Rhode Island seeks Medicaid overhaul, cap on spending

Washington -- A proposed Medicaid waiver to modernize Rhode Island's program is encountering growing opposition from physicians and others who fear cuts to their payments and to patients' benefits.

Gov. Donald L. Carcieri's administration is negotiating with the Centers for Medicare & Medicaid Services on a Medicaid waiver that would change nearly every part of the state's program. Its primary stated goal would be to move more Medicaid enrollees into home- and community-based care. Another goal is to empower beneficiaries to manage their care, find medical homes and receive more information about health care quality and cost.

But the waiver also would be the first to impose a dollar limit on combined state and federal Medicaid spending. The cap would be about $10.8 billion for the waiver's first five years -- $1.6 billion less than the state estimates it would need to spend under the existing program.

The waiver is also controversial because it would give the state administration near total authority to manage its Medicaid program. For example, it could change Medicaid eligibility and benefits or institute waiting lists for long-term care without federal review.

The bid for spending limits and unprecedented authority is stoking fears that the waiver's primary goal is to cut Medicaid spending rather than to improve the program. A perception that Carcieri's administration kept organized medicine in the dark when crafting the waiver has exacerbated concerns.

"This issue came out full form from the administration with very little input from or warning to the hospitals or physicians in the state," said Nick Tsiongas, MD, immediate past president of the Rhode Island Medical Society. "I don't think there is a single significant health care stakeholder that supports this waiver."

The proposal was written behind a "shroud of secrecy," said Andrew Snyder, MD, immediate past president of the Rhode Island chapter of the American Academy of Pediatrics. The medical society and AAP chapter are part of a coalition of health care organizations that oppose the waiver. The coalition has about 20 members.

Physicians in the state who see Medicaid patients have a personal stake in whether the waiver will receive federal approval, Dr. Tsiongas said. "I don't see how we can avoid drawing the conclusion that it will lower physician reimbursement."

Carcieri spokeswoman Amy Kempe said the waiver is still under negotiation and details are subject to change -- including the spending limits.

Some Medicaid reform is needed because the program is not sustainable, Kempe said. Medicaid spending accounts for about 25% of the state's budget and could reach 30% by 2011. The state could cut Medicaid each year, but that wouldn't improve the program's efficiency or value, she said.

The state is counting on the waiver to receive CMS approval quickly. Lawmakers used a projected $67 million in fiscal year 2009 savings from the waiver to help reverse a deficit of $430 million on a $6.9 billion budget. The fiscal year began on July 1.

Carcieri announced the waiver in January, unveiled a first draft in March and submitted it for federal approval in early August. Kempe declined to speculate on whether CMS might approve the waiver before the Bush administration exits on Jan. 20, 2009. The state Legislature will need to approve the final version for the waiver to take effect.

Kempe said she has heard concerns from physicians and others about the perceived lack of outreach. The administration crafted the waiver proposal with the advice of actuaries and Medicaid experts. State staff also answered questions about the waiver in budget hearings last summer, she said. "There have been and will continue to be communications with the advocacy groups, the providers, families and the populations it serves."

Public hearings on the waiver scheduled for September were canceled at the last minute so the format could be revised to allow more public input, Kempe said. She expects the hearings to be rescheduled soon.

Rep. Eileen Naughton, a member of the House Finance Committee, is still dissatisfied with the lack of communication. Lawmakers approved the fiscal 2009 budget after the administration promised to keep committee members informed of the waiver's progress, to hold stakeholder meetings and to allow a joint House-Senate committee to review the waiver. "None of this has happened. [The administration's] credibility is seriously in jeopardy," Naughton said. She agreed that the administration also did not invite physicians and other health care professionals to help write the waiver.

Lawmakers proposed smaller waivers that could be approved in 45 days and could achieve the same $67 million in savings, Naughton said. But the administration told her that recent budget cutbacks for state agencies have left them without enough staff to pursue both the comprehensive waiver and the proposed alternative. She expected further budget deficits in the state before the end of fiscal 2009.

Many would agree that more community- and home-based care is needed for Medicaid enrollees, Naughton said. But whether the capacity exists to begin moving many institutional patients into these new settings is unknown, said Ed Quinlan, the Hospital Assn. of Rhode Island's president.

Not enough specifics are available to determine how the waiver would affect care for people with disabilities, said Elizabeth Earls, president and CEO of the state Council of Community Mental Health Organizations.