DHS Sec. Seemeyer Provides Key Insight on Medicaid Block Grant Debate

Borgerding: Wisconsin’s Medicaid expansion should be funded fairly by feds

February 10, 2017

“No state should be punished or rewarded for expanding Medicaid” is a phrase that Wisconsin Department of Health Services Secretary Linda Seemeyer said should define the conversation currently underway in every state and in Washington, D.C. around the subject of Medicaid block grants and equity among the states.

Seemeyer cited the costs of the population served by Medicaid as a major issue that must be considered in any discussions about funding the program through state block grants. By 2040, more than a quarter of the population in Wisconsin will be 65 or older, which drives utilization. Along with that, she noted that children account for 9 percent of the cost in the Medicaid program, adults are about 27 percent of the cost, and the elderly, blind and disabled account for 64 percent of the expenses in the Medicaid program. 

“When we talk about getting a block grant, we have to consider that population (elderly/blind/disabled) are expensive to care for; it consumes a lot of the budget,” Seemeyer said. “That is a problem.” 

Wisconsin has had much success with keeping the elderly and disabled out of long-term care, she said, with only 25 percent of that population in long-term care here, compared to 47 percent in other states. 

“The states are talking…other states have this issue, too,” she said. “We think it is critical for us to separate these two Medicaid populations (elderly/disabled/blind from kids/adults).” Seemeyer suggested the elderly/blind/disabled should be “carved out” if Medicaid moves to block grant funding.

Seemeyer said the Governor is interested in reform and welcomes the idea of a state block grant program. However, she said DHS has made the Governor aware of the unique issues in Wisconsin, and he is very interested in equity among the states in terms of resources, echoing one of WHA’s key concerns. 

“There is a lot at stake. They will set parameters that will last a long time,” according to Seemeyer. “Wisconsin is an aging population, and we have one of the lowest rates of uninsured in the country. I think the Governor wants to keep the quality of health care high and cut a deal that does not disadvantage us.” 

WHA President/CEO Eric Borgerding commented that the low uninsured rate is due to the subsidies on the exchange and the decisions that Wisconsin made to add over 130,000 people below 100 percent of the federal poverty level to Medicaid.

“Wisconsin providers and taxpayers are paying a disproportionate share of funding for our Medicaid program,” Borgerding said. “There is absolutely no reason why Wisconsin should not be recognized for the expansion of Medicaid, the so-called “partial expansion” of Medicaid that we did. We added 130,000 people who are in poverty to Medicaid—that’s probably more than some states that are getting full federal funding added, but for Wisconsin it is costing us $280 million a year. We took the federal Medicare cuts to pay for coverage expansion, but are receiving less of a benefit because of a line that was arbitrarily drawn by the Obama Administration that defines 'expansion' at 133 percent of the federal poverty level.” 

Seemeyer provided a high-level overview of the Governor’s state budget, which was released February 8. (See related article.). She said from her perspective, “it’s a good one” because it “takes care of long-standing goals and urgent and future issues.” 

The Governor’s budget maintained funding levels for the Disproportionate Share Hospital (DSH) program and included $200,000 in funding for the Rural Residency Assistance Program. 

Seemeyer briefly discussed the Medicaid co-payments or premiums and work requirements. Borgerding said WHA members are concerned about the logistics of collecting a co-pay. He suggested that the State take responsibility for collecting the co-pays, rather than put the onus on providers. 

“Collecting a co-pay is a cost to us, and in reality, it’s a cut to our already low Medicaid reimbursement,” Borgerding said. “If it is a good idea, we should think about how the State can assume this risk instead of providers who are receiving 65 percent of the cost to treat Medicaid patients.” 

DHS is in the process of talking to the Governor’s office on how co-pays, premiums and work requirements for Medicaid recipients might work. 

“We have no desire to see our waiver result in more uncompensated care,” she said. She encouraged the Board and WHA members to discuss their concerns with the requirements with the Department. 

