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Will feds give Virginia leeway on Medicaid?

RICHMOND—On a turbulent final day of the General Assembly session last month, lawmakers agreed to budget language requiring the state to seek a variety of waivers from the federal government before it will consider expanding the Medicaid program.

The waivers are aimed at giving the state more control over how it runs Medicaid—and how much it costs.

The federal government has promised to pay for Medicaid expansion in states—100 percent at first, then 90 percent after the first few years.

Proponents say it would provide new jobs and save money for states in the long run. Opponents say the Medicaid system is broken—costs have been increasing at a fast pace for years—and that expanding it doesn’t fix any of its problems.

What exactly is the state looking for in its waiver applications? And how likely is it that all those waivers will be granted?

Medicaid is jointly run by the federal government and the state, but the federal government sets most of the rules.

For Virginia to change the way it runs certain programs, then, it must—in the words of state Secretary of Health and Human Resources Bill Hazel—“call Mom and get permission.”

Medicaid’s federal overseers have what Hazel said is called an “innovation” waiver.

“If you can improve your program so you maintain or improve quality and reduce costs, [they] will waive some of the normal requirements,” Hazel said. “It’s a little nebulous what all is involved in that.”

One thing Virginia wants to do is match its Medicaid benefits more closely to those provided by commercial health insurance providers.

For example, Medicaid requires the state to pay for patient transportation to certain doctors or for some procedures, while most people who get health insurance through a private provider don’t have coverage for transportation costs.

Hazel said Virginia would like to at least limit its transportation coverage, perhaps paying for some trips but not all of them.

“That can’t be waived but what we can say is we’ll do it a certain number of times,” Hazel said.

He said the state also wants to explore ways to incorporate more cost-sharing and more wellness encouragement for Medicaid recipients.

The state is looking also at limiting provider networks, like private health insurance coverage does, and combining different Medicaid programs into a single program administration.

Hazel said Virginia also wants to experiment with how to handle people transitioning off Medicaid.

He said the state would like to try other things, like taking a program that’s successful in one place and reproducing it elsewhere. In those cases, he said, Virginia wants the federal government to set parameters but then give Virginia flexibility to try different things within the parameters, instead of having to check back with the federal government for permission to change things.

He said Virginia isn’t looking to get around quality of care and access requirements, “but we would like to be able to have some flexibility in the program to meet some very real needs.”

Hazel thinks there’s a “pretty high” chance the federal government will give Virginia the go-ahead on most of what it wants.

“I do think [the federal government] is interested in working with us,” he said.

He predicted any other states that aren’t looking for similar waivers will do so soon.

“Everybody is trying to figure out how to do more for less right now,” Hazel said.

Partly because of the Affordable Care Act, he said, the issue of Medicaid coverage and costs has become a state problem.

“States have an interest in finding solutions to that,” Hazel said. “And in order to find solutions, they need to have the tools.”

The policy issues surrounding Virginia’s quest for Medicaid waivers are not quite the same as the political issues.

Gov. Bob McDonnell opposes the Medicaid expansion, saying he doesn’t want to expand a broken system.

State lawmakers wrote the waiver language into the budget, and also created through the budget a commission that will be responsible for evaluating the waivers’ progress and deciding if expansion is justified.

McDonnell hasn’t yet signed off on that language, and could still amend it.

Even if he doesn’t, most of the commission members will be appointed by the legislature—a fact both Republicans and Democrats used to claim victory on the issue of expansion. Giving authority to expand Medicaid to an arm of the legislature takes it away from this or future governors.

The House members have already been named, and none of them favor expansion.

They and the Senate appointees, who haven’t yet been named, are expected to evaluate the state’s progress on getting the federal waivers over the course of this year and into 2014.

Chelyen Davis: 540/368-5028