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Capitol Correspondence - 01.14.19

Administration Considering Bypassing Congress for Medicaid Block Grants

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For more on this issue please reference the ANCOR Connected Community (ACC) message that Esme Grewal, Vice President of Government Relations, issued to ANCOR members on Saturday, January 13.

The orignal scoop by Politico Pro from late last week is available below. Additionally, this update from Axios Vitals will be of interest to members because it quotes Matt Salo, Executive Director of the National Association of Medicaid Directors (NAMD), and explains some of the legal challenges and volatility that could arise from the proposed approach by CMS to bypass Congress.

“The Trump administration is quietly devising a plan bypassing Congress to let states receive block grants for Medicaid, a longstanding Republican goal, several sources with knowledge tell POLITICO.

Three administration sources say CMS is drawing up guidelines on what could be a major overhaul of Medicaid in some states. Instead of the traditional open-ended entitlement, states would get spending limits, along with more flexibility to run the low-income health program.

Aware of the political sensitivity, the administration has been deliberating and refining the plan for weeks, hoping to advance an idea that Republicans since the Reagan era have unsuccessfully championed in Congress against stiff opposition from Democrats and patient advocates. During the Obamacare repeal debate in 2017, Republican proposals to cap federal Medicaid spending helped galvanize public opposition, with projections showing millions would be forced off coverage. In addition to potential legal obstacles presented by moving forward without Congress, the effort could face strong opposition from newly empowered House Democrats who’ve vowed to investigate the administration’s health care moves.

The administration’s plan remains a work in progress, and sources said the scope is still unclear. It’s not yet known whether CMS would encourage states to seek strict block grants or softer spending caps, or if new limits could apply to all Medicaid populations — including nursing home patients — or just a smaller subset like working-age adults.


Republicans have sought to rein in Medicaid spending, especially as enrollment swelled under Obamacare’s expansion of the program to millions of low-income adults in recent years. CMS Administrator Seema Verma has warned increased spending on the Medicaid expansion population could force cutbacks on sicker, lower-income patients who rely on the program.

The administration wants to let states use waivers to reshape their Medicaid programs, but the effort could face legal challenges in the courts. Waivers approved by the Trump administration to allow the first-ever Medicaid work requirements for some enrollees, for example, are already being challenged in two states.

Also complicating the administration’s push: the newfound popularity of Medicaid, which has grown to cover about one in five Americans. Voters in three GOP-led states in November approved ballot measures to expand Medicaid, which has been adopted by about two-thirds of states. Newly elected Democratic governors in Kansas and Wisconsin are pushing their Republican-led legislatures to expand Medicaid this year.

Verma has been trying to insert block grant language into federal guidance for months but has encountered heave scrutiny from agency lawyers, two CMS staffers said. She mentioned interest in using her agency’s authority to pursue block grants during a meeting with state Medicaid directors in the fall but did not provide details, said two individuals who attended.

There is some precedent for the federal government capping its spending on the entitlement program. Former President George W. Bush’s health department approved Medicaid spending caps in Rhode Island and Vermont that would have made the states responsible for all costs over defined limits. However, those spending caps were set so high there was never really any risk of the states blowing through them.


CMS is hoping to make an announcement early this year, but it could be further delayed by legal review, which has already been slowed by the prolonged government shutdown.

Some conservative experts said the administration’s plans ultimately may be limited by Medicaid statute, which requires the federal government to match state costs. However, they say the federal government can still try to stem costs by approving program caps.”