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Medicaid Criteria Changes Don’t Ensure Waivers Will Further Program Objectives

The Centers for Medicare & Medicaid Services (CMS) has revised its criteria for approving demonstration projects (or “waivers”) for states to test new ways to deliver health care to low-income people through Medicaid — and, in doing so, it signaled that the Trump Administration plans to approve proposals that won’t promote Medicaid’s objectives.

Medicaid’s core mission is to provide comprehensive health coverage to low-income people so they can get the health services they need.  Under section 1115 of the Social Security Act, states can use waivers to test new policies and approaches to delivering care to beneficiaries. While states have considerable flexibility under Medicaid law to customize their programs, section 1115 waivers provide additional flexibility by letting states deviate from certain provisions in Medicaid law to implement demonstration projects that promote Medicaid’s objectives. 

Section 1115 authority is broad, but not unlimited, as we’ve written.  Under CMS’ previous criteria, states had to show that their demonstration projects would increase coverage, improve access to care and health outcomes, or increase the efficiency and quality of care for beneficiaries.  Guided by these criteria, CMS rejected state proposals that would create barriers to coverage and care, such as making work a condition of someone’s Medicaid eligibility or ending coverage for people with incomes below the poverty line when they fail to make a premium payment.

With the new criteria, that will change.  For example, the new criteria note that CMS would likely approve proposals that “promote upward mobility” or “promote responsible decision-making,” neither of which links to Medicaid’s core mission of providing comprehensive health insurance to low-income people but which would, instead, let states kick people off of coverage if they don’t comply with new requirements that have nothing to do with health insurance.  And more importantly, the new criteria no longer include increasing coverage as a policy that would likely further Medicaid’s objectives.  That’s a significant shift in CMS policy, consistent with CMS Administrator Seema Verma’s recent remarks that CMS will no longer “just accept the hollow victory of numbers covered.”

The Trump Administration is also apparently willing to consider waivers that let states evade Medicaid requirements in large part because some states, as well as the Administration, don’t like or agree with some parts of Medicaid law, such as the Affordable Care Act’s Medicaid expansion.  In fact, Verma recently said that the Medicaid expansion “does not make sense,” and that one of Medicaid’s goals should be to help the 11 million low-income adults who have gained coverage “move up, move on, and move out.”  She’s also said that “one of the major fundamental flaws in the Affordable Care Act was putting in able-bodied adults into a program that was designed for disabled people” as “it stretched the safety net and it jeopardizes care for the individuals that the program was originally intended for.”

While it’s too early to tell how far the Trump Administration will go in approving Medicaid waivers that would weaken Medicaid, these changes show the Administration’s intentions, and are consistent with Verma’s reported commitment to continuing to pare back the law administratively, to the extent they can.  This points to the Administration’s intent to allow changes that could harm millions of low-income adults who have gained coverage under the Medicaid expansion.