A View from the States: Key Medicaid Policy Changes: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2019 and 2020

Challenges and Priorities in FY 2020 and Beyond Reported by Medicaid Directors and Conclusion

While national attention on health care is focused on broader debates involving prescription drug pricing and the 2020 elections, states continue to administer and make changes to Medicaid programs focusing on payment and delivery system reforms, adapting to state budget and policy priorities as well as new federal Medicaid options.

Over half of states reported that delivery system and payment reforms are a key priority. Efforts to better align payment with quality and improved health outcomes continue to be an important focus area for over half of states. States are pursuing these goals through managed care contract changes focused on value-based payment initiatives and the social determinants of health. In addition, a number of states specifically mentioned transforming their behavioral health systems and/or services, implementing SUD initiatives, and developing maternal, infant and/or child health initiatives.

Nearly a third of states reported information technology (IT) systems projects currently underway or planned as high priorities. Consistent with past surveys, these projects often relate to Medicaid Management Information Systems (MMIS) procurements and eligibility system upgrades and replacements. This year, states also mentioned IT initiatives focused on data analytics and reporting, and implementation of health information exchanges (HIEs). These types of IT initiatives typically support other program objectives related to delivery system reform and value-based purchasing, quality improvement, provider and MCO monitoring, and cost control strategies.

One quarter of states reported that dealing with state Medicaid budget and fiscal challenges remained a top priority. Even when state economic and budget conditions are more favorable, state Medicaid directors remain focused on the task of managing the Medicaid budget with a goal to constrain growth while preserving eligibility, covered services, and provider access. A subset of these states identified managing/responding to high cost prescription drugs and gene therapies or managing pharmacy expenditures as a key priority.

Ten states mentioned implementation or pursuit of new Section 1115 demonstration waivers, waiver amendments, or waiver renewals as key priorities for 2020. Section 1115 Medicaid demonstration waivers provide states an avenue to test new approaches in Medicaid that differ from federal program rules. These waivers, however, require significant administrative time and resources to develop, negotiate with CMS, and implement. Waivers also often necessitate system changes (MMIS and/or eligibility), contracting with new support vendors, MCO coordination (including contract amendments), outreach and engagement of members, providers, and other stakeholders, state regulatory changes, and other administrative tasks.

A few state Medicaid directors reported also tracking broader state coverage initiatives that extend beyond Medicaid. States including Colorado, Idaho, Illinois, Maine, New Mexico, Nevada, and Oregon are exploring potential state-based coverage expansion options. Options mentioned included Medicaid buy-ins, converting to a state-based marketplace, and other public option models. Washington reported on the implementation of a state public option plan.

States reported on a broad array of strategies to prepare for an aging population. By the year 2030, all baby boomers will be at least 65 years old and 1 in 5 US residents will be at retirement age. In preparation for these demographic changes, state reported plans to continue efforts to rebalance LTSS service delivery to reduce reliance on institutional care settings, use managed long-term services and supports, adopt LTSS payment reforms, and better integrate care for Medicare-Medicaid dual eligibles. A few states also mentioned broader state initiatives related to preparing for an aging population:

• Colorado and Vermont have established working groups to examine issues related to aging for the state and for individuals.
• Recognizing that family caregivers provide the majority of LTSS at no cost to the state, the 2019 Oregon legislature directed the Oregon Health Authority and Department of Human Services to examine options to provide family caregiver supports.
• Washington reported that its legislature created the Long Term Care Trust Fund in 2019 – the nation’s first state-operated, payroll tax funded, social insurance program to pay for long-term care. Payroll deductions will begin in 2022 and benefits will first become available in 2025.

A limited number of states expressed interest in a potential Medicaid block grant option and few states had assessed the implications of broader health reforms. CMS is developing waiver guidance for states interested in pursuing a block grant financing model or other types of capped federal financing. The majority of states reported that they were not interested in pursuing such an option, while others were undecided or waiting to review the guidance. Tennessee reported plans to submit a block grant waiver request no later than November 21, 2019 as required by state legislation passed in FY 2019. States were also asked to comment on potential challenges or opportunities for their state Medicaid programs related to proposed federal coverage expansions such as Medicare-for-all, public plan options, or Medicaid buy-in options. While most reported that there were no current efforts to assess the impact of various options, some states noted general concerns about potential state costs, the need for system modifications, provider access challenges, and other potential transition issues for Medicaid enrollees.

Conclusion

State actions in FY 2019 and FY 2020 reflect an innovative, dynamic Medicaid program that is constantly evolving to address the most pressing health care issues facing the nation, including initiatives to control prescription drug spending, improve birth outcomes and reduce maternal mortality, address the opioid epidemic, and allow seniors to age in place. With fewer budget pressures, many states reported expansions or enhancements to provider rates and benefits. While several states implemented, adopted, or continue to debate the ACA Medicaid expansion, a number of states continue to pursue policies promoted by the Trump administration that could restrict eligibility such as work requirements. At the time of the survey, litigation challenging the ACA was pending before the U.S. Court of Appeals for the 5th Circuit that could have complex and far-reaching consequences for Medicaid and the entire health care system if the ACA is overturned.¹ Looking ahead, the trajectory of the economy, the direction of federal policies around Medicaid Section 1115 waivers, and the focus of the debate and attention to health care issues in the lead up to the November 2020 elections will also be factors that continue to shape Medicaid in FY 2020 and beyond.