Press release

CMS Administrator Seema Verma’s Speech to the National Association of Medicaid Directors in Washington, D.C

CMS Administrator Seema Verma’s Speech to the National Association of Medicaid Directors in Washington, D.C
(As prepared for delivery – November 12, 2019)

Thank you.  It was two years ago, a mere seven months into my tenure as administrator, that I spoke to all of you  about Medicaid’s critical role in the fabric of our nation’s healthcare system.  And as our nation vigorously debates the role of government in healthcare, one thing we all agree on is that government’s duty to protect the vulnerable is a sacred responsibility.

Gandhi once said, “The true measure of any society can be found in how it treats its most vulnerable members.” His sentiment impresses the gravity and importance of programs like Medicaid.

Take the adult with a developmental disability, who might otherwise be institutionalized, but instead is able to live and work in the community; the child with severe disabilities whose parents might not be able to work, or even care for them in their home; or the mom-to-be, who might lack basic prenatal care. To millions, Medicaid is more than a safety net. It is a lifeline that must be preserved and protected for those who truly need it.  

To pass Gandhi’s test, we must provide access to high quality care that helps beneficiaries, wherever they are, to achieve independence and the best quality of life. At the same time, any vision for Medicaid that would trap beneficiaries into poverty – instead of helping them reach their fullest potential – or recklessly drive the program into bankruptcy – fails the test miserably. Our duty to protect the vulnerable means ensuring that the program is there for future generations as well as the current one.

Unfortunately, that sort of long-term sustainability – the product of a rigorous attention to value, accountability, and integrity – remains far from certain. We can see even now the challenges on the horizon as the baby boomer population ages, applying even greater pressure on the nation’s largest payer of long-term care. 

Delivering on Promises
And so when our administration took office, we understood that the status quo was not sustainable and that the system stood in dire need of improvement.  Medicaid’s open-ended financing structure has made it the number one or number two state budget item; yet even so, the program has trouble demonstrating its effectiveness.  Medicaid pays for nearly half of the nation’s births, and yet maternal mortality rates continue to rise dramatically.  State innovation has been hamstrung by federal paternalism born of an unshakeable conviction that Washington always knows best.  So our Administration has committed to unleashing the innovation that comes from 54 Medicaid programs fulfilling their role, as laboratories of democracy.

From having worked outside CMS for many years, I understand all too well how you can be worn down by federal inefficiencies, bureaucracy and the seeming inconsistency from one interaction to the next, from one state to the next.

That’s why CMS has completely reorganized our Medicaid operations so that our regional Medicaid teams are integrated with our Baltimore staff, creating centers of excellence and providing consistency on state plan changes, and waivers. Our efforts focus on process improvement, and the results speak for themselves. Our latest data shows that we’ve achieved a 23 percent reduction in SPA processing time – with almost 80 percent approved on the first clock. We’ve seen a remarkable 75 percent reduction in the approval times for 1915(c) waiver amendments. Managed care waivers and HCBS renewals are both getting done in nearly half the time.

To spark state innovation, we’ve also supported state-led demonstrations that address social and economic factors, as well as local and emerging health threats.

Last week we approved the first-ever demonstration to expand access to services for people living with serious mental illness through residential care in IMDs, right here in DC.  We have also approved 27 substance use disorder waivers, allowing states to provide more treatment options to our beneficiaries.

Additionally, we have approved 10 community engagement programs to link working-age, non-disabled adult beneficiaries with community, educational, and job opportunities - with another 10 proposals currently under review. Now, I recognize that this policy comes with some controversy. But I reject the premise of the criticisms.

Lyndon Johnson once said that the aim of public assistance programs “is not only to relieve the symptoms of poverty, but to cure it, and above all, prevent it.” The father of Medicaid was right: True compassion involves not just paying the bills, but improving our beneficiaries’ quality of life... And if we are serious about improving health outcomes, then we must address the social determinants of health and – in the case of our abled bodied adults – help them live happier and healthier lives… a life infused with meaning and purpose… that is, a life that knows the dignity of a job. A Medicaid program that locks people into poverty begins to look less like a safety net and more like a trap.  

We are living in one of the strongest American economies in history.[1] the unemployment rate is at its lowest level in 50 years.[2]  We shouldn’t leave people behind, and we have an obligation to give our beneficiaries a shot at the American dream.

As with any major new program, CMS carefully monitors operational issues that arise during implementation. There’s been a lot of discussion about Arkansas, whose program was only operational for 10 months. While these challenges must be addressed, less than a year does not allow us to distinguish between the operational challenges of implementation, and the long-term effects of the policy itself. Those with an axe to grind may wish to draw fatal conclusions from the early experiences of one state, but objective observers would do well to be more cautious.

Ultimately, only a third of those who failed to comply with the requirement in Arkansas have since re-enrolled, despite the requirement not being in effect since March.  Where did they go?  I think that’s an important question. Are they simply living without coverage by choice or have they found other options?  In any case, our administration is committed to supporting states who want to innovate in their programs and test strategies to reduce poverty in their states. 

