Two Medicaid Updates: Work Requirement, PBMs

By Steve Haner

Medicaid Work – Training Requirement Dead

Disappointing many, thrilling many, and surprising nobody, the Governor of Virginia has openly broken his 2018 promise to couple expanded Medicaid coverage with a work or job training requirement for able-bodied recipients. Moving people out of poverty is no longer the goal.

Governor Ralph Northam was quoted in posted story by the Richmond Times-Dispatch saying:

“Virginians made clear they want more access to health care, not less. Given the changed makeup of the General Assembly and based on conversations with new leadership, it is unlikely Virginia will move forward with funding a program that could cause tens of thousands of Virginians to lose health care coverage.”

To which outgoing Speaker Kirk Cox responded:

“The Governor and I made personal commitments to each other on this long-term public policy agreement. There wasn’t an asterisk that said, “unless my party wins the next election.” It’s a sad reflection on the value of integrity in modern politics.”

Before the election, the excuse for not moving forward was a need for federal matching funds. Now the claim is that such a requirement “could cause tens of thousands of Virginians” to drop off Medicaid. Neither is legitimate, as explored previously on Bacon’s Rebellion. It also could cause tens of thousands to find their way to paying jobs with employer-provided benefits.

Now we’ll have to measure the success of the Medicaid expansion by the health metrics of the recipients, but don’t expect the state to embrace that effort with regular reports, either. Spending – the favored metric of the Left — we know will rise and will be deemed proof of success. Money begets health just like money begets education, right?

The Poverty Industry across the U.S. has fought other states’ efforts to impose work, training or community service conditions on Medicaid recipients not ineligible for work because of age, infirmity or disability. The same battle was brewing in Virginia. But it was part of a political compromise, one which drew enough Virginia Republican legislators over to the idea to pass the expansion in 2018.

Every Republican on House Appropriations who voted aye on expansion is now out of a job, by retirement or electoral defeat. Cox, who helped arrange the compromise, merely lost the Speaker’s gavel.

Did PBM Report Understate Potential Savings?  

Is Virginia’s Medicaid program overpaying for pharmacy benefits by relying on pharmacy benefit managers? A report ordered by the General Assembly has tentatively concluded yes, claiming a potential savings of $32 million with certain changes. The presentation to a joint legislative committee can be seen here, and this is the Daily Press story on the meeting.

At about the same time, in Kentucky a similar review is finding potential savings of $240 million, so the Virginia numbers are being met with skepticism. As the Daily Press reported, the remaining pharmacist in the General Assembly, Republican Keith Hodges, sees it as a lowball number and will keep pressing his legislation to move the savings to the consumers, public or private. (The other pharmacist-legislator was the defeated Delegate Chris Jones of Suffolk.)

The $32 million savings mentioned in Medicaid Director Karen Kimsey’s slide set may simply be administrative costs and may not include the cost of the medications. Advocates for change, which include the state’s pharmacies being squeezed out by the large PBMs, will continue to press an apparently reluctant state for more details.

As reported previously on Bacon’s Rebellion, the pharmacy costs for Medicare are controlled at the federal level, but states have flexibility in managing their own Medicaid operations. Virginia spreads the business among six managed care organizations, which in turn have their own PBM contracts.

Each has its own contracts with pharmacy providers, its own preferred drug list, and a variety of policies on “spread pricing.” Spread pricing is the heart of the argument, with critics complaining that the PBMs are keeping for themselves the bulk of the discounts they negotiate, and not passing on the benefits either to Medicaid or private insurers.

Based on Kimsey’s slides, the state benefits from this approach by having predictable costs and the MCOs take on some of the short-term risk should costs explode. It is not in her slides, but the Daily Press reports she told legislators that only two of the six programs hold back the benefits of spread pricing, amounting to $29 million in the 18 months ending June 2018.

Based on what is being seen in other states, the legislators need to keep digging. This pile clearly is high enough to hide a much larger pony.

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10 responses to “Two Medicaid Updates: Work Requirement, PBMs

  1. After breaking his word on the Medicare comprise, I don’t expect Northam will get Republican legislators trust him ever again to keep his word. Now that the Dems control the General Assembly, perhaps he thinks he doesn’t need them anymore. However, given the far-leftward tilt of many legislators these days, Northam, who is a moderate by comparison, may find himself wanting to work with Republicans from time to time. Many would welcome a chance to slip him the shiv.

    • As a wise and sly legislator from the Kingdom of Vinton once taught me, what goes around comes around. All my best lessons in this game were learned from wise and sly legislators like him.

