Missouri House Committee Moves Forward on Medicaid Expansion

The Columbia Missourian tells us that the House Interim Committee on Medicaid Transformation decided to begin drafting a Missouri Medicaid expansion proposal this week.  The article is unclear on what exactly a waiver would look like that could "give the state access to federal funds on its own terms." But I can't fault The Columbia Missourian for being unclear on the limits of state discretion under a waiver, because it isn't clear to anyone yet.  All of the study models for the Missouri Committee (Iowa, Indiana, and Arkansas) are still in a state of flux.

And isn't that the real question: how far will HHS bend to entice buy-in now that it may not be coerced? How far will the Medicaid statute itself as well as the ACA allow HHS to bend?

In the meantime, Paul Rand's election year proposal to block grant Medicaid is also apparently under study in Missouri.  Other states have used the 1115 waiver process to substantially block grant Medicaid (think Rhode Island) but that is a negotiated process — just as, I suspect, the ACA Medicaid expansion waiver process will be. 

The Private Option for Medicaid Expansion

I appreciate that the Missouri version of Arkansas-style Medicaid Expansion is being circulated without name as "Rough Draft No. One."  The shoe fits.  As far as I can tell, the proposal mimics in essentials Arakansas' 1115 waiver application.  You can see that here:  http://humanservices.arkansas.gov/dms/Documents/Final%201115%20Waiver%20Materials%20for%20Submission.pdf and, whatever you think of it, it is no rough draft.  Its drafters have given considerable  thought to "leveraging the efficiencies of the private market to improve continuity, access, and quality for Private Option beneficiaries."  

I think the "rationale" section of the Arkansas 1115 waiver application is the most interesting. "Arkansas Medicaid provides rates of reimbursement lower than Medicare or commercial payers, causing some providers to forego participation in the program and others to "cross subsidize" their Medicaid patients by charging more to private insurers. The Demonstration will rationalize provider reimbursement across payers, expanding provider access and eliminating the need for providers to cross-subsidize."

Now, that's a pretty tall order because cross-subsidization and perverse cross-subsidization is at least as present between and among commercial insurance products as between government funded health insurance and commercial insurance.  It is also an interesting take on the problem of low Medicaid participant provider reimbursement rates in Arkansas.  After all, states establish their own Medicaid provider payment rates within federal requirements and Arkansas has not chosen to be at the top of the permissible range.  "Indeed, there are 23 states with higher Medicaid reimbursement rates (relative to Medicare's)" (Avik Roy in Forbes on March of 2013).

What is the message: we need the commercial insurance market to save Medicaid from ourselves?

Missouri Medicaid Expansion: Potential Rural Impact

There's an interesting new report on what Medicaid expansion would mean for Missouri put out by Wash. U., SLU, and the MIssouri Budget Project. You can see it here:


All parts of the state would benefit, but poorer rural areas the most.

Bodegas Clinicas: Diagnosing an Outbreak of Competition

The New York Times today has an interesting article about the
ambivalence of the Los Angeles medical establishment over the
proliferation of what are known as  "bodegas clinicas" –small
storefront licensed physicians' offices that operate on a cash economy
without the intermediation of health insurance.  These bodegas clinicas 
specialize in offering primary care services to some of California's
uninsured including some of California's estimated 2.5 million
undocumented residents.

What's not said in the article is as telling as what is.  Bodegas
clinicas have been thriving in California for some  years. Their growth
is of a piece with the growing number of medical clinics found in
Mexican border cities — clinics that cater to undocumented California
residents who may re-cross the border for care as well as uninsured or
underinsured American residents who cross the border for care in Mexico.

Why the hue and cry now about quality concerns in Los Angeles' bodegas clinicas?

One reason is surely that some of the documented now using these cash-based programs have (under California's early Medicaid expansion) or will
become eligible for Medicaid.  And whatever can be said about Medicaid
reimbursement rates in California, they are certainly higher than zero. 
The newly or about-to-be low income insured, as a result, are in the
genuinely odd position of being sought after as customers. 

