Time to Modernize Medicaid’s Broken Waiver Process

For all the attention on various ways to improve Medicaid’s finances and sustainability in recent months, another key area of Medicaid policy that deserves focus is improving the state waiver process. With all the recent calls for bipartisanship, this should be an area where Democrats and Republicans can work together to improve the program.

Medicaid is a state-federal partnership and a critically-important safety net for millions of our nation’s most vulnerable patients. The program dates back to the Great Society era and will cover up to 98 million people and cost taxpayers more than $600 billion this year alone.

The Center for Medicare and Medicaid Services’ new administrator, Seema Verma, has a deep background as a Medicaid reformer, and has the unique opportunity to improve the critical program.

Since the creation of Medicaid, the secretary of Health and Human Services has been allowed to waive longstanding provisions of the Medicaid statute. Today, Medicaid waivers are widespread, with virtually all states using waivers to test pilot programs and demonstration projects or enroll patients in managed care or home and community-based services.

In fact, roughly $1 in every $3 spent under a 1115 waiver and some 7 in 10 enrollees receive their care through a private managed-care plan, often through a managed care waiver. In fact, several state Medicaid programs operate almost entirely under a waiver.

Despite the prevalence and normalcy of Medicaid waivers, the process for states obtaining waivers is needlessly long, cumbersome, and uncertain.

Take my home state of Kentucky for instance. Under the leadership of Gov. Matt Bevin, Kentucky has applied for a waiver to create some flexibility and new policies that are specific to Kentuckians’ needs. The waiver application includes requiring a sliding scale for premiums ranging from $1 to $15 and some work requirements for Medicaid beneficiaries. These reforms would give recipients the opportunity to work themselves off the program — a groundbreaking idea that, if successful, could serve as a template for other states that want to help people better themselves and transition off the program. Unfortunately, it has been two years and the waiver has not been approved.

An analysis in 2014 found that CMS takes more than six months to approve a waiver — with some waivers waiting more than a year for approval. In recent years, it took CMS as long as two full years to process a state waiver the agency ultimately approved. Unfortunately, the real total time frame for a state to receive approval is even longer than these tallies suggest, since official waiver requests are often only submitted for approval after significant preliminary conversations and pre-negotiations with CMS staff.

We need to streamline the waiver process and grant states more flexibility to do the important work of caring for their populations.

While the glacial pace for waiver review may just be “business as usual” for Washington bureaucracy, it represents an unacceptable time frame that impedes state innovation and sound program management. The lengthy review process effectively prioritizes bureaucratic processes over vulnerable beneficiaries who often receive better care through state initiatives allowed under a waiver.

Part of the problem is the “Mother, may I?” mentality within CMS that forces states to repeatedly ask permission for even the most banal and routine changes to Medicaid programs. This mindset is likely due in large part to the fact that few of the nearly 400 staff at the Centers for Medicaid and CHIP Services  have ever worked for a state Medicaid program, a health care provider, or a managed care plan.

CMCS’ composition may suggest that CMS institutionally faces important limitations, because individual staff lack an important point of view — the first-hand knowledge about health care operations, which could ultimately better inform the decisions they are asked to make.

Compounding their lack of first-hand experience, the CMS bureaucracy has at times done a poor job of evaluating waivers that receive approval or learning from successful state efforts. While states are required to conduct their own review of waivers, it is not clear how CMS may be using — or ignoring — state conclusions about successful models. CMS’s website shows only a handful of state-specific and cross-state evaluations that the agency has conducted over the last 20 years.

Even though CMS has a contracting vehicle for “analytic support and technical assistance for models and demonstration programs,” when CMS tried to examine state-specific demonstration projects, the agency has not always given states fair treatment. For example, in one recent case, CMS allowed a subcontractor to review a state’s waiver — even though that same subcontractor was on record criticizing elements of the same waiver.  

With a regulatory process like this, it’s little wonder state leaders are warning that managing paperwork to meet CMS demands consumes limited resources that would be better invested in managing the program to serve patients. Some have called for a fundamental overhaul of Medicaid waivers themselves.

A nonpartisan group of the nation’s Medicaid directors recently asked Congress to “provide flexible options for states to streamline waiver authorities,” saying the problem is that “states must patch together numerous waiver authorities and coordinate the siloed federal funding streams for these various services and programs.”  

Echoing this frustration, governors have underscored the need to fundamentally rethink the role waivers play, noting the 1115 waiver process is not sufficient to enable effective state management of the Medicaid program. In recent months, several governors have called for amending the law on Medicaid waivers.

This is an area of Medicaid policy that holds bipartisan promise, and I look forward to working together to adopt commonsense reforms to make the waiver process more efficient, predictable, and fair for states. Administrator Verma is taking action to clean up the bloated bureaucracy, but addressing the waiver process will require an act of Congress.


Rep. Brett Guthrie (R-Ky.) is vice chairman of the House Energy and Commerce Health Subcommittee.

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