Block Grant Guidance
On January 30, 2020, Centers for Medicare and Medicaid Services (CMS) announced a new guidance allowing states to use Medicaid’s 1115 waiver authority to finance Medicaid for adults under 65 who don’t qualify for Medicaid on the basis of “disability or need for long-term care services and supports and who are not covered under the state plan” through a block grant or per capita caps, reframing those restrictions on Medicaid funding as “Healthy Adult Opportunity.” For more detail on the new guidance and its impact on people with disabilities, check out our fact sheet here.
CMS’ new policy will lead to cuts in critical Medicaid services, eligibility or both. Under this new guidance, states would receive a preset amount of funding (if the state requests a block grant, it is a lump sum and in a per capita cap structure funding is capped to a certain amount per beneficiary) instead of matching funds for any services actually provided. States are then entirely responsible for any costs for providing services above that capped amount. This shortfall in funding will lead to reductions in benefits, access to those benefits, and/or enrollment eligibility. While the guidance says states could apply for adjustments in limited unanticipated circumstances (like a public health crisis), that process is not described in detail in the guidance and will likely not provide states with the rapid response they need to address unexpected costs.
This new policy will harm people with disabilities. CMS is saying the guidance does not impact people with disabilities because it does not apply to people who qualify for Medicaid on the basis of disability, such as because they qualify for Social Security Disability Insurance. However, there are many people with disabilities who don’t qualify for Medicaid on the basis of disability, and those people would be among the population directly targeted by this guidance. By one estimate, five million people with disabilities could have their access to care threatened by the guidance.
This new guidance allows states to impose harmful policies. Under this new guidance, states can impose harmful policies that lead to the loss of Medicaid coverage, such as the imposition of work requirements and premiums and copayments not otherwise allowable in Medicaid. The guidance also allows states to restrict prescription drug coverage, covering as little as one drug per class for most conditions, eliminate non-emergency medical transportation, waive managed care standards and oversight, and eliminate retroactive coverage for the population covered by the state’s waiver.
This guidance is a dangerous first step that opens the door to block grants across the Medicaid program. The Trump Administration has been clear in its desire to allow states to completely block grant Medicaid. Based on prior attempts by the Administration, it is likely that this guidance is meant to lay the groundwork for future block granting of other Medicaid populations.
CMS does not have authority to allow block grants. Disability and healthcare advocates strongly oppose any efforts to block grant Medicaid and successful fought attempts by Congress to block grant Medicaid in 2017. We believe this is an illegal attempt by the Administration to fundamentally change Medicaid, which only Congress can do. It is expected that litigation will be brought if CMS approves any state waivers approved under this guidance, and we will be monitoring those efforts closely.