Medicaid Demonstration Waivers
Lack of Opportunity for Public Input during Federal Approval Process Still a Concern Gao ID: GAO-07-694R July 24, 2007States provide health care coverage to about 60 million low-income individuals through Medicaid, a joint federal and state program established under title XIX of the Social Security Act (the Act). Title XIX of the Act established parameters under which states operate their Medicaid programs, such as requiring states to cover certain services for certain mandatory groups of individuals such as low-income children; pregnant women; and aged, blind, or disabled adults. The Secretary of Health and Human Services (HHS), however, possesses authority to allow states to depart from these requirements under certain conditions. Under section 1115 of the Act, the Secretary may waive certain Medicaid requirements and authorize Medicaid expenditures for experimental, pilot, or demonstration projects that are likely to assist in promoting Medicaid objectives. Medicaid section 1115 demonstration projects vary in scope, from targeted demonstrations, which are limited to specific services and populations, to comprehensive demonstrations, which affect Medicaid populations statewide, cover a broad range of services, and account for the majority of a state's Medicaid expenditures. Since 1982, the Secretary has approved comprehensive demonstration projects in a number of states, including Arizona, Florida, Hawaii, Oregon, Tennessee, and Vermont. Since our 2002 report, and our subsequent 2004 report on 1115 demonstration approvals, HHS has continued to review and approve waivers of federal requirements for new comprehensive demonstration proposals. At Congress's request, we reviewed recently approved comprehensive demonstrations, including the process HHS used to obtain public input on these proposals. This correspondence addresses (1) implications for beneficiaries of recently approved comprehensive Medicaid demonstrations and (2) the extent to which the Secretary ensured opportunities for public input during the approval process. Our review encompassed recently approved comprehensive demonstration programs in two states, Florida and Vermont. These were the two demonstration programs meeting our criteria of (1) being approved by HHS from July 2004 (when we last reviewed HHS-approved section 1115 demonstrations) through December 2006 and (2) being comprehensive, including accounting for greater than 50 percent of the state's Medicaid expenditures.
Recently approved Medicaid section 1115 demonstrations in Florida and Vermont have mixed implications for beneficiaries in terms of coverage and eligibility. The demonstrations are implementing different methods for administering each state's Medicaid program and, as of March 2007, had been under way less than 8 months in Florida and less than 18 months in Vermont. Consequently, the actual effect of the demonstrations on beneficiaries was not yet known. Officials in both states took steps to obtain public input in line with HHS's 1994 policy, but HHS did not provide opportunity for public input at the federal level once the proposals were received or post the states' proposals on its Web site before approving them. Instead, HHS relied on Florida and Vermont officials to obtain and respond to public comments. Both states provided opportunities for public input--for example, by holding public hearings and posting drafts of the demonstration proposal on the states' Web sites. Even so, stakeholders in each state and at the national level said they lacked access to specific information about aspects of the proposals that directly affected beneficiaries or lacked sufficient time to review and comment on the proposals. In Vermont, for example, the state's Medical Care Advisory Committee, established by the state to facilitate consumer input in state Medicaid policy, voted against approval of the demonstration proposal because members said they lacked sufficient time and information to understand the proposal. In Florida, stakeholders said that information about the demonstration proposal provided during public meetings was insufficient for adequately understanding implications and that, upon request, state officials did not provide key documents related to the demonstration, such as budget and demographic information related to the proposal. At the federal level, organizations representing individuals aged 50 and above, children and families, and other Medicaid beneficiaries affected by the Florida and Vermont demonstrations said that HHS did not post the proposals to its Web site or provide them with timely information about the demonstrations upon request. Unless Congress and HHS take actions in response to the matters for congressional consideration and recommendations to HHS presented in our July 2002 report, it appears likely that HHS will continue to approve waivers for comprehensive demonstration proposals--with potentially significant implications for program beneficiaries--without adequate opportunity for public input.
GAO-07-694R, Medicaid Demonstration Waivers: Lack of Opportunity for Public Input during Federal Approval Process Still a Concern
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July 24, 2007:
The Honorable Henry A. Waxman:
Chairman:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable John D. Dingell:
Chairman:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Frank J. Pallone, Jr.:
Chairman:
Subcommittee on Health:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Sherrod Brown:
United States Senate:
Subject: Medicaid Demonstration Waivers: Lack of Opportunity for Public
Input during Federal Approval Process Still a Concern:
States provide health care coverage to about 60 million low-income
individuals through Medicaid, a joint federal and state program
established under title XIX of the Social Security Act (the Act). Title
XIX of the Act established parameters under which states operate their
Medicaid programs, such as requiring states to cover certain services
for certain mandatory groups of individuals such as low-income
children; pregnant women; and aged, blind, or disabled adults.[Footnote
1] The Secretary of Health and Human Services, however, possesses
authority to allow states to depart from these requirements under
certain conditions. Under section 1115 of the Act, the Secretary may
waive certain Medicaid requirements and authorize Medicaid expenditures
for experimental, pilot, or demonstration projects that are likely to
assist in promoting Medicaid objectives. Medicaid section 1115
demonstration projects vary in scope, from targeted demonstrations,
which are limited to specific services and populations, to
comprehensive demonstrations, which affect Medicaid populations
statewide, cover a broad range of services, and account for the
majority of a state's Medicaid expenditures.[Footnote 2] Since 1982,
the Secretary has approved comprehensive demonstration projects in a
number of states, including Arizona, Florida, Hawaii, Oregon,
Tennessee, and Vermont.
In 1994, the Department of Health and Human Services (HHS) established
in the Federal Register the department's policies and procedures for
evaluating Medicaid section 1115 demonstration[Footnote 3] proposals,
including processes for soliciting public input at both the state and
federal levels.[Footnote 4] At the state level, for example, states
were expected to post notice of proposals in major newspapers, hold
public hearings about the proposal, or take certain other steps to
solicit public input. At the federal level, HHS indicated that it would
notify interested organizations when it received a demonstration
proposal; publish monthly notices of all new and pending demonstration
proposals in the Federal Register; allow for a 30-day comment period
after new proposals were received; acknowledge, if feasible, receipt of
comments; and refrain from approving or disapproving proposals until at
least 30 days after proposals were received.
In July 2002, we reported that HHS had not consistently provided an
opportunity at the federal level for the public to learn about and
comment on pending demonstrations in accordance with its 1994
policy.[Footnote 5] We concluded that public input was important at the
federal level in part because approved demonstrations represent federal
policy that may have influence beyond a single state. A federal-level
process also provides more visibility and transparency for all affected
and interested parties, including Congress. Because HHS disagreed with
our recommendation that the agency provide for a federal public input
process--indicating instead that it planned to post notice of proposed
(pending) and approved demonstrations to its Web site--we suggested
that Congress consider requiring the Secretary to improve the public
notification and input processes at the federal level to ensure that
individuals affected by section 1115 demonstrations have an opportunity
to review and comment on proposals before they are approved. Congress
has not yet enacted legislation that responds to this recommendation.
Since our 2002 report, and our subsequent 2004 report on 1115
demonstration approvals,[Footnote 6] HHS has continued to review and
approve waivers of federal requirements for new comprehensive
demonstration proposals. At your request, we reviewed recently approved
comprehensive demonstrations, including the process HHS used to obtain
public input on these proposals. This correspondence addresses:
* implications for beneficiaries of recently approved comprehensive
Medicaid demonstrations and:
* the extent to which the Secretary ensured opportunities for public
input during the approval process.
Our review encompassed recently approved comprehensive demonstration
programs in two states, Florida and Vermont. These were the two
demonstration programs meeting our criteria of (1) being approved by
HHS from July 2004 (when we last reviewed HHS-approved section 1115
demonstrations) through December 2006 and (2) being comprehensive,
including accounting for greater than 50 percent of the state's
Medicaid expenditures.[Footnote 7] To assess the reliability of HHS
information on states' Medicaid expenditures, we reviewed HHS
documentation on the collection of and quality assurance activities
related to the data and interviewed knowledgeable HHS officials, and
determined the data to be reliable for our purposes. To assess
implications for beneficiaries of the Florida and Vermont
demonstrations, we reviewed HHS's and states' documents, including
proposals for these demonstrations and approved demonstrations' terms
and conditions,[Footnote 8] and federal and state laws; we also
interviewed state and HHS officials, including officials from
CMS.[Footnote 9] To examine public input processes, we reviewed certain
federal and state laws and guidance; interviewed HHS and state
officials; interviewed representatives from national, state, and local
stakeholder groups; reviewed information posted by HHS on its Web site;
and reviewed documentation of public meetings and written responses to
public comments. (See enc. I for a list of stakeholder groups
interviewed for this correspondence.) Because the Florida and Vermont
demonstrations were in their early implementation phase during our
review, we focused our assessment largely on determining implications
for Medicaid beneficiaries under the terms of the states'
demonstrations as approved by HHS. We did not, however, consider
implications of these demonstrations with respect to other aspects of
federal oversight of the Medicaid program.[Footnote 10] We conducted
our review from June 2006 through June 2007 in accordance with
generally accepted government auditing standards.
Results in Brief:
Recently approved Medicaid section 1115 demonstrations in Florida and
Vermont have mixed implications for beneficiaries in terms of coverage
and eligibility. The demonstrations are implementing different methods
for administering each state's Medicaid program and, as of March 2007,
had been under way less than 8 months in Florida and less than 18
months in Vermont. Consequently, the actual effect of the
demonstrations on beneficiaries was not yet known.
* Florida's demonstration program. Approved by HHS in October 2005 and
launched in July 2006, Florida's demonstration program is designed to
give Medicaid beneficiaries more options in selecting health care plans
and benefits. In the initial phase of the demonstration, certain
Medicaid beneficiaries in two counties are required to enroll in
managed care benefit plans. Managed care plans compete for Medicaid
beneficiaries by offering different coverage options, including
customized benefits, subject to certain limitations. For example, some
plans could offer supplemental coverage for nonemergency dental
benefits or over-the-counter pharmaceuticals not offered by other
health plans. If beneficiaries do not choose a plan, they are
automatically enrolled into a plan by the state, and coverage can be
limited to emergency medical services and nursing home level care for
beneficiaries for up to 30 days pending beneficiaries' enrollment in a
managed care plan. Unlike many other previous Medicaid managed care
systems, managed care plans in Florida have the authority to design
benefit packages subject to approval by the state. Medicaid
beneficiaries are notified about changes in their benefits from year to
year and are responsible for determining whether plans continue to meet
their health care needs. Medicaid beneficiaries may also voluntarily
"opt out" of Medicaid coverage altogether and use a state-paid Medicaid
premium toward their costs to enroll in an employer-sponsored insurance
plan or--if they are self-employed--in a commercial benefit plan. In
making this choice, however, these individuals, including mandatory
Medicaid beneficiaries,[Footnote 11] would no longer be entitled to
mandatory Medicaid benefits; for example, children would no longer be
entitled to mandatory comprehensive screening and treatment benefits if
their parents enrolled in an employer-sponsored or commercial benefit
plan that did not provide these benefits. Medicaid beneficiaries can
choose a new benefit plan each year. If they opt out of Medicaid but
later desire to enroll in one of Florida's Medicaid demonstration
managed care plans, they need to wait for a qualifying event or open
enrollment period before reenrolling. Initially implemented in a two-
county area, the components of the demonstration are planned for
statewide implementation by June 2010.[Footnote 12]
* Vermont's demonstration program. Approved by HHS in September 2005
and launched the following month, Vermont's demonstration created a
single, state-operated managed care organization to cover virtually all
of the state's Medicaid population.[Footnote 13] The demonstration is
designed to contain costs; to improve system accountability and quality
of care; and, by potentially delivering services to Medicaid
beneficiaries for less and reinvesting savings, to allow the state to
serve more of its uninsured population. As a condition of approval, HHS
required that the state be at risk for paying any costs for the
demonstration beyond an established spending limit; however, the state
has additional flexibility beyond traditional Medicaid requirements to
change benefits, increase cost-sharing requirements, and alter
eligibility for nonmandatory Medicaid beneficiaries. For example, the
state is authorized to change the covered benefit package offered to
certain groups of beneficiaries, such as nonmandatory groups that
previously received Medicaid coverage at the state's option, without
additional HHS approval as long as the changes result in no more than a
5 percent increase or decrease each year from the prior year's total
Medicaid expenditures.
Officials in both states took steps to obtain public input in line with
HHS's 1994 policy, but HHS did not provide opportunity for public input
at the federal level once the proposals were received or post the
states' proposals on its Web site before approving them. Instead, HHS
relied on Florida and Vermont officials to obtain and respond to public
comments. Both states provided opportunities for public input--for
example, by holding public hearings and posting drafts of the
demonstration proposal on the states' Web sites. Even so, stakeholders
in each state and at the national level said they lacked access to
specific information about aspects of the proposals that directly
affected beneficiaries or lacked sufficient time to review and comment
on the proposals. In Vermont, for example, the state's Medical Care
Advisory Committee, established by the state to facilitate consumer
input in state Medicaid policy, voted against approval of the
demonstration proposal because members said they lacked sufficient time
and information to understand the proposal. In Florida, stakeholders
said that information about the demonstration proposal provided during
public meetings was insufficient for adequately understanding
implications and that, upon request, state officials did not provide
key documents related to the demonstration, such as budget and
demographic information related to the proposal. At the federal level,
organizations representing individuals aged 50 and above, children and
families, and other Medicaid beneficiaries affected by the Florida and
Vermont demonstrations said that HHS did not post the proposals to its
Web site or provide them with timely information about the
demonstrations upon request. Unless Congress and HHS take actions in
response to the matters for congressional consideration and
recommendations to HHS presented in our July 2002 report, it appears
likely that HHS will continue to approve waivers for comprehensive
demonstration proposals--with potentially significant implications for
program beneficiaries--without adequate opportunity for public input.
