How to Enhance and Improve State Medicaid Plans Frank Rider Throughout 2013, this column is exploring five major strategies to optimize State Medicaid programs in support of systems of care. We began by examining opportunities to maximize enrollment and retention of eligible children in Medicaid and the Children’s Health Insurance Program (CHIP). In April/May we studied the nature and scope of the Early Periodic Screening, Diagnosis and Treatment (EPSDT) benefit to which all children enrolled in Medicaid are entitled. We then considered the broad scope of behavioral health care services and supports for significant mental health conditions, especially reflecting new policy guidance from the Center for Medicaid and CHIP Services (CMCS) and the Substance Abuse and Mental Health Services Administration (SAMHSA). We now turn our attention to the primary mechanisms available to States wishing to incorporate such expanded service options into their offerings. Recognizing that better health care, improved behavioral health outcomes, and cost-effectiveness advantages can result from program enhancement and improvements, the basic design of Medicaid is intentionally dynamic and able to incorporate emerging health care approaches that reflect the state-ofthe-art science as the field rigorously challenges itself to stay current on what works. The Medicaid program was initially created in 1965 under Title 19 of the Social Security Act. Since first enacted, many different mechanisms are now available for States to accomplish mandates that refer directly to sections of Title 19, which has undergone substantial reforms in recent years. This article looks at four of those mechanisms. Getting the Most from a State’s 1905(a) Authority Section 1905(a) of the Social Security Act lists more than 30 categories of healthcare services for which Federal Medicaid matching funds are available. Some of those categories are mandatory, in that States must provide them if they choose to participate in Medicaid, as all States have. Other services are optional, meaning that States may elect to provide them, or not, as they so choose. Some examples of mandatory and optional services follow:  Mandatory: Physicians’ services, inpatient hospital services, outpatient hospital services, federally qualified health center services, EPSDT services, family planning services, and laboratory and x-ray services.  Optional: Prescription drugs, home health services, prosthetic devices, personal care, targeted case management, eyeglasses, and medical care or remedial care furnished by licensed practitioners under State law. Amending a State’s Medicaid Plan allows it to incorporate new categories of optional services for all eligible populations. The Centers for Medicare and Medicaid Services (CMS) recently highlighted several States, including Massachusetts and New Mexico, have used their Section 1905a authority to improve their benefit design for children and youth with significant mental health conditions. However, States have sometimes been reluctant to use this authority when they might prefer to limit the scope of their changes to only certain subsets of their entire Medicaid populations (e.g., persons with intellectual disabilities, children and youth only) or geographic subdivisions of the State (e.g., a pilot demonstration project). To allow more limited program enhancements, Congress has vested CMS with the authority to waive certain provisions of Title 19, through specific exceptions limited in both scope and duration. Let’s look closely at two types of waivers for which State Medicaid agencies can apply. Enhanced Use of Home and Community-Based Services: 1915(c) Waiver Authority Nearly all States have used the 1915(c) Home and Community-Based Services (HCBS) waiver mechanism to develop improved benefit designs for Medicaid enrollees who have particularly serious types of healthcare needs that place them at risk of needing an institutional level of care (e.g., State hospital, psychiatric residential treatment facility). HCBS services have long demonstrated an ability to help even severely impaired individuals thrive in their communities. Many States, in fact, have been granted multiple 1915c waivers, tailored to serve many different healthcare populations. In recent years, about one-third of States have used this mechanism to enhance services and supports for young people with significant mental health needs, in particular. CMS has developed a special web page to support States that are considering applying for a 1915c waiver. You can view an example of a successful State waiver application from Indiana, here (PDF). CMS also provides a State Profiles tool at its Web site where you can readily see the current waivers that apply to your State’s Medicaid program. Enhanced Use of Managed Care Services: 1915(b) Waiver Authority Waivers are available under 1915(b) that allow States to use managed care in their Medicaid programs. In a managed care delivery system, people get most or all of their Medicaid services from an organization under contract with the state. Through particular payment mechanisms, like a “per member, per month pre-paid capitation” or a monthly “case rate,” managed care approaches allow Medicaid payors to dedicate known amounts of service funds to address a defined scope of health care needs for specific populations, spreading corridors of limited risk and flexibility among care management entities and/or networks of service providers. In a managed care environment, for example, the Medicaid program might allocate $30.00 per enrolled member per month to cover behavioral health service needs (recognizing that in a typical month perhaps 5-10% of enrolled members might have such a need). Managed care options began to proliferate during the 1980s as a way to manage the growth in healthcare costs. Today, CMS estimates that nearly 50 million Americans receive Medicaid benefits through some form of managed care,1 and almost all States have at least some managed care components in their Medicaid programs (Arizona and Rhode Island are States whose entire Medicaid programs are based on managed care approaches). States that use the 1915(b) waiver authority are able to use financial savings that accrue to the State to then provide additional services to the waiver 1 http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Delivery-Systems/ManagedCare/Managed-Care.html population. California, Iowa, Louisiana, and Michigan (PDF) are among States that have used the 1915(b) authority, sometimes in combination with the 1915(c) authority, to enhance their children’s mental health delivery systems. CMS offers extensive technical assistance to assist state Medicaid agencies to develop, enhance, implement, and evaluate managed care programs. Enhanced Use of Section 1115 Authorities The Social Security Act gives the U.S. Department of Health and Human Services the authority to approve experimental, pilot, or demonstration projects to further the objectives of the Medicaid program, such as improving care, increasing efficiency, and reducing costs. These Section 1115 demonstrations offer States more flexibility to design and improve their programs than otherwise allowed under Section 1915. In recent years, the Section 1115 mechanism is being employed with increasing frequency, and several recently approved Section 1115 demonstrations have included mental health services for children and youth. Most recently, Arizona received approval for a new level of Section 1115 demonstration to integrate physical and behavioral health services provided to children enrolled in the Children’s Rehabilitative Services program. One can find current, specific information about waivers in every state by using the “State Profiles” tool at www.medicaid.gov. Enhancements within 1915(i) State Plan Amendments In recent years, Congress created an additional option in Section 1915(i) of the Social Security Act that provides a new opportunity for States to enhance their State plans to cover more eligible members with additional services. Under 1915(i), States may not waive the requirement to provide services statewide, and they cannot limit the number of participants in the State who may receive the services if they meet the population definition. However, they can amend their State Medicaid plans to offer intensive homeand community-based behavioral health services (e.g., intensive care coordination, respite, parent and youth support partners) without the limitation in a 1915(c) waiver that restricts such services to only enrollees who are assessed as needing an institutional level of care. Section 1915(i) State plan amendments allow Medicaid programs to target their initiatives and limit costs by permitting them to identify a specific population and establish needs-based criteria to help them manage their service delivery system. Montana has one of the first CMS-approved Section 1915(i) State plan amendments (PDF) for children and youth with significant mental health conditions, and Indiana and Washington are currently pursuing enhancements through this option. Summary State Medicaid plan amendments and Medicaid waivers provide a selection of mechanisms available to States to enhance or otherwise improve the benefits they provide to members who have significant behavioral health needs.