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North Texas Leaders Decry Impact of Medicaid Block Grants

Congressman Marc Veasey and the DFW Hospital Council are critical of the new proposal.
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Rep. Marc Veasey D-Fort Worth (Courtesy: Rep. Veasey's Office)

An attempt by the Trump Administration to add flexibility to how states administer their Medicaid funding is drawing criticism from local democratic politicians and hospital groups alike, with some calling them Medicaid block grants that invite states to slash funding for Medicaid that could impact 4 million Texans.

New guidance was released at the end of January by the Centers for Medicare and Medicaid Services, which  says the Healthy Adult Opportunity focuses on adults under 65 who are not eligible for Medicaid because of disability or need for support and who are not eligible under the state plan. CMS says the plan would allow states to incentivize high value care to reduce costs, better negotiate drug prices, make programmatic adjustments without federal approval,

States that want to access that level of flexibility will have their federal funding capped at an aggregate or per-enrollee basis, but any spending over that amount will not be eligible for federal financial participation.

In exchange, states would agree to a limit on federal financing in the form of a per capita or an aggregate cap. States that opt for the aggregate cap and meet performance standards could access a portion of federal savings if actual spending is under the cap. The new plan incentivizes states to choose the aggregate total, because states will share in the savings if they can keep Medicaid spending under the cap.

Today, Medicaid represents $1 out of every $6 spent on healthcare in the country, and is the primary source of funding for states to provide care to low-income residents. Medicaid funded by both the states and federal government, and states must meet federal minimum standards and a variety of options while operating their Medicaid programs. States currently receive federal matching funds that don’t have a limit to serve their low-income residents. The funds reflect demographic and economic shifts, healthcare costs, emergencies and natural disasters.

Critics of the new waiver are saying it could result in significant Medicaid cuts. North Texas Congressman Marc Veasey led a resolution condemning the new rules, which was passed by the House of Representatives earlier this month. “These illegal block grants are just plain wrong. They will allow states who participate to limit the amount of federal dollars they receive to pay for the health care for the millions of lower income and vulnerable people across our country that depend on this program, including over 4 million people in my home state of Texas,” said Veasey via release.

The Kaiser Family Foundation wrote that when a similar rule was debated in Congress in 2017, it would have resulted in Medicaid cuts of up to one third over the next two decades.

Steve Love, the President and CEO of the DFW Hospital Council is also worried about the impact of the new rules if Texas applied for the waiver. He says the community engagement rules could result in work requirements, beneficiaries may have to pay more for services, drugs could be restricted, and states could change eligibility and provider payments without approval by CMS.

Putting a cap on federal funding would limit the amount that makes its way to health systems and physicians, who often operate at a loss when treating Medicaid patients. According to the Kaiser Family Foundation, Texas only pays Medicaid  providers 65 percent of the Medicare pays for the same services. Meanwhile, most hospital systems received more than 200 percent of the Medicare rate for their services last year.

For Love, the way to improve efficiency is to give an expanded Medicaid a chance to have an impact in Texas, which is one of a few states that has not expanded Medicaid. “If the real focus is to expand coverage, let’s put the Affordable Care Act (ACA) expansion side-by-side with the Healthy Adult Opportunity and chose the one that effectively expands coverage and is most favorable to the taxpayers of Texas. It would be the Medicaid expansion through the ACA.,” Love writes.

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