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Waivers
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Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001a. list
[Personally Identifiable Information] [partial] (1 page)
06/22/1994
b(6)
001b. list
[Personally Identifiable Information] [partial] (1 page)
05/24/1994
b(6)
COLLECTION:
Clinton Presidential Records
Chief of Staff
Harold Ickes (Health Care Files)
OA/Box Number: 8104
FOLDER TITLE:
Waivers
2022-0433-S
rs3716
RESTRICTION CODES
Presidential Records Act |44 U.S.C. 2204(a)]
Freedom of Information Act 15 U.S.C. 552(b)]
PI National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRAJ
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRAJ
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information |(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRAJ
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy |(a)(6) of the PRAJ
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions |(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells [(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
JUL-15-1994 00:04 FROM DEP SEC HHS
TO
P.02
.........................
8
Wawes
DEPARTMENT OF HEALTH & HUMAN SERVICES
Chief of Sta"
he
(
Washington, D.C. 20201
Floren women -greed
July 15, 1994
MEMORANDUM
TO:
Carol Rasco
Christine Varney
FROM:
Kevin Thurm 2-Th
SUBJECT: Florida Waiver Update
Attached please find an update on the Florida waiver provided to
me today. I understand Governor Chiles will be calling Leon
Panetta and/or seeing the President over the weekend.
If you have any questions, please do not hesitate to call me.
Attachment
SHH OBS data FRIM 50:00 P661-SI-700
TO
July 15, 1994
STATUS OF HCFA NEGOTIATIONS ON THE FLORIDA WAIVER
The State of Florida is seeking a waiver to implement the Florida
Health Security (FHS) program, which would provide Insurance to 1.1
million uninsured persons at or below 250% of the poverty level.
After several weeks of discussion, HCFA and the state have resolved
a large number of issues. There are now two issues outstanding:
o
Budget Neutrality: We are endeavoring to agree on a
methodology to ensure that Florida spends no more under the
waiver than it would have in the absence of a waiver. This
would essentially create a cap on Medicaid spending. HHS and
OMB have been concerned that Florida's estimate of what they
would spend in the absence of a waiver is too high, creating
a significant Federal budget risk. The President raised this
issue with the Governor at their meeting last month.
In computing the baseline costs that determine the spending
cap, the State insists on using an estimate of the future
growth rate rather than actual growth. However, the growth
rate has slowed substantially in the past year, from 21% to
14% or even less. On Thursday, HCFA offerod to lock in a
17.75% growth rate, which would be a favorable arrangement for
the State. The State had been insisting on 18.5% and has not
yet responded to this offer.
Should Florida reject this orrer, HCFA is prepared to make the
State another offer using an alternate methodology.
o
Use of Insurance Agents: Florida plans to use insurance
agents to sell health plans under its FHS program. However,
the Justice Department has indicated that Florida's plan would
violate the Medicare/Medicaid anti-kickback statute. This
statute addresses the policy concern that insurance plans
could out-bid one another in offering remuneration of
commissioned agents, and result in Medicaid patients being
"steered" to plans offering the most lucrative commissions to
the agent. There is considerable Congressional interest in
this issue, with Rep. Waxman investigating whether some
abusive, high-profit Medicaid managed care plans obtain
enrollees by offering high commissions.
Florida continues to argue that their plan does not violate
the law. The Justice Department and the HHS Inspector General
are once again explaining our position to the State.
JUL-15-1994 00:05 FROM DEP SEC HHS
TO
P.04
-2-
The Secretary does have the authority to create a safe harbor
from the statute, in "consultation" (interpreted by DOJ and
OMB as "approval") with the Attorney General, if the HHS IG
finds that the plan in question does not raise fraud and abuse
concerns. We do not believe that the Justice Department or
the HHS IG are prepared to make such an assurance at this
time. In addition, issuing a safe harbor regulation for
Florida would take several months at least, since it. would
require a proposed rule in the Federal Register, a public
comment period, and a final regulation that responds to public
comments. Such a timetable would be a problem for Florida.
It appears that Florida must alter their plan in order for it
to be judged acceptable by the HHS IG and Justice, but they
have so far shown no flexibility in doing so, citing political
concerns.
Wawns
he
THE WHITE house
MEMORANDUM FOR THE PRESIDENT
FROM: Carol H. Rasco
SUBJ: Waivers
DATE: July 24, 1994
FLORIDA: Following my last message to you about the impending
call Attorney General Reno would make to Governor Chiles, I had a
call late Friday evening from Governor Chiles' DC staff member
who said they are all VERY appreciative of the work of the White
House. AG Reno called the Governor's office and not only told
them she felt the matter could be closed by having a flat
commission for the insurance agents, but that she would like to
have Justice Dept. officials sit down with Florida's legal
advisors to discuss the matter fully for one last time. Jay
Peterson who serves as Chiles' legal counsel is to meet by
midweek this coming week with John Hogan of Justice who is also
formerly from Florida. The parties know each other, trust each
other and fully recognize they are looking at legal issues, not
policy issues. I have asked Bruce Lindsey to call Buddy McKay as
a follow up to his discussions with Buddy last week to make
certain Buddy is aware of these latest developments.
NINTH CIRCUIT: HHS has advised Justice they do not feel there is
a need for an appeal. I have attached the HHS memo outlining the
rationale. In the meantime, HHS is confident they have in this
administration created the necessary record in granting waivers
and on the broader issue of public notice in rule making/waiver
granting, HHS has been working on that issue with NGA/others
anyway. We will continue to monitor this situation to make
certain it does not become a false impediment to timely issuance
of waivers.
I will be giving you per your request a regular update on the
waivers described on the "pending" chart in your briefing
materials for the NGA meeting.
CC: Leon Panetta
Lloyd Cutler
Phil Lader
Harold Ickes
Bruce Lindsey
Marcia Hale
Joel Klein
07/22/94
17:13
202 456 7028
DOM. POL
003
DEPARTMENT OF HEALTH & human SERVICES
Office of the Secretary
Office of the General Counsel
Washington, D.C. 20201
July 22, 1994
TO
: Kevin Thurm
Chief of staff
Through: ES clossing 7/22/94
FROM : Deputy General Counsel
SUBJECT: Beno v. Shalala - Whether to request rehearing
The Ninth circuit Court of Appeals has decided Beno v. shalala,
which involved a challenge to the Department's 1992 approval of a
welfare demonstration project pursuant to Section 1115 of the
Social Security Act. Reversing a trial court, the appellate
panel held that, under the facts of this case, the Department
could not legally grant the waivers needed to implement the
proposed demonstration in the absence of an adequate documentary
record to support its decision. While the discussion in the
opinion is broad-ranging, the actual decision is quite narrow.
Specifically, the court held that because of the importance of
the objections raised by critics of the demonstration and the
"extraordinarily sparse administrative record" the Department
must review the proposal further.
A request for a rehearing of this decision, either by the panel
that decided the case or en banc by the full Ninth circuit, must
be made by Wednesday, July 27th.
The following reasons argue against requesting further review:
1. There is no basis for seeking a review only by the panel that
decided the case. There are no issues that we could raise
that were not addressed in the decision.
2. Successful requests for hearing en banc generally require a
strong factual case, where the holding of the court raises
important issues of law or the threat of significant harm to
the losing party. The facts in this case may not meet this
test.
