California gets $6.2 billion Medicaid Transformation Waiver

January 04, 2016

Modern Healthcare, Virgil Dickson 

The CMS has formally signed off on California's $6.2 billion Medicaid waiver, along with its decision to renew extra funding that supports the state's public safety net hospitals for just one year instead of five.

The CMS announced its decision in a Dec. 30 letter to California officials. As part of the waiver, known as Medi-Cal 2020, the state will receive $6.2 billion to sustain efforts to reform its Medicaid program under a massive transformation waiver that expired on Oct. 31.

The new waiver also includes $3.3 billion to help public safety net hospitals maintain and launch delivery-system reform initiatives, including infrastructure development, system redesign and improvements targeting clinical outcomes and population health.

The funding to help those hospitals shoulder the burden of uncompensated care, however, was renewed for only one year instead of five like the rest of the provisions. The state will receive $236 million for the uncompensated care pool, the same as it received under the final year of previous waiver.

After the first year, the CMS will reconsider that funding based on the results of two independent reports.

The first report, due May 15, will focus on uncompensated care delivered at public hospitals. The second report, due June 1, 2017, will focus on uncompensated care, provider payments and financing across all hospitals serving Medicaid beneficiaries and the uninsured under the current waiver.

Since the state expanded Medicaid eligibility under the Affordable Care Act on Jan. 1, 2014, about 2 million newly eligible people have signed up for Medi-Cal. Another 1.1 million people who were already eligible but not enrolled also signed up.

However, about 3 million people still lack coverage in the state, according to Enroll America, a not-for-profit organization working to get people signed up for health coverage under the ACA. About 2 million of them are eligible for Medicaid or premium subsidies for an exchange plan but have not enrolled. The rest are immigrants living in the U.S. without authorization.

California is among nine states that have federally funded uncompensated-care pools created under Medicaid Section 1115 demonstration waivers.

Last year, the pools were the subject of a public feud between the Obama administration and Florida Gov. Rick Scott and Texas Gov. Greg Abbott. The Republican governors accused the administration of holding the funding hostage to force the states to expand their Medicaid programs.

The CMS rebuffed that interpretation of its messages to officials in Florida and Texas, but the administration did question why the federal government should subsidize care for uninsured Americans who would be covered if their states expanded Medicaid eligibility under the Affordable Care Act.

The agency echoed that position in a letter to California's Medicaid director explaining that the independent analysis of the safety net pool should assess why some Californians remain uninsured.

“Coverage is the best way to assure beneficiary access to healthcare for low income individuals, and uncompensated-care pool funding should not pay for costs that would otherwise be covered in a Medicaid expansion,” CMS Medicaid Director Vikki Wachino wrote to the state last fall.

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