Announcer (00:05):

Welcome to Hospitals in Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn.

Chip Kahn (00:14):

Hello and welcome to Hospitals in Focus. We appreciate your listening.

(00:20):

In this episode, we will look at the Medicaid program, a program that covers over 86 million of the most vulnerable Americans, ranging from young mothers to babies to seniors in nursing home care. Medicaid has been in the headlines a lot this year As public policy makers on the state and federal levels discuss ways to manage enrollment and bring spending under control. It is now the largest funded government health program in the nation. Medicaid is run primarily by the states and faces many immediate issues that threaten coverage from eligibility redeterminations to legislative efforts to mandate work requirements. The implications of these challenges could have far-ranged effect on the lives of millions of our country’s most vulnerable patients.

(01:14):

Here to walk us through these policies is Dr. Lynn Blewett, a professor at the University of Minnesota School of Public Health, where she has built a reputation as one of the nation’s foremost experts in health policy, access to care, and Medicaid coverage. Thanks so much for joining us today, Lynn.

Dr. Lynn Blewett (01:32):

Thanks, Chip. Happy to be here.

Chip Kahn (01:34):

As we get started, let’s talk a bit about you. What drew you into research and your specialty of Medicaid?

Dr. Lynn Blewett (01:43):

Well, once I got my PhD from the University of Minnesota, I left and went to work for the state as their health economist, and I started a small group looking at healthcare markets spending and the distribution of health insurance coverage. And I got very involved in state health policy, and at the time, it was the beginning of our Minnesota Care Program, which was a forerunner for the Children’s Health Insurance Program at the federal level. So we started that program with state dollars, which is now matched with federal funds.

(02:12):

And so I was concerned about how people got coverage, and at the time, we thought we could get to universal coverage in Minnesota. And so I was working very hard at avenues and mechanisms to increase coverage and access and I’ve just stayed at the state level, which at the state level, Medicaid is really where the action is in terms of access expansion. That’s kind of how I got started.

Chip Kahn (02:34):

Yeah, I guess from that period, Medicaid became the largest. It now covers more Americans and spends more money than even Medicare, which had been our largest program. So you are where the action is.

(02:47):

So let’s talk a bit about the complexity though of this program because it’s not simply a healthcare program per se or a healthcare delivery program. It does so many other things for the Medicaid recipients and the role it plays in our healthcare system. Where do you see it headed in the future?

Dr. Lynn Blewett (03:07):

It’s an interesting program in that it started as a program for moms and kids and low-income families, and now it covers the long-term care costs of the elderly and the disabled. The ACA expansion to include adults without children are now covered, and so it is almost one out of every five individuals in the country are enrolled in the Medicaid program.

(03:30):

Now, the costs are going up as healthcare costs are increasing. States have to manage their budgets every year or two years. Most are on a two-year cycle, and so there’s pressure in terms of financing and where the money’s going to come from. And so both at the federal level, as we’ve just seen with this new debt ceiling debate and concern about what’s going to happen to the Medicaid and our other subsidized programs, there’s a tension between the importance of this program in providing coverage for a substantial part of our population and the costs that incur because of that.

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And it’s all tax-supported, so it relies on state and federal money, and because states have to balance their budgets and have less finance capability than the federal government, it really is a federal government decision in terms of either expansion or changes in that financing strategy.

Chip Kahn (04:25):

Just as an aside, in terms of looking to the future, where do you see states going? Because you bring up this really key issue that differentiates the federal side of it from the state side. At the state side, you’ve got this issue of balanced budgets in most states, having to balance their budget, and the fact that Medicaid, I think frequently, could be the largest or one of the largest items in their budget. Do you see constraint at the states becoming a problem? Will any states, do you think, back off Medicaid to the extent they can within the federal requirements?

Dr. Lynn Blewett (05:00):

With the ACA expansion, the federal government is paying 90% of the cost of that expansion. So most states, it makes financial and economic sense to participate. There are 10 states that haven’t expanded and why they haven’t expanded is partly political and partly budgetary, but any economic analysis shows that it’s a boon to the states to do the expansion.

(05:24):

And the states that have some revenue, Minnesota just came off a huge surplus of $18 billion, California has a huge surplus, and the states are now providing coverage expanding to undocumented and others who are not currently eligible with state-only dollars. So they’re doing what they can to expand. I don’t see the feds supporting that progress, but as we saw with the kids, they didn’t cover low-income coverage families back in the ’90s and they’re now fully supporting that expansion. So I think states are pushing the envelope a little bit where they can, and the entitlement programs are such a huge issue at the federal level in terms of the divide between the Republicans and the Democrats that I just don’t think anything substantial is going to happen in the short term.

