States Deal with Medicaid Challenges with Cuts and New Payment Methods

As NAHAM News has reported before, many States are facing Medicaid budget cuts and shortfalls as costs increase. This has spurred different reactions across the nation, as some states look to privatize programs, others have switched their payment methods away from a ‘fee-for-service’ model, and yet others continue to audit existing programs to try to eliminate unnecessary waste.

Kaiser Health News recently summarized how a number of states are handling the issue.

“Facing budget pressures, state officials in Georgia, Minnesota, Kansas and West Virginia are among those making cuts and switching to new payment methods as well as to managed care to cut the cost of the state-federal health care program for the poor and disabled.” The approaches these states are taking mirror much of the debate we can anticipate in the coming months running up to the election. More on this later…

Find the summary (State Officials Seek Medicaid Savings In Cuts, Payment Methods, Managed Care) here: http://www.kaiserhealthnews.org/Daily-Reports/2012/August/10/states-medicaid.aspx.

In Georgia, Georgia Health News reports that state officials say proposed budget cuts to Georgia Medicaid and PeachCare would total $170 million in state funds through the next fiscal year. And with the matching federal funds generated by that state spending, the reductions would have a more than $500 million impact on the two health insurance programs.

In Minnesota, Minnesota Public Radio reports that the state is first in the nation to receive federal approval for a new way of paying for health care in its Medicaid program. Minnesota will pay some hospitals and clinics based on how well their patients do medically and their ability to cut costs. This challenges the current “fee-for-service” approach that some say does nothing to rein in costs.

In Kansas, Kansas Health Institute News reports that the Kansas Medicaid program is scheduled to convert to a privatized system called KanCare. In January, three for-profit, managed-care organizations will take over the federal/state program that pays for health care for low-income children, seniors and people with disabilities.

In West Virginia, the Associated Press has reported that the state is planning an audit of eight state health care agencies and Medicaid with the goal of improving programs with existing or fewer resources.

Readmission Rates Impact Medicare Reimbursements

Under the Affordable Care Act, hospitals with high readmission rates are beginning to see their Medicare reimbursements cut by up to 1%.

See “Denver Health: Low Readmission Rate Not Easy to Emulate,” by Eric Whitney, Colorado Public Radio (August 16, 2012). This story is part of a collaboration that includes Colorado Public Radio, NPR and Kaiser Health News.

Find the article here: http://capsules.kaiserhealthnews.org/index.php/2012/08/denver-health-low-readmission-rate-not-easy-to-emulate/

According to the article, Medicare now sets a standard of tracking readmissions within 30 days of discharge. Those with the worst rates can be fined up to 1% of reimbursements, and that rate will increase to 3 percent in 2014. And as Colorado Public Radio reports, Medicare says two out of three hospitals it evaluated failed to meet its new standards for preventing readmissions within 30 days of discharge.

This may be a particular problem with safety net hospitals – calling the penalties unfair, because the low-income patients they serve often lack access to follow-up care and medications after discharge. But Medicare has pointed to Denver Health, saying it should serve as a model for other safety net hospitals.

So take a look at Denver Health, who despite being a safety net hospital, has an enviable low readmission rate. As reported by Colorado Public Radio, Denver Health’s quality chief calls the new policy imprecise and perhaps unfair.

“The Affordable Care Act has put a ton of pressure on hospitals to focus on this, and my fear is that that is being done at the expense of other quality improvement and safety initiatives,” said Dr. Thomas MacKenzie of Denver Health. “It’s important that we have some incentive in place to try to reduce readmissions; I’m not sure that having a penalty for readmission rates is the way to go.”

But Dr. MacKenzie notes that there are a number of aspects at Denver Health that are hard to replicate everywhere.

Denver Health, Colorado’s biggest safety net system, includes a 477-bed hospital and eight community primary care clinics. About a third of its patients are uninsured, another third are on Medicaid. The integrated system and low reimbursement rates create both a financial incentive and an opportunity to provide as much care as possible in the lower cost outpatient settings.

The hospital is often at full capacity – creating an incentive to make sure patients aren’t readmitted unnecessarily.

Denver Health was also an early adopter of electronic medical records. Colorado Public Radio quotes Dr. MacKenzie: “easy sharing of patient information between the hospital and clinics effectively keeps admissions down. It also helps those recently discharged get priority in scheduling follow-up appointments, putting them at the head of what can be long wait lists at community clinics.”

