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MAKING MEDICAID WORK FOR THE MOST 

VULNERABLE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 8, 2013 

Serial No. 113–65 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

MICHAEL C. BURGESS, Texas 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

JOHN D. DINGELL, Michigan 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

GENE GREEN, Texas 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. John P. Sarbanes, a Representative in Congress from the State of 

Maryland, opening statement ............................................................................. 4 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 5 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 6 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 71 

WITNESSES

Nina Owcharenko, Director, Center for Health Policy Studies, Heritage Foundation .................................................................................................................... 8 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 92 

Alan Weil, Executive Director, National Academy for State Health Policy ....... 17 

Prepared statement .......................................................................................... 19 

Answers to submitted questions ...................................................................... 96 

Tarren Bragdon, President & Chief Executive Officer, Foundation for Government Accountability ............................................................................................. 39 

Prepared statement .......................................................................................... 41 

Answers to submitted questions ...................................................................... 99 

SUBMITTED MATERIAL

Statement of the American Academy of Pediatrics .............................................. 73 

(1) 

MAKING MEDICAID WORK FOR THE MOST 

VULNERABLE 

MONDAY, JULY 8, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 4:00 p.m., in room 

2123, Rayburn House Office Building, Hon. Joseph R. Pitts (chairman of the subcommittee] presiding. 

Present: Representatives Pitts, Burgess, Gingrey, Cassidy, Griffith, Bilirakis, Ellmers, Dingell, Barrow, Christensen, Castor, Sarbanes, and Waxman (ex officio). 

Staff Present: Clay Alspach, Chief Counsel, Health; Matt Bravo, 

Professional Staff Member; Sydne Harwick, Legislative Clerk; 

Monica Popp, Professional Staff Member, Health; Andrew 

Pawaleny, Deputy Press Secretary; Noelle Clemente, Press Secretary; Alli Corr, Minority Policy Analyst; Amy Hall, Minority Senior Professional Staff Member; Elizabeth Letter, Minority Assistant 

Press Secretary; and Karen Nelson, Minority Deputy Committee 

Staff Director for Health. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. PITTS. The time of 4:00 having arrived, we will call the subcommittee to order. The chair will recognize himself for an opening 

statement. 

Today’s hearing is the third in a series examining the current 

Medicaid system and ideas for reform. It builds on the subcommittee’s March 18 hearing, ‘‘Saving Seniors and Our Most Vulnerable 

Citizens From an Entitlement Crisis,’’ and our hearing of June 12, 

‘‘The Need For Medicaid Reform: A State Perspective.’’ It also complements the Energy and Commerce Committee’s ‘‘Medicaid Check 

Up’’ report from March, Representative Upton and Senator Hatch’s 

May report, ‘‘Making Medicaid Work,’’ and the committee’s recent 

Idea Lab on the program. 

Medicaid was designed to protect the most vulnerable Americans, 

including pregnant women, dependent children, the blind, and the 

disabled. Nearly one in four Americans was enrolled in the Medicaid program at some point in 2012, making Medicaid the largest 

government healthcare program, surpassing Medicare. We have an 

obligation to ensure that the program provides quality health care 

2 

to beneficiaries and has the flexibility to innovate to better serve 

this population. 

As we have seen, we are failing on both counts. Only 70 percent 

of physicians are accepting Medicaid patients, leading to problems 

with accessing care and scheduling follow-up visits after initially 

seeing a provider. Medicaid beneficiaries often lack access to primary care and preventive services and are twice as likely to visit 

the emergency room. In some cases, outcomes for Medicaid patients 

are worse than the outcomes of those who have no insurance at all. 

Regarding flexibility, instead of encouraging States to pursue 

new and innovative models of care, we have locked them into a 

one-size-fits-all program dictated by Washington. When States do 

try to modernize and tailor their programs to the individual populations they serve, they often spend years waiting for the Centers 

for Medicare & Medicaid Services, CMS, to approve their waivers. 

Before we implement a Medicaid expansion which, if fully adopted, 

would add another 26 million Americans to the program, we must 

first address these issues in the current program. 

I look forward to hearing from our witnesses today about ideas 

to strengthen this vital safety net, and I welcome all of them to our 

subcommittee. 

And I yield the balance of my time to the gentleman from Louisiana, Dr. Cassidy. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

The Subcommittee will come to order. 

The Chair will recognize himself for an opening statement. 

Today’s hearing is the third in a series examining the current Medicaid system 

and ideas for reform. It builds on the Subcommittee’s March 18 hearing, ′′Saving 

Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis,′′ and our 

hearing of June 12, ′′The Need for Medicaid Reform: A State Perspective.′′ 

It also complements the Energy and Commerce Committee’s ′′Medicaid Check Up′′ 

report from March, Rep. Upton and Sen. Hatch’s May report, ′′Making Medicaid 

Work,′′ and the Committee’s recent Idea Lab on the program. 

Medicaid was designed to protect the most vulnerable Americans, including pregnant women, dependent children, the blind, and the disabled. Nearly 1 in 4 Americans was enrolled in the Medicaid program at some point in 2012, making Medicaid 

the largest government health care program, surpassing Medicare. 

We have an obligation to ensure that the program provides quality health care 

to beneficiaries and has the flexibility to innovate to better serve this population. 

As we have seen, we are failing on both counts. 

Only 70% of physicians are accepting Medicaid patients, leading to problems with 

accessing care and scheduling follow-up visits after initially seeing a provider. Medicaid beneficiaries often lack access to primary care and preventive services, and are 

twice as likely to visit the emergency room. 

In some cases, outcomes for Medicaid patients are worse than the outcomes of 

those who have no insurance at all. 

Regarding flexibility, instead of encouraging states to pursue new and innovative 

models of care, we have locked them in a one-size-fits-all program dictated by Washington. When states do try to modernize and tailor their programs to the individual 

populations they serve, they often spend years waiting for the Centers for Medicare 

and Medicaid Services (CMS) to approve their waivers. 

Before we implement a Medicaid expansion, which, if fully adopted, would add another 26 million Americans to the program, we must first address these issues in 

the current program. 

I look forward to hearing from our witnesses about ideas to strengthen this vital 

safety net, and I welcome all of them to the Subcommittee. 

Thank you. 

3 

Mr. CASSIDY. Thank you, Mr. Chairman. 

The current debate over reforming the Medicaid program brings 

to mind—and I am paraphrasing Samuel Johnson—no one likes 

change, even from worse to better. 

Even those who support Obamacare and Medicaid, the Medicaid 

component, said that they never would design Medicaid today as it 

was designed 50 years ago to meet today’s needs. Now, there are 

many issues with the current Medicaid program. It serves a diverse 

group of people—children, adults in long-term care, the disabled, 

pregnant women, and now able-bodied adults. If the intent of Medicaid is to take care of the most vulnerable, I raise issue with the 

child or individual with traumatic brain injury having to compete 

for limited Medicaid funds with a healthy childless adult. 

There is also great variability in how much Federal money each 

State receives per Medicaid beneficiary. As evidence, the five 

wealthiest States receive almost twice as much in Federal Medicaid 

contributions toward the care of their low-income residents than 

those living in the five poorest States. If the intent of Medicaid is 

an implicit Federal guarantee to provide a baseline of coverage for 

the most vulnerable, why should a disabled Medicaid recipient living in New York receive twice as much Federal Government aid as 

a disabled person living in California? 

Other problems include quality and access to doctors. The chairman referenced a recent study that found that Medicaid patients 

have longer hospitalization, higher cost, and worse outcomes than 

even the uninsured. Yet despite being a high-cost program for 

States, Medicaid frequently pays below a physician’s cost to see a 

patient, which effectively denies them access. Medicaid, as I like to 

say, is the illusion of coverage without the power of access. 

I applaud the chairman and the committee for holding this hearing. We can’t just simply add or subtract cash from the Medicaid 

system and call it reform. We have to be willing to reexamine the 

effectiveness of our Medicaid structure. I think that all the members of this committee can agree Medicaid should be structured in 

a way that provides benefits to individuals in the most efficient and 

effective way. I also would like to add that I recently introduced 

the Medicaid Accountability Care Act, which I hope can also be 

considered. 

I yield the balance of the time to Dr. Gingrey. 

Mr. GINGREY. Mr. Chairman—and I thank the gentleman for 

yielding—our Medicaid program has continually underperformed 

for our most needy population. Instead of focusing Medicaid dollars 

on new, healthier people, as in the President’s health care law, we 

should be directing more attention to improving the health outcomes of the existing populations. We must allow the States the 

ability to experiment with their programs to approve our results. 

An outdated and overly bureaucratic waiver process does not allow 

the proper freedom to develop new methods to deliver care to our 

poorest and most vulnerable. 

Mr. Chairman, it is past time to repeal the maintenance of effort 

provisions in Obamacare and release the States to investigate 

novel ways to improve on a system that currently fails its participants. And thank you for the extra time, and I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

4 

Recognize the gentleman from Maryland, Mr. Sarbanes, who is 

filling in for the ranking member today. 

OPENING STATEMENT OF HON. JOHN P. SARBANES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MARYLAND 

Mr. SARBANES. Thank you, Mr. Chairman. I appreciate your convening this hearing on the very important subject of the Medicaid 

program. 

As you, yourself, said, Medicaid is an important program. We 

view it as a critical safety net that provides healthcare coverage for 

those individuals who have been shut out of private insurance, either because that is unaffordable to them or it is unavailable or it 

doesn’t cover the benefits that they need. 

It is important to recognize that when we talk about the Medicaid program, we are not just talking about a program that covers 

low-income families. We are talking about a program that covers 

children and adults with disabilities, and pays for nearly half of all 

long-term care services. 

I had the privilege for 18 years of representing a number of 

health care providers as an attorney, in particular those who provide services to our elderly, and I understand how critical the support from the Medicaid program is for a lot of the services that are 

provided to those most in need among our elderly. And so it is important for us to understand the full dimensions of the Medicaid 

program. We are talking about home- and community-based services, we are talking about rehabilitative therapy, and we are talking about adult daycare and caregiver respite. 

In 2011—and you mentioned this yourself—the Medicaid program provided healthcare assistance for almost one out of every 

four or five people in the country, including 30 million children. 

That is why it is so critical to make sure that this program remains 

strong and that we build upon the most important elements of it. 

I am particularly focused on how we can bring this kind of coverage to bear where people are. It is what I call place-based health 

care. I have championed efforts, particularly with respect to young 

people, to make sure that those who are eligible for Medicaid can 

get that care wherever they may be and where it is easiest for their 

families to receive it, including in their schools and in school-based 

health clinics. 

The coverage for children under Medicaid is really one of the 

most important aspects of the program. And I would like to enter 

into the record, without objection, testimony from the American 

Academy of Pediatrics on this issue of why it is so important both 

to pediatricians and obviously to children as well. This is from Robert Hall with the American Academy. 

Mr. PITTS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. SARBANES. The Affordable Care Act, as we know, includes an 

expansion of the Medicaid program to include more low-income 

adults, taking it up to 138 percent of the poverty rate. Half of today’s uninsured have incomes below the new Medicaid limit. So 

they stand to benefit from this adjustment going forward. Unfortunately, we do have States across the country who so far have deVerDate Nov 24 2008 14:19 Feb 28, 2014 Jkt 037690 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-65 CHRIS
5 

clined to become partners in this effort, take advantage of the Medicaid expansion. The result of that is that you will have many lowincome adults who will likely remain uninsured, with predictable 

results both for them and for our society. 

We also have to look at this through an economic lens. And as 

the economy continues to improve, more and more people are still 

finding themselves in need of this very important healthcare safety 

net. If you cut Medicaid, that is essentially cutting jobs. Medicaid 

stimulates the economy. Every dollar spent is good economics. According to one study by the Kaiser Family Foundation, every dollar 

cut from Medicaid means up to $2.76 cut from the State economy 

in which that occurs. The loss of Federal Medicaid dollars means 

a loss of healthcare jobs and healthcare economic activity across 

the country, which means you are moving States in exactly the 

wrong direction that we want to be pushing them in terms of our 

economic recovery. 

States and the Federal Government need to focus on creating 

jobs, on incentivizing economic growth, not on cutting the most vulnerable programs, such as Medicaid. So I believe the expansion of 

the Medicaid program under the Affordable Care Act is not only 

something that makes tremendous sense for the health of vulnerable populations across the country, but for State economies as 

well. And I look forward to hearing from our witnesses today as 

they discuss this critical program and how we can all continue to 

push for quality affordable health care for all our citizens. 

With that, I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

And now yields to the vice chair of the subcommittee, Dr. Burgess, for 5 minutes for an opening statement. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. I thank the chairman for yielding. 

As we meet here today to discuss Medicaid, recognize that it was 

created to protect and care for some of the poorest and most needy 

in our Nation. However, in reality, the program, because of weak 

oversight, chronic underpayment of providers, lack of coordination 

of benefits, ends up being only another empty promise made by the 

Federal Government. The ability of Medicaid to provide healthcare 

coverage for the most vulnerable is further threatened by the Affordable Care Act and the drastic expansion of the program to 

nearly 72 million Americans in 2014. 

Medicaid currently consumes almost a quarter of States’ budgets, 

surpassing expenditures on education, transportation, and emergency services. Many States have been forced to cut Medicaid reimbursement rates to providers as a way to address budget shortfalls. 

Look, as someone who has provided services to Medicaid beneficiaries, I understand firsthand that coverage does not guarantee 

access. Medicaid low reimbursement actually creates increased barriers to care, limiting beneficiaries’ access to services because Medicaid pays less for comparable service than private insurers or, in 

some instances, even Medicare itself, making finding providers and 

appointments hard and sometimes impossible. Escalating costs and 

6 

shrinking access are symptoms of the greater systemic problems 

within the Medicaid system. 

And look, we need to move beyond small reforms and instead address the underlying system’s structural problems. We sat here this 

very room with a Health Subcommittee hearing in 2008 and talked 

about this very problem. Many of you will remember, it was the 

day that Lehman Brothers collapsed and the economy was headed 

for a crisis. We heard in that hearing that day that if you wanted 

to do health care reform on the cheap you just expand Medicaid. 

You are not really paying the providers to see the patients but, 

after all, that is not really what is critical, it is critical that we provide the coverage. 

Well, anyone who has practiced in the Medicaid system will tell 

you that the ability to meet the cost of providing the care is critical 

for a hospital, for a clinic, for a doctor’s office. And if you can’t meet 

that, your doors will quickly be closed. But as we sat here in that 

room that day in September, we never even asked ourselves, is the 

best we can do Medicaid? And wouldn’t we be better to reform the 

program before we expanded it? But unfortunately, those questions 

were never answered. 

So I would submit today, it is time for us to get back to the basics. We need to ask ourselves, what was Medicaid created to do, 

and is it doing the best it can do under the circumstances? We 

know the structural and fiscal problems in the healthcare system. 

How long will America tolerate staring at these problems without 

fixing them for future generations? 

It is time not just to reform Medicaid. We actually need to reboot 

the entire system. As we have seen from the events of the last 

week and a half, the problems in the Affordable Care Act are beginning to mount. They are reaching critical mass. This subcommittee has within its power to take up this issue and act. 

I thank the chairman. And I will yield the balance of my time 

to the full committee chair, who is not here, so I will yield back 

my time. 

Mr. PITTS. The chair thanks the gentleman. 

Now recognize the ranking member of the full committee, Mr. 

Waxman, 5 minutes for an opening statement. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much Mr. Chairman. 

The hearing today is called ‘‘Making Medicaid Work For the Most 

Vulnerable.’’ I think that is a good topic. But I do want to talk 

about what the Republicans have proposed. They have proposed 

making Medicaid a block grant. So the States would be told, this 

is the amount of money you would get, no more, no less, you don’t 

have to do anything, no requirements, do the best you can. And if 

you can’t afford to do what you have been doing, well, you do less. 

That is up to you. 

What the Republicans, in effect, are proposing is to shift the responsibilities to the States, the cost to the patients and providers, 

and avoid continuing a Federal responsibility. Block grants, or per 

capita grants, increases in beneficiary premiums and copays do not 

7 

reduce healthcare costs, but simply shift the cost onto the beneficiaries, providers, and States. And they make it less likely that 

people will be able to access care when they need it. 

Are there things we can do to improve the program? Certainly. 

One thing we could do is to make it a Federal program, not have 

State differences, have a Federal Medicaid program, guarantee 

that providers will get the same reimbursement rates as the Medicare providers get paid. That would improve the program. But I 

don’t think that is something that we are likely to hear much support for from the majority party that is in control. 

I think this is a good hearing to have. I know we have a number 

of witnesses. I am particularly interested in hearing from Mr. Weil 

on what the States have been able to do to make the program innovative, effective, and efficient, cover low-income beneficiaries within 

the flexibility afforded the State Medicaid programs right now. 

Things the States can do today. I believe Mr. Weil will tell us that 

States continue to advance their Medicaid programs by implementing innovations, such as the multipayer collaboratives to improve access to primary, well-coordinated care; efforts to increase 

access to higher-quality, lower-cost developmental and oral health 

services; and others for the prevention of chronic disease. 

Due to efforts like these, multiple studies have shown that Medicaid enrollees have comparable access to care as those with private 

coverage and much more reliable access than to those who are uninsured. When we hear complaints about Medicaid, the Republicans are forgetting that before Medicaid these people were uninsured and didn’t have access to any care. And under the Medicaid 

program, if beneficiaries can get access with lower cost sharing, if 

we make very poor people—which is the bulk of who the Medicaid 

patients are—have to come up with more money out of pocket, they 

just won’t have access to care because they can’t afford it. Not only 

does the Medicaid program ensure equal access to care, it operates 

with efficiency. Medicaid costs are nearly four times lower than average private plans. 

And there are other proposals that I think will streamline State 

payment systems, improve provider reimbursement timelines, ultimately increase their participation in State programs. One thing 

that I am very proud of is that at least we are going to, for a couple 

of years, require that preventive and primary care providers be 

paid the same rate as Medicare. But we didn’t make that a permanent change, which would make a lot of sense. We put it in for a 

couple of years only in hopes that after it is in, people will—either 

at the Federal level or the State level—will try to keep it in place 

because it makes a lot of sense. If we can’t afford to pay everybody 

a Medicare rate who serves Medicaid patients, at least pay those 

for whom we would like people to have access the most, and those 

are people who will provide primary and preventive care. 

The Affordable Care Act expands the Medicaid program. I think 

this is a good thing to do. And I am proud of the Affordable Care 

Act. I think it is going to mean for millions of people they are going 

to have access to care, access to health insurance, whether it is 

through Medicaid, if they are lower income, or through the purchase of a private health insurance plan in the marketplace exchanges. 

8 

Let’s stop complaining, let’s make this law work because the Republicans don’t have anything to offer but driving costs and shifting them over to people who can’t afford to pay them and thereby 

denying them the services they need. 

Thank you, Mr. Chairman. Yield back my time. 

Mr. PITTS. Chair thanks the gentleman. 

That completes the opening statements of the members. We have 

one panel today. I will ask them to take their seats at the table. 

And I will introduce them at this time. 

First we have Ms. Nina Owcharenko, director, Center for Health 

Policy Studies of the Heritage Foundation. Secondly we have Mr. 

Alan Weil, executive director of the National Academy for State 

Health Policy. And finally, Mr. Tarren Bragdon, president and 

CEO, Foundation for Government Accountability. 

Welcome. Thank you for coming today. You will each have 5 minutes to summarize your testimony. Your written testimony will be 

entered into the record. And so at this time, Ms. Owcharenko, we 

will recognize you for 5 minutes for your opening statement. 

STATEMENTS OF NINA OWCHARENKO, DIRECTOR, CENTER 

FOR HEALTH POLICY STUDIES, HERITAGE FOUNDATION; 

TARREN BRAGDON, PRESIDENT & CHIEF EXECUTIVE OFFICER, FOUNDATION FOR GOVERNMENT ACCOUNTABILITY; 

AND ALAN WEIL, EXECUTIVE DIRECTOR, NATIONAL ACADEMY FOR STATE HEALTH POLICY 

STATEMENT OF NINA OWCHARENKO 

Ms. OWCHARENKO. Chairman Pitts, Ranking Member Waxman, 

and members of the committee, thank you for having me today. 

As has already been well noted, the challenges facing the Medicaid program are not new. These challenges are unavoidable and 

raise serious concerns about whether Medicaid will be able to meet 

the needs of those who are enrolled in the program today, especially the most vulnerable. 

The program serves a very diverse group of low-income people: 

children, pregnant women, disabled, and the elderly. The Affordable Care Act adds to this growing government health program by 

expanding eligibility to all individuals with incomes below 138 percent of the poverty level. And unlike traditional Medicaid, eligibility will be based on income alone. 

I see three major challenges facing Medicaid in the future: demographic, structural, and fiscal. 

The demographic challenges. With in the addition of the new 

Medicaid expansion, the Centers for Medicare & Medicaid Services’ 

2011 Actuarial Report on Medicaid projects that nearly 80 million 

people—one in four—will be on Medicaid by 2021. By enrollment 

alone, children will remain the largest and primary category of 

Medicaid enrollees, although it is worth noting that as a result of 

the Affordable Care Act, the able-bodied, non-elderly adults will be 

a very close second. But while only 16 percent of total enrollment, 

64 percent of spending in 2011 was for the aged and disabled. As 

these competing trends continue, Medicaid will be more diverse 

and more complex to administer. 

9 

Structural challenges. Payment rates are one of the key indicators for access and physician participation in Medicaid, it has already been noted today. In its annual report to Congress, MACPAC 

notes that while varying by State, Medicaid fee-for-service payments to physicians are on average two-thirds those of Medicare 

and even worse for primary care services. A 2006 published survey 

found that 21 percent of physicians reported that they were not accepting new Medicaid patients while only 4 reported not taking 

new privately insured patients and 3 percent reported not taking 

new Medicare patients. 

While the Affordable Care Act did provide Federal funding to 

boost Medicaid payments for primary care physicians, that funding, 

as has been noted, is temporary. And also as noted by the 

MACPAC report, several States have already indicated that it is 

unlikely that they will be able to maintain those new rates. Therefore, access and quality issues will remain a challenge for Medicaid 

beneficiaries in the future. 

Fiscal challenges. Entitlements, including Social Security, Medicare, and Medicaid, are fueling this country’s spending crisis. These 

three programs represent 62 percent of the Federal budget in 2012 

and will absorb all tax revenue by 2048. By 2021, total Federal and 

State spending on Medicaid alone is projected to reach $795 billion 

and 3.2 percent of GDP by 2021. 

For States, which have to operate under a real budget, the fiscal 

situation is no better. When the Federal contributions are included, 

Medicaid is the largest budget item for State budgets, representing 

24 percent. In its recent fiscal report, the GAO warned that absent 

any intervention or policy changes, State and local governments 

would face an increasing gap between receipts and expenditures in 

the coming years. This is due in large part to rising healthcare 

costs for Medicaid, as well as health benefits for government employees and retirees. 

Although these fiscal challenges are well established, the lack of 

action only makes the future outlook worse for Medicaid and its 

beneficiaries. I suggest there are a few basic principles that should 

guide efforts to addressing the key challenges facing Medicaid. 

One, meet current obligations. Rather than expanding to new 

populations, attention should be given to ensuring that Medicaid is 

meeting the needs of existing Medicaid beneficiaries. Moreover, 

population should be prioritized based on need first. 

Two, return Medicaid to a true safety net. Medicaid should not 

be the first option of coverage but a safety net for those who cannot 

not obtain coverage on their own. Careful attention should be given 

to transitioning those who can into the private insurance market. 

Three, integrate patient-centered, market-based reforms. Efforts 

to shift from traditional fee for service to managed care have accelerated at the State level, but more should be done. Empowering patients with more choices and spurring competition among providers, including insurers, will help to deliver better quality of care 

at a lower cost. 

Four, ensure financial sustainability. Similar to other entitlement reforms, the open-ended Federal financing model of Medicaid 

means reform. Sound budgeting at the Federal and State levels 

10 

should provide a predictable and sustainable path for the program 

and taxpayers alike. 

In conclusion, I think it is encouraging to see efforts both in the 

House and in the Senate that are aimed at addressing these serious challenges facing Medicaid’s future. With Federal and State 

policymakers working together, meaningful change in Medicaid will 

ensure that the most vulnerable are not left behind. 

Thank you. 

Mr. PITTS. The chair thanks the gentlelady. 

[The prepared statement of Ms. Owcharenko follows:] 

11 


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~~~ • 

214 Massachusetts Avenue, NE • Washington DC 20002 • (202) 546-4400 • heritage.org 

CONGRESSIONAL TESTIMONY 

Making Medicaid Work for the 

Most Vulnerable 

Testimony before 

Committee on Energy and Commerce 

Subcommittee on Health 

United States House of Representatives 

July 8, 2013 

Nina Owcharenko 

Director, Center for Health Policy Stndies 

The Heritage Foundation 
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86389.002

My name is Nina Owcharenko. I am the Director for the Center for Health Policy 

Studies at The Heritage Foundation. The views I express in this testimony are my own, 

and should not be construed as representing any official position of The Heritage 

Foundation. 

Making Medicaid Work for the Most,vulnerable 

The challenges facing the Medicaid program are not new. These challengesdemographic, structural, and fiscal-are unavoidable and raise serious concerns about 

whether Medicaid will be unable to meet the needs of those who are enrolled in the 

program,especially the most vulnerable. 

The program serves a very diverse group oflow-income people: children, 

pregnant women, disabled, and elderly. In some states, Medicaid has expanded beyond 

these traditional groups to include others, such as parents and, in a few cases, even 

childless adults. The traditional program and incremental changes have resulted in 

Medicaid serving on average over 57 million people (and over 70 million at some point) 

in 2012 at a combined federal-state cost that was expected to reach over $430 billion. 

The Affordable Care Act (ACA) did not address the long-term challenges facing 

the Medicaid program. The ACA adds to this growing government health program by 

expanding eligibility to all individuals with incomes below 138 percent ofthe Federal 

Poverty Level (FPL). This is a significant change. Unlike traditional Medicaid, with 

income and categorical eligibility requirements such as disability, eligibility for the 

expansion population is based solely on income. 

Medicaid at Risk 

• Demographic Challenges. With the addition ofthe new Medicaid expansion, the 

Centers for Medicare and Medicaid Services' 2011 Actuarial Report on the 

Financial Outlook/or Medicaid projects that nearly 80 million people (one in 

four) will be on Medicaid by 2021.1 Of this increase, the Actuarial Report 

projects that just over 30 million enrollees will be children, followed by 28.5 

million adults, 10.2 million disabled, and 6.5 million aged. By enrollment alone, 

children remain the largest and primary category of Medicaid enrollees, although 

I Centers for Medicare and Medicaid Services, 2011 Actuarial Report on the Financial Outlook/or 

Medicaid, March 16,2012, p. 22, http://www.cms.govlResearch-Statistics-Data-andSystems/Research/ ActuariaiStudiesIDownioadslMedicaidReport20 II.pdf. It is also worth noting that this 

estimate is based on the assumption that not all states will choose to accept the ACA Medicaid expansion. 

The Actuaries estimate that if all states expanded, the number of enrollees by 2021 would reach 85 million 

and that, even without expansion, enrollment would reach close to 60 million due to the ACA's other 

interactive effects. See ibid., pp. 40, 41. 
13 


86389.003

it is worth noting that as a result of the ACA expansion, able-bodied, non-elderly 

adults are now a very close second. 

In 2011, the aged and disabled accounted for over 64 percent of spending but only 

16 percent of total enrollment. Setting aside enrollment growth due to the new 

expansion, the Actuarial Report points out that "growth in aged adults is expected 

to be faster than the other categories of enrollment.,,2 The report also notes that 

"Per enrolIee costs for the disabled have been increasing at a faster pace than for 

aged beneficiaries.',3 

The further expansion of the Medicaid program alongside the aging populations 

makes Medicaid more diverse and more complex. 

• Structural Challenges. In its annual report to Congress, the Medicaid and CHIP 

Payment and Access Commission (MACP AC) notes that while varying by state, 

Medicaid Fee for Service (FFS) payments to physicians are, on average, twothirds those of Medicare and even worse for primary care services.4 

Payment rates are a key indicator for physician participation in Medicaid. A 2006 

published survey found that 21 percent of physicians reported that they were not 

accepting new Medicaid patients, while only 4 percent reported not taking new 

privately insured patients and 3 percent reported not taking new Medicare 

patients.5 A survey ofthe peer-reviewed academic literature illustrates that access 

and quality are problems for children as well as for adults in Medicaid.6 

While the ACA did provide federal funding to boost Medicaid payments for 

primary care physicians, that federal funding is temporary, which means that 

states will either return to previously set levels or face new costs. As noted in the 

MACPAC report, several states have indicated that it is "unlikely" they will be 

able to maintain the new rates.7 

2 Ibid., p. 30. 

3 Ibid, p. 27. 

4 Medicaid and CHIP Payment and Access Commission, Report to the Congress on Medicaid and CHIP, 

June 2013, p. 50, http://www.macpac.gov/reports. 

5 Peter Cunningham and Jessica May, "Medicaid Patients Increasingly Concentrated Among Physicians," 

Center for Studying Health System Change, Tracking Report No. 16, August 2006, 

http://www.hschange.comiCONTENT/866/866.pdf. 

6 Kevin D. Dayaratna, "Studies Show Medicaid Patients'Have Worse Access and Outcomes than 

the Privately Insured," Heritage Foundation Backgrol.lnderNo. 2740, November 7,2012, 

http://www.heritage.org/research/reports/20 12/11/studies-show-medicaid-patients-have-worse-access-and-outcomesthan-tbe-private1y.insured. 

7 MACPAC, Report to the Congress on Medicaid and CHIP, p. 55. 

2 
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86389.004

Therefore, access and quality issues will remain a challenge for Medicaid 

beneficiaries in the future. 

• Fiscal Challenges. Entitlements, including Social Security, Medicare, and 

Medicaid, are fueling the country's spending crisis. These three programs 

represented 62 percent of the federal budget in 2012 and will absorb all tax 

revenue by 2048.8 By 2021, total federal and state spending on Medicaid alone is 

projected to reach $795 billion ($478 billion in federal spending and $314 billion 

in state spending) and 3.2 percent ofGDP by 2021.9 

For states, which have to operate under a real budget, the fiscal situation is no 

better. In its recent State and Local Government' Fiscal Outlook report, the 

Government Accountability Office warned that "absent any intervention or policy 

changes, state and local governments would face an increasing gap between 

receipts and expenditures in the coming years" due in large part to the rising 

health-related costs of Medicaid and health care benefits for government 

employee and retirees.1O When the federal contributions are included, Medicaid is 

the largest budget item for state budgets, representing 24 percent. 

Although these fiscal challenges are well-established, the lack of action only 

makes the future outlook worse for Medicaid and its beneficiaries. 

Guiding Principles 

Four fundamental principles should guide efforts to address the key challenges facing 

Medicaid. 

• Meet current obligations. Rather than expanding to new populations, attention 

should be given to ensuring that Medicaid is meeting the needs of existing 

Medicaid beneficiaries. Moreover, populations should be prioritized based on 

need. 

• Return Medicaid to a true safety net. Medicaid should not be the first option for 

coverage but a safety net for those who cannot obtain coverage on their own. For 

those who can afford their own coverage, careful attention should be given to 

transitioning them into the private market. 

8 Alison Acosta Fraser, ed., "Federal Spending by the Numbers 2012," Heritage Foundation Special Report 

No. 121, October 16,2012, http://www.heritage.org!researchlreports/2012/1O/federal-spending-by-thenumbers-2012. 

9 Centers for Medicare and Medicaid Services, 2011 Actuarial Report on the Financial Outlook/or 

Medicaid, p. 50. 

10 U.S Government Accountability Office, State and Local Governments' Fiscal Outlook: April 2013 

Update, GAO-13-546SP, Apri130, 2013, http://\Vww.gao.gov/assels/660/654255.pdf. 

3 
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• Integrate patient-centered, market-based reforms. Efforts to shift from 

traditional fee for service to managed care have accelerated, but more should be 

done. Empowering patients with choice and spurring competition will help to 

deliver better quality at lower cost. 