Chip Kahn (06:12):

One thing unfortunately that is happening in the short term is as a result of COVID, where there was a moratorium on determining eligibility, Medicaid covered many who had not gone through a new process during their time on Medicaid. Now with the COVID Public Health Emergency going off, Congress has moved beyond COVID. We are going through a period where what’s on the top of everyone’s mind is this action by the states of redetermination of Medicaid eligibility. It is something that had happened every year on a rolling basis and now is being reinstituted.

(06:52):

It’s not always in the headlines, and actually, it’s not being discussed as much up here as I think we would hope, but this is a very large change from our COVID period and why it’s risen to such importance this year.

(07:11):

How do you see this playing out in the various states? I know it’s maybe not consistent across the states. And also, I’d like to get your feedback as to how you think different states are handling trying to transition some of these current Medicaid recipients that may lose out through the redetermination in terms of their coverage.

Dr. Lynn Blewett (07:31):

We, in my niche of health policy, we call this “The Medicaid Unwinding” or “The Great Unwinding,” and as you said, during COVID, states got a bump in their federal match to their Medicaid program of 6.2%. So they got a financial incentive, and the agreement was anybody who enrolled in Medicaid, they would keep on, and the idea was to make sure that they would get their COVID vaccines and their treatments and have access to needed care. And so Medicaid enrollment grew and then it stayed stagnant because there wasn’t any redetermination during that time period.

(08:08):

Well, as of April 1st of this year, states have started to redetermine all of the people on their programs to make sure they’re eligible because some programs, some people have gotten jobs and gotten employer-sponsored coverage, others have moved, maybe they’ve died. And so all of those people are still on the roll. So they’re systematically going through the Medicaid rolls and redetermining whether they’re income-eligible for the programs that they’re in. This is a huge undertaking by the states.

(08:39):

The advocates are super concerned about states not doing due diligence in terms of keeping people who are eligible enrolled. For example, Arkansas. There’s a period, states can take up to 14 months, and most states are doing their redeterminations across that whole time period. So they’re doing a chunk every single month, they’re going through different categories, and many states are prioritizing children, newborns, people with chronic conditions. And so there are mechanisms to try to focus on those that need coverage the most. But then there’s states like Arkansas and Florida, which have hit the news, the national news recently, which in Arkansas, they’re pursuing it very quickly and they are going to be done, they started on April 1st and they’re going to be done within six months.

(09:25):

So a new analysis showed that 500,000 people across 11 states have already fallen off Medicaid, and partly that’s due to what they call procedural errors. So you send a letter, nobody responds, you drop them. Other states are sending a letter, then they’re sending another letter, and there’s just more active engagement with the enrollees. So there’s a lot of conflict between some state governments and the advocates who are really pushing to slow this down, make sure people who are eligible are covered, and then for those who are not eligible, that they get access to the marketplace, either the healthcare.gov, the federal or the state marketplace plans, which they’re likely eligible for a subsidy.

(10:09):

So we’re all watching the numbers and there’s not really good time-relevant information right now. We’re looking at the monthly enrollment reports and advocates are talking to members who have been dropped, and a lot of the members don’t know they’re doing this unwinding. A lot of people don’t even know they’re enrolled in Medicaid, so it’s kind of a little bit of a cluster.

Chip Kahn (10:31):

Lynn, to add to this complexity, you’ve had a movement in many states in recent years away from Medicaid recipients simply being in a fee-for-service Medicaid program and being signed up for Medicaid-managed care where insurance companies, HMOs, are providing the coverage.

(10:51):

How do you see this process you’re describing playing out regarding the role of the health plans where someone is actually enrolled in an HMO or in a health plan, and even though they’re a Medicaid recipient, as far as they know, they’re covered by Aetna or covered by Centene or covered by Kaiser Permanente, and then all of a sudden, they’re into this situation where the state is going through a redetermination process?

Dr. Lynn Blewett (11:20):

Yeah. Again, it varies across states, and on average, about 55% of all the Medicaid enrollees are in managed care, but that can be up to, in California, it’s 80%; Minnesota, it’s 84% of their enrollees. And so in Minnesota, in California, they’re working with the health plans to communicate with members and they’re sharing data and information and the health plans are on board.

(11:45):

When the health plans get their capitation rates, and people don’t know they’re enrolled, they’re not using services, so it’s been a boon to the health plans, especially in the last year where people are obviously transitioning to other employment and other coverage options.

