CMS, HHS Send Letter to Governors on Medicaid

Just after her Senate confirmation as Administrator of the Centers for Medicaid Services (CMS), Seema Verma joined HHS Secretary Tom Price in a letter to governors on their commitment to work together to improve the Medicaid program.   The letter states that the federal framework for Medicaid has not “kept pace with emerging evidence around the factors that drive improvements in health outcomes” and the ACA’s Medicaid expansion was a “clear departure from the core, historical mission of the program.”   The letter highlights CMS’ commitment to a “new era for the federal and state Medicaid partnership,” by:

  • improving state and federal program management,
  • supporting innovative approaches to increase employment and community engagement,
  • aligning Medicaid and private insurance policies for non-disabled adults,
  • creating reasonable timelines and processes for Home and Community Based Services and finally,
  • providing states with more tools to address the opioid epidemic.

This letter aligns with comments from both Secretary Price and Ms. Verma to provide states with increased flexibility in the Medicaid program.   As this conversation continues, we will be following new developments at both the CMS and state level and will keep you all updated.

The New Medicaid Landscape: How the Administration May Increase Flexibility for States

While it is unclear what changes Congress may make to the Medicaid program, even without further Congressional action, changes are coming to Medicaid.  The recent Senate confirmations of Health and Human Services Representative Tom Price as Secretary of Health and Human Services and Seema Verma as Administrator of the Centers for Medicare and Medicaid Services (CMS) suggest that, even without Congressional action, the new Administration will soon be granting states significantly greater flexibility to design their own programs using waivers than they have had to date.

While the Administration must enact the laws that Congress has passed and does not have the authority to create or pass laws, it does have the authority to grant waivers in the Medicaid and CHIP programs to states interested in pursuing new or innovative ways to deliver care in the state’s Medicaid program.    By way of background, in order to receive federal funding, there are certain federal requirements a state must include in its Medicaid program, including mandatory coverage of certain populations, services, and payments.  Through a waiver, states cannot seek to waive all of these federal requirements in Medicaid, but can seek waive certain requirements, which provides them with additional flexibility under the law.  Each must be approved by the CMS.

The most common form of Medicaid waiver today is the 1115 waiver, originally created to test experimental, pilot or demonstration projects, and which can focus on areas such as delivery system reform, behavioral health, and other services.  Each 1115 waiver must follow a transparency process, as directed by the Affordable Care Act.   Today, 33 states operate 41 different 1115 waivers that are used to test innovations such as delivery reforms, Medicaid expansion or new services.  To date, seven states (Arkansas, Arizona, Iowa, Indiana, Michigan, Montana, and New Hampshire) have used 1115 waivers for Medicaid expansion.  For an in-depth look at each of these waivers, see NACHC’s recent waiver update.

While the Administration’s health care plans are still being developed, we do know that Seema Verma will work to provide states additional flexibilities in Medicaid and CHIP.  If fact, in her previous work as health care consultant, she helped states design 1115 waivers, including the Healthy Indiana 2.0 waiver.   During her confirmation hearing with the Senate Finance Committee in February, she noted that “(a)ny state should have that flexibility to design a program that works better for the people that they are serving and they’re better positioned to make those decisions than we are in D.C.”

It is too soon to say what states will request under the new Administration, but we can look to the flexibilities states have requested in the past to get an understanding of what types of flexibilities states may seek going forward.  Of importance to health centers, it is worth noting that to date, no changes to FQHC provisions, including changes to PPS or FQHC services, have been approved by CMS. However, it will be important for Primary Care Associations and health centers to remain engaged in their state conversations to ensure that FQHC provisions remain intact.

