Press release

SPEECH: Remarks by Administrator Seema Verma at the 2018 Medicaid Managed Care Summit

Remarks by Administrator Seema Verma at the 2018 Medicaid Managed Care Summit
(As prepared for delivery – September 27, 2018)

It is great to be back in front of a room full of professionals dedicated to improving the lives of Medicaid beneficiaries. For me, it’s a little like coming home. I see the faces of the people out working on the front lines, of transforming the American health care system, working to making Medicaid a stronger and more sustainable program.

Medicaid is more than a safety-net program. It’s our nation’s commitment to care for our most vulnerable citizens. And I believe that societies, throughout history, should not just be judged by their wealth and influence, but they should also be judged by how they treat those who are less fortunate. Since its inception Medicaid has served as a powerful tool in making sure that our nation’s most vulnerable can get the care they need. 

People tell me that I am a realist. I guess you have to be to take on this job.

And the reality at CMS … is pretty refreshing right now. We are making great progress on a goal I set nearly a year ago as I outlined an aggressive agenda aimed at transforming Medicaid…the largest program at CMS serving more than 80 million beneficiaries. Our strategy is centered on 3 key pillars: 

  • Flexibility
  • Accountability, and
  • Integrity

Those central themes have been our guiding strategy as we’ve worked to deliver on our early commitments to ushering in a new day in the Medicaid program.

So let’s begin with Flexibility. Giving states the flexibility is more than just paying for health care – it’s empowering them to act on what works best for the citizens in their community. And this is necessary if we are truly serious about improving the health outcomes of the most vulnerable Americans. State and local officials know much more about the unique needs of their friends and neighbors than Washington DC does.  

To this end, we are proposing modifications to a few of our regulations; including the Medicaid Access to Care Rule and the Medicaid Managed Care Rule, and with each of these proposed rules, we have worked closely with states in an unprecedented manner to promote individual choice and local control – leading to better health outcomes for Americans on Medicaid.  

But we cannot regulate our way to innovation.  

To elicit meaningful reform, the best thing that CMS can do is create a fertile ground for states to serve as the laboratories of innovation in Medicaid policy...and then get out of their way. And that’s why we’ve opened opportunities for states to seek demonstrations to test new and exciting reforms.

Additionally, in January, we released a groundbreaking new demonstration opportunity in response to state requests to test work and community engagement incentives among able-bodied adult beneficiaries. This guidance was followed by four approvals of innovative Medicaid demonstrations.  

We are committed to this issue and we are moving closer to approving even more state waivers.  

As such, I’m happy to share with you today that we have finalized the terms for our next innovative community engagement demonstration, which we expect to deliver to the state very soon. So stay tuned! 

But this is not a policy that is without controversy. I have heard the criticisms… and felt the resistance…but I reject the premise, and here is why: it is not compassionate to trap people on government programs, or create greater dependency on public assistance as we expand programs like Medicaid.

True compassion is giving people the tools necessary for self-sufficiency… allowing able-bodied, working age adults to experience the dignity of a job, of contributing to their own care, and gaining a foothold on the path to independence. 

From my experience working directly with indigent patients in the early phases of my career, I saw first-hand that no one sets out in life with the goal of relying on the government. Personal responsibility and self-sufficiency are bedrock American values.  

And there is clear evidence that people are happier and healthier when they are working and leading independent, self-sufficient lives. Arthur Brooks of the American Enterprise Institute, wrote a book about the concept of earned success. The idea that we value what we earn much more than we value what is given to us. The drive to earn propels us to new heights, whereas dependency limits us.  

The problem too often is that the most well-meaning government policies trap people in a hopeless cycle of poverty, making it too difficult to escape, and too easy to become more dependent.  Instead, we ought to insist that the able-bodied participate in earning benefits. 

To quote from Arthur’s Book, the Conservative Heart: 

“Work gives people something welfare never can. It’s a sense of self-worth and mastery, the feeling that we are in control of our lives. This is a source of abiding joy. There’s a reason that Aristotle wrote “happiness belongs to the self-sufficient.”  

Community engagement requirements are not some subversive attempt to just kick people off of Medicaid. Instead, their aim is to put beneficiaries in control with the right incentives to live healthier independent lives. 

