Since assuming office last January, the Trump administration has signaled a shift in Medicaid policy. In early November, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma made the administration’s strongest statements to date in support of work requirements as a condition of Medicaid coverage.

Kicking off the annual meeting of the National Association of Medicaid Directors (NAMD), Administrator Verma delivered a keynote speech sharply criticizing the policy of the prior administration while outlining her vision for the future of Medicaid. She focused on this administration’s willingness to approve waivers to support state efforts to implement a range of policies not permitted by the previous administration, particularly with respect to the low-income adult population made eligible for Medicaid by the Affordable Care Act (ACA). Verma also focused on this administration’s goals related to state flexibility, accountability and program integrity as she discussed greater emphasis on monitoring and evaluating the changes that states adopt.

The Administrator’s remarks revisited many of the themes articulated in a March letter to governors from then-Department of Health and Human Services (HHS) Secretary Tom Price and a newly confirmed Administrator Verma. The letter “promised a new era for the federal and state Medicaid partnership where states have more freedom to design programs that meet the spectrum of diverse needs of their Medicaid population.” The Administrator’s remarks at the NAMD conference left no doubt that the CMS policy direction remains unchanged, even as HHS undergoes a leadership transition. In conjunction with the Administrator’s speech, CMS issued a series of guidance documents, some of which execute on promises first noted in the March letter, including helping states leverage Medicaid to address the opioid epidemic and streamlining the waiver and Medicaid State Plan Amendment (SPA) approval processes. Taken together, the Administrator’s remarks and new guidance signal that there may be more activity on the waiver front in the coming months, and that the administration is poised to grant states approval to implement work requirements and other limits on Medicaid coverage for low-income adults without disabilities.

This Manatt on Health: Medicaid Edition describes Administrator Verma’s position on Medicaid waivers, including those that include work requirements, and also provides an overview of other recent Medicaid policy developments.

Medicaid Waiver Developments

  • Updated Objectives of the Medicaid Program. CMS updated a section of its website that describes the core objectives of the Medicaid program. The revisions are significant because they reflect the new administration’s vision for Medicaid, and also because the Secretary of HHS can only grant Section 1115 waivers if they further the objectives of the Medicaid program. Most notably, the new language includes a focus on efforts to “strengthen beneficiary engagement in their personal healthcare plan, including incentive structures that promote responsible decision-making” and “enhance alignment between Medicaid policies and commercial health insurance products to facilitate smoother beneficiary transition.” This language is widely viewed as an effort by HHS to make it easier to maintain that waivers to permit higher cost sharing and work requirements are consistent with the objectives of the Medicaid statute if, as is widely anticipated, such waivers are challenged in court.
  • Work Requirements & Community Engagement. In her NAMD remarks, Administrator Verma drew a distinction between traditional Medicaid populations (e.g., low-income children and people with disabilities) and the low-income adult populations made eligible by the ACA. Echoing themes articulated in the March letter to governors and referencing the updated objectives of the Medicaid program, she described the agency’s commitment to approving proposals that promote community engagement and work requirements for working-age, “able-bodied” Medicaid beneficiaries. To date, CMS has only approved voluntary work referrals, but CMS currently is reviewing proposals from Arkansas, Indiana, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin that include work-related requirements as a condition of Medicaid coverage.1
  • Substance Use Disorder Waivers. In early November, CMS issued a letter to State Medicaid Directors to refine prior policy with respect to Section 1115 demonstration projects designed to increase access to treatment for opioid and other substance use disorders. The updated policy clarifies the criteria that CMS will use to waive longstanding Medicaid rules to enable states to pay for treatment in certain residential treatment facilities (i.e., institutions for mental disease, or IMDs) for which Medicaid otherwise would not pay and no longer limit payments to 15 day-stays, as had been the prior administration’s approach. The revised policy seeks to incorporate metrics to demonstrate that outcomes are improving for impacted beneficiaries within established timeframes and requires participating states to conduct rigorous evaluations of these demonstrations. To qualify for a waiver pursuant to the new guidance, states must specify how they will meet six newly articulated goals and six new milestones focusing on the use of evidence-based programs to meet the needs of individuals with substance use disorders; some of these goals focus on developing, over time, the full continuum of services needed to serve people with substance use disorders. New Jersey, Utah and West Virginia recently received waivers to use Medicaid to fund substance use disorder treatment services delivered at IMDs.

Updated CMS Review Processes

  • Section 1115 Demonstration Process Improvements. In a November 6 informational bulletin, CMS provided an update on Section 1115 demonstration process improvements designed to facilitate expedited approvals and strengthen monitoring and evaluation of Section 1115 demonstrations. While much of the bulletin describes longstanding practices (e.g., the use of standard templates, technical assistance, fast track approval of certain extensions, etc.), there are several new elements, including a commitment to develop parameters for expedited approval of waivers that are substantially similar to those approved in other states as well as a stated willingness to consider ten-year (rather than five-year) extensions of routine, successful, non-complex waivers. The informational bulletin also notes that, for demonstrations that meet certain criteria, states will be able to submit less frequent monitoring reports.
  • State Plan Amendment and 1915 Waiver Process Improvements. Also on November 6, CMS issued a second informational bulletin describing the agency’s effort to improve collaboration with states by streamlining the review and approval of SPAs and 1915(b) and 1915(c) waivers. Reiterating the agency’s commitment to process SPAs and waivers as efficiently as possible, the informational bulletin outlines a number of short-term process improvements, several of which build on historic CMS practices (including making toolkits available to states and expanding the CMS web-based system for the submission, review and approval of SPAs). The informational bulletin was crafted based on input from Medicaid directors, and the agency indicates that it is continuing to convene a federal-state workgroup to develop additional approaches to streamline reviews.