So here’s the policy conundrum, according to someone on the ground: “It’s a bit of a leap to say that one hospital’s readmission rate being different from another reflects a difference in quality and care… Only a proportion of [readmissions] within 30-days are preventable. We think probably a quarter of them are preventable, at most.”

Dr. MacKenzie told Colorado Public Radio that hospitals should only be held responsible for readmissions within three days to a week of discharge. That’s because readmissions after that period could be either more the patient’s responsibility, or medically necessary for reasons beyond the hospital’s control.

13 States Cut Medicaid to Balance Budgets

Kaiser Health News reports that “13 States Cut Medicaid To Balance Budgets”.

Find this article here: http://www.kaiserhealthnews.org/Stories/2012/July/25/medicaid-cuts.aspx .

By Phil Galewitz and Matthew Fleming (July 24) and produced in collaboration with USA Today.

KHN reports that 13 states are moving to cut Medicaid by reducing benefits, paying health providers less or tightening eligibility, even as the federal government prepares to expand the insurance program for the poor to as many as 17 million more people.

States routinely trim the program as tough times drive up enrollment and costs. But the latest reductions – which follow more extensive cuts last year -- threaten to limit access to care for some of its 60 million recipients.

"With more people on Medicaid, states will have to continue to ratchet down payments and limit services," says Nina Owcharenko, director of the center for health policy studies at the conservative Heritage Foundation.

Some worry the cuts to doctors and hospitals could make it more difficult to expand the state-federal program in 2014, as called for by the federal health law. "Some providers may be unwilling to accept new Medicaid patients," says former New York Medicaid Director Deborah Bachrach.

But she notes the law may counter that effect with its funding boosts to community health centers and its temporary rate increases for primary care doctors beginning in January 2013.

Most of the cuts went into effect this month, according to a 50-state survey by Kaiser Health News for USA Today. Among them:

--Illinois cut enrollees to four prescriptions a month; imposed a copay for prescriptions for non-pregnant adults; raised eligibility to eliminate more than 25,000 adults and eliminated non-emergency dental care for adults.

--Alabama cut pay for doctors and dentists 10 percent and eliminated coverage for eyeglasses.

--Florida cut funding to hospitals that treat Medicaid patients by 5.6 percent – following a 12.5 percent cut a year ago. The state is also seeking permission to limit non-pregnant adults to two primary care visits a month unless they are pregnant, and to cap emergency room coverage at six visits a year.

--California added a $15 fee for those who go to the emergency room for routine care and cut reimbursements to private hospitals by $150 million.

--Wisconsin added or increased monthly premiums for most non-pregnant adults with incomes above $14,856 for an individual.

South Dakota, Maryland, Colorado, Louisiana, New Hampshire, Hawaii and Maine also are making reductions to their programs. Connecticut is weighing cuts likely to go into effect this fall.

A few states have increased Medicaid benefits, including Arizona, which will boost pay for mental health providers next April. And some are looking at restoring cuts made during the worst of the recession, said Vernon Smith, managing principal with consulting firm Health Management Associates and a former Michigan Medicaid director.

Stacey Mazer, senior staff associate with the National Association of State Budget Officers, notes that fewer states are cutting the program this year, partly because many are in better economic shape and partly because "states are hearing a lot of hue and cry about the impact on access."

Last November, for instance, about 3,500 Medicaid recipients in New Hampshire had to find new doctors after cuts led LRGHealthcare in Laconia to stop offering primary care to non-pregnant adults, says Senior Vice President Henry Lipman.

"To see two decades of providing access for our community basically erased has been very disheartening," he says.

It is unclear how many states will participate in the law's Medicaid expansion since the Supreme Court ruled last month that they may not be penalized for opting out. A number of Republican governors have vowed not to participate, citing costs. Although the federal government will pay for the first three years, states will still have to cover up to 10 percent of the costs after that.

Medicaid Expansion Reduces Mortality, Study Finds

Benjamin D. Sommers, M.D., Ph.D., Katherine Baicker, Ph.D., and Arnold M. Epstein, M.D published “Mortality and Access to Care among Adults after State Medicaid Expansions” in the New England Journal of Medicine.

Find the study here – http://www.nejm.org/doi/full/10.1056/NEJMsa1202099. 

Here is the brief, taken from the website above –

BACKGROUND: Several states have expanded Medicaid eligibility for adults in the past decade, and the Affordable Care Act allows states to expand Medicaid dramatically in 2014. Yet the effect of such changes on adults' health remains unclear. We examined whether Medicaid expansions were associated with changes in mortality and other health-related measures.

