States must be sound stewards of taxpayer dollars and the need to do so now is particularly acute as states confront financial landscapes devastated by the pandemic. Federal investments are providing relief to unemployed workers, small businesses, schools and universities, hospitals, and other health care providers. Additional funding is directed to governors to parse out in a manner that further mitigates need. Their challenge is understanding that need in light of direct grants to providers so funds – whether from federal appropriation, state general funds, or other grants – can be put to the most effective use.
Last week, the Centers for Medicare & Medicaid Services (CMS) released two highly anticipated initiatives — the Maternal Opioid Misuse (MOM) Model and the Integrated Care for Kids (InCK) Model — which will provide multi-year funding to states to improve integrated care for maternal and child health populations enrolled in Medicaid and the Children’s Health Insurance Program (CHIP).
NASHP has been tracking these important initiatives since they were first announced by the CMS Center for Medicare and Medicaid Innovation (Innovation Center) last year and has compiled and promoted exemplary integrated care delivery models, strategies, and innovations for pregnant and postpartum women and children that states can consider as they develop their applications for these initiatives.
The MOM Model is designed to:
- Improve quality of care and reduce costs for pregnant and postpartum women with opioid use disorder (OUD) and their infants;
- Expand access, service-delivery capacity, and infrastructure based on state-specific needs; and
- Create sustainable coverage and payment strategies that support ongoing coordination and integration of care.
The CMS Innovation Center will award a maximum of $64.5 million through up to 12 cooperative agreements with state Medicaid agencies and their care delivery model partners for a five-year period. Applications for the MOM Model are due to CMS by 3 p.m. (EST), May 6, 2019. A CMS webinar about the MOM Model Notice of Funding Opportunity was held Feb. 21, 2019. The recording, slides, and transcript from the webinar are available here.
The InCK Model is designed to reduce expenditures and improve the quality of care for children under 21 years of age covered by Medicaid and CHIP through prevention, early identification, and treatment of behavioral and physical health needs. States and local organizations will work to conduct early identification and treatment of children with health-related needs across settings to:
- Increase behavioral health access;
- Respond to the opioid epidemic; and
- Improve child health outcomes.
The CMS Innovation Center will award a maximum of $128 million through eight cooperative agreements with state and local participants for a seven-year period (awarding up to $16 million per recipient). Applications to implement the InCK Model are due to CMS by 3 p.m. (EST), June 10, 2019. A CMS webinar about the InCK Model NOFO is scheduled for 2:30 to 4 p.m. (EST) Tuesday, Feb. 19, 2019.
There has been significant federal investment made in recent years to address the opioid crisis in every state. This chart summarizes the key federal funding that has flowed to each state’s government agencies and other stakeholders to address the opioid crisis. Data featured in these charts represent grants from multiple federal agencies provided through specific initiatives aimed at supporting state efforts to prevent and treat addiction by addressing behavioral and mental health workforce shortages, promoting evidence-based research, making justice system innovations, and more.
The funding summary chart below shows the total federal grant amounts each state received in FY 2018. To see a more detailed breakdown of the targeted federal initiatives in recent years, click the tabs along the top of the chart. Individual agency funding charts feature grants awarded since FY 2017.
In early January, the National Academy for State Health Policy (NASHP) asked all state Children’s Health Insurance Program (CHIP) and Medicaid officials:
- How state CHIP funding exhaustion dates and contingency planning had changed as a result of the Dec. 22, 2017, continuing resolution that provided states with a short-term allotment of $2.85 billion, and
- What has been impact of the extended uncertainty about long-term, predictable funding on states and their CHIP programs.
The following is a summary of the information shared by 34 states whose officials responded to the poll.
Estimating the Exhaustion of Federal CHIP Funds
Given the temporary changes to the allocation of redistribution funds, states are uncertain how much future federal funding they can count on to keep their CHIP programs operational. The officials shared estimates of when their state may exhaust federal funds with NASHP on the condition of confidentiality.