When you consider that, less than 5 years ago, Medicaid was expanded to nearly 15 million new working-age adults, it’s fair that states want to add community engagement requirements for those with the ability to meet them. It’s easier to give someone a card, it’s much harder to build a ladder to help people climb their way out of poverty. But even though it is harder, it’s the right thing to do.

Between the years 2000 and 2017, the overall work rate for non-disabled working age adults fell by 3.4 percentage points. Over half of this decline occurred before the Great Recession even began.  

Historically, childless working age adults were working at a rate much higher than the overall rate for working age, able bodied adults – as you might expect. But that is changing. In 1979, the employment rate for childless adults under 50 was almost 10 percentage points higher than the overall rate. By 2017, it was only 2.6 percentage points higher, and, not surprisingly, this group also experienced the largest increase in welfare.  

Put simply, even before the Recession began, childless adults under 50 were on a disturbing trajectory…Depending less on work and self-sufficiency, and more on government assistance.  

It is therefore no surprise that, as this group continues on an unsustainable trajectory, states have looked to the Medicaid program to help reverse this trend, increase self-sufficiency, and break the chains of welfare dependence.   

And this motivation comes at an incredible time of opportunity. Under President Trump’s leadership, we are now experiencing among the lowest rates of unemployment we’ve seen in over 50 years. The Trump administration has created a booming American economy. Not only are job opportunities on the rise, but wages grew at the fastest rate in August since the Great Recession.  

But despite these promising signs, we also know that there is often a skills gap between those needing employment, and the available jobs.  Too many live in the shadows of opportunity, instead of its light, because they don’t have 21st century skills. That’s why this effort is also about helping those individuals find new hope through education and job training opportunities.  

And these policies are not blunt instruments. We’ve worked carefully to design important protections to ensure that states exempt individuals who have disabilities, are medically frail, serve as primary caregivers, or have an acute medical condition that prevent them from successfully meeting the requirement. Some have argued that a Medicaid demonstration can never advance the program’s objectives if the project ultimately reduces Medicaid enrollment or spending. 

But I prefer to think of it more like President Reagan, who said, “We should measure welfare’s success by how many people leave welfare, not by how many people are added.” 

As our economy thrives, it can lift up as many Americans as possible, and lift millions off of programs like Medicaid and instead onto private insurance. There will always be a need for a safety net and programs like Medicaid. We want it to be there for those who need it most.  

Others believe that any consequences for failing to comply with a program requirement, like disenrollment or periods of non-eligibility, shouldn’t be allowed. There is no basis for that contention. CMS has approved demonstrations that include those exact type of incentives for failure to comply with requirements like monthly premiums going back across several federal administrations. Even the Children’s Health Insurance Program – or CHIP - allows states to impose premiums and consequences for failure to pay them in certain circumstances. 

Some have argued that these demonstrations are unnecessary because nearly all Medicaid beneficiaries are already working. To that I say – great. Then this policy won’t impact them, and in fact if you look at Arkansas the vast majority of adults subject to the requirement were ultimately exempted from the monthly reporting requirement because of their steady employment. Nothing to argue about there! 

We’ve also heard that the costs associated with implementing community engagement are too high, in terms of updating eligibility systems and providing the necessary supports. But we view these as important investments, not unlike those we have made in other aspects of the program, that help build capacity for states to address the whole human needs of their beneficiaries, and one that can pay dividends as we aim to end cycles of generational poverty. We have taken steps to ensure that appropriate protections have been designed to shield against unintended consequences.  

We’ve strongly encouraged states to align their Medicaid requirements with similar policies in SNAP and TANF, and to take steps to ensure that if an individual is meeting the requirements of one program, they aren’t having to do something different in another. 

One of the most encouraging outcomes that I’ve seen emerge in states participating in this initiative is the level of engagement and partnership between stakeholders.  

When I was in Arkansas this spring to hand deliver their signed waiver, I heard directly from these groups about some of the unique work happening to help lift people out of poverty. There, the state is working with community colleges and technical schools to connect Medicaid beneficiaries with new educational opportunities, including partnerships with nursing homes to provide free job training for enrollees.  