Moreover, the precise legal holding is quite limited. It only
requires the Department to create some administrative record
to support its decision. TO make a credible case for hearing
en banc, however, DOJ might need to refer to the broad
language in the decision and to characterize the decision as
Page 2
having wider implications than a careful reading of the
specific holding of the court would require. For example, it
might be necessary to argue that the decision incorrectly
requires the Department to develop an extensive administrative
record supporting the approval of any demonstration. Filing
papers that read the opinion broadly would be very undesirable
since, if a rehearing is not granted, the Department would
have made unnecessary concessions in this regard.
3. Because the specific holding is narrow, the Department should
be able to comply with the mandate without a substantial
change in policies or procedures and without increasing the
time needed to review applications.
4. In fact, the standards for waiver review specified by the
court are similar to those already adopted by the Department
in the Section 1115 Policy Principles adopted last August. The
procedures specified by the court generally are consistent
with Section 1115 Procedural Principles currently being
considered for adoption by the Department.
5. There is a possibility that an en banc review could result in
a decision that is adverse to the Department on issues that
were argued before, but not decided by, the current panel.
6. Even if the Circuit just affirmed the decision, this could
expand the impact of the decision.
what Well
Michael S. Wald
3003
94562878
01
JUL-22-1994 17:15 FROM
Withdrawal/Redaction Marker
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001a. list
[Personally Identifiable Information] [partial] (1 page)
06/22/1994 b(6)
COLLECTION:
Clinton Presidential Records
Chief of Staff
Harold Ickes (Health Care Files)
OA/Box Number: 8104
FOLDER TITLE:
Waivers
2022-0433-S
rs3716
RESTRICTION CODES
Presidential Records Act - |44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
PI National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRAJ
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRAJ
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy |(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions [(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells 1(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
00:40 FROM DEF DEL and
SERVICES
Waivers
DEPARTMENT OF HEALTH & HUMAN SERVICES
Chief of Staff
he
(
/
Washington, D.C. 20201
HHS ATTENDEES
MEETING WITH GOVERNOR CHILES AND THE PRESIDENT
JUNE 23, 1994, 2:15 P.M., OVAL OFFICE
BRIEFING 2:00 P.M., OVAL OFFICE
NAME
DATE OF BIRTH
SOCIAL SECURITY NO.
Kevin Thurn
John Monahan
Judy Feder
(b)(6)
Bruce Vladeck
Kenneth Apfel
JUN-22-1994 12:30 FROM
TO
94561799
P.02
DEPARTMENT OF HEALTH & human SERVICES
Health Care Financing Administration
(
The Administrator
Washington, D.C. 20201
JUN 22 1994
To:
Kevin Thurm
Chief of Staff
From:
Bruce Vladech
Administrato
FJRBV
Subject: Update on Florida's Section 1115 Waiver Application
Purpose
This note provides an up-to-date summary of our discussions with
the State of Florida on their proposed 1115 Medicaid waiver.
Proposal
The Florida Health Security (FHS) Program, submitted on February
10, uses a managed competition model to provide health insurance
for 1.1 million low-income Floridians. The Florida waiver differs
from other previously approved State-wide 1115 health care reform
waivers in that the Florida Medicaid program, except for coverage
of the medically needy, remains intact. FHS is a voluntary program
for the non-Medicaid uninsured that allows employers and
individuals with incomes below 250 percent of the poverty level to
buy modified community rated insurance which is subsidized by the
State and Federal government. Particular features include:
Any family unit with gross annual income below 250 percent of
poverty, irrespective of the value of their assets, will be
eligible to apply.
Insurance will be provided through Community Health Purchasing
Alliances (CHPAs) that currently provide policies for the
small employer market.
Individuals and firms must be uninsured for 12 months prior to
joining the CHPA.
Purchase is entirely voluntary both on the part of the
individual and employer.
Medicaid eligibles, except for the medically needy who will be
grandfathered into FHS, are ineligible for FHS and will remain
in Medicaid.
Licensed agents sell insurance policies through the CHPAS and
receive commissions from the Accountable Health Partnerships.
The benefit package is the Florida Department of Insurance
(DOI) package used in the small employer market. It contains
both managed care and indemnity packages, which contain
significant cost sharing and fewer benefits than Medicaid.
JUN-22-1994 12:30 FROM
TO
94561799 P.03
2
The Florida legislature has not given final legislative approval to
the proposal as the Senate is deadlocked 20-20 along party lines.
Governor Chiles has already called one inconclusive special
legislative session this summer and plans to call another shortly.
Resolution of outstanding issues in the waiver application would
presumably give the legislature additional impetus to act.
One unusual feature of FHS has made the evaluation of this waiver
application more difficult than usual. FHS would use Medicaid
savings to subsidize what the State considers a private sector
program. Since our statutory authority is designed to assist
in promoting the objectives of title XIX...", and FHS is designed
for an uninsured low-income population, a major issue is the extent
to which FHS must contain Medicaid-type features. The State wants
FHS to mirror the small employer market and include many features
of that market, including limited benefits and high cost-sharing to
guard against inappropriate use and unfavorable risk selection.
Nevertheless, Federal Medicaid funds must be used for a program
that is consistent with the purposes of Medicaid, provides
Medicaid-type protections for enrollees, and does not in effect
become a block grant.
While we have managed to reach agreement with the State in several
areas in reconciling these apparently conflicting objectives,
several of the remaining unresolved issues stem trom this
conundrum. For example, as a general policy, managed care plans
that enroll Medicaid beneficiaries must have no more than 75%
Medicare/Medicaid enrollees. If we consider the FHS population to
be Medicaid, some current Medicaid managed care plans may no longer
meet this test. Approval could also create a precedent for
subsequent State waivers.
Progress to Date
We are now actively engaged in negotiations with the State on the
remaining outstanding issues, and are hopeful that we will
ultimately reach agreement on a waiver provided the State is
prepared to meet us halfway on some of the remaining issues. We
have made substantial progress in supporting the State's policy
goals while at the same time assuring access, quality, and
financial protections given both our statutory authorities and our
goals on health care reform. We have reached agreement on several
issues ranging from protecting certain vulnerable populations to
the basic methodology for calculating budget neutrality. We
continue to meet to establish key final baseline estimates that
will guarantee appropriate federal contributions.
Major Outstanding Issues
1. Matching of Premiums
Whenever private premiums have been collected on behalf of Medicaid
beneficiaries, our longstanding policy prior to the Tennessee
JUN-22-1994 12:31 FROM
TO
94561799 P.04
3
waiver was to provide Federal match on total premiums minus
employer and individual payments; that is, we only match State
contributions. Florida is requesting that Federal matching
payments be based on gross premiums including a combination of
employer, employee, and State contribution. This proposal would
have the State share diminish as income class increases. For
example, at 200% to 250% of the Federal poverty level, an
individual and employer would each contribute $25, the State $1,
and the federal government $65. The State proposes to cap the
number of enrollees at this higher income level.
In the case of the Tennessee waiver, we agreed to match individual
premiums on a limited basis. Until recently we took the position
in the negotiations that we would not agree to a Tennessee-like
solution, because of our concern about reinforcing that precedent.
