How to Enhance and Improve State Medicaid Plans Frank Rider

How to Enhance and Improve State Medicaid Plans
Frank Rider
Throughout 2013, this column is exploring five major strategies to optimize State Medicaid programs in
support of systems of care. We began by examining opportunities to maximize enrollment and retention
of eligible children in Medicaid and the Children’s Health Insurance Program (CHIP). In April/May we
studied the nature and scope of the Early Periodic Screening, Diagnosis and Treatment (EPSDT) benefit
to which all children enrolled in Medicaid are entitled. We then considered the broad scope of
behavioral health care services and supports for significant mental health conditions, especially
reflecting new policy guidance from the Center for Medicaid and CHIP Services (CMCS) and the
Substance Abuse and Mental Health Services Administration (SAMHSA). We now turn our attention to
the primary mechanisms available to States wishing to incorporate such expanded service options into
their offerings.
Recognizing that better health care, improved behavioral health outcomes, and cost-effectiveness
advantages can result from program enhancement and improvements, the basic design of Medicaid is
intentionally dynamic and able to incorporate emerging health care approaches that reflect the state-ofthe-art science as the field rigorously challenges itself to stay current on what works. The Medicaid
program was initially created in 1965 under Title 19 of the Social Security Act. Since first enacted, many
different mechanisms are now available for States to accomplish mandates that refer directly to sections
of Title 19, which has undergone substantial reforms in recent years. This article looks at four of those
Getting the Most from a State’s 1905(a) Authority
Section 1905(a) of the Social Security Act lists more than 30 categories of healthcare services for which
Federal Medicaid matching funds are available. Some of those categories are mandatory, in that States
must provide them if they choose to participate in Medicaid, as all States have. Other services are
optional, meaning that States may elect to provide them, or not, as they so choose. Some examples of
mandatory and optional services follow:
Mandatory: Physicians’ services, inpatient hospital services, outpatient hospital services,
federally qualified health center services, EPSDT services, family planning services, and
laboratory and x-ray services.
Optional: Prescription drugs, home health services, prosthetic devices, personal care, targeted
case management, eyeglasses, and medical care or remedial care furnished by licensed
practitioners under State law.
Amending a State’s Medicaid Plan allows it to incorporate new categories of optional services for all
eligible populations. The Centers for Medicare and Medicaid Services (CMS) recently highlighted several
States, including Massachusetts and New Mexico, have used their Section 1905a authority to improve
their benefit design for children and youth with significant mental health conditions.
However, States have sometimes been reluctant to use this authority when they might prefer to limit
the scope of their changes to only certain subsets of their entire Medicaid populations (e.g., persons
with intellectual disabilities, children and youth only) or geographic subdivisions of the State (e.g., a pilot
demonstration project). To allow more limited program enhancements, Congress has vested CMS with
the authority to waive certain provisions of Title 19, through specific exceptions limited in both scope
and duration. Let’s look closely at two types of waivers for which State Medicaid agencies can apply.
Enhanced Use of Home and Community-Based Services: 1915(c) Waiver Authority
Nearly all States have used the 1915(c) Home and Community-Based Services (HCBS) waiver mechanism
to develop improved benefit designs for Medicaid enrollees who have particularly serious types of
healthcare needs that place them at risk of needing an institutional level of care (e.g., State hospital,
psychiatric residential treatment facility). HCBS services have long demonstrated an ability to help even
severely impaired individuals thrive in their communities. Many States, in fact, have been granted
multiple 1915c waivers, tailored to serve many different healthcare populations. In recent years, about
one-third of States have used this mechanism to enhance services and supports for young people with
significant mental health needs, in particular. CMS has developed a special web page to support States
that are considering applying for a 1915c waiver. You can view an example of a successful State waiver
application from Indiana, here (PDF). CMS also provides a State Profiles tool at its Web site where you
can readily see the current waivers that apply to your State’s Medicaid program.
Enhanced Use of Managed Care Services: 1915(b) Waiver Authority
Waivers are available under 1915(b) that allow States to use managed care in their Medicaid programs.
In a managed care delivery system, people get most or all of their Medicaid services from an
organization under contract with the state. Through particular payment mechanisms, like a “per
member, per month pre-paid capitation” or a monthly “case rate,” managed care approaches allow
Medicaid payors to dedicate known amounts of service funds to address a defined scope of health care
needs for specific populations, spreading corridors of limited risk and flexibility among care
management entities and/or networks of service providers. In a managed care environment, for
example, the Medicaid program might allocate $30.00 per enrolled member per month to cover
behavioral health service needs (recognizing that in a typical month perhaps 5-10% of enrolled members
might have such a need).
Managed care options began to proliferate during the 1980s as a way to manage the growth in
healthcare costs. Today, CMS estimates that nearly 50 million Americans receive Medicaid benefits
through some form of managed care,1 and almost all States have at least some managed care
components in their Medicaid programs (Arizona and Rhode Island are States whose entire Medicaid
programs are based on managed care approaches). States that use the 1915(b) waiver authority are able
to use financial savings that accrue to the State to then provide additional services to the waiver
population. California, Iowa, Louisiana, and Michigan (PDF) are among States that have used the 1915(b)
authority, sometimes in combination with the 1915(c) authority, to enhance their children’s mental
health delivery systems. CMS offers extensive technical assistance to assist state Medicaid agencies to
develop, enhance, implement, and evaluate managed care programs.
Enhanced Use of Section 1115 Authorities
The Social Security Act gives the U.S. Department of Health and Human Services the authority to
approve experimental, pilot, or demonstration projects to further the objectives of the Medicaid
program, such as improving care, increasing efficiency, and reducing costs. These Section 1115
demonstrations offer States more flexibility to design and improve their programs than otherwise
allowed under Section 1915. In recent years, the Section 1115 mechanism is being employed with
increasing frequency, and several recently approved Section 1115 demonstrations have included
mental health services for children and youth. Most recently, Arizona received approval for a new level
of Section 1115 demonstration to integrate physical and behavioral health services provided to children
enrolled in the Children’s Rehabilitative Services program.
One can find current, specific information about waivers in every state by using the “State Profiles” tool
Enhancements within 1915(i) State Plan Amendments
In recent years, Congress created an additional option in Section 1915(i) of the Social Security Act that
provides a new opportunity for States to enhance their State plans to cover more eligible members with
additional services. Under 1915(i), States may not waive the requirement to provide services statewide,
and they cannot limit the number of participants in the State who may receive the services if they meet
the population definition. However, they can amend their State Medicaid plans to offer intensive homeand community-based behavioral health services (e.g., intensive care coordination, respite, parent and
youth support partners) without the limitation in a 1915(c) waiver that restricts such services to only
enrollees who are assessed as needing an institutional level of care.
Section 1915(i) State plan amendments allow Medicaid programs to target their initiatives and limit
costs by permitting them to identify a specific population and establish needs-based criteria to help
them manage their service delivery system. Montana has one of the first CMS-approved Section 1915(i)
State plan amendments (PDF) for children and youth with significant mental health conditions, and
Indiana and Washington are currently pursuing enhancements through this option.
State Medicaid plan amendments and Medicaid waivers provide a selection of mechanisms available to
States to enhance or otherwise improve the benefits they provide to members who have significant
behavioral health needs.