      • I miss that sly legislator from Vinton. Just think, if he had not been gerrymandered out of his district by Republicans, he would be the next Speaker. That would have been fun to watch, although he was more fun and effective in committees and as floor leader.

  2. One of the things I’ve noticed with the ACA or Obamacare is that the amount of subsidy is tied to the income level of the recipient and with that program – more than a few folks do NOT have stable permanent type career jobs… in short they change jobs – and when they do – it changes the amount of subsidy and “adjustments” are made when they do their taxes.

    I’d point out also that the Federal govt SNAP program IS doing exactly this – they are going to deny food stamps to any able-bodied who does not have a job.

    I doubt seriously that folks in lower income ranges than those with Obamacare are going to do any better at getting employer-provided insurance than those who get Obamacare.

    Further – I suspect that lower Medicaid-type income level their jobs are also not typically stable , long-term, career type jobs.

    So that causes a big problem with the “work requirement” if their eligibility is tied to WHEN they have a job or not. The government is just not able to keep up with such changes in any kind of a timely manner even if the recipients conscientiously reported their job changes when they happened.

    In order for such a thing to work – the employers would have to do the paper work because there would not be any waiting until the end of the year to “reconcile” … one would presume that if someone lost their job, that Va would stop providing the Medicaid. Imagine, for instance, someone who was getting insulin – and lost their job, what would happen.

    So – something seemingly simple like a work requirement (which I support in concept) is not so easy to implement and certainly not without more govt employees to implement it.

    Even then, if the GOP presented a plan – and they supported it – along with the govt bureaucracy to implement it – I might agree that the Gov did reneg but I’ve not seen a GOP plan so I wonder if this is just not more partisan “counting coup” stuff

    • Let me get this straight. The Governor promised to do it. He has all the staff, the existing work training programs, the existing TANF job programs. But since state legislators with none of those resources didn’t write a plan for the state, it is okay to reneg? It is now their fault?

      • Nope and if it was an absolute promise without qualification then bad on the Gov.

        But again. How do you implement this on a practical basis for folks who do not have permanent jobs?

  3. Kirk Cox trusted the personal word of a man who went to a party in his twenties in blackface with a date in klan robes and then lied when confronted with the evidence years later. How many other times has Northam lied and deceived as governor. Shame on Northam for being a dissembler but Cox for trusting him.

  4. Is the post tied to new trump policy on SNAP cuts? If so, timing is curious

    • No, the post was prompted by the TD posting a story on line four hours ago about Northam’s reversal, and the DP story in this morning’s VPAP clips on the PBM report. Both were topics I’ve written about before. Nothing to do with things beyond the Potomac. But that is a similar argument over whether these benefits are “by right” or can, in some cases, be conditioned on efforts toward work or work preparation. In that case, the Trump Administration seems to be actually following the law (where Northam is seeking to ignore legislative intent.)

      https://www.usnews.com/news/politics/articles/2019-12-04/new-trump-administration-rule-endangers-snap-benefits-for-nearly-700k

      “We’re going back to the original congressional intent. That’s what the administration is supposed to do,” Perdue added. “Look at the original congressional intent and go back there.”

      The work requirement applies to “able-bodied” recipients of SNAP benefits between the ages of 18 to 49 years old without dependents. It does not apply to children and their parents, people over 50 years old, people with a disability or pregnant women.”

  5. Again – take a person who has 3 jobs over the course of a year or perhaps someone who has two part time jobs then changes employment.

    1. – for job changes – how does that work?

    2. – think about a system run by the state where people can sign up then lose coverage when they lose a job, then sign up again when they get another job.

    3. – If someone has a job, loses it, and a month later gets another – how does that get handled?

    Health insurance as we know it was not really designed for employment “churn”. It was predicated on the idea that you’d be going to work for an employer and stay for a career.

    The 21st century economy no longer works that way and especially so for folks on the lower economic tiers , many of them in service jobs or gig jobs.

    Do those folks end up with covered then not-covered, then covered, several times over the year as they change jobs?

    It will take a significant govt bureaucracy to do this which is going to add significantly to the cost of it – and that cost will be born by Virginia taxpayers.

    These folks will have MedicAid cards – will show up at Doctors offices and hospitals – and those providers take the cards, deliver services, then find out the coverage has lapsed.

    People with “good” jobs that have health insurance benefits – keep their jobs or they find another job with benefits before they change. Folks in the lower economic tiers don’t typically do that.. it’s a much more chaotic process.

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