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 New Limited CMS Block Grant Program Draws Attention of LT/PAC Profession

A block grant initiative unveiled by the Centers for Medicare & Medicaid Services (CMS) would allow states to seek a waiver to cap Medicaid funding for low-income adults brought into the program under the Affordable Care Act. While long term and post-acute care (LT/PAC) providers will not be directly impacted by the plan, the profession is alert to the possibilities that any changes to Medicaid could filter throughout the program.

The new CMS initiative, called Healthy Adult Opportunity (HAO), would also let states limit health benefits and drugs available to some patients.

In reaction, Mike Cheek, senior vice president of reimbursement policy at the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), said AHCA is reviewing the CMS block grant letter.

“While the new initiative does not directly impact long term care services, this is an important issue because most people who reside in nursing centers rely on Medicaid, as well as tens of thousands of seniors in America’s assisted living communities, because any changes to Medicaid financing is critical. Medicaid is the primary funding source for all long term care services,” he says.

“We will continue to work with our members, CMS, and other stakeholders to ensure that we can provide the quality care on which our nation’s most vulnerable residents rely via stable and predictable Medicaid funding.”

In announcing the program, the agency stressed that states are not being forced to take part since HAO is an optional demonstration initiative.

“It is designed to give states unprecedented tools to design innovative health coverage programs tailored to the unique needs of adult beneficiaries, while holding states accountable for results and maintaining strong protections for our most at-risk populations,” CMS said in a statement.

HAO is meant to provide states with an opportunity to meet the needs of their adult beneficiaries under age 65 who aren’t eligible on the basis of a disability or their need for long term care and for whom Medicaid coverage is optional for states.

“Other low-income adults, children, pregnant women, elderly adults, and people with disabilities will not be directly affected, except from the improvements that result from states reinvesting savings to improve and sustain Medicaid for everyone,” CMS said.

Also, the agency said that for the first time, participating states will have more negotiating power to manage drug costs by adopting a formulary similar to those provided in the commercial market, with special protections for individuals with HIV and behavioral health conditions.

In exchange for increased flexibility offered through the HAO, states must accept increased accountability for the program’s results.

Before the official release of the HAO initiative, CMS Administrator Seema Verma said she expects the proposal to be challenged in court, but believed its design would hold up under scrutiny. Verma said the initiative is being executed under the Section 1115 waiver authority that allows CMS to consider state requests for altering the way in which it operates aspects of its Medicaid program.

When asked about a Section 1115 waiver request submitted by Tennessee last year to allow for the block granting of its Medicaid funding, Verma said the new HAO model is “something different” and that CMS is still considering the Tennessee submission.

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