RESULTS: Medicaid expansions were associated with a significant reduction in adjusted all-cause mortality (by 19.6 deaths per 100,000 adults, for a relative reduction of 6.1%; P=0.001). Mortality reductions were greatest among older adults, nonwhites, and residents of poorer counties. Expansions increased Medicaid coverage (by 2.2 percentage points, for a relative increase of 24.7%; P=0.01), decreased rates of uninsurance (by 3.2 percentage points, for a relative reduction of 14.7%; P<0.001), decreased rates of delayed care because of costs (by 2.9 percentage points, for a relative reduction of 21.3%; P=0.002), and increased rates of self-reported health status of “excellent” or “very good” (by 2.2 percentage points, for a relative increase of 3.4%; P=0.04).

CONCLUSIONS: State Medicaid expansions to cover low-income adults were significantly associated with reduced mortality as well as improved coverage, access to care, and self-reported health.

The full text and discussion is available.

The release received significant coverage –

Kaiser Health News reported that “As states decide whether to expand their Medicaid programs to cover low-income childless adults, the impact of their choices became clearer today in a study showing a reduction of mortality in states that have already made that move.”

Find this article, by Matthew Fleming (JULY 25TH, 2012, 5:00 PM) here: http://capsules.kaiserhealthnews.org/index.php/2012/07/medicaid-expansion-reduces-mortality-study-finds/.

As reported by KHN, “The research published in the New England Journal of Medicine found a 6.1 percent reduction in mortality among low-income adults between the ages of 20 and 64 in Maine, New York and Arizona — three states that expanded coverage since 2000, compared with similar adults in New Hampshire, Pennsylvania, Nevada and New Mexico, neighboring states that did not do so.”

KHN also reports that 1) “The decline in mortality, by an overall 19.6 deaths per 100,000 adults, was especially pronounced among older individuals, minorities and residents of the poorest counties,” and 2) “The study also found “improved coverage, access to care and self-reported health” among the newly covered adults.”

The study comes after “the Supreme Court struck down a provision of the 2010 federal health care law that sought to force all states to extend Medicaid coverage to everyone with incomes up to 133 percent of the federal poverty level. That level, according to KHN is currently $14,856 for individuals and $25,390 for a family of three.

As we have covered previously, KHN reminds us that “Although the federal government will pay the full cost of the expanded coverage for three years starting in 2014, and at least 90 percent thereafter, a number of state governors have said they will not approve the wider coverage.”

The authors cautioned that their study “cannot definitively show causality,” because other factors might have contributed to the reduction in death rates in the population newly covered by Medicaid. Among those factors, they said, was the possibility that “expanding coverage had positive spillover effects through increased funding to providers, particularly safety-net hospitals and clinics

From KHN’s report: “This answers the question of what happens when you give people Medicaid who didn’t already have coverage, as opposed to comparing people who have Medicaid with people who have something else,” said Sommers. “The latter is not apples to apples, because Medicaid recipients are usually sicker and with worse socioeconomic conditions.”

Kaiser Health News also reports other sources covering the story –

Los Angeles Times: Medicaid May Help People Live Longer, Study Indicates

As states consider whether to expand their Medicaid insurance programs for the poor under President Obama’s healthcare law, new research indicates the decision may have life-and-death consequences. A study published Wednesday in the New England Journal of Medicine indicates that residents of states that expand coverage will probably live longer, be healthier and have better access to medical care (Levey, 7/25).

The New York Times: Medicaid Expansion May Lower Death Rates, Study Says

Into the maelstrom of debate over whether Medicaid should cover more people comes a new study by Harvard researchers who found that when states expanded their Medicaid programs and gave more poor people health insurance, fewer people died (Belluck, 7/25).

The Wall Street Journal: Death Rates Vary In Medicaid Study

States that opted for larger Medicaid programs had lower death rates, according to a study released Wednesday in the New England Journal of Medicine. The findings come as states struggle with the growing financial burden of the health-insurance program for the poor, and weigh whether to take part in its expansion under President Barack Obama's health-care law (Dooren, 7/25).