• Ensure fiscal sustain ability. Similar to other entitlement refonn efforts, the 

open-ended federal financing model in Medicaid needs refonn. Budgeting at the 

federal and state levels will provide a predictable and sustainable path. 

Conclusion 

It is encouraging to see efforts in the House and Senate that are aimed at addressing the 

serious challenges facing Medicaid's future. With federal and state policymakers working 

together, meaningful change in Medicaid will ensure that the most vulnerable are not left 

behind. 

4 
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******************* 

The Heritage Foundation is a public policy, research, and educational organization 

recognized as exempt under section 501(c)(3) of the Internal Revenue Code. It is 

privately supported and receives no funds from any government at any level, nor does it 

perform any government or other contract work. 

The Heritage Foundation is the most broadly supported think tank in the United States. 

During 2011, it had nearly 700,000 individual, foundation, and corporate supporters 

representing every state in the U.S. Its 2011 income came from the following sources: 

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Foundations 

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The top five corporate givers provided The Heritage Foundation with 2% of its 2011 

income. The Heritage Foundation's books are audited annually by the national accounting 

firm of McGladrey & Pullen. A list of major donors is available from The Heritage 

Foundation upon request. 

Members of The Heritage Foundation staff testify as individuals discussing their own 

independent research. The views expressed are their own and do not reflect an 

institutional position for The Heritage Foundation or its board oftrustees. 

5 
17 

Mr. PITTS. Now recognizes Mr. Weil for 5 minutes for an opening 

statement. 

STATEMENT OF ALAN WEIL 

Mr. WEIL. Thank you, Mr. Chairman, members of the committee. 

I appreciate the opportunity to appear before you today. 

I am the executive director of the National Academy for State 

Health Policy, a nonprofit, nonpartisan organization that works 

with State leaders to promote excellence in State health policy and 

practice. My own experience includes a cabinet position in Colorado 

running the Medicaid agency. 

Ten years ago I wrote that Medicaid is the workhorse of the 

American health care system, and that characterization remains 

true today. Unambiguous evidence demonstrates Medicaid’s success 

in providing access to care and relieving the financial burdens associated with that care. 

My testimony is a report from the field where I observe a Medicaid program that is dynamic, continually evolving to meet the 

changing needs of vulnerable populations, leading how care is 

structured and delivered, and participating in transformations of 

care delivery that are occurring around the country. 

For example, Medicaid has led the way in promoting the use of 

developmental screening methods to identify children who would 

benefit from early intervention services. The percentage of children 

receiving such screening has grown from under 20 to more than 30 

percent. In North Carolina, it is 75 percent. Nationwide, children 

with public health insurance are actually more likely to receive 

critical developmental screenings than children with private health 

insurance. 

In 2000, Surgeon General David Satcher called poor oral health 

America’s silent epidemic. Medicaid programs around the country 

are actively pursuing efforts to ameliorate this crisis through early 

interventions in medical practices, not just in dental offices. Washington State and Maryland, among others, have innovative programs designed to increase access to dental care for vulnerable 

children. 

Medicaid is the Nation’s primary payment source for long-term 

services and supports, and now States are spending more than a 

third of their long-term service budgets on home- and communitybased supports that meet people’s needs more effectively and more 

humanely. 

In the area of eligibility and enrollment, Louisiana has led the 

way in streamlining processes for Medicaid applicants and those 

seeking to renew their coverage. Oklahoma launched the Nation’s 

first online realtime enrollment system for Medicaid. 

But some of the most exciting work in Medicaid is how it works 

with other private and public programs. All but three States now 

rely on managed care for delivering care to at least some of their 

Medicaid enrollees. Two-thirds of Medicaid enrollees receive most 

or all of their benefits in managed care. And States are increasingly relying on mandatory managed care programs in Medicare for 

more complex populations, such as children with special healthcare 

needs and people of all ages with a variety of disabilities. 

18 

Medicaid has been a leader in promoting the development of patient-centered medical homes; 29 States have launched one or more 

programs in Medicaid or the Children’s Health Insurance Program 

to promote patient-centered medical homes. In 18 of those States, 

public and private payers and purchasers are working together to 

support these medical home projects. And in 15 of those initiatives, 

Medicare is also a participant. 

The health home model is an extension of the medical home that 

integrates physical health, behavioral health, long-term services 

and supports to meet the needs of the most complex populations. 

A dozen States are pursuing these integrated models with support 

from the Federal Government under the Affordable Care Act. 

Back in 2006, when Massachusetts reformed its healthcare system, it took a blended personal health and public health approach 

to smoking cessation services for Medicaid enrollees. In Massachusetts, smoking prevalence among Medicaid enrollees dropped by 26 

percent in just 2 years, with significant health cost savings as an 

added benefit. 

Around the country, Medicaid programs are pursuing new models of accountable care that encourage health care providers to organize and coordinate care as they accept financial risk and accountability for health outcomes. The structure of these programs 

is as varied as the States that are pursuing them: New Jersey, 

Minnesota, Illinois, Colorado, Oregon. The States are taking approaches that meet their own needs. Twenty-five States have received support to test or further develop comprehensive multipayer 

payment and delivery system reforms through funding from the 

Centers for Medicare & Medicaid Innovation State Innovation 

Model cooperative agreements. These States are pursuing the 

shared aim of better care and improved population health at a 

lower cost, using their Medicaid programs as a catalyst for system 

improvements that embrace not just Medicaid, but Medicare and 

private payers and private providers as well. 

Medicaid is surely a complex program, but it is also a very dynamic program. It is also surely open to improvement, as is anything that we have created. But fundamentally, as I look out at the 

experience of the States and what is going on out in the field, I see 

a program that works for America’s most vulnerable. 

Thank you, Mr. Chairman. 

Mr. PITTS. The chair thanks the gentleman. 

[The prepared statement of Mr. Weil follows:] 

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86389.007

BOARD OF DIRECTORS 

Chair 

Margarita Alegria, PhD 

Cambridge Health Alliance 

JliceChair 

Susan Reinhard, RN, PhD 

AARP Public Policy Institute 

Secretary 

John Morrison, JD 

Monison, Motl & Sherwood 

Treasurer 

Mary Kennedy 

Association for Community 

Affiliated Plans 

Kristen Grimm 

Spitfire Strategies 

Angela Monson, MPA 

Oklahoma University 

Health Science Center 

Martia Nielsen, PhD, MPH 

Patient Centered Primary Care 

Collaborative 

President 

Alan Wei), JD, MPP 

Center for Health PoHcy 

Development 

TESTIMONY BY ALAN R. WElL 

Executive Director 

National Academy for State Health Policy (NASHP) 

Before the 

Energy and Commerce Committee 

Subcommittee on Health 

United States House of Representatives 

Hearing on 

Making Medicaid Work for the Most Vulnerable 

July 8, 2013 

The views presented are those o/the author and do not necessarily represent 

those o/NASHP trustees or sponsors. 

10 Free Street, 2"' Floor 11233 20" Street, NW. Suite 303 

Portland, ME 04101 Washington, DC 20036 

Phone (207] 874-6524 Phone (2021903-0101 

Fax (2071874-6527 Fax (2021903-2790 

info@nashp.org 

www.nasbp.org 
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EXECUTIVE SUMMARY 

Medicaid is the "workhorse" of the American health care system. It is not 

glamorous, but it is effective in achieving its goals of providing access to health care 

services and relieving the financial burden associated with care for those least able to 

afford it. Medicaid is a dynamic program that is evolving to meet the changing needs of 

vulnerable populations, leading change in how care is structured and delivered, and 

participating in the nationwide transfonnation of care delivery and financing. 

In this testimony I describe steps Medicaid is taking to address the particular 

needs of the population it serves. Examples of the kind of innovation that occurs 

continuaIly within the Medicaid program can be found in the areas of developmental 

screening, oral health, long tenn services and supports, and eligibility streamlining. 

I then discuss how Medicaid is working with other public and private systems to 

promote better health outcomes and a more efficient, better organized health care system. 

I review six examples of these interdisciplinary approaches: Medicaid managed care, 

patient-centered medical homes, health homes, integration with public health, 

accountable care models, and the State Innovation Models program. 

I conclude by noting that Americans who are without health insurance seek access 

to care and to be treated with dignity, just like anyone else. While the nation debates the 

future of Medicaid and the future of the health care system, Medicaid is the only practical 

option millions of vulnerable Americans have for meeting their health care needs. 
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86389.009

Chairman Pitts, Ranking Member Pallone, and members of the committee, I 

appreciate the opportunity to appear before you today to discuss how Medicaid is 

meeting the needs ofthe most vulnerable Americans. I am the Executive Director of the 

National Academy for State Health Policy (NASHP), a non-profit, non-partisan 

organization dedicated to excellence in state health policy and practice. NASHP works 

with state leaders to identify emerging issues, develop policy solutions, and support 

innovation in policy and practice. Prior to joining NASHP, I directed a major research 

project at the Urban Institute, and, before that, I was executive director ofthe Colorado 

Department of Health Care Policy and Financing, which is the state Medicaid agency. 

Medicaid Overview 

Ten years ago, I called Medicaid the 'workhorse' of the American health care 

system. 1 That characterization remains true today. Medicaid is not glamorous, but it is 

strong and effective in achieving its goals. Medicaid provides access to critical health 

and social supports forthe most vulnerable Americans, whether they are poor children 

and their families; people with profound health care needs such as those with traumatic 

brain injuries, serious and persistent mental illnesses, cerebral palsy, multiple sclerosis, 

Down's syndrome or autism; or in need of social supports due to frailty or dementia. 

Medicaid is an expression of our nation's commitment to the most vulnerable. 

Because the Medicaid program is so complex, it is worth reminding ourselves of a 

few important facts. In 2012, Medicaid covered more than sixty-two million Americans.2 

1 Weil, A. There's Something About Medicaid. Health Aff (Millwood). Jan 2003 22(1): 13-30. 

2 Kaiser Family Foundation. Medicaid: A Primer-Key Information on the Nation's Health Coverage 

Program for Low-Income People. Washington (DC): KFF. 1 Mar 2013. Accessible from: 

http://kff.orglmedicaidfissue-brieffmedicaid-a-primerf 

2 
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Children and their parents account for about forty-seven million of these, but despite 

representing seventy-five percent of enrollment, they only account for thirty-four percent 

of spending. Fully forty-two percent of Medicaid program costs are associated with 

meeting the needs of people with disabilities, while the remaining twenty-three percent 

are spent on elders, where Medicaid fills in the significant gaps in Medicare coverage--

most critically Medicare's lack of a long-term care benefit.3 Medicaid is administered by 

the states within federal standards, and is financed jointly by the two levels of 

government. In FY 2011, federal Medicaid expenditures were $275 billion, where they 

represented 7.6% ofthe federal budget, while state Medicaid expenditures were $157 

billion, representing on average 23.7% of state general fund spending.4

,5 

Just like private health insurance, Medicaid is a financing mechanism. Its primary 

functions are to provide access to health care services and relieve the financial burden 

associated with care for those least able to afford it. Evidence demonstrating Medicaid's 

success in achieving these goals is unambiguous. Myriad studies compiled in the 

Institute of Medicine's 2009 report "America's Uninsured Crisis" conclude that Medicaid 

and the Children's Health Insurance Program improve access to services, increase the 

likelihood that an enrollee will have a usual source of care, increase the use of primary 

and preventive services, and reduce unmet medical needs.6 One recent study from 

3 Kaiser Family Foundation. Medicaid Enrollees and Expenditures, FFY 2009. KCMU/Urban Institute 

estimates based on data from FFY 2009 MSIS and CMS-64, 2012. Washington (DC): KFF. Accessible 

from: http://kff.orglmedicaidlslide!medicaid-enrollees-and-expenditures-ffv-20091 

4 Congressional Budget Office. Federal Grants to State and Local Governments. Washington (DC): CBO. 5 

Mar 20B.Accessible from: 

http://www.cbo.gov/sitesldefaultlfileslcbofiles!attachmentsl43967 FederalGrants.pdf 

5 National Association of State Budget Officers. State expenditure report: examining fiscal 20 I 0-20 12 state 

spending. Washington (DC): NASBO; 2012. Available from: http://www.nasbo.org/sites/defaultifilesiState 

Expenditure Report I.pdf 

6 Institute of Medicine ofthe National Academies: Committee on Health Insurance Status and Its 

Consequences, Board on Health Care Services. America's Uninsured Crisis: Consequences for Health and 

3 
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Wisconsin shows enrollment in Medicaid leading to reductions in hospitalizations and, in 

particular, preventable hospitalizations.7 

People without health insurance live sicker and die younger than those with any 

form of health insurance, including Medicaid.8 When Medicaid coverage expands, 

deaths decline.9 For statistical and ethical reasons, it is hard to tie a specific form of 

health insurance to specific improvements in health, but recent research provides 

important evidence of some direct health benefits associated with Medicaid coverage 

even as it fails to show evidence of improvement in other areas. I am unaware of any 

private health insurance plan that has been subject to the same scrutiny as Medicaid 

regarding its health effects, yet the vast majority of Americans would never question if 

having health insurance is good for them. 

At a time when Medicaid is poised for growth and the country is debating the 

program's efficacy, my testimony will focus on the changing nature of the program. In 

my work with states, I see a dynamic program that is evolving to meet the changing 

needs of vulnerable populations, leading change in how care is structured and delivered, 

and participating in the transformation of care delivery and financing that is occurring 

around the country. 

Health Care. National Academies Press, Washington (DC). 2009. Accessible from: 

http://www.iom.edufReportsl2009/Americas-Uninsured-Crisis-Conseguences-for-Health-and-HealthCare.aspx 

7 DeLeire, T., Dague, L., Leininger, L., Voskuil, K., Friedsam, D. Wisconsin Experience Indicates That 

Expanding Public Insurance to Low-Income Childless Adults Has Health Care Impacts. Health 

Affl:Millwood). 2013 Jun. 32(6):1037-1045. Accessible from: 

http://content.healthaffairs.org/content/32/6/1037.full 

8 Institute of Medicine, "America's Uninsured Crisis." 

9 Sommers, B., Baicker, K., Epstein, A. Mortality and Access to Care among Adults after State Medicaid 

Expansions. New England Journal of Medicine, 13 Sept 2012: 367:1025-1034. Available from from 

http://www.n91llJlIWoi/fullil 0 .1 056/NEJMsa 1202099#t~articJeMethods 

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Meeting the Needs of the Medicaid Population 

In this first section of my testimony I discuss steps Medicaid is taking to address 

the particular needs of the population it serves. The areas I discuss represent just a few 

examples of the kind of innovation that occurs continually within the Medicaid program. 

The areas I will focus on are developmental screening, oral health, long term services and 

supports, and eligibility streamlining. 

Developmental Screening 

As the source of insurance coverage for one of every three children, Medicaid has 

a particular interest in assuring that children with developmental delays or at risk of delay 

are identified and receive needed services. The Children's Health Insurance Program 

Reauthorization Act (CHIPRA) of2009 required the development of a core set of quality 

measures for child health. Released in early 2011, one of the core measures is the 

percentage of children screened for risk of developmental, behavioral, and social delays 

using a standardized screening tool at certain ages. 

Research suggests that many health problems and disorders in children could be 

prevented or ameliorated with prevention, early detection, and intervention. Prevention 

and early intervention efforts targeted to children, youth and their families have been 

shown to be beneficial and cost-effective and reduce the need for more costly 

interventions and outcomes such as welfare dependency and juvenile detention. Evidence 

also indicates that pediatric primary care providers who use a standardized, validated, 

5 
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developmental screening tool more effectively identify children at risk for developmental 

delay than those who rely solely on medical judgment.lO 

Medicaid has led the way in promoting the use of valid screening methods to 

identify children who would benefit from early intervention services. The percentage of 

children receiving such screening has grown from 19.5 percent in 2007 to 30.8 percent in 

2011-12, with improvement in every state but one.!! Medicaid policy has played a 

critical role, with fourteen states requiring Medicaid providers to perform a standardized 

developmental screening as part of certain well-child exams. In twenty-six states, the 

Medicaid program pays an additional fee for standardized screening. Some states 

reimburse for more than one type of screen during a well-child visit (e.g. mental health, 

parental depression, autism). 

North Carolina leads the nation in developmental and behavioral health 

screenings for children ages birth to five. Seventy-five percent of Medicaid well-child 

exams for children in this age range include a developmental screen, and the state 

requires the use of standardized screening tools during specific well-child visits in order 

to receive Medicaid reimbursement. 

North Carolina began by implementing screening through its Community Care of 

North Carolina (CCNC) networks. Oklahoma is pursuing changes that will make 

developmental screening and follow-up a requirement for all three tiers of medical home 

recognition in the state. Oregon has made developmental screening a "must pass 

element" in its revised Patient Centered Primary Care Homes (PCPCH) standards to be 

10 D. Rydz, et aI. "Developmental Screening," J Child Neurol. 2005; 20(l}: 4-21. 

11 Child and Adolescent Health Measurement Initiative, Data Resource Center for Child & Adolescent 

Health, "Newsletter, April 9, 2013." (Retrieved April 10, 2013). 

6 
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released in October 2013 and an incentive metric for its Coordinated Care Organizations 

(CCOs)Y 

Medicaid is not only leading in policy; it is leading in outcomes. Children with 

public health insurance are now more likely to receive a developmental screen than 

children with private health insurance. 13 

Oral Health 

In 2000, Surgeon General David Satcher called poor oral health America's silent 

epidemic. I4 State Medicaid programs are actively pursuing efforts to ameliorate this crisis 

for the vulnerable populations they serve. 

For example, North Carolina's Into the Mouths o/Babes program pioneered the 

use of Medicaid funding to encourage doctors and nurses (who children are more likely 

to see than a dentist) to provide oral screenings and fluoride varnish to very young 

children, as soon as their first teeth erupt. IS Evaluations have shown the Into the Mouths 

0/ Babes program is cost-effective in preventing decay, reducing the number of children 

who must be treated in a hospital for extensive decay, and improving a child's likelihood 

12 Information about state approaches to improving developmental screening can be found at 

http://www.nashp.org!abcd-welcome. 

13 The Data Resource Center for Child and Adolescent Health, a project of the Child and Adolescent 

Health Measurement Intiative. 2007 National Survey of Children's Health: Question 4.16: Developmental 

Screening During Health Care Visit, age 10 months - 5 Years by Type ofinsurance. Accessed June 18, 

2012. Available from: http://\vww.childhealthdata.orglbrowse/survey/results?q=257&g==74 

14 U.S. Department of Health and Human Services. Oral Health in America: A Report of the Surgeon 

General. Rockville (MD): U.S. Department of Health and Human Services, National Institute of Dental and 

Craniofacial Research, National Institutes of Health, 2000. Accessible from: 

http://silk.nih.gov/publiclhcklocv.@www.surgeon.fulh:pt.pdf 

15 Snyder, A. "Increasing Access to Dental Care in Medicaid: Targeted Programs for Four Populations. 

National Academy for State Health Policy, March 2009. Accessible from: 

http://nashp.org!publication/increasing-access-dental-care-medicaid-targeted-programs-four-populations. 

7 
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of being seen by a dentist for routine care. 16 This innovative practice has spread across 

the country, with forty-four state Medicaid programs following suit by 2013. 17 

Washington's Access to Baby and Child Dentistry program is a long-standing, 

successful partnership between Medicaid, counties, and local dental associations in which 

enhanced Medicaid payments are made to general dentists who receive specialized 

training and agree to treat children under the age of five. This very successful initiative 

helps provide timely preventive care to children at high risk of dental decay. Between 

1997 and 2004, the number of Medicaid-enrolled children receiving dental care m?re 

than doubled, and the number of children under age two who received care more than 

quadrupled.IS 

Maryland responded to the tragic death in 2007 of a child from a brain infection 

resulting from untreated dental caries with a comprehensive set of dental policy changes, 

including Medicaid payment rate increases, administrative streamlining, and 

enhancements to public health programs. 19 Since then, the state has experienced a 

marked improvement in children's access to dental care, with use of preventive dental 

16 Stearns, S. et. al. Cost-Effectiveness of Preventive Oral Health Care in Medical Offices for Young 

Medicaid Enrollees. Archives of Pediatric & Adolescent Medicine 2012; 166(10): 945-951. Accessible 

from: http://archpedi.jamanetwork.com/articie.aspx?articieid=1355373. 

17 American Academy of Pediatrics. State Medicaid Payment for Caries Prevention Services by Non-Dental 

Professionals. (updated June 2013). Accessible from: 

http://www2.aap.org/oralhealthldocslOHReimbursementChart.pdf. 

18 Pew Center on the States. Washington's ABCD Program: Improving Dental Care for Medicaid-Insured 

Children. Washington (DC): The Center. 29 Jun 2010. Accessible from: 

http://www.pewstates.org!research/reports/washingtons-abcd-program-858993 73 157. 

19 Maryland Dental Action Coalition. Maryland Oral Health Plan, 2011-2015. 2011. Accessible from: 

http://www.mdac.uslmaryland -oral-health-plan!. 

8 
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services among Medicaid-enrolled children rising by nineteen percentage points between 

2007 and 2011.20 

While dental access for children in Medicaid lags behind children with private 

health insurance, eMS reports that between fiscal years 2007 and 2011, twenty-four 

states achieved a ten percentage point increase in the proportion of children with a 

preventive dental visit?! These improvements reflect continued efforts by states to tackle 

the persistent challenge oflow-income children's access to oral health care?2 

Long-Term Services and Supports (LTSS) 

As the nation's primary payment source for long-term services and supports, 

Medicaid policy largely defines how low-income elders and people with disabilities 

receive skilled nursing services, residential services, and supports for activities of daily 

living. From 1999 to 2009, the share of Medicaid LTSS spending devoted to home and 

community based services for older people and adults with physical disabilities increased 

from 18.6 percent to 35.1 percent. States continue to shift their Medicaid long-term 

services and supports expenditures from nursing facility care to home and communitybased services. This shift promotes human dignity and saves money. 

For more than two decades, Washington has been leading the way providing longterm services and supports in the community, enabling older adults and individuals with 

disabilities to have choices about where they live, what services they receive, and who 

20 Centers for Medicare and Medicaid Services. CMS Oral Health Initiative and Other Dental-Related 

Items, CMCS Informational Bulletin 04-18-13.18 Apr 2013. Accessible from: http://medicaid.gov/FederalPolicy-GuidancelDownloadslCIB-04-18-13 .pdf 21 Ibid. 

22 See, for example, Government Accountability Office. Efforts Under Way to Improve Children's Access 

to Dental Services, but Sustained Attention Needed to Address Ongoing Concerns, GAO-l 1-96. 

Washington (DC): GAO. 30 Nov 2010. Accessible from: http://gao.gov/products/GAO-l1-96. 

9 
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provides their services. By offering a wide range of services, avoiding waiting lists for inhome care, and expediting services, the state has been successful at diverting individuals 

from institutions. Washington has one of the most balanced long-term services and 

supports systems in the nation, with three-quarters of individuals receiving services in the 

community, rather than in institutions, and sixty-two percent of its long-term services and 

supports budget spent on home and community-based services. 

Washington has actually reduced the number of persons residing in nursing 

facilities. The state has been successful in transitioning individuals out of nursing homes 

and back into the community by assigning case managers to develop and implement 

transition plans. Washington works not only with those who have just arrived in a 

nursing home, but also those who have been resident for an extended period, who require 

a more comprehensive set of supports to return to the community. Between 2005 and 

2010, Washington decreased the number of Medicaid supported nursing facility residents 

by six percent.23 

Eligibility Streamlining 

Medicaid eligibility was built on a welfare application platform, which presents 

significant barriers for busy families unable to take unpaid time to wait in line to enroll 

and requires a large bureaucracy for administration. Taking advantage of opportunities 

created by the delinking of Medicaid from welfare in the Personal Responsibility and 

Work Opportunity Reconciliation Act of 1996 (commonly known as welfare reform) and 

the creation ofthe State Children's Health Insurance Program in 1997, states have made 

23 AARP. Across the States: Profiles of Long-Term Services and Supports. 2012. Accessible from: 

http://www .aaro.org/contentidam/aaro/research/pubJic policy institute!ltc/20 12/across-the-states-20 12-

full-report-AARP-ppi-Itc.pdf. 

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major strides in simplifying their eligibility processes to improve customer service and so 

the program can better serve those who meet eligibility standards. 

Before they were required to take these steps by the Affordable Care Act, states 

were moving away from administratively burdensome requirements like face-to-face 

interviews and asset tests and embracing innovations such as presumptive eligibility, 

allowing for continuous eligibility regardless of income fluctuations, and borrowing data 

from programs like SNAP to determine eligibility more efficiently. States are relying on 

new technologies to make Medicaid enrollment a more modem, 21 st century experience. 

Some states already use electronic case records, allow electronic verification of eligibility 

and information sharing across programs, and allow individuals to update their 

information using a consumer-facing personal account. Nearly all states are using new, 

enhanced federal matching funds to upgrade their antiquated computer systems. 

In 20 I 0, Louisiana became the first state to implement Express Lane Eligibility. 

The Department of Health and Hospitals partners with the Department of Children and 

Family Services to use SNAP eligibility determinations to automatically enroll and renew 

children's Medicaid coverage. 

Also in 2010, Oklahoma launched the nation's first online, real-time enrollment 

system for Medicaid, which can accept applications, generate documentation requests, 

make determinations, and enroll individuals into a plan 24 hours a day, 7 days a week. 

Oklahoma's automated system allows eighty-two percent of applicants to enroll when 

they apply, with about half of those applicants required to submit additional 

documentation that confirms their eligibility. The automated system offers a particular 

benefit to busy families: in 20 II, one-quarter of online applications were submitted in the 

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evenings after,S p.m. or on weekends.24 The eligibility system has been able to maintain 

operations even when state offices are closed. For two days in February 2011, most of 

Oklahoma's agencies were closed due to a blizzard, but the automated system continued 

operations, enrolling 780 individuals. 

Integration with Other Systems 

Medicaid is increasingly working with other public and private systems to 

promote better health outcomes and a more efficient, better organized health care system. 

In this section I review six examples of these interdisciplinary approaches: managed care, 

patient-centered medical homes, health homes, integration with public health, 

accountable care models, and the State Innovation Models program. 

Medicaid Managed Care 

All but three states rely upon managed care for delivering care to at least some of 

their Medicaid enrollees. Two-thirds of Medicaid enrollees receive most or all of their 

benefits in managed care. Recent trends are toward greater reliance upon mandatory 

Medicaid managed care programs for more complex populations, such as children with 

special health care needs and people of all ages with disabilities. Halfthe states have 

voluntary or mandatory programs that enroll individuals who are dually eligible for 

Medicare and Medicaid into a managed care program.25 

States' use of managed care reflects a desire to achieve cost savings and budget 

predictability. These programs enable states to tap into care management strategies 

developed in the private sector. Managed care plans have data systems that gather 

24 Turner T., Online enrollment [powerPoint Presentation]. Oklahoma Healthcare Authority; 2012. 

2S Kaiser Family Foundation, "Medicaid Managed Care: Key Data, Trends, and Issues," (February 2012). 

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quality and utilization information that helps states monitor and improve program 

performance. While these programs have been controversial in some instances, they 

reflect a desire by states to utilize care coordination and care management methods and 

move away from Medicaid's fee-for-service history. 

Patient-Centered Medical Homes 

Medicaid has been a leader in promoting development of patient-centered medical 

homes, recognizing that strong primary care systems are the backbone of high performing 

health systems. Over the past seven years, states have been redesigning Medicaid to 

deliver better primary care through the medical home model, an enhanced model of 

primary care that provides whole person, accessible, comprehensive, ongoing and 

coordinated patient-centered care. Since 2006, twenty-nine states have launched one or 

more programs in Medicaid or the Children's Health Insurance Program, which offer new 

medical home payments and supports to primary care providers to deliver higher quality, 

more accessible, patient-centered care. In eighteen of these states, public and private 

payers and purchasers are working together to support mUlti-payer medical home 

projects, aligning objectives and incentives to spur system-wide transformation. Fifteen 

of these initiatives also include Medicare. 

For example, in Michigan, Medicaid and Blue Cross Blue Shield have teamed up 

with Medicare to launch one of the largest medical home programs in the country, 

reaching over 1,000,000 patients. Maine's patient-centered medical home pilot includes 

ten multi-disciplinary community care teams serving multiple primary care practices. 

Maine is building on this critical infrastructure as it pursues additional payment and 

delivery system reforms, including health homes and community-driven accountable care 

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organizations. Maryland's multi-payer patient-centered medical home program serves 

250,000 patients across Medicaid and the state's five largest commercial payers. 

Participating practices achieved significant savings in the program's first year. The state 

announced in October 2012 that twenty-three of the fifty-two participating practices 

received shared savings payments for containing costs while meeting program quality 

standards.26 

Health Homes 

The health home model is an extension ofthe medical home that focuses on 

chronically ill Medicaid enrollees. Twelve states have received approval to implement 

health home programs under Section 2703 of the Affordable Care Act.27 Health homes 

integrate physical health, behavior health, and long-tenn services and supports to meet 

the needs of the most complex populations. 

States are using health home programs to design comprehensive, person-centered 

programs that best fit the needs of their high-risk, high-cost populations. Many states 

have successfully leveraged the existing medical home and primary care case 

management infrastructure already built in their state. Others have used the program to 

serve as a platfonn for future delivery refonns. 

For example, New York phased in a statewide health home program that required 

providers to apply as a larger team with other providers in their community, 

strengthening or fonnalizing partnerships across the health care continuum and ensuring 

26 Comprehensive infonnation regarding state efforts to support patient-centered medical homes can be 

found at http://nashp.orglmed-home-map. 

27 http://www.integratedcareresourcecenter.comlhhstateresources.aspx. 

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that the spectrum of health and psychosocial needs of a patient could be met. 28 

Washington recently received approval ofits health home state plan amendment, which 

serves as a foundation for the state's Financial Alignment for Medicare-Medicaid 

Enrollees Demonstration. 

Integrating Health Care Services and Public Health 

Efforts to improve population health can be more effective if they blend personal 

health care services with public health interventions. Campaigns to reduce smoking offer 

an excellent opportunity to integrate these approaches. 

Massachusetts provides an instructive example. In 2006, Massachusetts' health 

reforms included the addition of a smoking cessation benefit to the state's Medicaid 

program. At the time, Massachusetts was one of only six states to include smoking 

cessation as a Medicaid benefit. In Massachusetts, Medicaid enrollees can obtain up to 

two 90-day regimens of smoking cessation medications per year, although higher levels 

are permitted with preauthorization. The medications are available by prescription (by a 

doctor, nurse practitioner or physician assistant), and copayments are nominal. 

Counseling is available, with up to sixteen sessions per year, including two 

intake/assessment sessions and fourteen counseling sessions (with more available with 

preauthorization), in the form of individual or group sessions. Since in-person counseling 

is not available statewide, participants can also use telephone counseling services, 

including Quitworks, a program offered by the Massachusetts Department of Public 

Health. These services are also available from all Medicaid managed care plans and some 

plans offer additional benefits. 

28http://www.chcs.org(usr doc!2012-12-11 spa approval plan pgS %28phase III%29.pdf. 

15 
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Simultaneous with the inclusion ofthis new Medicaid benefit, the public health 

department launched a campaign to publicize the availability of the smoking cessation 

benefit. The campaign included radio and transit advertising and community outreach. In 

the first two years, forty percent of Medicaid enrollees in Massachusetts took advantage 

of the smoking cessation benefit. As a result, smoking prevalence among Medicaid 

enrollees dropped twenty-six percent in two years. 

Costly medical procedures among those who utilized the cessation benefit also 

fell dramatically. Among benefit users, there were thirty-eight percent fewer 

hospitalizations for heart attacks and seventeen percent fewer emergency-room visits for 

asthma symptoms in the first year after using the benefit. There were seventeen percent 

fewer claims for maternal birth complications since the benefit was implemented, state 

health officials reported. The state saved $3 for every $1 that was spent on the smoking 

cessation program?9 

Accountable Care 

Medicaid programs around the country'are pursuing new models of accountable 

care that encourage health care providers to organize and coordinate care as they accept 

financial risk and accountability for health outcomes. Some states are building their 

models directly on the Accountable Care Organizations authorized by the Medicare 

program. Other states are developing approaches tailored to meet the specific needs of 

the state and the state's Medicaid population. 