However, we are now discussing an option that would limit federal
exposure and assure rcasonable matching shares by adjusting
Florida's cap on higher income enrollees. It remains to be seen
whether the State will accept this approach. One question is
whether we should match employer premiums, which might set a new
precedent at a time when we have additional pending waiver requests
to do so, some of which are far more extensive (e.g.
Massachusetts). We are attempting Lo structure the terms and
conditions in a way that will minimize this issue.
2. Insurance Brokers
Under FHS, insurance brokers, not alliances as under HSA, market
policies to individuals and receive commissions from the AHPS. We
believe that this practice may contain incentives for agents to
enroll healthy individuals or individuals receiving minimal State
subsidies in plans, and to stay away from such populations as the
medically needy. The State has indicated that this provision
reflected a difficult political compromise with insurance brokers
within the State. General Counsel has informed the State that this
practice would violate Federal fraud and abuse laws, which bar
commissions and kickbacks in Medicaid-related programs. This is
still an open issue pending a meeting with the State and the
Justice Department to obtain further clarification. Nevertheless,
even if such a policy is not technically illegal, we feel it would
be damaging to permit Federal matching funds for this purpose. We
have informed the State of our position, and they are attempting to
accommodate our concerns by ensuring that Federal funds are not
used for this purpose.
3. Encounter Data
In all State-wide Medicaid waivers, we have required 100 percent
encounter data in order to track and evaluate the demonstrations,
especially to ensure access and quality for vulnerable populations.
For Florida, we would use these data to estimate the impact of FHS
on individuals who were insured through the demonstration, and to
compare FHS's impact with those of other state-wide demonstrations.
JUN-22-1994 12:32 FROM
TO
94561799 P.05
4
Florida is opposed to providing 100 percent encounter data for
physician services. They argue that such a requirement is
extremely burdensome for managed care organizations and would
undermine physician support for FHS. The State has offered to
provide a one percent sample of physician encounters and says it. is
amenable to some increase in sample size. However, much of this
data is already available, since most physicians, including many in
managed care plans, are paid on an encounter basis.
We continue to believe that 100 percent encounter data is essential
for several reasons. First, managed care arrangements create
incentives for plans to restrict use of services. Second, such
incontives arc reinforced in the managed care and indemnity plans
in FHS due to the high copayments. Third, because we are concerned
about the impact of FHS on at-risk individuals located in various
geographic areas and treated by different providers, we cannot
specify all the samples we might need a priori. For example, it is
possible that the underlying structure of FHS may deter appropriate
levels of utilization for some groups (e.g., children with asthma
living in underserved areas, pregnant women, persons with mental
Illness). Without 100% encounter data, we cannot evaluate such
ímpacts. We are especially concerned with the civil rights
dimension of a project such as Florida's, and we don't believe we
can assure adequate compliance with civil rights laws without
complete data. We are now attempting to write language for the
terms and conditions of the waiver that would give beneficiaries
necessary protection but also attord the State the appearance of a
victory on this issue. We do not propose to make any substantive
concessions on this issue at this time.
4. Premium Rating Bands
As in the small employer market, premiums under FHS are
differentiated on the basis of age and sex. This will result in
large differentials in premium rates by age (e.g. 5 to 1) and sex
(e.g. 3 to 1). Since Federal and State premium subsidies are
limited to a fixed percentage of a $116 benchmark premium,
individuals in high premium bands (e.q. males 50-60) will face
substantial out-of-pocket premium payments.
The State is willing to work with the Legislature to try to
eliminate the rating factor by gender, but is not willing to drop
the age factor. They argue that if they eliminate the age factor
higher risk individuals will opt in while healthier younger people
will not purchase FHS coverage. This will result in an increase in
the baseline premium with the concomitant result of fewer
individuals and employers buying coverage through FHS. The State
is willing to consider narrowing the premium bands based on age
over time. We believe that creating a disincentive for higher risk
persons to obtain insurance is inconsistent with the principles of
health care reform. We recommend a special term and condition that
commits the State to a specific narrowing of the premium bands on
JUN-22-1994 12:33 FROM
TO
94561799 P.06
5
age, starting in the second year, be included as part of the
waiver.
5. Copayments and Benefits
The high copayments in the managed care plans ($100 a day for the
first five days of hospital care, $100 per visit for emergency
care, and $10 per visit for prenatal and postnatal care) and
indemnity plans (20 percent coinsurance) could croate barriers to
care. In a similar vein, benefits under FHS are far more limited
than under Medicaid, especially with regard to EPSDT modically
necessary follow-up services for children.
These features result from the FHS benefit package being conformed
to the DOI small employer market package. The State has indicated
that children in families with incomes below the poverty level will
receive all necessary services through other SLate-sponsored
programs, while women with infants who have incomes below 185
percent of poverty will be covered by Medicaid. Nevertheless, we
still believe that these copayments and benefit limitations are
inappropriate in a Medicaid demonstration where at least 60 percent
of the enrollees will have incomes below 150% of the poverty level.
We are attempting to structure a compromise whereby the State could
subsidize some of the more egregious copayment and benefit gaps,
especially for the traditionally high priority populations in the
Medicaid program, e.g., the lowest-income enrollees, pregnant
women, infants, and children.
Summary
We have made substantial progress to date. The State is now
pushing hard to see draft final terms and conditions. We must
proceed cautiously given the fact that any waivers provided to one
State are immediately seen by all other states as a precedential
minimum, and applications that are either already in house and
impending contain very expensive expansions of these precedents.
Further, Congressional unhappiness with the waiver process carries
the risk of legislative restrictions on our authority under 1115
(if the District Court, in the NACHC lawsuit, doesn't impose such
restrictions first). Nevertheless, we are still hopeful that we
will be able to construct an agreement that will satisfy both
parties.
CC: Ken Apfel
Judy Feder
Jerry Klepner
John Monahan
JUN-22-1994 12:30 FROM
TO
94561799
P.02
DEPARTMENT OF HEALTH & human SERVICES
Health Care Financing Administration
The Administrator
Washington, D.C. 20201
JUN 22 1994
To:
Kevin Thurm
Chief of Staff
From:
Bruce Vladech
Administrato
FFRBV
Subject: Update on Florida's Section 1115 Waiver Application
Purpose
This note provides an up-to-date summary of our discussions with
the State of Florida on their proposed 1115 Medicaid waiver.
Proposal
The Florida Health Security (FHS) Program, submitted on February
10, uses a managed competition model to provide health insurance
for 1.1 million low-income Floridians. The Florida waiver differs
from other previously approved State-wide 1115 health care reform
waivers in that the Florida Medicaid program, except for coverage
of the medically needy, remains intact. FHS is a voluntary program
for the non-Medicaid uninsured that allows employers and
individuals with incomes below 250 percent of the poverty level to
buy modified community rated insurance which is subsidized by the
State and Federal government. Particular features include:
o
Any family unit with gross annual income below 250 percent of
poverty, irrespective of the value of their assets, will be
eligible to apply.
Insurance will be provided through Community Health Purchasing
Alliances (CHPAs) that currently provide policies for the
small employer market.
Individuals and firms must be uninsured for 12 months prior to
joining the CHPA.
Purchase is entirely voluntary both on the part of the
individual and employer.
