What’s the Process for Implementing $554 Million of Medicaid Cuts?

Seven months ago, the Wisconsin Legislature hurriedly passed a bill giving the Department of Health Services (DHS) sweeping authority to rewrite the laws governing Medicaid and BadgerCare. On September 30, DHS finally unveiled a lengthy outline of its plans for cutting $554 million from the state’s Medicaid programs. Those plans include 39 initiatives, and you can find our preliminary summary of those plans and some of the likely consequences on the WCCF website.

The most frequent questions I get about the department’s proposals concern the procedural steps that lie ahead:  Do some of the proposals need to be reviewed by the legislature? If so, what will that timetable be?  Will there be any public hearings?  Do any of the changes require rulemaking?  What’s the role of the federal government in reviewing and approving the proposed changes?  Unfortunately, I can’t answer all of those questions, but I take a stab in this blog post at summarizing what we know at this point about the process for review and approval of the DHS plans.

The Legislature’s role – One thing that we know for sure is that the full Legislature does not need to review and approve any of the DHS proposals. That isn’t to say they couldn’t do so, or shouldn’t at least have meetings to hear the concerns of the people they were elected to represent, but the budget repair and budget bills give the decision making authority to unelected state officials. (See WCCF’s issue brief about the sweeping shift in power.)

The Joint Finance Committee’s role – The budget bill does provide one small check on the unprecedented delegation of policy-making authority to the executive branch. It gives the Joint Finance Committee (which is comprised of 12 Republicans and 4 Democrats) the option of reviewing any DHS proposals that conflict with current statutes. From the date when the Finance Committee formally receives the proposals (and that hasn’t happened yet), the committee has 14 days to request a meeting on proposals that conflict with the statutes. If the committee notifies DHS within that time period that it wants to hold a meeting to review those proposals, DHS may submit the proposals to federal officials only with the approval of the Committee. We don’t know yet whether the committee will hold a meeting.

Public hearings – It’s unclear if or when there will be any public hearings on the DHS proposals that make dramatic changes to BadgerCare or on the long list of proposed Medicaid-related changes. Secretary Smith told people at the Covering Kids and Families conference last week that there would be at least one hearing, though other DHS officials have reportedly made conflicting statements. The Save BadgerCare Coalition has requested DHS to hold hearings on the proposed BadgerCare and Medicaid changes, and has asked the Assembly and Senate health committees to do the same. DHS did hold a town hall meeting today on one particular proposal relating to long-term care (see Monday’s blog post).

The federal role – The vast majority of the proposals require federal approval, but for most of them the federal role is just to approve Medicaid “plan amendments.”  At the risk of over-generalizing, approval of such amendments is typically pretty routine, if the proposals don’t conflict with federal statutes or rules. However, proposals that do conflict with federal law require federal waivers of the conflicting statutes or rules, and getting waivers can be a lengthy process and is much more difficult than getting a plan amendment approved. Most of the changes relating to BadgerCare require a waiver of federal “maintenance of effort” (MOE) requirements, which are part of the federal health care reform law and which prevent the state from reducing coverage of adults below 133 percent of the federal poverty level. The MOE standards also preclude tightening of other standards that affect program participation (including such things as increasing premiums), or any reduction in child eligibility prior to 2019.

Reducing eligibility of adults – The budget bill says that if the DHS waiver request isn’t approved by federal officials by Dec. 31, 2011, then the department shall reduce eligibility of parents and childless adults to 133% of the poverty level (from 200% now), effective on July 1, 2012. That change would end BadgerCare coverage for an estimated 53,000 adults. The state’s self-imposed Dec. 31 deadline provides relatively little time for federal review of the waiver request, making it unlikely that it will be approved by the end of the year.  If the Legislature and Governor don't move the Dec. 31 deadline, it appears very likely that the state will end coverage for at least 53,000 adults next July.  (Unfortunately, we think the changes that would result if the state gets the waivers are even worse; we'll elaborate on that in a later post.)

We’ll provide updates as we learn more about the DHS timetable and whether the agency, the health committees or the Finance Committee plan to hold any hearings.