In July, Arkansas became the first state to go live with their community engagement program. And a few weeks ago, Governor Hutchinson reported that more than 1,000 Arkansas Works enrollees have found jobs since the program began in July. Imagine the impact that this has had on the lives of those individuals and their families. One specific example he cited, was a woman in Harrison, Arkansas. She visited a Workforce Specialist and is now enrolled in LPN school at North Arkansas Community College with financial assistance. In addition to taking classes, she is also gaining real world experience by working at a long-term care facility one day a week.  

Governor Hutchinson also described a gentleman in Rogers, Arkansas, who came into a workforce center after receiving his notice in the mail. There, he received an assessment and a referral for employment, and after nearly a year of being unemployed, is now earning over $17 an hour.

This is earned success. It is not granted by government, but realized through sweat, toil and initiative. 

These are only a couple of examples – but the fact is that these two lives, and potentially many more, have been steered onto a pathway out of poverty. Over time, the woman in Harrison and the man in Rogers may begin to earn their health insurance through their employer, and no longer rely on government assistance, and we should all join with them in hoping for this brighter future.  

Let me be clear, there is no shame in receiving extra help when it’s needed – that’s why we have a safety net to care for folks on hard times. But our default position must always be to help and encourage those who are able to lift themselves up and find their footing again. 

There is dignity and pride that is derived from work…for paying one’s own way…and I believe it is the desire of nearly every American to achieve financial independence. 

In America we believe we can be anything we want to be, never dictated by one’s station at birth. The migrant farmer still dreams of one day owning the farm. The waiter still aspires to one day own the restaurant. We don’t ascribe to the artificial barriers posed by class…because we believe through hard work, we can realize our biggest dreams. 

While we've ushered in a new era of state flexibility, we are also committed to enhancing our collective accountability for delivering results on behalf of beneficiaries and taxpayers. So that brings me to our next pillar – Accountability. Despite growing from 10% of state budgets in 1985 to nearly 30% in 2016, Medicaid has never developed a cohesive system of accountability that allows the public to easily measure and check our results.  

If we are going to be good stewards of taxpayer dollars and good servants to the 80 million Americans who depend on Medicaid and CHIP, we must be honest with ourselves and honest with all of our stakeholders about how well we are doing. I agree with oversight bodies like the GAO – we need to do better. That’s why we’ve been working to enhance how we evaluate state demonstration projects, including standardizing how certain common types of waivers get evaluated, developing standardized metrics across waivers, and using consistent monitoring and evaluation protocols. 

This will hold true for community engagement demonstrations, where we will be closely monitoring their implementation and ensuring thorough independent evaluations are conducted. But we also will not draw rash conclusions after only a few months of data and information.  

As we drive toward value across the entire health care delivery system, we believe that greater transparency creates stronger accountability, and we were very excited earlier this summer to publish the first-ever CMS Medicaid & CHIP Scorecard.  

If you haven't had a chance to take a look at that yet I strongly suggest you do. We’ve had about 14 states that have spent six months working diligently with us on crafting this version of the Scorecard.  

In addition to displaying health outcome and quality metrics in areas like well-child visits and chronic health conditions, you’ll see for the first time public reporting on our administrative performance. 

This includes both state and federal performance measures in areas like the speed of processing managed care rate reviews or state plan amendments. Soon the scorecard will begin to reflect some of the real progress we are making on this front. For example, between 2016 and the first quarter of 2018, we saw a 23% drop in the average approval time for Medicaid state plan changes. 

84% of those requested changes were approved within the first 90-day period in the first quarter of 2018, a 20% increase over 2016. 

And over that same time period, the average time to approve renewals for home and community based waivers decreased by 38%. 

And this version of the Scorecard is only the first step in this project. We are already hard at work on the next iteration, which we hope to update annually with new features and expanded measures. Future updates will include additions like the ability to generate year-to-year comparisons and understand differences in state and regional performance.  

We are also working to develop more measures, including ones that look at the areas of cost, program integrity, and beneficiary satisfaction. And, I’d be remiss, if I didn’t mention a group to whom we should hold ourselves accountable for serving better – and that is the 12 million Americans who are dually eligible for Medicaid and Medicare. It’s essential that we give states and health plans the tools to better integrate the full array of services these individuals rely on. 