Competition appears to be breaking out on the low end of the health
insurance scale between bodegas clinicas and safety net providers for
newly or about-to-be Medicaid eligible and soon-to-be subsidized health
insurance exchange purchasers. Students of competition policy will note
that one way to drive competition from the marketplace is to attempt to
raise rivals' costs, say — for example — by activating expensive
licensing investigations into the business models of thinly margined

California has some of the lowest Medicaid reimbursement rates in the
entire country.  They are on a downward trajectory. This does not and
will not make Medicaid beneficiaries particularly sought after in
facilities with a better payor mix.  But California's Federally
Qualified Health Care Centers (FQHCs) and FQHC look-alikes are fighting
for their financial lives.  And Medicaid reimbursement may look good to

In fact, if California's 100 plus FQHCs cannot make the case for
their own newly insured to stay with them as well as to solicit the
business of newly insured from others, they will be in trouble.  This is
because they serve the undocumented — the outsiders to the Affordable
Care Act. An FQHC will be hard pressed to make the successful business
case for a patient panel consisting entirely of the undocumented
uninsured. The problem is that some FQHCs have behaved exactly like
providers of last resort — impersonal and inflexible.

What I do like about the New York Times article is how it offers
insight into why some consumers with options might prefer bodegas
clinicas for primary care over an FQHC.  The article points out the good
neighborhood access of these facilities, the extended hours designed to
accomodate the many service worker patients who work the night shift, 
and the linguistic competence of all levels of the staff. I have written
elsewhere on what patients at all income levels seek from the clinical
encounter. (You can read more here:

Is it possible that, in one of the more modest corners of our
country's health care delivery system we can learn lessons about health
care delivery success that is neighborhood based, culturally competent,
and forgiving of those without the foresight to fall ill only inside of
bankers' hours?


X posted at http://prawfsblawg.blogs.com/

Broccoli Ice Cream

It has been two days since Florida Governor Rick Scott traveled to D.C. to meet with HHS Secretary Kathleen Sebelius to discuss possible Medicaid expansion under the Affordable Care Act in Florida. Since then, Mum's the word on what they discussed.

But today we are being inundated with competing ten-year cost estimates for Florida's possible Medicaid expansion. Governor Scott estimates a state taxpayer burden of $26 billion but the Florida Agency for Health Care Administration estimates a $3 billion price tag.

Why the spread?

Some of the difference relates to Governor Scott's budgetary assumption that the federal government will change the law and reduce funds pledged to the state. Florida's Agency for Health Care Administration priced the possible expansion as written — the federal government to assume 100% of the expense for expanded Medicaid enrollees in 2014-2016, gradually tapering down to a 90% federal government cost share in 2020 and beyond. This is in contrast to Florida's conventional Medicaid match or Federal Medicaid Assistance Percentage (FMAP), set at 58.08% in 2013.

Governor Scott's budget assumption discloses his disbelief that the federal government can or will honor the enhanced cost share. Whether the budgetary assumption is designed to disguise the generosity of the federal enhanced matching percentage is unclear. Certainly, it is harder to rationalize turning down something free — what I have analogized to the offer of a free ice cream cone — all upside and no visible downside.

Another contributor to the wildly different budgetary estimates is more subtle, however. Governor Scott's budgetary estimate appears to add in a high-end estimate of funds to cover Medicaid enrollment for those Floridians currently eligible for Medicaid but presently unenrolled. The governor's budgetary estimate, in short, acknowledges two truths: Medicaid's current eligibles have surprisingly low participation or take-up rates and any increase in take-up rates among this population will be at Florida's standard Medicaid matching percentage of 58.08 %, not at the ACA-enhanced matching rate. It is easier to understand fearing increased Medicaid enrollment that comes without full or near-full federal subsidy — something I analogize to broccoli.

Why would Governor Scott think Florida's non-expansion Medicaid population will increase? Because Florida's Medicaid take-up rate has lots of room for increase. Best estimates are that there are 500,000 children in Florida currently eligible for Medicaid (and Medicaid extension programs) who are not enrolled. No one knows how much of the outreach effort to enroll the Medicaid expansion population could spill over into increased currently eligible Medicaid take-up. No one knows how much of the ACA-mandated streamlined Medicaid eligibility guidelines and processes will spill over into increased currently eligible Medicaid take-up. Everyone is busy guestimating, though.

This is the story of Medicaid expansion from a state budgetary perspective: ice cream (100% federal match) plus broccoli (significantly increased already eligible take-up at a non-enhanced subsidy).