The Associated Press/Wall Street Journal: Study: New Medicaid Expansion Could Be A Lifesaver

Until now, the Medicaid debate has been about budgets and states' rights. But a statistical study by Harvard researchers in the New England Journal of Medicine found a 6 percent drop in the adult death rate in Arizona, Maine and New York, three states that have recently expanded coverage for low-income residents along the general lines of the federal health care law. The study found that for every 176 adults covered under expanded Medicaid, one death per year would be prevented (7/25).

State Option for Medicaid Expansion: First the Ruling; Now the Price Tag

The Congressional Budget Office, the official price fixer for Congress, has found that “Federal spending under the health care law is likely to be $84 billion lower over the next 11 years than previously projected now that states can opt out of the law’s Medicaid expansion.”
See the report at the CBO website here – http://www.cbo.gov/publication/43472 .

Here’s the brief, from the CBO –

What Is the Net Budgetary Impact of the Coverage Provisions Taking Into Account the Supreme Court’s Decision?

CBO and JCT now estimate that the insurance coverage provisions of the ACA will have a net cost of $1,168 billion over the 2012–2022 period—compared with $1,252 billion projected in March 2012 for that 11-year period—for a net reduction of $84 billion. (Those figures do not include the budgetary impact of other provisions of the ACA, which in the aggregate reduce budget deficits.)

The projected net savings to the federal government resulting from the Supreme Court’s decision arise because the reductions in spending from lower Medicaid enrollment are expected to more than offset the increase in costs from greater participation in the newly established exchanges.

How Will States Respond to the Supreme Court’s Decision Regarding the Medicaid Expansion?

The Supreme Court’s decision has the effect of allowing states to choose whether or not to expand eligibility for coverage under their Medicaid program pursuant to the ACA. Under that law as enacted but prior to the Court’s ruling, the Medicaid expansion appeared to be mandatory for states that wanted to continue receiving federal matching funds for any part of their Medicaid program. Hence, CBO and JCT’s previous estimates reflected the expectation that every state would expand eligibility for coverage under its Medicaid program as specified in the ACA. As a result of the Court’s decision, CBO and JCT now anticipate that some states will not expand their programs at all or will not expand coverage to the full extent authorized by the ACA. CBO and JCT also expect that some states will eventually undertake expansions but will not do so by 2014 as specified in the ACA.

How Does Insurance Coverage Change After the Supreme Court’s Decision?

CBO and JCT now estimate that fewer people will be covered by the Medicaid program, more people will obtain health insurance through the newly established exchanges, and more people will be uninsured. The magnitude of those changes varies from year to year.

In 2022, for example, Medicaid and the Children’s Health Insurance Program (CHIP) are expected to cover about 6 million fewer people than previously estimated, about 3 million more people will be enrolled in exchanges, and about 3 million more people will be uninsured. Although the estimates discussed here are dominated by the movements of people losing eligibility for Medicaid, other smaller shifts in coverage are expected to occur as well. (The changes in coverage reflect the net effect of all estimated changes stemming from the Court’s decision, not just the movements of people who lose eligibility for Medicaid. For example, relative to prior estimates, not all of the increases in enrollment in exchanges and in the uninsured are among people who would have been newly eligible for Medicaid.)

NAHAM News has previously reported on the Supreme Court’s ruling that states may opt out of the Affordable Care Act’s Medicaid expansion.

Find a KHN report on the new option for states here –
http://www.kaiserhealthnews.org/Stories/2012/July/02/state-costs-Medicaid-expansion.aspx .

Kaiser Health News reports “CBO Reports On Impact Of Medicaid Ruling, Health Law Repeal Effort”.

See that article, by Julie Appleby (July 24, 2012) here – http://capsules.kaiserhealthnews.org/index.php/2012/07/cbo-reports-on-impact-of-medicaid-ruling-health-law-repeal-effort/.

The CBO estimated that –

• 6 million fewer low-income Americans will gain coverage through Medicaid and the Children’s Health Insurance Program by 2022 now that the Supreme Court has ruled that the law went too far in trying to force all states to expand Medicaid eligibility.

• About 3 million of them are likely to remain uninsured, while another 3 million will purchase coverage through new marketplaces called exchanges. Those buying coverage would receive subsidies to help cover the cost.

• Although the subsidies are more expensive per person than Medicaid, the cost to the federal government would fall because only about half of those losing Medicaid eligibility would be eligible to obtain subsidized private coverage.

KHN reminds us that the in the court case, states argued successfully that the federal law was overly coercive because it would have withdrawn all Medicaid funding from states that did not expand eligibility for Medicaid, a joint federal-state program.