The common trends in the flexibilities currently approved by CMS via an 1115 waiver include:

  • Premium Assistance Models: Under this approach, Medicaid funds are used to help an individual pay premiums for coverage purchased through the private market. There is much variation in this approach across the states; some states have required individuals to enroll in Qualified Health Plans (QHPs) in the Marketplaces to expand waivers, while others have used Employee Sponsored Insurance models.
  • Premiums or Monthly Contributions: States have requested to apply premiums to the expansion population, typically no more than 2 percent of a beneficiary’s income for those individuals that fall between 100-138% of Federal Poverty Level (FPL), to be used toward offsetting the cost of expansion. Some states that have chosen to use this model have also included “premium protections,” such as individual incentives or delays in premiums, to lessen the burden on beneficiaries.
  • Healthy Behavior Incentives: States have included incentives for healthy behaviors as a way to reduce premiums or copayments.
  • Waiving retroactive eligibility: States have waived retroactive eligibility, meaning that coverage starts on the date of the first premium payment, as opposed to the date of enrollment. States have also requested to bar individuals from re-enrolling if they are disenrolled for unpaid premiums.
  • Higher copayment amounts: While higher copayment amounts are not allowed via 1115 waivers, Indiana created a special demonstration via its waiver to look at allowing higher copayment amounts for non-emergency use of the emergency department for certain individuals.
  • Waiver of certain required benefits: Two states have received a waiver from the requirement to provide non-emergency medical transportation.

The table below provides an overview the currently approved flexibilities from CMS via 1115 expansion waivers.

Please note that the table includes provisions that states have requested and CMS has approved to date.  We do expect that states may seek new and additional flexibilities that have previously been denied but may be approved under the new Administration, such as:

  • Premiums for individuals with incomes under 100% of the FPL as a condition of eligibility;
  • Waiver of Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefits
  • Waiver of free choice of family planning provider
  • Work requirements or incentives as a condition of Medicaid eligibility

In fact, we have already seen movement on some of these provisions, including:

  • Arizona has announced it is considering a waiver that includes work requirements and a lifetime cap on eligibility
  • Indiana is seeking a renewal of Healthy Indiana 2.0, which is coming under question due to concerns with the evaluation data
  • Arkansas recently announced its plans to submit amendments to its Arkansas Works program, including limiting eligibility, applying work requirements, and reforming employee sponsored insurance.

As Seema Verma takes the reins at CMS, much remains uncertain.  But NACHC will continue to monitor the states’ waiver requests and the potential impact on FQHCs and their patients and work with Primary Care Associations and health centers to address any issues that may arise.

CMS Issues Proposed Rule on “Market Stabilization” for the ACA Marketplaces

On February 15, 2017, CMS issued its proposed rule on “market stabilization” in the Affordable Care Act’s Marketplaces.  This proposed rule is one of the first issued by the Trump Administration.  Below you will find a summary of the major provisions of the proposed rule and can read NACHC’s comments on the proposed rule here.  We will continue to follow this and other actions from the Administration and encourage you to check back for further updates.


Summary of Proposed Rule on ACA Marketplace Stabilization 

  • Stated goal is to “stabilize” the ACA Marketplaces by making them more attractive (aka less risky) for insurers, so they’ll be less likely to withdraw.
  • Development of this proposed rule began under the Obama Administration, although it is not entirely clear which provisions resulted from which Administration.
  • Major provisions include:
    • Cutting the length of the Open Enrollment Period by half (from 3 months to 6 weeks), which aligns with Medicare and most private sector Open Enrollment periods.
    • Tightening up on Special Enrollment Periods (SEPs) by strengthening the requirements that people applying during a SEP prove that they qualify (e.g., they really did get married, have a baby, get laid off).
    • Lowering the requirement that Qualified Health Plans (QHPs) contract with 30% of the Essential Community Providers in their service area to 20%. (Note that the NPRM does not propose to eliminate the requirement that QHPs contract with at least one FQHC in each county in their services areas.)
    • Requiring individuals who dropped out of a plan and later choose to re-enroll in the same plan to pay any back premiums before they can re-enroll.
    • Slightly loosening the actuarial requirements on QHPs.
    • CMS will defer entirely to States’ reviews of QHPs for network adequacy. (In states without adequate capacity to conduct such reviews, CMS will defer to outside accrediting bodies.) For the 2016 and 2017 plan years, CMS had applied minimum time-and-distance standards when evaluating network adequacy.
  • Contrary to some expectations, the proposed rule did not include any provisions to:
    • Increase the spread between how much the youngest and oldest enrollees can be charged.
    • Further restrict the ability of third-parties to pay individuals’ premiums
    • Increase flexibility around the required Essential Health Benefits.