In commenting on a draft of this report, HHS said the department
continues to disagree with our recommendation that the Secretary
provide for an improved public input process at the federal level. HHS
said that sufficient opportunities are available at the state level and
that a new federal-level requirement could create legal challenges that
would delay HHS's and states' implementation of innovative
demonstrations. We disagree with HHS's contention that its current
policies and practices allow for sufficient public input. For example,
stakeholders reported they lacked access to specific information about
the proposals during the public input process. Also, HHS told us in
2002 that it planned to post proposed demonstrations on its Web site,
but has not since established this policy in a written form in HHS
guidance,[Footnote 14] and has not followed this practice in the case
of recently approved demonstrations in Florida and Vermont.
Furthermore, HHS did not explain or provide a basis for its contention
that allowing for federal input could create legal challenges.
Therefore, we disagree with HHS's suggestion that a public process
should be limited in order to avoid legal challenges. Because of long-
standing concerns with inadequate opportunities for public input in the
process and because a notice-and-comment period at the federal level
would provide for a more open and transparent process for all parties,
we maintain our earlier recommendation that Congress consider requiring
the Secretary to institute such a process.
We also provided a copy of a draft of this report to Florida and
Vermont. Florida stated that our draft report did not provide an
accurate representation of the demonstration structure as it
selectively represented certain aspects of Florida's demonstration and
omitted or underemphasized other innovative and integral aspects of the
program. We maintain that our report accurately describes the major
components of Florida's demonstration. We did, however, update the
report to discuss a component of the demonstration that Florida said
was important, specifically, information on a financial benefit to
encourage healthy behaviors; about $34,000 had been used by
beneficiaries as of March 2007. Vermont, while disheartened that some
stakeholders noted that the state's public input process was somehow
weak or not well rounded, stated that our draft report was thorough,
thoughtful, balanced, and complete.
Background:
Medicaid is one of the largest programs in federal and state budgets.
In fiscal year 2005, the most recent year for which complete
information is available, total Medicaid expenditures were an estimated
$317 billion. States pay qualified health providers for a broad range
of covered services provided to eligible beneficiaries. The federal
government reimburses states for its share of these expenditures. The
federal matching share of each state's Medicaid expenditures for
services is determined under a formula defined under federal law and
can range from 50 to 83 percent.[Footnote 15] Each state administers
its Medicaid program in accordance with a state Medicaid plan, which
must be approved by HHS.[Footnote 16] Traditional Medicaid programs
represent an open-ended entitlement, meaning the state will enroll all
individuals who are eligible for Medicaid, and both the state and the
federal government will pay, without limitation, their share of state
expenditures for people covered under a state's approved Medicaid plan.
States have considerable flexibility in designing their Medicaid
programs, but under federal Medicaid law, states generally must meet
certain requirements for which benefits are to be provided and who is
eligible for the program, and states may impose only nominal
deductibles, coinsurance, or co-payments on some Medicaid beneficiaries
for certain services.[Footnote 17] For example, states are required to
cover certain services, such as physician, hospital, and nursing
facility services, as well as early and periodic screening, diagnostic,
and treatment (EPSDT) services for children (under the age of 21).
States can receive federal matching payments to cover certain optional
services, such as prescription drugs, vision, and dental services, but
if they do so, they must generally provide the same benefits to all
covered beneficiaries. Groups of individuals that states are required
to cover under the state plan are known as "mandatory" populations, and
states may choose to provide Medicaid coverage to additional optional
groups of individuals.[Footnote 18] Generally, optional Medicaid
beneficiary groups share characteristics similar to the mandatory
groups, but have higher incomes and states may cover these individuals
under a state plan. Expansion eligibility groups are those individuals
who do not fall under statutorily defined Medicaid eligibility
categories but whom states are able to cover under a section 1115
demonstration.
Under section 1115 of the Social Security Act, the Secretary has
authority to waive certain federal Medicaid requirements and authorize
Medicaid expenditures for experimental, pilot, or demonstration
projects that are likely to assist in promoting Medicaid
objectives.[Footnote 19] States have used the flexibility granted
through section 1115 to implement major changes to existing state
Medicaid programs. For example, some states have used Medicaid section
1115 demonstrations to introduce mandatory managed care for their
Medicaid beneficiaries; other states have expanded Medicaid coverage to
additional populations or services.
Recognizing that people who may be affected by a demonstration project
"have a legitimate interest in learning about proposed projects and
having input into the decision-making process," HHS established
procedures in a 1994 Federal Register notice for both a federal-and a
state-level public notice-and-comment process.[Footnote 20] At the
state level, the requirements of this policy have remained essentially
unchanged since the notice was issued on September 27, 1994. In
directing states to facilitate public involvement and input during the
development of proposed demonstrations, the notice describes a variety
of ways that states may create opportunities for public input, such as
holding public hearings, convening commissions with open public
meetings, enacting state legislation regarding the demonstrations, or
posting information about demonstration proposals in newspapers. HHS's
policy also instructs states to include in their formal 1115
demonstration proposals a brief narrative describing the process used
to obtain public input.[Footnote 21] In the 1994 notice, HHS indicated
that it would post notice of new and pending demonstrations in the
Federal Register; allow for a 30-day comment period; notify certain
organizations of the receipt of demonstration proposals; acknowledge,
if feasible, comments made; and refrain from approving or disapproving
proposals until at least 30 days after proposals were received.
Demonstrations in Florida and Vermont Have Mixed Implications for
Beneficiaries, but Actual Effects Are Unknown:
Recently approved demonstrations in Florida and Vermont implement
different methods for administering each state's Medicaid program and
have potentially wide-ranging implications for beneficiaries. In
Florida, for example, beneficiaries have greater flexibility to choose
among different benefit plans, but could face the loss of some
benefits, limits on covered services, or additional cost-sharing
requirements, and beneficiaries could face up to 30 days with limited
coverage before being enrolled in a managed care benefit plan. Vermont
may use savings from managed care operations to fund additional health
care initiatives, but the state is at financial risk should
demonstration costs exceed the approved spending limit, with uncertain
implications for beneficiaries should that happen. Because the
demonstrations were in early stages of implementation at the time of
our review, the actual effect on beneficiaries of their various
components was not yet known.
Florida's Demonstration Provides Beneficiaries More Choice, but
Beneficiaries Assume Risk for Their Choice of Plans, under Which
Benefits Could Be Limited:
Florida's demonstration proposal, which Florida submitted and HHS
approved in October 2005, gives beneficiaries a more active role in
determining their health care by requiring them to choose from a number
of managed care plans in their area. Under the demonstration, HHS gave
authority to the state to develop and pay risk-adjusted premiums
[Footnote 22] to managed care plans that cover beneficiaries, and to
establish an annual maximum benefit limit for adults.[Footnote 23] The
state in turn is requiring most beneficiaries, including aged and
disabled persons and certain families and children,[Footnote 24] to
choose from a number of managed care plans offering a variety of
benefit packages (beneficiaries are automatically enrolled in a plan if
they do not make a choice), or they can opt out of Medicaid and enroll
in employer-sponsored benefit plans or, in the case of those who are
self-employed, in commercial benefit plans. By choosing a benefit plan
or opting out of Medicaid to purchase employer-based or commercial
insurance, however, beneficiaries may also experience reduced benefits
or increased cost sharing such as co-payments or deductibles. Florida's
demonstration program began in July 2006 in two counties, Broward and
Duval, and is scheduled to expand statewide by 2010.
Selected features of the Florida demonstration and implications for
beneficiaries include the following:
* Managed care plans have flexibility to offer state-approved benefit
plans tailored to specific groups of beneficiaries: Participating
managed care plans can vary the amount, duration, and scope of benefits
offered to individual beneficiaries who share demographic
characteristics or who have varying levels of medical need, and they
can drop or impose cost sharing on certain services as long as the
required cost sharing is within those limits approved for services
under the state Medicaid plan. According to state officials, managed
care plans must provide the same level of coverage available under the
state plan with respect to children under age 21 and pregnant
women.[Footnote 25] Managed care plans are encouraged to compete for
enrollees by offering customized benefit packages--for example, by
including additional services or lower cost sharing--targeted to
specific populations. To ensure that all benefit plans offer sufficient
coverage, the state must approve all benefit packages offered to
Medicaid beneficiaries.[Footnote 26] Managed care plans participating
in the demonstration as of March 2007[Footnote 27] offered similar
plans, in that they each covered certain basic Medicaid benefits, such
as hospital inpatient and outpatient services, ambulance services, and
maternity services. However, some participating plans offered
beneficiaries additional services, such as adult dental benefits, over-
the-counter pharmacy benefits, and frail-or elder-care services that
were not offered by other plans. Some plans limited beneficiaries to 60
lifetime visits for home health services--consistent with Florida's
state-plan-required coverage--while others expanded this service to 210
visits annually per beneficiary. Several plans had no limits on the
amount or cost of prescription drugs a beneficiary may use, while
others limited the number of monthly prescriptions that beneficiaries
were allowed or the annual covered cost for prescription drugs. Nearly
half of the plans required beneficiaries to pay some form of co-
payments, while the remaining plans did not have co-payment
requirements. Whereas before the demonstration all beneficiaries
meeting the same eligibility requirements received the same benefits as
covered under the state Medicaid plan, under the demonstration,
Medicaid beneficiaries could enroll in a participating plan based on
the particular benefit package offered by managed care plans, much as
they would in the commercial insurance market. In addition, unlike many
other previous Medicaid managed care systems, managed care plans may
change benefit packages annually with state approval. After
beneficiaries are notified each year about changes in their benefits,
they are responsible for determining whether their plans continue to
meet their health care needs. Under the demonstration, beneficiaries
can remain with the same plan or can choose a new plan each year during
a designated open enrollment period. Beneficiaries need to review their
plans each year to ensure that they understand how benefits may be
changing.
* Beneficiaries can have the state contribute towards the purchase of
available employer-sponsored insurance or commercial health insurance
and voluntarily opt out of Medicaid: Under Florida's demonstration,
beneficiaries can choose to "opt out" of Medicaid and have the state
use their Medicaid premium toward paying the costs of employer-
sponsored health insurance or, if they are self-employed, towards
individually purchased commercial health insurance. HHS has authorized
the state to pay for such costs up to the state-established Medicaid
premium and receive federal matching payments for these expenditures.
Although employer-sponsored or commercial benefit plans must meet
minimum state licensing standards, these plans are not subject to
benefit package requirements applicable to plans participating in the
demonstration and, therefore, may offer fewer benefits than plans
participating in the demonstration. Also, these plans may have greater
cost-sharing requirements, such as deductibles, co-payments, and higher
monthly premiums than those the state would allow for plans
participating in the demonstration.[Footnote 28] By choosing to opt out
of Medicaid, beneficiaries from mandatory populations could receive
fewer benefits through employer-sponsored health plans. For example,
children of parents who opt out and who previously had comprehensive
Medicaid coverage for a broad range of EPSDT services could potentially
have their benefits reduced. Medicaid beneficiaries who opt out of
Medicaid have 90 days to choose to enroll instead in a Medicaid managed
care plan. After 90 days, the beneficiary must remain with the employer-
sponsored insurance and can make no further changes, including
enrolling in a Florida Medicaid managed care plan, until the next
employer-sponsored open enrollment period, unless the enrollee no
longer has access to employer-sponsored coverage. If a beneficiary
loses eligibility for participation in the employer-sponsored plan, the
state has a process for "opting back in" to a Medicaid managed care
plan.
* Choice counselors will assist beneficiaries with choosing benefit
plans or with opting out of Medicaid, but beneficiaries must assume
risk for their choices: Through the mandatory enrollment of
beneficiaries into managed care plans that they choose, Florida's
demonstration emphasizes individual involvement in selecting from
benefit plan options, and the state expects to gain valuable
information about the effects of infusing market-based approaches into
a public entitlement program. To assist beneficiaries with their
choices, Florida is providing counselors--called "choice counselors"--
to provide information about choosing a benefit plan and about opting
out of Medicaid. According to the demonstration's terms and conditions,
independent choice counselors will provide beneficiaries with
information about each plan's coverage, benefits and benefit
limitations, cost-sharing requirements, network and contacts,
performance measures, results of consumer satisfaction reviews, and
access to preventive services. Because the choice of benefit plans
could have significant implications for beneficiaries, how well Florida
implements choice counseling is critical to beneficiaries'
understanding their options and making sound choices regarding which
benefit plan best meets their needs. As of March 2007, it was too early
to evaluate the effectiveness of choice counselors in helping
beneficiaries choose benefits plans.
* Florida may limit retroactive eligibility and benefits for new
beneficiaries: Under the demonstration, Florida may limit eligibility
to the date of an individual's Medicaid application and need not
provide Medicaid coverage for new beneficiaries retroactively, that is,
for up to 3 months before the date the individual applied for
assistance. Under the statutory requirements for Medicaid, if an
applicant is found eligible for Medicaid, a state plan must make
medical assistance retroactive for up to 3 months. HHS approved a
waiver of this statutory requirement for the demonstration. In
addition, Florida could, if it chooses, restrict newly eligible
beneficiaries' coverage for Medicaid services for up to 30 days after a
beneficiary is determined to be eligible, but before a benefit plan is
selected or before the state assigns a beneficiary to a benefit plan.
During this 30-day period, or until a beneficiary selects a benefit
plan or is assigned to one, Florida can restrict his or her care to
only emergency medical services and nursing home level of
care.[Footnote 29] Florida Medicaid officials, however, informed us
that pregnant women and children under 21 years of age will continue to
have retroactive eligibility for up to 3 months prior to the date of
application,[Footnote 30] will receive full state plan benefits, and
are also exempt from receiving limited benefits for up to 30 days
before they are enrolled in a managed care plan.
