Mulling Medicaid expansion: the ‘back and forth world’ (with no deadline?)

Back in May, Gov. Bill Haslam told reporters that his administration was engaged in heavy dialogue with federal officials on expanding Medicaid and that the issue would likely be decided — one way or the other — during the summer.

“I think if we haven’t made real progress by this summer, it will show that we’re not going to. I think it will come down to, here’s what CMS says it will do and that works for us or it won’t and we’ll know that by summer,” he said at the time.

Summer has ended and with fall underway, the dialogue with the federal Centers for Medicare and Medicaid Services, or CMS, continues — Haslam called it “this back and forth world” at one point — with no clear deadline for a decision, officials say.

Asked a week ago whether layoffs in the hospital industry around the state indicate it is getting too late to make a decision, the governor quickly disagreed.

“No, no” he said. “I think that one of the things about this decision on Medicaid is there’s no deadline.”

But House Minority Leader Craig Fitzhugh, D-Ripley, says that further months of delay will mean lost federal money that could be going to cover perhaps 180,000 Tennesseans through Medicaid — funds that would help hospitals and other providers cover costs they are now writing off.

The Affordable Care Act, enacted by Congress in 2010, cut payments to providers and those are already in place — a factor in ongoing hospital layoffs, according to David McClure, senior vice president for finance of the Tennessee Hospital Association.

“Hospitals so far in this state have absorbed right at $260 million in cuts,” McClure said. THA projects that over a 10-year period the cuts will cost Tennessee hospitals $5.6 billion. Recently, federal “sequestration” cuts and other moves have even further undermined hospital revenues.

Under the federal law, the cuts were to be at least partially covered by Medicaid expansion, which would mean patients not able to pay their bills now would have them paid by Medicaid. The U.S. Supreme Court, however, while upholding most aspects of the Affordable Care Act, struck down the provision mandating that all states expand Medicaid to cover people with income of less than 138 percent of the federal poverty level.

That meant that states had the option of deciding themselves whether to expand Medicaid. Under the law, the federal government would pay 100 percent of the cost of expansion for the first three years; after that states would ultimately have to shoulder 10 percent of the cost.
Although estimates vary, the one most used by state officials projects that 180,000 more low-income Tennesseans would be covered by Medicaid through the expansion, bringing in about $1.2 billion per year in payments to hospitals and providers.
“To me, it’s still a no-brainer,” said Fitzhugh.

Many Republican legislators, however, strongly oppose expansion — citing the costs to the state in later years and a general concern about assisting Obamacare.

“One of the things that has led me to keep trying to come up with a solution that works is that we are concerned about the health care providers around the state,” Haslam said.

People can begin enrolling Tuesday for health insurance purchases through federal exchanges, also called marketplaces, opening in Tennessee under the Affordable Care Act, also known as Obamacare. The insurance program officially goes effect on Jan. 1.

That’s the date that expanded eligibility for Medicaid, operated as TennCare in Tennessee, could also take effect — if a decision is made by then. The threshold decision will be made by Haslam, but he has committed to seek the Republican-controlled General Assembly’s approval.

The Legislature is not scheduled to return to Nashville until Jan. 14, so — barring an unlikely special session on the subject by Haslam before then — the state would be foregoing federal money at that point.

Fitzhugh said that, as he understands it, the federal money is allocated quarterly so that if the delay goes past Jan. 1, “we leave $300 million (one-fourth of the 2014 funding) on the table.”

“If we dragged it out until after April 1, that would be $600 million left on the table,” he said.

The minority leader, who discussed Medicaid expansion with Haslam last week, said, “I believe there’s a way” for the governor to give notice to CMS before Jan. 1 of the state’s intent to expand so the money would be held in reserve for Tennessee, unless the General Assembly rejected the Haslam plan, in which case it would never be allocated.

Kelly Gunderson, communications director for TennCare, said she is unaware of how such a move would work.

Haslam wants CMS to approve a waiver to regular Medicaid rules so the federal expansion money could be used to buy private insurance for those covered, require co-payments for some persons and change the payment system to be based more on successful outcome of treatments.

“I told (legislators) if we bring you something back it won’t just be Medicaid with a little paint on it; it really will be something that works toward improving outcomes,” the governor said.

Working out details of such a proposal — one that the Legislature and the federal government would both accept — has been difficult and time-consuming, including an August trip to Washington for direct meetings between Haslam and CMS officials and well as “emails and phone calls day by day.”

“We could go present a waiver to them today, one we know that they won’t approve,” said Haslam after the Aug. 23 trip. “But we’re not going to waste their time or ours until we have something we think is realistic.”

He now declines to say when a decision might come.

“I just don’t know when that will be,” he said.