HHS offers states advice on achieving Medicaid savings
With states considering reductions in Medicaid spending to address mounting budget deficits, Health and Human Services Secretary Kathleen Sebelius has sent a letter to governors outlining ways they can save money on Medicaid expenditures.
"I know you are struggling to balance your budget while still providing critical healthcare services to those who need them most," Sebelius wrote in the letter, sent on Feb. 3. "I want to reaffirm the Obama Administration's commitment to helping you do both."
[See also: States struggle to keep up with Medicaid costs]
For short-term savings that could be of immediate help to states, HHS suggests four areas to reduce spending: modification of Medicaid benefits, more effective management of high-cost enrollees, more efficient medication purchasin; and ensuring program integrity (i.e. reducing claims errors and ferreting out fraud).
Experts say many states have already tried to address these areas and may not find enough additional savings to make a significant dent in expenditures. Some, meanwhile, have looked at improving the management of pharmacy benefits
"States (are) feeling the intense pressure of knowing they have done all the easy stuff to save money already," said Carolyn Ingram, senior vice president of the Center for Health Care Strategies and former New Mexico Medicaid director. "We took on fraud and abuse, we redesigned our benefit package, and we have coordinated care better for dual eligibles."
Republican governors, especially, have been pressing the administration to allow them more leeway in how they manage their Medicaid programs without jeopardizing federal matching dollars, which comprise 57 cents out of every dollar spent in the Medicaid program.
Last month, Arizona Gov. Jan Brewer received approval from the state Legislature to apply for a Medicaid waiver that would allow the state to drop as many as 280,000 people from Medicaid. It's a gambit many industry watchers don't expect to be granted, since it's a direct challenge to current "maintenance of effort" language in the Affordable Care Act that requires states not to alter Medicaid eligibility rules.
[See the full story: Arizona governor seeks to drop 280,000 from state Medicaid rolls]
Sebelius indicated that door is not yet closed as a possible solution for some states.
"Recent conversations suggest a lack of clarity about what flexibility currently exists in Medicaid," she noted. "Some of you have asked whether I can 'waive' the maintenance of effort requirements for people who a state has covered under Medicaid's 'optional' eligibility categories and waivers. I note that the Affordable Care Act gives a state the flexibility to reduce eligibility for non-disabled, non-pregnant adults with incomes above 133 percent of the federal poverty line ($14,500 for an individual) if the state has a budget deficit, although prior to June 30, this would mean the loss of the enhanced FMAP under the Recovery Act. I continue to review what authority, if any, I have to waive the maintenance of effort under current law."
While significant short-term relief may be hard to find, the Centers for Medicare and Medicaid Services has launched programs that may provide longer-term savings. These include renewed efforts to better manage so-called dual-eligibles, who are covered by both Medicare and Medicaid – a population that represents 15 percent of Medicaid recipients but account for nearly 40 percent of all program spending.
In an effort to expedite working with the states to achieve short-term Medicaid savings, HHS will hold "virtual meetings" with state Medicaid directors and health policy experts.
"In these sessions, we will share information about promising Medicaid cost-saving initiatives underway in one or more states that we are prepared to support and approve in other states on a fast-track basis," Sebelius said.