According to Florida officials, another key component of the
demonstration is the enhanced benefit program to promote healthy
behaviors. Under the program, accounts are established to provide
incentives to enrollees for participating in state-defined activities
that promote healthy behaviors. An individual who participates in
certain state-defined activities that promote healthy behavior is given
up to $125 per state fiscal year in "credits" in an individual enhanced
benefit account to use for certain health-care-related expenditures. As
of March 2007, beneficiaries had used about $34,000 of $1.7 million
credited to their accounts under the program.[Footnote 31]
Florida began implementation of this demonstration program in July
2006; however, beneficiaries were not enrolled in benefit plans until
September 2006. As of March 2007, more than 165,000 beneficiaries were
enrolled in benefit plans. At the time of our review, the demonstration
program was not yet far enough along to determine the effect on
beneficiaries and the extent to which providing beneficiaries with
increased choices, along with the increased risk associated with those
choices, was improving care.
Vermont's Demonstration Grants the State New Flexibility, but Some
Beneficiaries May Have Benefits Reduced and Eligibility Delayed or
Denied:
Vermont's demonstration, submitted in April 2005 and approved by HHS in
September 2005, provides the state with the flexibility necessary to
administer most of the state's Medicaid program in a more centralized
manner. The demonstration, which began in October 2005, allows the
state to operate its own managed care organization. Under the
demonstration, an office within the state's Medicaid agency was
converted to a publicly operated managed care organization responsible
for providing services and managing costs for most of the state's
Medicaid program.[Footnote 32] The demonstration proposal indicated
that changes to the state's Medicaid program under the demonstration
would be transparent to most Medicaid enrollees in the short term: the
demonstration would not change delivery or coverage of services to
beneficiaries.
Selected features of the Vermont demonstration and implications for
beneficiaries and providers include the following:
* Expected cost savings could enable Vermont to serve more of the
state's uninsured population: HHS permitted the state to convert its
Office of Vermont Health Access, which is within the state's Medicaid
organization, into a single, state-run managed care organization. As
described in the demonstration proposal, the demonstration is designed
to put in place a series of health care options responsive to
priorities supported by the governor and state legislature, including
improved access to health care for Vermont's uninsured, cost
containment within Medicaid, and improved system accountability and
quality of care. Under the demonstration, the state is provided
flexibility, including the ability to use creative payment mechanisms,
rather than fee-for-service, to pay for services not traditionally
reimbursable through Medicaid. The state expects the new state-run
managed care organization to be more efficient. By employing a cost-
containment strategy, which includes standardizing provider
reimbursement systems and managing chronic care, the new state Medicaid
structure and finance arrangement could help state officials address
Medicaid deficits that had been projected to occur in Vermont. Under
the demonstration, the state automatically enrolled nearly all Medicaid
beneficiaries in the new state-run managed care organization. In doing
so, according to the state's Medicaid director, it hoped to introduce
chronic-care management and disease prevention services for enrollees,
such as smoking-cessation programs. State officials indicated that
savings generated by the demonstration could be applied to previously
state-funded programs, such as those for the state's uninsured.
* Expenditures for Medicaid services are allowed to increase or
decrease up to 5 percent annually for nonmandatory beneficiaries: Under
Vermont's demonstration, HHS provided the state the authority to change
the benefit package for the nonmandatory eligible population as long as
the changes result in no more than a 5 percent cumulative increase, or
decrease, each year in total Medicaid expenditures.[Footnote 33] The
state is required to notify HHS of any such change in the benefit
package but is not required to receive HHS approval for the changes. If
Vermont's Medicaid program incurs financial setbacks or continues to
run deficits, these beneficiaries could potentially experience a
reduction in benefits offered by the state, such as the number of
prescriptions allowed or number of doctor visits permitted each month,
as long as these reductions do not decrease state expenditures for
Medicaid by more than 5 percent annually.
* Optional and expansion Medicaid populations may see an increase in
their share of costs: Under the demonstration's terms and conditions,
HHS permitted Vermont to maintain or increase premiums and co-payments
for services for optional and expansion Medicaid populations--as long
as such cost sharing for children in optional and expansion populations
does not exceed 5 percent of a family's income. The state is not
required to obtain HHS approval for changes to premiums and co-payments
within the range specified in the demonstration's terms and conditions
if they do not exceed 5 percent of a family's gross income for eligible
children. The state agreed to maintain the state plan co-payments and
premium provisions for the mandatory population.
* Optional and expansion Medicaid populations may experience a change
or delay in eligibility: Under the demonstration's terms and
conditions, Vermont agreed to maintain eligibility established in the
demonstration's base year for mandatory beneficiaries but was
authorized, for optional and expansion populations, to impose
enrollment caps or eliminate eligibility during the 5-year
demonstration. The state can limit enrollment and impose waiting lists
for these groups; however, such changes must be approved by HHS.
* Financing approach limits federal risk but shifts risk to state and
potentially to all beneficiaries and providers: Another component of
Vermont's demonstration is a spending limit, which, if exceeded, would
end federal matching payments for Medicaid services paid under the
demonstration. By establishing a spending limit on federal matching
funds, HHS transfers financial risk from the federal government to the
state, with implications for all beneficiaries and providers. If the
state experiences an unexpected increase in Medicaid beneficiaries or
expenditures during the demonstration period, it could reach or exceed
the demonstration's spending limit. The state would then have to
finance the demonstration using only state funds. Without available
federal matching funds to continue to cover the demonstration's
required costs to provide services, options available to the state to
reduce expenditures could include reducing benefits and increasing cost
sharing requirements, cutting back on populations served, or decreasing
provider payment rates.
Vermont began implementation of this demonstration program in October
2005, and the demonstration proposal indicated that, initially,
delivery of services to beneficiaries would not change. Nearly all
Medicaid beneficiaries were enrolled in the demonstration at the time
it was initiated, and as of December 2006, the latest month in which
information was available, more than 141,000 beneficiaries in Vermont
were enrolled. At the time of our review, the demonstration program was
not yet far enough along to assess the financial effects of the
demonstration on beneficiaries' benefits, coverage, or eligibility,
including the accuracy of the spending projections approved for the
demonstration.
States Provided Opportunities for Public Input on Proposals but Details
Were Lacking, and HHS Did Not Provide for Input at the Federal Level:
In Florida and Vermont, beneficiaries and other stakeholders had a
number of opportunities at the state level to provide public input and
comment during the development of demonstration proposals. Despite
these opportunities, local stakeholders in each state we spoke to told
us that state officials did not provide sufficient information or time
to review the proposals prior to their submission for federal review
and approval. At the federal level, HHS did not provide formal public
notice or the opportunity to comment. Also, contrary to its stated
policy of posting demonstration proposals on its Web site prior to
approval, HHS did not do so in the case of Florida or Vermont.
Florida and Vermont Provided Opportunities for Public Notice and
Comment, but Stakeholders Reported That Only Limited Information Was
Available:
Florida and Vermont followed HHS's guidance regarding public notice and
comment, each holding multiple public forums and posting information on
state Web sites and in newspapers. Stakeholders in each state, however,
reported that the information provided was primarily broad concepts,
lacking the specificity they needed to offer constructive comments or
ask meaningful questions. For example, stakeholders said that public
documents did not adequately describe growth trends used to develop the
demonstrations' budgets. In both Florida and Vermont, the state
legislatures were active in soliciting public input and reviewing
versions of the demonstration proposals as they were developed.
Stakeholders in each state, however, reported that they were not given
sufficient time to review the proposals once they were made public and
prior to the state submitting the formal proposal to HHS for review and
approval.
Florida's Public Notice-and-Comment Process:
Florida Medicaid officials followed HHS's policy for public process at
the state level by conducting stakeholder presentations and posting a
draft of the proposed demonstration on the state's Web site for 30 days
during September 2005. Before submitting a proposal to HHS on October
3, 2005, the Florida State Medicaid Director and state officials from
the Agency for Health Care Administration (AHCA), the agency
responsible for the state's Medicaid program, made presentations to the
public about general concepts of the demonstration, during which the
public could comment as well as learn about the demonstration.
Concerned about the proposal and the speed at which it was progressing,
Florida's legislature had earlier enacted legislation that authorized
AHCA to implement the demonstration, subject to parameters defined
under state law and as approved by HHS. The state law also required
AHCA to post drafts of the section 1115 demonstration proposals on the
state's Web site for 30 days for public comment before submitting it to
HHS and to obtain approval from the state legislature before submitting
and implementing the demonstration proposals.[Footnote 34] The state
legislature also sponsored several public forums to solicit public
input on the proposal.
Some stakeholders we spoke to, including those representing
beneficiaries, reported that information about the proposal was not
available, for example, budget and demographic information and nursing
home and pharmaceutical costs. Two stakeholders representing hospitals
and a large managed care organization in Florida made positive comments
about the way the state created opportunities for public input during
the development of the proposal. However, two state-level
organizations--one representing individuals aged 50 and older and one
that provides legal services to low-income individuals--filed formal
public information requests for material not made available to
stakeholders during the development of the demonstration proposal after
these organizations were unable to acquire documents through other
means. In October 2005, soon after the state submitted its proposal to
HHS, the organization that represents individuals aged 50 and older
filed a public-records request to obtain a copy of a state-sponsored
analysis of Medicaid expenditure trends. Organization officials told us
they received the requested analysis, but only after repeated requests.
Another organization--a state-level group providing legal services to
low-income people--after experiencing difficulty obtaining sufficient
information on the proposal from state Medicaid officials during public
meetings, in December 2004 filed a Freedom of Information Act request
with HHS for copies of draft proposals, state plan amendments related
to the demonstration, budget and demographic information, and
correspondence between HHS and state officials. As of June 2007, 20
months after HHS approved the demonstration proposal in Florida, the
organization had not received the requested documents from
HHS.[Footnote 35] In addition, stakeholders in Florida expressed
concern that the state's Medical Care Advisory Committee[Footnote 36]
did not participate in the development of the demonstration proposal
because it had not convened while the demonstration proposal was under
development and review.
Vermont's Public Notice-and-Comment Process:
Vermont Medicaid officials followed HHS's requirements for public
process at the state level, and the final demonstration proposal
submitted to HHS included a record of public comments and the responses
offered by the state Medicaid officials. Officials from the Vermont
Agency of Human Services and Office of Vermont Health Access, both
responsible for administering the state's Medicaid program, held three
public hearings during which they received public questions and
comments. Additionally, the Vermont legislature made several changes to
the proposal before voting to approve the demonstration. For example,
counsel to the legislature advised the state legislature that HHS would
not have authority to approve a Medicaid demonstration as a block
grant, as the governor and state Medicaid officials had initially
proposed. As required under state law, the Vermont legislature oversees
the demonstration by approving any changes made to demonstration
components or financing.[Footnote 37]
Stakeholders in Vermont also reported difficulties in obtaining
sufficient information on the demonstration proposal, such as the
effect of the demonstration on benefits for beneficiaries and methods
the state used to formulate the demonstration's projected savings.
Local stakeholders we interviewed told us that the level of detail
provided by Vermont Medicaid officials in presentations was limited to
broad examples used to illustrate how the demonstration would operate
and that state officials could not offer a comprehensive explanation of
the demonstration's implementation. These stakeholders told us they
were unclear about many of the implications for beneficiaries. Members
of the state's Medical Care Advisory Board, established by the state to
facilitate consumer input to its Medicaid policies, told us that they
had lacked time and information to review the demonstration proposal
prior to its formal submission to HHS for review and approval and had
voted in April 2005--just before the proposal was submitted to HHS--not
to approve its going forward. The board did not receive information it
had requested from the state on federal matching formulas,
disenrollment rates, historical cost and caseload trends, programs
included in the budget projection, or how the demonstration interacts
with the state budget. Because the board's role was advisory, however,
the state submitted the demonstration proposal despite the board's lack
of support.
At the Federal Level, HHS Did Not Provide Notice and Opportunity for
Public Comment by Stakeholders:
At the federal level, HHS did not provide a process for public notice
and comment on either Florida's or Vermont's proposed demonstrations.
In January 2007, HHS officials reiterated statements made to us by HHS
officials in 2002 that the agency no longer followed the federal public
notice-and-comment process in its 1994 policy published in the Federal
Register and instead was posting pending and approved demonstration
proposals to its Web site. (Table 1 shows the differences between the
1994 and 2007 federal-level policies.) However, some national
stakeholders reported that HHS did not post the proposals to its Web
site before approving the Florida and Vermont demonstrations. Further,
HHS had not posted to its Web site a demonstration amendment proposal
submitted by Vermont Medicaid officials to HHS in September 2006 until
mid-April 2007.[Footnote 38] All of the national stakeholders we
queried about the demonstration amendment told us that they were
unaware of the proposed amendment and that neither HHS nor state
Medicaid officials had provided them a copy.
Table 1: Comparison of HHS's 1994 and 2007 Policies on Public Notice
and Comment at the Federal Level:
Federal action: State notified as to adequacy of intended public
process;
1994: [check];
2007: [check].
Federal action: Monthly notice of all new and pending proposals
published in Federal Register;
1994: [check];
2007: [Empty].
Federal action: Federal Register notice published indicating that HHS
is accepting written comments on proposals;
1994: [check];
2007: [Empty].
Federal action: List maintained of organizations requesting notice of
receipt of demonstration proposal;
1994: [check];
2007: [Empty].
Federal action: Organizations notified when proposal received;
1994: [check];
2007: [Empty].
