Skip to main content

CMS Releases Medicaid Block Grant Plan: Healthy Adult Opportunity

Analysis  |  By Jack O'Brien  
   January 30, 2020

CMS' announcement comes more than three months after Tennessee unveiled its block grant program for TennCare, the state's Medicaid plan. 

The Centers for Medicare & Medicaid Services (CMS) released its Medicaid block grant proposal Thursday morning under the name "Healthy Adult Opportunity" (HAO). 

The HAO initiative allows states that have expanded Medicaid under the Affordable Care Act (ACA) to transition state Medicaid programs into a block grant program. 

States will be allowed to pursue a block grant program based on "an aggregate or per-capita cap" financing model, according to a CMS letter to state Medicaid directors.

Additionally, participating states will adopt a prescription drug formulary similar to that available on the commercial market, allowing for special protections for patients with HIV and behavioral health conditions, according to a CMS press release.

The announcement marks the culmination of a decades-long goal by Republicans to transition state Medicaid programs into block grants as a way to cap spending and increase flexibility in managing the programs. 

CMS Administrator Seema Verma said the HAO aims to ensure that Medicaid remains financially viable and meets the needs of beneficiaries enrolled in the program.

"This opportunity is designed to promote the program’s objectives while furthering its sustainability for current and future beneficiaries, and achieving better health outcomes by increasing the accountability for delivering results," Verma said in a statement. "We’ve built in strong protections for our most vulnerable beneficiaries, and included opportunities for states to earn savings that have to be reinvested in strengthening the program so that it can remain a lifeline for our most vulnerable."

Related: CMS Mulls Medicaid Block Grants Via Waivers

CMS' announcement comes more than three months after Tennessee unveiled its block grant program for TennCare, the state's Medicaid plan. State officials said the transition could save Tennessee around $1 billion in savings.

In November, Tennessee became the first state to ask CMS to change its Medicaid program into a block grant.

State proposals to transition Medicaid programs into block grants must abide by existing transparency and public notice guideliness, according to CMS.

Related: Tennessee Unveils First-Of-Its-Kind Block Grant Proposal for Medicaid

Healthcare leaders quickly responded to CMS' announcement, with the American Medical Association (AMA) and the Leadership Conference on Civil and Human Rights (LCCHR) opposing the proposal.

"The AMA opposes caps on federal Medicaid funding, such as block grants, because they would increase the number of uninsured and undermine Medicaid’s role as an indispensable safety net," Patrice A. Harris, M.D., M.A., president of the AMA, said in a statement. "The AMA supports flexibility in Medicaid and encourages CMS to work with states to develop and test new Medicaid models that best meet the needs and priorities of low-income patients. While encouraging flexibility, the AMA is mindful that expanding Medicaid has been a literal lifesaver for low-income patients. We need to find ways to build on this success. We look forward to reviewing the proposal in detail."

Vanita Gupta, CEO of LCCHR, echoed Harris' point and stated that the policy was in line with the Trump administration's goal to "undermine the health care of people in America from day one."

"Allowing states to block grant Medicaid is only the latest attack. With this proposal, the president is essentially putting forward the notion that we should ration health care for the most vulnerable people in our nation," Gupta said in a statement. "Besides being an affront to civil and human rights, Trump’s guidance is an illegitimate attempt to implement changes that were rejected by Congress during the failed ACA repeal effort in 2017. The Trump administration does not have the authority to make this structural change via letter—or unilaterally. We will work with our allies to ensure this foolhardy and dangerous scheme does not take root."

Related: Seema Verma's American Dream: Empower Consumers, Unleash Competition

Correction: An earlier version included commentary from the American Health Care Association and the American Hospital Association regarding the Medicaid Fiscal Accountability Rule, not the Healthy Adult Opportunity. This story has been updated to reflect that and include commentary from the American Medical Association and The Leadership Conference on Civil and Human Rights.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

Photo credit: Allison Shelley/Getty Images

Get the latest on healthcare leadership in your inbox.