The CBO did not try to predict which states would decide not to expand Medicaid. Instead, it used an estimate of the share of the population that might be affected, ran it through various scenarios, and settled on a middle ground.

Because “states will face different costs and benefits from expanding their Medicaid programs and will have different preferences about whether or to what degree to do so,” the analysis should not be considered a “definitive interpretation” of how the federal low will be implemented, the report cautioned.

Also, as a reminder for those following this issue –

The federal law sought to expand eligibility to all Americans earning up to 133 percent of the federal poverty line, more than $14,800 for individuals and about $25,400 for a family of three.

Many states do not currently cover adults without dependent children, no matter how low their income.

In another, separate report, CBO has estimated that repeal of the health care law as proposed in a bill passed July 11 by the Republican-controlled House would add $109 billion to the federal deficit between 2013 and 2022.

Find that report here - http://www.cbo.gov/publication/43471 .

Here’s the brief –

“What Would be the Effect of Repealing the ACA on Discretionary Spending? In addition to those effects on direct spending and revenues, by CBO’s estimates, repeal of the ACA would reduce the need for appropriations to the Internal Revenue Service by between $5 billion and $10 billion over 10 years. Repealing the ACA would also reduce the need for appropriations to the Department of Health and Human Services by between $5 billion and $10 billion over 10 years, CBO estimates. Such savings might be reflected in reductions in total discretionary spending, or they might free up room for additional spending for other purposes under the caps on discretionary appropriations that were established by the Budget Control Act of 2011. H.R. 6079 would also repeal a number of authorizations for appropriations, which, if left in place, might or might not result in additional appropriations.”

Can States Limit Existing Medicaid Programs as "the Uninsured Come Out of the Woodwork?"

Will the Affordable Care Act, as treated by the Supreme Court “bring the uninsured out of the woodwork?” That’s what states are really concerned about.  Politics of whether a state chooses to expand its program as anticipated under the ACA aside – what about all of those currently eligible but not enrolled under state Medicaid plans right now? This we learn from NPR’s Julie Rovner in “Will Medicaid Bring the Uninsured Out of the Woodwork?” (July 11, 2012).

So we here at NAHAM News will be looking for answers to the question - can states limit their current Medicaid programs as a way to manage costs? - not what the law anticipated, and not what the Supreme Court took clear aim at.

Find her article here: http://www.npr.org/blogs/health/2012/07/11/156568678/will-medicaid-bring-the-uninsured-out-of-the-woodwork

And we see that the question now is not what the Court spoke to rather clearly – that states have the option to expand their programs without losing the funding they already receive from the federal government, but whether states can cut back on the eligibility of their current program as more uninsured show up to sign up.

Rovner reports that since the Supreme Court decided last month that an expansion of Medicaid under the Affordable Care Act should be optional, quite a few Republican governors have been vowing to take a pass. All eyes are on how many states choose to do so – declining to offer (expand) Medicaid to people with incomes up to 133 percent of the poverty line. This year that's just under $15,000 a year for an individual, or a little over $25,000 for a family of three.

One analysis is to consider what states leave on the table by not expanding Medicaid as anticipated under the health care law. The law provided 100 percent coverage for people newly eligible for Medicaid by the federal government, and 90 percent in the out years. Compare this offer to the existing the Medicaid program, where the federal government pays an average of just under 60 percent.

But it's not just those newly eligible people states are worried about.

Here’s the thinking of Dennis Smith, secretary of the Wisconsin Department of Health Services and former head of the federal Medicaid program under President George W. Bush:

"Folks don't really understand the struggle states are in," says Dennis Smith, Smith says this year his state put more than a billion dollars into its existing Medicaid program. "And that took up literally almost the entire new revenues available to the state — meaning revenues not just for health care, but also intended for education, transportation, law enforcement and everything else," he says.

Even so, Wisconsin had a $600 million budget shortfall. "So states just don't have the dollars, even with those enhanced federal match rates," Smith says.

But what really has many state leaders worried is something called the "woodwork effect."

When big parts of the health law go into force in 2014, they worry it will bring out of the woodwork the millions of people who are already eligible for Medicaid but aren't already enrolled.

Put another way, here’s how it could play out – When some people look to see if they can get health insurance through one of the health exchanges, they may discover a cheaper option – their eligibility for Medicaid – the existing program.

