DHS gets preliminary approval for some of its BadgerCare cost cutting

Saturday, December 10, 2011 at 2:44 AM by

A letter sent today by the Centers for Medicare and Medicaid Services (CMS) gives Wisconsin preliminary approval to make some cost-cutting changes to BadgerCare, while notifying state officials that the federal waiver review process for most of the changes won’t be completed on the accelerated schedule sought by the Walker Administration.

The Department of Health Services (DHS) has proposed cutting about $554 million from Medicaid and BadgerCare in the current biennium (a task that grew considerably more difficult as DHS took almost 8 months from when it was delegated the responsibility for the cost cutting to when the department announced a preliminary outline of its plans). The state General Fund share of the proposed cuts would be about $220 million.

The proposed changes to BadgerCare would reduce GPR spending by about $116 million GPR in the current biennium, accounting for a little over half of the total savings. On November 10, DHS submitted a waiver request to CMS seeking authority to make about $90 million of the proposed cuts to BadgerCare in ways that potentially violate the “maintenance of effort” (MOE) requirements in the federal health care reform law. The letter sent today by CMS to DHS Secretary Dennis Smith addresses the proposed MOE waiver.

In short, today’s CMS letter says it probably won’t be able to act as quickly as the Walker Administration had hoped on the 221-page waiver request, although the letter clears a path for the state to begin implementing portions of its BadgerCare proposals that the federal agency says don’t require a waiver.

The Walker Administration has been insisting that if CMS does not approve the entire MOE waiver by the end of 2011, DHS would implement a fallback plan that will eliminate eligibility of 53,000 non-pregnant, non-disabled adults with incomes over 133% of the federal poverty level (FPL), beginning in July 2012 (and saving $60 million GPR). Today’s letter means DHS will have to decide whether it plans to follow through with the threat to cap adult eligibility, or whether it will consider postponing the state’s self-imposed December 31 deadline while it continues to discuss the waiver proposals with CMS.

A WCCF blog post today explains the CMS letter, and contains WCCF’s preliminary response.  In addition, a recent WCCF publication provides a side-by-side comparison of the consequences of approval of the MOE waiver versus the effects of the fallback option to cap adult eligibility.

Next week we’ll take a close look at the estimated number of people affected by each of the two options and the fiscal effects of various scenarios.

Jon Peacock

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