29 Comprehensive information regarding the Massachusetts program can be found at 

http://www.mass.gov/dph/mtcp. 

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86389.024

For example, New Jersey is launching a Medicaid Accountable Care Organization 

Demonstration Project in which groups of providers will assume responsibility for 

Medicaid populations within a designated geographic area under a shared savings 

payment model. Minnesota's Health Care Delivery Systems Demonstration will reward 

groups of Medicaid-participating providers and integrated delivery systems that can 

achieve savings below a total cost of care target while meeting quality performance 

requirements. Illinois is recognizing new collaborations of health care providers and 

community agencies called Care Coordination Entities that will assume financial risk for 

delivering a package of Medicaid services to enrolled beneficiaries. 

Other states are using accountable care principles to develop innovations in their 

Medicaid programs. Colorado rolled out seven Regional Care Collaborative 

Organizations (RCCOs) that are responsible for providing medical management, care 

coordination, and support to Medicaid providers that function as medical homes. RCCOs 

and primary care providers can receive incentive payments based on performance on 

select quality indicators. Oregon has built upon a robust patient-centered medical home 

infrastructure to launch a statewide network of Coordinated Care Organizations 

(CCOs)-new health plans that secure integrated and coordinated health care for Oregon 

Health Plan enrollees under global budgets. CCOs are expected to move beyond fee-forservice payment mechanisms for compensating health care service providers, 

. ' 

implementing alternative payment methodologies that are based on health care quality 

and improved health outcomes.30 

30 Additional information regarding state approaches to develop accountable care models can be found at 

http://v.'WW.nashp.org/state-accountable-care-activitv-map. 

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86389.025

State Innovation Models 

Twenty-five states have received support to test or further develop 

comprehensive, multi-payer payment and delivery system reforms through Centers for 

Medicare and Medicaid Innovation's State Innovation Models cooperative agreements. 

These states are pursuing the shared aim of better care and improved population health at 

lower cost, using reforms of their Medicaid programs as a catalyst for broader system 

improvements. 

For example, Vermont's SIM approach includes the use of Community Health 

Teams and Support Services at Home programs, and is seeking to integrate mental health 

with medical services. Arkansas is focusing on a population-based care delivery model. 

In Arkansas' medical homes, each patient will be supported by a constellation of 

providers who address their complete health needs. Health homes will provide additional 

support to individuals with special needs. Patients will be managed by a "quarterback" 

provider who assumes responsibility for management of acute and chronic conditions. 

Minnesota organizes providers who are not formally integrated into "virtual ACOs" by 

aligning financial arrangements and creating a shared clinical information system. 

Minnesota's model seeks to integrate medical care, mentaVchemical health, community 

health, public health, social services, schools and LTSS, and encourages providers to 

partner with community organizations to manage population health. 

Conclusion 

Medicaid's federalist structure is a source oftension, but also strength. Medicaid 

is costly, which reflects the profound needs of people vulnerable due to poverty and poor 

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86389.026

health. Medicaid is imperfect and suffers from many ofthe same shortcomings as the 

rest of the American health care system. But I am unaware of any proposal to replace or 

fundamentally change the program that holds promise for better meeting the needs ofthe 

most vulnerable Americans. Indeed, those who propose major changes to Medicaid 

should subject their proposals to the same scrutiny they apply to the current program. 

As states choose whether or not to expand their Medicaid programs, Congress 

should be aware that the program they have authorized is dynamic and evolving to meet 

the needs of the most vulnerable Americans. Americans who are without health 

insurance seek access to care and to be treated with dignity, just like anyone else. While 

the nation debates the future of Medicaid and the future of the health care system, 

Medicaid is the only practical option millions of vulnerable Americans have for meeting 

their health care needs. Medicaid works for the most vulnerable. 

I greatly appreciate the opportunity you have given me to offer this testimony. 

19 
39 

Mr. PITTS. And now recognize Mr. Bragdon for 5 minutes for an 

opening statement. 

STATEMENT OF TARREN BRAGDON 

Mr. BRAGDON. Thank you, Mr. Chairman, members of the committee. I serve as the CEO of the Foundation for Government Accountability. We are a Naples, Florida-based free market think 

tank specializing in State health and welfare policy solutions. 

Medicaid in its current form, or Old Medicaid, represents, as you 

have heard, the single largest and fastest growing line item in 

State budgets, consuming about one in four State dollars. At the 

Federal level, Medicaid spending represents about a quarter of deficit spending and is projected to double over the next decade. 

Given these cost projections, Medicaid is failing the American 

taxpayer. But more importantly, it is failing the patients that it is 

supposed to represent. Poor access to specialists, the inability to 

personalize care, and perverse eligibility requirements keep too 

many Americans poor and sick and rob them of the hope of a better 

life. And for many Americans, Old Medicaid is not a safety net, but 

it is a tightrope, and patients are falling off every day. 

Because of the Affordable Care Act, many States are debating 

whether or not they should expand their broken Old Medicaid systems. This debate is a misguided priority. The real priority for 

States should be not expansion, but rather to make Medicaid work 

for the most vulnerable. And Congress can help State leaders by 

creating more flexibility at the Federal level to do that. 

When States have flexibility to innovate and reform Old Medicaid, truly patient-centered care can be a reality. And one of the 

many pro-patient strategies working in the States are giving Medicaid patients the power to choose from several different competing 

private plans. Old Medicaid typically forces patients into one or two 

government-run plans, and this government-centered approach ignores that Medicaid patients have unique needs and individual 

concerns. But in States where Medicaid patients have a robust 

choice of plans, such as Florida, Kansas, and Louisiana, patients 

are our priority. For example, in Florida’s Medicaid Reform Pilot, 

patients can choose from 13 different private plans and 31 different 

customized benefit packages. A commonsense funding formula in 

these States features risk-adjusted capitated rates so these private 

plans earn more money to enroll sicker patients and have the incentives to improve health and disincentives to cherry-pick. 

Because plans compete for patient enrollment, they also are constantly striving to improve access to specialists, offer more specialized services, and enhance their customer service. And patients like 

this choice, with 70 to 80 percent of Medicaid patients proactively 

choosing a plan rather than being automatically assigned to one. 

This choice structure also promotes better health outcomes. 

Again, in Florida’s Reform Pilot, the private plans in the reform 

outperformed Old Medicaid on 22 of 33 widely tracked health outcomes, and 94 percent of those health outcomes had improved since 

2008. And when this reform goes statewide in Florida, taxpayers 

will save a billion dollars a year. And similar savings are occurring 

in Kansas—a billion over 5 years—and Louisiana—$150 million in 

the first year. My written testimony includes details of other stratVerDate Nov 24 2008 14:19 Feb 28, 2014 Jkt 037690 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-65 CHRIS
40 

egies that States have embraced, including integrating work with 

health outcomes, promoting specialty plans, and unleashing innovation to better serve patients. 

But Federal rules and regulations can make it difficult for States 

to innovate, including the slow and inflexible waiver process, new 

taxes on private Medicaid plans, and additional cost shifts to the 

States. Luckily, this committee is exploring ways that Congress can 

make State reform easier and grant additional flexibility, and 

many of these reforms are detailed in my testimony, including allowing proven waivers to become seamlessly incorporated into 

State plan amendments, providing greater flexibility on mandatory 

and optional services, and creating an off-ramp that lets patients 

safely transition off Medicaid toward self-sufficiency in the hope of 

a better life. 

To make Medicaid work for the most vulnerable, Congress should 

recognize that proven pro-patient, pro-taxpayer solutions are out 

there. And there are strategies that can make it easier for State 

leaders and for patients to make Medicaid work for both patients 

and taxpayers. And I am happy to discuss that more in the questions. Thank you. 

Mr. PITTS. The chair thanks the gentleman and thanks the witnesses for their opening statements. 

[The prepared statement of Mr. Bragdon follows:] 

41 


86389.027

FOUNDATION FOR 

GOVERNMENT 

ACCOUNTABILITY 

15275 Collier Blvd., Suite 201-279 

Naples, Florida 34119 

239.244.8808 

www.FloridaFGA.org 

United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Health 

Making Medicaid Work for the Most Vulnerable 

July 8,2013 

Tarren Bragdon 

President and Chief Executive Officer 

Foundation for Government Accountability 
42 


86389.028

I am Tarren Bragdon and serve as the President and CEO of the Foundation for Government 

Accountability. The Foundation is a free-market think tank specializing in health and welfare 

policy solutions and is based in Naples, Florida. Thank you for the opportunity to testifY on this 

critical issue. 

Medicaid currently represents the single largest and fastest growing line item of state budgets.1 

Medicaid spending already represents one-fourth of the federal deficit and federal Medicaid 

spending is expected to more than double during the next decade? This spending growth is 

nearly twice as fast as the expected growth in the economy.3 

But more importantly, Medicaid is failing patients by keeping too many people poor and sick, 

and robbing them of the hope of a better life. States are currently debating whether or not to 

expand this broken Old Medicaid program, but that should not be the priority. The priority for 

states should be to make Medicaid finally work best for patients and taxpayers. 

Some states are leading the way. Here are a few strategies that are working well for patients, 

providers, policymakers and taxpayers: 

1. Empowering Medicaid patients with meaningful choices. States such as Florida, Kansas 

and Louisiana have empowered Medicaid patients to choose the health plans that work best for 

them. In Florida, for example, patients can choose from up to 13 different health plans offering 

31 different and customized benefit packages.4 

When given meaningful choices and adequate, objective information, Medicaid patients take 

more control over their health. In Florida's Reform Pilot and in Louisiana's Bayou Health, for 

example, independent choice counselors assist Medicaid patients in navigating the plan selection 

process, providing neutral comparisons based on patients' specific needs and concerns. ;·6 

As a result, between 70 percent and 80 percent of patients in Florida's Reform Pilot actively 

choose their health plan, compared to the 20 percent to 30 percent who let the state automatically 

I Brian Sigritz, "State expenditure report: Examining fiscal 2010-2012 state spending," National Association of 

State Budget Officers (2012), http://www.nasbo.orgisitesldefaultlfiles/State%20Expenditure%20Report_I.pdf. 

2 Christina Hawley Anthony et aI., "The budget and economic outlook: Fiscal year 2013 to 2023," Congressional 

Budget Office (2013), http://www.cbo.gov/sitesldefaultlfileslcbofiles/attachmentsl43907-BudgetOutlook.pdf. 

3 Ibid. 

4 Florida Agency fur Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidlmedicaidJeformlpdfiFL_1115_YR_ 6 ]inal_ Annual_Report _ 07"() 1-11_06-30-

12.pdf. 

, Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidlmedicaid_reformlpdfiFLI115'yr_ 6 ]inal_annuaiJeport_ 07-01-11_06-30-

12.pdf. 

6 Medical Vendor Administration, "Request for proposals: Enrollment broker for Louisiana Medicaid coordinated 

care networks, RFP # 305PUR-DHHRFP," Louisiana Department of Health and Hospitals (2011), 

http://new.dhh.louisiana.gov!assets!docslMaking_Medicaid _ BetterlRequestsforProposalslenrollbrokerlEB _ RFP ]1 

NAL.pdf. 

ACCOUNTAIHLlTY 

Page 2 of 11 
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assign them to a plan.7 In Louisiana, approximately 70 percent of new Medicaid patients actively 

choose their health plan.s Choice counseling programs ensure patients are empowered not only 

with the ability to choose, but with the knowledge necessary to choose wisely. 

This active participation and plan selection illustrates that, when given the power to choose and 

the information necessary to make an educated decision, patients want to take more 

responsibility over their health future. In Kansas, for example, American Indians were allowed to 

opt out of the reforms that offered them a choice of multiple private plans and instead remain in 

traditional Old Medicaid. But since the reforms launched in January 2013, just 12 American 

Indians chose to opt out of the reforms and return to Old Medicaid.9 

The competition among plans has resulted in those plans constantly striving to innovate, improve 

customer service and maximize the offered benefits and rewards. Costs for these reformed 

benefit packages have been substantially below spending for similar populations statewide. 1O 

Florida expects to save nearly $1 billion annually when the reforms are phased in statewide. II 

This example highlights how states are able to deliver more choices to Medicaid patients and still 

save precious taxpayer dollars. 

These customized benefit packages are not only delivering greater choice, they are delivering 

better results as well. The plans offered in Florida's Reform Pilot outrerformed the traditional 

Old Medicaid program on 22 of33 widely-tracked health outcomes. I Better yet, 94 percent of 

the Reform Pilot's regularly-tracked health performance measures have improved since 2008.13 

Implementing a robust Medicaid marketplace, where patients choose the health plan that works 

best for them, has increased access to needed care, improved health outcomes, provided patients 

with greater satisfaction with the quality of the care and service they receive, and lowered costs 

for taxpayers. 

7 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidimedicaidJeformlpdflFl_1115yr_ 6 ]inaL annuaLreport_ 07-01-11_06-30-

12.pdf. 

, Between January 2013 and May 2013, approximately 56,000 of the 82,000 newly eligible Bayou Health patients 

made pro-active choices about which health plan in which to enroll. See, e.g., Maximus, "New enrollment by 

Medicaid eligibility group and health plan," Louisiana Department of Health and Hospitals (2013), 

http://dhh.louisiana.gov/index.cfmlpagelI391. 

9 Division of Health Care Finance, "Quarterly report to CMS regarding operation of 1115 waiver demonstration 

program: Quarter ending March 31, 2013," Kansas Department of Health and Environment (2013), 

http://www.kancare.ks.gov/reportslKanCare_Quarterly_Report_QE_3_31_13.pdf. 

10 Tarren Bragdon, "Florida's Medicaid reform shows the way to improve health, increase satisfaction and control 

costs," Heritage Foundation (2011), http://www.medicaidcure.orglwp-contentiuploads/2012109IMedicaid-CnreFloridas-M'edicaid-Reform-Pilot.pdf. 

11 Ibid. 

12 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 7, 2nd quarter progress report," 

Florida Agency for Health Care Administration (2012), 

htlp:llahca.myflorida.comlmedicaidlmedicaid JeformlpdfiFU 115_ Q2 yr _7 Jeport _10-1-2012_12-31-

2012_final.pdf. 

13 Ibid. 

Page 3 of II 
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2. Integrating work with health outcomes. Kansas has created two unique employmentfocused pilot programs that integrate work with health outcomes for individuals with 

developmental disabilities. The first pilot, which covers individuals receiving SSI who are on the 

waiting list to receive home and community-based services, provides assistance with obtaining 

employment and provides up to $1,500 per person per month in employment support services.I4 

The second pilot focuses on youth and those who would likely meet the criteria for Social 

Security Disability but are not yet receiving it. These individuals receive employment assistance 

focused on jobs with employer-sponsored health coverage and receive wrap-around Medicaid 

services once enrolled in a work-related health plan. IS 

By integrating employment into Medicaid, KanCare can help these individuals gain opportunities 

to maintain and improve their skills, helping lead to long-term employment and productivity. 

Given the strong association between employment and better health, integrating employment 

services also helps to avoid the culture of poverty, poor health and social isolation stemming 

from lack of employment.I6 

3. Innovation through private plans. States have also been able to harness, through contracted 

private plans, innovations which improve quality and reduce costs. By allowing health plans to 

offer customized and extra benefit packages, states can provide patients with benefits not 

typically covered by the traditional Old Medicaid program, but which have profound effects on 

health outcomes. In 2012, plan providers in Florida's Reform Pilot offered 31 different benefit 

packages, with coverage for over-the-counter drugs, vision, preventive dental coverage, nutrition 

therapy and respite care included among the value-added extra benefits. I? In Kansas, individuals 

can choose plans that offer additional dental benefits, smoking cessation programs, OED 

programs, Weight Watchers membership and Boys and Girls Clubs membership, among other 

benefits.I8 Customized and enhanced benefit packages ensure that health plans are able to 

compete on value by tailoring their benefits to best meet the needs and desires of their patients. 

This customization is most evident for patients with very complicated health challenges. In 

Florida's Reform Pilot, for example, these patients are offered specialty plans tailored to their 

unique needs. This includes plans developed specifically for medically fragile children and plans 

customized to best manage HIV/AIDS. I9 Kansas offers programs that are specifically designed 

14 Division of Health Care Finance, "KanCare: Section IllS demonstration waiver," Kansas Department of Health 

and Environment (2013), 

?,ttp:llwww.kancare.ks.gov/downloadlKanCare_Section_1115_Demonstration_August_6_2012.pdf. 

Ibid. 

16 Ellie C. Hartman, "A literature review on the relationship between employment and health: How this relationship 

may influence managed long term care," Wisconsin Department of Health Services (2008), 

http://www.dhs.wisconsin.gov/wipathwaysIResearchDocsllitrevw.pdf. 

17 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comimedicaidlmedicaid JeformipdflFl_1115 yr _ 6 ]inat Annual_Report _ 07·01·11_06·30· 

12.pdf. 

18 Division of Health Care Finance, "Medicaid for Kansas: Choosing a KanCare health plan," Kansas Department of 

Health and Environment (2013), http://www.kancare.ks.gov/choosing_a...plan.htm. 

19 Ibid. 

Page 4 of 11 
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to help manage complicated conditions such as HIV/AIDS and schizophrenia.20 Specialty plans 

ensure that patients with complicated health challenges can receive the unique care they deserve. 

Private plan innovation is not just occurring in plan customization. Private plans are also 

innovating wellness programs. These wellness programs adopt incentive structures that reward 

Medicaid patients for healthy behavior. Patients in Florida's Reform Pilot plans can earn up to 

$125 per year for receiving certain preventive services, complying with maintenance and disease 

management programs, keeping appointments and engaging in other healthy behaviors?l 

Individuals may then use these rewards to purchase over-the-counter items at participating 

pharmacies.22 In Kansas, patients can choose plans that offer cash incentives for healthy 

behaviors, such as getting vaccinations, regular checkups and the like.23 

This kind ofwellness program further encourages Medicaid patients to take control of their own 

health by offering financial incentives for engaging in healthy behaviors. Similar wellness 

rewards programs operate through contracted Medicaid managed care organizations in Arizona, 

Georgia, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Missouri, Mississippi, New 

Hampshire, Ohio, South Carolina, Texas, Washington and Wisconsin. 

In Ohio, for example, patients can earn up to $175 for preventive services and disease 

management. Pregnant mothers may earn up to $100 for completing regular prenatal visits and 

parents can earn another $100 for completing regular well-child visits. In South Carolina, parents 

can earn an extra $105 just for completing regular well-child visits. 

But not all programs are innovating. Here are a few things that are not working: 

1. Perverse funding formulas. Under the Patient Protection and Affordable Care Act, states that 

choose to expand Medicaid coverage will receive an enhanced matching rate for the new 

Medicaid population.24 This population consists primarily of able-bodied adults without children 

and low-income parents.25 The enhanced matching rate for the newly eligible population starts at 

100 percent in 2014 and then gradually reduces to 90 percent by 2020.26 

20 Division of Health Care Finance, "KanCare: More choices, better access, healthy patients," Kansas Department 

of Health and Environment (2013), http://www.kancare.ks.gov/downloadlKanCare ]roPatient]roTaxpayer.pdf. 

21 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidimedicaidJeformlpdflFl_1115 Jr_ 6 ]inal_annual_report_ 07-01-11_06-30-

12.pdf. 

22 Ibid. 

23 Division of Health Care Finance, "Medicaid for Kansas: Choosing a KanCare health plan," Kansas Department of 

Health and Environment (2013), http://www.kancare.ks.gov/choosin&...a-plan.htm. 

2442 U.S.C. § 1396d(y). 

2S Genevieve M. Kenney et al., "Opting into the Medicaid expansion under the ACA: Who are the uninsured adults 

who could gain health insurance coverage?" Urban Institute (2012), http://www.urban.orgiUploadedPDF/412630-

opting-in-medicaid.pdf. 

26 42 U.S.C. § 1396d(y). 

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The matching rate for currently eligible individuals, on the other hand, ranges from 50 percent to 

83 percent, with the federal government typically paying an average of 57 percent of Medicaid 

expenditures.27 This means that states will receive less federal support to provide services to the 

most vulnerable; those patients currently eligible for Medicaid, including the elderly, individuals 

with disabilities and children. This perverse funding formula provides states with incentives to 

cut services and benefits for the most vulnerable, giving preferential treatment to adults without 

any disabilities or dependent children. 

There are more than 511,000 individuals on waiting lists to receive home and community-based 

services through Medicaid.28 Those on waiting lists include individuals with intellectual 

disabilities, developmental disabilities, traumatic brain and spinal cord injuries, physical 

disabilities, mental health conditions and HIV/AIDS,29 The Medicaid expansion's perverse 

funding formula ensures these individuals will be kicked to the end of the line in order to provide 

coverage to able-bodied adults in the states that opt to expand. 

2. A too expansive, broken program. When broken Old Medicaid programs become too 

expansive, states often delay payments to doctors, hospitals and other providers in order to make 

ends meet. For example, Illinois owed doctors, hospitals and other medical providers more than 

$2 billion for unpaid Medicaid services at the end of fiscal year 2012.30 The average medical 

provider waited more than 5 months to receive reimbursement for their services, with some 

delays lasting eight months or more.31.

32 These reimbursement delays occurred despite federal 

law requiring states to pay 90 percent of Medicaid bills within 30 days and 99 percent within 90 

days.33 

Earlier this year in Maine, a coalition of 39 hospitals demanded $484 million for unpaid 

Medicaid bills dating back to 2009.34 The hospitals went so far as to launch radio and newspaper 

advertisements to build public pressure on state policymakers to pay down the backlog of 

Medicaid bills. Of course, Maine expanded Medicaid eligibility to able-bodied adults without 

2742 U.S.C. § 1396d(b). 

2S Kaiser Commission on Medicaid and the Uninsured, "Waiting lists for Medicaid section 19J5(c) home and 

community-based service (HCBS) waivers," Kaiser Family Foundation (2013), http://kff.orglmedicaidlstateindicatorlwaiting-lists-for-hcbs-waivers-2010/. 

29 Ibid. 

30 John Sinsbeimer, "General obligation bonds, Series A and B of April 2013," Illinois Governor's Office of 

Management and Budget (2013), http://www.state.il.uslbudgetilLState02a-FlN.pdf. 

31 Mallory Meyer et aI., "State of Illinois budget summary: Fiscal year 2012," Illinois Commission on Government 

Forecasting and Accountability (2011), http://cgfa.ilga.govlUploadIFY2012BudgetSummary.pdf. 

32 Jennifer Levitz and Louise Radnofsky, "Delays in Medicaid pay vex hospitals," The Wall St. Journal (2013), 

http://online.wsj.comiarticlelSB 1 000 1424127887324442304578234020690323296.html. 

33 42 C.F.R. § 447.45(d) 

34 Jennifer Levitz and Louise Radnofsky, "Delays in Medicaid pay vex hospitals," The Wall st. Journal (2013), 

http://online.wsj.comiarticleISBl0001424127887324442304578234020690323296.html. 

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children in 2002.35 Its Medicaid expansion far exceeded projected costs, forcing the state to cap 

enrollment in the program at various times and lengthen payment cycles to cope.36 

Likewise, Arizona expanded Medicaid eligibility to childless adults in 2000.37 But the expansion 

cost four times what was expected, forcing policymakers there to cut other areas in order to 

maintain the expansion.38 Indeed, Arizona had to eliminate Medicaid coverage for heart, liver, 

lung, pancreas and bone marrow transplants in 20 lOin order to pay for the growing costs of its 

Medicaid expansion.39 

These payment delays and service cuts - emblematic of an expansive, broken program - ensure 

that Medicaid patients will face greater difficulty in finding doctors willing to treat them, likely 

resulting in worse health outcomes. 

3. Slow, inflexible federal waiver processes. For many states, the waiver process is a long, 

drawn-out and complex negotiation with CMS. States face burdensome reporting requirements, 

subjective deadlines and general uncertainty about whether and when CMS will approve 

requested reforms. Even if a state receives a federal waiver to implement its desired reforms, the 

waiver lasts just three to five years.40 After that time, it must either seek an optional extension of 

the waiver or submit a new waiver request altogether if it wants to continue its reforms. Even 

reform ideas that have proven effective elsewhere must follow this slow, inflexible process and 

states have no guarantee that the federal government will grant them permission to implement 

these effective reforms. 

4. New taxes on private plans. The Affordable Care Act imposes a new $8 billion tax on private 

health plans, starting in 2014. This tax gradually increases to more than $14 billion in 2018, then 

increases at the annual growth in premiums. Strangely, this new tax also applies to Medicaid 

plans in states that have reformed their programs with managed care. Because the Medicaid 

managed care rates are required by federal law to be actuarially sound, the cost of this new tax 

will be borne by state and federal taxpayers. This results in a situation where the federal 

government is taxing both itself and states, increasing Medicaid costs and shifting more costs to 

the states. 

35 Alexis Gibson. "MaineCare for childless adults: Section IllS demonstration," Centers for Medicare and Medicaid 

Services (201\), http://www.medicaid.gov/Medicaid-CHIP-Program-InformationlByTopics/w aiversilllS/downloadslme/me-childless-adults-fs.pdf 

36 Jonathan Ingram, "Medicaid expansion: We already know how the story ends," Foundation for Government 

Accountability (2013), http://www.medicaidcure.orglwp-contentiuploads/2013/03IMedicaid-Expansion-WeAlready-Know-How-the-Story-Ends-Medicaid-Cure-Policy-Brief-31.pdf. 

37 Jennifer Vermeer, "Ballot proposition 204, Healthy Arizona: Publicity pamphlet fiscal impact summary, revised 

Aug. 17,2000," Arizona Joint Legislative Budget Committee (2000), http://www.azleg.gov/jlbc/ballotprop204.pdf. 

3. Jonathan Ingram, "Medicaid expansion: We already know how the story ends," Foundation for Government 

Accountability (2013), http://www.medicaidcure.orglwp-contentiuploads/2013/03IMedicaid-Expansion-WeAlready-Know-How-the-Story-Ends-Medicaid-Cure-Policy-Brief-3I.pdf. 

39 Kevin Sack, "Arizona Medicaid cuts seen as sign of the times," New York Times (2010), 

http://www.nytimes.coml2010/12/0S/uslOStransplant.httnl. 

40 Section IllS waivers are generally approved for five-year periods, Section 19I5(b) waivers are generally 

approved for five-year periods and Section 19I5(c) waivers are generally approved for three-year periods. 

ACCOUNTABILITY 

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Nearly one-fifth of this new tax on private plans is expected to be borne by Medicaid programs.4! 

The tax is expected to increase Medicaid capitated rates by up to 2.5 percent for some states, 

with the national average falling somewhere between 1.5 percent and 1.6 percent. 42 This amounts 

to between approximately $37 billion and $42 billion in increased Medicaid costs during the next 

ten years, with much ofthat added burden falling on state governments.43 Adding a new tax on 

Medicaid plans will only accelerate the mayhem Medicaid programs are already creating for 

state budgets. 

States are leading the way, implementing innovative solutions to the persistent problems Old 

Medicaid has created. But federal rules and regulations often hinder state leaders who want to 

make their Medicaid safety nets more responsive to patients, more accountable to policymakers 

and more affordable to taxpayers. Additional flexibility from the federal government should give 

each individual state the opportunity to build a Medicaid safety net to best serve patients and 

taxpayers. 

A few recommendations to provide states with additional flexibility include: 

1. Reject the one-size-fits-all expansion. Expanding Medicaid eligibility diverts scarce 

Medicaid resources away from the truly vulnerable in order to fund coverage for able-bodied 

adults. Prioritizing able-bodied adults above the elderly, individuals with disabilities and lowincome children will only exacerbate the many problems present in Old Medicaid. 

The various fiscal and health promises made by expansion supporters have already been broken 

in the states that have previously expanded eligibility to this group of people. They are likely to 

be broken in the states that opt into the Affordable Care Act's Medicaid expansion.44 Medicaid 

expansion, including its perverse funding formula, should be rejected and states should regain 

their control over eligibility levels based on the needs, culture and values of their own state 

population. 

2. Remove perverse funding dynamics. Under current law, states that implement innovative 

reforms see the majority of their savings go to the federal government, not to the states 

themselves. Under current Medicaid matching rates, states can expect to see only 17 percent to 

50 percent of the savings their innovative reforms achieved. This creates a disincentive for states 

to make meaningful changes, as the lion's share of savings will accrue to the federal government. 

The federal government could reduce this perverse funding dynamic by granting states flexibility 

and incentives to better share those savings. Doing so would promote innovation and provide 

41 John D. Meerschaert et aI., "PPACA health insurer fee estimated impact on state Medicaid programs and 

Medicaid health plans," Milliman (2012), http;lIpublications.milliman.comipublicationsihealthp:ublished/pdfsJppaca-health-insurer-fee.pdf. 

2 Ibid. 

43 Ibid. 

44 Jonathan Ingram, "Medicaid expansion: We already know bow the story ends," Foundation for Government 

Accountability (2013), bttp:llwww.medicaidcure.orglwp-contenVuploadsJ2013/03IMedicaid-Expansion-WeAlready-Know-How-the-Story-Ends-Medicaid-Cure.Policy.Brief.31.pdf. 

Page 8 of II 
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states with a greater financial incentive to implement bold solutions. Although this 

recommendation would appear to increase federal spending, in practice it would reduce federal 

spending as states would have strong incentives to innovate and generate savings with Medicaid 

reform, something lacking today. 

3. Allow proven waivers to be seamlessly incorporated into state plan amendments. The 

waiver process is often accompanied by uncertainty about whether and when the federal 

government will approve requested reforms. Because waivers have a limited duration, this 

uncertainty persists even for reforms that have proven effective and popular. Currently, states are 

operating under 378 different active waivers and have another 27 waivers pending with the 

Centers for Medicare and Medicaid Services.45 

Congress could embrace an accountable, common sense approach to Medicaid oversight by 

granting states the flexibility to turn previously-approved waivers into permanent state plan 

amendments once the waivers have been proven effective. Doing so alleviates the stress and 

uncertainty states now face as their waivers approach scheduled expiration dates. This also 

ensures patients' care and taxpayer savings do not face interruptions resulting from lengthy 

renegotiations with CMS. Further, states should be able to incorporate a reform proven effective 

in other states into their own state plans without enduring the burdensome waiver process and 

scrutiny the reform already received elsewhere. 

This would allow states to avoid months- or years-long delays for waiver approval. Reforms 

accomplished through state plan amendments can expect approval within 180 days. And rather 

than needing approval again after just a few years, a state plan amendment becomes a permanent 

part of a state's Medicaid program unless changed by a future state plan amendment. 

4. Provide greater flexibility on mandatory and optional services. Customized benefit 

packages provide patients with the greatest value and competition among plans has proven 

effective at reducing costs for taxpayers. In Florida, Medicaid patients can choose from up to 31 

different, customized benefit packages.46 The state allows health plan providers to offer 

customized benefit packages as long as the benefit packages are actuarially equivalent to the 

state plan and still provide key benefits at a level sufficient to meet patient needs.47 

But states and health plan providers are hamstrung by federal rules dictating how much they can 

customize benefits. Federal rules require coverage for inpatient hospital services, outpatient 

hospital services, early and periodic screening, diagnostic and treatment services, nursing facility 

45 Centers for Medicare and Medicaid Services, "Medicaid waivers: Dynamic list," U.S. Department of Health and 

Human Services (2013), http://www.medicaid.govlMedicaid-CHIP-Program-InformationIByTopicsiWaiversidynamic-listlWA-50S.xml. 

46 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comimedicaidimedicaidJeformipdfIFL_1 1 15_ YR_ 6 ]inal_Annual_Report_ 07 -0 I -11_06-30-

12.pdf. 

47 Florida Agency for Health Care Administration, "Florida Medicaid reform: Application for I I 15 research and 

demonstration waiver," Florida Agency for Health Care Administration (2005), 

http://ahca.myflorida.comimedicaidimedicaid Jeformlwaiver/pdfslmedicaid Jeform _waiver _final_' 0 1905 .pdf. 

