Mass and Feds Cut a Deal on Medicaid Waiver

This afternoon the Patrick Administration announced a new deal with Federal HHS on the Medicaid waiver that serves as the backbone of our reform law. The last waiver expired in June of 2011.

It is a 3-yr $26.75 billion deal.

I need some more details before I can figured out how exactly this waiver will mesh with the Governor’s payment reform bill. But until then, some early thoughts:

• The Patrick administration looks like they withdrew a number of requests to get this deal done.

• The Massachusetts waiver deal raises some interesting questions for the future of the national health reform law. [Even if I think the lessons to be learned from Massachusetts are somewhat limited to the national plan.]

• A foundational assumption of the Massachusetts reform was that as patients obtained insurance, the cost of care for individuals without insurance would go down. The record has been mixed on this front.

• If safety net hospitals in Massachusetts cannot transition to a new care model that allows them to be more self-sustaining with 98% coverage, how much will the PPACA ultimately cost when similar hospitals in 49 other states try to adjust? This waiver includes an additional $120 million a year to try to push a transition that was supposed to take place organically 3-5 years ago.

• The new PPACA entitlement is in part funded with reductions in payments to similar hospitals across the nation, but the precedent set here by the federal government should call into question that basic “savings” assumption.

• I am glad to see that CMS has included some benchmarks for the state to hit in order to receive funding.

• Massachusetts officials will be happy with more federal funding for the reform, as it means less of a future hit to the state budget, but taxpayers are smart enough to know they pay for both state and federal spending.

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