THE THREATENED IMPACT OF RECENT FEDERAL REGULATIONS

By  Hansine Fisher

WHAT IS THE MEDICAID ADMINISTRATIVE MATCH PROGRAM? §         Medicaid Administrative Match, sometimes called “MAM” or “AdMatch” by local health jurisdictions, covers a range of federally-approved activities that assist state Medicaid agencies such as the State Department of Social and Health Services (DSHS) to carry out their administrative functions more efficiently.   §         Each state must obtain federal approval to claim reimbursement for these activities.   §         A longstanding agreement between the State’s Medicaid agency (within DSHS) and local health jurisdictions ensures that Medicaid-eligible individuals and families will have better access to health care through improved outreach, linkage, interagency coordination, and systems development efforts around Medicaid services.   §         The agreement between DSHS and the Center for Medicare and Medicaid Services (CMS) states the terms by which federal matching funds (also referred to as Federal Financial Participation or FFP) under Medicaid available to local health jurisdictions for the cost of administrative activities that directly support efforts to identify and enroll potential eligibles into Medicaid, to bring them into services covered by Medicaid, to remove barriers to accessing Medicaid services and to reduce gaps in Medicaid services.

HOW DOES IT WORK? §         The Department of Social and Health Services has for many years used agreements with local health jurisdictions to expand its outreach efforts.  §         These agreements increase the opportunities to inform the State’s poorest and most vulnerable residents about the Medicaid program, what it offers, how to apply, and to assist them in accessing needed care and treatment.   §         The activities which form the basis of these agreements have been approved by the federal Center for Medicare and Medicaid Services (CMS), and are the key to federal reimbursements earned by local health jurisdictions.  (Statewide, local health jurisdictions are earning about $17 million annually through Medicaid administrative claiming.) §         The agreements expand the capacity of the Medicaid program in another way.   §         Federal regulations require that the costs of the outreach and linkage activities covered by the agreement be shared proportionately by the State (and its partners) and the federal government.  The agreements require that the local health jurisdictions contribute the “non-federal” share of the cost, rather than the State.  This enables the State to expand its Medicaid outreach and follow along activities without additional legislative appropriations.

WHAT CMS HAS DONE §         CMS, the federal Medicaid agency, has historically used published laws, regulations, policy, and other written guidance as the basis for approving plans covering the delivery of Medicaid services and administrative activities within a state.§         The Deficit Reduction Act of 2005 required changes to the Medicaid Targeted Case Management (TCM) program. §         CMS needed to change the Code of Federal Regulations so that it complied with the language of the Deficit Reduction Act. §         However, when it published the new rule for TCM (2237-F) in the Federal Register on December 4, 2007, CMS included language that was not in the Deficit Reduction Act. §         One section of the “new” language in the regulations is being interpreted by CMS to mean that most, if not all, of the federally-reimbursable Medicaid linkage activities now performed by local health jurisdictions through their agreements with DSHS will no longer be allowed.  §         There is no basis in current law or  standing regulations for this interpretation, and CMS itself has gone on record over the years saying that activities which connect individuals to Medicaid services can be claimed as a Medicaid administrative cost (MAM in Washington) or as a Medicaid service such as TCM. The new rule is being interpreted to mean that linkage may only occur when it is a Medicaid service.  §         Within the mission of public health, referral activity is a critical component of outreach program and clearly distinct from case management as defined in the new TCM regulations. §         In public health programs, the types of referral activities now reimbursed as Medicaid administrative costs serve two purposes: to ensure that outreach programs to at-risk/vulnerable populations (e.g., pregnant women at risk because of their young age, lack of social supports, or other medical conditions; homeless individuals and families; individuals with a diagnosis of HIV/AIDS) result in timely and appropriate referrals for prenatal care, medical evaluations, and chronic conditions, and to determine the type of medical care needed by special populations and facilitate linkage to such care.  Much of the public health activity focuses on the “front door” – identifying persons at risk, steering them toward ongoing care and care management of their medical needs, and following up to make sure the care is adequate to the person’s needs. §         Local health jurisdictions have estimated that as much as 65% of the federal reimbursements they are now earning through the Medicaid Administrative Match program will be lost (or about $11 million annually).

THE RESPONSE §         CMS wrote the TCM regulations so they would go into effect on March 4, 2008. §         CMS employees in the Seattle regional office have verbally informed the State Medicaid agency that Medicaid referral activities now claimed by local health jurisdictions will no longer be allowed.  §         The TCM rule is one of seven rules promulgated by CMS in 2007 whose combined effect is expected to result in a $50 billion reduction in Medicaid payments to the States over the next five years, according to a reported recently issues by the US House of Representatives’ Oversight Committee on Oversight and Government Reform. §         The National Governors’ Association, with 100% support from all its members, wrote a letter to Congress on February 25^th urging Congress to take immediate action to delay the implementation of all seven regulations.    §         Several governors, including Governor Gregoire, also testified before Congress at this time on the impact of these cuts. §         Following the receipt of the governors’ letter, and their testimony, both houses of Congress have begun to look at all the CMS regulations promulgated in 2007 and what might be done to stop their implementation in the context of the FY09 federal budget.   §         The Senate Budget and Finance Committees, of which Senators Murray (Budget) and Cantwell (Finance) are members, are playing a critical role in this discussion.   §         Legislation is being considered that would place a moratorium on all CMS regulations is under discussion and should be introduced soon.   §         The moratorium language would most likely need to be in “must pass” legislation – the continuing resolution on the budget, funding for the wars in Iraq and Afghanistan, the alternative minimum tax, or the fix in Medicare to prevent the 10% reduction for physician services – in order to avoid a Presidential veto. §         On another front, the State of Maine has just recently filed a federal lawsuit on the TCM regulations on the grounds that they exceed the language in the Deficit Reduction Act and violate the federal Administrative Procedures Act.  Maine has been joined in this lawsuit by three other states – Maryland, New Jersey and Oklahoma.  Any action coming out this lawsuit will impact all states. 

WHAT CAN BE DONE §         The Congressional delegation is expected to be in Washington State during the two week March recess, which begins March 15^th, so it is a great time to speak to your Congressional representatives about how this issue will impact the people in your jurisdiction and your agency.   §         Members of the Washington State Congressional delegation are Senators Maria Caldwell and Patty Murray, Representatives Brian Baird, Norm Dicks, Richard (Doc) Hastings, Jay Inslee, Rick Larsen, Jim McDermott, Cathy McMorris Rodgers, Dave Reichert, and Adam Smith. §         Ask them to support a moratorium on implementing the TCM regulation (CMS 2237-IFC) and let them know that you understand and appreciate efforts already underway to place a moratorium on all 7 regulations promulgated by CMS in 2007.