Page 90fll 
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services, home health services, laboratory and x-ray services, family planning services, nurse 

midwife services, certified pediatric and family nurse practitioner services, freestanding birth 

center services, transportation to medical care and tobacco cessation services.48 States may only 

choose which additional services to offer and set the scope and range of those services. 

With added flexibility from the federal government, states could offer more customized benefit 

packages to vary these minimum benefits, so long as the benefit packages meet specified 

actuarial standards. One potential avenue for this customization would be to grant states much 

more flexibility for benchmark Medicaid coverage. 

States currently have the oftion to design benefit packages for certain populations that vary from 

traditional Old Medicaid.4 However, the flexibility provided in designing these benefit 

packages, known as "benchmark coverage" or "benchmark-equivalent coverage," is limited in 

nature. The benefit packages must be equivalent to the standard Blue Cross/Blue Shield health 

plan offered to federal employees, the health plan offered to state employees or the larfest 

commercial, non-Medicaid health maintenance organization plan offered in the state.s 

Benchmark-equivalent coverage must also provide specified mandatory services.Sl Current law 

also requires states to "wrap around" benchmark coverage with additional benefits not t~ically 

covered by private insurance, such as transportation services to and from medical visits.s The 

Affordable Care Act further requires such benchmark-equivalent coverage include all essential 

health benefits. 

Given adequate flexibility, states could restructure their covered benefits to provide truly patientcentered customized benefit packages. And if plans meet a target actuarial value, states should be 

free to allow plans to be offered that vary covered services and benefits, including those that are 

federally mandated, as well as the amount, duration and scope of those services. States would 

evaluate each proposed customized benefit plan in order to ensure plans meet the target actuarial 

value. 

This will create greater competition within the Medicaid marketplace, lowering the cost to 

taxpayers and improving quality. Patients will be able to prioritize benefits according to their 

personal needs and circumstances and select the plans that will provide them with the greatest 

value. For example, a patient may wish to select a plan that does not offer transportation 

services, but instead select a plan that offers a better dental benefit package. They deserve that 

choice. 

5. Create an off-ramp for Medicaid. Currently, federal restrictions on marketing private 

insurance plans to individuals transitioning off of Medicaid impose an undue burden on those 

leaving Medicaid. These restrictions further worsen the gaps in coverage for individuals leaving 

48 Centers for Medicare and Medicaid Services, "Medicaid benefits," U.S. Department of Health and Human 

Services (2013), http://www.medicaid.govlMedicaid-CHIP-Program-lnfonnationIBy-TopicsIBenefitslMedicaidBenefits.htm!. 

49 42 C.F .R. § 440.300 et seq. 

50 42 C.F.R. § 440.330. 

51 42 C.F.R. § 440.335. 

52 42 C.F.R. § 440.390. 

ACCOUNTAlnUTY 

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Medicaid. As Florida's Refonn Pilot has proven, Medicaid patients can and do make infonned 

choices about their health coverage when given access to appropriate infonnation. Denying them 

such infonnation while they are transitioning off of Medicaid hinders their ability to make 

educated choices, taking away their power to make meaningful decisions over their health 

futures. 

Other federal rules and regulations restrict states from using Medicaid funding in innovative 

ways to move individuals off of Medicaid and into private coverage. With greater flexibility in 

this area, states would be able to take proactive steps to create an off-ramp for Medicaid, helping 

ensure that Medicaid patients are not trapped in government dependency and a culture of 

poverty, but rather help them move from poverty into long-tenn employment and productivity. 

Conclusion 

Despite Medicaid's fiscal challenges to state budgets and the federal budget, there are proven 

strategies that are working today for both Medicaid patients and taxpayers. However, the current 

funding structure, new taxes, a slow federal process, and perverse incentives inherent in 

Medicaid expansion threaten Medicaid services to the most vulnerable. It doesn't have to be that 

way. With reasonable flexibility, targeted incentives, streamlined administration, and a smooth 

off-ramp, the Medicaid safety net can work better today for patients and providers and be 

sustainable for taxpayers into the future. 

Page II of 11 
52 

Mr. PITTS. We will now begin questioning. I will recognize myself 

5 minutes for that purpose. 

For the Nation’s vulnerable citizens, having Medicaid does not always result in good health care. Studies have shown that while enrollment is growing rapidly, with more than 70 million Americans 

enrolled in Medicaid at some point in 2012, access to quality care 

is still a struggle for most. The new health care law proposes the 

largest expansion of Medicaid in history, an expansion that is 

clearly built on a framework that is already failing to meet current 

obligations in helping our most vulnerable citizens. 

Mr. Bragdon, in your testimony you note that States should be 

cautious in opting into Medicaid expansion. At this point, the majority of States are either not expanding or are still undecided. 

What are some considerations you would raise with States that are 

still deliberating the decision to expand in 2014? 

Mr. BRAGDON. Thank you for the question. 

When you look at States that have expanded Medicaid in the 

past, the two States that have most closely replicated the expansion of the Affordable Care Act are Maine and Arizona. And the realities of those States were much higher per-person cost, much 

higher per-enrollee cost, and many more people enrolling than 

originally projected. And what happened was, as that safety net 

was stretched further and further, those States proposed and did 

cut services to the most vulnerable. Arizona stopped covering heart 

and lung transplants. Maine proposed cutting services to folks with 

brain injury and stopped paying their hospitals altogether, mounting $400 million in unpaid bills dating back over 5 years. 

So what happens as States expand is the most vulnerable, who 

tends to be higher cost, as was mentioned, the services are cut back 

on those individuals first. 

Mr. PITTS. Ms. Owcharenko, would you respond to that question 

as well? 

Ms. OWCHARENKO. Sure. I think the primary caution I would 

give to the States is you have to take the long view of what the 

future of Medicaid is going to look like versus just the short view. 

I think the temptation of the bump in Federal dollars to the States 

is a tempting offer, but it has a very short-term impact. And I 

think States need to take the longer view, not only for their own 

State taxpayers, but for Federal taxpayers who their constituencies 

are as well. So looking at what are the implications at the Federal 

level, understanding that our country cannot survive on the spending path that we have today. 

Mr. PITTS. Now, in your testimony you mention some of the innovations States are pursuing. From your experience, what are some 

of the barriers that States face in pursuing new innovative delivery 

models, such as those outlined in your testimony? 

Ms. OWCHARENKO. Well, I think one of the things that has been 

mentioned by many of the folks here is the lack of flexibility at the 

Federal level. Too many times the States have to figure out which 

holes to jump through, how to get things done. Even if we think 

that they are making progress today under current rules, imagine 

what States could do if they had greater flexibility to do more innovative projects without having to have the constraint of all the Federal requirements on there. I think that would probably be the best 

53 

direction for the States to take and the Federal Government to enable them to. 

Mr. PITTS. Each of you have highlighted the value of managed 

care and increased care coordination in the Medicaid program that 

moves us away from Medicaid’s flawed fee-for-service history, and 

it improves care and reduces costs. If given one opportunity, what 

would be an important policy reform to pursue that would allow for 

States to more easily pursue managed care models for Medicaid? 

If each of you would respond. Start with you, Ms. Owcharenko. 

Ms. OWCHARENKO. I think expanding without having to do so 

many waivers on the populations that could be included. I would 

argue that the States know best when they are trying to develop 

and deliver care to the most vulnerable, which groups they think 

are best suited for the managed care approach. 

I would also note, though, that it is not just good enough to have 

one managed care plan. What you want is insurers competing 

against each other. And so making sure that there is competition 

and giving the patients the choice to choose I think will alleviate 

concern that there may not be a plan that is best suited for the 

most vulnerable. 

Mr. PITTS. Mr. Weil. 

Mr. WEIL. The rapid movement of States in their Medicaid population toward managed care makes it hard for me to see that there 

is a major Federal barrier to reliance on managed care. The primary area that remains a challenge is integration with the Medicare program. We do have some demonstrations going on right now 

designed to enable alignment of managed care plans between Medicare and Medicaid. I think we are going to have to see how that 

evolves. But that, to me, is the population that faces the largest 

barriers in that movement. 

Mr. PITTS. Mr. Bragdon. 

Mr. BRAGDON. Thank you. I think there are a few different 

things. One, looking at the robust competition among private plans. 

Nobody is suggesting that Medicaid not set the floor of benefits 

that should be available in those private plans. But as the plans 

build on top of that, you can provide much more comprehensive 

care that Old Medicaid does not. For example, Kansas added a dental benefit when they moved to a private plan. GED services so 

that individuals could ultimately get the best safety net, which is 

a good-paying job. Florida shows how when you give people choice 

and choice counseling, which I think is an important component, so 

that patients understand the differences among those private 

plans. 

I think lastly, there is this debate over mandatory versus voluntary private care. But when you look at how patients vote with 

their feet, patients appreciate having robust choices of several different private plans. In Kansas, Native Americans are given a 

choice of whether to choose from one of the three different private 

plans or opting back into Old Medicaid. Out of 4,000, only 12 

stayed in Old Medicaid. Louisiana, 0.3 percent of people voluntarily 

chose Old Medicaid versus five different private plans. 

Mr. PITTS. Thank you. 

The chair recognizes the ranking member, Mr. Sarbanes, for 5 

minutes for questions. 

54 

Mr. SARBANES. Thank you, Mr. Chairman. I want to thank our 

panelists today. 

Mr. Weil, Ms. Owcharenko mentioned challenges to the Medicaid 

program. And I didn’t hear that that necessarily formed an indictment of the program overall, but it just laid out what some of the 

challenges are. I wanted to get maybe your reaction to those challenges, whether you think the Medicaid program can handle them. 

So the first one obviously is the demographic challenge that is 

coming at us, particularly the baby boomer generation and the implications that has for the Medicaid program, and this notion of 

competition within the diversity of the pool of beneficiaries that is 

covered by the Medicaid program. These are realities we are going 

to have to deal with. My sense is an expanded Medicaid program 

that we are trying to make better every day is going to be best 

equipped to handle that challenge. 

She spoke of structural challenges—for example, relating to payment rates. Did acknowledge that in 2013 and 2014 there is an attempt made to achieve 100 percent parity with Medicare rates for 

primary care. That is a good step in the right direction. And then 

spoke of the fiscal challenges ahead of us, with entitlement programs or, as I often refer to them, earned benefit programs in some 

instances. 

But your testimony suggested that in some ways Medicaid is on 

the cutting edge with respect to innovations that not only can improve care, particularly care that one might put under the heading 

of sort of public health. When you look at children, developmental 

screening, where what the Medicaid program does is really cutting 

edge, ahead of both the commercial arena and potentially even 

Medicare there. The dental care for children and patient-centered 

medical homes. Among many examples you gave, these are 

things—particularly the last one I mentioned—that can improve efficiencies and save costs over the long run. And it is really because 

of ACA that we are going to see some opportunities for that. 

So can you address these challenges, the demographic, structural, fiscal, and other challenges you see, and why an expanded 

Medicaid program in some ways may be best equipped to handle 

them? 

Mr. WEIL. Thank you, Mr. Sarbanes, for the question. 

The demographic challenges are real. They affect Medicare as 

well as Medicaid. We can’t ignore the reality that we are aging and 

they will increase the average cost per person. 

But I think against that backdrop it is worth noting that despite 

aging of the population, the Medicaid nursing home census has 

stayed flat despite the aging of the population, that our use of 

home- and community-based services grows, and some leading 

States have really shown us how to not just prevent people from 

going into nursing homes in the first place but help them come 

home even after they have been resident there for some time. 

Washington State is a leader in that regard. 

With respect to your question about expansion, I think we need 

to be careful about what I heard the repeated use of the term ablebodied adults, as if somehow they don’t need health insurance. If 

they are not sick, then the good news is they won’t cost us any 

money. So we shouldn’t be so worried about providing them with 

55 

coverage. But everyone gets sick, sometimes more than others, or 

they may have chronic conditions that are untreated, that getting 

them early care will actually reduce the overall cost. And we know 

there is growing prevalence of chronic conditions, particularly 

among the target populations in the Medicaid expansion. 

The issue here is, are we going to move this population into a 

system where there is someone responsible for managing their 

care, a State and Federal Government responsible for paying, and 

usually a private plan—and I should note, most States offer their 

Medicaid enrollees a choice of plans—a private plan that is interested in maintaining health or do we just leave them the alternative? The only alternative I am aware of is that they are uninsured and no one is accountable for improving results. 

And similarly, I will readily admit that Medicaid payment rates 

are below commercial and in some instances below Medicare rates. 

But again, I think we have to ask, compared to what? These are 

people who would otherwise be uninsured. There would be no payment source for them. There are mission-driven providers and 

other providers that have a broad cross-section of patients that understand that they are going to subsidize care for some in order to 

serve others. And Medicaid helps alleviate the burden, although it 

does not completely eliminate it. 

So these are challenges. But my experience is that States observe 

them, look ahead, and are doing what they can to tackle them 

within the design of the current program. 

Mr. SARBANES. Thank you very much. I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

Now recognize the vice chairman, Dr. Burgess, for 5 minutes of 

questioning. 

Mr. BURGESS. Thank the chairman for the recognition. 

Ms. Owcharenko, let me ask you, we have heard it mentioned 

several times in the opening statements and I believe in your testimony about low provider rates and how that affects access for Medicaid patients. So low provider reimbursement rates. Medicaid is a 

shared Federal and State responsibility. So how can the Federal 

Government ensure provider rates are set at levels that will encourage participation? 

Ms. OWCHARENKO. Well, I think one of the points is that you 

have to contrast it with the fiscal challenges. So if you have provider payment issues, you are not paying providers enough, then 

the easy solution is to say, well, just pay them more. Well, to pay 

them more you have to pay for that, and so someone is going to 

have to pay for that. The States have decided in many instances 

they are not willing to spend the money to the Medicare levels; otherwise, they wouldn’t have had the Federal Government come in 

for the temporary boost. 

The challenge is, what happens when that boost is gone? Can the 

Federal Government continue to provide that type of a level of reimbursement? I think that is the whole problem we have with Medicaid in the long term, is it sustainable from a fiscal standpoint? 

Mr. BURGESS. Well, let me just ask you, for that 2-year interval, 

who is responsible for paying those increased rates? 

Ms. OWCHARENKO. Well, the Federal Government. Well the Federal taxpayers are paying that. 

56 

Mr. BURGESS. Then past 2015? 

Ms. OWCHARENKO. It will go back to the States. And as the 

MACPAC study said, many States are already saying that it is 

doubtful that they will be able to keep and sustain that level. So 

the challenge will be, the States will be back here in Washington 

saying, we need more Federal dollars, and we don’t want them 

temporary, we want them permanent. Well, then, the Federal Government is going to have to find the money, if they are going to 

go down that road. And I just would argue that the Federal Government doesn’t have the money today to be continuing that type 

of spending. 

Mr. BURGESS. We have actually seen that movie before. The 

stimulus, in February of 2009, provided an 18-month bump-up in 

Medicaid reimbursement rates, as it was about to run out in August of 2010. As I recall, we had to have an emergency meeting of 

Congress in the middle of the August recess—one of the few times 

that has happened, except for war and pestilence—and the purpose 

of that was to pass a supplementary stimulus bill to augment those 

Medicaid rates. For the record, I voted against it both times. 

Let me just ask you a question, because we are looking at the— 

you have States that have agreed with Medicaid expansion and 

some that have not. Now, the Supreme Court in their wisdom said 

that you could not make acceptance of the standard Medicaid, regular Medicaid contingent upon the acceptance of the expansion. So 

States actually have some leeway there. The deadlines for the exchanges, since this expansion of Medicaid was not set in Federal 

statute but rather by a court directive, there are no dates, there 

are no drop dead dates for the States. So actually, wouldn’t a State 

be well advised to see what happens in a few other States before 

they jump into this? 

Ms. OWCHARENKO. I think with the complexity that we see the 

healthcare law facing, I think it would be wise for States to think 

again for the long term and see how this plays out. I think this will 

be an annual debate I think moving forward as well. 

Mr. BURGESS. But at this present time, there is no penalty for 

a State that says, not now. 

Ms. OWCHARENKO. That is correct. That is correct. 

Mr. BURGESS. And they can always revisit it in subsequent legislative sessions in the future. 

Ms. OWCHARENKO. That is correct. 

Mr. BURGESS. When you get back to getting the providers to get 

back into the system, I can remember in Texas in the early 1990s, 

the State said, look, we will cover your first $100,000 in medical 

liability claims for Medicaid patients if you agree to see a certain 

number. That program did not last very long. I presume it was a 

cost-related factor. But it seems that something along those lines, 

to encourage providers to come back into the system, would make 

a great deal of sense. 

Is there flexibility built into this Medicaid expansion that would 

allow States to do that? 

Ms. OWCHARENKO. I am not familiar with any at this time. But 

the other panelists may know more than I do on that. 

Mr. BURGESS. Mr. Weil, let me ask you a question, because you 

mentioned something about the Center for Medicare & Medicaid 

57 

Innovation and the use of—what did you describe it as, multipayer 

systems? Could you provide us a reference for that? I would be interested in what the data was that CMMI used to make that determination, how much money was forwarded in those grants. Do you 

have that information available? If not today, could you make it 

available to us? 

Mr. WEIL. Yes, Mr. Burgess. I would be happy to. That is public 

information. We are quite early in these cooperative agreements. 

But the States that were awarded them, what they intend to do 

with the funds, that is all public. It is available from CMS, and I 

am happy to supply it to you. 

Mr. BURGESS. All right. I would appreciate you making that 

available. My experience with CMMI has not been that great. It 

seems to be a bureaucracy that not even a bureaucrat could love. 

But I would be interested in what you base those statements on. 

Thanks, Mr. Chairman. I will yield back. 

Mr. PITTS. Chair thanks the gentleman. 

Now recognize the distinguished ranking member emeritus, Mr. 

Dingell, 5 minutes of questions. 

Mr. DINGELL. Mr. Chairman, I thank you for your courtesy, and 

I commend you for holding this important hearing today. 

Medicaid is a critical program. It provides health insurance to 

the most vulnerable in our society. Many States, including my own 

State of Michigan, are currently deciding whether to expand their 

Medicaid programs under the Affordable Care Act. I believe expanding the program was the right thing to do because it is going 

to expand health care to millions of Americans who desperately 

need it. 

These questions are for Mr. Weil of the National Academy for 

State Health Policy. 

Mr. Weil, in your testimony you note that Medicaid is a source 

of insurance coverage for one out of three children. Is that correct? 

Yes or no? 

Mr. WEIL. Yes, sir. 

Mr. DINGELL. Now, Mr. Weil, children and their parents account 

for 75 percent of Medicaid enrollees. Is that correct? Yes or no? 

Mr. WEIL. Yes, that is correct. 

Mr. DINGELL. And this population accounts for only 34 percent 

of the spending in the program. Is that correct? Yes or no? 

Mr. WEIL. Yes. 

Mr. DINGELL. One area where Medicaid has been very innovative 

is the area of developmental screening for children which helps 

promote early detection and prevention of healthcare problems? 

Mr. Weil, how many States require Medicaid providers to perform 

developmental screenings on children as a part of routine exams? 

I believe the number is 14. Is that right? 

Mr. WEIL. That sounds right. 

Mr. DINGELL. They are not, however, required to require this 

kind of work. Is that correct? 

Mr. WEIL. That is right. 

Mr. DINGELL. Now, Mr. Weil, recently we have seen the national 

percentage of children receiving developmental screening rise from 

19.5 percent in 2007 to 30.8 percent in 2012. Is that correct? 

Mr. WEIL. Yes, sir. 

58 

Mr. DINGELL. This is a great improvement, and I believe Medicaid’s innovation in this area has helped increase the number of 

children that undergo developmental screening tests. Mr. Weil, is 

it correct that a child with public health insurance is now more 

likely to receive a developmental screening than a child with private insurance? Yes or no? 

Mr. WEIL. Yes, it is. 

Mr. DINGELL. Now, Mr. Weil, oral health is another area where 

State Medicare programs are successfully implementing innovative 

programs and are seeing positive results. Isn’t that so? 

Mr. WEIL. Yes, it is. 

Mr. DINGELL. Now, Mr. Weil, do you believe that the reforms in 

North Carolina and Washington, with which I think you are familiar, which you described in your testimony, have led to positive 

health outcomes and are models for other States to follow. Is that 

right or wrong? 

Mr. WEIL. Yes, it is. 

Mr. DINGELL. Now finally, a recent study in the New England 

Journal of Medicine studied the impact that expanding Medicaid 

has on mortality rates. So, Mr. Weil, do you agree with the conclusion of this study that expanding Medicaid will lead to lower rates 

within the States that do it? Yes or no? 

Mr. WEIL. I believe the strongest evidence says that expanding 

Medicaid will reduce mortality. That is correct. 

Mr. DINGELL. I very much thank you for this. 

I believe Medicaid brings real health benefits to our vulnerable 

populations. The States are currently coming up with new, innovative strategies to improve access to care. 

As States across the Nation, including my own State of Michigan, 

are debating whether to expand Medicare or not, I hope they will 

look at this evidence as how the program is working to improve 

health outcomes for millions of Americans. States should also consider the financial benefits for expanding Medicaid as well. Michigan alone could save $1 billion over the next 10 years if they chose 

to expand Medicaid, which I hope they will do. 

I hope this committee will continue to examine this issue in a bipartisan manner. 

Mr. Weil, you have been most helpful to us. 

Thank you, Mr. Chairman. I yield back 1 minute and 15 seconds. 

Mr. PITTS. The chair thanks the gentleman. I now recognize the 

gentleman from Georgia, Dr. Gingrey, for 5 minutes for questions. 

Mr. GINGREY. Mr. Chairman, thank you. 

Let me—I want to address the first question to Ms. Owcharenko. 

Much has been said that the Medicaid waiver program offers 

States all the flexibility that they need to improve and reform their 

programs, the existing waiver program. 

As you know, this administration is a strong supporter of the 

Medicaid population expansion, you said up to 138 percent of the 

Federal poverty level. May there be an opportunity for the administration to intentionally withhold waiver determinations if the State 

does not get with the program and expand? 

Ms. OWCHARENKO. I can’t speculate, but we do know the waiver 

process is long and cumbersome, and you don’t know when, there 

is no time limit on how long a process may take or the complexity 

59 

of the waiver. But we also need to recognize, too, that the waiver 

is dictated by the statute. There are only certain things that can 

be waived and so to the point that you want to do something above 

and beyond what the statute allows you to, that still is a limitation, 

but I can’t speculate. 

Mr. GINGREY. Well, Mr. Chairman, we have seen this administration continually use almost coercive methods to aid implementation of the law. Allowing Medicaid waivers as the only process for 

States to innovate seems to offer the administration a situation 

ripe for abuse. This is why we need to repeal the Medicaid and 

CHIP maintenance of effort provisions and give States a chance to 

truly innovate. 

Continuing along that line, the maintenance of effort provisions 

in Obamacare have not only been costly, but they have been a barrier to reforms. That is why I introduced H.R. 1472, the State 

Flexibility Act to repeal PPACA Medicaid and CHIP provisions in 

the President’s health care law, repeal the maintenance of effort. 

In these difficult fiscal times, States often must make cuts to 

other non-mandated programs, such as education, because they 

don’t have the flexibility to improve their existing Medicaid programs. In other words, get rid of people that are on the rolls that 

shouldn’t be there that maybe 2 years ago, 3 years ago, prior to 

PPACA, these people were eligible but now they are making 

$75,000 a year, and they are frozen on the program. 

Would you please explain to the panel how these provisions increase costs to both the States and the Federal Government and actually hamper patient outcomes? 

Ms. OWCHARENKO. I would say that the maintenance of effort 

freeze really does take a tool out of the toolbox that States have 

to work within their budgets within their means and within their 

budgets to provide the care to who they feel are the most vulnerable and the most needy. Again, getting back to the flexibility for 

the States, I think the closer the policymakers are to what is going 

on on the ground at the State level, the better are suited in deciding who should get the care, where the adaptation should be, where 

we can scale back maybe, or where policy should be increased. 

Mr. GINGREY. Well, I’m just thinking that if they didn’t have that 

maintenance of effort provision and they were able to kind of clean 

up the rolls, if you will, then maybe some of these States would be 

willing to expand, because they wouldn’t be throwing money at people that really don’t need it. Mr. Bragdon, would you care to comment on that as well? 

Mr. BRAGDON. Thank you. I think that you are touching on an 

important point that when you look at how States can customize 

their Medicaid programs, that you need different solutions for different populations, and you also need a very dynamic toolkit, if you 

will. 

In Florida, for example, the average single mother who is on welfare, or on TANF and receiving Medicaid is on the program for 5 

months. And so for those individuals, it is also about creating some 

sort of off-ramp, because what happens now is you are on Medicaid, 

you may be in a private plan you like, but there is no ability to 

keep that private plan once you go off the program, there is no 

ability to even become aware of what is available to people—— 

60 

Dr. GINGREY. I’m going to interrupt you because I just have 30 

seconds left. I want to make this comment. And I thought about 

this of course 3 1⁄2 years ago right here when we were in the minority on the side when this bill was being developed, and this Medicaid expansion, up to 138 percent of the Federal poverty level, 

where would those people get their care if they were not eligible 

for Medicaid? They would get it on the exchanges and the provision 

that goes to them would be all Federal dollars. They wouldn’t be 

State dollars. So it is really a game of moving the hat around to 

see where the pea is. 

You clearly, that was a setup so that there would be less Federal 

costs and more burden on the backs of the States. And I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

The chair now recognizes the gentlelady from Florida, Ms. Castor. 

Ms. CASTOR. Thank you very much, Mr. Chairman. 

Thank you to the panel. 

This is a very important topic, and as Mr. Weil testified, there 

are so many exciting innovations going on all across the country 

when it comes to Medicaid that is the lifeline for families and seniors and children and disabled. 

I have wanted to, I think it is very important that we share and 

understand what is happening in these innovations. We do this on 

a regular basis for those that are interested in the children’s health 

care caucus that I co-chair with Republican Congressman Dave 

Reichert from Washington State where we educate staffers across 

Capitol Hill, other policymakers, Members, and we have another of 

our Medicaid matters for kids sessions this Friday here in the Rayburn building at 12 o’clock, and I would like to thank First Focus 

Campaign For Children, all the children’s hospitals across the 

country, the pediatricians, the Kaiser Family Foundation for helping to organize these very important Medicaid educational sessions. 

The one on Friday is called ‘‘Unlocking Ideas to Improve Care For 

Kids on Medicaid.’’ 

One of the most exciting innovations I know of in Florida in my 

home town at St. Joseph’s Hospital is their complex, their chronic 

complex clinic for children. It has been running for 12 years now. 

It provides continuous comprehensive and coordinated care for the 

most medically needed children in our community. The clinic was 

organized after years and years of watching children cycle through 

the emergency room without a real focus on their ongoing health 

care needs. The hospitals desperately wanted someone to provide 

them with coordinated care. So the clinic came together. It now 

serves over 1,000 children in the Tampa Bay area with a great 

team of pediatricians, pediatric nutritionists, nurses, social workers 

and many others. The families in my area love this clinic. And we 

also appreciate the fact that it saves $6,000 per patient per year 

in hospital costs alone and some national studies say that we are 

saving closer to 10,000 a year. That is one of the innovations that 

I am excited about. 

Mr. Weil, name another one where you, where things are going 

right under Medicaid, this important Federal/State partnership. 

Mr. WEIL. Well, I think some of the most exciting work is in the 

area of patients in medical homes and health homes where what 

61 

we are trying to do is take a health care system, not just in Medicaid but in the system at large that primarily sends its resources 

to the most expensive settings for care for hospitals, for institutional care and build out, as you described in the scenario you described, build out an infrastructure of the kind of care people need 

at a better touch, it is closer to the community, it is less expensive, 

it is less episodic, it is more continuous, and also, and I think some 

of the best innovations going on now are about bringing in mental 

health into how we think about delivering health care. We have 

traditionally had very strong lines and barriers between these systems, different funding streams, different programs, and we are 

understanding that people with untreated mental health conditions 

cost more in physical health, and that the relationship between the 

two requires a different model of care. We are seeing it in oral 

health. I including included a few examples in my written testimony. 

And what is great about these kinds of innovations is that Medicaid is a part, sometimes it is a leader, sometimes it is a follower, 

but most providers of services within Medicaid also provide services 

to privately covered folks, and if they are, if it is not pediatric care, 

they are usually in Medicare as well. 

So the interesting exciting innovation, the most interesting exciting, from my perspective, is when Medicaid is part of a broader 

conversation across public and private payers and providers, physicians and hospitals and others to fundamentally rethink how people get care, and then pays in a way that supports that as opposed 

to just writing checks for services that people need. 

Ms. CASTOR. I think you are right. I think you are right. 

And Mr. Bragdon, I know you did not mean to mislead this committee by heralding the great success of Florida’s Medicaid privatization. The statewide waiver was just approved a couple of weeks 

ago. So be careful when you testifying in front of Congress. And 

then the pilot program of Medicaid privatization was known as a 

real disaster. The State’s own study condemned the results. We 

had patients unable to gain access. We had providers, private providers leave the State. 

So be careful when you testify before Congress and saying this 

is a great success when the evidence and everyone across the board 

has really condemned what has happened. We are more hopeful 

with the new waiver and privatization, it is like night and day. 

There are broad new conditions for consumer protections. Providers, if they back out and leave, are going to be penalized, their 

medical loss ratios. 

So those are some of the innovations that can happen with that 

important Federal/State partnership. But you have got to, you really have to do your homework on what has happened in the past 

and what is actually happening moving forward. Thank you. 

Mr. PITTS. The gentlelady’s time has expired. The chair recognizes gentleman from Louisiana, Dr. Cassidy 5 minutes for questions. 

Mr. CASSIDY. Thank you, Mr. Chairman. Mr. Weil, I am a doctor 

who takes care of Medicaid patients in a public hospital clinic, so 

I am very familiar that Medicaid can actually have a beneficial efVerDate Nov 24 2008 14:19 Feb 28, 2014 Jkt 037690 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-65 CHRIS
62 

fect. But I think there are some things kind of in the interest of 

Ms. Castor’s kind of fact check sort of thing. 

Let’s first talk about the paper that Mr. Dingell referenced that 

showed an all-cause decreased mortality after Medicaid expansion. 

Now, I happened to have read that article and I happened to know 

and I looked it up just to confirm. In Maine, actually mortality increased after Medicaid expansion. The authors point out only in 

New York was there a statistically significant effect of decreased 

mortality, and that overwhelmed the increased mortality in Maine 

and the no significant effect in Arizona. 

So would you disagree with that table which I am looking 

straight at or would you acknowledge that, indeed, it is only oneState specific and indeed, if we were to look at Maine, we would 

actually see an increase in mortality after Medicaid expansion? 

Mr. WEIL. I will happily defer to you looking at the table and say 

that as you know as a clinician, you never want to take your conclusions too far based on one or two studies and I think we are 

right now in an environment where people are looking at one or 

two studies and using it to caricature a program. So I appreciate 

your clarification very much. 

Mr. CASSIDY. Secondly I also point out and you were very careful 

in your testimony to say that Medicaid prevents people from having financial duress, but you did not make the claim that it improves health. And again, as you and I both know the National Bureau of Economic Research found in their Oregon study that when, 

and I am quoting from their conclusions, this randomized controlled study showed that Medicaid coverage had generated no significant improvements in measured physical health outcomes in 

the first 2 years, but it did reduce financial strain. 

So it also makes it clear that the best study from NBER has 

shown that Medicaid expansion did not improve health outcomes. 

And lastly I will say that in your—by the way, I enjoyed 

everybody’s testimony and I don’t mean to challenge, I am just trying to point this out, you seem to suggest in your testimony that 

the choice is dichotomous, either somebody is uninsured or they are 

on Medicaid. But then I will quote another National Bureau of Economic Research study, again, by Mr. Gruber, who is a big backer 

of Obamacare, who points out that 60 percent of the children that 

go on to a public insurance program actually formally had private 

insurance but the expansion of the public insurance crowded out, 

if you will, the private insurance so it is not the employer or the 

family paying the bill, it is now a taxpayer paying the bill. And 

that is 60 percent. 

Any comments upon that because again, it is not—you know 

where I am going with that. 