Federal action: Thirty-day comment period provided before decision on
proposal;
1994: [check];
2007: [Empty].
Federal action: Acknowledgment issued for receipt of all comments;
1994: [check];
2007: [Empty].
Source: 59 Fed. Reg. at 49,249 (Sept. 27, 1994) and HHS officials.
[End of table]
In January 2007, HHS officials told us--as they had told us in 2002--
that the department no longer adhered to the 30-day waiting period to
accept and consider comments before rendering a decision on a
demonstration proposal as described in the agency's 1994 policy. For
example, in Florida, HHS approved the state's demonstration proposal 16
days after the state submitted the formal proposal to HHS.[Footnote 39]
Nearly all of the national stakeholders we interviewed told us that
this window was not enough time to allow them to review and comment on
Florida's final proposal. Further, stakeholders said that HHS does not
notify interested groups or the public when HHS receives a
demonstration proposal for review. As a result, in contrast to the
department's 1994 policy, beneficiaries and other interested parties
may be unaware that HHS has received a proposal until after the
proposal has been approved, as some reported was the case for Florida.
Several national stakeholders reported that requests they made to HHS
for information about both demonstrations went unanswered. These
stakeholders told us that such information helps their organizations to
evaluate proposed demonstrations before providing comments and to
assist local stakeholders in understanding the implications of proposed
demonstrations.
The Medicaid Commission recently endorsed compliance with policies
requiring a public input process at the federal level for achieving
Medicaid reform.[Footnote 40] In December 2006, the commission issued a
report to the Secretary of Health and Human Services, which
recommended, among other things, that compliance with existing policies
regarding public notice of section 1115 demonstration proposals, such
as HHS's 1994 public notice-and-comment policy, be monitored and
enforced. The report recommended that HHS and states enforce existing
federal and state laws and regulations so that stakeholders such as
beneficiaries, providers, and family members may provide input while
new programs and delivery models affecting them are developed and
implemented. The Medicaid Commission found that information and
perspectives offered during public comment periods constituted
important feedback and recommended that HHS and state officials elicit
public feedback when state Medicaid agencies pursue policies that would
restructure state Medicaid programs.
A broad range of national stakeholder organizations have also raised
concerns to Congress about the need for an improved federal-level
process for public input during HHS review of demonstration proposals.
A group of nearly 60 national stakeholder organizations sent a letter
in February 2006 to the Chairman and Ranking Member of the Senate
Committee on Finance, expressing concern that significant and complex
policy changes are made to the Medicaid program through section 1115
demonstrations, often with little opportunity for public input. This
group of national stakeholders further stated that it wanted to ensure
that major changes made to Medicaid were subject to appropriate public
input and congressional oversight and that the ramifications of these
changes for beneficiaries were well understood.
Views varied among the national stakeholder groups we interviewed
concerning the need for a public input-and-comment process at the
federal level. National stakeholder organizations representing state
governors and legislatures did not believe that additional measures
were required at the federal level to provide for public input. These
groups--the National Governors Association, National Conference of
State Legislatures, and the Center for Health Transformation--told us
that state-level public input processes were sufficient for providing
information and opportunities for comment and that additional action at
the federal level would not add to stakeholders' understanding of
demonstration proposals. In contrast, national stakeholder groups we
interviewed that represent beneficiaries generally told us that a
process for public comment at the federal level was important to their
organizations. In November 2006, a panel of 16 representatives from a
broad range of national stakeholder organizations described the
relationship between HHS's current actions and their organizations'
activities:
* Providing public input during the federal approval process.
Representatives said that providing public input on topics that affect
their constituents is a significant responsibility for their
organizations during the federal approval process. HHS did not,
however, provide an opportunity for national groups to offer public
input during the approval process for the Florida and Vermont
demonstrations. An official from a national group representing
community health centers said, for example, that HHS had not provided
the organization an opportunity to offer input to the pending
demonstration proposals, both of which affect health centers in those
states. Officials from other national groups confirmed that HHS directs
their organizations to offer input to states rather than to HHS, even
after HHS has received a formal demonstration proposal from a state. In
addition, an official from a national organization providing legal
services to low-income individuals, including Medicaid beneficiaries,
said that HHS has no formal process to notify national stakeholders of
pending proposals received for HHS review and that if advocates and
organizations did not actively seek out information through other
channels, they would not be aware of pending demonstration proposals.
* Providing technical assistance to local affiliates and beneficiaries.
Representatives told us that information from HHS on proposed
demonstrations during the approval process is critical for their
organizations to provide technical assistance to beneficiaries and
local affiliates, particularly if the state-level public input process
was insufficient. For example, an official from a national organization
representing children with behavioral health issues (many of whom are
Medicaid beneficiaries) commented that local members often call the
national organization to ask for information about demonstration
proposals pending in their own state. Likewise, an official from an
organization representing individuals with Alzheimer's disease said
that state and local chapters rely on the national organization for
expertise and information on public policy issues, including proposed
Medicaid demonstrations. An official from a national group providing
social services to low-income seniors told us that the group uses
information provided by HHS to inform its constituency of implications
of new or untested Medicaid policies on long-term care services.
Officials from other national groups we contacted also told us that HHS
did not provide requested information related to pending demonstrations
in Florida and Vermont, including copies of the proposals.
* Informing HHS about lessons learned from past demonstrations.
Representatives said that HHS itself cannot necessarily track every
implication for beneficiaries that could occur over a demonstration's 5-
year period for all the demonstrations it approves for different
states. As a result, national stakeholders try to inform HHS on which
provisions and procedures from former demonstrations have and have not
worked and on what implications may have developed for beneficiaries.
National groups told us they have an "experiential base" of knowledge
about the past performance of demonstrations, which, through an open
exchange of information with stakeholders, can benefit HHS officials in
deciding whether to approve a demonstration proposal.
* Monitoring changes to federal Medicaid policy. Representatives also
expressed concern that HHS has introduced major changes to federal
Medicaid policy through approvals of state demonstrations and that
public input at the federal level is an important requirement for
monitoring and anticipating these changes. An official from a national
organization representing providers of mental health services told us
that the federal approval process for demonstration proposals has
become so complex that changes in federal Medicaid policy have occurred
without a complete paper trail available to the public showing how
demonstration proposals were developed, which limits accountability and
transparency for HHS.
Concluding Observations:
Both the Florida and Vermont demonstrations embody significant changes
in how these states operate their Medicaid programs. In approving these
demonstrations, HHS has approved state Medicaid reforms that depart
from previously approved demonstrations. These reforms have potentially
mixed implications for beneficiaries covered under the demonstrations
in terms of how the demonstrations may affect their access to health
care services. In Florida, which will test the effects of combining
market-based commercial approaches with the delivery of services to the
low-income Medicaid population, it is important that beneficiaries are
fully informed and understand the trade-offs involved with their health
care choices, especially if they are relinquishing certain Medicaid
benefits, such as EPSDT. In Vermont, the federal financial risk is
limited to a specified level, but the risk of increased costs due to
unforeseen circumstances is assumed by the state--and could potentially
result in program changes for beneficiaries and providers should the
spending limit be exceeded. As HHS noted in issuing its 1994 policy,
people who may be affected by a demonstration have a legitimate
interest in learning about proposed demonstrations and should have an
opportunity to provide input to the decision-making process. Although
Florida and Vermont officials provided for public input and comment
during the development of their proposals, many stakeholders reported
seeking, but not obtaining, more time and information to understand and
provide informed input on the proposed changes. A federal-level process
does not exist that would allow stakeholders and beneficiaries to learn
of, review, and provide input on the submitted proposals.
HHS's objective of expediting the waiver review and approval process is
reasonable. But, as we stated in our 2002 report, public input into new
demonstration proposals is important not only because such input helps
ensure that demonstrations are consistent with overall Medicaid goals
and that the waiver of certain statutory provisions is justified by the
benefits obtained, but also because approved demonstrations represent
federal policy whose influence may reach beyond a single state. A
notice-and-comment opportunity at the federal level would provide for a
more open and transparent process for all affected and interested
parties, including Congress--something that, as shown by our earlier
work and more recently in Florida and Vermont, may be better
accomplished at the federal rather than state level. Unless Congress
and HHS take action in response to the matters for congressional
consideration and recommendations to the Secretary that we presented in
our July 2002 report--namely that Congress consider requiring the
Secretary to improve public notification and input at the federal level
and that the Secretary provide for an improved process--it appears
likely that HHS will continue to approve waivers for comprehensive
Medicaid demonstrations without adequate opportunity for public input.
Improvements should include, at minimum, posting pending demonstration
proposals to the HHS Web site, implementing a 30-day comment period
after receipt of a demonstration proposal before issuing a decision,
and notifying interested parties of the receipt of proposals.
Agency and State Comments and Our Evaluation:
We provided a draft of this report for comment to HHS, Florida, and
Vermont. Each provided written comments, which we summarize and
evaluate below.
HHS's Comments and Our Evaluation:
As in 2002, when we reported concerns with the lack of opportunity for
public input to the section 1115 demonstration approvals, HHS disagreed
with our recommendation that called for the Secretary to improve the
opportunities for public input at the federal level. HHS expressed a
view that opportunities for public input are more than adequate because
states have a broad array of options for soliciting public input, and
because HHS holds states accountable for complying with its 1994 policy
and subsequent guidance regarding public input. HHS expressed concern
that requirements that the department build a new process would create
redundancy and slow the approval process, delaying states' creative
approaches under the demonstrations. Of greatest concern to HHS was
that federal legislation could create a pathway to court that would
allow a single individual to delay implementation of a Medicaid
demonstration and in so doing, disrupt a state's budget.
Our report points out that Florida and Vermont offered opportunities
for public notice and comment consistent with HHS's policy for input at
the state level; however, we do not agree that such a process at the
state level precludes the need for input to HHS once a proposal is made
final and submitted to HHS for approval. It is only at this point in
the process that a state's final plans may be made clear. As discussed
extensively by HHS in its comments, states may make significant changes
to plans for the demonstration before submitting a proposal to HHS;
stakeholders may not be aware of these changes or the plans as laid out
in the final proposal.[Footnote 41] Further, demonstrations have
potentially far-reaching implications for beneficiaries beyond a
state's borders, as approval of an innovative approach in one state
paves the way for other states to follow suit through similar
demonstrations. Finally, HHS did not explain or provide a basis for its
contention that allowing for input at the federal level would create
legal challenges. Therefore, we disagree with HHS's suggestion that a
public process should be limited in order to avoid legal challenges.
Although ensuring that opportunities for comment are available for 30
days or longer after a proposal is received could slow the current
process--since HHS is approving some proposals more quickly, as in
Florida--we believe this added time is a cost that is outweighed by the
potential benefits in improved transparency and the potential for
meaningful federal consideration of input from beneficiaries and
others. We maintain that such a process is important for ensuring that
precedent-setting decisions to waive Medicaid requirements are made
after the consideration of concerns of stakeholder organizations and
those affected by the decisions. Furthermore, because not all
information key to stakeholders may be available to them during the
state process and because the proposal might be changing significantly
during the state's process, a notice-and-comment process that provides
openness and transparency for all affected and interested parties at
the federal level remains important for ensuring adequate public input
to the final proposal as submitted to HHS. Consequently, we continue to
believe our recommendation is valid.
HHS committed to several actions to ensure a transparent approval
process which we summarize and respond to below.
* HHS noted that its 1994 policy predates widespread access to, and use
of, the Internet. HHS said that it has a policy to post applications on
its Web site within 10 days after the application, renewal, or
amendment request is received.[Footnote 42] HHS also stated its
intention to add to the CMS Web site within the next several months a
summary page of pending actions including state and federal contact
information. We note that HHS did not have a 10-day-to-Web site policy
during the course of our review and that HHS told us in 2002 that it
planned to post waiver applications to its Web site but did not do so
in the case of Florida and Vermont. When asked for a copy of its new 10-
day policy, HHS officials told us that the policy was contained in
division manager performance expectations and was communicated to staff
who work with 1115 demonstrations.
* HHS also noted that CMS accepts and responds to written comments on
demonstration proposals at any time. Officials had made this
observation during our review, but also provided documentation
indicating that they had received only one comment on the Florida
demonstration and none on the Vermont demonstration during the process.
Finally, HHS offered several additional comments of a technical nature,
including questioning our selection of Florida and Vermont as the focus
of our review. HHS indicated that other state demonstrations have
higher matching rates and high federal financial exposure; in
particular, family planning demonstrations, for which states receive a
90 percent matching rate. We recognize HHS has approved many section
1115 demonstrations, some of which carry higher matching rates than the
Florida and Vermont demonstrations. Yet we focused our work on recently
approved comprehensive demonstrations, for which the majority of the
state's Medicaid spending was directed by the demonstration's terms,
precisely for the reason indicated by HHS--that these "two projects are
significant demonstrations with far-reaching financial and programmatic
implications." Other recently approved section 1115 demonstrations
identified by HHS either were not comprehensive, or did not affect more
than 50 percent of the state's Medicaid spending.[Footnote 43] The
family planning demonstrations that HHS highlighted as at high risk of
federal financial exposure because of their high matching rates cover a
small portion of many Medicaid services that states provide, and these
demonstrations are not consistent with HHS's definition of
"comprehensive." We incorporated other of HHS's technical comments
where appropriate. HHS's comments are reproduced in enclosure III.