We cannot allow those who prefer the status quo to weaponize the legal system against state innovation. And let’s be clear, it not just state community engagement programs that are under attack. They want to prevent states from adhering to any principles of personal responsibility that could help our beneficiaries successfully transition off public assistance and prepare them to use private coverage.

I believe their goal is to use the legal system – without any input from the people – to manipulate Medicaid into the prototype of a single-minded, single-payer nirvana – a utopia of open-ended government run healthcare. Part of my mission is to fight such under-handed tactics and preserve the right of states to shape your programs in ways that are consistent with the needs of your residents, your cultures, and your values.  Anything less stifles innovation, and represents a disservice to the millions of people on Medicaid today and those who will need it in the years and decades to come.

Move to Value
But to sustain Medicaid for these future generations, we must be more innovative in how we operate our programs.  We should not ration care  but instead make how we pay for care, more rational. In other words, Medicaid must move towards value-based care.

I already mentioned how Medicaid’s open-ended financing encourages ever greater healthcare spending; the same is true of fee-for-service reimbursement, which rewards volume over outcomes.

CMS, along with payers across the country, is advancing new payment models that upend this paradigm and move toward a system that pays for what we want: better quality, at a lower cost.

Medicaid’s journey along that path has come in fits and starts. At the federal level, we’ve thrown a lot of money at it, often without a clear objective in mind. To be charitable: the results have been mixed.

So going forward, there will be no new SIM grants, no more open-ended, one-off DSRIP waivers. We must move forward with a more unified, cohesive approach – across payers, across CMS, and across states. Doctors on the front lines need payers to march in lock step together towards common value based care models to increase provider adoption.

Later this year, CMS will issue guidance to define this new direction and help states maximize opportunities to support value-based payment in Medicaid through our existing authorities. We will also provide more guidance on how states can address the social determinants of health as part of a value based strategy.

And the CMS innovation center is developing several new payment models that help providers ease into higher levels of risk. As we do so, our goal is to ensure that each model has a clear lane for Medicaid.

We have already done this in our ambulance model, which will drive down unnecessary emergency department utilization.  We’ll be offering similar guidance on state alignment and participation with our Direct Contracting and primary care models.  In these models we are allowing a variety of organizations to accept anything from full to partial risk for Medicare beneficiaries.

When it comes to serving those dually eligible for Medicare and Medicaid, state participation is essential in these models to ensure that costs aren’t simply shifted to Medicaid.  I strongly encourage states to participate in value based purchasing and lean into the CMS Innovation Center models.

Dual eligibles have historically represented 20 percent of Medicare’s patient population, but about a third of the costs. For states, the imbalance is even more startling – with duals historically comprising 15 percent of beneficiaries but one third of spending.  

Every state that cares about Medicaid costs and outcomes – hopefully all of you -- should have a strategy on duals.    Thanks to guidance we’ve issued over the last year, there have never been more opportunities for states to improve care for dually eligible beneficiaries, and CMS stands ready to support your efforts.

And looking beyond duals, we’ve seen that as the skyrocketing costs in Medicaid have made the need for value-based reforms not just at the provider, or issuer level.  Many states have expressed a willingness to be held accountable for improving outcomes in exchange for greater flexibility and budget certainty. Block grant and per capita cap proposals are two such alternative financing approaches. Some states have expressed a desire to explore such principles through section 1115 demonstrations. 

We are encouraged by this interest. You will soon see guidance from us that lays out initial opportunities to test new approaches to delivering and financing care for certain optional adult populations. The Medicaid Value and Accountability Demonstration won’t compromise important beneficiary protections, but it will inject rigorous accountability for outcomes, provide significant and unprecedented flexibilities for program operation, and offer opportunities for shared savings that can be reinvested back into Medicaid.

In Medicaid, as in all of our programs, CMS is initiating a new era of humility on the part of the federal government. The federal government should identify expected outcomes, results, and standards – not micro-manage process.   

But with that flexibility comes accountability. The taxpayers are making a massive investment in the Medicaid program, and so we need to hold ourselves and states accountable for producing commensurate outcomes. That’s why we launched the Medicaid and CHIP Scorecard.

All American taxpayers help finance the nation’s largest health coverage program, so everyone deserves to know how it’s performing. Increasing public transparency on these programs drives accountability for results.

Last week we launched a new version of the Scorecard, with lots of new features, and measures, including some that specifically focus on dual eligibles.  Of note, there is also a section on federal accountability. Just as states must be accountable, so must CMS.   We are making public, CMS processing times in areas like managed care rate review and 1115 demonstration approvals.  The Scorecard will continue to evolve and we are already planning for next year when we will share data on per-capita spending by eligibility group and state.

Growing Costs
Our shared accountability must also extend to program integrity. The Medicaid program has grown tremendously and now consumes 30 percent of total state budgets. If we want to ensure that the program remains a viable safety net for generations to come, we have an obligation to make sure our policies promote sustainability.  Part of that is moving to value based care, as I mentioned earlier.