Mr. WEIL. Well, I do have to begin by commenting on your characterization of the first study. First of all, there were, as you know, 

demonstrated positive effects on depression, so the physical health 

word is important. But I don’t think it shows that it did not improve outcomes. I think it didn’t show that it improves outcomes. 

And I think those are actually quite different. We don’t—— 

Mr. CASSIDY. But if questions take the no hypothesis we really 

cannot claim a benefit unless the benefit was shown. 

63 

Mr. WEIL. I completely agree with you. We cannot claim a benefit 

unless the benefit is shown. That does not equate with the absence 

of benefit, it simply means we were unable to show a benefit. And 

since you are being very careful, I am going to ask that we be 

equally careful in that regard. 

The literature on crowd-out which used to be a very hotly debated topic and has faded from view for some time has great complexity about what you count as the numerator and the denominator. We know that low and moderate income people and families, 

their income fluctuates and they do gain different sources of coverage, although the prevalence of private coverage—— 

Mr. CASSIDY. I only have a minute left. 

Mr. WEIL. I am sorry. My sense would just be, I don’t think that 

we can state on the basis of the Gruber study that 60 percent of 

those children would still have private coverage if they did not public coverage. 

Mr. CASSIDY. Maybe. I will say they had 400,000 observations, 

and Gruber obviously is, one, respected and, two, a big backer of 

the Obamacare, so it is not like he is trying to find something to 

trash himself. 

Lastly, is there a philosophical difference if a State is going to 

manage care and they are going to capitate payment to the insurance plan, is there any difference in facts that if the Federal Government gives only a set amount of money to the State, which, in 

turn, gives a set amount of money to the insurance plan? Is there 

any kind of difference in that? 

Mr. WEIL. Well, yes, a plan organizes and finances the delivery 

of care. A State organizes the policy environment for that finance 

and delivery, so they are akin, but I think they have different effects. 

Mr. CASSIDY. But if you give $100 to the State to care for somebody and the State gives $90 to the insurance plan, that really is 

the same mechanism, the capitated payment in each case. 

Mr. WEIL. If 100 percent of the cost were through capitation, and 

it was just who wrote the bill, then I would agree it is the same, 

but that is not how I see the program. 

Mr. CASSIDY. OK, that may be an issue of perception. I yield 

back. 

Mr. PITTS. Mr. Bragdon, did you want to respond to Ms. Castor’s 

remarks regarding Florida reforms? I apologize that she had to 

leave, but I wanted to give you an opportunity to respond quickly. 

Please. 

Mr. BRAGDON. Thank you, Mr. Chairman, I appreciate the opportunity. 

In my testimony, I referred to the Florida reform pilot. The facts 

are very clear: The Florida reform pilot outperformed on health 

outcomes in 64 percent of the cases. It had higher levels of patient 

satisfaction in 82 percent of the cases. But perhaps the best validation of how this approach of patient-centered pro-patient/pro-taxpayer is working is the fact that the Obama administration approved the waiver. 

This is a proven bipartisan approach that saves money, improves 

health and produces more satisfied patients. And would be happy 

64 

to provide further information to the Congresswoman so she can 

understand that. 

Mr. PITTS. The chair thanks the gentleman. The chair now recognizes the gentlelady from Virgin Islands, Dr. Christensen, for 5 

minutes for questions. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman, and thank you for 

the hearing, and welcome to our panelists. 

And Mr. Weil, my first question was really about Medicaid flexibility, but I think your testimony and the answers that you have 

given really have demonstrated that flexibility and innovation are 

not only possible, but they are happening in different States across 

the country and improving access and actually in some of the cases 

you cited, improving outcomes as well. Improved outcomes is what 

we are all looking to achieve here. 

I am sure that all of you are familiar with the 2002 IOM Report 

on Unequal Treatment, a report that demonstrated bias and discrimination in health care, in the health care of racial and ethnic 

minorities, still in other studies, more recent studies since that 

have demonstrated the same as it relates to cardiac care and other 

medical conditions. 

We know that racial and ethnic minorities make up at least 58 

percent of non-elderly Medicaid enrollees. And in addition to that, 

the prior low reimbursement rates, limited accesses to providers, 

and even when there were providers, some of the needed ancillary 

services were not available in the neighborhood because of how 

Medicaid was paid for before the Affordable Care Act. 

So Mr. Weil, don’t you think these factors have some impact and 

import on whether, even with Medicaid being available and access 

to health care being available, don’t those factors parallel? We 

haven’t even talked about the socio and economic determinants of 

health that are not changing in those communities. 

Mr. WEIL. Well, I appreciate the question and the observation. I 

am struck by how frequently I hear people repeat the phrase that 

Medicaid is a lousy, broken program because people on it, and then 

they fill in the blank. The people on it are poorer and sicker and 

disproportionately nonwhite, and as you indicated there is a strong 

evidence based in all of those areas that health outcomes are worse 

regardless of source of coverage, and very rarely do people make an 

effort to actually control for it, because it is impossible to control—— 

Mrs. CHRISTENSEN. Even regardless of income level and education level. 

Mr. WEIL. So we know, for example, that lower income Americans are less likely to use health care services whether they have 

private or public coverage because they are less comfortable—on 

average, they are less comfortable with the system, less able to 

navigate it, and providers seeking payment are less likely to locate 

in the places where they live. To indict the Medicaid program for 

the outcome of that seems to me a bit odd. 

Mrs. CHRISTENSEN. I agree and thank you because when those 

inequities are addressed then the socioeconomic determinants of 

health when they are addressed in poor and racial and ethnic minority communities and rural communities, and some of the reforms that you have cited in the different States are more widely 

65 

adopted, I think we will see those changes. And we are seeing 

changes where those things are happening. They are really making 

a difference in improved care for vulnerable patients for whom 

Medicaid has been their lifeline. 

The Affordable Care Act recognizes that we needed to begin to 

make Medicaid a stronger safety net. The law, along with State 

changes, is already beginning to make a difference. The Republican-recommended reforms really are not designed, as I see it, and 

I am a practice, I was a practicing family physician to help the vulnerable. I think they run the risk of reducing access to care and 

leaving some of our most vulnerable out of the health care system 

entirely. 

Let me see if I can fit in one other question. 

The Affordable Care Act includes a provision which will provide 

additional payment to certain Medicaid providers for primary care 

services. What impact on access to primary care do you believe that 

this policy will have? And what other steps can we take to improve 

access to these important services for our most vulnerable? Dr. 

Weil. 

Mr. WEIL. Well, higher payment is certainly a positive, although 

its temporary nature I think is going to limit the behavioral response on the part of physicians. It is unlikely they are going to 

fundamentally change where they practice or how they practice for 

an incentive that they know will last a short period. I think it is 

important to think of that as a step, as an imperfect step in broader efforts to reorient health care system spending toward primary 

care and it, in and of itself, is not going to achieve fundamental—— 

Mrs. CHRISTENSEN. It is 2 years probably because we had to reduce the cost of the bill, and we had to reduce the cost of the bill 

because we could not score the prevention, the savings from prevention which is something we still need to do. Thank you, Mr. 

Chairman. 

Mr. PITTS. The chair thanks the gentlelady and now recognizes 

the gentlelady from North Carolina, Mrs. Ellmers for 5 minutes for 

questions. 

Mrs. ELLMERS. Thank you, Mr. Chairman, and thank you to our 

panelists today. I do want to talk a little bit about the North Carolina programs that are moving forward. I am very proud of the 

work that they are doing in North Carolina. Over, it has grown 90 

percent over the last decade from less than 8 billion annually just 

a decade ago to more than 14 billion annually as of 2012. North 

Carolina spends more per person on Medicaid than any of its 

Southern State neighbors. Recognizing North Carolina’s Medicaid 

failures, Governor McCrory has proposed reforms outlining the 

State’s partnership for a healthy North Carolina. And I commend 

him for his work, and also, North Carolina Health and Human 

Services chairwoman, Dr. Aldona Wos, for the work that she has 

done, and I echo the words of Representative Bert Jones in North 

Carolina calling it a win-win-win situation because it benefits the 

patients, it benefits the health care providers, and the taxpayers of 

our State. 

With that, I do want to expand a little bit on the Florida issue, 

because North Carolina is looking at Florida. 

66 

And I do have a question, Mr. Bragdon, for you in relation to 

some of the discussion that has already gone on. Is it not true that 

Florida’s Medicaid reform demonstration was approved 8 years ago, 

but only last month did the State receive final approval to go forward with the State reforms? Is that part of the situation that we 

are talking about? 

Mr. BRAGDON. Thank you for the question, Congresswoman. 

Florida started a reform pilot in five counties, it covered 300,000 

individuals, moms and kids as well as those who are on SSI. And 

then 2 years ago, the legislature voted and the Governor submitted 

a waiver to expand that reform pilot to all 67 counties. 

Mrs. ELLMERS. So it was expansion? 

Mr. BRAGDON. Correct. 

Mrs. ELLMERS. Great. So basically obviously we are talking about 

tough times here, scarce resources, drastically growing enrollment 

levels. States need to know that they can move forward with reforms, and I know that is part of the discussion that we have been 

having today. 

Unfortunately, they are currently forced to live under the 

‘‘maybe’’ or wait-and-see approval Federal agency process that 

takes years to find out whether or not their demonstration projects 

can be approved. 

From your perspective, Mr. Bragdon, what can be done to improve the Medicaid reform review process by CMS? I am sure that 

is kind of a broad answer, but if you can give a couple of pointers. 

Mr. BRAGDON. Thank you for the question. I think first and foremost, States need predictability. You have in the State plan 

amendment, which is an administrative filing, you have predictability, there are set time frames, if the Federal Government does 

not act, it is deemed approved. What happens with a waiver is 

there is no time limit and therefore CMS can drag its feet. In the 

case of Kansas, CMS approved the waiver 2 days before implementation began. 

So what we are seeing is States are playing a game of chicken 

with the Federal Government moving forward with implementation 

with the hope that CMS will act at the last minute, otherwise there 

will be all this wasted effort. 

Mrs. ELLMERS. Ms. Owcharenko, I have been practicing your 

name. Do you want to expand on that at all? Is there anything that 

you would like to add to that? 

Ms. OWCHARENKO. I think that Tarren made a great point about 

predictability, and I think that this is one of the things that does 

have bipartisan or nonpartisan issue which is, how can you improve the innovations that are happening in the State faster so 

that you get more results so that people can study the results to 

say does this work? Does this not work? And I think that that is 

one thing I think that people can come together to look at is how 

do you speed up the process, and allow a lot more innovation at the 

State level without having the barriers. 

Mrs. ELLMERS. Keeping that in mind, right now with Medicaid 

enrollment at over 70 million, one in four Americans expected to 

become a Medicaid beneficiary as a result of the ACA, do you believe there are measures in place to ensure proper eligib—after a 

67 

week being back in North Carolina I can’t speak today—eligibility 

verification? 

Ms. OWCHARENKO. I think that it is actually even before the Affordable Care Act, the trend has been going in the opposite direction with presumptive eligibility, express lane eligibility, those 

things kind of move in the opposite direction. I think with the massive complexity of this health care law, I think it is important that 

there are some stronger eligibility processes in place, not only for 

Medicaid, but on the exchange side as well. 

Mrs. ELLMERS. Thank you so much. Mr. Bragdon, I have about 

one second. Is there anything you would like to add? 

Mr. BRAGDON. Ditto. 

Mrs. ELLMERS. Thank you, and I yield back the remainder of my 

time. 

Mr. PITTS. The chair thanks the gentlelady and now recognizes 

the gentleman from Florida, Mr. Bilirakis. 

Mr. BILIRAKIS. Mr. Chairman, I thank you for holding this hearing, and I thank the panel for the testimony. 

Mr. Bragdon, under the current law the system seems to be 

rigged to maintain the status quo in my opinion. If a State tries 

to reform the system to increase outcomes and reduce costs, they 

typically don’t see most of the savings. How can we transform the 

system to incentivize States and allow them a greater share of the 

savings? 

Mr. BRAGDON. Thank you for the question, Congressman. 

I think that this is really a key factor that is holding States back 

from innovating. States get to keep only about 40 cents of every 

dollar that they save, or in the case of expansion, 10 cents out of 

every dollar that they save. What I think would be a better approach to promote innovation would be to have shared savings. One 

of the things that private Medicaid plans do is they share the savings that coordinated care contributes with providers, so providers 

have an incentive to save money as well as the plan. 

It should be the same with the Federal Government to States. 

Why not allow the States to keep one out of every three, or one out 

of every two Federal dollars that they save through innovation? 

Mr. BILIRAKIS. Very good. For the panel, what reforms are needed to help beneficiaries transition off Medicaid and on to private insurance? What are the challenges that beneficiaries face? For the 

panel. 

Ms. OWCHARENKO. I would say, first of all, it is prioritizing the 

population that not everyone on Medicaid is treated the same, and 

I think that is for a benefit for the beneficiary. The higher up the 

income scale, the more access you would likely have to private 

health insurance and that should be encouraged. The same rules 

that apply at the higher income should not apply at the lower income and vice versa. 

Mr. WEIL. I would agree that Medicaid’s reliance on private 

plans makes that transition easier when it occurs, and that States 

are currently making significant efforts to try to ensure smooth 

transitions between Medicaid and the exchange. Unfortunately, the 

biggest barrier to transitioning smoothly from Medicaid into private coverage is that the jobs most people move into when they 

68 

move off of Medicaid don’t offer health insurance. And so in the absence of that, there is nothing to transition to. 

Mr. BRAGDON. I would agree with both responses. I think that 

you, it is very important to look at for individuals who are on Medicaid, many of them are on Medicaid for a short amount of time, 

and yet those private plans are prohibited from marketing to them 

or reaching out to them and just making them aware of here are 

other options that are available. 

And States need to be more creative to create transition products 

that aren’t quite Medicaid private plans but aren’t quite private insurance to give people some protection to not only catastrophic coverage, but also preventive services. 

Mr. BILIRAKIS. Is it a good idea to provide diversity of plan options to consumers? 

Mr. BRAGDON. Thank you. Yes. And I think that the most strong 

evidence of that is consumers voting with their feet. When you give 

them a diverse group of plans with meaningful differences, 70 to 

80 percent voluntarily pick a plan different than the one they were 

defaulted into. 

Mr. BILIRAKIS. Mr. Weil? 

Mr. WEIL. I certainly see advantages to plan choice. It think 

there are two constraints I would put in that comment. One is that 

in less populous areas of the country, plan choice doesn’t really 

mean anything because the real challenge is finding providers and 

having different administrative structures over them doesn’t really 

provide any value. 

And the second constraint is that unfettered choice or 

unstructured choices can be very hostile, actually, to consumers. 

The private industry knows very well how to structure choices in 

ways that help people make choices and not bewilder them. But in 

general, certainly choice is a key component of the drive to quality. 

Mr. BILIRAKIS. Ms. Owcharenko. 

Ms. OWCHARENKO. I would agree with the panelists and just say, 

though, that a slight difference a choice of the same product across 

without any differentiation is kind of choice with no choice, you are 

not really choosing anything different. So I do think there needs to 

be some sort of diversification or ability for insurers to offer different types of plans with additional benefits, et cetera, in order to 

really have what choices. 

Mr. BILIRAKIS. Thank you. One last question if I may, Mr. Chairman. Mr. Bragdon and Ms. Owcharenko, the administration seems 

focused on expanding Medicaid as you know. 

How many people are Medicaid eligible and are not enrolled? 

Shouldn’t we focus on getting care to those groups before we focus 

on expanding Medicaid? 

Also, this expansion of patients will increase the patient load on 

the Medicaid system. Has there been an influx in doctors taking 

Medicaid? I don’t think so. What will this patient surge do to the 

system? And we will start with Mr. Bragdon, please. 

Mr. BRAGDON. I think there are—absolutely there are real challenges to access for individuals. A card is not access. And we need 

to look at can you actually provide access to care? 

Ms. OWCHARENKO. I would just point out that with the question 

of there are many out there, knowing children, many children that 

69 

are eligible but not enrolled in the program, raises the question of 

what is it that keeps those children out? Is it that they—it is obvious they are eligible. They would qualify. The question is do their 

parents see that there is value in getting the Medicaid program. As 

Tarren has pointed out having a card may not be the type of care 

that best suits them. 

Mr. BILIRAKIS. Thank you very much. I yield back. 

Mr. PITTS. The chair thanks the gentleman. The chair now recognizes the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate it greatly. 

Mr. Bragdon, I was looking at your written testimony, and on 

pages 7 and 8, you go through a process—you may want to refer 

to it, although you probably know it like the back of your hand— 

where some of the Medicaid programs that rely on some private 

programs are going to be hit with the tax inside of Obamacare. 

Could you explain that to us more fully than just a one- or twoparagraph response might give to the American people? 

Mr. BRAGDON. Sure. One of the new funding mechanisms for Affordable Care Act is a new tax on private plans which falls on 

those private Medicaid plans as well. And so you have this perverse dynamic where the Federal Government is, on one hand, taxing itself and then at the same time, taxing States to raise revenue. 

And what is going to happen is States either need to come up 

with the money or they have to cut services for individuals to pay 

the tax. 

Mr. GRIFFITH. Explain how that works if you can, because I was 

not here when the bill was passed and I have always been under 

the impression this was on the wealthier people and on plans that 

were private plans. Is this because some States have, or work with 

private-type plans to provide the coverage for their citizens? 

Mr. BRAGDON. This is not the tax on Cadillac plans. This is a different tax that is essentially a premium tax for private health 

plans, but those private plans within Medicaid are included within 

that tax, and that tax over the next decade is going to raise costs 

from 37 to $42 million for those private Medicaid plans only. 

Mr. GRIFFITH. And the number in your report said something 

like one-fifth of all the money raised by this new tax included in 

the Obamacare plan is actually a tax that we paid by Medicaid? 

Mr. BRAGDON. Correct. 

Mr. GRIFFITH. OK. I appreciate that. 

Virginia is looking at a lot of reforms and things before they do 

the expansion. They set up a special committee, et cetera. And 

amongst those, I am going to go to a specific question instead of 

just reciting again the different things that Virginia is looking for, 

although I think those are good, but one of them is value-based 

purchasing, and I kind of like that idea that they are looking at. 

And I think we need to do this in an efficient way that it saves 

money and provides a greater flexibility to our States. Now obviously, there has to be a balance because you don’t want to put a 

co-pay into that value pricing that keeps people from using services 

that they may need. So I would ask all of you, from your experience, where have States been able to use that successfully and 

where has it been not successful? 

70 

Mr. Bragdon start with you and then we will just go down the 

table. 

Mr. BRAGDON. I think it is key for States to look at value-based 

purchasing not only innovative things working directly with providers in how do you get better care for individuals, and there are 

great examples of States doing that to promote more providers participating in the Medicaid program, where you have private plans 

they pay if the Medicaid patient no-shows, or in some States the 

plan itself coordinates travel to make sure the patient can actually 

get to the doctor, but it also add benefits to attract patients. So for 

example, adding dental benefits, all within that same fixed price, 

but really creating taking Medicaid like a floor and building on top 

of it, which I think is really key. 

You have to also look at, are individuals actually getting 

healthier? Because that is what we want the safety net to do, is 

take somebody who is poor and sick and make them healthier so 

they have the hope of a better life. So ultimately, value based 

should look at, is it improving health? 

Mr. GRIFFITH. Absolutely. Mr. Weil. 

Mr. WEIL. States use their flexibility to set payment rates to promote plans that can demonstrate higher value through standard 

measures of quality and measures of access. 

There is also movement towards what is known as value-based 

insurance design which is a specific form of value purchasing design to make it less expensive, for example, for people to get maintenance drugs for a chronic condition, maybe even free, because it 

is actually cheaper to give them free medication than to have them 

not take the medicine because of a $3 copayment. There is a whole 

center at the University of Michigan that is helping States and private payers in that area. It is a very active area. 

Mr. GRIFFITH. Obviously not easy answers. 

Mrs. Owcharenko. 

Ms. OWCHARENKO. Thank you. I think that it actually what has 

been said is great, and what it shows is that Medicaid has seen 

kind of the failure of its past in trying to find ways to be more innovative and in doing things in a more efficient way. But I would 

caution like in the State of Virginia that those reforms should take 

place and those results should come through before deciding whether to now add a new expansion population into that making further 

the complexity of what reform is intended to achieve. 

Mr. GRIFFITH. Particularly in light of the fact that the Federal 

Government is going to reduce the amount of money it gives back 

to the States for the expansion as time goes by. I do appreciate 

that. 

Mr. Weil, I also appreciate the fact that you are concerned about 

rural districts. I have a rural district, and while I like the idea of 

having multiple plans, if folks can’t get there it doesn’t do us any 

good. So I do appreciate all of your testimony this afternoon. 

And with that, Mr. Chairman, I yield back. 

Mr. PITTS. The chair thanks the gentleman. That concludes the 

questions from the members. Thank you very much, very informative testimony today. There will be questions that members have 

that will be submitted to you in writing. We ask that you please 

respond promptly to those questions. 

71 

I remind members that they have 10 business days to submit 

questions for the record, and members should submit their questions by the close of business on Monday, July 22nd. 

Without objection, the subcommittee is adjourned. 

[Whereupon, at 5:40 p.m., the committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Today’s hearing is the third in a series of subcommittee hearings on the current 

challenges facing Medicaid programs across the country. I want to thank Chairman 

Pitts for his leadership on this issue and want to welcome today’s witnesses. 

Through the Committee process, we can continue to have a valuable discussion 

about the strengths and weaknesses of the current Medicaid program. As we move 

toward reform, I hope we will continue to gather the most relevant and timely data 

and state input, and continue these important discussions with Medicaid stakeholders and patients. 

The Medicaid program is extremely complex and its operating structure and 

equally complex financing framework are often topics for reform. Many have said 

that if you see one Medicaid program, you still only know one Medicaid program— 

as every state is quite different. 

Before we move forward, we must understand not only who Medicaid is currently 

serving, but better appreciate how well Medicaid is doing in accomplishing its goals. 

Reform must ensure the path forward for a modern Medicaid program that is 

strong enough to face the challenging realities of scare federal and state resources. 

Reform must empower states and Medicaid stakeholders with the necessary flexibility to make Medicaid more than just a coverage program or card without access. 

Surprising to most, Medicaid today covers more Americans than any other government-run health care program, including Medicare. 

While Medicaid covered approximately four million people in its first year, there 

were more than 72 million individuals enrolled in the program at some point in Fiscal Year 2012—nearly 1 in 4 Americans. 

Those enrollment figures on their own, and their potential drain on the quality 

of care of the nation’s most vulnerable folks is cause for alarm. But once the president’s health care law is fully implemented, another 26 million more Americans 

could be added to this already strained safety net program. 

Medicaid enrollees today already face extensive difficulties finding a quality physician because, on average, 30 percent of the nation’s doctors won’t see Medicaid patients. Studies have shown that Medicaid enrollees are twice as likely to spend their 

day or night in an emergency room than their uninsured and insured counterparts. 

Instead of allowing state and local officials the flexibility to best administer Medicaid to fit the needs of their own populations, improve care, and reduce costs, the 

federal government has created an extensive, ‘‘one-size fits-all’’ maze of federal mandates and administrative requirements. 

With the federal debt at an all-time high, closing in on $17 trillion and states 

being hamstrung by their exploding budgets, the Medicaid program will be increasingly scrutinized over the next 10 years. 

Its future ability to provide coverage for the neediest kids, seniors, and disabled 

Americans will depend on its ability to compete with state spending for other priorities including education, transportation, public safety, and economic development.As I noted at the opening, Energy and Commerce Committee Republicans remain committed to modernizing the Medicaid program so that it is protected for our 

poorest and sickest citizens. We will continue to fight for those citizens because we 

believe they are currently subjected to a broken system. 

The program needs true reform, and we can no longer tinker around the edges 

with policies that add on to the bureaucratic layers that decrease access, prohibit 

innovation, and fail to provide better health care for the poor. In May, Senator 

Hatch and I introduced Making Medicaid Work—a blueprint and menu of options 

for Medicaid reform that incorporated months of input from state partners and policy experts from a wide range of ideological positions. My hope is that this morning’s 

hearing is the next step in discussing the need for reform so that we can come together in finalizing policies that improve care for our most vulnerable citizens. 

Washington does not always know best—we have a lot to learn from our states and 

should better understand the challenges facing our current programs before we consider any expansion of the program. 

72 

Thank you, Mr. Chairman and I yield my remaining time to —————————. 

73 


86389.038

July 8, 2013 

American Academy 

of Pediatrics 

DEDICATED TO THE HEALTH OF ALL CHILDREW 

Statement for the Record 

On behalf of the 

American Academy of Pediatrics 

Before the 

U.S. House of Representatives Committee on Energy and Commerce, 

Subcommittee on Health 

American Academy of Pediatrics • Department of Federal AITairs 

601 13th Street NW, Suite 400 North • Washington, DC 20005 

Tel: 800.336.5475 • E·mail: kidslst@aap.org 
74 


86389.039

American Academy of Pediatrics 

Statement for the Record 

House Energy & Commerce Subcommittee on Health 

Hearing: "Making Medicaid Work for the Most Vulnerable" 

July 8, 2013 

The American Academy of Pediatrics (AAP), a non-profit professional organization of62,000 

primary care pediatricians, pediatric medical subspecialists, and pediatric surgical specialists 

dedicated to the health, safety, and well-being of infants, children adolescents, and young adults, 

appreciates this opportunity to provide a statement for the record for the Energy and Commerce 

Committee's Subcommittee on Health hearing entitled "Making Medicaid Work for the Most 

Vulnerable." 'This statement is divided into three areas focused on the importance of Medicaid to 

children, extending the Medicaid payment increase and renewing the federal govermnent's 

commitment to pediatric quality improvement in Medicaid and other insurance systems. 

Children are, by definition, a vulnerable population. Currently, pediatricians believe that poverty 

is the most important threat to US child health. More than one in five children lives below the 

federal poverty level (FPL) in the United States and almost one in two are poor or near poor. 

Thirty-four percent of Hispanic children in the US live in poverty. Thirty-nine percent of 

African-American children in the US live in poverty. 

The effects of poverty on children's health and well-being are well documented. Poor children 

have increased infant mortality, higher rates oflow birth weight and subsequent health and 

developmental problems, increased frequency and severity of chronic diseases such as asthma, 

greater food insecurity with poorer nutrition and growth, poorer access to quality health care, 

increased unintentional injury and mortality, poorer oral health, lower immunization rates, and 

increased rates of obesity and its complications. There is also increasing evidence that poverty in 

childhood creates a significant health burden in adulthood that is independent of adult-level risk 

factors and is associated with low birth weight and increased exposure to toxic stress (causing 

structural alterations in the brain and long-term epigenetic changes). 

The consequences of poverty for child and adolescent well-being are perhaps even more critical 

than those for health. These are the consequences that may change life trajectories, lead to 

unproductive adult lives, and trap them in intergenerational poverty. Children growing up in 

poverty have poorer educational outcomes with poor academic achievement and lower rates of 

high school graduation; they have less positive social and emotional development which, in turn, 

often leads to life "trajectory altering events" such as early unprotected sex with increased teen 

pregnancy, drug and alcohol abuse, and increased criminal behavior as adolescents and adults; 

and they are more likely to be poor adults with low productivity and low earnings. 

The Importance of Medicaid to Children 

Children are the poorest members of our society, a society that knows how to use policies and 

programs to raise its citizens out of poverty. Medicaid is one of the most important anti-poverty 

programs in US federal policy, efficiently fmancing the periodic needs of healthy children, and 

helping families avoid medical bankruptcy due to the costs of medically necessary health 

services. Because of the incredibly widespread and corrosive nature of pediatric poverty in the 

US, Medicaid should be strengthened for children, not undermined. 

Page 20f7 
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86389.040

American Academy of Pediatrics 

Statement for the Record 

House Energy & Commerce Subcommittee on Health 

Hearing: "Making Medicaid Work for the Most Vulnerable" 

July 8, 2013 

Medicaid is also structured to address the unique needs of the pediatric population. Children are 

not simply little adults. The health care needs of infants, children, and adolescents are 

sufficiently distinct from those of adults, such that a health care system designed around the 

needs of adults will not meet the needs of children. The number one cause of death in U.S. 

children is injury, not heart disease or cancer. Meanwhile, obesity among children is epidemic. 

Furthermore, children are uniquely dependent upon caregivers to detect medical problems, to 

access health care, to translate the nature of their symptoms to clinicians, to receive 

recommendations for care, and to arrange for and monitor ongoing treatments. As infants and 

children are in constant stages of development, their capabilities, physiology, size, cognitive 

abilities, judgment, and response to interventions constantly change and must be continuously 

monitored to insure that these changes are proceeding within an acceptable trajectory. Specific 

attention to the unique characteristics of children must and should frame all design and financing 

considerations for this segment of the population. 

Most children are healthy, so the epidemiology of disease is different in the pediatric population 

than in the adult population. Nevertheless, an important segment of children suffer from chronic 

conditions that affect their development and that require specific attention for generating, 

maintaining, and restoring age appropriate functioning. Children and youth with special health 

care needs constitute around 15% of the pediatric population but 40% of the pediatric "spend." 

Specific consideration of the unique characteristics of children must and should frame all plans 

for the design and financing of health care services for this segment of the population. 

The economic, ethnic, and racial demographics of the pediatric population in the U.S. put 

children at risk of adverse outcomes due to existing health care disparities that must not be 

ignored. To account for these specific differences between children and adults, essential services 

for infants, children and adolescents must include not just preventive care but the full range of 

diagnostic, therapeutic, and ongoing counseling and monitoring not only of healthy children but 

also of those with developmental disorders, chronic conditions, behavioral, emotional and 

learning disabilities. 

Services that are medically necessary for children are thus different than those for adults. For 

children, medically necessary services include prevention, diagnosis, treatment, amelioration or 

palliation of physical, mental, behavioral, genetic or congenital conditions, injuries, or 

disabilities, and these services need to be age appropriate. Treatment interventions should be 

evidence-based, but since large scale randomized controlled trials are significantly less plentiful 

for children than for adults, when that standard is lacking, observational studies, professional 

standards of care, or consensus of pediatric expert opinion must serve as acceptable substitutes. 

Medicaid's Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit should 

serve as the standard of benefits for children, alongside Bright Futures' well baby and well child 

periodicity schedule recommendations, in all health plans. Because EPSDT is an important 

coroerstone of the program, the benefit package for children in Medicaid is the gold standard of 

care for children. 

Page 3 of7 
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86389.041

American Academy of Pediatrics 

Statement for the Record 

House Energy & Commerce Subcommittee on Health 

Hearing: "Making Medicaid Work for the Most Vulnerable" 

July 8. 2013 

It is a national tragedy that not every child in the US has quality health insurance. Research has 

consistently shown the important role that health care coverage plays in children's access to and 

use of health care services and their attainment of positive health outcomes. Medicaid is a vital 

component of the American health and social safety net, particularly for low-income children 

and children with special health care needs. The entitlement to Medicaid must be protected to 

ensure the health and well-being of millions of children. 

The AAP recognizes the achievements of the Medicaid program in improving access to health 

care services for children. The Medicaid program provides documented improvement in health 

care access, preventive visits, and a usual source of care, resulting in improvement in health care 

outcomes and the overall health status of children. Arguments to the effect that being covered by 

Medicaid is worse than having no insurance are not accurate. Pediatricians also know that the 

U.S. health system continues to shed employer-sponsored insurance, and in particular, dependent 

coverage under such insurance. 

Although the percentage of U.S. children with private employer-sponsored health insurance 

decreased from 66.2% to 53.0% from 1997-2011, the proportion covered by public insurance, 

including Medicaid and the Children's Health Insurance Program (CHIP), increased from 21.4% 

to 42.0% so that the total percent of uninsured U.S. children decreased from 13.9% to 6.6% at a 

time when uninsurance rates among adults were increasing. 

Moreover, the reductions in uninsurance were concentrated among the target population of 

children in families at or below 200% of the federal poverty level. The percentage of those 

covered by employer-sponsored insurance in that group fell from 34.4% to 24.9%, while the 

percentage of those on Medicaid or CHIP increased from 41.3% to 60.4%, so that the 

uninsurance rate among these children decreased from 24.6% to 15.3% over this period. 