- Eleven states anticipate exhausting their funds sometime in February 2018
- Ten states anticipate exhausting their funds sometime in March 2018
State contingency plans evolve with the emerging information from the Centers for Medicare & Medicaid Services (CMS) and with potential legislative action from Congress, which must pass a financial package by Jan. 19, 2018, to avoid a federal government shutdown. CMS officials have told states that future redistribution funds cannot be guaranteed and, as expected, state officials hope Congress will take action to provide long-term, predictable funding soon. Without Congressional action, there are states that may need to either freeze enrollment or initiate disenrollment by the end of January or early February.
The Impact of Prolonged Uncertainty
The impact of sustained uncertainty for the future of CHIP varies across states. Some officials report they face more significant and immediate implications than others, but all states are experiencing challenges operating a health coverage program without guaranteed funding. Here are some key budgetary and program concerns:
- Continued uncertainty has a significant impact on budgeting and planning for state resources. Should a state assume that Congress will extend CHIP? How much money should states budget for children’s coverage – enough to ensure they match CHIP dollars? A higher level of funding to provide state matching dollars for more children in Medicaid? If so, where do those funds come from?
- Should states with biennial legislative sessions convene special sessions? If so, when should they address the potential changes in states budget as a result of changes to federal funding for CHIP?
Limited Medicaid and CHIP resources are stretched thin:
- Agency staff have focused on contingency planning, budgeting, and keeping the program operational rather than make additional improvements to CHIP or other state health initiatives, such as delivery system reforms and eligibility and other information technology systems improvements.
- For months, a significant amount of staff resources has been devoted to communications and outreach to families, stakeholders and partners (including health plans, providers, contractors, vendors, and community-based organizations) to ensure they have accurate and current information.
- Uncertainty has delayed implementation of new state laws – both laws related to the CHIP program and to other health programs because the responsibility for implementing the laws falls to the same agency officials who must focus on CHIP.
Loss of participating providers and increased utilization of the delivery system:
- Although not wide-spread yet, there are reports of states losing participating providers from health plans that contract with CHIP due to the uncertainty of future funding for the program.
- There is an increased demand from families seeking primary care and specialty health services for their children while the program is still operational. This has been taxing to the delivery system in some areas and also results in an increase in spending that more rapidly depletes the available funding.
- Given the time required to make significant eligibility and claims systems changes, some states have had to make the changes even though they have not had to implement them yet. This has resulted in expenditures for staff and contractor/vendor time, as well as the cost of systems changes, even though these actions may not be needed if Congress ultimately extends the program.
States’ responses to NASHP’s poll underscore the fact that Congressional delay in extending the CHIP program’s funding could soon result in children losing their health coverage and highlight the systemic implications for states. Budgetary, systems, provider network, and agency work delays will likely affect states and their coverage programs for months after the uncertainty is resolved.
When Rhode Island health policymakers read the U.S. Centers for Disease Control and Prevention’s Healthy People 2010 report, they realized their children’s generation could face a shorter life expectancy than their own unless they changed their approach to public health. In response, Department of Health officials doubled down on their commitment to address health disparities and improve the social factors that directly affect health, such as housing and nutrition.
At the same time, they understood they needed a new financial approach to support their growing focus on improving health and health equity and reducing obstacles such as poverty, discrimination, poor education, and unsafe environments. Their solution: braided funding from a number of sources to help realign staff, break down organizational silos, and promote cross-sector collaboration.
The department first tested its innovative, collaborative approach through integrated projects, such as bringing together staff from diabetes, obesity, and maternal and child health programs and recruiting community partners to work on a shared initiative. When those initial projects proved successful, they took stock of their funding sources and looked for opportunities to divest from disease-specific funding sources and invest instead in more community-focused funding.
“Where is the funding for doing this kind of work?” observed Ana Novais, executive director of health in Rhode Island’s Department of Health. “There is no health equity funding being given to us, but nearly every proposal or grant we receive mentions health disparities.”
Rhode Island ultimately designed a method for “braiding” together funds from several sources to support its work to improve health equity. Officials wove together federal funds from the Maternal and Child Health Bureau of the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration, the Preventive Health and Health Services Block, and two different chronic disease grants from the U.S. Centers for Disease Control and Prevention. They combined these federal funding streams with state funds, designed their work plan to meet both the department’s health equity goals as well as the various federal grants’ requirements, and then requested proposals from community organizations to improve health equity.