But we must also ensure that the dollars we are spending are truly going to support patient care. That’s a fairly straightforward exercise when you can directly link a payment to a covered service rendered to a qualified beneficiary. It becomes less clear in the murky world of supplemental payments, where dollars often attach to the provider who is able to help finance the payment instead of the patient who received a service.

That’s why, today, CMS is proposing a comprehensive overhaul to our regulations to ensure that all Medicaid payments to providers are transparent, including a requirement that states clearly account for how they finance their share of supplemental payments.

We have seen a proliferation of payment arrangements that mask or circumvent the rules.  Shady recycling schemes drive up taxpayer costs and pervert the system by shifting resources away from higher value settings. For example, while the Medicaid statute allows local governments to contribute their tax dollars to fund the state’s share of Medicaid payments, this opportunity has been abused.

We’ve seen payments increasing dramatically over the years for governmental providers that are able to self-fund the state match, to levels that often far exceed even Medicare payments and have little connection to improving the health of Medicaid beneficiaries. This rule will shine a light on these practices and help to set reasonable limits that even the playing field, addressing a source of government distortion and unfair competition in many markets. The government should not be placing its thumb on the scale. 

Now, I recognize that these schemes often have their roots in self-interested providers, egged on by opportunistic consultants seeking to leverage regulatory loopholes or hide behind a lack of transparency. I know that most state leaders want to make sure every dollar is supporting value and improving care for Medicaid beneficiaries, and those of you that are doing the right thing have nothing to worry about. We have your back.

Calder Lynch will go over some of the mechanics of the rule in more detail tomorrow during the closing plenary.  (this will now be the best attended closing plenary in history!)  Kidding aside, we recognize that these are big potential changes and we look forward to your careful review and comments.

Just as we must make sure Medicaid payments are going towards patient care, we must also be vigilant in limiting precious Medicaid dollars to those who qualify. Very soon, CMS will announce the annual Payment Error Rate Measurement – or PERM – figures, for a number of our programs, including Medicaid. The eligibility component of the Medicaid and CHIP measurement were frozen in 2014, but our Administration restarted this process in 2017.

Unfortunately, the results are deeply concerning.  That sound you hear is the screeching of the canary in the coal mine. The PERM review has identified deficiencies that have been revealed in other recent state and federal eligibility audits.  Lax eligibility practices jeopardize the sustainability of the program.  While this cycle only includes a third of states, the results underscore the urgency for a shared commitment on the part of CMS, states, and our vendors to ensure that everyone receiving benefits are actually eligible for them.

That’s why we’re not waiting to take action. CMS will build on our previous guidance on eligibility by overhauling our regulations to tighten the standards for eligibility verification and ensure that CMS and states have appropriate safeguards in place. That includes efforts to ensure that states conduct timely redeterminations and make use of appropriate data sources to verify ongoing income eligibility.

As I close out my remarks, I want to return to the central promise that has infused this speech: Our government’s commitment to our most vulnerable populations, to be there in times of need.

That’s why I find recent reports noting an increase in the number of uninsured children in America so concerning. As a mother, I understand the critical role that healthcare plays in the development of a child.    We cannot jeopardize the health of our nation’s children.   

Now, we expect to see downturns in Medicaid enrollment during times of booming economic performance, like what we are experiencing today under President Trump’s leadership. The number of children in poverty dropped by nearly 1 million between 2017 and 2018, with poverty rates for black and Hispanic Americans at all-time historic lows.  That’s something to celebrate.

But census reports also show that the number of uninsured children has increased.  The data show that much of this loss occurred among children in families with incomes exceeding 400 percent of the poverty level, most of whom don’t qualify for any public support. In other words, people are earning more in the stronger economy and may not qualify for extra help. That’s why it so important that we keep our focus on lowering the cost of health care in this country.  We should also take steps to ensure that children in families with rising incomes can successfully transition to CHIP coverage or other private coverage, including the Exchange.  Pregnant women face similar challenges when their Medicaid coverage ends, and we should look for ways to help support their successful transition off the program.  These obligations represent our promise as stewards of this critical program.   

Indeed, fulfilling our promise to all our Medicaid beneficiaries is nothing short of a solemn obligation of government. Noisy and unconstructive complaints about disruptions to the status quo in the current Medicaid program – a status quo that is increasingly unstable and unaffordable – seem to me little better than a call to default on that promise.   That’s why the Trump Administration is steadfast in its commitment to supporting state innovation.

But if Medicaid is to remain a lifeline for millions – it must shake off the fetters of a stale conventional wisdom; we must seek out fresh and innovative ways to drive value, integrity and accountability in Medicaid. We must never forget that our duty is both to improve the quality of care for current beneficiaries and to preserve this critical program for the future ones. I urge you to partner with us in that effort.  Thank you.                                                


Get CMS news at, sign up for CMS news via email and follow CMS on @CMSgov