Medicaid works for children, but it also works for pediatricians. The AAP and its members have 

made a strong commitment to the Medicaid program. In general, pediatricians serve more 

Medicaid patients than do other primary care physicians. On average, 30% of a pediatrician's 

patients are covered by Medicaid, illustrating the commitment of pediatricians to ensure that 

Medicaid-insured children have access to a medical home. 

Because parental insurance is a predictor of children's insurance status, a state's decision to 

forego federal funding for Medicaid enrollment for eligible adults will have a predictable 

negative effect on children's coverage. The Academy urges states to expand their Medicaid 

programs because strong evidence suggests that children's health outcomes improve as their 

parents gain insurance. In addition, many children now covered by Medicaid lose health 

insurance as they become young adults. How states choose to respond to the opportunity 

afforded by the Affordable Care Act (ACA) to participate in the adult Medicaid expansion can 

have a great impact on many pediatric patients. Even so-called "childless adults" deserve the 

dignity and security of quality health insurance, and the Academy has adopted policy noting that 

health care is a right for everyone. The Academy plans an outreach and enrollment campaign to 

Page 4 of7 
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86389.042

American Academy of Pediatrics 

Statement for the Record 

House Energy & Commerce Subcommittee on Health 

Hearing: "Making Medicaid Work for the Most Vulnerable" 

July 8, 2013 

raise awareness about new health insurance options for parents of children who visit 

pediatricians for back-to-school physicals and has pledged to work in other ways to educate the 

public about their new rights under established law. 

Major program reforms are under consideration even as Medicaid expansion is being adopted by 

more states. Federal legislators have publicly discussed allowing states more flexibility in 

changing Medicaid rules and regulations without waivers, altering eligibility requirements, 

cutting benefits to optional Medicaid eligibility groups, implementing cost sharing, and offering 

capped funding allotments or block grants for acute and long-term care. Although children 

through 20 years of age represent 54% of all Medicaid enrollees, they account for only 23.5% of 

all Medicaid expenditures. 

Consequently, state and federal cost-containment strategies targeting children are not likely to 

yield significant savings and, in fact, may result in far greater state expenditures. Costs do not 

disappear when children are cut from or drop out of the Medicaid program as a result of costcontainment strategies. States may experience higher expenditures in areas such as primary care 

clinics in public health departments, increased utilization of emergency departments, and an 

increase in the number of preventable hospitalizations. Other costs, which are more difficult to 

quantity, such as school absences for children and missed work for parents when children are 

sick as well as the adverse consequences of delayed treatment, are also likely. The AAP, 

therefore, continues to maintain its strong support for the Medicaid program. Nevertheless, 

pediatricians know that the Medicaid program could be improved and would respectfully offer 

the recommendations contained in the attached Medicaid Policy Statement issued by the 

Academy on May 5, 2013. 

Medicaid Payment 

The ACA increased Medicaid payment rates for primary care services to at least 100 percent of 

Medicare rates for calendar years 2013 and 2014. This landmark investment in improving access 

to care for children in the Medicaid program should serve as an important indicator of the federal 

government's recognition that payment rates in Medicaid have been subpar. The AAP strongly 

believes that Congress should make federal support for these payment rates permanent, extend 

the increase to all pediatric codes, and extend the provision to all pediatricians, including all 

pediatric subspecialists. 

For decades, the Academy has fought to ensure that meaningful access to health services is 

available to children in the Medicaid program. Prior to 2013, Medicaid rates averaged below 70 

percent of Medicare rates for primary care services and were simply insufficient to cover the 

costs of providing care. For many services and in many states, payment was even lower. 

Pediatricians and other health care providers need to be focused on treating and caring for our 

children, not distracted by the inadequacy of payment rates. Nationally, pediatricians provide a 

majority of all office visits (65.7 percent) to children on Medicaid. Without consistent payments, 

Page 5 of7 
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86389.043

American Academy of Pediatrics 

Statement for the Record 

House Energy & Commerce Subcommittee on Health 

Hearing: "Making Medicaid Work for the Most Vulnerable" 

July 8, 2013 

fewer physicians are able to participate in Medicaid, threatening children's access to quality 

health care. 

While the change to improve payments has been delayed in many states, it has been reported that 

at least 42 states will be providing the payment increase in their fee for service programs by the 

end of this month and that only ten states do not have an approved Medicaid managed care 

methodology. Additionally, the AAP's chart noting how to apply for the increase has been 

downloaded more than 12,000 times. There is clearly deep interest in making this program 

work. 

The Academy strongly believes that appropriate payment rates are needed to provide real access 

to care. Ultimately, children will lose if Congress fails to address low payment rates under 

Medicaid. There is solid evidence that appropriate payment to pediatricians will result in children 

having better access to comprehensive health services in a medical home. 

2l!!!!tt 

The Academy applauds Congress' continuing Bipartisan focus on improving the quality of care 

in the Medicare, Medicaid, and CHIP programs. In particular, the AAP noted with deep interest, 

pages 15-16 of Chairman Upton's "Making Medicaid Work," which argues for more 

standardized reporting on quality within Medicaid programs. Congress and the American people 

deserve to know what their tax dollars are buying and thus, we would urge that the 

Subcommittee, full Committee, and Congress require or incentivize a uniform level of quality 

reporting in Medicaid. 

Building on the commitment to improve quality of care in Medicaid and CHIP found in 

CHIPRA's Title IV, the Academy has worked with other organizations (the American College of 

Obstetricians and Gynecologists, the March of Dimes, the Children's Hospitals Association, 

Nemours, the National Partnership for Women and Families, and the National Institute to 

Improve Child Health Quality) to produce an agreement regarding a renewed federal focus on 

maternal and child health quality. 

Title IV of CHIPRA created important initiatives to advance the quality of care for children and 

pregnant women. By enacting Title IV, Congress provided critical direction and funding to 

address the inequity created by Medicare driving quality improvement that focuses primarily on 

seniors. As a result of Title IV, virtually every state Medicaid program is now engaged in 

pediatric and maternity quality improvement efforts, and a number are engaged in projects 

involving the private sector as well. In just a few short years, CHIPRA's quality provisions have 

set in motion significant changes in both pediatric and maternity care that should be sustained 

and enhanced. 

These organizations' joint recommendations to improve CHIPRA's impact on quality follow: 

1) Extend the authority and funding provided under section 401 (i) beyond fiscal year 2013. 

Page 6 of7 
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86389.044

American Academy of Pediatrics 

Statement for the Record 

House Energy & Commerce Subcommittee on Health 

Hearing: "Making Medicaid Work for the Most Vulnerable" 

July 8,2013 

2) Continue funding for the Centers of Excellence program and encourage the development, 

implementation and stewardship of measures that can be used at the state, hospital, 

practice and/or plan level. 

3) Expand efforts to spread the use of the CHIPRA and Medicaid core set of measures and 

other measures developed through the Pediatric Quality Measures Program across 

different health care delivery and coverage systems. 

4) In consultation with the states and relevant medical provider organizations, within one 

year of the provisions' extension develop a plan to require states to report on the full 

complement of pediatric core set measures within five years of the provisions' extension, 

and provide enhanced federal funding and technical assistance to states for these 

activities. 

5) Continue the authority and current funding level for Section 40 I (d), the demonstration 

projects program that allow states and providers to spread successful quality 

improvement practices for children, and extend its efforts to examine perinatal care. 

6) ModifY the electronic health records program to include CHIP in case mix calculations 

that allow for incentive payments under the HITECH Act. 

Title IV ofCHlPRA has achieved remarkable results in the few short years since its passage. We 

commend you once again for your vision and leadership in establishing these landmark 

provisions and urge your attention to maternal and pediatric quality improvement as discussions 

on how to solve the Medicare Sustainable Growth Rate formula move forward. If Medicare 

includes a quality improvement component to justifY continued payment rates and children and 

pregnant women are excluded due to the nature ofthe Medicare program, a parallel system for 

children and pregnant women is strongly justified. It would be a missed opportunity to exclude 

children and pregnant women yet again simply because of the nature of Titles XVIII, XIX and 

XXI of the Social Security Act. 

We appreciate your willingness to consider the recommendations of the American Academy of 

Pediatrics and look forward to working with you to continue these important efforts to improve 

the health of the Medicaid program, and ultimately the health of children. 

Page 7 of7 
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86389.045

P E D I AT RIC S' 

Medicaid Policv Statement 

COM\1ITTEE ON CHILD 'HEALTH FI"lANCING 

Pediatrics; originally published online April L 2013; 

001: 10.IS42/peds.2013-0419 

The online version orthis article, along with updated information and services, is 

located on the World Wide Web at: 

II ttl': Ilpedi a tries. a" I' I' u blica tions. org/con ten tlea r ly 1201310312 7/peds.20 13-0419 

PEDIATRICS is the official joumal ofthe American Academy of Pediatrics. A monthly 

publication. it has been published continuously since 1948. PEDIATRICS is owned. 

published, and trademarked by the American Academy of Pediatrics, 141 N011hwest Point 

Boulevard, Elk Grove Village, Illinois, 60007. Copyright:D 2013 by thl.? American Academy 

of Pediatrics. All rights reserved. Print ISS"I: 00) 1-4005. Online ISSN: 1098·4275. 

American Academy of Pediatrics 

Downlnaucd from pctii,]tric:-'.,Mppur.i iCdlil'n:--.org h) guest on July 5. 2013 
81 


86389.046

POLICY STATEMENT 

Medicaid Policy Statement 

COMMllTEE ON CHILD HEALTH fiNANCING 

KEY WORDS 

MedlCil,d.Ghlld Ilealthlnsurance Program. beneflts, coverage, 

firtJ1CI'lg, payment, ellglblHy, oCitreach, ewoii'TJent managed 

care Q,Jallty Improvement 

ABBREVIATIONS 

MP-AmeNan Academy of PediatriCS 

MRA--f"mencan Recovery and Reinvestment Act 

ACA-"atI8'ltProtectlon and Aifordable Care Act 

CHIP--C\)ilG~en's Health Insurarcc Program 

GMS~Centcrsfor MedICare u,d Medlcilld SerVices 

CPT-Current Procedural Terminology 

DHdS-i.lepartment of dea:th and ,lu'11an Services 

FHa - essential health be'lefits 

EPSDT-£ar'y and Periodic Sc~eel'1l'lg. )Iagnosis and ~reatment 

FMAP-federai medical assistance percentage 

fPL-federalpovflrty'evel 

HMO- -healtt'> rrl(lll1te.nance. orgar\'nj~,o'l 

MC0-managed care orgarlizatlOn 

MOF--- rnalilterance of effort 

This ClOCUme'lt IS CODyng'lted "MIS p~operty of the Aroe~lcan 

Academy of Pedlatrlt,g <l10 Its Boa~d of Directors All aL;trlO~S 

have ~Ied conDlet of IOterest statements With the America'! 

.Acade-ny ofPedia:r,cs Anycon:ltcts have been resolvedthroLgh 

a process apprQved by the ofDlrec::orsTheAmmCil'1 

ACBoemyofPedlatrlcs hasncitrersoliciteG noracceptedary 

camrnerclallnvolvement In :fle developmert oithe contert of 

trllspubilcatlOn 

Ali policy statements from t'le American Academy ::if PediatriCS 

automatlcaily expire 5 years afte~ puhlicatlon vlless reaffirmed, 

revised retn.'d at or before that tlffic 

wwwpedI8tr:C50rg/cg:!dOlil0'542!peds20130419 

dOl ID 1542!peds2013{l419 

PFDIATRiCS OSSN Nurrbers ?rlOt, 0031 4085, Onlme j098·42751 

Copyr'lght© 2013 by ~he American Academy of PediatriCS 

PFDIATRiCS Vo~umc 131. Nurntler 

Medlcmd Insures 39% of the children in the United States. This reVISion 

of the 2005 MediCaid PolICY Statement of the American Academy of Pe· 

dlatrlcs reflects opportunities for changes In state Medicaid programs 

resulting from the 2010 Patient ProtectIOn and Affordable Care Act as 

upheld In 2012 by the Supreme Court Policy recommendations focus 

on the areas of benefit coverage. finanCing and payment, eligibility, outreach and enrollment, managed care, and quality improvement Pedwlncs 2013,1311-10 

HISTORY OF MEDICAID PROGRAM 

The Medicaid program was enacted In 1965 as Title XIX of the Social 

Security Act With funding streams derived from both federal and state 

governments All states have participated in this voluntary program 

smce Arizona Joined In 1982. Federal law designates which groups of 

people must be eligible for Medicaid enrollment and what core medical 

benefits must be prOVided. Each state may then expand eligibility 

criteria, enhance benefits, contract With managed care organizations 

(MCOs) to administer the Medicaid program, and apply for waivers to 

develop specialized programs for particular populations. For instance, 

states have had the opttOn to enroll children whose families have an 

Income at or below 200% of the federal poverty level (FPL) In Medicaid, 

although only 6 states had chosen to do so by 1997 when the State 

Children's Health Insurance Program (CHIP) was enacted by Congress 

as Title XXI of the SOCial Security Act 

By 2009, total Medicaid enrollment had grown to mclude 34.2 million 

mfants, children, and adolescents younger than 21 years. Medicaid 

prOVided benefits to 39% of the US pediatric population and covered 

48% of all births In 2009, Medicaid payments to providers for all age 

groups had expanded to $3260 billion.* Although children younger 

than 21 years represented 53% of all Medicaid enrollees, they 

oftotai Me:lcald costs fer fiscal year20::J9 of S3BO S bl:lion inclJ des nonprovlder expenses 

such as dIsprOportIOnate S1are hasp!:al payments. adr"1JlIs~ratlOn 005:5. the VaCCInes for 

ChddrenProgram and otr-cr adJustmcrtts Calculated costs per participant alse d'ffer for 3 

reasons (1) CMS uses estl'Tla:ed·personyeareqUlvaients·· (J01 rTllliwn) for nsca'year 

2009ratherthar 'ever participants·· (S29 m,l.lDn unlQuepartl::lpants covered by Medicaid 

for at least I rront~l) as the baSIS for tl-Je calculatlor1. (2) the AAP cons,ders 19 ana 20·yeilroid participants to be chlldrell,whereas CMS cO'1sldersthern to be adults. and (3) eMS 

segre~atcs botli ch!ctren and adul:s who are elF,d and!or disabled mto a separate 

d'sabled·· Gat(!~~ry 

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82 


86389.047

accounted for only 29% of all Medicaid 

provider payments. In 2009, Medicaid 

expenditures averaged $2630 per Child 

younger than 21 years compared with 

$6459 per adult between the ages of 21 

and 64 years and $11812 per senior 

Citizen 65 years or older? 

Except for a few specla! programs (eg, 

faml!y plannmg serVices, Amencan 

!ndlan/Aiaskan Native populations, admmlstratlve costs), the federal govern· 

ment funds a different proportion of 

each state's Medicaid budget" ThiS 

federal medical aSSistance percentage 

(FMAP) for each state IS based on 

a formula that relates the 3-year roBmg 

average per capita mcome In the state 

to that for the entire United States By 

law, the minimum and maximum FMAPs 

are 50% and 83%, respectively il Before 

the passage of the 2008 Amencan Recovery and Remvestment Act (ARRA: Pub 

l No 111-5), the FMAP vaned across 

states from 50% to 76% Under ARRA 

and other FMAP "extension legislatIOn" 

(EducatIOn, Jobs, and Medicaid ASSIStance Act of 2010 [Pub l No. 111-226;) 

FMAPs temporarily Increased through 

June 2011 (eg, to a range of 620/0-85% 

In the second quarter of fiscal year 

2010). These enhanced FMAPs transiently decreased state Medicaid 

expenditures for fiscal year 2009 

through fiscai year 2011 However, with 

the sunset of ARRA FMAP legislatIOn and 

more Medicaid beneficiaries due to 

contmued poor economic ConditIOns 

and other factors, state Medicaid costs 

mcreased sharply m ftscai year 2012 

and are expected to contmue to climb 

through fiscal year 2019 t 

'Beglomrtjl l[l 2020,the federal governmerttwll 

~~III fund 90% [lIthe i)(ld:tlonai Gcds associated 

newly ellg'oie partlc,pants under the If 

theACAMed!ca,dexpansiO~weretobeaoontedby 

all states, the C~ngress,Jnal Budget OffiG~ 'lad 

estimated that the ~otal cost of t~e 

il,ledl~a'o pr0gl'am a:t:nblltanleto MediCilH:t ex 

FROM 

IMPACT OF THE ACA AND THE 2012 

SUPREME COURT DECISION ON 

THE MEDICAID PROGRAM 

Passage of the Patient Protection and 

Affordable Care Act (ACA)~ In ~0104 

profoundly changed the Medicaid program through Its expansion of MedIca!d eligibility to all legal residents 

younger than 65 years with individual 

or family Incomes at or below 138% 

of the FPL i, Hence, the ACA not only 

added a large populatIOn of adults 

(ages 19 through 64) who became 

newly eligible for Medicaid but in 

many states. the expansIOn also increased the number of eligible cilildren (through age 18) by mandating 

a higher ml!llmum Income eligibility II 

The ACA directed the federal government to fund Med!cmd expansIOn In 

full through 2016 and then at lower 

but still Significant !evels thereafter 

(tapering to 90% funding by 2020) The 

landmark Supreme Court deCISion 

upheld the constitutionality of the AC/\, 

;Erq,(Jmpa$Slngt~e Patlrnt Protection and Afford· 

able Care Act an:; the amendment law associated 

With th"t ,wt the Hearth Care and fducatlon Rec 

onClllatlon (Pj,:; l No 1 \1 1~2) 

'lhe IICA estabi'sMeo a new national floor:;1 

Me(llcaJdGcverage at 153%oltMe rPlwlth 

a gt~ndard:i% of ,ncome disregard that G[mstl 

tutcljpart ofa SWlpllned modl~ed adjlJstedgl'Oss 

i[lcomeca,culat'ondesignedtoharmonm.'means 

tested ell~lbdlty (Me!iIC8Id disregards tne first fl% 

of one's mcome beforc calculatlnlltMe proportion 

10111e fPU The ACA nacl mandated a ml'll'llllm 

mGome level for MeoiciHd eligibility al ',58% of the 

,?lbegmnmgIn 2014 

WlthlO CHiP 

drenbelow 13R% of the rPLw'lo are notCIJl'ren:ry 

by MedlcJIG or by CHIP 'n 8:Jditlon 

Ln~nown number of chl,dren w,th family Incomes 

beTween 100% and 158%oftre FPl who are C,Jr 

With respect to the contested "10-

dlvldual mandate" for every Amerlcan 

to obtam health IOsurance by a 5 to 

4 margin;' However. the Court also 

struck down as unconstitutIOnal an 

enforcement prOVision of the ACA that 

would have a!lowed the Department of 

Health and Human Services (DHHS) to 

Withhold all federal Medicaid fundlOg 

from states that declined to partiCIpate in Medicaid expanSion By a 7 to 

2 maJority, the Court ruled that thiS 

provISion constituted undue coercIOn 

on states by the federal government; 

10 a remedy, however, the Court upheld the constitutIOnality of the Med" 

Icald expanslOrJ as an mdlvldual state 

option 

1 egal scholars generally agree that the 

narrowly written Court deCISion did 

not invalidate other changes made by 

the ACA to the Medicaid program that 

pertamed to existing populatIOns B 

The constitutIOnality of 3 provISions In 

particular has specl8! Importance for 

the pediatriC populatlOn First Section 

2001 (b) of the ACA Imposes a "mamtenance of effort" (MOE) reqUirement 

that disallows states from restricting 

eligibility or reducing b~neflts for 

current chlid Medicaid beneficiaries 

untt! 2019 Second, SectIOn 2001 (a) (5) 

(b) expanded Medicaid ellg!bliity for 

children under 19 by raiSing the minimum qualifying family Income level to 

138% of tile FPl Third, the ACA required states to Improve outreach to 

and simplify enrollment of any person 

currently eligible for Medicaid." 

Many children now covered by Medicaid 

lose health Insurance as they become 

young adults, so that how states choose 

to respond to the opportunity afforded 

by the ACA to partiCipate In the adult 

Medicaid expansion can have a great 

Impact on many pediatriC patients. It IS 

hkely that additIOnal negotiatmns Will 

ensue In the future between the SGCretary of the federai DHHS and state 

Medicaid agenCies that have initially 
83 


86389.048

signaled reiuctance to pursue full~scale 

Medicaid expansIOn G 

lhls revIsion of the American Academy 

of Pediatrics (AAP) Medicaid Policy 

StatefTIent advocates for the prOVISiOn 

and funding of children's services In 

the Medicaid program and hlgh!lghts 

changes In or new opportunities for 

state advocacy efforts as a result of 

the passage of the ACA and the 2012 

Supreme Court decIsIOn 

The AAP continues to vOice strong 

support for the Medicaid program and 

over the years has offered a contmuIng series of recommendations aimed 

at enhancing care and Improving 

outcomes for children 7 !n partlcuiar, 

the AAP has long advocated Innovative 

approaches to care (such as pediatriC 

medical homes) that aim to achieve 

better health outcomes while reducing costs of care The AAP stands 

ready to support newer population 

health-based programs (eg, Medicaid 

accountable care organizatIOns) that 

seek to attain those same objectives 

AAP members have been mtegral proViders In both regular Medicaid and m 

state-speclnc Medicaid waiver programs and consequently have working 

experience With reform efforts of 

varYing success 

BENEFITS AND MEDICAL HOME 

8eyond a core set of mandated benents, federal gUidelines prOVide states 

With Wide discretion in benent deSign 

The AAP recommends that all state 

Medicaid agenCies 

PrOVide all children at a minimum 

the Early and PeriodiC Screening, 

DiagnOSIs, and Treatment (EPSOn 

benefit and ail other mandatory 

and optional benefits as outlmed 

In the AAP statement "Scope of 

Health Care Benefits for Children 

From Birth Through Age 26."B E.nsure that the medical necessity 

definltlOns used by each state for 

PE:J:ATRICSVc!ume 131 

purposes of Justlfymg medical services covered by Medicaid payment 

are consistent With the EPSDT polICy Furthermore, each state's process for determmmg medical 

necessity should rely on the expertise of pediatriCians, pediatriC 

medical subspeclailsts, and pediatriC surgical speCialists. Ensure that 

In the process of making deCISions 

on the baSIS of medical necessity, 

the medical, behaVIOral health, and 

developmental care needs of the 

child are fully consIdered and that 

appropriate comprehenSive benefits are aVailable to address the full 

range of these needs g 

Develop appropriate benefits that 

address the needs of pregnant women Pregnant women should be 

afforded the full range of maternity 

care (preconceptIOn, prenatal. !abor, delivery, and postpartum) recommended In the GUidelmes for 

Perinatal Care Issued JOintly by the 

American College of ObstetriCians 

and Gynecologists and the American 

Academy of PediatriCS Detail the 

full scope of pediatriC Medicaid 

benefits In COnSumer brochures, 

on Web Sites, and, most Importantly, 

In state plan documents and managed care contracts State agenCIes 

should prOVide a clear compaflSon 

of pediatriC Medicaid benefits and 

networks among managed care plans 

so that families can choose a plan 

that IS most appropriate for the 

needs of thew child(ren) 

2 Provide pharmacy beneAts appropriate for children and broad 

enough to pay for mediCines and 

speCialized nutfitlOnal products reqUired for children With specl3! 

health care needs and for children 

With rare diseases State Medicaid 

Pharmacy and Therapeutics committees should populate and operate a pediatrIC formulary With the 

recognitiOn that less expenSive 

(usually generic) drugs may not 

be as efiectlve as alternative but 

more costly (usually brand name) 

drugs of the same class In all 

patients under all Circumstances 

Pharmacy benefits should acknowl· 

edge that many medications are 

appropriately preSCribed to children In the absence of a pedlatflc 

label mdlcatlon or dosmg mfor· 

mallOn, Optimally, states ShOUld 

mandate that all Medicaid MCOs 

operating In the state adopt the 

same state pediatriC Medicaid for· 

mulary to ensure continuous and 

consistent treatment of patients 

(especially those With speCial health 

care needs or rare diseases) because they often tranSitIOn between 

Medicaid Insurers 

Ensure that all children have timely 

access to appropriate services from 

those qualified pediatriC medical 

subspecmilsts and pedlatnc surgical speCialists who are needed to 

optlm!ze thew health and well-being 

Ensure that Medicaid prOVider networks are suffiCient to guarantee 

that children who tranSition from pedmtnc to adul: care providers do not 

experience disruptIOn m services 

Adopt perIOdiCity schedules as defined In tne AAP gUidelines 10 Imrnurl!7atlon schedules should also be 

consistent With national guidelines 

as periodically reVised by the AdvIsory Committee on Immllfllzation 

Practices of the Centers for DISease Control and Prevention, the 

American Academy of PediatriCS. 

and the American Academy of FamIly PhYSICians 

New or contlnUirg efforts m which the 

AAP and 11s members can partiCipate 

that can result tn enhanced benefits 

for children enrolled in Medicaid 

programs Include the follOWing 

1 Develop and then faCilitate the 

Imp!ementatlon of a workmg pediatric medical home model that 

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84 


86389.049

Incorporates Bright Futures gUideIlnes: 7 and treatment services as 

codified m EPSOT 

Work with Medicaid and prIVate In· 

surance compafJIes to standardize 

parameters for the medical home 

concept '" '4 The wide variatIOn m 

both panel size and family demographics encountered across pediatric practices suggests that a 

variety of models may be needed 

3 Develop and direct a program that 

educates parents. patients, and 

physIcians about the advantages 

of a pediatnc medical home,'" 

Partner with AAP state chapters. 

other pedlatnc health care providers, and families With children 

who are Medicaid beneficiaries to 

mOnitor and recommend Improvements to state Medicaid programs 

and to the Centers for Medicare 

and Medicaid Services (eMS) 

5 Ass!st parents, patients, and physICians to understand the full scope 

of MedIcaid benefits 

FINANCING AND PAYMENT 

Medicaid fee schedules and capltated 

payments to primary care and subspeCialty prOViders are Significantly 

lower than payments for comparable 

services from Medicare and private 

Insurance companies. low Medicaid 

payment IS the primary reason that 

phYSICians limit partiCipation m the 

program With resulting barriers to 

patient access for prtmary care and 

subspecl8tty health care serVices 

Even at academiC medical centers that 

sel've as "safety nets" for uninsured 

or undertnsured patients, reduced access may be reflected by slgmficantly 

longer watt times for subspeCialty 

care??> Hence, the m:tlal mtent of Title 

XIX to prOVide truly equal access to 

quality primary and subspeCialty care 

has not been fulfilled Other documented reasons why prOViders decline or 

iROMTKE A/,;ERICAN ACA)fMY O~ :Jf:.JIATRICS 

limit partiCipation In Medicaid Include 

delayed or unpredictable payments. confUSing or burdensome payment poliCies 

and paperwork, and nonadherence to 

scheduled VISitS '/ 

Although the MOE prOVISion In the ACA 

proscribes states from restrlctmg 

their current MediCaid eligibility rules 

until 2019 for children, states may 

choose Instead to reduce thew expenses by limiting nonmandatory services for adults. trlmmmg payments 

for serVices, revoking any higher 

payments to specrfic groups of phYS1-

Clans, and cutttng hospital payments 

States have vOlced alarm that high 

unemployment rates and increasing 

numbers of families enrolled m MedIcaid wlil critically affect their budgets 

In addition, as the US population ages, 

the growing number of senIOrs who 

become eligible for Medicare will also 

sweil the ranks of senIOrs dually eligible for Medicaid coverage The CMS 

Office of the Actuary has estimated that 

If each state fully Implemented the ACA 

Medicaid expanSion, state Medicaid 

expenditures would more than double 

over the decade from 2009 to 2019, 

from $1323 billIOn to $3133 bliJlOn.c4 

To the extent that any state chooses to 

partiCipate In the ACA Medicaid expanSIOn, It will be Vital that federal 

and state governments not compromise necessary coverage for children 

nor fail to prOVide adequate payment 

for pediatric care In addition, states 

must be cognizant that ACA dlscontmued federal disproportIOnate share 

hospital payments to all states, anticIpating that Medicaid expanSion to 

the adult populatIOn would prOVide 

replacement revenue for safety net 

hospitals. Hence, states that choose 

not to partiCipate in Medicaid expansIOn may rISk the Viability of some 

safety net hospitals 

In 2011, Medicaid payments for evaluatIOn and management services across all states averaged ",64% of the 

Medicare rates and lagged even farther behind payments by private 

insurers 75 The ACA prOVides federal 

fundmg to Medicaid programs and 

state-financed Medicaid managed care 

plans to pay eligible phYSICians at 

Medicare rates for certain evaluatIOn 

and management serVices, preventive 

care, and ImmUniZation admmlstratlon dUring 2013 and 2014 (but not 

subsequently), Includmg well-child 

("checkup") codes (Current Procedural 

Terminology [CPT] codes 99381-99385; 

99391-99395) Payment at thiS level 

should be sustamed beyond 2014 and 

expanded to Include all Medicaid servIces. ThiS will reqUire mtense federal 

and state-specific advocacy 

The AAP proposes Ule followmg recommendatIOns for federal and/or state 

actIOn 

1 Ensure that Medicaid payments to 

prOViders for the goods and servIces Involved in carmg for Children not only pay for the reiated 

work and practice expenses but 

also prOVide a suffiCient return 

to make contlnJed operatIOn of 

a practice or facility economically 

feaSible In a broader context, 

payments should suffiCient to 

enroll enough prOViders and faCilIties SO that as reqUired by federal law, Medicaid patients have 

"equal access" to care and servIces as do nongovernmentally insured patients m that geographiC 

regIOn Failure to prOVide thiS fair 

level of payment wlil lead to contmued early attrttlOn of current 

pedlatnc prOViders as well as 

failure to attract physiCians to 

pursue careers In primary or subspeCialty pediatriC care To achieve 

thiS aim, the AAP recommends the 

follOWing 

a Increase base Med!cald payment rates for all CPT codes, 

Includmg pedJatfic speCific CPT 

codes (eg, well-chile! checkup, 

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85 


86389.050

counseling, and developmental 

assessment), to all providers to 

the 2012 or 2009 regional Medicare fee schedule rate, whichever IS higher, or, In the case 

of preventive services without 

a Medicare payment to a rate 

calculated by applYing Medicare fee schedule methodology to the published values of 

work, practice expense, and 

professional liability Insurance 

relative value units adjusted 

for the geographiC regIOn 

These payment rate prmclples 

should be made permanent 

(ie, extended beyond the 2014 

termination date) With the 

minimum level of payment 

per CPT code established as 

the greater of the 2012 Medicare actual or calculated rate 

or the current year's rate 

Establish a methodology to pro· 

vide additional fair payment to 

a practice that recognizes the 

extra resources that might be 

Invested on behalf of Its MedIcaid patients to promote wel!-

ness (eg, to pay for more 

vigorous outreach to mcrease 

partlclpatJOn rates With wei!-

child checkups) and to provide 

care coordination of infants 

and children With complicated 

physical and/or mental health 

Illnesses (eg, to pay for carc 

coordmators. social workers, 

extended office hours. home 

VISitatIOns, dental care, durable medical equipment, etc) 

At present, fee-for-service payments (even If Increased to 

Medicare rates) and current 

Federally Qualified Health Center payments do not fully pay 

for these extra resources 

c Reward practices that meet or 

exceed AAP-approved predefined quality and performance 

~FDIATRICSV():l:rl'e 131 Number 5. May 20'3 

metrlcs With Incentive payments ~B 

ReqUire Medicaid managed care 

plans to determine payment 

based on the prmclples outlmed 

In (a) and (b) so that pediatriC 

providers and patient-centered 

medical home (PCMH) programs are appropnateiy compensated Similarly, reqUire 

managed care plans to make 

providers eligible for additIOnal incentive payments. as In 

(c), If. for Instance. providers demonstrate Improved outcomes, 

reduction of total Medicaid 

costs, and robust efforts to 

transItIOn children With special health care needs to adult 

care Provide Input to Medicaid 

managed care plans about 

possible deSigns and Implementations of structured incentive programs based on quality 

and performance parameters 

advocated by the MP 

e Explore the feasibility of adJusting fedor-service or capltated 

payments to a provider on the 

baSIS of a rISk-adJustment mechanism that accounts for the extra costs associated With carmg 

for children With chrOniC conditIOns and other key pediatriC diagnoses among the children In 

the provider panel 

Establish a mechanism Within 

state Medicaid agencies and 

Medicaid MeOs for rapid adjustment of fee·for-servlce or 

capltated payments to proViders for recommended new 

vaccines and other new technologies that rapidly achieve 

transiatlOn from clinical trials 

to standard clinical practice 

ReqUire that paperwork In 

support of claims is not unduly 

burdensome and that clean 

claims are paid Within 30 to 

45 days of submiSSion, so that 

practices can meet their cash 

flow obligatIOns 

Oppose the conversIOn of MediCaid finanCing to an annual allotment or block grant programs 