Chip Kahn (12:01):

At the same time, you’ve got clinicians and hospitals out there who’ve been providing care to many of these who may lose out in the redetermination process. At the community level, how do you see this impacting those who provide care? And I know it’s something that is being looked at by the research community, and what do you think is going to happen here with those who are right now in that group that could be going through a cancer therapy or some other kind of chronic care services that they really depend on?

Dr. Lynn Blewett (12:40):

That’s the biggest concern. And I think for hospitals, there’s going to be, in the short term, arise in uncompensated care. I think federal qualified health centers are going to see an influx of people, and they may be doing some of the enrollment activities when someone comes and says, “I don’t have Medicaid anymore, I don’t know where to go,” and they might be helping them get enrolled in whatever they’re eligible for.

(13:01):

So there’s definitely going to be a transition period and a lot of researchers have estimated how many that’s going to be, how many got employer coverage, but it’s all simulation and estimation. Nobody really knows, and we probably won’t know for another year how this all shakes out, but there’s definitely going to be more uninsured.

Chip Kahn (13:20):

Obviously that’ll be an issue for those who provide care.

(13:24):

Another topic that is much discussed right now in the congressional context because it was included in a House bill, Medicaid work requirements. That was not included in the ultimate debt ceiling package, but it’s clear that it’s on the agenda of some in Washington. What do you know about this policy? Has it been applied? I know there are a few places where pieces of it have been applied and where it’s been utilized. What are its implications? What have been the effects?

Dr. Lynn Blewett (13:56):

Well, work requirements for Medicaid haven’t worked very well, and the reason is that there’s an estimate that eight out of 10 Medicaid recipients who are not blind, disabled, or are able to work, already work. They either work part-time or full-time, and so you’re really targeting a very small number of people. And then in order to get them into a work program, Medicaid is not a work access program. Medicaid is a healthcare program, healthcare coverage program. So you have to connect with your department of employer relations or you have to find a place to get them enrolled in some kind of job-finding program. Medicaid doesn’t do that.

(14:38):

And so there’s an extra added paperwork of helping these people find a place to find employment or show that they’re looking for employment. And it’s a couple layers of bureaucracy to make that happen. And then people have to document that they are indeed working. So then you have to work with the employer and get their W-2s and get their pay stubs.

(14:58):

And so once states have figured this out, and early on, Arkansas was the first state to do this work requirements, and once they found out how much it cost and the bureaucracy involved in doing the work requirements, they stopped. It didn’t make any sense to spend a significant amount of money to get people into work programs that just weren’t working.

(15:21):

I don’t mean to pick on Arkansas on this call, but they’re back with another request for a waiver to allow them to do work requirements again, so we’ll see how that goes. It’s one way to limit your enrollment, and it’s one way to sort of try to do some cost efficiencies by not allowing people on your rolls, but it’s very Draconian, and the evidence is that it doesn’t work.

Chip Kahn (15:46):

Dealing with the most vulnerable, which is in a sense, the definition of the Medicaid program, one of the important aspects of it is something that our audience may be familiar with, which is Medicaid Disproportionate Share Hospital payments or DSH payments for our purposes of discussion. We’re heading to one of those policy cliffs right now if Congress doesn’t act to prevent before the end of the year reductions in these DSH payments.

(16:17):

How important is this program to Medicaid recipients, to the Medicaid population, and beyond that, to the providers that serve them? And if we did go over the cliff and have pretty significant cuts in the program, what would be the possible effects of this?

Dr. Lynn Blewett (16:39):

So the Disproportionate Share Payments are one of several supplemental payments that are included in the hospital rates or the managed care rates. And it has made the program complicated in terms of its financing, but the goal was to pay for the uninsured and unpaid costs of care for the uninsured and for the Medicaid shortfall, so the amount that Medicaid pays in relation to your costs.

(17:08):

In MACPAC, so that’s the advisory committee that advises Congress, and one of their recent reports this spring was that they found no meaningful relationship between the Disproportionate Share allotments and the intent of the program. So I think this has raised concern with the advisory committee and with Congress, it’s like, well, if we are providing these for hospitals that serve low-income populations, but it’s going to hospitals that serve others, don’t have a patient base that’s low-income, is this program really meeting its goals and objectives? So, I think they’re taking a critical look.

(17:45):

The problem now is that under the American Rescue Plan, DSH allotments were increased by $1.5 billion. So you have your regular DSH payments, plus your extra DSH payments. I think there’s a significant concern about the safety net hospitals with this cut. And again, it depends on each state, how much DSH they get, and how they distribute it across hospitals and that varies, and it’s not always easy to find that data and information.

(18:13):

I think there’s going to be pressure. They’ve extended the cuts over a period of time, which I think will be helpful. And then I think they’re trying to renegotiate sort of the distribution, and so I think that’s going to be on the plate for several years. I think people are going to be watching, advocates, in addition to hospitals and providers, are going to be watching these cuts and the impact.