That's why I call it broccoli ice cream.

cross posted at http://prawfsblawg.blogs.com/

Kansas Reinvents Medicaid or Medicaid Reinvents Kansas?

It was down to the wire, but Kansas has received CMS approval (for the most part) of its Section 1115 Medicaid waiver application, allowing it to proceed with its experiment with state-specific Medicaid reform beginning tomorrow, January 1, 2013.  The waiver is time limited, but waiver renewals and extensions are pretty common, so think of this as the first cycle of Kansas Medicaid reform efforts.

Since Kansas has announced its intention to not expand Medicaid under the ACA, its attempts to reign in Medicaid spending on its existing Medicaid eligible population should be interesting.  As KanCare's August, 2012 waiver application pointed out, Kansas has experienced Medicaid cost increases exceeding seven percent each year of the past decade.

The hard questions are: why has this occurred?  And what is found in the KanCare proposal that will help to turn the tide on Medicaid health care inflation?

The plan is to push as many Medicaid enrollees in Kansas to managed care as quickly as possible, in the hopes of improving utilization review and care integration.  Though CMS, in its recent section 1115 demonstration project waiver letter, put the brakes on this slightly by delaying the movement of certain Mediciad sub-populations into managed care and by refusing to waive the 45 day appeal process for Medicaid managed care vendor patient assignment decisions, we will see a big move into the Medicaid managed care products of the three selected vendors: Amerigroup of Kansas; Sunflower State Health Plan, and United Healthcare Community Plan.

All of this will happen while the general pool of Medicaid eligibles in Kansas likely expands considerably under the seamless enrollment mechanisms between the Federal Health Exchange for Kansans and the Medicaid eligibility portal for Kansans. Even without a state specific exchange, the plan is for Kansans to experience simplified enrollment under the ACA, a part of the ACA unchanged by NFIB v. Sebelius.

These are interesting times to be a Medicaid administrator in a non-Medicaid expansion state.  As Medicaid take up rates change, in line with the streamlining of eligibility, Medicaid will likely expand considerably even in non-expansion states.  And those new enrollees, in Kansas, will be in managed care.

This may be reinventing Medicaid as we know it for Kansas, but it is a fairly well trod path to Medicaid reform in other states. Medicaid Managed Care has been around for some time.  What is unusual about KanCare is the extension of Medicaid Managed Care, eventually, to the disabled, to low income seniors, and to those in skilled nursing facilities. These folks are the expensive folks in the Medicaid budget. 

So the real challenge for Kansas, as it is for every state, is to stop health care cost inflation for this group. Not surprisingly, this will be the challenging part of the assignment for a number of reasons — the most significant of which are that Kansas is, outside of a very few metropolitan areas, a sparsely populated state. Sparsely populated places are notoriously difficult to serve in health and senior services for two reasons: geographic distance can challenge economies of scale pretty quickly and managed care entities have, historically, found it difficult to serve rural areas in a cost effective manner.

How will Kansas do this? It is an experiment, so let's watch it unfold. In the meantime, Kansas has already indicated its ultimate goal: a global waiver that will administer an outcomes based Medicaid and CHIP program under a per-capita block grant.

HHS Secretary Sebelius Sounds Tired

There is a tired note to Secretary Sebelius's December 10, 2012  letter to the states on timlines and terms for exchanges and market reforms under the ACA. You can see it for yourself here: http://cciio.cms.gov/resources/files/gov-letter-faqs-12-10-2012.pdf.  It is true — as she points out–that negotiations have been underway about ACA implementation, on one issue or another, for more than two years. But I want to suggest that this will not all be resolved anytime soon. This will be a marathon and not a sprint.

Secretary Sebelius also sounds tired of negotiations over the possibility of phased-in or partial expansion of Medicaid to 133% of the federal poverty level. The latest FAQ format guidance to the states does indicate, though,  that "[i]f a state that declines to expand coverage to 133% of FPL would like to propose a demonstration that includes a partial expansion, we would consider such a proposal to the extent that it furthers the purposes of the program, subject to the regular federal matching rate." The regular FMAP varies by state, of course, but in no instance even approaches 100%. Choices will have to be made.

This means that fifty flowers can bloom, but it will cost you.

