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Adapting to Medicaid Changes and Trends in 2018

Summary

On March 6, Avalere experts came together to discuss the latest Medicaid developments.

The webinar featured:

The discussion focused on the following topics:

  • Personal Responsibility Reforms
  • Prescription Drug Management
  • Medicaid Expansion
  • Entitlement Reform
  • Personal Responsibility Reforms

There is broad interest to provide flexibility to states to design their Medicaid programs. States are seeking new and extended flexibilities that fall in two broad categories: waivers that affect participation (e.g., eligibility, enrollment, and program incentives) and waivers that focus on implementing more commercial-style benefits in the program (e.g., cost sharing, drug coverage, and plan design). CMS has approved Medicaid’s first work requirement waivers for Kentucky, Indiana, and Arkansas. Other states are expected to follow.

Prescription Drug Management

To help manage drug spending, states are exploring a variety of strategies that move beyond traditional drug management tools. Emerging strategies include drug spending caps, closed formularies, mandatory supplemental rebates, and outcomes-based contracts. Further, states’ use of managed care has been growing steadily through the years but increasingly states are taking control of the drug benefit.

Medicaid Expansion

To date, 31 states and DC have expanded Medicaid coverage under the Affordable Care Act (ACA). Other states, like Maine, North Carolina, and Virginia, continue to consider or move toward expanding. Some states have requested permission to roll back the ACA expansion eligibility level from 138% of the Federal Poverty Level (FPL) to 100% FPL. Avalere analysis finds that if the federal government permits states to expand Medicaid to 100% of poverty and all states change eligibility levels accordingly, nearly 4M people could shift from Medicaid to exchanges, and 7M could be newly eligible for coverage. CMS is expected to issue its decision in the coming months.

Entitlement Reform

Congressional repeal and replace initiatives in 2017 included significant Medicaid reforms: repealing enhanced federal match for the Medicaid expansion population, implementing per capita caps, and allowing states to elect to receive a block grant for certain populations. Under the capped funding proposals, states would have needed to lower spending, which may have entailed reducing eligibility and enrollment, limiting or changing service use, reducing state payments, or seeking new sources of funding.

Looking ahead, legislative deadlines and elections in 2018 will shape the outlook for Medicaid reforms. The Administration will continue to act on waivers and demonstrations, including possibly rolling out a proposed demonstration on Medicaid drug coverage to test state-driven rebate negotiation. A Medicaid managed care rule is expected in late summer/early fall, which may provide states additional flexibility and simplify the waiver process. Next week, Congress will need to pass legislation to fund the government, which could be a vehicle for changes to Medicaid. Finally, 2018 elections could change many states’ governors and the composition of Congress, which could shift the policy agenda.

Listen to the archived webinar here.

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