Sustainable Medicaid Reform: The Rhode Island Consumer Choice Global Compact Waiver By Gary Alexander
Director, Department of Human Services
In 1965, the Medicaid program was created to provide health coverage to a limited number of low-income and disabled people. Distinct from the similarly-named Medicare program, Medicaid is funded jointly by the federal government and the individual states. Over the next four decades, the desire to supply health insurance to the needy blossomed into one of the nation’s costliest programs, and without systemic reform, may bankrupt Rhode Island.
Like many social welfare programs, Rhode Island’s Medicaid system has evolved over the years, expanding beyond the traditional role of a safety net to become the principal source of health coverage and services for more than 200,000 Rhode Islanders, one-fifth of the state’s population. Along the way, the Medicaid program has transformed from a payer for services into an integral part of the State’s health care system and the chief financier of the long-term care industry. Today, Rhode Island currently ranks #2 in the nation for Medicaid spending per capita, spending $1,589 per citizen enrolled.
In the 40 years since it was first established, Medicaid has become less about the quality of care and the individuals it is designed to protect, and more about the cost of that care. The first and most foremost purpose of Medicaid is to provide the highest quality of care and services to individuals who cannot afford it and the state’s most vulnerable, not to line the pockets of healthcare providers.
Rhode Island and the nation are on the precipice of a full blown recession. Rhode Island is already feeling the pressures of the economic downward spiral, with increasing unemployment and decreasing general revenues. The single largest piece of the state’s budget is health and human services, and the simplest way to balance the budget would be to cut programs and reduce eligibility. That may save a few dollars in the short run, but it does not address the problems that only systemic change can achieve.
Medicaid forecasts show that even a quick economic recovery will not reverse current trends. By 2011, total Medicaid expenditures will comprise about 30 percent of the State’s overall budget, and could consume as much as fifty cents or more of every general revenue dollar. Some forecasts show that by 2050, Medicaid will exceed the State’s budget.
At issue for the State is the financing of Medicaid and the growing gap between general revenues and Medicaid operating expenditures. Fiscal pressures, service demand and institutional bias have colluded to push Rhode Island further down the path toward comprehensive Medicaid reform. No longer can the state cut programs to balance the budget. Funding cuts will inevitably harm the individuals Medicaid was designed to protect. The need for reform is real.
The Rhode Island Consumer Choice Global Compact Waiver, crafted by the Executive Office of Health and Human Services and the Department of Human Services, is real reform and establishes the basis for fiscal solvency and sustainability. The Waiver would establish a new State-Federal compact that provides the State with greater flexibility while assuring federal funding certainty. Rhode Island will use the additional flexibility afforded by the waiver to redesign the State's Medicaid program to provide cost-effective services that better meet the changing needs of the individuals it serves.
For sake of simplicity, Medicaid covers four main groups, or “populations” that share key eligibility characteristics: children and families, children with special health care needs, adults with disabilities, and elderly. The Waiver addresses each of these populations. All Medicaid funded services, from preventative care in the home and community to acute care in high-intensity hospital settings to long-term and end-of-life care, will be organized, financed and delivered for the five year period.
The three major tenets of Medicaid Reform include rebalancing the way long term care is provided, implementing a managed care system across all Medicaid populations, and completing the transition from payer of bills to organizer and purchaser of services for all Medicaid consumers. Rebalancing the provision of long term care to emphasize home and community-based settings such as shared living, assisted living, and at-home care, where possible, will enable consumers to maintain a family or community-based lifestyle. Under the Global Waiver Compact, decisions on the type of service and the setting for those services will be determined in consultation with the consumer and the family, as well as on the assessment of the level of care needed. One of the central goals of the Waiver is to reorient the Medicaid program to reward responsible personal choices, including prevention and wellness. A person-centered system provides comprehensive primary care that facilitates partnerships between beneficiaries, physicians, other healthcare professionals and community providers and, when appropriate, the beneficiary’s family. Further, the Waiver will implement care management instruments across populations, increasing the opportunity for more efficient monitoring of access and quality, greater use and efficacy of performance-based payment incentives. Ensuring that every beneficiary has access to the right services in the right settings requires that the State change the way services are organized and purchased. This will require the centralization of certain programmatic functions (in-take, assessment and referral); the reconfiguration of others and the integration of others. Not only must every Medicaid dollar the State spends achieve the best health outcome, but any dollars saved from implementing a fair share approach must be reinvested in the program. Additionally, the model of “smart” payments and purchasing must be expanded so that increased competition can yield not only the best value, but also improved capacity and performance.What does the Global Waiver not do?
It does not cut mandated benefits. Any proposed change will go through any and all statutory requirements and public comment.
It does not change federal eligibility standards. Federally mandated populations will continue to be eligible, and federally mandated services will continue to be provided. Rite Care will remain as will all care management programs, including PACE, Rhody Health Partners, and Connect Care Choice, among others. Institutional care settings will remain an option for individuals with the highest needs. The new system will, in fact, mandate eligibility for three new populations: parents with children in state custody, children needing residential and mental health treatments while still in the custody of parents, and elders at risk for long term care who could remain in their homes longer if they receive home and community-based services.
It does not limit choice. The Waiver offers the State the opportunity to implement a broad-based strategic reform plan that anticipates rather than reacts to outside pressures, while providing person-centered services and giving beneficiaries and their families’ choices in healthcare.
The State cannot do this alone. It is critical for all stakeholders to be at the reform table. Engagement and partnership with service providers, health plans, consumers, state agencies, legislative leaders and the federal government will be necessary to achieve this challenge. The alternative is to accept the only other choice: reduce Medicaid expenditures by cutting eligibility and services.
Rhode Island is taking the lead in Medicaid reform. Any risk that represents is less of a risk than keeping the status quo. The Rhode Island Consumer Choice Global Compact Waiver will ensure the long-term viability of Medicaid, create program integrity and financial stability, protect the individuals it serves, and create a stronger, more responsive system.