Novais explained the proposal asked communities to define themselves as health equity zones and submit proposals to prevent chronic diseases, improve birth outcomes, and improve the social and environmental conditions of neighborhoods across the state. See NASHP’s In the Zone for more about Rhode Island’s work to advance health equity and community health.
Novais recently shared her expertise and experience when she chaired a session on braiding and blending funds for improved population health at the annual 2017 NASHP state health policy conference held in late October. The session, presented in partnership with the de Beaumont Foundation, also featured state officials from Louisiana, Vermont, and South Carolina. Each state uses innovative braiding or blending models to address non-clinical health needs that affect public health through programs such as supportive housing and nurse home visiting for low-income, first-time mothers.
These innovative strategies may become even more important — and more widespread — in the wake of federal proposals to create block grants and cut state public health funding. A number of state health policymakers expressed concern that the flexibility provided by block grants may not adequately compensate for cuts to already lean public health budgets. To help state health policymakers prepare for and respond to such proposed changes, NASHP, the de Beaumont Foundation, and the Association of State and Territorial Health officials recently convened a group of state health policymakers from 11 states to strategically address opportunities and challenges that may result from potential changes to the federal funding landscape.
A new NASHP report, Blending, Braiding, and Block-Granting Funds for Public Health and Prevention: Implications for States, charts a way forward for states interested in maximizing their abilities to coordinate work and resources across programs. It distils ideas from the recent meeting of state leaders and explores state responses to possible federal funding scenarios. The report also:
- Surveys historic and existing sources of block grants and disease- or condition-specific federal funding;
- Examines how states currently use those funds; and
- Poses key questions for officials to ponder in the months ahead.
In this time of rapid policy changes, it is important to learn from states working to align their funding sources to advance their population health and prevention goals. “This paper is an important and much-needed resource for state officials seeking to improve health and health equity by investing in building stronger, healthier, and more resilient communities during this time of change,” said Novais.
Presented in partnership with the de Beaumont Foundation.
Congressional inaction in funding the Children’s Health Insurance Program (CHIP) has put states – and the children and families CHIP covers– in a cliffhanger scenario. While there have been encouraging legislative steps taken to extend the program, the bill currently appears to be stalled. With the help of temporary, reallocated CHIP funding, states are continuing to support their programs, but these funds are running out. As a result, a growing number of state officials expect they will have to notify families that their children’s coverage is in jeopardy by as early as this month.
To date, 17 states, including Washington, DC, (AZ, CA, CO, DC, DE, FL, HI, ID, MA, MN, MT, NV, OH, OR, PA, UT, and WA) have received redistribution grants from the Centers for Medicare & Medicaid Services (CMS) to continue their programs. Another nine states (AL, AK, CT, GA, KS, KY, NY, VA, and VT) are also expected to receive redistribution grants in the coming days and weeks.
As detailed in a previous NASHP blog, states are eligible to receive redistribution dollars only after spending their available federal fiscal year (FFY) 2017 carryover CHIP funds. The redistribution funds are available as a last resort and nearly $1.2 billion of the total available $2.9 billion has been reallocated to enable states to continue their CHIP programs. In December, Minnesota will be the first state to exhaust all of its federal CHIP funds, including its redistribution grant , and it’s possible that Oregon and Arizona could.do the same.
|Ultimately, timing for notifying families that their children’s coverage could end depends on how long a state can continue its CHIP program while also giving families adequate time to prepare.
Unfortunately, right now some states don’t have much time.
Many states using redistribution grants to fund their separate CHIP programs are watching Congressional activity closely, hoping federal CHIP funding will be extended as part of the continuing resolution (CR) that must pass by Friday, Dec. 8, 2017, to keep the federal government operating. However, reports suggest there will be two CRs – the first by Dec. 8th to ensure the federal government is operational in the short term and another in the coming weeks that will fund the government for a longer term. Congress is most likely to consider adding CHIP funding to the later one. With continued CHIP funding uncertainty, it remains unclear if states can and will put their plans to notify families that their children’s coverage could end on hold until after Congress acts on the second CR. For example, both Colorado and Oklahoma have already sent informational notices to families; Virginia and Connecticut plan to send notices in early to mid-December. Ultimately, timing for notifying families depends on how long a state can continue its CHIP program while also giving families adequate time to prepare — and unfortunately some states don’t have much time.
