Politics & Government

Gov. Bevin submits Medicaid overhaul plan to Feds, with some changes

Kentucky Gov. Matt Bevin.
Kentucky Gov. Matt Bevin. File Photo

Gov. Matt Bevin on Wednesday submitted his Medicaid waiver proposal to the federal government, hoping to reshape the program that provides health insurance for 1.32 million Kentuckians.

The revised plan Bevin sent to the U.S. Department of Health and Human Services — which he calls Kentucky HEALTH — had a handful of changes that he said are a response to public criticism of the original waiver proposal he unveiled in June. Over the next five years, it could shave $2.2 billion off the expected $37.2 billion expense of Kentucky’s Medicaid program, according to the waiver application.

Speaking to reporters, Bevin said there is not much room on his side for compromise if HHS wants changes.

“It has been clear even when I was a candidate, certainly since I’ve been governor, from the moment of my inaugural speech to my budget address and every time I’ve been on record since then,” Bevin said. “If, in fact, there are not structural changes made, there will not be the ability to have an expanded Medicaid in Kentucky. That’s just the reality of it. So the ball is in their court. If there is to be expanded Medicaid in Kentucky, it is entirely up to them.”

The most controversial measures in Bevin’s original plan remain, including premiums and co-pays and a requirement that able-bodied adults be engaged in their communities for at least 20 hours every week, through a job, classes, volunteering or other specified activities.

Also, the final plan continues to classify dental and vision care and over-the-counter medicines as “enhanced benefits” that Medicaid recipients could earn only by performing various tasks. Medical transportation no longer would be covered except for emergencies.

“The things that many Kentuckians are concerned about, the things that would create obstacles to coverage and move us backward instead of forward, are still in there,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy in Berea.

Among the waiver’s changes since Bevin first proposed it in June: Allergy testing and private-duty nurses would remain covered. People who are determined to be “medically frail” would be exempt from premiums and co-payments. And the list of acceptable community engagement activities would expand to include personal caretaking, passing the high school equivalency test and getting preventative medical care for children, including immunizations and vaccinations.

The federal government pays most Medicaid costs, so HHS must approve changes to how the states operate their individual programs. HHS has repeatedly warned that it won’t approve a state waiver that limits access to benefits through work requirements or other potential hurdles.

“Kentucky’s Medicaid expansion has been very successful in improving health coverage, access to care, health outcomes and financial security for its citizens,” said HHS spokeswoman Marjorie Connolly on Wednesday.

“HHS has been clear that, as we begin the review of this application, we will assess it based on longstanding Medicaid principles of access to coverage and affordability of care,” Connolly said. “As in other states, we are prepared to continue dialogue for as long as it takes to find a solution that maintains and builds on Kentucky’s historic progress and avoids moving backwards.”

Negotiations over Medicaid waivers can take many months, Connolly said.

Dennis Smith, a Washington attorney who offered advice on the waiver to the Bevin administration, said Wednesday there is no legal reason HHS can’t accept the “community engagement” requirements that Kentucky proposes. That should not be a deal-breaker, he said.

“There is certainly flexibility there for those provisions to be approved. The (HHS) secretary has the discretion to do that,” said Smith, who was director of the Center for Medicaid and State Operations at the Centers for Medicare and Medicaid Services under President George W. Bush. “Part of the very purpose of Medicaid is to help people become independent. That’s part of Medicaid’s mission.”

Under the authority of the federal Affordable Care Act, Democratic Gov. Steve Beshear expanded Medicaid in Kentucky to include people whose incomes are up to 138 percent of the poverty level, or $16,105 a year for an individual.

Beshear’s Medicaid expansion added roughly 440,000 Kentuckians, which means that 30 percent of the state’s population is now enrolled. This has dropped Kentucky’s uninsured rate from 20 percent to 7.5 percent. Of all 50 states, only Arkansas saw a steeper decline.

However, Kentucky struggled to cover its Medicaid expenses even before the expansion. Bevin, a Republican elected to succeed Beshear last November, says there is no realistic way to pay for this growth. He estimates that the state’s share will be $1.2 billion over the next five years.

“If there is not some way to balance the financial impossibility of funding it, together with the need for healthcare outcomes, then we’re just deluding people,” Bevin said Wednesday. “Why trick people, why lie to people, which is what would be done if we were to promise something that there was not the ability to pay for. So we’re trying to balance the cost with the ultimate goal, which is quality health outcomes.”

Among the waiver’s changes since Bevin first proposed it in June: Allergy testing and private-duty nurses would remain covered. People who are determined to be “medically frail” would be exempt from premiums and co-payments. And the list of acceptable community engagement activities would expand to include personal caretaking, passing the high school equivalency test and getting preventative medical care for children, including immunizations and vaccinations.

Recipients would have to pay from $1 to $15 in monthly premiums, although the revised waiver ties those premiums to household income rather than — as the original plan did — individual income. After a year, people above the federal poverty line would have to pay $37.50 a month. That above-poverty population would be locked out of Medicaid for six months if they miss a payment.

Medicaid recipients with access to a workplace health plan would be at first encouraged, and then required, to switch to that plan. However, the state presently does not have accurate information about where these people work. Some of the biggest enrollment for expanded Medicaid came in economic sectors, such as construction, food service and retail, where insurance often is not offered to workers, according to federal data.

The waiver’s savings depend heavily on eliminating nearly 86,000 Kentuckians from the Medicaid program over the next five years, according to an analysis by the Kentucky Center for Economic Policy.

Potential barriers to coverage could doom the waiver’s chances in Washington, said Emily Beauregard, executive director of Kentucky Voices for Health. Generally, once a state has expanded Medicaid coverage, HHS does not allow much in the way of restrictions, she said.

“The primary question is whether Governor Bevin is willing to negotiate on this or whether he’ll walk away from Medicaid expansion entirely,” Beauregard said. “There’s a lot at stake here. For nearly half a million Kentuckians, this plan means they either keep their health coverage or they don’t.”

Staff writer Daniel Desrochers contributed to this report.

John Cheves: 859-231-3266, @BGPolitics

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