Chip Kahn (18:36):

Medicaid payment, and then all these sorts of different streams of funding and the formulas that are used for this federal-state mix funded program, are simply to say extremely complex, and in recent years, actually to add another layer of complexity, is the addition of something called supplemental payments. One way to boil it down is to say, states make arrangements with hospitals to maximize the financial help they get with uncompensated care for higher costs and the costs for higher cost Medicaid patients. It is vital to the hospitals, but the last two administrations seem to want to cut these payments.

(19:23):

Obviously, I think for our audience here, we could take a whole podcast on even just explaining how supplemental payments work, but basically to suffice it to say, through these arrangements, the states have found ways to increase the federal match and to get more money to the hospitals.

(19:43):

How do you see this process though playing out in terms of federal policy towards these programs that maximize federal contributions, enhance the ultimate payments to hospitals, but probably pull more from the federal government than they otherwise would’ve wanted to spend on the care they’re paying for?

Dr. Lynn Blewett (20:05):

Yeah. Well, most states have at least one provider tax that’s used to support their Medicaid financing, and CMS and the Congress has approved of these taxes as long as they meet certain conditions. One, that they’re broad-based, so it’s not like we’re only going to tax teaching hospitals or we’re only going to tax for-profit hospitals. It has to be broad-based. It has to be uniform, so you can’t tax one hospital more than another. It has to be all uniformly applied.

(20:33):

And then the key one that I think you’re getting at is what they call “hold taxpayers harmless,” which is kind of a weird way to say they don’t want to fully replace the amount of tax that a hospital contributes. So a for-profit hospital with very low Medicaid payments may be paying, because it has to be uniform, may be pay paying more in taxes, but they don’t want the redistribution method to be they get their full tax reimbursed through the Medicaid program, through the supplemental payment to the hospital.

(21:05):

And there’s some indication, and so CMS has been on states to monitor this over time. And I think recently, there’s been, and I haven’t found who’s the culprit, but there was guidance released by CMS that hospitals were actually doing this on their own. So the state wasn’t pooling money and then redistributing to the hospitals, that they were redistributing it, they were giving it to an entity, and the hospitals were doing their own redistribution. And so the message to the states was, “You need to figure out what’s going on in your state in terms of the distribution.” And the intent is that there be a redistribution, so the hospitals that serve less of the Medicaid population and uninsured contribute more towards, and that’s distributed to those who are serving more of the low-income.

(21:55):

It’s super interesting, but states have been doing this for a long, long time, and CMS has these core guardrails, if you will, and hospitals have found ways. And you can see that a hospital saying, “Well, I don’t want to pay for… I want to get the full amount back that I contributed or close to the full amount.” And that’s against the, basically, federal law. And so there’s kind of another crackdown, and this has been an issue over the years and it kind of bubbles up and then it gets back under control and there seems to be kind of new mechanisms. And in the guidance, they say it might be a formal agreement or an informal agreement between providers, which makes me think that it’s happening sort of outside of the realm of the state contracts.

(22:43):

So I think it’s going to get figured out, and it’s this sort of push and pull between the private sector and the public sector of where that money goes, but the intent is that the Medicaid funds and the redistribution go to low-income hospitals that are serving Medicaid.

Chip Kahn (23:01):

Do you have any sense from the research you mentioned on Medicaid Disproportionate Share that there seemed to be some kind of disconnect between what would apparently be the attention and the actual distribution of the funds? On the supplemental side is there any research that tells us whether it is going to enhance, in a sense, however you would define the right hospitals?

Dr. Lynn Blewett (23:24):

With Disproportionate Share, there’s more clear evidence that there’s not a relationship here. There’s less available, publicly available data, to tell us that, but it’s clear from CMS’s strongly worded letter that they have some indication that this is happening and that they’re going to be reviewing any provider taxes or any health-related taxes and make sure that they meet these core principles of the policy.

Chip Kahn (23:55):

I guess it is the case that these approaches are really being used both in states. We’re now down to, I guess, almost single digits. We’re still a little bit above that in terms of states that have not expanded Medicaid against those who have. Is there any sense that it’s used more in the states that haven’t expanded Medicaid or is it pretty evenly divided across the states as an approach?

Dr. Lynn Blewett (24:19):

No, I think it’s pretty evenly divided. And I think this is why Medicaid is interesting to work with, but also gets complicated is that the Congress, maybe with CMS, I don’t know, has used the Medicaid program to achieve other policy objectives. So when we had the COVID, they bump up the federal matching rate to get money to the states to do COVID stuff. And then they pay 90% match to get states to do electronic medical records and to improve their technology. So that’s a 90% match as opposed to in Minnesota, we get 50% match. You get higher rates to do different things.

(25:00):

So one of the things that some of the states negotiated during, I don’t even know, I guess it was early Obama Administration, was 1115 waivers to do these low-income subsidy programs. They’re uncompensated care pools, which is made up of Medicaid money. And so the Medicaid, it’s through a 1115 waiver, so it’s a waiver process. You make an application to the government and states like Florida, Texas, but also California and Massachusetts, so it’s not just the non-expansion states, negotiated. We were going to have this uncompensated care pool and provide payments to hospitals who do substantial care for uninsured and low-income Medicaid populations. So it’s another flow of money to those hospitals in terms of Medicaid money for doing uncompensated care.

(25:48):

Now, this ship is not in the press at all because it’s super hard to explain. And then every state has their own deal with CMS in terms of how it’s set up, but it’s a significant amount of financing into those states, and I think is one of the barriers for them to expand because they’re already getting a big chunk of Medicaid through this program. And for Florida, DeSantis got that waiver approved before President Trump left office, and then that’s approved through 2030. So he has that uncompensated care pool that’s pretty much only for hospitals, directly to hospital payments for uncompensated care, which is what the expansion is supposed to do.

(26:29):

Is it better to do this low-income subsidy pool or uncompensated care pool or expansion? And for now, they have less pressure. The hospitals are not clamoring at the door because they already have a pool that’s financing that. But not every state. There’s only like seven states that have it. So it isn’t like something you can set a policy, and I know the Obama Administration tried to pull back on some of them. Two states, Hawaii and I can’t remember the other state, theirs have expired, but Florida and Texas have extended their program.

(27:02):

So again, it’s like almost to really understand the financing, you can look at the Medicaid program and the federal match, but then all these supplemental payments that come through, and then the managed care, and then uncompensated care pools, which don’t fit into really any of those categories. So there’s a lot of flexibility in the Medicaid program and states that know how to use that flexibility and can get their programs through under an administration that’s amenable to their ideas, that’s kind of how things work.

Chip Kahn (27:33):

Well, we’ve delved into the Medicaid program this afternoon, and despite its complexity, undeniably in terms of those who are covered by it on the ground, is a link to life that’s really critically important to them.

(27:50):

Lynn, we deeply appreciate all the work you do in enhancing knowledge about these programs that are so complicated. It’s critically important. We really thank you for being with us this afternoon and know that our audience will be very interested in the discussion that we just had.

Dr. Lynn Blewett (28:06):

Thank you, Chip. I really enjoyed it.

Announcer (28:13):

Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at FAH.org. Follow the Federation on social media @FAHhospitals, and follow Chip @ChipKahn. Please rate, review, and subscribe to Hospitals in Focus.

(28:32):

Join us next time for more in-depth conversations with healthcare leaders.

Lynn A. Blewett, PhD, MA

Dr. Blewett is the founding Director of SHADAC, The State Health Access Data Assistance Center, as well as a Professor in the Division of Health Policy and Management at the University of Minnesota, School of Public Health, where she teaches graduate courses on the U.S. health care system and international health systems.

Dr. Blewett has a committed history in working and researching health policy, access to care, Medicaid coverage, and payment policy with experience at both the state and national levels. She has expertise in leading applied policy research, directing research with diverse funding, analyzing state and federal data resources, and translating research to inform health policy. Her health policy experience includes legislative work for the U.S. Senate and state policy work as Director of the Health Economics Program for the Minnesota Department of Health.

Dr. Blewett has published over 50 articles related to health and health care. She has served as Chair of the National Center for Health Statistics (NCHS) Scientific Advisory Board and as a Member of the National Committee on Vital and Health Statistics (NCVHS). Dr. Blewett is also a member of the National Association of Social Insurance (NASI), held a position on the Executive Committee of the board for AcademyHealth, and previously served on the board for the University of Minnesota Medical Center (UMMC). Locally, Dr. Blewett served on the Governor of Minnesota’s state task force on health care financing in 2015 and 2016, developing specific recommendations related to Medicaid financing and access to care, and was a board member of a local access-to-care program “Portico,” which provides outreach and enrollment for Medicaid and safety net programs.

Dr. Blewett holds a Ph.D. in Health Services Research, Policy and Administration from the University of Minnesota, a master’s in Public Affairs from the Hubert H. Humphrey Institute of Public Affairs at the University of Minnesota, and a B.A. in Psychology from the University of Wisconsin at Madison.