Capital Beat: Questions linger on Medicaid expansion

It was, for many, the end of months of anticipation. The release last month of the Republican plan to reauthorize New Hampshire’s Medicaid expansion program – sponsored by Senate President Chuck Morse and Majority Leader Jeb Bradley – provided a first glimpse at one of the state’s most significant, controversial pieces of legislation.

The program, which presently provides health care to more than 50,000 Granite Staters, would be updated with a new delivery system, new funding mechanisms and a long-sought work requirement. Dozens showed up to a hearing after its release, voicing both support and skepticism.

But for all its 16 pages, Morse and Bradley’s first draft leaves a lot unclear. Gov. Chris Sununu and Senate leadership are continuing to hold negotiations with Centers for Medicare and Medicaid Services (CMS) in Washington, meaning much has yet to be set in stone.

With the stakes heightening, and the floor debates approaching, here are four open questions surrounding the program so far:

How much will the state’s share cost?

Since its initial authorization in 2014, New Hampshire’s Medicaid expansion program has stood on a crucial tenet: no state taxpayer funding. To push the bill through the Legislature in 2016, lawmakers guaranteed that the mandatory state share – which will increase to 10 percent by 2020 – would not come from the general fund.

That’s required creativity; in the past, lawmakers found a workaround featuring a trust fund and a round of contributions from hospitals and insurers. This year, they’re deviating again, proposing a multi-front revenue plan involving premium taxes, voluntary donations, and a share of the state’s liquor profits.

But absent from the plan is a key metric: the actual cost of the state’s share. Senate leadership has thrown out a loose estimate of $30 million – a significant reduction from past years – owing, they say, to a planned shift of the program’s recipients into a cheaper system of care. That number is far from final, however, facing further review Centers for Medicare and Medicaid Services (CMS), in Washington, legislators stress.

Many unknowns remain. For one, the bill requires the state to increase rates paid out for behavioral health services, but doesn’t specify what the rates are. And additional costs – from medications not covered under the new managed care system, or from additional efforts to fund efforts against the opioid crisis – could sway the final price tag.

Still, Senate President Chuck Morse, R-Salem, expects the costs to drop. An analysis last year found that moving people into the new system – known as managed care – could save the state around $200 million, reducing the state share with it. And he said he’s confident the new funding sources will cover the final bill.

Is the new funding structure legal?

Making the numbers add up is just the first step. Getting CMS to approve the new spending structure has long been the real challenge.

Some history is useful. In its 2016 reauthorization, the Legislature turned to insurers and hospitals – not taxpayers – to cover the bill, a rabbit-in-a-hat approach that won many over. But last Julythe program received a jolt, with a letter from CMS informing the governor that the arrangement appeared illegal. By relying on hospital donations, however voluntary, New Hampshire was potentially violating federal rules prohibiting providers from paying into the same system they later benefited from, the agency found.

Since then, Sununu says he’s made frequent in-person trips to the agency, seeking a solution that satisfies Washington but keeps the New Hampshire taxpayer off the hook. The new bill makes key changes to the structure of the trust fund, removing the specific mechanisms for providers and insurers. Bradley has said that arrangement addresses the letters’ concerns. CMS will have the final say.

Will the feds come through for the Alcohol Fund?

One of the most integral components of the new plan is also its most surprising. Looking to replace the hospital contributions, estimated at around $10 million, Senate leadership went after a program with a long history: the alcohol fund.

Created in 2000, the fund is designed to comprise five percent of state liquor profits, to be available for substance abuse treatment programs. But over two decades, the Legislature has continually underfunded it, irking treatment advocates and providers alike.

Under the proposed plan, the fund would finally be restored to five percent, but with significant strings attached. The bill would allow the Governor’s Commission on Alcohol and Other Drug Abuse Prevention, Treatment and Recovery – the group that manages the fund – to transfer the funds to the Medicaid expansion plan. In return, the bill says, the fund must be made whole with either federal or state dollars.

The arrangement could bring in $10 million to the state share alone, say Senate leaders. But it raises a series of questions. To start, nothing in the law mandates that the Commission actually transfer the funds, which are vital to the state’s ability to pay its share; Commission members must sign off first. Were the Commission to vote against transferring funds, the state’s share could theoretically come up short, triggering a severability clause that could end the program.

Additionally – and more worryingly for some – if the money were transferred, the law is quiet on how specifically the fund would be refilled. It’s only clear that it must be.

According to Morse and Bradley, Washington is expected to pick up the slack. New Hampshire is negotiating a deal to get CMS to fill the fund, brandishing the state’s $200 million projected overall savings as an incentive. But both said that nothing has been made final yet. And if the federal government declines to provide the money, the law stipulates that the funds must be made up from other sources within the Department of Health and Human Services itself.

The situation is vexing treatment advocates, who are calling for clearer and stronger language protecting the fund.

Michele Merritt, president and CEO of New Futures, an advocacy group, said the organization supports the reauthorization legislation overall, but pressing for “protecting the integrity and the stability of the alcohol fund.”

“I think we can strike an appropriate balance,” she said.

Can the Democrats get behind the work requirement?

It’s the provision that never quite made it through. From the beginning, Republican representatives have been pressing to add a work requirement to New Hampshire’s program, arguing it will encourage workforce participation and help low-income recipients transition out of the program.

While the Obama administration flatly denied New Hampshire’s initial attempt in 2016, viewing it a violation of the intent of the program, the Trump administration is singing a different tune. New Hampshire is one a handful of states expected to be granted waivers to implement work requirements in coming weeks; Kentucky and Indiana have already made it happen.

But that puts Democrats in a tricky position. The latest bill, presently set to reauthorize Medicaid expansion for five years, will need all the political muscle it can get from Democrats to get it across the finish line. Yet the party has long been leery of work requirements, seen by some members as a potential deterrent for the neediest to seek care.

Senate Republicans’ latest version requires participants work an average 25 hours a week, and makes exceptions for a host of categories including substance abuse treatment, vocational training, and community service. And while Democratic leadership has had a hand in crafting it, members have some qualms. One provision, for instance, would exempt single parents with dependent children up to six years old – Democrats think it should be raised
to 12.

Above all, they say, they want a system where no one gets “kicked off” the program by dint of the work requirement.

“I think we all share a goal of helping people recover their health and work their way out of poverty. There are some details that I don’t think we’re quite there on, and I’m hopeful that we get there,” said Cindy Rosenwald, Deputy House Democratic Leader.

Bradley, asked about the concerns, said the bill still has much to be hammered out. Still, the nuances of compromise are hardly the biggest obstacles for the legislators who back reauthorization.

The real challenge is convincing the legislators who don’t.

(Ethan DeWitt can be reached at, or on Twitter at @edewittNH.)

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