State Comments and Our Evaluation:
In commenting on a draft of this report, Florida stated that our draft
report did not provide an accurate and unbiased representation of its
demonstration. In particular, Florida said the report did not
acknowledge key aspects of the state's demonstration, such as the use
of choice counselors to provide information to beneficiaries and the
implementation of an enhanced benefit program. Florida said such
omissions and underemphasized facts could lead to inaccurate
conclusions about the nature of the demonstration and its implications
for beneficiaries. Florida also said the report overemphasized the
customized benefit packages and opt-out program components of its
demonstration and did not adequately describe other important
components. From our analysis of the demonstration's terms and
conditions, we believe the draft report accurately reflects the major
potential implications for beneficiaries over the 5-year demonstration
period; we have nonetheless added information to our report on the
enhanced benefit program which had not previously been described.
Florida also took issue with the use of the phrase "commercial managed
care plans," saying that the state is not solely contracting with
commercial plans. Because the state did not consider all contracted
plans as "commercial," we removed this word when describing the plans
with which Florida contracts. We note that Florida acknowledges that
its demonstration seeks to build upon the "commercial" market
structure.
Florida also reiterated its extensive efforts to provide opportunities
for public comment during development of the demonstration proposal and
stated that it would not be prudent to duplicate the state's process at
the federal level. Florida offered opportunities for public comment;
nevertheless, stakeholders reported that information about the proposal
was not available and two state-level groups filed public information
requests to obtain this information. Stakeholders also expressed
concern that Florida's Medical Care Advisory Committee--required by
federal regulation to provide consumer input to the state on Medicaid
policy development and program administration--did not participate in
the development of the demonstration proposal. Finally, Florida
provided several technical comments, which we incorporated as
appropriate. Florida's comments are reproduced in enclosure IV.
Vermont stated that our draft report was thorough, thoughtful,
balanced, and complete; nonetheless, state officials were disheartened
that some stakeholders reported that the state's public input process
was somehow weak or not well rounded. Vermont also noted that there is
no more uncertainty regarding future benefit levels under the Vermont
demonstration than there is without any demonstration at all, as
optional Medicaid populations have always been subject to inclusion at
states' discretion. Vermont's comments are reproduced in enclosure V.
As arranged with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
after its issue date. At that time, we will send copies of this report
to the Secretary of Health and Human Services, the Administrator of the
Centers for Medicare & Medicaid Services, and other interested parties.
We will also make copies available to others upon request. In addition,
the report will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staff members have any questions, please contact me at
(202) 512-7114 or allenk@gao.gov. Contact points for our Office of
Congressional Relations and Public Affairs may be found on the last
page of this report. Major contributors to this report are acknowledged
in enclosure VI.
Signed by:
Kathryn G. Allen:
Director, Health Care Issues:
[End of section]
Enclosure I: National, State, and Local Stakeholder Groups Contacted:
National stakeholder groups that GAO contacted:
* Alzheimer's Association:
* American Association of Homes and Services for the Aging:
* AARP (formerly the American Association of Retired Persons):
* American Network of Community Options & Resources:
* Center for Health Transformation:
* Center on Budget and Policy Priorities:
* Families USA:
* Georgetown Health Policy Institute:
* The Heritage Foundation:
* March of Dimes:
* National Association for Children's Behavioral Health:
* National Association of Community Health Centers:
* National Conference of State Legislatures:
* National Governors Association:
* National Health Law Program:
* National Health Policy Forum:
* National Mental Health Association:
* National Senior Citizens Law Center:
* National Women's Law Center:
* Service Employees International Union:
State-level and local stakeholder groups in Florida and Vermont that
GAO contacted:
* Florida AARP:
* Florida Association of Health Plans:
* Florida Hospital Association:
* Florida Legal Services:
* Low Income Pool Council (in Florida):
* Florida Pediatric Society:
* WellCare (in Florida):
* Vermont Association of Hospitals and Health Systems:
* Bi-State Primary Care Association (in Vermont):
* Vermont Legal Aid:
* Vermont Medical Care Advisory Committee (known as the Medicaid
Advisory Board):
[End of Section]
Enclosure II: Summary of Mandatory Federal Requirements for Traditional
State Medicaid Programs:
Table: Summary of Mandatory Federal Requirements for Traditional State
Medicaid Programs.
Mandatory health benefits.
States must cover, at a minimum, the following services under their
state plans:
* Inpatient hospital services.
* Outpatient hospital services.
* Prenatal care.
* Vaccines for children.
* Physician services.
* Nursing facility services for persons aged 21 or older.
* Family planning services and supplies.
* Rural health clinic services.
* Home health care for persons eligible for skilled-nursing services
* Laboratory and x-ray services.
* Pediatric and family nurse practitioner services.
* Nurse-midwife services.
* Federally qualified health-center services.
* Early and periodic screening, diagnostic, and treatment services for
children under age 21[A].
Mandatory eligibility groups.
States must cover, at a minimum, the following individuals under their
state plans:
* Individuals eligible for Aid to Families with Dependent Children
program (now known as Temporary Assistance for Needy Families, or TANF)
if they meet requirements that were in effect in their state on July
16,1996.
* Children under age 6 whose family income is at or below 133 percent
of the federal poverty level (FPL).
* Pregnant women whose family income is below 133 percent of FPL.
* Supplemental Security Income recipients in most states.
* Recipients of adoption or foster care assistance under Title IV of
the Social Security Act.
* Special protected groups.
* All children born after September 30, 1983, who are under age 19 and
in families with incomes at or below FPL.
* Certain Medicare beneficiaries[B].
Cost-sharing limits.
States are limited to the following cost-sharing requirements under
their state plans:
* States may not impose enrollment fees or premiums on mandatory
eligibility groups.
* States may impose nominal deductibles, coinsurance, or co-payments on
some Medicaid beneficiaries for certain services.
* Certain Medicaid beneficiaries must be exempt from this cost sharing,
including pregnant women, children under age 18, and hospital and
nursing home patients expected to contribute most of their income to
institutional care.
* All Medicaid beneficiaries must be exempt from co-payments for
emergency services, hospice services,and family-planning services[C].
Source: GAO analysis of federal laws and Department of Health and Human
Services regulations and guidance.
[A] Social Security Act §§ 1902(a)(10)(A), 1905(a) (codified, as
amended, at 42 U.S.C. §§ 1396a(a)(10)(A), 1396d). Effective March 31,
2006, states also have the option of limiting coverage of services for
certain Medicaid recipients to either benchmark coverage or coverage
that provides a benefit package equal in value to benchmark coverage.
Benchmark coverage is defined as (1) the Federal Employee Health
Benefits Program (Blue Cross/Blue Shield) benefit plan, (2) the health
benefits plan offered to state employees, (3) coverage offered by a
health maintenance organization with the largest enrollment in the
state, or (4) a package of benefits approved by the Secretary of Health
and Human Services. SSA § 1937 (to be codified at 42 U.S.C. § 1396u-7).
[B] SSA § 1902(a)(10)(A)(i)) (codified, as amended, at 42 U.S.C. §
1396a(a)(10)(A)(i)).
[C] SSA § 1916 (codified, as amended, at 42 U.S.C. § 1396o). Effective
March 31, 2006, states may impose premiums on certain previously exempt
Medicaid recipients with family incomes above 150 percent of the FPL.
States may also impose more than nominal cost sharing on certain
services such as nonpreferred drugs and nonemergency services provided
in an emergency room. States also have the option of imposing co-
payments on certain individuals in previously exempt populations. SSA §
1916A (to be codified at 42 U.S.C. § 1396o-1).
[End of table]
[End of section]
Enclosure III: Comments from the Department of Health and Human
Services:
Department Of Health & Human Services:
Centers for Medicare & Medicaid Services:
200 Independence Avenue SW:
Washington. DC 20201:
June 7, 2007:
To: Marjorie Kanof:
Managing Director, Health Care:
Government Accountability Office:
From: Leslie V. Norwalk, Esq.:
Acting Administrator:
Subject: Government Accountability Office (GAO) Draft Report: "Medicaid
Demonstration Waivers: Lack of Opportunity for Public Input during
Federal Approval Process Still a Concern" (GAO-07-694R):
The Centers for Medicare & Medicaid Services (CMS) appreciates the
opportunity to comment on the above mentioned GAO draft report. We note
that the report included no new recommendations for the Department of
Health and Human Services ("HHS" or "the Department") or Congressional
action, but reiterates a July 2002 recommendation (from report GAO-02-
817, "Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver
Projects Raise Concerns") to establish a Federal public input process
that includes, at a minimum, notice in the Federal Register and a 30-
day public comment period.
We continue to disagree with this recommendation because the
opportunity for public input remains more than adequate, as we detail
below. The Department continues to take steps in partnership with
States to ensure that there are many opportunities for interested
parties to share their views. States have a broad array of options for
soliciting public input, and States are in the best position to decide
which public input process will be most effective. We continue to hold
States accountable for having in place a public process for comments,
as described in the September 27, 1994, Federal Register notice and
later reaffirmed in subsequent policy guidance on May 3, 2002.
Acceptable practices for new section 1115 demonstration proposals
include: public hearings, commission process, State legislative
process, the State's own administrative procedures Act, or publication
in newspapers of large circulation. Legislation requiring the
Department to build a new public input process would create redundancy
and slow the demonstration approval process, delaying States' creative
approaches to expanding coverage. Of greatest concern is that
legislation could create a pathway to court which would allow a single
individual thousands of miles away to hold up the decisions made by
elected State legislators and governors responsible for their Medicaid
programs perhaps for years, throwing a State budget into disarray.
Furthermore, the Department also stipulates in the Special Terms and
Conditions (STCs) (in essence, the contract between Federal and State
governments) governing a section 1115 demonstration that any subsequent
program changes use a similar process. States seeking approval to amend
substantive aspects of their demonstrations are required to describe in
the amendment request the public process undertaken for the proposed
change. We note that this latter requirement with respect to program
changes is an enhancement under this administration to assure adequate
public involvement; it has been in place now for nearly 4 years.
Further, we believe that the most effective involvement of stakeholders
is through their local and regional branches, which may avail
themselves of the public process used at the State level. This kind of
up-front involvement of regional or local stakeholders can assist the
State in shaping the demonstration, resolving concerns, and building
support for the proposal ultimately submitted to the Department. We
also contend that it is primarily the responsibility of the State
government staff to ensure that there is adequate and appropriate
involvement of outside stakeholder groups on a demonstration proposal;
it is the responsibility of CMS staff to involve other Federal
Government stakeholders, such as staff from other Department operating
divisions, Department staff divisions, and the Office of Management and
Budget, as appropriate.
The GAO report states that stakeholders in Florida and Vermont did not
have adequate opportunities to provide input at the State level. In
both the cases of Florida and Vermont, the States provided ample
opportunity for review and comment to their citizens. In Vermont, the
Medicaid reform proposal went through the State legislative process,
which included multiple legislative hearings and testimony before the
Health Access Oversight Committee, monthly meetings of the Medicaid
Advisory Board, and consistent coverage by the media. Furthermore,
solicitation of citizen and stakeholder input was provided from
February to April of 2005 in a wide variety of forums, including the
distribution of the concept paper, public announcements, public
hearings, and a written comment period. A full description of the
public process occupied an entire chapter of the State's final
application. The chapter included a detailed chronology of events that
allowed interested parties input into the design of the demonstration.
The State also noted that 56 written comments were submitted by the
deadline.
Likewise, the State of Florida also made a significant effort to
provide opportunities for public comment during all stages of
development of the demonstration. The Florida Agency for Health Care
Administration posted Florida's section 1115 Medicaid Reform
demonstration application on its Web site for a 30-day period prior to
submitting the final application to CMS. The State reported that during
the 30-day period, 92 written comments were received. The agency
provided individualized written response to these comments.
However, the State's effort at building public awareness was not
limited to this single 30-day period. The Florida Medicaid Reform
demonstration, as submitted, was almost identical to the concept paper
developed in early 2005. The concept paper was widely available for
almost 7 months prior to the State's submission of an 1115
demonstration application. It was added to the Governor's Web site
following a January 11, 2005, press release and provided an opportunity
for questions and comments. This posting was followed by five public
hearings between February and March of 2005. Prior to the concept
paper, the Governor issued a white paper and the State held public
workshops in June, July, August, October, and November of 2004.
Clearly, by the time of the 30-day public notice period described in
the preceding paragraph, the concepts that informed the Florida
Medicaid reform proposal, and indeed many of the proposed programmatic
details, were widely known for those parties that wished to stay
abreast of the Governor's health reform plan.
With respect to the Department's listing of pending proposals in the
Federal Register, we again note, as in previous Agency comments on the
prior 2002 GAO report, that the now nearly 13-year-old notice predates
widespread access to, and use of, the internet. Accordingly, over time,
the Health Care Financing Administration (predecessor agency to CMS)
discontinued the listing of pending proposals in the Federal Register.
Additionally, States have since continued to demonstrate that they
provide adequate public notice at the State level.
To provide information about section 1115 waiver applications and
subsequent amendments, it is our policy to post waiver applications on
our Web site within 10 days after the application, renewal, or
amendment request is received. We note that CMS accepts and responds to
written comments on all demonstration proposals at any time.
We also post other critical information on our Web site once a
demonstration is approved. These items include demonstration program
overviews, fact sheets, STCs, award letters, waiver and expenditure
authorities lists, amendment proposals, and other significant
communications with the State about the demonstration. We are also
currently in the process of adding quarterly reports, annual reports,
and demonstration evaluations completed to date. These additions will
ensure stakeholders are fully informed with regard to program
operations and outcomes. We believe that stakeholder access to
information on operations and outcomes is equally important as the up-
front stakeholder input during the development phase of a
demonstration, as described in the Florida and Vermont examples above.
We also intend to add to the CMS Web site a summary page of pending
actions including State and Federal contact information within the next
several months. The summary will be updated as necessary to reflect
current State activities. This new Web site feature will replace, in
electronic fashion the Federal Register list highlighted in section
VIII of the January 1994 Federal Register guidance. These additional
documents and features on the CMS Web site will further enhance the
Department's goal of transparency.
