Nebraska Applies for Two-Tiered Medicaid Expansion Waiver

Reprinted with AIS Health permission from the January 27th issue of Health Plan Weekly

With Medicaid demonstration programs that include work requirements struck down in three states, it’s become increasingly clear that such waivers may not survive legal scrutiny. So Nebraska, which last month submitted its own Section 1115 waiver application, is trying a different tactic.

In its application to CMS, the state proposes to modify voter-approved Medicaid expansion by creating two tiers of coverage: Basic, which includes “comprehensive medical, behavioral health and prescription drug coverage” as required by federal law, and Prime, which is the Basic package plus vision, dental and over-the-counter medication coverage. To access the Prime benefits, non-exempted adults must complete “certain wellness, personal responsibility and community engagement activities” such as choosing a primary care provider, regularly attending scheduled doctor appointments, and engaging in a job or volunteer work.

“Unlike other states, everyone who meets underlying eligibility criteria will receive at least the robust Basic benefits package,” the application notes. The demonstration project would be called the Heritage Health Adult (HHA) expansion program.

One of the questions surrounding Nebraska’s unique waiver request is whether it could better withstand legal scrutiny than the Arkansas, Kentucky and New Hampshire work requirements waivers, which have been blocked by federal judges, according to Patricia Boozang, a senior managing director at the consulting firm Manatt Health. Those waivers ran into trouble because the courts ruled that their potential to lessen Medicaid enrollment was not consistent with the objectives of the program — chiefly, to provide medical coverage.

Rather than threatening to end Medicaid coverage for people who don’t comply with the state’s requirements, Nebraska would simply give them a less-generous benefits package, Boozang tells AIS Health.

“The courts really have to opine on that,” she says regarding whether Nebraska’s approach is more legally permissible. “In the scheme of things, I guess it’s a kinder, gentler work requirement, if there is such a thing.”

However, even if the waiver survives a court challenge, that “doesn’t mean it’s good policy,” says Jerry Vitti, founder and CEO of Healthcare Financial, Inc., a company that connects low-income, elderly and disabled populations with public benefit programs.

Nebraska is asking people who are very vulnerable, who often have language or literacy barriers, and who may even be transient, to comply with “a pretty burdensome requirement for that demographic,” he tells AIS Health. “It’s counterintuitive to me that you’re going to cut benefits for those least able to comply.”

Nebraska — which contracts with WellCare Health Plans, Inc., Centene Corp. and UnitedHealthcare to administer coverage to its Medicaid population — says in its waiver application that those insurers will be involved with administering its waiver program. For example, the managed care plans “are responsible for providing Case and Care Management services to Heritage Health beneficiaries” — a requirement for receiving Prime benefits.

“Current managed care contracts will expire during the course of the five-year demonstration and reprocurement activities will be conducted accordingly,” the state notes, adding that the just-closed transaction between Centene and WellCare may affect the timing of contract reprocurement.

Both Vitti and Boozang agreed that if approved, Nebraska’s waiver program could add some administrative burden for the state and, depending on how it organizes the program, its Medicaid MCOs.

“I am struck by the potential administrative complexity,” Boozang says, based on her experience working with states to design 1115 waivers. It’s not about the fact that there are tiered benefits, since states often manage different benefits packages for different populations, she says. But it will be challenging to implement, for example, the state’s complicated rules regarding medical appointment attendance. “They talk about a good cause exemption — like if your ride didn’t come to get you to that medical appointment, you might be forgiven for that,” Boozang says. “That’s information state Medicaid agencies don’t collect today; that’s getting information from providers on a consistent basis that’s — they don’t have an information stream for that.”

And if the state opts to lean on its Medicaid MCOs to gather most of the data for its demonstration, they might have concerns beyond just feasibility, she says. “I think the second thing that plans will raise is…we want to be good partners, but you need to pay us for the administrative infrastructure you’re asking us to establish.”

Vitti says he thinks other conservative-leaning states may consider following Nebraska’s example if its waiver stands up to a legal challenge, as they “want political cover” to expand Medicaid. That could be a net positive, he adds, since it could pave the way for otherwise-reluctant states to cover more people.

But Boozang says she’s unsure whether Nebraska’s approach will be a template. “I think the [work requirements] litigation has really thrown cold water on states implementing or pursuing these types of waivers, so I think that has to play out,” she says. Plus, “the election is now looming, and I think [it] will really influence what happens with these types of waivers.”

Contact Boozang at pboozang@manatt.com and Vitti at joe@joereblando.com. View the waiver application at https://bit.ly/36gGwNK.

by Leslie Small