Medicaid eligibles, except for the medically needy who will be
grandfathered into FHS, are ineligible for FHS and will remain
in Medicaid.
Licensed agents sell insurance policies through the CHPAs and
receive commissions from the Accountable Health Partnerships.
The benefit package is the Florida Department of Insurance
(DOI) package used in the small employer market. It contains
both managed care and indemnity packages, which contain
significant cost sharing and fewer benefits than Medicaid.
JUN-22-1994 12:30 FROM
TO
94561799 P.03
2
The Florida legislature has not given final legislative approval to
the proposal as the Senate is deadlocked 20-20 along party lines.
Governor Chiles has already called one inconclusive special
legislative session this summer and plans to call another shortly.
Resolution of outstanding issues in the waiver application would
presumably give the legislature additional impetus to act.
One unusual feature of FHS has made the evaluation of this waiver
application more difficult than usual. FHS would use Medicaid
savings to subsidize what the State considers a private sector
program. Since our statutory authority is designed to assist
in promoting the objectives of title XIX...", and FHS is designed
for an uninsured low-income population, a major issue is the extent
to which FHS must contain Medicaid-type features. The State wants
FHS to mirror the small employer market and include many features
of that market, including limited benefits and high cost-sharing to
guard against inappropriate use and unfavorable risk selection.
Nevertheless, Federal Medicaid funds must be used for a program
that is consistent with the purposes of Medicaid, provides
Medicaid-type protections for enrollees, and does not in effect
become a block grant.
While we have managed to reach agreement with the State in several
areas in reconciling these apparently conflicting objectives,
several of the remaining unresolved issues stem from this
conundrum. For example, as a general policy, managed care plans
that enroll Medicaid beneficiaries must have no more than 75%
Medicare/Medicaid enrollees. If we consider the FHS population to
be Medicaid, some current Medicaid managed care plans may no longer
meet this test. Approval could also create a precedent for
subsequent State waivers.
Progress to Date
We are now actively engaged in negotiations with the State on the
remaining outstanding issues, and are hopeful that we will
ultimately reach agreement on a waiver provided the State is
prepared to meet us halfway on some of the remaining issues. We
have made substantial progress in supporting the State's policy
goals while at the same time assuring access, quality, and
financial protections given both our statutory authorities and our
goals on health care reform. We have reached agreement on several
issues ranging from protecting certain vulnerable populations to
the basic methodology for calculating budget neutrality. We
continue to meet to establish key final baseline estimates that
will guarantee appropriate federal contributions.
Major Outstanding Issues
1. Matching of Premiums
Whenever private premiums have been collected on behalf of Medicaid
beneficiaries, our longstanding policy prior to the Tennessee
JUN-22-1994 12:31 FROM
TO
94561799 P.04
3
waiver was to provide Federal match on total premiums minus
employer and individual payments; that is, we only match State
contributions. Florida is requesting that Federal matching
payments be based on gross premiums including a combination of
employer, employee, and State contribution. This proposal would
have the State share diminish as income class increases. For
example, at 200% to 250% of the Federal poverty level, an
individual and employer would each contribute $25, the State $1,
and the federal government $65. The State proposes to cap the
number of enrollees at this higher income level.
In the case of the Tennessee waiver, we agreed to match individual
premiums on a limited basis. Until recently we took the position
in the negotiations that we would not agree to a Tennessee-like
solution, because of our concern about reinforcing that precedent.
However, we are now discussing an option that would limit federal
exposure and assure reasonable matching shares by adjusting
Florida's cap on higher income enrollees. It remains to be seen
whether the State will accept this approach. One question is
whether we should match employer premiums, which might set a new
precedent at a time when we have additional pending waiver requests
to do so, some of which are far more extensive (e.g.
Massachusetts). We are attempting LO structure the terms and
conditions in a way that will minimize this issue.
2. Insurance Brokers
Under FHS, insurance brokers, not alliances as under HSA, market
policies to individuals and receive commissions from the AHPS. We
believe that this practice may contain incentives for agents to
enroll healthy individuals or individuals receiving minimal State
subsidies in plans, and to stay away from such populations as the
medically needy. The State has indicated that this provision
reflected a difficult political compromise with insurance brokers
within the State. General Counsel has informed the State that this
practice would violate Federal fraud and abuse laws, which bar
commissions and kickbacks in Medicaid-related programs. This is
still an open issue pending a meeting with the State and the
Justice Department to obtain further clarification. Nevertheless,
even if such a policy is not technically illegal, we feel it would
be damaging to permit Federal matching funds for this purpose. We
have informed the State of our position, and they are attempting to
accommodate our concerns by ensuring that Federal funds are not
used for this purpose.
3. Encounter Data
In all State-wide Medicaid waivers, we have required 100 percent
encounter data in order to track and evaluate the demonstrations,
especially to ensure access and quality for vulnerable populations.
For Florida, we would use these data to estimate the impact of FHS
on individuals who were insured through the demonstration, and to
compare FHS's impact with those of other state-wide demonstrations.
JUN-22-1994 12:32 FROM
TO
94561799 P.05
4
Florida is opposed to providing 100 percent encounter data for
physician services. They argue that such a requirement is
extremely burdensome for managed care organizations and would
undermine physician support for FHS. The State has offered to
provide a one percent sample of physician encounters and says it is
amenable to some increase in sample size. However, much of this
data is already available, since most physicians, including many in
managed care plans, are paid on an encounter basis.
We continue to believe that 100 percent encounter data is essential
for several reasons. First, managed care arrangements create
incentives for plans to restrict use of services. Second, such
incontives arc reinforced in the managed care and indemnity plans
in FHS due to the high copayments. Third, because we are concerned
about the impact of FHS on at-risk individuals located in various
geographic areas and treated by different providers, we cannot
specify all the samples we might need a priori. For example, it is
possible that the underlying structure of FHS may deter appropriate
levels of utilization for some groups (e.g., children with asthma
living in underserved areas, pregnant women, persons with mental
Illness). Without 100% encounter data, we cannot evaluate such
ímpacts. We are especially concerned with the civil rights
dimension of a project such as Florida's, and we don't believe we
can assure adequate compliance with civil rights laws without
complete data. We are now attempting to write language for the
terms and conditions of the waiver that would give beneficiaries
necessary protection but also afford the State the appearance of a
victory on this issue. We do not propose to make any substantive
concessions on this issue at this time.
4. Premium Rating Bands
As in the small employer market, premiums under FHS are
differentiated on the basis of age and sex. This will result in
large differentials in premium rates by age (e.g. 5 to 1) and sex
(e.g. 3 to 1). Since Federal and State premium subsidies are
limited to a fixed percentage of a $116 benchmark premium,
individuals in high premium bands (e.q. males 50-60) will face
substantial out-of-pocket premium payments.
The State is willing to work with the Legislature to try to
eliminate the rating factor by gender, but is not willing to drop
the age factor. They argue that if they eliminate the age factor
higher risk individuals will opt in while healthier younger people
will not purchase FHS coverage. This will result in an increase in
the baseline premium with the concomitant result of fewer
individuals and employers buying coverage through FHS. The State
is willing to consider narrowing the premium bands based on age
over time. We believe that creating a disincentive for higher risk
persons to obtain insurance is inconsistent with the principles of
health care reform. We recommend a special term and condition that
commits the State to a specific narrowing of the premium bands on
JUN-22-1994 12:33 FROM
TO
94561799 P.06
5
age, starting in the second year, be included as part of the
waiver.
