Manatt on Health: Medicaid Edition

Wisconsin Releases Draft Waiver Amendment Proposing New Eligibility Requirements

By Patricia Boozang, Senior Managing Director | Mindy Lipson, Senior Manager

On April 19, 2017, Wisconsin released for public comment a proposed amendment to its BadgerCare Reform Section 1115 demonstration. BadgerCare Reform currently provides coverage to approximately 150,000 childless adults ages 19 to 64 with incomes up to 100% of the federal poverty level (FPL). The waiver amendment would maintain the current managed care delivery system for this population, while modifying features of coverage.1 According to the waiver application, the intent of the proposed amendments is to:

  • Build on private sector healthcare models;
  • Promote healthy behaviors; and
  • Support behavioral health and substance use disorder treatment needs.

Wisconsin, which has not expanded its Medicaid program under the Affordable Care Act (ACA), is among the first states to submit an 1115 waiver request under the Trump Administration. Wisconsin's request is notable because it seeks to implement coverage features that have never before been approved by the Centers for Medicare and Medicaid Services (CMS):

  • Cost sharing for emergency use of the emergency department (ED);
  • Limits on the duration of Medicaid enrollment;
  • Participation in work-related activities as a condition of Medicaid eligibility for a duration of longer than 48 months; and
  • Drug screening, testing, and treatment as conditions of Medicaid eligibility.

The State's 2015 biennial budget, Act 55, requires the State to request CMS approval to implement many of the features reflected in the waiver. The demonstration is currently authorized through December 31, 2018, and new features would not be implemented until at least a year after approval of the amendment. A more detailed summary of the BadgerCare Reform waiver amendment request follows:

Benefits. Enrollees would continue to receive State Plan benefits.

Premiums. Enrollees with incomes between 21% and 100% of the FPL would be subject to sliding scale monthly premiums up to 2% of household income. Premiums would be charged on the household basis, with those with incomes of 21% to 50% FPL subject to $1 monthly premiums; 51% to 80% FPL subject to $5 monthly premiums; and 81% to 100% FPL subject to $10 monthly premiums. Enrollees who fail to pay premiums in a timely manner would be disenrolled from and locked out of coverage for a period of six months, unless they pay all past due premiums.2 Third parties, including providers, employers and non-profit organizations, would be permitted to pay premiums on behalf of enrollees.

Cost Sharing. Enrollees would continue to be subject to State Plan cost sharing. The State is requesting a waiver to permit cost sharing for all ED visits. Individuals would be subject to an $8 co-payment for their first ED visit in a year and $25 for all subsequent visits. The waiver does not distinguish between emergency and non-emergency ED visits.

Healthy Behavior Incentives. On an annual basis, enrollees would be required to complete a health risk assessment. Enrollees can reduce their required premium contributions by half if they complete the risk assessment and attest that they:

  • Do not exhibit a "health risk behavior," such as tobacco use, being overweight, alcohol use, or not using a seatbelt;
  • Have a "health risk behavior," but are taking action to reduce their risk; or
  • Have a "condition beyond their control."

Enrollees who do not complete the health risk assessment or who exhibit a "health risk behavior," and are not taking action to address the behavior would be subject to full sliding scale premiums described above.

Time-Limited Enrollment and Work Requirements. Wisconsin is seeking a waiver to limit BadgerCare enrollment to 48 months for individuals ages 19 to 49. After 48 months, individuals would be disenrolled from coverage and would not be permitted to re-enroll for six months unless they become eligible for Medicaid under a different eligibility category. The State would not begin tracking enrollment months until this provision is implemented.

Wisconsin is seeking to link participation in work requirements to the 48-month enrollment limit. Any months in which an enrollee is meeting the work requirements—80 hours or more of work or participation in job training, as defined by the State's Supplemental Nutrition Assistance Program (SNAP)—would not count toward the 48-month limit. Populations that may have difficulty meeting the work requirement, including individuals with mental illness, individuals who are obtaining higher education on at least a half-time basis, or individuals who are caregivers, would be exempt from the enrollment limit.3 The State is requesting federal matching funds for "costs not otherwise matchable" to pay for employment training.

Mandatory Drug Screening, Testing, and Treatment. Wisconsin is proposing that all BadgerCare applicants and current enrollees complete an annual drug use screening as a condition of eligibility. When screening results indicate that an individual may be using a controlled substance, the State would require that individual to complete a drug test. Individuals who fail to complete the required drug test would not be eligible for coverage; new applicants would not be permitted to enroll and current enrollees would be disenrolled. These individuals would be subject to a six-month lockout period during which they would not be permitted to reapply for coverage.

Of individuals subject to a drug test, those with positive results (assuming that they do not have a prescription for a controlled substance) would be required to complete substance abuse treatment as a condition of eligibility. If they do not enroll in and complete a treatment program, they would no longer be eligible for Medicaid and would be locked out of coverage for six months.

Institution for Mental Disease (IMD) Exclusion Waiver. Wisconsin is seeking to waive the "IMD exclusion" to permit the State to receive federal matching funds for services provided in an IMD. This waiver would apply to the State's entire Medicaid population that is ages 21 to 64, and if approved, the State would modify its Medicaid benefit package to cover up to 90 days of residential substance use disorder treatment.

Moving Forward

As one of the first states to submit a waiver request under the Trump Administration, Wisconsin's 1115 demonstration proposal will serve as a barometer of the level of flexibility the new Administration will grant to states seeking to introduce new features and eligibility requirements in their Medicaid programs. Notably, the State's proposal to vary premiums based on enrollee health behaviors is not permissible in the individual market pursuant to federal health status non-discrimination rules (45 C.F.R. § 146.121(c)) and therefore seems inconsistent with the stated goal of aligning BadgerCare to private sector health insurance. Additionally, Wisconsin's requests to tie Medicaid coverage to completion of a drug screening assessment and, if warranted drug testing and treatment, and limit the duration of Medicaid enrollment are also likely to be controversial and potentially undermine Medicaid's coverage role. These new conditions on Medicaid eligibility would also impose a new level of administrative complexity and costs with which Wisconsin will have to grapple and CMS will have to consider in reviewing the waiver amendment.

1Under the demonstration, the State is also authorized to charge premiums for Transitional Medical Assistance (TMA) enrollees with incomes between 100 to 133% FPL. The waiver amendment request does not apply to the TMA population.

2The waiver amendment application does not specify the length of the grace period that enrollees will have to pay premiums before facing disenrollment.

3Other exempt populations will include individuals receiving Social Security Disability Insurance, individuals unable to work for physical or mental reasons, individuals who are receiving or have applied for unemployment insurance, individuals who are participating in an alcohol or drug treatment program, or individuals attending high school on at least a half-time basis.



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