President’s Report: Board Approves 2017 WHA Goals
In presenting the 2017 WHA goals, Borgerding noted that the complexity of the health care industry is reflected in the diversity, depth and details included in the document. The goals are based on the WHA Strategic Plan 2014-2018, and also the dialogue and takeaways from the 2016 Board Planning Session. 

“We have adopted a very transparent and extremely accountable approach to our annual goals,” Borgerding said. “There is not a lot in our goals that is not accomplished, even though sometimes it is difficult to translate accountability measures into an advocacy agenda. Advocacy is not just lobbying. It is everything else we are doing in so many other spaces.” 

The policy leadership that WHA provides, according to Borgerding, is not confined to the four walls of the hospital any longer. It is constantly expanding to include other aspects of the continuum of care. 

“Our members cite advocacy as the core deliverable they expert from WHA, and to be a leader in setting that agenda,” Borgerding said.

WHA Advocacy Efforts Target Federal Health Care Reform
WHA Senior Vice President Joanne Alig said WHA has had an internal “Repeal and Replace” team focused on federal health reform. Alig said there are three components to the reform issue: ACA repeal and replace; Restructure Medicaid through block grants based on per enrollee cap or other policies; and, Medicare premium supports or other changes. 

Alig said the top issue coming out of the election continues to be maintaining coverage expansion while taking into account millions of people are now covered either through the insurance exchange or by Medicaid expansion. At the same time, providers are concerned that any change in coverage could increase uncompensated care and cost shifting. 

“We know uncompensated care is down at the same time those gains are being offset by Medicare and Medicaid shortfalls,” according to Alig. 

Alig said 195,000 people in Wisconsin are covered since the ACA went into effect, with a 38 percent reduction in Wisconsin’s uninsured rate, which is now tied for the seventh lowest in the nation at 5.7 percent. It is better than 25 of the 31 states that expanded Medicaid. Alig added that 242,863 signed up for coverage through the insurance exchange marketplace for 2017, and Wisconsin has gained 130,000 childless adults with income less than 100 percent of FPL who are now enrolled in BadgerCare. 

Alig summarized the actions that can be taken through regulatory actions made possible by President Donald Trump’s Executive Order, which includes the ability to change requirements around special enrollment periods, create additional exemptions to the individual mandate, extend the availability of ACA-noncompliant health plans, and modify the details of how insurers meet network adequacy. ACA replacement is complicated, and there are now a few plans that have been released and that give an indication of the themes and policies being considered at the national level. Alig reviewed these plans, including the GOP, “A Better Way.” 

WHA has been fully engaged in the federal reform issue, making several trips to Washington to meet with Wisconsin’s congressional delegation (see latest news on this front). WHA staff has also delivered several letters and white papers to the congressional and state delegation along with state agency leaders to keep them fully informed on the impact reforms would have on their constituents. In addition, Borgerding participated on an expert panel discussion on reform hosted by Wisconsin Health News and authored an op-ed that was picked up statewide and ran in USA Today’s online edition. 

WHA Board Chair Cathy Jacobson recently appointed a subcommittee on health care reform to proactively engage and react to health care reforms as Congress and the President move toward repealing and replacing the ACA. 

“ACA repeal ‘rocketed’ onto the WHA agenda, and our members expect the Association to be a leading source of information to both federal and state lawmakers,” Borgerding said during his President’s Report. “Never before have we seen federal and state issues come together as they are now.” 

WHA Launches State Budget Agenda
WHA Senior Vice President Kyle O’Brien led the Board through WHA’s advocacy agenda related to the state budget process. The Medicaid cost-to-continue of $279 million is much lower than in the past and the state budget maintains, does not increase, DSH funding. 

O’Brien said WHA will continue a comprehensive advocacy strategy to improve Medicaid reimbursement for Wisconsin hospitals in the state budget and closely monitor policies regarding work and employment training program requirements for certain childless adults enrolled in Medicaid. (See related article.)

This story originally appeared in the February 10, 2017 edition of WHA Newsletter