Feds OK $129.7M for RI Medicaid changes over next 5 years

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PROVIDENCE, R.I. (WPRI) – The federal government has awarded Rhode Island up to $129.7 million to spend over the next five years to change how Medicaid pays for care and to train local workers for health jobs, Gov. Gina Raimondo announced Monday.

“This is a huge milestone,” Raimondo said during a well-attended State House news conference, where she was flanked by members of Rhode Island’s congressional delegation.

Raimondo pitched the announcement as “Reinventing Medicaid 2.0,” casting it as the second phase of her administration’s push to reshape how Rhode Island manages the huge health insurance program for low-income residents. Medicaid now makes up almost one-third of the state budget, spending $2.3 billion to cover 317,000 people during 2014-15; the federal government covers about half the cost, with the state picking up the rest.

In a letter Oct. 20, the U.S. Centers on Medicare and Medicaid Services said the newly authorized $129.7 million “will advance Rhode Island’s delivery system reform efforts and support the new managed care-based payment and delivery system model, the Accountable Entity.” (Accountable Entities are integrated networks of providers, such as hospitals and doctors, that are supposed to be paid for their overall quality of patient care, as opposed to getting a flat fee for each service provided.)

The letter describes the new Medicaid money as a “one-time investment,” and said the final two years of funding – roughly $50 million – will be made available only if the federal agency agrees to a renewal in 2018. Officials said no new state money will be needed to match the new federal funding, with existing health and higher-education spending providing the match.

Receiving $130 million over five years “is real money,” U.S. Sen. Sheldon Whitehouse said. “My bet is we will more than save that as the learning from that expenditure begins to deploy itself.”

Secretary of Health and Human Services Elizabeth Roberts argued the federal funding “is going to really transform how we meet the needs of Rhode Islanders and improve their health.” About 5% of the money will be devoted to the training initiatives, but the vast majority will go toward building out the infrastructure the state needs to reshape how health care is delivered, she said.

“We need the upfront investment,” Roberts said, adding: “I think we’re going to be pretty creative with our providers.” As one possible example, she suggested helping underwrite the cost of installing electronic health-record systems at nursing homes.

The administration said its various changes to Medicaid since taking office last year, including cuts in payment rates for hospitals and nursing homes, are now on track to save the state more than $100 million this year. Of the new federal money, $20.5 million will be used to fund a Medicaid incentive program for hospitals and nursing homes the administration created last year, but that will be phased out quickly after the federal government refused to make it permanent.

A spokeswoman for Roberts’ office said the remaining $109.2 million in new federal money “will support the further development of accountable entities, health care workforce development, state administration of the transformation program, and support of smaller state programs eligible for federal match under this authority.”

The Senate Fiscal Office recently visualized the new model for paying Medicaid providers (with “MCOs” standing for managed-care organizations, meaning insurers contracted by Medicaid, such as UnitedHealthcare and Neighborhood Health Plan):

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Patrick J. Quinn, executive director of SEIU 1199NE, a union which represents health care workers, said he welcomed the new federal Medicaid funding. He argued officials need to do more to tackle “redundant administrative costs and outrageous executive compensation” that drain money for the program.

“Low wages plague long-term care jobs, causing high turnover among our workforce and harming our efforts to enhance the quality of care,” Quinn said in a statement. “That’s why workers in nursing homes, community programs for individuals with developmental disabilities, and home care across the country and in Rhode Island have joined in the Fight for $15 and a Union.”

Raimondo’s announcement comes amid uncertainty about the future of the Medicaid program as Republicans prepare to take full control of the White House and Congress in January. President-elect Donald Trump has pledged to repeal President Obama’s health law, which expanded Medicaid coverage, and GOP congressional leaders have long supported efforts to reduce the program’s costs. However, some Republican governors have expressed concern over how changes could impact state budgets.

“Hopefully the example of Rhode Island will be evidence and ammunition, frankly, for us to make the case that this current system, when administered properly, can produce good results,” Congressman David Cicilline said.

Rhode Island’s Medicaid program has also seen turnover at the top since Raimondo took office, with Deidre Gifford stepping down as state Medicaid director in the fall of 2015 and her replacement, Anya Rader Wallack, departing earlier this year after a short tenure.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes The Saturday Morning Post and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram