Medicaid innovators weigh in on renewed block grant push

 

Another day, another effort to turn Medicaid into a block grant program.

Politico has reported that the Trump Administration and CMS Administrator Seema Verma are looking at ways to circumvent the legislative process to allow states to receive capped Medicaid block grants through the Section 1115 Waiver Program, which allows states to test and implement coverage approaches that don’t meet federal program rules.

The idea had long been an ambition for conservatives looking to reform entitlement programs who have argued that block granting would inject much needed flexibility and potential innovation into Medicaid programs laden with bureaucratic and regulatory red tape.

However, that reasoning doesn’t play as well with the people actually trying to boost innovation within Medicaid with tech-oriented solutions.

Adimika Arthur, the executive director of HealthTech 4 Medicaid, an industry group made up of venture-baked startups working in the Medicaid space, said that changes in the “regulatory maze” are necessary, but block grants aren’t the solution.

“Unfortunately typically block granting has had the overarching goal to control costs and providing opportunities for health tech within that may be very low,” Arthur said.

One area where she’s seen a lot of consensus for reform among the organization’s members has been in potential changes in procurement policy, opening up the ability for smaller upstart vendors to sell statewide.

Researchers have found that block grant program funding – which is often tied to inflation – generally declines over time and is vulnerable to economic shocks like natural disasters or economic downturns.

Abner Mason, CEO of ConsejoSano said while it’s important that states have more flexibility, that needs to be weighed against the potential harm to Medicaid beneficiaries.

“I think when you’re deal with this vulnerable population of Medicaid patients, it’s vitally important to their health that they get these services. That’s probably not the space where we want to be experimenting whether or not block grants will work,” Mason said.

“We have not had an economic downturn since the expansion of Medicaid through Obamacare but I’ve been around long enough to remember that these things still happen.”

Mason argued that flexibility in regulations and funding should be built off of a fundamental principal of trying to provide access to affordable and convenient healthcare for the population.

Medicaid – while still more politically vulnerable than Medicare – has received a boost in public opinion in recent years after the Affordable Care Act. In 2018’s midterm election, voters in three largely conservative states approved Medicaid expansion plans.

In order to provide more local control and flexibility over Medicaid programs, Section 1115 waivers have been utilized for a range of different proposals running the gamut recently from a full-scale transition to managed care in the case of North Carolina to the implementation of work requirements for Medicaid coverage in states like Arkansas and Kentucky.

“I think flexibility is important and when you offer flexibility sometimes people will want to do things that you may not agree with, but I’ve got to be consistent on letting groups try different things,” Mason said.

“However, we’ve got to be accountable for results and agree on the metrics for measuring them so we can judge a policy by its merits.”

From the perspective of Canary Health CEO Adam Kaufman, potential changes in reimbursement policy are much more important to spurring innovation than an overhaul in the way that Medicaid itself is funded.

A popular argument from block grant proponents is that the cost pressures from capped spending will drive states to look for novel and less costly solutions to continue to provide coverage.

“(Block grants) are not tapping into the central issue and you’d have to believe a long daisy chain of reasoning that if you give states more flexibility that they’ll actually radically change the way they do things,” Kaufman said.

“That piece bothers me less as an innovator and more as a citizen, the idea that extreme fear is going to drive innovation.”

Instead, where Kaufman said his digital therapeutics company has found success is through federal grants which have allocated additional funding to prove out their technology as a pathway to new sales.

Andrey Ostrovsky, Solera Health‘s chief medical officer and senior vice president of behavioral health, said he doesn’t completely demonize the idea behind block grants.

If done correctly, Ostrovsky said, they have potential to boost the flexibility to use money in creative ways and cut down on costs in the process. But that outcome relies on a number of unlikely assumptions.

“It assumes the entity administering the block grant can integrate new technology and approaches, has technology underpinning an advanced population health system and the ability to recognize and pivot their direction if things don’t go well,” said Ostrovsky said. “That’s exceptionally rare to find in a state Medicaid program.”

Instead, Ostrovsky predicted the likely reality of block grant waivers as similar to current work requirement programs which have already kicked thousands of beneficiaries off coverage and are currently tangled in a number of legal battles.

Ostrovsky, who previously served as Medicaid’s chief medical officer, said there’s plenty of avenues to push for innovation within Medicaid programs, but they rely on the hard (and often lengthy) work of coalition building with state policymakers and Medicaid administrators.

“The Medicaid program already has a lot of flexibility build within even the current system,” Ostrovsky said. “The real lever that entrepreneurs and their investors can pull is to reach out to state leaders and say ‘how can we help you’ and in turn learn how the funding flow works and who are the key stakeholders. You do that over a couple year period and some magical things can happen.”

Photo: zimmytws, Getty Images