Medicaid Expansion in Missouri

Governor Jay Nixon has reiterated his support for expanding Medicaid in Missouri under the ACA to provide health care to an estimated 300,000 Missouri citizens. He has announced his intention to submit a budget for the next fiscal year to the legislature to do just that. Missouri House Speaker Tim Jones fired back pretty quickly with the observation that "My first question to the Governor is this — where is the money to pay for ths once the federal aid goes away?" Speaker Jones further urged the prioritization of job creation over "expanding welfare."

This sums it up pretty well, actually, these dueling press statements. Is it better to take 100% federally funded Medicaid expansion from 2014-2016, increasing to 10% state funded Medicaid expansion by 2020 or to sit back and watch and wait? Speaker Jones' concern that the rich federal expanded Medicaid matching percentage may wither quickly after 2020 — paradoxically — would seem to militate just as much in favor of grabbing that time limited offer now as it would support passing on it.


Missouri Governor Jay Nixon Announces Medicaid Expansion Budget Proposal

On November 19, 2012, Missouri Governor Jay Nixon announced his intent to forward a Medicaid expansion budget to the Missouri legislature.  Describing the move as both the right and the smart thing to do, Governor Nixon made his announcement locally at Truman Medical Center — one of  Kansas City's safety net hospitals.

Based on the governor's remarks, Medicaid expansion is right because it is smart economically. Expanded Medicaid's value is both in expanded health insurance coverage and in job creation as well as tax revenue. You can read excerpts of his announcement here: http://www.news-leader.com/viewart/20121129/NEWS06/311290053/Nixon-Missouri-Medicaid-expansion-governor

The value of Medicaid as an economic engine for job growth is rarely discussed.  Governor Nixon has it about right: the role of Medicaid in state and local economies is an under-discussed subject. Medicaid spending, particularly through the infusion of federal Medicaid dollars into state and local economies, generates activity around jobs and state  and local tax revenue. And the extremely favorable FMAP for ACA Medicaid expansion (100% of total state contribution, eventually modulating to 90% of total state contribution) means the multiplier effect for the ACA Medicaid expansion would be particularly pronounced. The thought of spending 333 million dollars to  bring over eight billion dollars over a seven year period into Missouri's economy might help to explain the Missouri Chamber of Commerce's position on Medicaid expansion.

If the debate about ACA Medicaid expansion in Missouri is to focus on fiscal responsibility, acknowledging the role of Medicaid in our state economy — and factoring in the economic growth as well as economic cost implications of Medicaid expansion — is a good place to start.

Considering Medicaid Expansion – Mental Health Services

The Kansas City Star's November 17, 2012 editorial on the need for honest analysis before decision-making on Medicaid expansion was unusual. I was particularly struck by the illustration of potential Medicaid expansion savings by shifting much of the cost of recipients of state mental health services from the states to the federal government.

Rather than parse the entire editorial for factual accuracy, I would rather comment on its general tone.  The KC Star cannot make the case for even considering the Medicaid opt-in as a balance sheet matter without first explaining to its reading public the tremendous roll government (both federal, state, and county) already plays in funding health insurance in the United States.

Suzanne Mettler's The Submerged State is a book about the costs to democracy when the government's subsidizing hand is hidden. You can read a bit about it here: http://www.press.uchicago.edu/ucp/books/book/chicago/S/bo12244559.html  Her point is that we hide much government subsidization behind tax policy (think the mortgage interest deduction) as a way of hiding the very nature of direct subsidization and cross-subsidization itself, thereby robbing our citizenry of the vocabulary necessary to have an informed debate on much of this subsidization.

How does this apply here?  I am guessing the KC Star editorial board imagines a significant percentage of its readership would be astonished to learn that the government — both state and federal — already subsidizes some mental health care to low income and indigent individuals. They might also be surprised to learn something the Star did not point out — that a number of states have spent much effort, since 1983, perfecting cost shifting maneuvers designed to game their way out of the state share of some of these agreements. Sounds like the Star is urging Kansas and Missouri to join the crowd.

Part of the ACA's simplification of Medicaid funding to the states for those newly eligible under Medicaid expansion was to simplify the system for beneficiaries but also to simplify the system as a matter of policy — rendering it both more transparent and more debatable in the public arena.