Medicaid Red Tape Stymies Innovation, States Say

State Medicaid directors say the federal government’s focus on bureaucratic process measures has quashed innovation efforts in the Medicaid program and resulted in inefficiencies and duplications.

“The current policies and procedures bog states down in endless, repetitive reporting and change requests and do not prepare states with the tools Medicaid needs to succeed,” says a report from the National Association of Medicaid Directors.

While the triple aim of better care, better health, and lower costs is often touted by officials at the Centers for Medicare & Medicaid Services as critical to an improved healthcare system, the NAMD report says the current Medicaid program is not structured to meet those goals. “Rather than coordination, health outcomes, program integrity, and efficiency—federal rules have a heavy hand in every aspect of Medicaid programs and remain fixed on process measures.”

Andrea Maresca, director of federal policy and strategy for NAMD, says that instead of a “smooth pathway for states to implement managed care programs or create incentive payment programs,” Medicaid is stuck in a regulatory system that requires time-consuming waivers to effect even the smallest of changes.

Federal dependence on the waiver system means successful programs implemented in one state are not easily adopted by another, explains Maresca. She points to Florida, which wants to expand its Medicaid managed care pilot from a handful of counties to the entire state. “There are states that have very robust managed care programs. Florida wants to do something similar but the culture of the Medicaid program is to throw up hurdles in every direction. It fails to translate the experience of states that are doing something well to other states that want to move in the same direction.”

The NAMD report identifies three areas where it says change is needed in the administration of the Medicaid program in order to foster and support innovation:

• Focus on improved healthcare outcomes rather than bureaucratic process measures. Maresca says CMS needs to reassess its time-consuming data collection requirements, examining why it wants the data, how it will be used, and how having the data will help achieve goals for better health outcomes for Medicaid beneficiaries.
• Streamline business practices to ensure state flexibility. Maresca says duplication of requirements is huge problem for states in running their Medicaid programs. The issue is especially critical as state budget cuts force staff reductions. She points to the overlap of state requirements for the accreditation of managed care plans and the federal requirement for external quality review of the plans as an unnecessary impediment.
• Support a system for rapid dissemination of best practices. The waiver system is a sore point for states. Maresca notes that the CMS Innovation Center’s focus for Medicare is on identifying best practices and expanding their use so they become a permanent part of healthcare. “That culture just doesn’t exist in Medicaid,” she says. Instead, states still have to get waivers to expand programs that they have been tweaking and improving for years. The report suggests that Medicaid follow the approach being implemented for “dual-eligibles” by the federal Medicare- Medicaid Coordination Office, which is working with states to test and then disseminate successful integrated care models for the dual-eligible population.

State Medicaid directors are racing the calendar in their efforts to make program changes. They are already looking at a projected 29% increase in state spending for the Medicaid program in fiscal year 2012. The report notes that the program’s problems will be “further compounded by the expansion of the program in 2014.” That’s when residents who earn less than 133% of the federal poverty level ($14,000 for individuals and $29,000 for a family of four) will be eligible to enroll in Medicaid.

Efforts to reach CMS officials to respond to the NAMD report were unsuccessful.

See also:
States Stymied in $4.3B Medicaid Collection Efforts