When CMS released a proposed rule to make significant changes to Medicaid last month, it was the first major change in 12 years. The proposed rule addresses a sweeping range of program goals, including a desire to “catch up” Medicaid to Affordable Care Act requirements and objectives now in place for Medicare and commercial plans.
One of the most important parts of the ACA is also the least controversial: the creation of the Center for Medicare and Medicaid Innovation (CMMI). Given a specific mandate and adequate funding, CMMI has already advanced innovation in healthcare. Today, CMMI has authored numerous value-based reimbursement innovations, all designed to improve quality and efficiency. These payment reform initiatives are critical to transforming healthcare from fee-for-service to fee-for-value.
Despite the equal size of both “Ms” in the acronym, CMMI has much broader authority in Medicare than Medicaid. In Medicare, they can create new initiatives, grant waivers and even adopt the best results as new Medicare policy without congressional action.
Medicaid is a different story. CMMI cannot simply create accountable care or medical home programs in Medicaid nor can they grant waivers to Medicaid policy. They also cannot apply the Medicare waivers to the program integrity laws (such as the Stark or Civil Monetary Penalty laws) to new Medicaid initiatives.
Instead, states must apply through a pre-ACA process to obtain waivers to Medicaid policy. This process is highly bureaucratic, needlessly complex and long. According to a recent study, it takes nearly a year for CMS to respond to a new waiver application.
In that same span of time, CMMI rolled out several new programs including ACOs, medical homes and the Bundled Payment for Care Improvement in Medicare. But not one of these applied to Medicaid.
To be clear, many states are trying to innovate in payment reform. Today, at least five states have various bundled payment programs in Medicaid and 19 states have Medicaid ACOs. In some states, such as Ohio, payment reform goals have been pursued for many years. But the states do not have enough authority on their own to innovate in the way CMMI has done with Medicare.
Among the barriers are the program integrity laws mentioned above. Medicare participants in CMMI projects receive exemptions that not only cover these laws relative to Medicare patients, but the waivers even cover care delivered under agreements with commercial payers. Without these waivers, providers currently participating in Medicaid payment reform may be taking an unacceptable legal risk. Furthermore, once innovation is proven successful in a state, there is no CMS-based effort to translate these findings across states.
CMMI is trying to work with the law as it exists today. Rather than force a single medical home project for Medicare, it wisely chose to launch in key states where a Medicaid medical home program was already in place and tailor the program in each state to match the local Medicaid program. Recently, in creating the new Oncology Care Model, CMMI made great efforts to create a program that states could choose to enable for Medicaid. These multi-stakeholder approaches to payment reform are critical to their success.
Medicaid has its own specific attributes that make the ability to meaningfully innovate even more important.
• There is a sweeping trend in Medicaid to end the carve-outs of behavioral health, which is among the most expensive parts of the Medicaid system. The ability to innovate with payment reform methods would be a powerful tool for states to use as new models of delivering behavioral health with medical care emerge.
• Many states have a significant access problem, with providers unwilling to accept Medicaid patients, for a variety of business reasons, including rates. The ability of payment reform to make Medicaid more financially attractive would increase access and quality for patients who need care.
• Medicaid is intended to be a state/federal partnership. One reason to have 58 different Medicaid programs (50 states plus D.C. and the territories) is to allow for localized approaches. But the barriers created by CMS impeding local innovation do not allow the states the latitude they need.
• In many states, Medicaid is delivered by Managed Care Organizations, entities that could greatly benefit from direct participation in CMMI programs (either existing or new) for their Medicaid members. As many of these payers operate in multiple states, having national-level coordination and regulation of their efforts toward payment reform makes perfect sense.
There were many options available to CMS to address this problem in the new rule. They could have granted CMMI broader powers to extend the waivers of the program integrity laws that exist for Medicare to Medicaid. They could have allowed CMMI a broader role in partnership with states for payment reform initiatives.
Most importantly, they could have given CMMI the authority to grant waivers to Medicaid policy in the areas of payment reform and quality improvement, even if they insist on retaining the current year-long process for waivers to benefits or financing.
Another option would have been to advance the timing of a little known area of the ACA called Section 1332 or the Wyden waivers. This part of the ACA is now unavailable until 2017, but it will greatly ease the process for states to get any form of Medicaid waiver. Recently, President Obama expressed support for moving up the date when Section 1332 can apply. Doing so, either in full or limited to payment reform and quality related waivers through CMMI, was an obvious way CMS could have enabled innovation in Medicaid.
Perhaps during the current comment period, enough organizations will highlight the need for better innovation in the final rule. Medicare and commercial plans can innovate in payment reform; Medicaid also needs to do so.
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