CHA News Article

CMS Announces Medicaid Block Grant Demonstration
For CEOs, CFOs, chief legal counsel, government relations executives, finance staff

The Centers for Medicare & Medicaid Services (CMS) has issued guidance to state Medicaid directors announcing a new demonstration called the Healthy Adult Opportunity initiative. It would allow states to operate their program within a defined budget target – set on either total expenses or per-enrollee basis – commonly known as “block grants.”

The targets will be negotiated based on each state’s historic costs and other factors, such as national and regional trends. CMS notes the guidance does not impose any requirements on states, and applications for the initiative will be approved on a case-by-case basis. CMS expects to approve demonstrations for an initial five-year period, with the potential for renewal up to 10 years.

Under the initiative, states can design a model to provide coverage for adults under age 65 who are eligible for Medicaid under the Affordable Care Act expansion or other coverage programs. However, those enrolled in Medicaid for disability or long-term care services — as well as children and pregnant women — would not be included.

States will have additional flexibility to design a benefit package that includes either essential health benefits defined using the requirements that apply to the individual health insurance market, or “benefits that meet larger health reform and Medicaid objectives,” as approved by CMS.

Using 1115 waiver authority, the initiative will provide states with opportunities to waive otherwise applicable Medicaid requirements, such as the elimination of retroactive coverage or hospital presumptive eligibility. States will also be able to impose work requirements and adjust cost-sharing requirements, with aggregate limits on premiums and cost sharing of no more than 5% of family income. 

Additional information — including details on network adequacy, quality strategies, and performance assessment — is included in a CMS fact sheet.  

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