5. Copayments and Benefits
The high copayments in the managed care plans ($100 a day for the
first five days of hospital care, $100 per visit for emergency
care, and $10 per visit for prenatal and postnatal care) and
indemnity plans (20 percent coinsurance) could create barriers to
care. In a similar vein, benefits under FHS are far more limited
than under Medicaid, especially with regard to EPSDT modically
necessary follow-up services for children.
These features result from the FHS benefit package being conformed
to the DOI small employer market package. The State has indicated
that children in families with incomes below the poverty level will
receive all necessary services through other $Late-sponsored
programs, while women with infants who have incomes below 185
percent of poverty will be covered by Medicaid. Nevertheless, we
still believe that these copayments and benefit limitations are
inappropriate in a Medicaid demonstration where at least 60 percent
of the enrollees will have incomes below 150% of the poverty level.
We are attempting to structure a compromise whereby the State could
subsidize some of the more egregious copayment and benefit gaps,
especially for the traditionally high priority populations in the
Medicaid program, e.g., the lowest-income enrollees, pregnant
women, infants, and children.
Summary
We have made substantial progress to date. The State is now
pushing hard to see draft final terms and conditions. We must
proceed cautiously given the fact that any waivers provided to one
State are immediately seen by all other states as a precedential
minimum, and applications that are either already in house and
impending contain very expensive expansions of these precedents.
Further, Congressional unhappiness with the waiver process carries
the risk of legislative restrictions on our authority under 1115
(if the District Court, in the NACHC lawsuit, doesn't impose such
restrictions first). Nevertheless, we are still hopeful that we
will be able to construct an agreement that will satisfy both
parties.
CC: Ken Apfel
Judy Feder
Jerry Klepner
John Monahan
JUN-22-1994 12:30 FROM
TO
94561799
P.02
SERVICES
3
DEPARTMENT OF HEALTH & HUMAN SERVICES
Health Care Financing Administration
The Administrator
Washington, D.C. 20201
JUN 22 1994
To:
Kevin Thurm
Chief of Staff
From:
Bruce Vladeor
Administrato
FfBV
Subject: Update on Florida's Section 1115 Waiver Application
Purpose
This note provides an up-to-date summary of our discussions with
the State of Florida on their proposed 1115 Medicaid waiver.
Proposal
The Florida Health Security (FHS) Program, submitted on February
10, uses a managed competition model to provide health insurance
for 1.1 million low-income Floridians. The Florida waiver differs
from other previously approved State-wide 1115 health care reform
waivers in that the Florida Medicaid program, except for coverage
of the medically needy, remains intact. FHS is a voluntary program
for the non-Medicaid uninsured that allows employers and
individuals with incomes below 250 percent of the poverty level to
buy modified community rated insurance which is subsidized by the
State and Federal government. Particular features include:
Any family unit with gross annual income below 250 percent of
poverty, irrespective of the value of their assets, will be
eligible to apply.
Insurance will be provided through Community Health Purchasing
Alliances (CHPAs) that currently provide policies for the
small employer market.
Individuals and firms must be uninsured for 12 months prior to
joining the CHPA.
Purchase is entirely voluntary both on the part of the
individual and employer.
Medicaid eligibles, except for the medically needy who will be
grandfathered into FHS, are ineligible for FHS and will remain
in Medicaid.
Licensed agents sell insurance policies through the CHPAs and
receive commissions from the Accountable Health Partnerships.
The benefit package is the Florida Department of Insurance
(DOI) package used in the small employer market. It contains
both managed care and indemnity packages, which contain
significant cost sharing and fewer benefits than Medicaid.
JUN-22-1994 12:30 FROM
TO
94561799 P.03
2
The Florida legislature has not given final legislative approval to
the proposal as the Senate is deadlocked 20-20 along party lines.
Governor Chiles has already called one inconclusive special
legislative session this summer and plans to call another shortly.
Resolution of outstanding issues in the waiver application would
presumably give the legislature additional impetus to act.
One unusual feature of FHS has made the evaluation of this waiver
application more difficult than usual. FHS would use Medicaid
savings to subsidize what the State considers a private sector
program. Since our statutory authority is designed to assist
in promoting the objectives of title XIX...", and FHS is designed
for an uninsured low-income population, a major issue is the extent
to which FHS must contain Medicaid-type features. The State wants
FHS to mirror the small employer market and include many features
of that market, including limited benefits and high cost-sharing to
guard against inappropriate use and unfavorable risk selection.
Nevertheless, Federal Medicaid funds must be used for a program
that is consistent with the purposes of Medicaid, provides
Medicaid-type protections for enrollees, and does not in effect
become a block grant.
While we have managed to reach agreement with the State in several
areas in reconciling these apparently conflicting objectives,
several of the remaining unresolved issues stem trom this
conundrum. For example, as a general policy, managed care plans
that enroll Medicaid beneficiaries must have no more than 75%
Medicare/Medicaid enrollees. If we consider the FHS population to
be Medicaid, some current Medicaid managed care plans may no longer
meet this test. Approval could also create a precedent for
subsequent State waivers.
Progress to Date
We are now actively engaged in negotiations with the State on the
remaining outstanding issues, and are hopeful that we will
ultimately reach agreement on a waiver provided the State is
prepared to meet us halfway on some of the remaining issues. We
have made substantial progress in supporting the State's policy
goals while at the same time assuring access, quality, and
financial protections given both our statutory authorities and our
goals on health care reform. We have reached agreement on several
issues ranging from protecting certain vulnerable populations to
the basic methodology for calculating budget neutrality. We
continue to meet to establish key final baseline estimates that
will guarantee appropriate federal contributions.
Major Outstanding Issues
1. Matching of Premiums
Whenever private premiums have been collected on behalf of Medicaid
beneficiaries, our longstanding policy prior to the Tennessee
JUN-22-1994 12:31 FROM
TO
94561799 P.04
3
waiver was to provide Federal match on total premiums minus
employer and individual payments; that is, we only match State
contributions. Florida is requesting that Federal matching
payments be based on gross premiums including a combination of
employer, employee, and State contribution. This proposal would
have the State share diminish as income class increases. For
example, at 200% to 250% of the Federal poverty level, an
individual and employer would each contribute $25, the State $1,
and the federal government $65. The State proposes to cap the
number of enrollees at this higher income level.
In the case of the Tennessee waiver, we agreed to match individual
premiums on a limited basis. Until recently we took the position
in the negotiations that we would not agree to a Tennessee-like
solution, because of our concern about reinforcing that precedent.
However, we are now discussing an option that would limit federal
exposure and assure rcasonable matching shares by adjusting
Florida's cap on higher income enrollees. It remains to be seen
whether the State will accept this approach. One question is
whether we should match employer premiums, which might set a new
precedent at a time when we have additional pending waiver requests
to do so, some of which are far more extensive (e.g.
Massachusetts). We are attempting Lo structure the terms and
conditions in a way that will minimize this issue.