It is particularly critical that we address this given the facts that dually eligible individuals are among our most expensive beneficiaries for both programs. Despite accounting for 20% of Medicare enrollees and 15% of Medicaid enrollees, they consume 34% of Medicare spending and 33% of Medicaid spending, respectively.  

Less than 10% of duals are enrolled in any form of integrated care, and instead have to navigate alone across disconnected delivery and payment systems to get the care they need. We have to change that. 

Earlier this year Congress challenged us to do more to promote integrated care through dual eligible special needs plans. Our work is well underway. In the coming year, we will support new models and opportunities for additional states to test innovations to better serve this population. Additionally, we will challenge ourselves and the states to be better business partners to health plans and providers. The administrative burdens and inefficiencies to serving dually eligible beneficiaries are unacceptable. It’s time to achieve a level of operational excellence that older Americans deserve. 

Which brings us to our final pillar: Program Integrity. 

Federal spending on Medicaid has ballooned, growing by over $100 billion between 2013 and 2016, and it often sits at the number 1 or 2 spot in state budgets. We have a responsibility to make sure that taxpayer dollars are spent only on qualified services for those who are truly eligible, even as we return greater control of the Medicaid program to the states.

And just last week, CMS’ independent Office of the Actuary released their financial report on the Medicaid program. It confirmed, what we have already known for quite some time – that our healthcare spending, particularly in Medicaid is forecasted to grow at an alarming pace. Since Day One, my top priority has been to ensure programs, such as Medicaid, will always be around to serve those that truly need the program, and that means slowing the growth of spending. 

Additionally, in June we launched our new Medicaid Program Integrity strategy that will bring CMS into a new era of enhancing the accountability of how we manage taxpayer dollars. This strategy includes several important new initiatives:  

First, we will take a close review of State eligibility determinations. And second, we will take steps to strengthen our oversight of state financial claiming and rate setting.  

We are also working to build a stronger regulatory framework to ensure transparency and accountability in Medicaid supplemental payments, with a particular emphasis on promoting integrity in the equity partnership we share with states by ensuring that states put up their fair share of state matching funds only from permissible sources.  

Transparency must also extend to our health plan partners. This room understands well that nearly all newly eligible individuals in Medicaid are served through managed care organizations. I’m putting you on notice now - CMS will begin targeted audits to ensure that provider claims for actual health care spending matches what the health plans are reporting financially. 

Finally, we are working to strengthen how we use data in the oversight of the program. 

For the first time, every state, D.C., and Puerto Rico are now submitting data on their programs to the Transformed Medicaid Statistical Information System (known as T-MSIS), and over the course of the coming months we will be validating the quality and completeness of that data, so that its use for program integrity purposes can be expanded and realized, including plans to release analytic files for research purposes beginning next year.

And as a part of our MyHealthEData Initiative, we have called on everyone who holds patient data, whether it be hospitals, insurers, or Medicaid Managed Care Plans, to give patients control of their records, so that they can be the chief drivers of value in our healthcare system.  

I truly believe that best ideas, attuned to the distinct needs of local communities, come from those communities - not DC. 

And I greatly appreciate the role that our health plan partners play in delivering quality care to Medicaid beneficiaries all across the country. I have seen firsthand the value that you bring to your partnership with states, and the resources that you can often bring to bear to serve the needs of our enrollees on the front lines. 

We must continue to work together, allowing state innovation to drive improvements in services. We must foster greater collaboration among…and between…state agencies, providers, advocates, and beneficiaries - to chart a path forward - because we recognize that what works in Montana won't be a good fit for Rhode Island, but we can all learn from our individual and shared experiences. 

But I have said before and I will say it again - until we move away from an open ended entitlement program, and only when states are held accountable to a defined budget - can the federal government finally end our practice of micromanaging every administrative process. I believe that it’s our imperative to instead focus on measuring the actual results on the program while unleashing the power of local innovation - so you will see more from us soon on new opportunities to do just that. So stay tuned. 

We want every individual to have the opportunity to achieve earned success, and we must encourage every American to strive for better health and well-being. These efforts must be supported, evaluated, and shared – not shunned. Prosperity can never be handed out as a government benefit, but our programs can play an important part in helping people get off the sidelines of American life and find independence and a sense of purpose. Thank you.