We also want to emphasize process issues with respect to the posting of
demonstration proposals under discussion to the CMS Web site. As noted
in our 1994 Federal Register notice, to reduce administrative burden on
the States, the Department adopted a number of procedures, including
expanding pee-application consultation with interested States. Through
this consultative process, many demonstration proposals develop from
very basic initial concepts into complex documents through an iterative
process where information is passed back and forth between the State
and the Department. An initial demonstration proposal often evolves
rapidly into a vastly different document, such that regimented public
posting and input solicitation may not keep up with changes to the
document. Alterations, additions, and deletions are made along the way,
often on a more-than-daily basis. In these instances, States may not
have labeled a particular document the "official or final submission;"
therefore, the Department intends to place increased emphasis on
working with States to make such a determination and immediately post
these documents. Heightened Departmental efforts in this area will
ensure that all documents identified as formal submissions are posted
in a timely fashion.
We also note that GAO took particular issue with the processing of the
State of Florida's demonstration application. Specifically, the report
notes with criticism that "HHS approved the State's demonstration
proposal 16 days after the State submitted the formal proposal to HHS."
Again, we emphasize the Department's commitment to pre-application
consultation, as described above. The Department has continued this
courtesy over 13 years and 2 administrations. Pre-application
consultation with Florida, for instance, lasted over a year, during
which time the public could involve itself through the State-level
process, also described above.
Finally, the report raises several concerns about beneficiaries'
information with regard to selection of a plan under the Florida
demonstration. The Department strongly agrees that it is crucial that
beneficiaries have access to full information about the benefits they
receive before they choose their health care plans. In fact, in the
case of Florida, the Department and the State agreed during
negotiations that informed choice is a key element of what is being
tested under the demonstration. The Choice Counseling Program performs
this pivotal function under Florida Medicaid Reform in order to ensure
that beneficiaries make such informed choices. The choice counselor
provides information about each plan's coverage, benefits and benefit
limitations, cost-sharing requirements, contact information, and data
on access to preventive services. The choice counselor also provides
information to individuals interested in opting out of Medicaid should
the individual be interested in pursuing an employer-sponsored
insurance option. Choice counseling materials are provided in a variety
of ways including, print, telephone, and face-to-face.
The State of Florida began the effort to implement a Choice Counseling
Program immediately upon approval of the demonstration in October 2005.
The process included public meetings asking potential plans, advocates,
and stakeholders how the program should be structured and how the
program should assist in improving health literacy. The State
contracted with a choice counseling vendor and worked with Florida
State University to develop a Choice Counseling Certification Program
to assist in training prospective counselors. The course is Web-based
and consists of 10 training modules. The Department regularly requests
updates on these aspects of choice counseling operations on monthly
monitoring calls.
In summary, we continue to disagree with the recommendation that
legislation be adopted to establish a Federal public notice process for
section 1115 demonstration waivers. Public notice and comment
opportunities are available at the State level, and we review waiver
applications carefully to ensure that States have provided adequate
public notice. In addition, we note that requiring the Department to
build a new public posting and input solicitation process for waivers
also would have broader implications. Establishing a procedure that
treats a waiver application like a regulation would set a precedent
that could be applied to other waiver applications as well as grant
applications. The ensuing delays would make it difficult for States and
the Department to come up with creative approaches to expand coverage
and has implications for programs beyond Medicaid and the State
Children's Health Insurance Program.
Additionally, CMS offers the following additional comments:
• Page 2 -We believe the first footnote is an inaccurate
characterization of what constitutes a "comprehensive section 1115
demonstration." While it is true that we would generally expect a
demonstration labeled "comprehensive" to be state-wide, it does not
have to be "applicable to all populations and benefits under a State's
Medicaid program." While that is one possibility, and that would indeed
be regarded as comprehensive, we believe "comprehensive" could also be
used to describe a demonstration that includes a majority of a
substantial population. We also note that comprehensive demonstrations
may in fact offer differential benefits to various populations (e.g.,
full. Medicaid benefits to a Medicaid State plan population: something
else for higher-income "expansion" groups).
• Page 17, second bullet ” We note that the 5 percent cost-sharing cap
parallels what is permissible under the title XXI statute so it is
reasonable to define 5 percent as a "ceiling" underneath which cost-
sharing may be applied (and varied as necessary).
• Page 17, third bullet ” Vermont indeed has an enrollment cap which by
its nature "changes or delays eligibility;" this is not a feature of
the Vermont demonstration that uniquely affects enrollment in this
particular State's program. Enrollment caps or waiting lists have been
approved in other States for non-Medicaid State plan populations.
• Page 20, Status of Freedom of Information Act (FOIA) request ” The
response to the FOIA request is pending.
• Page 22 ” With reference to the Catamount Health amendment to the
Vermont demonstration, we note that CMS informed the State that its
September 2006 submission would be regarded as a concept. The actual
formal submission date was December 15, 2006. We also note that the
Catamount Health legislation was passed in the Vermont legislature with
a good deal of attention in May 2006, so it is unlikely that
stakeholders were unaware of the impending proposal.
• Page 26 ” The report states, "National stakeholders try to inform
IIHS on which provisions and procedures have and have not worked and
what implications may have developed for beneficiaries." We welcome
such input.
• Page 26 ” In "Concluding Observations, "the report notes that Florida
and Vermont have features that depart from previously-approved
projects. We note that this is the nature of a demonstration project
under section 1115 of the Social Security Act. By definition, they
allow departure from past practice (whether in Medicaid State plan or
other authority), and CMS has attached an important evaluative
component in both of these demonstrations. Moreover, during the
entrance conference, in an effort to put section 1115 demonstrations in
context; we suggested GAO look at several demonstration projects
approved since 2004. However, GAO targeted Florida and Vermont out of
several comprehensive demonstrations currently approved. While these
two projects are indeed significant demonstrations with far-reaching
financial and programmatic implications, there are other demonstration
types with higher matching rates, and, concomitantly, high Federal
financial exposure. These the GAO neglected to include in its scope of
work. Family planning section 1115 demonstrations, in which State
spending is matched at 90 percent, provide one clear example.
• Page 27 ” There is a specific reference to unforeseen circumstances
affecting the State and the attendant financial exposure for the State.
This is the nature of an aggregate cap where the spending ceiling is a
pre-determined fixed number. We believe the STC's that CMS negotiates
with States, including those pertaining to budget ceilings, are both
comprehensive and contain sufficient safeguards to address emergency
circumstances. They are binding to both parties to the agreement, the
Federal Government and the States.
• Page 28 ” Public input is again identified as somehow having been
less than "adequate;" we disagree --see discussion above.
The CMS again appreciates the opportunity to review and comment on the
subject draft report.
[End of section]
Florida Medicaid:
Charlie Crist:
Governor:
Andrew C. Agwunobi, M.D.:
Secretary:
May 23, 2007:
Dr. Marjorie Kanof:
Health Care Managing Director:
United States Government Accountability Office:
441 G Street, NorthWest:
Washington, DC 20548:
Dear Dr. Kanof:
Thank you for providing the Agency for Health Care Administration, the
single state agency for administering the Florida Medicaid program,
with the opportunity to comment on the draft report entitled Medicaid
Demonstration Waivers: lack of Opportunity for Public Input during
Federal Approval Process Still a Concern (GAO-07-694R). As requested by
your staff, we are providing our requested technical corrections in
Attachment A; otherwise, our comments are below. As provided for under
Section 1115 of the Social Security Act, the Secretary for Health and
Human Services has broad authority to grant waivers of statutory
provision to implement experimental, pilot, or other demonstration
projects likely to assist in promoting the objectives of the Medicaid
statute. Florida was granted such a waiver in order to implement our
state legislated reform project in October 2005. The draft report
focuses on recent waivers approved in Florida and Vermont, and attempts
to address the following issues:
* Implications for beneficiaries as a result of recently approved
comprehensive Medicaid demonstrations; and
* The extent to which the Secretary ensured opportunities for public
input during the approval process.
We support the Government Accounting Office's (GAO's) efforts to
evaluate Florida's Medicaid Reform effort and analyze the above issues.
Florida understands the need to carefully monitor the impact of our
demonstration in meeting the established goals as it has the potential
to fundamentally reshape the Medicaid program and make it more
effective. Florida also recognized the importance of obtaining public
input as part to the demonstration process and made significant efforts
to ensure that Florida's 1115 Florida Medicaid Reform Waiver was
developed in a manner that considered the impact on beneficiaries and
provided the opportunity for meaningful public input.
To address the above objectives, Florida believes that the GAO's report
should provide an accurate and unbiased representation of events.
Medicaid is a very complex program governed by many complex statutory
and federal requirements. Operating under a waiver further complicates
the Medicaid program. Therefore, to understand Florida's 1115 research
and demonstration waiver program and draw accurate implications, there
must be a fundamental and accurate representation and understanding of
the demonstration program structure.
From our perspective, the report falls short of the objective as there
is selective representation of certain aspects of Florida's 1115
Medicaid Reform Waiver while other innovative and integral concepts are
omitted entirely or underemphasized. The draft report contains some
factual errors regarding our program design and actual structure of
Florida's 1115 Medicaid Waiver program is relegated to footnotes. These
errors are related to the description of the program as well as the
phrasing used to describe the program. While page 10 recognizes the
actual effects are unknown at this time, the report draws some
speculative conclusions regarding the impact of Florida's 1115 Medicaid
Reform Waiver. As a result, the report provides a slanted review of our
program and may lead a reader to draw inaccurate conclusions about the
implications. Below is an outline of our concerns and recommendations
for the report to ensure that it more accurately represents our
Medicaid Reform efforts.
Results in Brief:
In this section of the draft report, a description of Florida's
demonstration program is provided. As indicated above there are several
items that are incorrect and should be corrected prior to publishing
the report. Below are our comments regarding this section.
* Page 5 describes Florida's demonstration program. The description
focuses exclusively on the customized benefit packages and the opt-out
program. This section fails to mention the Enhanced Benefits program
and the expanded Choice Counseling Program created under Florida's 1115
Medicaid Reform Waiver. As indicated in the waiver document, patient
empowerment and responsibility are fundamental principles of Reform,
and are designed to encourage recipient participation. To advance this
goal, Florida created the Enhanced Benefits Program as an integral
component of the program design. The program has been well received by
virtually all stakeholders. The program has the potential to positively
impact an individual as it provides them with new incentives to seek
preventive health care. The state expects this will ultimately lead to
healthier individuals and reduce future health care costs. The Choice
Counseling Program was significantly expanded for the population
affected by Florida's 1115 Medicaid Reform Waiver: face-to-face choice
counseling (a local choice counseling presence), at-home visits,
education sessions, extended call center hours, and the development and
implementation of an independent certification process for choice
counselors are unique to the Medicaid Reform Choice Counseling Program.
While these were significant parts of Florida's 1115 Medicaid Reform
Waiver, they were completely omitted in the 'Results in Brief'
description of the waiver.
* Pages 5 and 11 use the phrase "commercial managed care plans." The
use of the term commercial appears to be a misnomer as it traditionally
refers to a line of business. Under Florida's 1115 Medicaid Reform
Waiver, beneficiaries are required to enroll in managed care plans.
These plans still must meet the requirements of a Medicaid plan
established by Congress under Sections 1903(m) and Section 1932 of the
Social Security Act. While Florida's 1115 Medicaid Reform Waiver seeks
to build upon the commercial market structure, the State is not solely
contracting with commercial plans. We request that the word commercial
be deleted when describing contracted plans under Florida's 1115
Medicaid Reform Waiver.
* Page 5 states, "..., and if they opt out of Medicaid and desire to
enroll in a Medicaid plan at a future date, they would need to reapply
to Florida's Medicaid program." This is incorrect. As written, this
appears to imply that if a beneficiary opts out of Medicaid and enrolls
in his or her employer-sponsored insurance plan (ESI) plan, then he/she
must reapply for Medicaid at a later date if the beneficiary chooses to
enroll in a Medicaid plan. This is inaccurate as Florida's 1115
Medicaid Reform Waiver does not change or affect Medicaid eligibility.
An individual that opts out of Medicaid continues to be eligible for
Medicaid. If a beneficiary is enrolled in an ESI plan and later chooses
to enroll in a Medicaid Reform health plan, then the beneficiary must
wait until his/her open enrollment period or his/her employer's open
enrollment period in order to request enrollment in the health plan.
However, the beneficiary does not need to reapply to Medicaid.
Additionally, if the beneficiary loses eligibility for participation in
the ESI plan (for example, is no longer is employed by that employer),
then there is a process for that beneficiary to request enrollment in a
Medicaid Reform health plan prior to the annual open enrollment period.
* Page 5, description of the Opt-Out Program, we believe that it is
essential that the draft report recognize that this is a completely
voluntary option with a process for 'opting back in' if the beneficiary
loses eligibility for participation in the ESI program. These facts
should be recognized in other sections of the draft report when
describing opt out.
Demonstration in Florida and Vermont Have Mixed Implications for
Beneficiaries, But Actual Effects Are Unknown.
Under this section, the draft report identifies potential implications
for beneficiaries. Below are our comments regarding this section.
* Page 10 states that, "In Florida, for example, beneficiaries have
greater flexibility to choose among different benefit plan, but could
face,...new cost sharing requirements." Under Florida's 1115 Medicaid
Reform Waiver, managed care plans are allowed to charge cost sharing
consistent with regulations specified in 42 CFR 438.108. Therefore, the
health plans can charge cost sharing consistent with the nominal levels
currently approved for services covered under the State Plan. These
represent existing costs sharing requirements – these are not new cost
sharing requirements. Many plans chose to eliminate any cost sharing
requirements, while other plans decided to implement cost sharing for
select services. This should also be corrected on page 12.
