Medicaid Opportunities & Challenges Task Force June 26, 2013 Jeff Bechtel, Senior Consultant Medicaid Waivers 101

What is a Medicaid waiver? What are the types of Medicaid waivers? What is a Medicaid Section 1115 waiver? How are waivers financed? How are waivers approved? How have states used waivers historically? How have states used waivers recently? What is South Dakota’s waiver history? Presentation Overview 2

What is a Medicaid waiver? Waivers are vehicles states can use to test new or existing ways to deliver and pay for health care services in Medicaid and the Children’s Health Insurance Program (CHIP). Using a waiver, states can change some basic rules of Medicaid related to things like access to services, level of care requirements, services provided, or populations served. Waivers are often directed at groups of people who might need extra services, like people with disabilities or older adults. 3

What types of Medicaid waivers exist? Section 1115 Research & Demonstration Projects – provide flexibility to test new or existing approaches to financing and delivering Medicaid and CHIP. Center for Medicare and Medicaid Innovation (CMMI) Waivers - provide flexibility to test service delivery and payment model to promote the “Triple Aim.” Section 1915(b) Waivers - provide flexibility to enroll Medicaid enrollees into mandatory managed care. Section 1915(c) Waivers - provide flexibility to provide home and community- based services to enrollees who would otherwise need institutional care. Section 1916(f) Waivers - provide flexibility to approve higher cost sharing than otherwise allowed. 4

What is a Section 1115 Waiver? Section 1115 Medicaid waivers provide states an opportunity to test and evaluate “experimental” policies that differ from federal Medicaid program rules, but promote federal program objectives. Section 1115 waivers give states additional flexibility to design and improve their programs by implementing policy approaches such as: Expanding eligibility to individuals who are not otherwise Medicaid or CHIP eligible. Providing services not typically covered by Medicaid. Using innovative service delivery systems that improve care, increase efficiency, and reduce costs. 5

What is a Section 1115 Waiver? Section 1115 provides the Secretary of HHS authority to: Waive compliance with certain federal Medicaid requirements; and Provide federal matching funds for costs that would not otherwise be included as Medicaid expenditures. Section 1115 does not provide authority for the Secretary to waive provisions outside Section 1902 (such as the federal matching formula). 6

How are Section 1115 waivers financed? Section 1115 waivers are required to be budget neutral for the federal government. Federal spending under a state’s waiver must not be more than projected federal spending would have been for the state without the waiver. Budget neutrality is enforced through a cap on federal matching funds over the life of the waiver. 7

How are waivers approved? Waivers are approved through a series of step and negotiations between a state and HHS: 1.State submits a waiver application to CMS, which is subject to state and federal public notice and comment requirements. 2.CMS staff reviews the waiver application (usually with involvement from other federal HHS agencies and OMB). 3.Usually CMS and state staff negotiate over the terms and conditions of the waiver. 4.If a waiver is approved, CMS issues an award letter to the state along with attachments listing the specific sections of the SSA and applicable regulations that are being waived or modified and the types of expenditures allowed as well as the “terms and conditions” of approval. 5.CMS typically approves waivers for a five-year period that can be extended, typically for three years. 8

How have waivers been used historically? (1990-early 2000s) Expansions to childless adults and mandatory managed care Health Insurance Flexibility and Accountability (HIFA) waiver initiative Restructuring with a focus on cost control 9

How have states used waivers recently? (Since January 2010) Coverage expansions and enrollment simplifications in preparation for the 2014 Medicaid expansion States secured waivers to expand Medicaid early (CA, CO, DC, MN, MO, NJ and WA). States obtained waivers to apply simplifications that are only available to children to their adult population (MA, NY). Eligibility and enrollment restrictions States obtained waivers to roll back eligibility for certain adults with incomes over 133% FLP due to state budget deficits (AZ, HI, NV, WI). CMS has rejected proposals for enrollment restrictions in many other cases. 10

How have states used waivers recently? (Since January 2010) Premium and cost sharing increases States obtained waivers to increase cost sharing for populations who would otherwise have their coverage eliminated (AZ, WI). CMS has rejected other proposals to charge higher premiums and cost sharing than allowed under federal rules. 11