President Trump Issues Executive Order on Affordable Care Act

In the first few days of his Administration, President Trump issued several Executive Orders.  Of particular note for the health care system and health centers was his first Executive Order, Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.  We have heard from many health center advocates who want to know how this action will affect their centers and their patients.

Let’s look at what Executive Orders are and how this will impact the health care environment.

What is an Executive Order?

By definition, an Executive Order is “a rule or order issued by the president to an executive branch of the government and having the force of law.”   These have been used by almost every President and are often a way for the President to use his or her authority to outline and implement policies, without Congressional approval.  They are also used symbolically to send a message about a President’s policy agenda or proclamations such as “National Health Center Week.”

What did this Executive Order do?         

First and foremost, while the Executive Order does technically carry the weight of the law, it cannot and did not repeal the Affordable Care Act.  That cannot be done without Congressional action.

The Executive Order stated that President Trump would like to see the “prompt repeal of the Affordable Care Act” and instructed Federal agencies, such as the Department of Health and Human Services, to reduce the “economic burden” of the ACA while it waits for Congressional action.   Specifically, the Executive Order instructed agencies to:

  • “take all actions consistent with law to minimize the unwarranted economic and economic burdens of the Act”
  • “waive defer, or grant exemptions from ACA requirements” and
  • grant states “greater flexibility in implementing health care programs”

The Order also states that agencies must follow proper rule-making procedure to change any regulations that are already in effect.

What remains to be seen by all in Washington and across the country, is how the Administration follows through on these steps and what impact it will have on the health care environment

One complication is timing – Representative Tom Price, the Administration’s nominee for Secretary of Health and Human Services, and Seema Verma, the nominee for Administrator of the Centers for Medicare and Medicaid Services, are both awaiting confirmation before they can assume their new roles.  Further, it is still unclear how the Executive Order will impact Congress’ work on repealing and replacing the Affordable Care Act, including whether it might make them feel that they can take more time to decide upon next steps.  One concern mentioned is that the new Administration might immediately stop enforcing the tax penalty behind the individual mandate, but during his confirmation hearing yesterday, Representative Price stated that he would not take administrative action to undermine the mandate in advance of Congress repealing and replacing the law.

Feel free to stay in touch with NACHC about any questions or concerns you might have about Executive Orders as we all watch closely to see what impact this will have at the national, state and local level.

2016: A Regulatory Year in Review

NACHC’s Regulatory Affairs Department has seen a lot of action over the last year, as the current Administration is wrapping up its remaining days in Washington, DC and has been working to propose and finalize a wide range of policy and administrative activities.

Highlights have included:


