid program costs varies based on several factors and currently ranges from 50% to 77.76%. This is known as the Federal Medical Assistance Percentage (FMAP). For AI/ANs who use facilities owned by the Indian Health Services or a Tribe, the FMAP is 100%.. ................
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