With a fixed budget. Block grant 

proposals typically result In cost 

shifting from federal to state 

budgets and do not reduce overall 

health costs or improve quality of 

care In fact, institutIOn of block 

grants In combination With revocatIOn of the MOE prOVIsion In ACA 

would likely restnct eligibility and 

reduce benefits for children to reo 

suit In the loss of the indlvldua! 

child's guarantee to access MedIcaid services Recently, the concept of usmg "per capita caps" 

to control Medicaid expenditures 

has resurfaced, but ultimately, 

thiS mechanism of fundmg poses 

the same risks for children as do 

block grants 

Work With the AAP to study the 

feaSibility of Implementing pediatriCspeCific accountable care organizations through carefully structured 

demonstration projects ma 

4 Pay primary care phYSICians for behaVioral health services that phYSIcians are qualified and competent 

to prOVide. Eliminate carve-outs for 

behaVioral health coverage 

Mandate that states perform an 

In-depth assessment of the fiscal 

vlabl!tty of any health plan before 

contractmg With that plan to administer a Medicaid program and 

conduct annual audits to vertfy 

contmued fiscal stability of the 

health plan ReqUire states that 

COlltract With MCOs to publish 

their phYSICian payment methodologies and rates for each child eligibility group on an annual basis 

Advocate for federal and state 

agencies to partner With organizatIOns, such as the AAP, to educate 

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86 


86389.051

phYSICians about programmatic 

changes :n Medicaid fee,for-servlce 

or managed care environments (e15, 

pay-far-performance and PCMH programs) PhYSICians should understand the qualrty and cost control 

objectives of new In!tlatlves and the 

Imkage between fully documenting 

ach!Cvement of these goals and payments to phYSICian practices 

Pay for the administration of immUniZations (Including muitlantlgen vaccines) and for counselmg 

uSing the current CPT code set Payments for vaccines should be at 

least 125% of the current Centers 

for Disease Control and Prevention 

private sector pnce list and payment for ImmUnizatIOn administratIOn should be. at mmlmum, 1000/0 

of the Medicare rate for each vaccine administration CPT code 

Ensure, wherever pOSSible, the 

availability of at least 2 financially 

Viable Medicaid MCOs In every 

glOn to allow fOI' patient chOice 

Requests for proposals for organIzatIOns to serve as Medicaid thirdparty admimstrators and the ensuing 

selection process should be fully 

transparent 

Explore innovative methods to establish trust funds to support graduate 

medical educatIOn specrfic to the 

prOVISion of primary and subspeCialty care for Medicaid partiCipants 

that will help maintain a qualified 

pediatriC prcvlder workforce 

10 ReqUire Medicaid to prOVide full 

payment for trained Interpreter 

serVices for patients With limited 

English proficiency ThiS will assist 

In thorough and accurate communication between prOVider and 

participant Increased accuracy of 

diagnOSIs and more appropriate 

treatment plan, and increased partiCipant understanding and adherence to treatment thus avoidmg 

adverse cimical consequences 

FROM THE AMERICA'l 

11 Pay for observatlOnai care, urgent 

care. day medlcme serVices, and 

necessary mterhospilai transport 

serVices, including transport of 

neonates from tertwry or quaternary neonatal or pediatrIC IIltenSlve 

care units to step-down convalescent units 

12 Implement poilcles and procedures 

to ensure eqUitable and prompt 

payment to prOViders and facilities 

for pediatriC services rendered to 

Medicaid patients out of state 

States should work together and 

With the federal government to 

achieve uniform and seamless processes to pay for these services 

13 ReqUire ali payers to report financia! data on an annual baSIS so 

that the medical loss ratIOs (the 

percentage of total funding that IS 

spent on patient care functIOns) 

are clearly delineated and transparent to the pubhc 

14 ReqUire states to develop clear 

and transparent rules and regulatIOns related to ACA prOVISIOns for 

recovery audit contracting processes. Each state must ensure 

that phYSICians who are licensed 

and have practiced In the state 

supervise the work of certified 

profeSSiOnal coders With expertise ifl pediatric primary and subspeCialty care. Key stakeholders, 

Includmg physiCians and the publiC. must have direct mput In the 

process to aVOid flawed statlstlcai 

analYSIS Payment errors due to 

both undercodmg and overcodmg 

should be mcluded in a !lnai rec" 

oncillatlon report A clear and fair 

appeals procedure that IS accomplished m a timely manner must 

be part of the formal recovery 

audit contracting process 

ElIGIBIlITY 

The AAP endorses the ACA-mandated 

expansion of Medicaid eligibility to 

mclude all children who !Ive in families 

With an mcome below 138% of FPl ~ 

The MP recommends that states Implement the follOWing additIOnal measures to faCilitate enrollment of children 

eligible for Medicaid or CHIP benefits 

1 Remove the 5-year waltmg period 

for eligible children and/or pregnant 

women who are lawfuHy resldmg In 

the United States consistent With the 

prOViSions of the CHIP ReauthOrIZatIOn Act (Pub l No 111·3) 

Identify uninsured children who 

are not finanCially eligible for MedIcaid and If pOSSible facilitate enrolling them In CHIP 

Ensure that children who are 

moved by the state mto a foster 

care program are tracked and Immediately enrolled In and covered 

bv Medicaid until age 21 usmg the 

Chafec option ~ In 2014, if chosen 

by the foster child alumna. MediCaid coverage becomes mandatory 

under the ACA until age 26 

4 Ensure that newborn mfants eligible for Medicaid are aSSigned to a 

speCific plan Immediately after birth 

so that timely prOVIsion of services 

In the first few months of life IS not 

Impeded by antICipated difficulties 

In payments of c!alms 

OUTREACH, ENROLLMENT, AND 

RETENTION 

lhe AAP recommends that states 

strengthen their outreach, enrollment, 

and retention efforts to enroll ali eilglbie uninsured children In Medicaid, 

CHIP. or exchange coverage 

"for flscal yea~ 2012. t'le I PL th~sholdg are S~tl 

415forasm6leadultand$31809forafamllyof4 

~nrcsholijs ate 

>A Me:hCilld OptlOIl knowrlastheCh~feeO;IMn, 

al'Jws staiC5 to CXCB~:1 MejlGald te for'1ler fo~ter 

guest on July 5. 2013 
87 


86389.052

Use multiple sites and replicate 

other effective strategies as have 

been Implemented In CHIP to maxImize and maintain enroHment of 

IndiViduals eligible for Medicaid 

Optimize coordinatIOn of Medicaid, 

CHIP, and exchange program 01.+ 

reach through the use of streamlined eligibility determltlatlOn, 

redetermination and enrollment 

processes includmg the use of 

short and easily understood com· 

man application forms, and expanded use of onlltle enrollment 

Once a child IS enrolled, coverage 

should continue for 12 months 

Consider Llsmg the medical home 

to enroll patients and provide a faw 

payment for the administrative expense of thiS procedure 

Adopt practICes that result In a "no 

wrong doors" approach to enrollment All venues for Medicaid, CHIP, 

and exchange program enrol!ment 

should be able to evaluate an applicant's eligibility for any of these 

programs and to process the appropriate application 

Advocate support for federal policies to provide incentives to states 

to If1crease enrollment and retention in Medicaid and to continue 

those incentives for CHIP programs 

MANAGED CARE 

In recent years, fiscal and poliCY conSiderations have et1couraged states to 

contract with MCOs to adrrHnister the 

Medicaid program As of fiscal year 

2009, an estimated 61% of Medicaid 

benefiCiaries 0 through 20 years of age 

were enroiled In a Medicaid health 

maintenance organizatIOn (HMO) 2 The 

AAP recommends that all MCOs should 

adopt a pediatriC medical home model 

for all cl111dren that adequately addresses thetr needs, includmg those 

with special health care needs Network adequacy should be determmed 

P''',\:PI[S Vpl.m" 1~1 5 May 2015 

by perIOdic evnluatlOn of the number of 

Medicaid proViders whose panels are 

open to all new Medicaid patients 13 

The AAP recommends that states adopt 

the followmg minimum set of practices 

and standards m their aDproach to 

Medicaid MCOs 

1 Ensure that MCOs (these may be 

either HMOs or provider·sponsored 

networks) proVide educational rna· 

terlals to families that are culturally 

effective and wntten at literacy 

levels and if! languages used by 

MediCaid reCIpients The use of 

audiOVisual aids should be encouraged 

PrOVide appropriate written, oraL 

and Web· based information and 

counseling to Medicaid eligible 

patients that allow Informed patient chOice of MCQ·based network options for pnmary care 

phYSICians, pediatriC medical subsp€CIallsts and pedlatnc surgical 

speCialists, and pediatriC hospital 

and anCillary services 

ASSign Medicaid partiCipants to 

an MeO that allows retention of 

the patient's medical home 

Recognize that pediatriCians are 

primary care phYSiCians who are 

eliglbie for pediatriC patient assignment m all default enrollment 

systems 

5 Ensure that the prOVider network 

of all Medicaid MeOs contams the 

followmg components 

a SuffiCient numbers of proViders 

trmned In primary care and 

subspeCialty pedl8trlcs, as weI! 

as pediatriC surgical specialists 

SuffiCient numbers of phYSICians 

and other licensed prOViders of 

oral health, menta! health, developmental, behaVioral, and 

substance·abuse services so that 

medically necessary services 

are accesslble Within a reasonable length of time 

c When pOSSible, a mmlmum of 1 

hospital that speclailzes m the 

care of children 

Vendors of durable medical 

eqUipment and home health 

care agencies that have expertel1ce carlllg for children, espeCially those With speCial healt.h 

care needs 

License an MeO as a pediatriC 

Medicaid prOVider only If ItS comprehenSive pediatriC network can 

prOVide children With quality care 

across the full continuum of care 

and hold that Mea accountable 

7 For Medicaid programs to be responsive to the needs of both 

patients and prOViders, It IS essential that the programs be subject 

to either competitIOn among at 

least 2 and when pOSSible 3 MeOs 

in a region or to regulation that IS 

regularly updated to reflect continUing mput from patients and 

prOViders PrOVider service networks (rwHor·profit organizatIOns 

created and governed by proViders) should be evaluated and 

approved on a level playmg field 

With HMOs 

ReqUire that Medicaid administrative processes such as site VISits 

and audits are Simplified to mmi· 

mlze the bJrden for prOViders 

and office staft Resu!ts of these 

processes should be available as 

a report card and transparent to 

prospective Medicaid enrollees 

9 Implement dedicated piannmg and 

overSight when MeOs contract for 

care delivery to children With speCial health care needs (mciudmg 

children With complex and/or rare 

diseases, children with behaVIOral! 

mental health conditions, and foster care ch!ldren) 

10 Establish an At! Payer Claims Database and reqUire MeOs to particIpate fully in reportmg encounter 

D()\\nloaded (fIlil1 p.:di;ltric:-.:l:lppuhli':illi\ln~.(1r1! by gue~l on Jul) 5.2013 
88 


86389.053

data. This would allow health polICy analysts and researchers In 

government, academia, and the 

private sector to examme regional 

patterns of utlitzatlon, access to 

care, and quality of care and inform efforts to construct "best 

practice" models of care 

QUALITY IMPROVEMENT AND 

PROGRAM INTEGRITY 

The AAP recommends that, DS appro" 

priate, CMS and the AAP, or state MedIcaid agencies and state AAP chapters, 

should work collaboratlvely to develop 

and/or enhance qualltY"lmprovement 

activities that can benefit all children 

eMS should encourage collaboratiOn among the Agency for Healthcare Research and Quality, the 

Natwna! Committee for Quality Assurance, the National Quality Forum, 

the MP, and the CHIP ReauthorIZatIOn Act PediatriC Healthcare Quality 

Measures Centers of Excellence 

These organizations can evaluate 

current quality and performance 

measures with a goal of recommending modifications or achlevlflg 

consensus around new measures 

that pertam to pedlatl'lc patients, In· 

cludmg children With speclai health 

care needs These measures should 

align With the recommendatIOns 

outlined In the AAP policy statement 

"Pnnciples for the Development and 

Use of Quality Measures "26 

States should reqUire health plans 

to use the core set of pediatriC 

quality Improvement measures that 

were created as part of the CHIP 

ReauthOrIZation Act These measures quantitate access to care, uti" 

lizatlOn of services, effectiveness of 

care, patlBllt outcomes, and satlsfac· 

tlon of both patients and prOViders 

refated to preventive, pnmary, acute, 

and chromc care for children States 

should develop mechanisms for 

publiC reporting of these measures 

!'ROM THF AMfRICA~ 

that allow Medicaid benefiCiaries 

to compare outcomes among 

MCOs. Consistent With federai statute, states should reqwre that all 

Medicaid pl'ograms prOVide access 

to quality primary and subspecialty 

pediatriC care that IS equal to that 

achieved through private payers 

("equal access" mandate) 

3 At a minimum. states should estab" 

Iish Medicaid Advisory Committees 

whose membership mcludes pedl8tflC primary care and subspecla!ty 

providers These committees can 

adVise state Medicaid agencies on 

Issues related to the IdentificatIOn, 

ImplementatIOn, and evaluation of 

quality measures and Improvement 

programs as well as Issues related 

to eligibility. enrollment. formulary, 

network adequacy, access, and medIcal necessity To achieve maXimal 

benefit, each state Medicaid agcllcy 

should employ a phYSiCian With pedlatnc expertise who can continuously assist the agency With these 

Issues as they relate to pediatriCS 

4 Federal and state agencies should 

work With the AAP to develOp tools 

and measures to monitor potential 

changes m the quality of ped!atnc 

care and the outcomes of the pediatriC population These tools and 

measures wlil be helpful In evalu" 

atmg the effect of PCMHs and the 

Impacl of reform on children WIth 

speCial health care needs 

States should assume central responSibility for key administrative 

procedures that pertam to all MedIcaid prOViders These procedures 

could Include meaningful prOVider 

assessment educatIOn leg, fraud 

and abuse tralnmg), and credentlalmg actiVities that would apply 

for all payers Within the Medicaid 

or CHIP programs 

States should rf:port results of 

peer review and reviews of medica! records In a timely manner to 

prOViders, plans, and benefiCiaries 

consistent With applicable federal 

and state laws related to confidentiality, peer revl8w priVilege, and 

care review privilege 

States should monitor enrollment 

patterns and develop prospective 

means to assess reasons for 

changes In enrollment to ensure 

that MCOs do not encourage chl!-

dren With a high level of need to 

SWitch to Other p:ans 

Stales should prOVide timely, meanmgful, lingUistically and culturally 

appropriate summaries of quality 

and performance measure and programs to benefiClanes to guide their 

chOice of Medicaid plan 

CONCLUSIONS 

By 2019, if Hie ACA Medicaid expansion 

were to be Implemented by ali states, 

16 millIOn addltlOnalllldlvlduals would 

gain It1surance coverage through 

Medicaid and CHIP Regardless of state 

variations in partiCipatIOn In the ACA 

Medicaid expanSiOn, Medicaid Will remaIO as the largest slllgie Insurer of 

chlidren. 30 AddltlOnai legal proceedIngs and federal/state negotl8tlons 

may clarify how DHHS Will Implement 

Medicaid expanswn In the new adult 

population. In the meantime, the AAP 

supports state chapter advocacy efforts to expand Med:cald to the newly 

ellglb!e populatIOn Although AAP chapters might not take the lead In advo" 

cacy, they can prOVide pediatriC 

expertise to coailtlon efforts and highlight the POSitive effects expanswn Will 

have on young adults 

To date, governmental health poliCY on 

both state and federal levels has not 

adequately met the medical, behaVioral, 

and developmental needs of children 

The ACA has provided a framework to 

redress some of these defiCienCies The 

MP, through its network of chapters, 

sections, committees, councils, and 

staff and 111 partnership With other 

guest on Ju!~ 5.2013 
89 


86389.054

allied organlzatlOns, can collaborate ability to provide the quality of care to 

with both federal and state agencies WhiCh we aspire 

to monitor Implementation of those 

aspects of the ACA that promise to 

enhance the care and outcomes of 

children and young adults and perhaps If'S Grace Srlder IVa 

suggest refinements for future regulatIOns Success In these endeavors wil! 

not only enhance the health and wellbeing of the children for whom ped!atriclans care but also will enrich our 

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Grace Snider, MD 

Piltle'lCC Haydock White, MD, ~!A 

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20Q2,11012 pt l)n9-248 

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med,cald re!mbUfsement on the access to 

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perspectlv(~ Med Care Res Rev 2005,62(61 

676-696 

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the oJallty ofr."'eCical of ",jedlcald 

patients 111 the USA Rev Econ Hausen 

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22 AAP Survey Of Pedlatnclan Par~:cip3tlon 

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23 BlsgawrJ. Pol.gky D, Rrodes KV At;! 

demlC med'cal centers 3'ld eqUity Ifl 

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25 t-,Ie:hodo'ogy ard DocumentatlOn_ Extllbit 1 

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90 


86389.055

;:J~o'es~l~n<l1 resOJrces/pracllce support/ 27 Am80'car Academy of Pealatr'cs Accountable 

pediatric-cos: mooeilPagBsIPeo1atric Cost Care (l~ganllall:1nS (AGOs) and Peolatrlc'ang 

Modelas;Jx [va!uaton [nga~emcnt MPNews 

76 rodgson[S, SlmpSOI1L.La'1nor CM.Amcricilr> 32(]) 189-193 

AC30wny of PediatriCS S~ee~lng Gomm'~re 1m 28 McCIella1 M, McKelliar Al\.lewis Jl, flaskl J, 

Quail:), improvement ana ManagemefJt, tS18f ES A ratlona! s:rdtegy ~o p:;t 

American Academy of PediatriCs Cornm:l~ee cou'll~ble care ,rto Health Alr 

on Practice and Ambu'a:ory Ml'DICll1e (Millwood) 201029(5) 982- 990 

clpiesfol'll'edevelop"1e'ltanduseofoJahty 28 ~ Kaiser Fam'ly h)undatlOfl, Commeasures PedlGtrlc$. 2008,121(2)411-418 ~ISSion on lJedlcaJd and Unmsured 

10 fRmJTWEAMtRICAN 

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g:uc's\on JU1) 5.2013 
91 


86389.056

Medicaid Policy Statement 

COMMITTEE ON CHILD HEALTH FINANCING 

Pediatrics; originally published online Aprill, 2013; 

Updated Information & 

Services 

including high resolution figures, can be found at: 

http://pediatrics.aappublications.org/content/early 12013/03/27 

Ipeds.20 13-0419 

Citations This article has been cited by 1 High Wire-hosted articles: 

http://pediatrics:aappublications.org/contentiearly/2013/03/27 

Ipeds.20 13-0419#related-urls 

Permissions & Licensing Infonnation about reproducing this article in parts (figures, 

tables) or in its entirety can be found online at: 

http://pediatrics.aappublications.org/siteimisc/Pennissions.xh 

tml 

Reprints Infonnation about ordering reprints can be found online: 

http://pediatrics.aappublications.org/siteimisc/reprints.xhtmI 

PEDIATRICS is the officiaJjournaJ of the American Academy of Pediatrics. A monthly 

publication, it has been published continuously since 1948. PEDIATRICS is owned, published, 

and trademarked by the American Academy of Pediatrics, 141 Northwest Point Boulevard, Elk 

Grove Village, Illinois, 60007. Copyright © 2013 by the American Academy of Pediatrics. All 

rights reserved. Print ISSN: 0031-4005. Online ISSN: 1098-4275. 

American Academy of Pediatrics DED1CATED TO THE HEALTH OF Al.l. CHll.DREN' 

Downloaded from pediatrics.aappublications.org by guest on July 5, 2013 
92 


86389.057

FRED UPTON, M!CHIGAN 

CHAIRMAN 

ONE HUNDRED THIRTEENTH CONGRESS 

HENRY A. WAXMAN. CALIFORNIA 

RANKING MEMflER 

(:ongn5'5' of tbe Wntteb ~tate5' 

~ou!ile of l\fpt'e~eltti!tiiJeg' 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RA VBURN HOUSE OfFICE BUILDlNG 

WASHINGTON, DC 20515-6115 

Ms. Nina Owcharenko 

Director 

Center for Health Policy Studies 

The Heritage Foundation 

214 Massachusetts Avenue, N.E. 

Washington, D.C. 20002 

Dear Ms. Owcharenko: 

July 29, 2013 

Thank you for appearing before the Subcommittee on Health on Monday, July 8, 2013, to testify 

at the hearing entitled "Making Medicaid Work for the Most Vulnerable," 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days 10 pennit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should bc as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Monday, Augus! 12,2013. Your responses should be mailed to Sydne Harwick, Legisl.tive 

Clerk, C<>mmittee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 

20515 and e·mailed in Word fonnat to Svdne.Harwick@mail.house.gov. 

Thank you again for youI' time and enon preparing and delivering testimony before the 

Subcommittee. 

Sincerely, I;. ?~ 

co: The Honorable Frank Pallone, Jr., Ranking Membcr, Subcommittee on Health 

Attachment 
93 


86389.058

Questions for the Record Responses 

Ms. Nina Owcharenko, The Heritage Foundation 

The best solution to encourage provider buy-in is to fundamentally refonn Medicaid by 

moving towards a defined contribution model where the government sets contribution 

level which could vary by category of eligibility and allows physicians to negotiate with 

the private insurers for participation. 

Federal taxpayers are responsible for funding the increased reimbursement rates included under 

the ACA. After 2015, when the additional federal funding ends, state would choose whether or 

not to maintain the higher payment levels. At the time of enactment, the Congressional Budget 

Office estimated the federal payments would be $8.3 billion between 2010-2019 while the Center 

for Medicare and Medicaid Services estimated the cost at $11 billion between 2010·2019. Of 

course if states were to maintain the higher payment level, states would have to budget for that 

increase. With delays in implementation, the impact of the provision is still unknown. 
94 


86389.059

Questions for the Record Responses 

Ms. Nina Owcharenko, The Heritage Foundation 

Diversity of plan option would be a good idea especially in light of the diversity in 

Medicaid beneficiaries - children, pregnant women, the disabled, low income elderly, 

and in some cases also parents and childless adults. Moreover, it would allow plans to 

tailor benefit packages to better meet the unique needs and manage the care for enrollees. 

Determining an exact figure of people who are Medicaid eligible but not enrolled is 

difficult. One study suggests that there are 4.5 million uninsured adults who Medicaid 

eligible but not enrolled (Kenney, et ai, 2012) and another study found an estimated 5 

million uninsured children are Medicaid or CHIP eligible but not enrolled (Kenney, et ai, 

2010). 

The priority should be to focus on improving the care for those currently enrolled in 

Medicaid before seeking out eligible-but-not-enrolled individuals and certainly before 

expanding eligibility to new groups. 

Physician participation in Medicaid has long been a challenge for the program. A recent 

study found that 113 physicians were not accepting new Medicaid patients and it is 

unclear whether the temporary boost in federal funding for primary care physicians in the 

ACA will change this trend. The increase in individuals dependent on Medicaid as well 

as the increase in the number of newly insured individuals as a result ofthe ACA may 

likely increase the demand for physician services. 

States have existing authority to experiment, but some experimentation needs federal waiver 

approval and the process for obtaining a waiver can be laborious. While I am familiar with the 
95 


86389.060

Questions for the Record Responses 

Ms. Nina Owcharenko, The Heritage Foundation 

Florida waiver and the basic parameters of the waiver process, I have not followed the waiver 

process for specific states. 

The recent Oregon Medicaid study offers new insight into the impact of Medicaid on 

patients. Heritage analysis by Kevin Dayaratna has also documented the quality of care 

issue facing Medicaid as does a March 20 II opinion piece in The Wall Street Journal by 

Scott Gottlieb, MD. 

Current beneficiaries face an outdated, one-size-fits-all program that is unable to meet the unique 

needs of enrollees. To help beneficiaries transition off Medicaid, there should be additional 

flexibility to adapt Medicaid benefit packages to more closely reflect private insurance, to allow 

more tailor benefits based on need and ability, and to better integrate private insurance options 

into Medicaid. 

"""V ""nu""" l\IIredic:Uj:U~:Mficillrry.is ;1lialls ,that is taken from our 1lJj)$1 

'm millioo OOW tmd 1 in 4 

While some efforts are being pursued to ensure better eligibility verification, I 

have some concern with policies to streamline eligibility requirements within 

Medicaid. Such efforts may potentially save money, but may not be focused on 

vigorous verification. 

The delay of the employer mandate is yet another indication that the 

Administration is not ready for implementation. The challenges facing this new 

system go beyond employer reporting requirements which will likely result in 

people being improperly enrolled, rejected and displaced throughout the whole 

ACA coverage network. 
96 


86389.061

FRED UPTON, MICHIGAN 

CHAIRMAN 

Mr,Alan Weil 

Executive Director 

ONE HUNDREDTHtRTEENTH CONGRESS 

HENRY A. WAXMAN, CAUFORNIA 

RANKING MEMBER 

(!ougre9'9' of tue ilnittb $tatt9' 

~j)U£lt of i'\tpU1iCntlltil.lt1i 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BllH DING 

WASHINGTON, DC 20515-6115 

July 29. 2013 

National Academy for State Health Policy 

1233201h Street, N.W .• Suite 303 

Washington, D.C. 20036 

Dear Mr. Weil: 

Thank you for appearing before the Subcommittee on Health on Monday, July 8, 2013, to testify 

at the hearing entitled "Making Medicaid Work for the Most Vulnerable." 

During the hearing, Members asked you to provide additional information for the record, and 

those requests are attached. The format of your responses to these questions should be as follows: (I) the 

name of the Member whose question you are addressing, (2) the complete text aftlle question you are 

addressing in bold, and (3) your answer to that question in plain text. 

To facilitate the printing oftbe hearing record, plcase respond to these questions by the close of 

business on Monday, August 12.2013. Your responses should be mailed to Sydne Harwick, Legislative 

Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 

20515 and e-mailed in Word format to Svdne.Harwiek@mllil.house.gov. 

Thank you again for your time and effort preparing and delivering testimony berol'" the 

Subcommittee. 

Sincerely, ? ?J:t::, 

ce: The Honorable Frank Pallone, Jr., Ranking Member, Subcommittee on Health 

Attachment 
97 


86389.062

BOARD OF DIRECTORS 

Chair 

Margarita Alegria, PhD 

Cambridge Health Alliance 

Vice Chair 

Susan Reinhard, RN, PhD 

AARP Public Policy Institute 

Secretary 

John Morrison, JD 

Morrison. MotI & Sherwood 

Tretlsurer 

Mary Kennedy 

Association for Community 

Affiliated Plans 

Kristen Grimm 

Spitfire Strategies 

Angela Monson, MPA 

Oklahoma University 

Health Science Center 

Marcia Nielsen, PhD, MPH 

Patient Centered Primary Care 

Collaborative 

President 

Alan Wei!, JD, MPP 

Center for Health Policy 

Development 

August 12, 20 l3 

Ms. Sydne Harwick 

Legislative Clerk 

Committee on Energy and Commerce 

2125 Rayburn House Office Building 

Washington, D.C. 20515 

Dear Ms. Harwick: 

As a follow-up to the July 8

th hearing entitled 'Making Medicaid Work for the 

Most Vulnerable', please find an attached response to Congressman Michael 

Burgess's question regarding the Center for Medicare and Medicaid Innovation 

and the use of multi-payer systems. 

Sincerely, 

Alan Weil, JD, MPP 

President 

10 Free Street, 2"" Floor 11233 20" Street, NW, Suite 303 

Portland, ME 04101 Washington, DC 20036 

Phone [207] 874-6524 Phone [202]903-0101 

Fax [207]874-6527 Fax [202]903-2790 

info@nashp.org 

www.nashp.org 
98 


86389.063

Attachment- Response to The Honorable Michael Burgess 

The Honorable Michael Burgess 

During the hearing, you mentioned the Center for Medicare and Medicaid 

Innovation and the use of multi-payer systems. Would you provide a 

reference for that? What was the data that CMMI used to make that 

determination and how much money was forwarded in those grants? 

Information on the Centers for Medicare and Medicaid Innovation State 

Innovation Models (SIM) initiative can be found at: 

http://www.cms.gov/apps/mediaipress/factsheet.asp?Counter=4546&intNumPerPa 

ge= I O&checkDate=&checkKey=&srchType= 1 &numDays=3500&srchOpt=0&src 

hData=&keywordType=All&chkNewsType=6&intPage=&show All=&p Year=&ye 

ar=&desc=&cboOrder=date 

According to information available on the CMMI website, the SIM initiative will 

provide nearly $300 million to 26 awardee states to "support the developm~nt and 

testing of state-based models for mUlti-payer payment and health care delivery 

system transformation with the aim of improving health system performance for 

residents of participating states." The majority ($250 million) ofthis funding will 

be provided to the six 'Model Testing' states (Arkansas, Maine, Massachusetts, 

Minnesota, Oregon, and Vermont) to implement State Health Care Innovation 

Plans over a 42-month span. 

The SIM awards were made competitively based upon applications submitted by 

the states. 

10 Free Street, 2nd Floor 1233 20'" Street, NW, Suite 303 

Portland, ME 04101 Washington, DC 20036 

Phone [207]874-6524 Phone [202]903-0101 

Fax [2071874-6527 Fax [2021903-2790 

info@nashp.org 

www.nashp.org 
99 


86389.064

FRED M1CH1GAN 

CHAlRMAN 

ONE HUNDRED THIRTEENTH CONGRESS 

HENRY A, WAXMAN, CALIFORNIA 

RANKING MEMBER 

{lCongre55 of tbe 'ijJiniteb ~tatt5 

~(lIIll't: (If 1\epreli'clttlltibcll' 

COMMITIEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFle" BUIUlING 

WASHINGTQN, DC 20515-6115 

Mr, Tarren Brngdon 

Chief Executive Officer 

Foundation for Government Accountability 

15275 Collier Boulevard, Suite 201·279 

Naples, FL 34 I 19 

Dear Mr, Brngdon: 

July 29, 2013 

Thank you for appearing before the Subeommittee on Health on Monday, lilly 8, 20 I 3, to testify 

at the hearing entitled "Making Medicaid Work for the Most Vulnerable:' 

Pursuant to the Rules ,,[the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The fomtat of your responses 10 these questions should be as follows: (I) the name oflhe 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To racilitate the printing of the hearing record, please respond to these questions by the close of 

business on Monday, August 12,2013. Your I';sponses should be mailed to Sydne Harwick, Legislative 

Clerk. Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 

20515 and c-mailed in Word format to Sydne.Harwick@man.bousc.gov. 

Thank you again for your time and effort preparing and de !ivering testimony before the 

Subcommittee. 

SinCerelY? ?ic 

co: The Honorable Frank Pallone, Jr., Ranking Member, Subcommittee on Health 

Attachment 
100 


86389.065

Attachment-Additional Questions for the Record 

The Honorable Michael Burgess 

L You have been involved in analyzing Florida's 1\1edieaid Reform pilot over the past five 

years. A signature component of Florida's Medicaid pilot is the opportunity for Medicaid 

beneficiaries to have a choice of managed care plans. How has this increased level of 

choice affected patient health and outcomes? How did this consumer-driven approach to 

Medicaid affeet patient !!ccess to providers? 