  • The final rule governing Medicaid Managed Care Plans: This is the first regulations on Medicaid Managed Care that CMS has finalized in years and covers policies guiding all areas of Medicaid Managed Care, including contract reviews and setting rates.  There were several items of importance for FQHCs including:
    • Clarifying rules about health center’s participation in value based payment arrangements in Medicaid Managed Care
    • Clarifying that incentive payments must be in addition to PPS, not in place of.
  • CMS State Health Officials Letter issued on PPS wrap around payments in Medicaid Managed Care
    • States may choose to “delegate” wrap around payments, only if the arrangement meets all of the requirements of an Alternative Payment Methodology (APM).
  • Medicare Physician Fee Schedule Final Rule: While this rule largely does not impact FQHC Medicare payments, it included several important provisions for FQHCs:
    • Implementation of an FQHC- specific market basket to be used as an annual inflation update for the Medicare PPS, in place of the Medicare Economic Index (MEI). This goes into effect January 2017
    • Easing the requirements for FQHCs to bill for chronic care management
  • The final rule on MACRA implementation: This is a major revision of the Medicare Part B payment system, which includes implementation of MIPS and Advanced Alternative Payment Methodologies (APM).  FQHC Medicare payment is not impacted by this new rule, but health centers are encouraged to voluntarily report these measures to demonstrate the quality of care they are providing to Medicare beneficiaries.
  • Process for enrolling new sites in Medicare: We continue to ask CMS to streamline the process for new FQHC sites to enroll in Medicare, and recently learned that they have taken steps to do so, by establishing a standardized – and much simpler – protocol for Regional Office reviews.  More information on this coming soon.


  • Draft Health Center Compliance Manual In August, BPHC published its long-awaited draft of the Compliance Manual, which consolidates many existing PINs and PALs into a single resource with information about requirements and how to demonstrate compliance.  NACHC was supportive of BPHC’s efforts, and submitted extensive comments about how the document could be further strengthened and clarified.
  • Further changes proposed for auto-HPSA scoring: In July, HRSA’s Bureau of Health Workforce proposed changes intended to standardize and automate the process for determining auto-HPSA scores.  Among other changes, they propose to :
    • measure poverty among a health center’s patient population by using Census data for those areas located 30-minutes or less from each site
    • assign scores at the site level rather than the organizational level.

NACHC has significant concerns about both of these proposals, as discussed in our comments.  We have met with BHW staff on several occasions to discuss our concerns and are currently participating in a Workgroup to address them.  We also continue to monitor other developments impacting shortage designations, including issues around provider data.

  • No new 340B policies – but lots of questions: HRSA’s Office of Pharmacy Affairs published two proposed regulations around 340B (both on relatively minor issues), but to date neither has been finalized.  Most notably, the draft mega-guidance – published in August 2015 – has not been finalized.  In addition, CMS’s final rule on Medicaid managed care provided no clarity around the relationship between Medicaid managed care and 340B.  Nonetheless, the scrutiny on 340B continues to intensify, and health centers are finding it increasingly difficult to retain savings associated with 340B.  Also, NACHC continues to work with the 340B office to streamline the process for new health center sites and pharmacies to become eligible for 340B.
  • FTCA: NACHC staff have met with and written to HRSA leadership requesting clarity and/or a streamlined process to confirm that FTCA covers specific types of services provided to non-patients (e.g., writing prescriptions for Naloxone for patients to give to family members) and telemedicine “touches.”  We are waiting for an official response from HRSA.



  • Increasing how many patients a provider can treat with Medication Assisted Treatment (MAT): As many of you are dealing with the opioid epidemic in your communities, the Substance Abuse and Mental Health Services Administration (SAMHSA) increased the cap on the number of patients that a physician can treat using MAT, up from 100 to 275.   In addition, it is working on additional information on the implementation of the Comprehensive Recovery and Addiction Act, which would allow physicians assistants and nurse practitioners to use MAT.
  • SAMSHA is seeking to make improvements in privacy policies for patients seeking treatment for substance use disorder (42 CFR Part 2). To date, it has only released a proposed rule (see NACHC comments) that would update these regulations to consider improvements in health care to more appropriately integrate patient information, while maintaining appropriate privacy regulations.

It has been a busy, but important year in Regulatory Affairs and with a new Administration coming into office, we expect 2017 to be just the same.  We want to thank you all for your time and attention in helping to formulate NACHC’s position on these rules and regulations and look forward to working with you in the New Year.   And don’t forget – you can always find up to date information and resources on our Regulatory Affairs site.


Happy Holidays!

Colleen and Susan