2. Insurance Brokers
Under FHS, insurance brokers, not alliances as under HSA, market
policies to individuals and receive commissions from the AHPS. We
believe that this practice may contain incentives for agents to
enroll healthy individuals or individuals receiving minimal State
subsidies in plans, and to stay away from such populations as the
medically needy. The State has indicated that this provision
reflected a difficult political compromise with insurance brokers
within the State. General Counsel has informed the State that this
practice would violate Federal fraud and abuse laws, which bar
commissions and kickbacks in Medicaid-related programs. This is
still an open issue pending a meeting with the State and the
Justice Department to obtain further clarification. Nevertheless,
even if such a policy is not technically illegal, we feel it would
be damaging to permit Federal matching funds for this purpose. We
have informed the State of our position, and they are attempting to
accommodate our concerns by ensuring that Federal funds are not
used for this purpose.
3. Encounter Data
In all State-wide Medicaid waivers, we have required 100 percent
encounter data in order to track and evaluate the demonstrations,
especially to ensure access and quality for vulnerable populations.
For Florida, we would use these data to estimate the impact of FHS
on individuals who were insured through the demonstration, and to
compare FHS's impact with those of other state-wide demonstrations.
JUN-22-1994 12:32 FROM
TO
94561799 P.05
4
Florida is opposed to providing 100 percent encounter data for
physician services. They argue that such a requirement is
extremely burdensome for managed care organizations and would
undermine physician support for FHS. The State has offered to
provide a one percent sample of physician encounters and says it. is
amenable to some increase in sample size. However, much of this
data is already available, since most physicians, including many in
managed care plans, are paid on an encounter basis.
We continue to believe that 100 percent encounter data is essential
for several reasons. First, managed care arrangements create
incentives for plans to restrict use of services. Second, such
incontives are reinforced in the managed care and indemnity plans
in FHS due to the high copayments. Third, because we are concerned
about the impact of FHS on at-risk individuals located in various
geographic areas and treated by different providers, we cannot
specify all the samples we might need a priori. For example, it is
possible that the underlying structure of FHS may deter appropriate
levels of utilization for some groups (e.g., children with asthma
living in underserved areas, pregnant women, persons with mental
Illness). Without 100% encounter data, we cannot evaluate such
impacts. We are especially concerned with the civil rights
dimension of a project such as Florida's, and we don't believe we
can assure adequate compliance with civil rights laws without
complete data. We are now attempting to write language for the
terms and conditions of the waiver that would give beneficiaries
necessary protection but also attord the State the appearance of a
victory on this issue. We do not propose to make any substantive
concessions on this issue at this time.
4. Premium Rating Bands
As in the small employer market, premiums under FHS are
differentiated on the basis of age and sex. This will result in
large differentials in premium rates by age (e.g. 5 to 1) and sex
(e.g. 3 to 1). Since Federal and State premium subsidies are
limited to a fixed percentage of a $116 benchmark premium,
individuals in high premium bands (e.q. males 50-60) will face
substantial out-of-pocket premium payments.
The State is willing to work with the Legislature to try to
eliminate the rating factor by gender, but is not willing to drop
the age factor. They argue that if they eliminate the age factor
higher risk individuals will opt in while healthier younger people
will not purchase FHS coverage. This will result in an increase in
the baseline premium with the concomitant result of fewer
individuals and employers buying coverage through FHS. The State
is willing to consider narrowing the premium bands based on age
over time. We believe that creating a disincentive for higher risk
persons to obtain insurance is inconsistent with the principles of
health care reform. We recommend a special term and condition that
commits the State to a specific narrowing of the premium bands on
JUN-22-1994 12:33 FROM
TO
94561799 P.06
5
age, starting in the second year, be included as part of the
waiver.
5. Copayments and Benefits
The high copayments in the managed care plans ($100 a day for the
first five days of hospital care, $100 per visit for emergency
care, and $10 per visit for prenatal and postnatal care) and
indemnity plans (20 percent coinsurance) could create barriers to
care. In a similar vein, benefits under FHS are far more limited
than under Medicaid, especially with regard to EPSDT modically
necessary follow-up services for children.
These features result from the FHS benefit package being conformed
to the DOI small employer market package. The State has indicated
that children in families with incomes below the poverty level will
receive all necessary services through other SLate-sponsored
programs, while women with infants who have incomes below 185
percent of poverty will be covered by Medicaid. Nevertheless, we
still believe that these copayments and benefit limitations are
inappropriate in a Medicaid demonstration where at least 60 percent
of the enrollees will have incomes below 150% of the poverty level.
We are attempting to structure a compromise whereby the State could
subsidize some of the more egregious copayment and benefit gaps,
especially for the traditionally high priority populations in the
Medicaid program, e.g., the lowest-income enrollees, pregnant
women, infants, and children.
Summary
We have made substantial progress to date. The State is now
pushing hard to see draft final terms and conditions. We must
proceed cautiously given the fact that any waivers provided to one
State are immediately seen by all other states as a precedential
minimum, and applications that are either already in house and
impending contain very expensive expansions of these precedents.
Further, Congressional unhappiness with the waiver process carries
the risk of legislative restrictions on our authority under 1115
(if the District Court, in the NACHC lawsuit, doesn't impose such
restrictions first). Nevertheless, we are still hopeful that we
will be able to construct an agreement that will satisfy both
parties.
CC: Ken Apfel
Judy Feder
Jerry Klepner
John Monahan
Wawers
he
MEMORANDUM
TO:
H.I.
FROM:
J.E.
DATE:
20 June 1994
RE:
Florida Chiles; - waivers
As you know, you are expected to make a decision on whether
or not Gov. Chiles gets a meeting with the President. (Your
staff of department heads has deferred this one to you, with the
consensus being that Chiles should not meet with the President,
but that the President will probably feel that he should. )
Marcia Hale has had a discussion with Kevin as have I.
Kevin will give you a more detailed account of his view, but
the short answer is:
"If we decide not to grant the waiver, then the
President should not see Chiles. If we decide to grant it, then
he should.
He feels that if Chiles comes in in advance of the decision,
he may end up with "egg on his face" next week.
Although HHS is not scheduled to have a decision until next
week, Kevin felt there would be some information on this by late
today.
As you know, Gov. Chiles has called himself to speak to you.
Wawers
he
MEMORANDUM
TO:
HAROLD ICKES
CAROL RASCO
MARCIA HALE
FR:
JOHN HART
DT:
JUNE 10, 1994
RE:
FLORIDA'S MEDICAID WAIVER REQUEST AND GOVERNOR CHILES'
HEALTH CARE PROPOSAL
I. Summary
As you know, Governor Chiles has applied to the Department
of Health and Human Services for a Medicaid waiver in order to
fully implement his health care reform proposal. Governor Chiles
called a special session of the Florida legislature this week to
vote on final measures of his health care plan. On Thursday,
June 9, 1994 the Florida Senate Health Committee voted 4 - 4 on
party lines on Governor Chiles' proposal, killing the plan for
the time being. The Governor's office has indicated they will
return to Washington shortly to resume negotiations on their
waiver application.
