Bevin submits formal Medicaid proposal to federal government, largely unchanged from his draft; negotiations come next

By Melissa Patrick and Al Cross
Kentucky Health News

Gov. Matt Bevin's administration formally submitted its revised Medicaid plan to Health and Human Services Secretary Sylvia Burwell Aug. 24, leaving largely unchanged provisions that Burwell has said will not be approved. But Bevin says he will negotiate.

At stake is coverage for about 430,000 people who are covered by the 2014 expansion of Medicaid under federal health reform by Democratic Gov. Steve Beshear, to households earning up to 138 percent of the federal poverty threshold.

The Republican governor's plan mainly targets able-bodied adults who qualify for Medicaid under the expansion. The plan is designed to encourage participants to have what Bevin calls "skin in the game" though premiums and a higher level of involvement in their health care.

The plan would require able-bodied adults who aren't primary caregivers to work, eventually 20 hours a week. Burwell has said that would violate "longstanding principles" of the program and would not be approved.

The submitted plan differed from the draft in that the "community engagement" to earn additional benefits could include personal caretaking, getting preventive medical care for children, and studying for and passing the high-school equivalency exam, with the state paying the testing costs.

But it made no change in the proposal to charge monthly premiums of $1 to $15, depending on income, except that people deemed "medically frail" would not have to pay and premiums would be assessed on households, not individuals.

Health and Human Services Secretary Sylvia Burwell

Burwell has indicated that she would not approve premiums for people below the poverty level, saying "States may not impose premiums or cost sharing that prevent low-income individuals from accessing coverage and care."

The submission to Burwell did not, as many health advocates had hoped, leave dental and vision care and over-the-counter drugs in regular Medicaid coverage. It would still make them available by performing certain tasks, though the changes would be delayed by three months to allow Medicaid members to earn credits for them.

The plan is called Kentucky HEALTH, standing for Helping to Engage and Achieve Long-Term Health. It seeks a waiver from federal rules, under a section of law allowing demonstration programs.

"The submission of this waiver is the result of many months of extensive research, planning and time spent traveling the state listening to Kentuckians,” Bevin said in a news release. “Kentucky HEALTH will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner that ensures better health outcomes for recipients.”

The proposal says it "is expected to save taxpayers $2.2 billion over the five-year waiver period," by reducing enrollment in the program, but only $331 million of that would be state tax money, because the federal government covers the bulk of Medicaid costs.

Gov. Matt Bevin (Lexington Herald-Leader photo)

Bevin says the state cannot afford to have 1.32 million people, nearly 30 percent of the Kentucky's estimated population, on Medicaid. About 430,000 are covered through the expansion, for which the federal government is paying the full cost through this year. Next year the state will be responsible for 5 percent, rising in annual steps to the federal health-reform law's limit of 10 percent in 2020. The state pays about 30 percent of the cost of traditional Medicaid participants.

Other changes to the draft that Bevin proposed in June included coverage of allergy testing and private-duty nursing.

The original proposal, submitted in June, was largely opposed by health advocates at three public hearings, with complaints that the program was too complicated and created barriers to care.

U.S. Rep. John Yarmuth, D-Louisville, issued a statement saying Bevin "has submitted a Medicaid waiver proposal that the federal government legally cannot approve. Once they deny it, he will terminate our Medicaid expansion and attempt to blame President Obama when Kentucky families lose their coverage."

But Washington, D.C., lawyer Dennis Smith, a former Medicaid official who has advised Bevin, said Wednesday no law keeps Burwell from accepting the plan. “There is certainly flexibility there for those provisions to be approved,” Smith told John Cheves of the Lexington Herald-Leader. “Part of the very purpose of Medicaid is to help people become independent.”

Several advocacy groups have posted statements about the final proposal, saying there are areas of it to applaud, but still some concerns.

Susan Zepeda, CEO of the Foundation for a Healthy Kentucky, applauded the cap for household premiums and the expanded rules around caregiving, among other things. But she also had a long list of concerns, including dental and vision benefits, elimination of retroactive coverage, removal of coverage for emergency transportation and lock-out periods for nonpayment of premiums. The lock-outs could be waived if members get current on their payments and take a financial- or health-literacy course.

Dr. Terry Brooks, executive director of Kentucky Youth Advocates, said he was glad that former foster children up to age 26 will be excluded from the waiver, and that getting preventive care for children can earn rewards. But he voiced "major concerns" that the plan would "negatively impact many parents and, as a result, impact their children as well." He cited concerns about co-payments and premiums that he said many can't afford, and that vision and dental services "are considered an earned benefit rather than services covered in a standard benefit package."

The state news release clarified some misconceptions that were apparent during the public comment period. For example, full-time students or individuals working more than 20 hours per week would be considered to meet the community-engagement requirements; smoking cessation benefits would not be changed; and disabled individuals receiving waivers or Supplemental Security Income would not be affected.

The release reiterates that the plan would not affect children, pregnant women, the medically frail and adults who were eligible for Medicaid before the expansion.

Bevin, a Republican, said in June when he announced the proposal that if federal officials don't approve this proposal, he would end the expansion. The submitted waiver says it "represents the terms under which the Commonwealth will continue Medicaid expansion."

The governor told reporters Wednesday, "If there are not structural changes made, there will not be the ability to have expanded Medicaid in Kentucky. That's just the reality of it. So the ball is in HHS's court."

Asked the next day at the State Fair if he was willing to negotiate with Burwell, Bevin said, "Absolutely, that's where we are in the process."

Beshear issued a statement saying, "By submitting this waiver proposal, which threatens to move Kentucky’s nation-leading progress in health backwards, Gov. Bevin is putting his own political ideology ahead of the health and well being of hundreds of thousands of Kentuckians."

The Centers for Medicare and Medicaid Services has 15 days from the date of submission to acknowledge that the waiver has been submitted correctly. A 30-day comment period will follow.

Burwell has indicated that the process could easily continue until after the November election, in which Republicans hope to take control of the state House and the White House. She told Beshear in a July 21 letter, "We are prepared to continue our dialogue with the state for as long as it takes to find a solution that continues Medicaid coverage for the people of Kentucky. As you know, Medicaid waivers in other states have often taken between six to 12 months to negotiate."

For the state Cabinet for Health and Family Services page on the topic, click here.