How have states used waivers recently? (Since January 2010) Managed care expansion States have obtained waivers or have pending proposals to expand mandatory manage care to high-need populations such as dual eligible (CA, TX, DE, NY, FL, KS, NJ, NM, OR). State have obtained waivers or have pending proposals to expand managed care to include a high cost services (DE, KS, NJ, NM, OR). Delivery system improvements States obtained waivers to use federal matching funds to cover uncompensated care cost and hospital improvement initiatives (CA, TX, MA, FL). 12

How have states used waivers recently? (Since January 2010) Payment and care delivery reforms States have proposals pending to increase care coordination (AZ, NJ, NV, NM, OR). States have submitted proposals to improve their payment methodologies (value-based payment initiatives) (NJ, NV, OR, NM, KS). 13

What is South Dakota’s history with waivers? South Dakota operates four 1915(C) Home and Community Based Services Waivers: 1.SD CHOICES Waiver – Provides supports to people with intellectual or developmental disabilities who meet ICF/MR level of care requirements so they can remain at home or in the community: Services include service coordination, residential and day habilitation, prevocational services, supported employment, specialized medical equipment and supplies, and nursing Providers are Community Support Providers (formerly known as Adjustment Training Centers) DHS administers this waiver with oversight from DSS Number Served: 2,509 Expenditures: $96.3 million 14

What is South Dakota’s history with waivers? 2.Family Support Waiver - Allows persons with intellectual or developmental disabilities who meet the ICF/MR level of care to remain living at home and in the community Services offered: service coordination, specialized equipment, respite care, personal care, companion care, nutritional supplements, and supported employment Providers are Community Support Providers (formerly known as Adjustment Training Centers) DHS administers this waiver with oversight from DSS Number Served: 920 Expenditures: $2.5 million 15

What is South Dakota’s history with waivers? 3.Assistive Daily Living Services Waiver - Allows persons with significant physical disabilities (quadriplegia) aged 18+ who meet the nursing facility level of care and who are able to manage and direct their own services to remain living at home and in the community Services offered: case management; personal attendant services; consumer preparation services; nursing; and emergency response Providers include home health agencies and Independent Living Centers DHS administers this waiver with oversight from DSS Number Served: 125 Expenditures: $3.2 million 16

What is South Dakota’s history with waivers? 4.Home & Community Based Waiver Services for the Elderly – Allows persons who meet nursing facility level of care, who are age 65+ or age 18+ with a qualifying disability, to remain living at home and in the community Services offered: assisted living; homemaker services; private duty nursing; adult day services; emergency response system; meals and/or nutritional supplements; specialized medical equipment/supplies; respite care; adult companion services; personal care services; and environmental accessibility adaptations Providers include: assisted living facilities; home health agencies; nutrition providers; private businesses; community-based social services organizations; private in-home service providers; long-term care facilities; durable medical equipment providers; pharmacies; community providers; utility companies; and telephone cooperatives DSS Division of Adult Services and Aging administers this waiver Number Served: 1,467 Expenditures: $10 million 17

What is South Dakota’s history with waivers? Medicaid Solutions Workgroup- Home and Community Based Services Sub- committee evaluated several State Plan HCBS options: State Plan HCBS Option 1915(i) option- allows targeted expansion of Home and Community Based Services to one or more selected populations Self-Directed Personal Assistance Services 1915(j) – allows states to establish self- directed personal assistance services Community First Choice 1915 (K) option- allows a new statewide option that includes 6% enhanced FMAP to provide HCBS attendance services for low income individuals After evaluation of these options, the workgroup determined that these are not viable options for South Dakota. 18

Summary/ Observations Obtaining a waiver is a complex, time-consuming process. The term “waiver” (especially for an 1115 waiver) is really a misnomer. Using a waiver, states can change some basic rules of Medicaid related to things like access to services, level of care requirements, services provided, or populations served. Waivers are discretionary, and constrained by CMS Policy Objectives. Waivers also must be “budget neutral” (i.e. not projected to cost more than status quo). This requirement significantly limits waiver awards. As noted during previous discussions, waivers relating to Medicaid “cost-sharing” requirements for population below 138% FPL have not yet been granted. 19

Questions? Sellers Dorsey sellersdorsey.com Jeff Bechtel Senior Consultant Sellers Dorsey