So here’s the problem with Medicaid that the state’s newly found option under the Supreme Court ruling might not be able to prevent – many of those people signing up for Medicaid won't be members of the newly eligible expansion group, whose bills will be largely paid by the federal government. “They'll be regular old Medicaid beneficiaries, and states will have to pay up to half their costs.

Rovner reports that this has some states looking at cutting back their Medicaid programs even now.

So look for a new question - can states cut back eligibility of the existing programs?

Wisconsin's Dennis Smith, who used to run the federal Medicaid program, says he reads the Supreme Court decision as allowing that.

NPR reports that the Obama administration disagrees. Last night it sent a letter to all the nation's governors, noting that "the Court's decision did not affect other provisions of the law." An administration official confirmed that included the requirement that states maintain current eligibility levels until the year 2014.

Health advocate Lesley, a former Capitol Hill staffer, agrees with the administration. "Our reading of the Supreme Court ruling is [that] the opinion by Justice Roberts ... cites basically a specific section of the law and basically changed the idea that the Medicaid expansion can no longer be a mandatory thing, but now is optional," Lesley says. "However, what it didn't touch on was this idea of requiring states to maintain coverage. So we believe that that is absolutely still in place."

You should also check out this article: See also Who’s in and who’s out: http://www.npr.org/blogs/health/2012/07/05/156312388/medicaid-expansion-whos-in-whos-out

Message to Policymakers: Go Slow on Medicaid

NAHAM News will be watching, listening to, and reporting on the policy discussions on what states will do with Medicaid.  Given the Supreme Court's decision on the Affordable Care Act, what states do will have a lot to do with the law's success in achieiving coverage for all (or most) Americans, within the price initially tagged to the law when passed, and what states do will significantly shape the future health care landscape.

Brett Norman of POLITICO reports that 3 former administrators of the Centers for Medicare & Medicaid Services (who served Republican presidents) have a bit of advice for Democrats trying to get conservative governors to go ahead with Medicaid expansion: Go Slow. Be flexible. Don’t make it a political litmus test. And try not to pour fuel on what’s already a hot-burning fire.

Find his article “Experts on Medicaid: Go Slow” by Brett Norman (July 10, 2012 10:48 PM EDT) here: http://www.politico.com/news/stories/0712/78365.html

The Medicaid ruling by the Supreme Court left the states with unexpected options and dozens of questions — and the 3 former CMS chiefs doubt they will be answered quickly, maybe not until after the elections.

Some big name, big state Republican governors are in open revolt against the 2014 Medicaid expansion, and others are still trying to figure out the costs and benefits, both political and economic.

The 3 former administrators counsel CMS to take it slow, avoid antagonizing states by issuing ultimatums and get ready for a whole new dynamic in the state-federal Medicaid negotiations — one in which the states have a lot more leverage than in the past.

Mark McClellan, who served at CMS under President George W. Bush and is now director of the Engelberg Center for Health Care Reform at the Brookings Institution says the new state position will “mean something, but we don’t know exactly what.”

With expansion now a political flash point, CMS flexibility could be the new name of the game. So, Tom Scully, who also served at CMS under President George W. Bush and is now a health care lobbyist, says don’t “make rejection of the Medicaid expansion a litmus test for Republicans,” and don’t tell states “they can either take or leave the Medicaid expansion — and the billions in federal funding.”

In fact, something more like appeasement might be the best approach at this point – that consistent with what Gail Wilensky, head of Medicare and Medicaid under President George H.W. Bush told POLITICO.

The federal health law would have required all states in 2014 to extend Medicaid coverage to everyone up to 133 percent of the federal poverty level, with the feds picking up 100 percent of the tab in the first three years and stepping down to 90 percent thereafter. It would have accounted for about half the new insurance coverage under the Affordable Care Act — some 17 million people.

Just about every state assumed that the court would either invalidate the expansion or permit it — and that states would have to go ahead or risk losing all their Medicaid funding.

So, POLITICO reports –

CMS’s options moving forward lie somewhere between two extremes. CMS could gamble on the all-or-nothing approach, hoping that reluctant states would play ball or face the wrath of provider group lobbies, especially the hospitals, which don’t want to see that federal funding left on the table.

On the other hand, CMS could consider an option — already suggested by Louisiana Gov. Bobby Jindal — to give states at least some of the expansion funds in the form of block grants, the holy grail of conservative health reformers.

But POLITICO reports that the administration had so far said that block grants are not on the table – at least not yet.

Go here to see what OMB head Jack Lew says: http://www.politico.com/news/stories/0712/78056.html