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Protecting Patients in State Medicaid Programs

NORD supports the ability of eligible rare disease patients to access comprehensive Medicaid services in their states without unnecessary and harmful barriers.

Section 1115 of the Social Security Act grants the Secretary of Health and Human Services (HHS) the authority to waive certain requirements in the Act, including Medicaid requirements, for the purpose of allowing a state to administer demonstration projects that have been approved by the Centers for Medicare and Medicaid Services (CMS). To be approved, these waivers must align with the objectives of the Medicaid program, which is “to serve the health and wellness needs of our nation’s vulnerable and low-income individuals and families.” The intent of these waivers is to help states seek innovative ways to control health care costs and improve services for Medicaid beneficiaries. These demonstration projects allow a state to direct federal Medicaid funds in ways that would not otherwise be permitted under federal law. However, several of the more recent demonstration projects proposed by states aim to restructure Medicaid benefits and eligibility in ways that undermine the purpose of the program and could disproportionately affect people with rare diseases.

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Concerning Trends in Section 1115 Waivers

Recently, one of the more concerning uses of section 1115 waivers has been to establish work requirements in state Medicaid programs. States seeking to add a work requirement often claim that it would improve the lives of beneficiaries. However, there is no evidence to support this claim.¹ Although some state proposals include exemptions to the work requirements, such exemptions could still be a significant challenge for rare disease patients to meet. Given the scarcity of physicians familiar with rare diseases and the prevalence of undiagnosed conditions, it is often difficult or even impossible for rare disease patients to convey the extent of their symptoms in a way that satisfies state exemption requirements. Forcing patients to justify their inability to maintain a consistent work schedule before they can receive or maintain care could result in a devastating loss of coverage throughout the rare disease community.

Another concerning trend in section 1115 waivers is when states seek to increase cost sharing and eliminate retroactive eligibility, which could leave some individuals, who may be below the federal poverty level, with extensive medical debt. Retroactive eligibility allows the start date of coverage for Medicaid beneficiaries to begin three months prior to the actual enrollment date. Many individuals who apply for Medicaid are doing so in the midst of a health emergency. Allowing coverage to apply retroactively ensures that those applying in such a situation will not be saddled with the bills they incurred prior to applying. Proposals to remove retroactive eligibility could be detrimental to all Medicaid beneficiaries, including individuals with rare diseases.

These concerns are not exhaustive, but they are representative of the ways in which the rare disease community may be harmed by some of the uses of section 1115 waivers. States are also attempting to create enrollment caps, restrict or remove benefits, and alter funding in ways that could severely limit the number of individuals capable of accessing Medicaid coverage. As noted above, Medicaid exists to be a safety net for those who cannot access other forms of health care coverage. Substantially altering the program in ways that reduce benefits for people in need is not only contrary to the goals of the Medicaid program, it could also worsen health outcomes and increase costs for rare disease patients and their caregivers.

Grading Methodology

Given the complexities and differences amongst state Medicaid programs, the different status of each waiver, and the significant harm posed by many of the proposed policies, this report grades each state’s waiver activity on a “Pass” or “Fail” basis. If a state sought and is working to implement or is currently seeking a waiver that contains policies capable of harming the rare disease community, it received a failing grade. All other states received a passing grade.

It is important to note, however, that the political backdrop against which section 1115 waivers are playing out is constantly changing. Recent elections have resulted in changes in the control of state executive and legislative branches. Ongoing litigation has halted the implementation of harmful section 1115 work requirement demonstrations in many states. But, based on the data available to NORD at the time of this report, these states are still assigned a “Fail” grade. NORD is hopeful that throughout 2021 these states will take actions to improve the concerning policies currently reflected in their waiver applications. NORD will continue to monitor these states and will update the NORD website with relevant changes. More information regarding the details of section 1115 waivers within each state can be found in the appendices.