II. Special Session
An issue arose regarding the politicizing of the waiver
review process and using customary questions and requests for
information from the Health Care Financing Administration (HCFA)
as indications that Governor Chiles' Waiver Application would not
be granted. Lieutenant Governor Buddy MacKay and health policy
advisors to Governor Chiles contacted the Administration to
request some form of a statement from the Administration that
Florida's waiver request was going through the customary channels
at HCFA and that the application was being given the appropriate
consideration. As you recall, I drafted a letter to Governor
Chiles clarifying the process. I faxed that letter to Lt Gov
Buddy MacKay late yesterday afternoon. Governor Chiles publicly
blamed election year politics as the motivation of those Senators
who voted against his proposal.
III. Next Action
Governor Chiles has stated that he may call another special
session in August or September to revisit this issue. HCFA will
continue their review process of Florida's waiver application.
Governor Chiles' staff have indicated that they will return to
Washington ready to negotiate their waiver request with HHS. I
will continue to follow the process and keep you abreast of
developments.
meeting Tues 5/24
WAIVERS
Fc
S
CONFIDENTIAL
To:
The President
From:
Nancy Hernreich
Date:
May 5, 1994
Re:
Call from Lieutenant Governor Buddy McKay
Lieutenant Governor Buddy McKay called this morning to follow up on the
conversations he had with you this weekend. He tried to get Sandy Friedman
to reconsider. She was complimented, but said she could not do it. The best
potential candidates in his opinion would be Jim Bacchus and John Hart.
Baccus could be recruited if he could be guaranted help to raise money.
McKay thinks Bacchus could win the election. John Hart is the County
Commissioner of Broward County, where he could raise a lot of money, and he
is electable. McKay's phone number is (904) 488-4711.
5/12/94-
Namey ,I I talked with nckay and have
anamed be to meet with him -
Harsed
5/0
Petrin to
Narry N Namy -
make Dave wry
fn us
first.
[
Withdrawal/Redaction Marker
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001b. list
[Personally Identifiable Information] [partial] (1 page)
05/24/1994 b(6)
COLLECTION:
Clinton Presidential Records
Chief of Staff
Harold Ickes (Health Care Files)
OA/Box Number: 8104
FOLDER TITLE:
Waivers
2022-0433-S
rs3716
RESTRICTION CODES
Presidential Records Act - |44 U.S.C. 2204(a)]
Freedom of Information Act - 15 U.S.C. 552(b)]
PI National Security Classified Information |(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRAJ
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRAJ
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute |(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy |(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes |(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions [(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells |(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
Wavers
he
Janice:
Tuesday, May 24th
1:00 p.m.
Meeting with HI/Lt. Governor MacKay and Douglas Cook
Kenneth MacKay (Buddy)
dob:
ss#:
(b)(6)
Douglas M. Cook
dob:
ss#:
contact: Jean Sadowski
Governor MacKay's office
904-488-4711
David-
Make prese these 2 are waw
waved in
J.
1pm Tuesday
MEMORANDUM
TO:
H.I.
FROM:
J.E.
DATE:
23 May 1994
RE:
Lt. Gov of Florida, Buddy McKay
You are scheduled to meet with McKay tomorrow (Tuesday) at
the President's request (I believe). .
Attached is a briefing memo from HHS (sent by Kevin Thurm,
prepared by John Monahan).
In addition, John Hart called from the road to give me the
following pointers:
-
McKay will push hard fro Florida waivers
-
you should defer to HHS and emphasize that they
are giving this their full attention and will
expeditious about it
-
the WH is very much aware of the political
problems that Gov. Chiles is enduring as a result
of this situation
Finally, Marcia Hale warns that McKay will try and maneuver
time for Chiles to come into meet with the President. (She
thinks it is not a good idea and that certainly we are not ready
for that to happen.)
MAY-23-1994 05:29 FROM DEP SEC HHS
TO
94561799 P.03
SERVICE
DEPARTMENT OF HEALTH & human SERVICES
Health Care Financing Administration
/
The Administrator
Washington, D.C. 20201
TO:
Carol Rasco
through Cos
x3R
FROM:
Bruce Vladeck
RE:
Florida's 1115 Waiver Proposal
DATE:
May 23, 1994
I understand that the Lieutenant Governor of Florida will be at the
White House tomorrow to discuss, among other Items, Florida's 1115
waiver proposal, entitled the "Florida Health Security Program
(FHSP).' It may be useful for you to have a better sense of the
process and issues. We recommend that you listen to the State's
concerns, but encourage the state to continue talking with HCFA.
Process
Florida submitted its waiver proposal to HCFA on February 10. HCFA
has been engaged in an intensive review of it since then. To give
you a sense of the scope of this effort, Florida's responses to our
questions about the proposal occupied more than 1000 pages.
The Florida State Legislature goes into session to consider the
FHSP on June 5, and HCFA will need some time to consider revisions,
if any, made to the proposal during the legislative session.
Otherwise, we're still on target for a decision in late June, which
is when the 120-day deadl ne occurs, taking into account the weeks
Florida took to respond to our questions. ECFA staff is meeting
all day May 24 with the State of Florida to lay out its concerns
with the waiver proposal which Florida has already submitted. We
do not expect that all issues will be worked out at this meeting.
Summary of FHSP
The program will utilize a managed competition model and will
provide voluntary health Insurance for up to 1.1 million uninsured
Floridians with income at or below 250% of the Federal poverty
level. Health plans will be offered by Accountable Health
Partnerships and sold by Community Health Purchasing Alliances.
Medicaid will remain a separate program.
Major Issues
Some of the more serious problems with the Florida proposal are:
-
While other states have sought 1115 waivers to finance
eligibility expansions in their Medicaid programs, FHSP
seeks to use Medicaid dollars to finance a program that
is separate from Medicaid and that the state considers
not to be subject to the same level of oversight that
exists in Medicaid.
MAY-23-1994 05:29 FROM DEP BEC HHS
TO
94561799 P.04
-
Under the FHSP, the health plans would pay insurance
agents to be the vehicle through which most people get
information about available plans. This may be a
violation of fraud and abuse amendments under Title XIX.
-
HCFA's 1115 waiver authority was granted to run
demonstrations which will help us to learn more about
service delivery issues. Florida has said that it will
not collect 100% encounter data, which is critical to our
ability to evaluate the program and has been required in
all demonstration programs.
-
Due to elimination of the Medically Needy program,
approximately 2000 individuals currently covered by
Medicaid will lose health insurance coverage entirely.
-
Florida is requesting federal match of employee and
employer premium contributions.
-
Florida 16 proposing a 6-month residency requirement for
all Florida Health Security applicants. Our Office of
General Counsel considers this provision to be clearly
unconstitutional.
FHSP and Health Reform
Assuming we approve some version of the FHSP, the approval will
likely be at the same time that key decisions on the ultimate shape
of health care reform are being made on the Hill. If we approved
the FHSP as proposed, the Administration could inadvertently be
seen as sending signals that parts of the President's plan are not
crucial to health care reform. Florida has claimed that its
proposal is very similar to the Health Security Act (HSA). Some
ways in which the FHSP differs from the HSA are:
-
The FHSP does not mainstream Medicald recipients.
-
There is a 12 month pre-existing condition exclusion
under the FHSP.
-
Approximately 2000 persons currently on Medicaid will
lose health insurance coverage.
-
The benefits package under FHSP is less comprehensive
then that offered under the HSA.
