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CMS Mulls Medicaid Block Grants Via Waivers

Analysis  |  By Steven Porter  
   January 14, 2019

The change, long sought by Republicans through failed legislative efforts, could make a big difference for states who take advantage of the opportunity. But critics question the plan's legality.

While details of the plan remain unclear, the Centers for Medicare & Medicaid Services has reportedly been drafting guidelines in recent weeks to authorize block grants through existing Medicaid waiver authorities.

Since the 1980s, conservatives have promoted Medicaid block grants, which would give states spending caps and greater flexibility in managing their own programs. In 2017, Republicans sought unsuccessfully to write the idea into law during their failed attempt to repeal and replace the Affordable Care Act.

Proponents argue that states are better-equipped to spend money prudently with less federal stipulation. But liberals and patient advocates have said Medicaid block grants would ultimately boot beneficiaries from coverage. Considering how touchy the topic has been in the past, the Trump administration has been tweaking its plan quietly for weeks, as Politico's Rachana Pradhan and Dan Diamond reported Friday, citing three unnamed Trump administration sources.

The Wall Street Journal's Stephanie Armour reported Friday that CMS has been considering the policy since last summer, citing an unspecified number of people familiar with preliminary policy discussions. Armour described the waivers as potentially authorizing states to "remodel their Medicaid programs to more closely resemble block grant proposals."

Legality Likely to Be Questioned

News of the idea drew a sharp rebuke from some policy groups and Democrats in Congress, who suggested a legal challenge would be in order.

"Hell no," said Sen. Bob Casey, D-Pennsylvania, in a tweet responding Friday evening to Politico's report. "If the Administration tries to decimate Medicaid through executive action after its scheme was rejected by Congress and the American people, I will fight it with everything I have."

Some conservative experts, too, have suggested the plan may run into a legal wall in the Medicaid statute.

"There's no direct provision of authority to waive the way that the federal government pays the states," the American Enterprise Institute's Joe Antos told Politico. "However, that doesn’t mean that you can't try to have some of the effects that people that like block grants would like to see, in terms of encouraging states to be more prudent with the ways they spend the money."

Without commenting directly on the administration's plan, a CMS spokesperson touted the basic idea in statements to Politico and the Journal.

"We believe strongly in the important role that states play in fostering innovation in program design and financing," the spokesperson said. "We also believe that only when states are held accountable to a defined budget—can the federal government finally end our practice of micromanaging every administrative process."

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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