NCSL wants Medicaid flexibility, federal support

A Medicaid reform proposal released by the National Conference of State Legislatures (NCSL) is driven by two factors — the increasing need for the Medicaid program and the program’s increasingly unaffordable cost to states. A partial solution envisioned by NCSL involves facilitating more state experiments to meet the needs of those who are uninsured and underinsured, allowing states to cut costs with minimal loss of services, and reducing long-term care costs.

"NCSL does not expect to be able to stop increases in Medicaid costs due to rising health care costs and the aging of the population," the organization says. "These will continue, and we expect to pay our share. We do hope to get more for our dollar and to slow the growth in costs." NCSL federal affairs counsel Joy Johnson Wilson tells State Health Watch that because the proposal was released just before the 2003 Christmas holiday, there was no time to shop it with members of Congress and their staffs. "But we have received a fair amount of response from other stakeholders and interested parties who want to pursue parts of it."

NCSL proposals include:

1. Allowing states to modify existing programs by plan amendment rather than waivers in many areas. Areas where this could be applied include establishing and setting the size of programs for home- and community-based care as an alternative to nursing homes; setting minimum work requirements for recipients with incomes above the minimum federal requirement for program eligibility; prescription-drug-only options with enhanced eligibility for the option and copayments and deductibles; basing eligibility for families and individuals on their low income even if they do not fit categorical eligibility; imposing enhanced deductibles and copayments on program recipients with incomes above minimum federal requirements for eligibility; and flexibility to modify priority service lists.

2. Modifying the prescription drug plan option to provide for regular compliance audits of the rebate program; public disclosure of prices that states pay for individual drugs and rebates received to reveal net prices; continuation of prior authorization procedures; and permitting a prescription drug-only option with enhanced eligibility and enhanced income-based deductibles and copayments.

3. Making permanent a provision for fiscal relief to states for Medicaid during hard economic times through a formula that would automatically provide additional relief in bad economic times and revert to the normal federal cost sharing in good economic times. NCSL suggests that the federal cost share for Medicaid be increased by 1% for every 0.25 of a percentage point that the national unemployment rate is above 4.5%. The organization suggests that for each federal fiscal year, the government use the average of the unemployment rates for the 12 months ending on the July 1 preceding the start of the federal fiscal year. NCSL says it recognizes that other formulas are possible and is prepared to work with Congress and the administration on alternatives that could achieve the desired result.

4. Providing additional flexibility to states in the Early and Periodic Screening, Diagnosis, and Treatment program, the Medicaid eligibility process, an expedited waiver process, and elimination of the current cost-neutrality requirement for many classes of waivers, especially for waivers with prior legislative approval.

5. Reforming the Medicaid nursing home program to provide for physical, psychological, and social needs of clients; preserve the right of self-determination, dignity, and independence; provide access to services for diagnosis and treatment of mental illness; provide incentives for provision of restorative and rehabilitative services; and recognize the important role nonmedical personal care and social services play in maintaining a person’s independence. NCSL also asks for relief from prescriptive nursing home reform requirements included in the 1987 Omnibus Budget Reconciliation Act.

Ms. Wilson says the top priority in the proposal is the section that may take many by surprise — the notion of an institutionalized automatic federal payment increase to states for Medicaid during hard economic times. "We really had to beg for the fiscal relief that we needed and got in the last session," Ms. Wilson tells State Health Watch. "There should be something in the law that is triggered when the economy hits a specific point. The proposal we’ve made [to tie such increases to levels of unemployment above a defined percentage] is just to get the discussion started. We want to work with an economist to flesh out our recommendations. I just think it’s needed because we worked so hard and still barely got some fiscal relief."

Another key priority is the reform of nursing home payments and requirements because, according to Ms. Wilson, states realize that long-term care is a "growth area" in terms of state budget problems. "There aren’t a lot of options for fixing it," she says, "although the partnership may help." A third area she stresses is the need for greater flexibility.

[Download a summary of the Medicaid reform proposal from For more information, contact Joy Johnson Wilson at (202) 624-8689.]