Some Insurers Balk, but Analysts Are Not Overly Concerned by Medicaid Block Grant Guidance

On Jan. 30, CMS released its long-awaited “Dear State Medicaid Director” letter containing detailed guidance that paves the way for states to receive capped federal Medicaid funding in exchange for more flexibilities. While such a waiver program is a long way from implementation in any state, that didn’t prevent insurers from reacting and analysts from speculating about how it would affect the managed care industry.

CMS’s 56-page letter outlines what it calls the “Healthy Adult Opportunity (HAO) initiative,” which would allow states to apply for Section 1115 waivers that cap spending on their Medicaid expansion populations. States would assume financial risk for any costs exceeding an “annual aggregate or per capita cap.” If states opt for an aggregate spending cap — also known as a block grant — and are able to spend less than the cap, they may be eligible to use a portion of that savings to reinvest in their Medicaid programs.

© 2021 MMIT

Leslie Small

Leslie has been reporting and editing in various journalism roles for nearly a decade. Most recently, she was the senior editor of FierceHealthPayer, an e-newsletter covering the health insurance industry. A graduate of Penn State University, she previously served in editing roles at newspapers in Pennsylvania, Virginia and Colorado.

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