Eakinomics: A New Medicaid Reform Option

Eakinomics: A New Medicaid Reform Option Nearly lost in the uproar that surrounds the coronavirus and Senate trial of the president, last Thursday the Administrator of the Centers for Medicare and Medicaid Services (CMS) Seema Verma announced the Healthy Adult Opportunity (HAO) demonstration project. The HAO essentially consists of pre-packaged opportunity use waivers that have been provided by CMS in the past – benefits, cost sharing, retroactive eligibility, social determinants of health, additional conditions of eligibility – as part of moving away from the traditional financing to either a block grant or a per-enrollee grant from the federal government. While the block/per-enrollee grant has never proved particularly popular, CMS is hoping that a variety of additional features will induce states to undertake Medicaid reforms. For example, states could choose to enroll additional target populations (under age 65) such as those with a substance abuse problem. If states take advantage of the tools and flexibilities to save money, they could retain 25 to 50 percent of the federal savings to use in their Medicaid programs. CMS took pains to emphasize that this is not simply gutting quality standards. States participating in the program still need to meet the Essential Health Benefits standard. And states will report in real-time data to evaluate the program and allow CMS to make changes as needed. The HAO has been a priority at CMS for years. Now comes the real test: How many states will use it?