* Page 10, footnote 21, is incorrect. The paragraph should refer to
comprehensive only. Medicaid Reform health plans that accept
comprehensive and catastrophic coverage are at full risk and Florida
will not pay any excess claims.
* Page 11 describes the flexibility of plans to offer state-approved
benefit plans tailored to specific groups of beneficiaries. However,
key facts regarding the design and evaluation of the program are
identified in footnotes 23 and 24. Specifically, plans have the
flexibility to provide a customized benefit package to non-pregnant
adults only. A Medicaid Reform health plan must continue to cover all
medically necessary services for pregnant women and children. These are
integral design issues that should be described in the text of the
draft report instead of footnoted. Since the report highlights that
beneficiaries who opt out of Medicaid do not have access to other
Medicaid services, including EPSDT, the reader could be left with the
incorrect impression that such protections do not exist for pregnant
women and children in a Medicaid Reform health plan. We request that
footnotes be incorporated into the text of the report so that
inaccurate conclusions will not be made.
* Page 12 states, "Some plans limited beneficiaries to 60 lifetime
visits for home health services, while others expanded this service to
210 visits annually per beneficiary." While this is accurate, the draft
report does not put this in context with current coverage under the
State Plan. Without knowing the current coverage requirements, the
reader is left wondering the impact of the flexibility. Under the State
Plan, Florida Medicaid covers up to 60 lifetime home health visits
without a prior authorization and then additional visits subject to
prior authorization. Therefore, Reform health plans covering 60
lifetime visits without prior authorization is consistent with coverage
outside of Florida's 1115 Medicaid Reform Waiver.
* Page 12 states that beneficiaries can opt out into a commercial
health insurance. This is incorrect as only self-employed Medicaid
beneficiaries who would be purchasing their own insurance may opt out
into a commercial health insurance plan (other Medicaid beneficiaries
could opt-out into ESI plans). Please clarify the participation
requirement.
* Page 13 states that when beneficiaries opt out of Medicaid they could
not re-apply to the Florida Medicaid Program. As indicated above, this
is inaccurate as Florida's 1115 Medicaid Reform Waiver does not change
Medicaid eligibility. If an individual were to opt out and enroll in
the ESI plan, but later lose Medicaid coverage due to excess income or
assets, the beneficiary could reapply to Medicaid. If they were to
regain eligibility, then the beneficiary would be allowed a new choice
of selecting a Medicaid Reform health plan or reenrolling in his/her
ESI plan. The reenroilment timeframes outlined apply to a beneficiary
that is enrolled in an ESI plan and when he/she can disenroll from the
ESI plan and enroll in a Medicaid Reform health plan. This language
should be corrected.
* On page 14, the report states that the information available to
choice counselors, moreover, may be incomplete. Specifically,
stakeholders stated that the choice counselors did not have access to
the health plans' drug formularies. If an individual is seeking this
information, he/she is advised of, and can obtain it, directly by
calling the Medicaid Reform health plan or visiting the plan's website.
It should be further noted that prior to development of the procurement
document for Choice Counseling services public meetings were held to
discuss the design of the Choice Counseling program. The need for the
health plans' preferred drug list was not identified until several
months after implementation of Medicaid Reform. The Agency has been
working on methods to make this information more accessible. To date,
Medicaid reform plans have made their PDLs available on their websites,
and the Choice Counseling vendor has implemented a special needs unit
to assist beneficiaries with complex conditions to ensure they have all
the information necessary (including PDL information) to make an
informed choice.
* Page 14 further states that Florida officials informed you that
pregnant women and children under 21 years of age continue to have
retroactive eligibility for up to 3 month prior to the date and will
received full state plan benefits, and this group is also exempt from
receiving limited benefits for up to 30 days before enrolled in managed
care plan. Please note that all individuals continue to be authorized
for retroactive eligibility for up to 90 days. While the Centers for
Medicare and Medicaid Services granted a waiver of Section 1902(a)(34)
so that the State was not required to provide retroactive eligibility
for up to 90-days prior to the application, the Agency has not
implemented this component of the program.
State Provided Opportunities for Public Input on Proposals but Details
were Lacking, and HHS Did Not Provide for Input at the Federal Level.
Under this section, the draft report provides comments regarding the
process used by Florida, Vermont, and DHHS to obtain public comments
from stakeholders. The stakeholders stated that details of the proposal
were lacking and expressed difficulty in obtaining responses to request
for information submitted to the Agency. We address both issues below.
Florida made an extensive effort to provide opportunities for public
comment during all stages of the waiver development as well as during
the implementation period. Most notably, the Agency posted Florida's
1115 Medicaid Reform Waiver application on-line for 30 days. During
this period of time, we received 92 written comments to which the
Agency provided an individual written response to each letter received.
This process of responding to public comment goes beyond any state or
federal requirement and was provided by the Agency to ensure
stakeholders comments were considered.
We regret that some stakeholders informed the GAO that they perceive
Florida state officials did not provide sufficient information. We do
not believe that is accurate as the 1115 Medicaid Reform Waiver
application was posted for a 30 day comment period. Furthermore, the
waiver was almost identical to the concept paper developed in March of
2005 and was widely available for almost seven months prior to our
submission of the waiver application to the Centers for Medicare and
Medicaid Services. As you note, two stakeholders representing hospitals
and a large managed care organization made positive comments about the
way the state created opportunities for public comment.
As you are aware, Medicaid is an extremely complex program. The Agency
made every effort to provide information and obtain input from
stakeholders; however, the apparent discrepancy in the perception of
the opportunity for comments may be more attributable to these
stakeholders understanding of the Medicaid program rather than the lack
of opportunity for comments. For example, the draft report specifically
states that information regarding nursing home costs was not available.
As the report notes in footnote 22, beneficiaries residing in nursing
homes are exempt from the program. As such, their costs were not
material to program and were not included in budget neutrality
analysis. Florida Medicaid made repeated efforts to clarify this with
advocates but it appears that the group was still confused about the
impact of the 1115 Medicaid Reform Waiver on Medicaid beneficiaries
residing in nursing homes. The group may have been referencing another
initiative called Florida Senior Care which was authorized by the
Legislature. However, this program is unrelated to Florida's 1115
Medicaid Reform Waiver. As such, we request that you clarify or delete
this reference.
In addition, the draft report notes that many requests were made for
information and details regarding information related to budget
neutrality of the waiver. Specifically, advocates noted that detailed
analysis regarding trends were not made available to fully understand
how the trends were developed. As indicated above, Medicaid is an
extremely complex program and budget neutrality is one of the more
difficult and complex aspects of the Medicaid program. Florida believes
its 1115 Medicaid Reform Waiver provided a sufficient explanation of
budget neutrality and the trends developed.
The draft report also notes that a state level group providing legal
services to low-income people had difficulty obtaining sufficient
information on the proposals in December 2004. This group submitted a
request for all records, electronic and hard copy, in any medium,
related to reform proposals, 1115 waivers, state plan amendments,
including emails, calendars, etc. As noted in Attachment 8, the Agency
held workshops in June, July, August, October and November of 2004. The
Governor's white paper was released in January 2005 which provided a
broad framework for the demonstration. The State did not withhold
documents as implied by the advocates. Rather, the State responded to
all requests timely. In this one instance, the broadness and sheer
volume of the request required extensive time to collect the
information, review it to ensure it was appropriately included and to
redact any beneficiary information as needed.
In addition, the group representing individuals age 50 and older stated
that they only received a copy of a state-sponsored analysis of
Medicaid expenditure trends in October 2005, after repeated requests.
Florida's 1115 Medicaid Reform Waiver was posted on line prior to
submission to the Centers for Medicare and Medicaid Services and
included the cost trend data. Therefore, we are unclear what document
was not made available and only provided after repeated attempts.
While we cannot speak to activities undertaken by DHHS to obtain public
comment, the Centers for Medicare and Medicaid Services routinely
inquired about the state's activities to obtain comments in an effort
to ensure that public input was obtained. We believe that it would not
be prudent to duplicate the public input process if the State has
provided ample opportunity for input. While many national stakeholders
felt that they should be able to submit comments directly to DHHS, this
seems to usurp a State's ability to administer a Medicaid program. As
Medicaid programs are designed at the State level, they differ in each
state and Medicaid state officials work directly with state
organizations. Most national organizations may not be sufficiently
familiar with a particular state Medicaid program to provide comments
to help improve the administration of the program. Further, many of the
national associations represent provider groups which may have material
interest in protecting their role in Medicaid. These goals are
sometimes at odds with improving Medicaid to make it more efficient and
effective. Therefore, we believe that such stakeholders should be
directed back to the State to provide comment.
Again, we appreciate the opportunity to provide comments on your draft
report and we reiterate the need for an accurate representation of our
Medicaid Reform efforts. Should you have any questions about our
comments, please contact me at (850) 488-3560.
Sincerely,
Signed by:
Thomas W. Arnold:
Deputy Secretary for Medicaid:
Enclosure
cc: Mr. Mark Thomas, Chief of Staff:
Mr. Clint Fuhrman, Deputy Secretary for Communications and Legislative
Affairs:
Enclosure: Comments from the Department of Health and Human Services
(HHS):
State of Vermont:
Cynthia D. LaWare, Secretary:
Agency of Human Services:
Office of the Secretary:
[phone] 802-241-2220:
[fax] 802-241-2979:
[hyperlink, http://www.ahs.state.vt.us]:
103 South Main Street:
Waterbury, VT 05671-0204:
May 22, 2007:
Marjorie Kanof:
Managing Director, Health Care:
The United States Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Kanof:
I am writing in response to your letter dated May 8, 2007, to Joshua
Slen, the Director of the Office of Vermont Health Access. The Agency
of Human Services in Vermont is the Single State Agency for receipt of
Federal Medicaid Revenues and as such Mr. Slen forwarded your letter to
my office for response.
The State of Vermont appreciates the thorough and thoughtful draft
report, and thanks you for the opportunity to provide comments from
Vermont's perspective prior to it becoming final. Overall, I found the
report to be balanced and complete. On page 6 you describe the Vermont
Global Commitment to Health Waiver as "...designed to contain costs; to
improve system accountability and quality of care; and, by potentially
delivering services to Medicaid beneficiaries for less and reinvesting
savings, to allow the state to serve more of its uninsured population."
This statement represents one of the most concise and accurate
descriptions that I have read.
On page 10 you state that "Vermont may use savings from managed care
operations to fund additional health care initiatives, but the state is
at financial risk should demonstration costs exceed the approved
spending limit, with uncertain implications for beneficiaries should
that happen." I wish to offer that there is no more uncertainty
regarding future benefit levels under the Vermont Waiver than there is
without any waiver at all. Historically, Vermont has been in the
forefront of broad inclusion (both populations and services) in its
Medicaid program. This commitment continues as reflected in our 2006
Health Care Reform Legislation and continues in 2007 with a new
comprehensive Oral Health Initiative proposed by the Governor and
enacted into law by the General Assembly. By your own analysis of the
Waiver Terms and Conditions, Vermont cannot make reductions to services
for mandatory populations and by design all other optional populations
have always been subject to inclusion by affirmative action on the part
of both our state executive and legislative branches. By its very
design the granting of "flexibility" carries with it the possibility
that covered services and populations may change over time. I would
argue that this differs from the traditional program design only in
express authority and not in intent or practice. In other words, the
State has constantly led the nation in covering populations and in
offering a breadth of services.
The ability to manage the Vermont program in a manner that provides for
the alignment with the statewide implementation of the Blueprint for
Health Initiative (a public-private partnership intended to transform
the system of care across the state) is critically important component
of the Waiver design. In fact, on page 16 of the report you indicate;
Expected cost savings could enable Vermont to serve more of the state's
uninsured population. ...As described in the demonstration proposal,
the demonstration is designed to put in place a series of health care
options responsive to priorities supported by the Governor and State
Legislature, including improved access to health care for Vermont's
uninsured, cost containment within Medicaid, and improved system
accountability and quality of care. Under the demonstration, the state
is provided flexibility, including the ability to use creative payment
mechanisms rather than fee-for-service to pay for services not
traditionally reimbursable through Medicaid.
The series of initiatives partially identified in your report arc
integral to the comprehensive system reform effort in Vermont. The
transformation of the health care system from one focused on acute
interventions to one designed to care for chronic conditions across the
lifespan involves dozens of separate but related changes in medical
practice. The Waiver allows the state to continue its commitment to
health care access and affordability for all Vermonters.
One aspect of the report that I found disheartening was the suggestion
that Vermont's public input process was somehow weak or not well
rounded. Please note that the public input process began in January
2005. The ongoing process involved multiple Public Announcements in
statewide media, public hearings that were held in various locations
around the State as well as broadcast on interactive TV, informational
sessions and numerous updates to specific stakeholder groups, and
continuous updates to comments, questions and answers posted on various
State websites (see Attachment). All of this culminated in debate,
testimony, refinements and ultimate approval of the waiver in our very
public citizen legislature process.
Once again I would like to applaud your thoughtful analysis. My
comments herein are intended to highlight some of the additional
details and to draw out the important Vermont context without which the
readers of your report might conclude that Vermont was in the process
of changing policies that have been deeply imbedded in state policy for
decades. The bottom line is that Vermont continues to be committed to
broad access to health care and is continually exploring new innovative
programs to provide better quality care efficiently to all Vermonters.
