Medicaid State Plan Amendments and Waivers? Part 1

The Medicaid program exists in every state in the nation.  Yet there is an old saying among Medicaid advocates, “Once you are an expert on one state’s Medicaid program, you know all there is to know about one state’s Medicaid program.”  Every state Medicaid program is unique.  States have tremendous flexibility in designing their Medicaid programs.  West Virginia can change many aspects of Medicaid in our state at any time.

 

Medicaid is a state and federal partnership program that provides quality, affordable health insurance to low-income, seniors, and people with disabilities.  The partnership is financial – every dollar that a state spends on Medicaid is matched with federal dollars.  The federal government pays for at least half of all Medicaid costs in every state.  

The rate of the match is different in every state based on the state's per capita income.  The poorer the state, the higher the federal match.  West Virginia has the second highest match in the country (only Mississippi has a higher match rate).  There are also special higher match rates for certain program spending.  The largest example is the higher match rate – the feds pay 90 percent - that states receive for care provided to the Medicaid expansion population under the Affordable Care Act.

The benefit of federal Medicaid matching dollars comes with some obligations.  West Virginia must operate our Medicaid program in compliance with the basic requirements in the Medicaid statute in the Social Security Act, and as interpreted by federal rules and guidelines.  But again, there is plenty of room for innovation and for making sure that Medicaid is designed to best fit the needs of West Virginians.  

To make changes to the Medicaid program, West Virginia can use:

1) a State Plan Amendment (SPA), or

2) a Waiver.

Advocates working to improve the Medicaid program need to understand these two ways that the Medicaid program can ask for approval from the federal Centers for Medicare and Medicaid Services (CMS) to make changes to the program. Basically, it is much easier for West Virginia to make a change with a SPA than a Waiver.  There are different kinds of Waivers but all are time-limited and require more data from the state on projected cost and federal budget impact, and involve more back-and-forth negotiation between the state and CMS.  Waivers are a heavier lift from an administrative perspective for a state.  And depending on politics at the federal level, a Waiver request may open the door to changes not necessarily desired by the state. 

This blog will focus on SPAs.  We will cover the different kinds of Medicaid Waivers in an upcoming blog.  There are five basic kinds of Waivers that allow a state to change different parts of the Medicaid program.  West Virginia, like other states, has more than one Waiver in place.

Medicaid State Plan Amendments 101

Every state has a Medicaid State Plan that outlines the details of its Medicaid program.  Certain changes can be made at any time to the Plan by filing a SPA with the CMS Regional Office.  The process is simple and relatively easy.

West Virginia can use a SPA to change administrative aspects of our Medicaid Plan.  This includes changing provider payment rates, adding or cutting optional services, adding managed care, and changing benefit structures like prescription limits or cost-sharing.

The proposed changes in the SPA must comply with federal Medicaid regulations.  So, for example, West Virginia can use a SPA to change optional services but not mandatory services, and cost-sharing changes must comply with federal rules. Most SPAs must apply to Medicaid enrollees throughout the state, not just in certain areas (a requirement called “statewideness”).  Most SPAs can only propose benefit or service changes that are available to all people eligible for Medicaid, regardless of their eligibility category (“comparability”). 

West Virginia can file a SPA by submitting the pages from the existing Medicaid State Plan that are going to be changed to CMS.  CMS has 90 days to review the SPA request.  If CMS has concerns or thinks the SPA violates federal requirements, CMS can request further information and a back-and-forth negotiation process begins.  The 90-day approval clock is stopped during this period of negotiations. Sometimes the state can move forward with the change while it works through any questions from CMS. This process of negotiation is usually faster and less complex than what occurs when a state submits a Waiver request.  The approval can apply retroactively, so that West Virginia can receive federal matching dollars for the change during the negotiation time period.

Importantly, a SPA change does not have to meet any budget requirements or be cost-neutral to the federal government.  This is different from Waivers, which generally have budget requirements.

Also, important to note, Congress can always change the Medicaid statute and any existing rules.  Congress can encourage states to change their Medicaid programs in a certain way by allowing the change to be a state option that can be implemented with a SPA rather than a waiver. Most recently, Congress is considering allowing states to use a SPA instead of a Waiver to extend postpartum coverage to Medicaid-eligible women from only 2 months to 12 months.  

For state advocates, understanding when a Medicaid improvement or change takes a SPA rather than a Waiver is important.  The support for the positive change may be much greater if it only takes a simple SPA and does not require a longer, more difficult, and sometimes risky Waiver approval.  On the other hand, many important changes will take a Waiver and working with the West Virginia Department of Health and Human Resources to understand the path forward is a key part of successful advocacy.


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