-
Employers may limit which plans are offered to their
employees under the FHSP.
cc:
Harold Ickes
LA Gm Mckay - 5/23/95 -
+3
- B Mc- then that HNS can accountate Fla
means
- Flu benetation mull advent the pen -
- new potitional left
- locket purch health exp am mater in to
centy
Spend
Error by:
- surys am medicade
- presents nector
-
Fla Health Sent - ther 4 it succeals mill name
that readyment can be rode; that affortable
comeone can be & male; & that saws an be
mode
molity
Bara a t allowes allergy
Proble by WHS- may medical & be ]
presents with mysta
500- - 600, our or [.] miller that came
be must will be in by 1996
- Have a 20/20 Sento
- New some new of support be HHS the
was may be butto comps coy commy -
Come park up to 250 06 9 ponerty
Argunt by appoats (repables) m
that fort art went que the was
therefore No new to pan Leath rents at
C ne of medical $ for prote both came rolution
would be unly to do sure as Internet ]
I nutered L F la re Energed
-
Frunker 1115- evans - 5/23/94
-
Margaret Pugh
Waven- wants to unleast
- attorates to medium
- waver of some Senty act
- reques ratification by state benetited F then
federal 1 appeared
- we have done this a lat
- Gov childs
- looks like a medicand up ann; but
really is an elembility exam to
prot expenses medical requests into
a new state provious -
$ Newa done before
7
- who new evaluation system that would
forms or seep requests
- want Fla program would lose the briend
medically needy movember
say lunt chone
curcens
- cause h about the benefit - partone
- P bont a mutto & was it out
- hunt lua raturn by Fla state
byntated
- Paly people form Fla are drug w/ poly real
am WUCA a ₩ WHS
- 120 day lead line ums out end of June
- wave request persy Ame sure
110 Feby 94
- V localard stitl not in the meety at HNS
- NUCD doesn't believe it can approve the
request met L my neun be able to
approve -
insurance
- Try to - produce ^ to low in one
population
John
Differents ren Flan:
Typenally
Propary voluty albour L me for medicand
$ to pay for the to allows
Ume for redical $ for quasi prints multure
usly low s/ C not to ratate shuts); rulter
using it to subsidy per prints reator
program.
- I matal to childs re-elaction
- childs callege a speed serion of the
byulated
- NO way 9 getty a wave before 85 me
special service
- IL we cant revolve the issues, how cum
we sure f fore -
THE WHITE HOUSE
WASHINGTON
DATE: 02/07/94
PHIL LADER
HAROLD ICKES
TO:
GEORGE STEPHANOPOULOS
MARK GEARAN
PAT GRIFFIN
FROM: JOHN D. PODESTA
Assistant to the President and
Staff Secretary
FYI.
NUMAN
SERVICE
HEALTH
DEPARTMENT OF HEALTH & human SERVICES
Chief of Staff
8
/
Washington, D.C. 20201
94 FEB 7 P5: 53
===
TO:
Carol Rasco
Assistant to the President
for Domestic Policy
FROM:
Kevin Thurm 9L-gh
SUBJ:
TENNCARE
Attached please find the update on TENNCARE from HCFA. If you
have any questions, please do not hesitate to call me or Bruce
Vladeck.
HCFA MONITORING OF TENNCARE DEMONSTRATION
Terms and Conditions of the Waiver
The waivers were awarded on November 18, 1993 and the program was implemented on
January 1, 1994. In approving the demonstration, HCFA imposed 35 special terms and
conditions on the award relating to a wide range of financial, data, access and quality
issues. Thirteen of these conditions were required to be satisfied before
implementation.
Because access to care was a critical concern, HCFA imposed requirements on the
State to protect beneficiaries from unnecessary disruptions in care.
In areas where provider participation was not sufficient, the fee-for-service
delivery system would be maintained.
Pregnant women were allowed to continue with their physicians until the baby
was delivered and for 60 days thereafter. Other seriously ill individuals would
be able to continue with their physicians for up to 30 days after the waiver, or
until they could be reasonably and safely transferred to a managed care
organization (MCO).
Since none of the MCOs had contracts with the State when the original
beneficiary plan assignments were made, HCFA required Tennessee to permit
all enrollees to have an additional 45 days to change to another MCO, if
desired. Of the approximately 690,000 Medicaid beneficiaries in the State,
only about 80,000 chose to do so.
We received about 1,200 letters before the award was made. Virtually all were from
providers or provider industry groups who objected to TennCare. Their complaints
centered around the reimbursement levels proposed by the State, and a Blue Cross/
Blue Shield of Tennessee threat to exclude providers from their other products if they
did not take TennCare patients. Since the approval of the demonstration, we have
received a few phone calls and provider letters, and a handful of negative beneficiary
letters, some of which were form letters that providers had encouraged their patients to
send. We have received no negative calls or letters from beneficiary advocacy groups.
On-Site Review
To ascertain that the 13 pre-implementation terms and conditions of the award had
been met, a team from HCFA central and 3 regional offices, along with a Public Health
Service representative, visited Tennessee on December 12-17.
2
The site visit team performed the following review activities during the December trip
to Nashville:
Review of contracts between the State and MCOs to determine if all required
provisions were included;
Analysis of State plans for monitoring, evaluating, and taking action as
necessary to improve the delivery of care:
Review of State's minimum data set and plans to monitor collection of data;
Certification that each geographical area in the state had sufficient provider
capacity; and
Tests related to the financial integrity of the TennCare project, including
review of State budget documents, conditions for supplemental payments to
providers, internal and external audits, and plans to monitor the financial
viability of MCOs.
A particular emphasis of the site team was the review of provider capacity. A random
selection of providers in the Blue Cross network (the largest of two State-wide
networks) was contacted by phone to ascertain their participation in TennCare. When a
significant number indicated that they would not participate, two review team members
flew to Blue Cross headquarters in Chattanooga to have them run a new provider list,
which was again tested for accuracy. The results indicated that the Blue Cross State-
wide network alone had eight times the number of primary care providers needed to
serve the Medicaid population. Of the 12 geographic areas of the state, even the one
with the least capacity had almost 5 times the number of primary care providers
needed.
Reports on Beneficiary Problems
There have been press reports indicating that it has been difficult for beneficiaries and
providers to contact the State and MCOs. In response the State has added personnel
to meet the demand and instituted an 800-number. Several MCOs have also instituted
800-numbers.
All reports HCFA has received about problems beneficiaries have had in getting care
have been investigated by central or regional office staff, with the cooperation of State
Medicaid staff. Tennessee newspapers have reported on two deaths. One was an AIDS
patient who was transferred from a hospital not in his MCO to another 40 miles away.
In that case, the attending physician was quoted as indicating that he would not have
transferred the patient if he had known he was critically ill. The second death was an
3
infant whose mother claims that she was unable to find a provider for the child. The
State, the hospital involved, and the HCFA regional office are investigating. A
preliminary report should be available by Friday, February 11.
We are continuing to closely monitor the implementation of TennCare by sending
Regional Office reviewers to the State. A financial management specialist visited
during the week of February 1, a quality review team will visit during the week of
February 14, and a combined regional and central office team will visit during the week
of February 28 to do extended review of new documentation related to access and
capacity. The team will also assess whether phone access to the State and MCOs has
improved. Additional visits are scheduled at least quarterly.