State’s Proposal to Waive Medicaid Requirements in Order to Accelerate Transformation

June 4, 2015

To:  Chief Executive Officers, Chief Financial Officers, and Government Affairs
From: Claudia Sanders, SVP Policy Development, WSHA
Ben Lindekugel, Executive Director, AWPHD
Jacqueline Barton True, Director, Rural Health Programs

Staff Contact: (After June 16) Chelene Whiteaker, Policy Director, Member Advocacy, at or one of the other WSHA staff listed above
Subject: State’s Proposal to Waive Medicaid Requirements in Order to Accelerate Transformation
This bulletin provides information on the state’s plan to apply for a waiver of federal Medicaid requirements in order to accelerate its work on health care system transformation. 
If the state is successful in getting federal approval for its waiver request, it is likely to have large implications for health care in our state. A waiver can provide significant new opportunities to receive additional federal funds for current and new programs undertaken by hospitals, counties, and public health agencies in care for vulnerable populations, such as those with behavioral health needs, the homeless, and others. Many opportunities will be directed through the newly forming Accountable Communities of Health (ACH). At the same time, the state will be justifying expenditures for these programs based on savings from the medical care system. 
The waiver underscores the importance for hospitals and health care systems to be active in the formation of the new Accountable Communities of Health in their local areas. 
On May 29, the Health Care Authority (HCA) released a concept paper on its plans to submit a waiver to the Centers for Medicare and Medicaid Services (CMS). If approved by CMS, the five-year global waiver would allow HCA to receive additional federal funds for Medicaid clients for services provided based on the state realizing medical care savings that offset the additional expenditures. The waiver would be submitted to waive current federal legal requirements and would be submitted under Section 1115 of the federal Social Security Act in the Delivery System Reform Incentive Program (DSRIP).  HCA plans to refine the concept over the next several months and make a formal request to CMS in September. 
The waiver will provide investments at both the state and regional levels. State funding will be spent on supportive housing, supported employment services, outreach and engagement, and activities designed to delay the need for Medicaid long-term care services. At the regional level funds will be invested using the Accountable Communities of Health.  Each ACH will administer and distribute regional investments and held accountable for performance. Each ACH will be asked to come up with funds to be used to assist in drawing down federal match available under this program. The ACH will be asked to fund 10 percent of the expenses in the first year, and 50 percent by Year 5 (representing the state’s match rate for the Medicaid program). 
Overall, HCA plans to invest resources in four areas:
1.  Delivery system transformation with activities around: 
     a. Integrating physical and behavioral health
     b. Aligning care coordination, transitioning inmates
     c. Providing more support for patients after they are hospitalized
     d. Providing community health teams
     e. Providing supportive housing
     f. Providing supported employment
2. Health system capacity
     a. Developing the workforce through development of community based teams, telemedicine, and community paramedicine
     b. Providing supports to providers to adopt value-based purchasing
3.  Population health improvement
     a. Addressing adverse childhood experiences
     b. Focusing on diabetes, substance use, high-risk perinatal, tobacco use, and mental health
4. Targeted long-term services and supports
     a. Family care giver supports
     b. Pre-Medicaid supports to prevent “spend down”
     c. Increasing nursing facility level of care eligibility to be above community level of care eligibility
The state is proposing to request a federal investment of $3 billion. Under the program, the state has to prove to the federal government that the program is “budget neutral.” HCA believes it can demonstrate savings through efforts already in place based on cost reductions achieved over the past several years (starting with the period from 1998 to 2002).  Using trend figures from past years, HCA assumes it has achieved $5.8 billion in savings since 2003 and will achieve $15 billion by 2020. 
HCA recognizes there are several different ways to provide the state share of funding for these programs: State general funds, designated health programs, or intergovernmental transfers (monies expended by local governmental agencies which may include public hospital districts, public health agencies, and counties). 
Next Steps
WSHA recommends hospitals become active members in their local Accountable Community of Health and inquire about how the ACH will be determining comments on the concept paper. (You can find the lead contact for each ACH linked here.) WSHA believes it is important for hospitals to be active in these organizations as they discuss new potential roles. 
WSHA staff intend to be active in this discussion at the state level by:

  • Analyzing this proposal, continuing discussions with HCA staff and providing comments to HCA.
  • Meeting with partner organizations to understand their perspectives.  
  • Making sure we understand federal rules and limitations related to provider-related donations and intergovernmental transfers.
  • Engaging in discussions with members at the WSHA & AWPHD Rural Hospital Leadership Conference in Chelan, the summer board retreat, and other upcoming meetings.
  • Understanding the experiences in other states where this type of waiver program has been implemented. 

Background and References
HCA will be hosting a webinar on June 15 for those that want to hear directly from the state about this plan. Information is available on the state’s website linked here.
Seven other states have already received a waiver under this program: California, Massachusetts, Texas, New Jersey, Kansas, New Mexico, and New York. Information is available from the Kaiser Family Foundation. Key findings are that under these programs, providers are tied to meeting performance metrics, often requiring new data collection and reporting. Also, the funding provided under these programs can be significant. (Over their five-year program duration, California and New York are expected to receive $6 billion each and Texas $11 billion.)


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