2. Low provider reimbursement rates in many states have led many providers to cease 

caring for Medicaid patients. How does the program address provider reimbursement 

nIles and maintain provider buy-in to the Medicaid program? How can the federal 

govel1unent ensure provider rates are set at levels that encourage provider buy-in 

3. The Florida Medicaid reform plan was predicated on patient choice of health plans. 

HOV>'evcr, recently wc've seen plans, like Aetna and United Healthcare, decline to ofjbr 

covcrage in the individual and small group markets in California. How did the Florida 

Medicaid program ensure there were II sufficient number of plans to offer beneficiaries' 

choice in plans? How would ynu ensure an adequate number of plans in rural regions? 

4. In a 2011 paper you published tor Heritage, you state that if "Florida's Reform Pilot were 

replicated natiomvide ... Medicaid programs could save up to $29 billion annually". Do 

you believe Florida's plan could be replicated and effective in all 50 states? What can 

other states learn from Florida's Medicaid plan? 

The Honorable Gus Bilirakis 

I. The current funding formula for Medicaid appears to create an incentive to hurt thc most 

vulnerable of our population. Currently, Medicaid covers traditional populations such as 

the elderly, the disabled, and children while only paying 57% of the costs on average. But 

\IDder expanded Medicaid in the ACA, new able-bodied childless adults are eligible with 

the federal government paying 100% ofthc bill in the first tew years and later 90% onhe 

cost. Does this not create a perversc incentive to target a healthier population rather than 

the truly needy? 

2. Under current law, the system seems to bc rigged to maintain the status quo. If a statc 

tries to reform their system to increase outcomes and reduce cost, they typically don't see 

most of the savings. How can we translorm the system to incentivize slates and allow 

them to a greater share of the savings? 

3. Some states have attached a work requirement as part of their Medicaid program. Will 

you elaborate on this requirement, how does it work, and how has it affected thc state's 

Medicaid program? 

4. In a recent hearing on Medicare benefit redesign, I asked the panel would it be 

worthwhile to have the government set an aetuarial value and allow for multiple 

Medieare plans in the marketplace. With Medicaid, at least ill Florida, we seem to have 

taken steps to do that. Consumers may have 31 different benefit packages to choose 
101 


86389.066

among, that may be more options than consumers have in the Health Exchanges. Is it a 

good idea to provide diversity of plan options to Medicaid bencl1ciaries? 

5. Before Florida created a state-wide managed Medicaid plan, it created a smaller 

demonstration program. Will you tell us what lessons were learned in the demonstration 

plan? How docs it serve as a model for the state? What were the patient outcomes in the 

demonstration? 

6. The Administration seems focused on expanding Medicaid. How many people are 

Medicaid eligible aud are not enrolled? Shouldn't we be focused ou getting care to those 

groups before we focus on expanding Medicaid? Additionally, this expansion of patients 

will increase the patient load on the Medicaid system. Has there been an influx in doctors 

taking Medicaid? What will this patient surge do to the system? 

7. How much has this administration embraced experiments in Medicaid? Florida recently 

received their waiver to roll out a statewide competitive managed care plan, but it took 

almost two years to obtain the waivcr. What has bcen the experience of other states who 

applied for waivers, how was it interacting with CMS during the process, and how long 

did it take for CMS to approve the waiver? 

8. TIle recent Oregon Medicaid study published in the New England Journal of Medicine 

seemed to show that individuals on Medicaid did not have better health outcomes than 

individuals without health insurance. Have you seen the study and what lessons should 

wc takc from it? 

9. What reforms are nceded to help beneficiaries transition off of Medicaid and into private 

insurance? 'W'llat are the challenges that beneficiaries face? 

The Honorable Renee Ellmers 

1, I an) concerned by the high rates of improper payment rates associated ",;t11 eligibility 

errors in Medicaid, which over the 20 I 0-20 12 period averaged $20 billion armually 

according to CMS. Every dollar that is spent in error on someone that could potentially 

not be a truly eligible Medicaid beneficiary, is a dollar that is taken from our most 

vulnerable citizens. With Medicaid enrollment at over 70 million now and 1 in 4 

Americans expected 10 become a Medicaid beneficiary as a result or the ACA, do you 

beJieve there arc measures in place to ensure propcr eligibility verification? 

2. What impact do you think the delay of the employer mandate reporting requirements 

might have on the number of individuals improperly enrolled in Medicaid? 

2 
102 


86389.067

FOUNDATION FOR 

GOVERNMENT 

ACCOUNTABILITY 

15275 Collier Blvd., Suite 201-279 

Naples, Florida 34119 

239.244.8808 

www.FloridaFGA.org 

United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Health 

Making Medicaid Work for the Most Vulnerable 

July 8, 2013 

Tarren Bragdon 

President and Chief Executive Officer 

Foundation for Government Accountability 
103 


86389.068

I am Tarren Bragdon and serve as the President and CEO of the Foundation for Government 

Accountability. The Foundation is a free-market think tank specializing in health and welfare 

policy solutions and is based in Naples, Florida. Thank you for the opportunity to testifY on this 

critical issue. 

Medicaid currently represents the single largest and fastest growing line item of state budgets.! 

Medicaid spending already represents one-fourth of the federal deficit and federal Medicaid 

spending is expected to more than double during the next decade.2 This spending growth is 

nearly twice as fast as the expected growth in the economy.3 

But more importantly, Medicaid is failing patients by keeping too many people poor and sick, 

and robbing them of the hope of a better life. States are currently debating whether or not to 

expand this broken Old Medicaid program, but that should not be the priority. The priority for 

states should be to make Medicaid finally work best for patients and taxpayers. 

Some states are leading the way. Here are a few strategies that are working well for patients, 

providers, policymakers and taxpayers: 

1. Empowering Medicaid patients with meaningful choices. States such as Florida, Kansas 

and Louisiana have empowered Medicaid patients to choose the health plans that work best for 

them. In Florida, for example, patients can choose from up to 13 different health plans offering 

31 different and customized benefit packages.4 

When given meaningful choices and adequate, objective information, Medicaid patients take 

more control over their health. In Florida's Reform Pilot and in Louisiana's Bayou Health, for 

example, independent choice counselors assist Medicaid patients in navigating the plan selection 

process, providing neutral comparisons based on patients' specific needs and concerns.5-6 

As a result, between 70 percent and 80 percent of patients in Florida's Reform Pilot actively 

choose their health plan, compared to the 20 percent to 30 percent who let the state automatically 

1 Brian Sigritz, "State expenditure report: Examining fiscal 2010-2012 state spending," National Association of 

State Budget Officers (2012), http://www.nasbo.orgisites/defaultJfiles/State%20Expenditure%20Report_l.pdf. 

2 Christina Hawley Anthony et aI., "The budget and economic outlook: Fiscal year 2013 to 2023," Congressional 

Budget Office (2013), http://www.cbo.gov/sitesldefaultlfileslcbofiles/attachmentsl43907-BudgetOutlook.pdf. 

'Ibid. 

4 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comimedicaidimedicaidJeformlpdfIFL_1115 _ YR _ 6 Jinal_ Annual_Report _ 07-01-11_06-30-

12.pdf. 

5 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comimedicaidimedicaidJeformlpdllFl_1115yr _ 6 _Final_annual Jeport_ 07-01-11_06-30-

12.pdf. 

6 Medical Vendor Administration, "Request for proposals: Enrollment broker for Louisiana Medicaid coordinated 

care networks, RFP # 305PUR-DHHRFP," Louisiana Department of Health and Hospitals (2011), 

http://new.dhh.1ouisiana.gov/assets/docslMaking_Medicaid_BetterlRequestsforProposalsienrollbrokerlEB_RFP JI 

NAL.pdf. 

Page 2 of 11 
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assign them to a plan.7 In Louisiana, approximately 70 percent of new Medicaid patients actively 

choose their health plan.8 Choice counseling programs ensure patients are empowered not only 

with the ability to choose, but with the knowledge necessary to choose wisely. 

This active participation and plan selection illustrates that, when given the power to choose and 

the information necessary to make an educated decision, patients want to take more 

responsibility over their health future. In Kansas, for example, American Indians were allowed to 

opt out of the reforms that offered them a choice of multiple private plans and instead remain in 

traditional Old Medicaid. But since the reforms launched in January 2013, just 12 American 

Indians chose to opt out of the reforms and return to Old Medicaid.9 

The competition among plans has resulted in those plans constantly striving to innovate, improve 

customer service and maximize the offered benefits and rewards. Costs for these reformed 

benefit packages have been substantially below spending for similar populations statewide.lO 

Florida expects to save nearly $1 billion annually when the reforms are phased in statewide. 1 I 

This example highlights how states are able to deliver more choices to Medicaid patients and still 

save precious taxpayer dollars. 

These customized benefit packages are not only delivering greater choice, they are delivering 

better results as well. The plans offered in Florida's Reform Pilot outrerformed the traditional 

Old Medicaid program on 22 of 33 widely-tracked health outcomes. 1 Better yet, 94 percent of 

the Reform Pilot's regularly-tracked health performance measures have improved since 2008.13 

Implementing a robust Medicaid marketplace, where patients choose the health plan that works 

best for them, has increased access to needed care, improved health outcomes, provided patients 

with greater satisfaction with the quality of the care and service they receive, and lowered costs 

for taxpayers. 

7 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidimedicaidJeformlpdflFl_1115y_ 6 ]inaLannualJeport _07-01-11_06-30-

12.pdf. 

8 Between January 2013 and May 2013, approximately 56,000 of the 82,000 newly eligible Bayou Health patients 

made pro-active choices about which health plan in which to enroll. See, e.g., Maximus, "New enrollment by 

Medicaid eligibility group and health plan," Louisiana Department of Health and Hospitals (2013), 

http://dhh.louisiana.gov/index.cfinlpage/1391. 

9 Division of Health Care Finance, "Quarterly report to CMS regarding operation of IllS waiver demonstration 

program: Quarter ending March 31, 2013," Kansas Department of Health and Environment (2013), 

http://www.kancare.ks.gov/reportslKanCare_Quarterly_Report_QE_3_31_13.pdf. 

10 Tarren Bragdon, "Florida's Medicaid reform shows the way to improve health, increase satisfaction and control 

costs," Heritage Foundation (2011), http://www.medicaidcure.orglwp-contentiuploads/2012/09IMedicaid-CureFloridas-Medicaid-Reform-Pilot.pdf. 

!I Ibid. 

12 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 7, 2nd quarter progress report," 

Florida Agency for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidimedicaidJeformlpdfIFU 115_ Q2y_7 Jeport_l0-1-2012 _12-31-

2012_final.pdf. 

13 Ibid. 

Page 3 of)) 
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86389.070

2. Integrating work with health outcomes. Kansas has created two unique employmentfocused pilot programs that integrate work with health outcomes for individuals with 

developmental disabilities. The first pilot, which covers individuals receiving SSI who are on the 

waiting list to receive home and community-based services, provides assistance with obtaining 

employment and provides up to $1,500 per person per month in employment support services.14 

The second pilot focuses on youth and those who would likely meet the criteria for Social 

Security Disability but are not yet receiving it. These individuals receive employment assistance 

focused on jobs with employer-sponsored health coverage and receive wrap-around Medicaid 

services once enrolled in a work-related health plan. IS 

By integrating employment into Medicaid, KanCare can help these individuals gain opportunities 

to maintain and improve their skills, helping lead to long-term employment and productivity. 

Given the strong association between employment and better health, integrating employment 

services also helps to avoid the culture of poverty, poor health and social isolation stemming 

from lack of employment.16 

3. Innovation through private plans. States have also been able to harness, through contracted 

private plans, innovations which improve quality and reduce costs. By allowing health plans to 

offer customized and extra benefit packages, states can provide patients with benefits not 

typically covered by the traditional Old Medicaid program, but which have profound effects on 

health outcomes. In 2012, plan providers in Florida's Reform Pilot offered 31 different benefit 

packages, with coverage for over-the-counter drugs, vision, preventive dental coverage, nutrition 

therapy and respite care included among the value-added extra benefits. 17 In Kansas, individuals 

can choose plans that offer additional dental benefits, smoking cessation programs, GED 

programs, Weight Watchers membership and Boys and Girls Clubs membership, among other 

benefits.18 Customized and enhanced benefit packages ensure that health plans are able to 

compete on value by tailoring their benefits to best meet the needs and desires of their patients. 

This customization is most evident for patients with very complicated health challenges. In 

Florida's Reform Pilot, for example, these patients are offered specialty plans tailored to their 

unique needs. This includes plans developed specifically for medically fragile children and plans 

customized to best manage HIV / AIDS. 19 Kansas offers programs that are specifically designed 

14 Division of Health Care Finance, "KanCare: Section 1115 demonstration waiver," Kansas Department of Health 

and Environment (2013), 

r,ttp:llwww.kancare.ks.gov/downloadlKanCare_Section_1115_Demonstration_August_6_2012.pdf. 

Ibid. 

16 Ellie C. Hartman, "A literature review on the relationship between employment and health: How this relationship 

may influence managed long term care," Wisconsin Department of Health Services (2008), 

http://www.dhs.wisconsin.gov/wipathwayslResearchDocsilitrevw.pdf. 

17 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comimedicaidimedicaidJeformlpdflFl_1115yr _ 6 ]inat Annual_Report _ 07 -01-11_06-30-

12.pdf. 

18 Division of Health Care Finance, "Medicaid for Kansas: Choosing a KanCare health plan," Kansas Department of 

Health and Environment (2013), http://www.kancare.ks.gov/choosing_a..plan.htrn. 

I" Ibid. 

Page 4 of II 
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to help manage complicated conditions such as HIV/AIDS and schizophrenia.2o Specialty plans 

ensure that patients with complicated health challenges can receive the unique care they deserve. 

Private plan innovation is not just occurring in plan customization. Private plans are also 

innovating wellness programs. These wellness programs adopt incentive structures that reward 

Medicaid patients for healthy behavior. Patients in Florida's Reform Pilot plans can earn up to 

$125 per year for receiving certain preventive services, complying with maintenance and disease 

management programs, keeping appointments and engaging in other healthy behaviors.21 

Individuals may then use these rewards to purchase over-the-counter items at participating 

pharmacies.22 In Kansas, patients can choose plans that offer cash incentives for healthy 

behaviors, such as getting vaccinations, regular checkups and the Iike.23 , 

This kind ofwellness program further encourages Medicaid patients to take control of their own 

health by offering financial incentives for engaging in healthy behaviors. Similar wellness 

rewards programs operate through contracted Medicaid managed care organizations in Arizona, 

Georgia, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Missouri, Mississippi, New 

Hampshire, Ohio, South Carolina, Texas, Washington and Wisconsin. 

In Ohio, for example, patients can eam up to $175 for preventive services and disease 

management. Pregnant mothers may earn up to $100 for completing regular prenatal visits and 

parents can earn another $100 for completing regular well-child visits. In South Carolina, parents 

can eam an extra $105 just for completing regular well-child visits. 

But not all programs are innovating. Here are a few things that are not working: 

1. Perverse funding formulas. Under the Patient Protection and Affordable Care Act, states that 

choose to expand Medicaid coverage will receive an enhanced matching rate for the new 

Medicaid population.24 This population consists primarily of able-bodied adults without children 

and low-income parents.25 The enhanced matching rate for the newly eligible population starts at 

100 percent in 2014 and then gradually reduces to 90 percent by 2020.26 

20 Division of Health Care Finance, "'KanCare: More choices, better access, healthy patients," Kansas Department 

of Health and Environment (2013), http://www.kancare.ks.gov/downloadlKanCare_ProPatient_ProTaxpayer.pdf. 

21 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaidimedicaidJeformlpdflFl_1115yr_ 6 ]inal_ annualJeport _07-01-11_06-30-

12.pdf. 

22 Ibid. 

23 Division of Health Care Finance, "Medicaid for Kansas: Choosing a KanCare health plan," Kansas Department of 

tlealth and Environment (2013), http://www.kancare.ks.gov/choosing_a...plan.htm. 

42 U.S.c. § 1396d(y). 

25 Genevieve M. Kenney et a\., "Opting into the Medicaid expansion under the ACA: Who are the uninsured adults 

who could gain health insurance coverage?" Urban Institute (2012). http://www.urban,orglUploadedPDF/412630-

~ting-in-medicaid.pdf. 

42 U.S.C. § I396d(y). 

A{;COUNTA1ULlTY 

Page 5 of 11 
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86389.072

The matching rate for currently eligible individuals, on the other hand, ranges from 50 percent to 

83 percent, with the federal government typically paying an average of 57 percent of Medicaid 

expenditures.27 This means that states will receive less federal support to provide services to the 

most vulnerable; those patients currently eligible for Medicaid, including the elderly, individuals 

with disabilities and children. This perverse funding formula provides states with incentives to 

cut services and benefits for the most vulnerable, giving preferential treatment to adults without 

any disabilities or dependent children. 

There are more than 511,000 individuals on waiting lists to receive home and community-based 

services through Medicaid.28 Those on waiting lists include individuals with intellectual 

disabilities, developmental disabilities, traumatic brain and spinal cord injuries, physical 

disabilities, mental health conditions and HIV/AIDS.29 The Medicaid expansion's perverse 

funding formula ensures these individuals will be kicked to the end of the line in order to provide 

coverage to able-bodied adults in the states that opt to expand. 

2. A too expansive, broken program. When broken Old Medicaid programs become too 

expansive, states often delay payments to doctors, hospitals and other providers in order to make 

ends meet. For example, Illinois owed doctors, hospitals and other medical providers more than 

$2 billion for unpaid Medicaid services at the end of fiscal year 2012.30 The average medical 

provider waited more than 5 months to receive reimbursement for their services, with some 

delays lasting eight months or more.31 •

32 These reimbursement delays occurred despite federal 

law reguiring states to pay 90 percent of Medicaid bills within 30 days and 99 percent within 90 

days.33 

Earlier this year in Maine, a coalition of 39 hospitals demanded $484 million for unpaid 

Medicaid bills dating back to 2009.34 The hospitals went so far as to launch radio and newspaper 

advertisements to build public pressure on state policymakers to pay down the backlog of 

Medicaid bills. Of course, Maine expanded Medicaid eligibility to able-bodied adults without 

2742 U.S.C. § 1396d(b). 

28 Kaiser Commission on Medicaid and the Uninsured, "Waiting lists for Medicaid section 1915(c) home and 

community-based service (HCBS) waivers," Kaiser Family Foundation (2013), http://kff.org/medicaid/stateindicatorfwaiting-lists-for-hcbs-waivers-20 1 01. 29 Ibid. 

30 John Sinsheimer, "General obligation bonds, Series A and B of April 2013," Illinois Governor's Office of 

Management and Budget (20 13), http://www.state.il.uslbudgetlILState02a-FIN .pdf. 

31 Mallory Meyer et aI., "State of Illinois budget summary: Fiscal year 2012," Illinois Commission on Government 

Forecasting and Accountability (201 I), http://cgfa.ilga.govfUploadIFY2012BudgetSurnmary.pdf. 

32 Jennifer Levitz and Louise Radnofsky, "Delays in Medicaid pay vex hospitals," The Wall St. Journal (2013), 

http://online. wsj .comiarticlelSB 1 000 1424127887324442304578234020690323296.html. 

33 42 C.F.R. § 447.45(d) 

34 Jennifer Levitz and Louise Radnofsky, "Delays in Medicaid pay vex hospitals," The Wall St. Journal (2013), 

http://online.wsj.comiarticle/SBI0001424127887324442304578234020690323296.htmi. 

Page 6 of II 
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children in 2002.35 Its Medicaid expansion far exceeded projected costs, forcing the state to cap 

enrollment in the program at various times and lengthen payment cycles to cope.36 

Likewise, Arizona expanded Medicaid eligibility to childless adults in 2000.37 But the expansion 

cost four times what was expected, forcing policymakers there 'to cut other areas in order to 

maintain the expansion.38 Indeed, Arizona had to eliminate Medicaid coverage for heart, liver, 

lung, pancreas and bone marrow transplants in 20 lOin order to pay for the growing costs of its 

Medicaid expansion.39 

These payment delays and service cuts - emblematic of an expansive, broken program - ensure 

that Medicaid patients will face greater difficulty in finding doctors willing to treat them, likely 

resulting in worse health outcomes. 

3. Slow, inflexible federal waiver processes. For many states, the waiver process is a long, 

drawn-out and complex negotiation with CMS. States face burdensome reporting requirements, 

subjective deadlines and general uncertainty about whether and when CMS will approve 

requested refonns. Even if a state receives a federal waiver to implement its desired refonns, the 

waiver lasts just three to five years.40 After that time, it must either seek an optional extension of 

the waiver or submit a new waiver request altogether if it wants to continue its refonns. Even 

refonn ideas that have proven effective elsewhere must follow this slow, inflexible process and 

states have no guarantee that the federal government will grant them pennission to implement 

these effective refonns. 

4. New taxes on private plans. The Affordable Care Act imposes a new $8 billion tax on private 

health plans, starting in 2014. This tax gradually increases to more than $14 billion in 2018, then 

increases at the annual growth in premiums. Strangely, this new tax also applies to Medicaid 

plans in states that have refonned their programs with managed care. Because the Medicaid 

managed care rates are required by federal law to be actuarially sound, the cost of this new tax 

will be borne by state and federal taxpayers. This results in a situation where the federal 

government is taxing both itself and states, increasing Medicaid costs and shifting more costs to 

the states. 

" Alexis Gibson, "MaineCare for childless adults: Section 1115 demonstration," Centers for Medicare and Medicaid 

Services (2011), http://www.medicaid.govlMedicaid-CHIP-Program-InformationlByTopics/Waivers/1115/downloadslme/me-childless-adults-fs.pdf 

3. Jonathan Ingram, "Medicaid expansion: We already know how the story ends," Foundation for Government 

Accountability (2013), http://www.medicaidcure.orglwp-contentluploadsI20 13/03IMedicaid-Expansion-WeAlready-Know-How-the-Story-Ends-Medicaid-Cure-Policy-Brief-31.pdf. 

37 Jennifer Vermeer, "Ballot proposition 204, Healthy Arizona: Publicity pamphlet fiscal impact summary, revised 

Aug. 17,2000," Arizona Joint Legislative Budget Committee (2000), http://www.azleg.gov/jlbciballotprop204.pdf. 

38 Jonathan Ingram, "Medicaid expansion: We already know how the story ends," Foundation for Government 

Accountability (2013), http://www.medicaidcure.orglwp-contentiuploads/2013/03IMedicaid-Expansion-WeAlready-Know-How-the-Story-Ends-Medicaid-Cure-Policy-Brief-31.pdf. 

39 Kevin Sack, "Arizona Medicaid cuts seen as sign of the times," New York Times (2010), 

http://www.nytimes.com/20 1 O/12/05/us/05transplant.html. 

40 Section 1115 waivers are generally approved for five-year periods, Section 1915(b) waivers are generally 

approved for five-year periods and Section 1915(c) waivers are generally approved for three-year periods. 

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Nearly one-fifth of this new tax on private plans is expected to be borne by Medicaid programs.4! 

The tax is expected to increase Medicaid capitated rates by up to 2.5 percent for some states, 

with the national average falling somewhere between 1.5 percent and 1.6 percent.42 This amounts 

to between approximately $37 billion and $42 billion in increased Medicaid costs during the next 

ten years, with much of that added burden falling on state governments.43 Adding a new tax on 

Medicaid plans will only accelerate the mayhem Medicaid programs are already creating for 

state budgets. 

States are leading the way, implementing innovative solutions to the persistent problems Old 

Medicaid has created. But federal rules and regulations often hinder state leaders who want to 

make their Medicaid safety nets more responsive to patients, more accountable to policymakers 

and more affordable to taxpayers. Additional flexibility from the federal government should give 

each individual state the opportunity to build a Medicaid safety net to best serve patients and 

taxpayers. 

A few recommendations to provide states with additional flexibility include: 

1. Reject the one-size-fits-all expansion. Expanding Medicaid eligibility diverts scarce 

Medicaid resources away from the truly vulnerable in order to fund coverage for able-bodied 

adults. Prioritizing able-bodied adults above the elderly, individuals with disabilities and lowincome children will only exacerbate the many problems present in Old Medicaid. 

The various fiscal and health promises made by expansion supporters have already been broken 

in the states that have previously expanded eligibility to this group of people. They are likely to 

be broken in the states that opt into the Affordable Care Act's Medicaid expansion.44 Medicaid 

expansion, including its perverse funding formula, should be rejected and states should regain 

their control over eligibility levels based on the needs, culture and values of their own state 

population. 

2. Remove perverse funding dynamics. Under current law, states that implement innovative 

reforms see the majority of their savings go to the federal government, not to the states 

themselves. Under current Medicaid matching rates, states can expect to see only 17 percent to 

50 percent of the savings their innovative reforms achieved. This creates a disincentive for states 

to make meaningful changes, as the lion's share of savings will accrue to the federal government. 

The federal government could reduce this perverse funding dynamic by granting states flexibility 

and incentives to better share those savings. Doing so would promote innovation and provide 

41 John D. Meerschaert et aI., "PPACA health insurer fee estimated impact on state Medicaid programs and 

Medicaid health plans," Milliman (2012), http://publications.milliman.comlpublicationslhealthpublishedlpdfslppaca-health-insurer-fee.pdf. 

42 Ibid. 

"Ibid. 

44 Jonathan Ingram, "Medicaid expansion: We already know how the story ends," Foundation for Government 

Accountability (2013), http://www .medicaidcure.orglwp-contentluploadsl20 13/03IMedicaid-Expansion-WeAlready-Know-How-the-Story-Ends-Medicaid-Cure-Policy-Brief-3 I .pdf. 

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states with a greater financial incentive to implement bold solutions. Although this 

recommendation would appear to increase federal spending, in practice it would reduce federal 

spending as states would have strong incentives to innovate and generate savings with Medicaid 

reform, something lacking today. 

3. Allow proven waivers to be seamlessly incorporated into state plan amendments. The 

waiver process is often accompanied by uncertainty about whether and when the federal 

govermnent will approve requested reforms. Because waivers have a limited duration, this 

uncertainty persists even for reforms that have proven effective and popular. Currently, states are 

operating under 378 different active waivers and have another 27 waivers pending with the 

Centers for Medicare and Medicaid Services.45 

Congress could embrace an accountable, common sense approach to Medicaid oversight by 

granting states the flexibility to turn previously-approved waivers into permanent state plan 

amendments once the waivers have been proven effective. Doing so alleviates the stress and 

uncertainty states now face as their waivers approach scheduled expiration dates. This also 

ensures patients' care and taxpayer savings do not face interruptions resulting from lengthy 

renegotiations with CMS. Further, states should be able to incorporate a reform proven effective 

in other states into their own state plans without enduring the burdensome waiver process and 

scrutiny the reform already received elsewhere. 

This would allow states to avoid months- or years-long delays for waiver approval. Reforms 

accomplished through state plan amendments can expect approval within 180 days. And rather 

than needing approval again after just a few years, a state plan amendment becomes a permanent 

part ofa state's Medicaid program unless changed by a future state plan amendment. 

4. Provide greater flexibility on mandatory and optional services. Customized benefit 

packages provide patients with the greatest value and competition among plans has proven 

effective at reducing costs for taxpayers. In Florida, Medicaid patients can choose from up to 31 

different, customized benefit packages.46 The state allows health plan providers to offer 

customized benefit packages as long as the benefit packages are actuarially equivalent to the 

state plan and still provide key benefits at a level sufficient to meet patient needs.47 

But states and health plan providers are hamstrung by federal rules dictating how much they can 

customize benefits. Federal rules require coverage for inpatient hospital services, outpatient 

hospital services, early and periodic screening, diagnostic and treatment services, nursing facility 

45 Centers for Medicare and Medicaid Services, "Medicaid waivers: Dynamic list," U.S. Department of Health and 

Human Services (20 13), http://www.medicaid.govlMedicaid-CHIP-Program-lnformationlByTopics/Waivers/dynamic-listIW A-50S.xml. 

46 Florida Agency for Health Care Administration, "Florida Medicaid reform: Year 6 annual report," Florida Agency 

for Health Care Administration (2012), 

http://ahca.myflorida.comlmedicaid/medicaidJeformlpdfIFL_1115_YR _ 6 Jinal_Annual_ Report_ 07 -01-11_06-30-

12.pdf. 

47 Florida Agency for Health Care Administration, "Florida Medicaid reform: Application for 1115 research and 

demonstration waiver," Florida Agency for Health Care Administration (2005), 

http://ahca.myflorida.comlmedicaid/medicaid Jeformlwaiver/pdfslmedicaid Jeform _waiver _final_I 0 1905 .pd£ 

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services, home health services, laboratory and x-ray services, family planning services, nurse 

midwife services, certified pediatric and family nurse practitioner services, freestanding birth 

center services, transportation to medical care and tobacco cessation services.48 States may only 

choose which additional services to offer and set the scope and range of those services. 

With added flexibility from the federal government, states could offer more customized benefit 

packages to vary these minimum benefits, so long as the benefit packages meet specified 

actuarial standards. One potential avenue for this customization would be to grant states much 

more flexibility for benchmark Medicaid coverage. 

States currently have the oftion to design benefit packages for certain populations that vary from 

traditional Old Medicaid.4 However, the flexibility provided in designing these benefit 

packages, known as "benchmark coverage" or "benchmark-equivalent coverage," is limited in 

nature. The benefit packages must be equivalent to the standard Blue Cross/Blue Shield health 

plan offered to federal employees, the health plan offered to state employees or the larffest 

commercial, non-Medicaid health maintenance organization plan offered in the state.5 

Benchmark-equivalent coverage must also provide specified mandatory services. 51 Current law 

also requires states to "wrap around" benchmark coverage with additional benefits not ~ically 

covered by private insurance, such as transportation services to and from medical visits.5 The 

Affordable Care Act further requires such benchmark-equivalent coverage include all essential 

health benefits. 

Given adequate flexibility, states could restructure their covered benefits to provide truly patientcentered customized benefit packages. And if plans meet a target actuarial value, states should be 

free to allow plans to be offered that vary covered services and benefits, including those that are 

federally mandated, as well as the amount, duration and scope ofthose services. States would 

evaluate each proposed customized benefit plan in order to ensure plans meet the target actuarial 

value. 

This will create greater competition within the Medicaid marketplace, lowering the cost to 

taxpayers and improving quality. Patients will be able to prioritize benefits according to their 

personal needs and circumstances and select the plans that will provide them with the greatest 

value. For example, a patient may wish to select a plan that does not offer transportation 

services, but instead select a plan that offers a better dental benefit package. They deserve that 

choice. 

5. Create an off-ramp for Medicaid. Currently, federal restrictions on marketing private 

insurance plans to individuals transitioning off of Medicaid impose an undue burden on those 

leaving Medicaid. These restrictions further worsen the gaps in coverage for individuals leaving 

48 Centers for Medicare and Medicaid Services, "Medicaid benefits," U.S. Department of Health and Human 

Services (2013), http://www.medicaid.govlMedicaid-CHIP-Program-InformationIBy-TopicslBenefitslMedicaidBenefits.html. 

49 42 C.F.R. § 440.300 et seq. 

so 42 C.F .R. § 440.330. 

51 42 C.F.R. § 440.335. 52 42 C.F.R. § 440.390. 

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Medicaid. As Florida's Refonn Pilot has proven, Medicaid patients can and do make infonned 

choices about their health coverage when given access to appropriate infonnation. Denying them 

such infonnation while they are transitioning off of Medicaid hinders their ability to make 

educated choices, taking away their power to make meaningful decisions over their health 

futures. 

Other federal rules and regulations restrict states from using Medicaid funding in innovative 

ways to move individuals off of Medicaid and into private coverage. With greater flexibility in 

this area, states would be able to take proactive steps to create an off-ramp for Medicaid, helping 

ensure that Medicaid patients are not trapped in government dependency and a culture of 

poverty, but rather help them move from poverty into long-tenn employment and productivity. 

Conclusion 

Despite Medicaid's fiscal challenges to state budgets and the federal budget, there are proven 

strategies that are working today for both Medicaid patients and taxpayers. However, the current 

funding structure, new taxes, a slow federal process, and perverse incentives inherent in 

Medicaid expansion threaten Medicaid services to the most vulnerable. It doesn't have to be that 

way. With reasonable flexibility, targeted incentives, streamlined administration, and a smooth 

off-ramp, the Medicaid safety net can work better today for patients and providers and be 

sustainable for taxpayers into the future. 

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