United States: Wisconsin Eyeing A Controversial Section 1115 Waiver

Last Updated: May 5 2017
Article by Christian Springer

Another state is stepping up to bat following Secretary Price's and CMS Administrator Verma's letter to state governors promising enhanced flexibility for their Medicaid programs.  Wisconsin has recently unveiled its plan to submit a new Section 1115 waiver application to CMS by May 26, 2017.  In short, the Wisconsin waiver seeks to infuse the state's Medicaid program with features from the commercial sector, and it does this by borrowing some elements from the Healthy Indiana Plan (HIP 2.0) and Kentucky waivers, which Seema Verma helped design before becoming CMS Administrator.  We've discussed those waivers here before.

But there are also some key distinctions between this waiver and the Indiana and Kentucky waivers, one of the most notable ones being that the Wisconsin waiver is not a Medicaid expansion waiver.  Rather, it's simply revamping its existing Medicaid program with respect to non-pregnant, childless adults between the ages of 19 and 64 with incomes up to 100 percent of the federal poverty level (FPL).  Further, the Wisconsin waiver would establish an unprecedented "time limit" on Medicaid eligibility.

In general, the Wisconsin waiver could offer some unique opportunities for stakeholders to approach the provision of healthcare from a much more holistic perspective, taking into account factors such as education, employment, healthy lifestyles, and substance abuse challenges.  But as is the case with all waivers that seek to emulate the commercial sector with a vulnerable population like Medicaid, implementation of the Wisconsin waiver will need to be closely monitored to ensure it does not produce opposite effects to its intended design.

Below we take a look at some of the Wisconsin waiver's key design features.

Monthly Premiums

The Wisconsin waiver would establish monthly premiums ranging from $0 to $10 per household depending on household income.  For example, Medicaid beneficiaries with 0% to 20% of the federal poverty level will not need to pay monthly premiums, while beneficiaries between 81% to 100% of FPL would pay the full $10.  Importantly, the household income tiers will not affect currently applicable copayment policies of the program (but the waiver would add a $8 copay for an ER visit and a $25 copay for subsequent visits during a 12-month period).  Furthermore, third party payers would be allowed to offer premium assistance to beneficiaries.

The Wisconsin waiver would also waive 50% of the monthly premiums for beneficiaries that engage in "healthy behaviors."  Conversely, beneficiaries engaged in behaviors that "increase their health risk" will owe the full standard amount.

Additionally, the Wisconsin waiver would "lock-out" beneficiaries for up to six months who fail to make their premium payments.  These beneficiaries could, however, pay their full balance and be allowed to re-enroll.  If beneficiaries are unable to pay their full balance, they may re-enroll notwithstanding any unpaid premiums after six months.

Healthy Behavior Incentives

As mentioned above, beneficiaries could reduce their monthly premium payments by 50% if they engage in "healthy behaviors."  Individuals who are found to have a health risk behavior, but who actively manage this behavior and/or have a condition beyond their control, will also have their premiums reduced by half.  Health risk behaviors are defined as things like alcohol consumption, body weight, illicit drug use, seatbelt use, and tobacco use.  According to the Wisconsin waiver, there would a threshold that determines when these behaviors are health risks.

Health Risk Assessment (HRA)

The HRA is the principal mechanism used to determine whether beneficiaries are engaging in healthy behaviors and are eligible for reduced premiums.  It would be performed twice: at enrollment and again at the annual renewal.  HRA completion would not be a condition of eligibility and it would simply operate to reduce premiums for eligible beneficiaries.

Time Limit on Medicaid Eligibility and Work Component

Among one of the more unique aspects of the Wisconsin waiver is that it would impose a 48-month (4 years) eligibility limit for beneficiaries.  This would be calculated on a cumulative basis.  Upon reaching the limit, beneficiaries would not be eligible for Medicaid until 6-months have elapsed.

Importantly, the time that a beneficiary spends engaged in employment or training programs (work component) would not count towards their 48-month eligibility limit.  The work component would apply to beneficiaries between the ages of 19-49, and exemptions to both the time limit and work component would align with the FoodShare Employment and Training program.

Substance Abuse Identification and Treatment

The Wisconsin waiver also attempts to address the growing Opioid epidemic by requiring individuals to undergo a drug screening assessment and, if indicated, a drug test.  Beneficiaries who test positive for the drug test and do not have a valid prescription will be referred to a substance use disorder (SUD) treatment program.  Beneficiaries who fail to complete the drug assessment or drug test will be ineligible to receive Medicaid benefits entirely, and refusal to participate in a SUD treatment program will also lock out the beneficiary from benefits for six months.

Reform to the Institutions for Mental Disease (IMD) Exclusion

Another notable aspect of the Wisconsin waiver is that it seeks a residential SUD treatment waiver of the federal exclusion for IMD reimbursement.  According to Wisconsin, the state is developing a benefit to provide full coverage of residential treatment, but in order to implement this benefit, it needs Medicaid funding to be available to reimburse residential SUD treatment provided in facilities that qualify as IMDs.  This is because Medicaid limits reimbursement for services provided in IMD facilities based on a decades-old policy position that states should bear primary responsibility for funding inpatient psychiatric services, with the exception of Medicaid beneficiaries under age 21.

In addition, Wisconsin is requesting a waiver of the 15-day limit for IMD coverage that was provided in the Medicaid Managed Care rule published in May 2016.

To view Foley Hoag's Medicaid and the Law blog please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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