Sincerely,
Signed by:
Cynthia D. LaWare, Secretary:
Agency of Human Services:
Attachment:
Medicaid Advisory Board Meetings:
The State of Vermont Global Commitment to Health Waiver was an agenda
topic at the following MAB meetings:
1/27/05:
2/24/05:
3/28/05:
4/7/05:
6/5/05:
8/5/05:
9/05/05:
10/05/05:
Public Announcements:
February 24th, 2005 – Concept paper and notice of Public Hearings
distributed to Medicaid Advisory Board, Vermont Legislature, Agency of
Human Services Policy Executives and posted on the website home pages
of the Agency of Human Services and the Office of Vermont Health
Access.
February 25th, 2005 – Public Announcements published in statewide
newspapers.
March 4th, 2005 – Second publication of Public Announcements in
statewide newspapers.
Public Hearings:
3/15/05 – Rutland, VT:
3/16/05 – Burlington, VT and on VT Interactive TV in Bennington,
Brattleboro, Castleton, Johnson, Lyndonville, Randolph, Rutland:
3/17/05 – Williston, VT:
OVHA/AHS Website Postings:
Concept Paper 2/24/05:
Comments, Questions and Responses – March 2005:
PowerPoint Presentation for Public Hearings – March 2005:
Global Commitment Waiver Proposal Final Version – 4/15/05:
MCO Implementation Workplan – Updated 9/23/05:
Questions and Responses – Updated 9/23/05:
Federal Terms and Conditions – Updated 9/23/05:
Federal Approval Letter - 9/28/05:
Contact and Staff Acknowledgments:
GAO Contact:
Kathryn G. Allen, (202) 512-7114 or allenk@gao.gov:
Acknowledgments:
In addition to the contact mentioned above, Katherine M. Iritani,
Assistant Director; Ted Burik; Ellen W. Chu; Tom Moscovitch; Terry
Saiki; Stan Stenersen; Hemi Tewarson; and Jennifer Whitworth made key
contributions to this report.
[End of section]
FOOTNOTES
[1] See Social Security Amendments of 1965, Pub. L. No. 89-97, § 121,
79 Stat. 286, 343-352 (1965) (adding new sections 1901-1905 and
amending sections 1109, 1115 of the Social Security Act, codified, as
amended, at 42 U.S.C. §§ 1309, 1315, 1396-1396d).
[2] For the purposes of this report, we use the Department of Health
and Human Services' (HHS) Center for Medicare & Medicaid Services (CMS)
definition that "comprehensive Medicaid section 1115 demonstrations"
include those that affect a broad range of services for Medicaid
populations statewide; in addition, we add the criterion that the
comprehensive demonstrations we reviewed account for greater than 50
percent of a state's Medicaid expenditures.
[3] For purposes of this report, we refer to "Medicaid section 1115
demonstrations," "section 1115 demonstrations," "demonstration
projects," and "demonstrations" interchangeably.
[4] In September 1994, HHS published in the Federal Register its policy
on public participation during the demonstration approval process. At
the federal level, HHS's policy stated that the department would post
notice of pending demonstrations in the Federal Register; notify
organizations that request information; and acknowledge, if feasible,
comments received. At the state level, HHS's policy expected states to
facilitate public involvement in developing demonstration proposals,
such as by holding public hearings, convening commissions with open
public meetings, enacting state legislation regarding the
demonstrations, or posting information in newspapers. See Medicaid
Program; Demonstration Proposals Pursuant to Section 1115(a) of the
Social Security Act; Policies and Procedures, 59 Fed. Reg. 49,249
(Sept. 27, 1994).
[5] GAO, Medicaid and SCHIP: Recent HHS Approvals of Demonstration
Waiver Projects Raise Concerns, GAO-02-817 (Washington, D.C.: July 12,
2002).
[6] GAO, Medicaid Waivers: Recent HHS Approvals of Pharmacy Plus
Demonstrations Continue to Raise Cost and Oversight Concerns, GAO-04-
480 (Washington, D.C.: June 30, 2004).
[7] Our findings from HHS's approval of these two states'
demonstrations cannot be generalized to HHS's approval of other states'
demonstrations. We used this criterion for purposes of our assessing
HHS's process as it was applied in these particular cases of
importance. These cases we considered important because the majority of
the state's Medicaid spending was governed by the terms of the
demonstration.
[8] For each demonstration it approves, HHS approval documents may
include a demonstration approval letter, a demonstration fact sheet,
the terms and conditions of the demonstration, and a description of
waiver and expenditure authorities granted by the Secretary for the
demonstration. The state documents its acceptance of HHS's approval
with an approval acceptance letter. A demonstration's terms and
conditions describe general requirements of the demonstration program,
such as benefits, eligibility, populations covered, cost-sharing
requirements, enrollment, evaluation, and allocated budget.
[9] Although HHS has delegated the administration of the Medicaid
program, including the approval of section 1115 demonstrations, to CMS,
we refer to HHS throughout this report because section 1115
demonstration authority ultimately resides with the Secretary, and,
accordingly, other HHS components are involved in the review and
approval of these demonstrations.
[10] In a separate letter to the Secretary of Health and Human
Services, we discuss concerns about the consistency of the Florida and
Vermont demonstrations with federal law. See B-309734, July 24, 2007.
[11] Mandatory Medicaid beneficiaries are those individuals who must be
covered under a Medicaid program, such as children under age 6 in
families with incomes at or below 133 percent of the federal poverty
level and pregnant women whose family income is below 133 percent of
the federal poverty level. (See enc. II for a summary of mandatory
Medicaid benefits, eligibility requirements, and cost-sharing limits.)
[12] Florida's demonstration is expected to expand to five counties in
2007 and to expand statewide by 2010.
[13] Populations not covered by the state managed-care organization
include individuals enrolled in the state's long-term care
demonstration and the State Children's Health Insurance Program
(SCHIP).
[14] When asked for a copy of its policy, HHS officials clarified that
the expectation that waiver applications be posted on the Web site is
not contained in formal HHS policy guidance, but in performance plans
for certain CMS division managers.
[15] See Social Security Act §§ 1903(a)(1), 1905(b) (codified, as
amended, at 42 U.S.C. §§ 1396b(a)(1), 1396d(b)). States with lower per
capita income typically receive higher federal matching shares.
[16] A state Medicaid plan details the fundamental characteristics of a
state's program such as the mandatory and optional populations a
state's program serves; the amount, scope, and duration of mandatory
and optional services the program covers; and the rates of and methods
for calculating payments to providers.
[17] See Social Security Act §§ 1902(a)(10)(A), 1905(a), 1916, 1916A
(codified, as amended, at 42 U.S.C. §§ 1396a(a)(10)(A), 1396d(a),
1396o, 1396o-1).
[18] Social Security Act § 1902(a) (10)(A)(i), (ii) (codified, as
amended, at 42 U.S.C. 1396a(a)(10)(A)(i), (ii)). In 2006, income
thresholds for Medicaid eligibility as a percent of the federal poverty
level in Florida were 200 percent for infants, 133 percent for children
age 1-5, 100 percent for children age 6-19, 185 percent for pregnant
women, 22 percent for nonworking parents, and 58 percent for working
parents. In Vermont, income thresholds in 2006 were 300 percent for
infants and children up to age 19, 200 percent for pregnant women, 185
percent for nonworking parents, and 192 percent for working parents.
The federal poverty level for a family of four in 2006 was $20,000.
[19] Social Security Act § 1115 (codified, as amended, at 42 U.S.C. §
1315).
[20] 59 Fed. Reg. at 49,250-251.
[21] In addition to HHS's 1994 policy, a May 3, 2002, letter issued by
HHS to state Medicaid directors reiterated that the public should
continue to be involved in the development of demonstrations and that
HHS will continue to review demonstrations to ensure that states are
following public-notice procedures. The letter stated that the states
have responsibility for providing opportunity for public input, for
example, through public forums, legislative hearings, placement of
information on the state's Web site with a link for public comments, or
distribution of draft proposals for comment. Letter to state Medicaid
directors 02-007 (May 3, 2002), available at [hyperlink,
http://www.cms.hhs.gov/SMDL/SMD/list.asp#TopOfPage] (downloaded Feb.
15, 2007).
[22] Florida calculates risk-adjusted premiums for Medicaid
beneficiaries based on eligibility groups, age, and gender for a
specific geographic area and then adjusts for risks associated with
health status.
[23] For plans accepting risk for comprehensive coverage only, the plan
would be responsible for care up to a $50,000 limit per beneficiary.
Once the plan reaches $50,000, the state reimburses the plan at 95
percent of the state's current Medicaid fee-for-service rate for costs
accrued up to the $550,000 annual maximum benefit limit for nonpregnant
adults. For plans accepting risk for both comprehensive and
catastrophic care, the plan is responsible for care of nonpregnant
adults up to the $550,000 annual maximum benefit limit.
[24] Specifically, the state is requiring aged and disabled persons
receiving cash assistance under the Supplemental Security Income
program and children and families receiving cash assistance under the
Temporary Assistance to Needy Families program to participate in the
demonstration. The demonstration will initially exclude several special-
needs groups currently receiving Medicaid services, such as foster-care
children, individuals with developmental disabilities, and individuals
residing in nursing homes or psychiatric facilities.
[25] In commenting on a draft of this report, Florida indicated that
managed care plans must also provide the same level of coverage
available under the state plan to Supplemental Security Income (SSI)
beneficiaries, and must provide emergency services to all enrollees in
the demonstration.
[26] To meet requirements of the demonstration, a managed care plan
must cover all the categories of mandatory services, as well as
optional services covered under Florida's state plan when indicated by
historical data. The plan, however, may cover services in differing
amount, duration, and scope as long as the plan can demonstrate that
its proposed benefits are actuarially equivalent to historical
utilization levels and are sufficient to cover the needs of the vast
majority of enrollees.
[27] As of March 2007, 16 plans were under contract to provide services
for the Florida demonstration.
[28] Under the demonstration, HHS approved a waiver of a statutory
requirement that establishes limits on the imposition of cost-sharing
on Medicaid populations and services, thereby allowing the state to
authorize participation by beneficiaries in employer-sponsored or
commercial health plans that may impose cost sharing amounts that
exceed such limits.
[29] Under the demonstration, HHS approved a waiver of a statutory
requirement that would otherwise have required the state to provide
mandatory benefits to all mandatory and optional Medicaid
beneficiaries, thereby allowing the state to limit coverage, for up to
30 days, pending enrollment in a managed care organization, to
emergency services and nursing home level of care.
[30] In commenting on a draft of this report, Florida said that
although HHS granted a waiver so that the state was not required to
provide retroactive eligibility for up to 90 days prior to the
application, the state had not as of June 2007 implemented this
component of the program.
[31] In March 2007--the latest month for which data were available--
about $15,000 of $524,000 credited by the state under the program had
been used by Medicaid beneficiaries. About 1,000 of 19,000 enrollees
receiving credits had used them.
[32] In addition to the recently approved comprehensive 1115
demonstration in Vermont (known as Global Commitment to Health), the
Secretary approved Vermont's Long Term Care demonstration in June 2005.
The Long Term Care demonstration enables the state to provide long-term
care beneficiaries home-and community-based alternatives to
institutional or nursing home care. The Global Commitment to Health and
Long Term Care demonstrations encompass Vermont's entire state Medicaid
program, with the exception of Medicaid Management Information System
(MMIS) costs, State Children's Health Insurance Program (SCHIP)
payments, and disproportionate share hospital (DSH) payments. DSH
payments are a form of Medicaid financing that allows states and HHS to
compensate those hospitals that care for a disproportionate number of
low-income Medicaid and uninsured patients in a state. Unlike other
federal Medicaid matching payments, federal Medicaid DSH payments do
not flow to states on an open-ended basis. Instead, these payments are
allocated among states as defined under federal law. States may claim
federal matching funds for DSH payments made to qualifying hospitals up
to these ceilings.
[33] Vermont is not obligated to provide state plan services to
optional or expansion beneficiaries but can instead provide coverage as
approved by HHS, which includes inpatient and outpatient hospital
services, physicians' surgical and medical services, laboratory and x-
ray services, and well-baby and well-child care.
[34] Fla. Stat. ch. 409.91211 (2006).
[35] In commenting on a draft of this report, HHS acknowledged that its
response to this request was pending.
[36] Under federal regulations, states are required to establish a
Medical Care Advisory Committee to advise the Medicaid agency about
health and medical care services. This committee must include members
of consumer groups who, along with other members, must have the
opportunity to participate in the development of Medicaid policies and
administration, including furthering the participation of recipient
members in the agency program. In Vermont, the committee is known as
the Medicaid Advisory Board. See 42 C.F.R. § 431.12.
[37] Vt. Stat. Ann. tit. 33 §§ 1901, 1901a, 1901e (2006).
[38] In commenting on a draft of this report, HHS indicated that it
considered the September 2006 submission a concept paper and did not
consider the amendment as a formal application until December 2006.
[39] For Vermont's demonstration, the HHS approval process took more
than 5 months; state Medicaid officials submitted the proposal to HHS
on April 15, 2005, and received HHS approval on September 27, 2005.
[40] The Medicaid Commission, appointed in July 2005 by the Secretary,
was charged by the Secretary with identifying reforms necessary to
stabilize and strengthen Medicaid. The commission issued its report and
recommendations in December 2006.
[41] In its comments, HHS acknowledged that demonstration proposals
often evolve rapidly--alterations, additions, and deletions are made
along the way, often on a more-than-daily basis. Further, states may
not have labeled a particular document the "official or final
submission."
[42] Because of the widespread availability of the Internet, we are not
reiterating the specific portion of our previous recommendation that
HHS post proposals in the Federal Register.
[43] In addition to Florida and Vermont, we identified California and
Iowa as states with recently approved comprehensive demonstrations. We
estimated the portion of total state Medicaid expenditures covered in
demonstration year one to be 4.6 percent and 4.4 percent, respectively.
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