Trump Administration Enables States to Convert Medicaid Funding into Block Grant

The Centers for Medicare and Medicaid Services (CMS) has released the Healthy Adult Opportunity Initiative, which would enable states to convert Medicaid funding into a block grant. The initiative will only be applicable to adults under age 65 who are ineligible for Medicaid because of disability or need for long-term care services.

Under this rule, states may voluntarily apply for a waiver to receive a fixed amount, negotiated according to the state’s historic costs and other factors like national and regional trends, to pay for services for adults who aren’t elderly, disabled, or pregnant, CMS explained in a press release announcing the new rule.

“This opportunity is designed to promote [Medicaid’s] objectives while furthering its sustainability for current and future beneficiaries, and achieving better health outcomes by increasing the accountability for delivering results,” said CMS Administrator Seema Verma. “We’ve built in strong protections for our most vulnerable beneficiaries, and included opportunities for states to earn savings that have to be reinvested in strengthening the program so that it can remain a lifeline for our most vulnerable.”

However, critics argue that any type of cap on Medicaid funding is harmful. “Medicaid block grants have rightly been rejected by Congress,” said Federation of American Hospitals President and CEO Chip Kahn. “Rebranding them under the thin veil of a demonstration doesn’t change the fact they would lead to arbitrary cuts that will weaken Medicaid for those most in need.”

So far, Tennessee is the only state to apply for a waiver to receive a block grant.

Sources: Fierce Healthcare, January 30, 2020; CMS press release, January 30, 2020.