On Dec. 1, 2017, U. S. Reps. Ryan Costello (R-PA) and Tom Emmer (R-MN) introduced a bill to be included in the Dec. 8 CR that gives CMS greater flexibility to allocate redistribution funding to states that will experience a CHIP shortfall this month. The bill would waive a proration rule in the current statutory formula that dictates the portion of redistribution funds CMS allocates to ensure all states receive some of these funds. If it passes, states that exhaust all of their federal CHIP dollars in December 2017, including those that have already received and used the entirety of their redistribution portion, could receive an additional payment.
It is expected that only Minnesota (and perhaps Oregon and Arizona) will run out of all of their funds in December and would be eligible to receive this additional payment. While the additional redistribution payment will be limited and relatively small, there will be less funds available for other states that are also running out of federal funds in future months. As a result, the urgency for Congress to appropriate new federal CHIP funds for all states remains critical, even with this short-term solution. Even if this short-term fix passes, with a growing number of states expected to exhaust their CHIP funds by the end of January, it does not guarantee there will be no notices going out to families this month.
|Alabama’s notification contingency timeline for its separate CHIP program:
Late December 2017: Send informational notice to families to alert them that coverage may end in February, 2018
January 2018: Freeze enrollment
February 2018: Disenroll children from CHIP
* Alabama expects to exhaust all federal CHIP funds in February, 2017, but needs to initiate notification in December 2017.
Throughout its 20 years, CHIP has enjoyed strong bipartisan support and states, Congress and CMS have enjoyed a productive partnership, sharing the common goal of serving the nation’s children. The House has passed a bill to continue the program for five years and while funding remains a stumbling block, states hope Congress will again find a bipartisan path forward to continue health coverage uninterrupted to the 9 million children who rely on their action.
Congress missed the Sept. 30, 2017, deadline to extend federal funding for the Children’s Health Insurance Program (CHIP), so there is currently no new or guaranteed future federal support for the program that covers an estimated 9 million children. There are two proposed bills to reauthorize CHIP – the Senate’s KIDS Act of 2017 and the House of Representative’s Healthy Kids Act – that were approved by their respective committees to advance them in the legislative process for consideration by the full Senate and House.
Meanwhile, the first states to exhaust their annual CHIP allotments are now working with the Centers for Medicare & Medicaid Services (CMS) to secure short-term funding to continue their programs as long as possible.
Financing for CHIP, a block grant-funded program, was most recently appropriated through the Medicare Access and CHIP Reauthorization Act (MACRA) passed in 2015. MACRA included two years (FFY 2016 and 2017) of CHIP funding allocated to states through annual allotments. States spend their allotted CHIP dollars at different rates for many reasons, including geographic differences in health care costs; varied types of service delivery; and what benefits are covered by a state’s CHIP program.
As a result, at the end of this fiscal year, states have varying amounts of unspent CHIP funds remaining. Because there are currently no newly-appropriated federal dollars supporting CHIP, states can use the unspent funds from FFY 2017 to continue to support their CHIP programs.
However, there is a “claw-back” provision in MACRA that requires states to reduce their FFY 2017 carryover or unspent allotment by one-third and return it to the federal treasury. The claw-back provision was designed to reduce MACRA’s overall cost and the amount Congress needed to “off-set” or “pay for” the program in order to pass the bill. Losing a third of the carryover funds is a serious challenge to states because they need this money to continue their CHIP programs in the absence of Congressional action to extend the program.
The Administration predicts a national CHIP shortfall of $13 billion in fiscal year 2018 without a CHIP extension. There is approximately $3 billion in unspent CHIP dollars from FFY 2016 that will be redistributed proportionately across all states as their CHIP carryover funds run out, but it is not clear exactly how much each state will receive. To claim their portion of the redistributed funds, states must contact CMS the month before they exhaust their FFY 2017 carryover money. CMS will then provide states with information and calculations of expected funds, which will be provided through a monthly grant. Federal estimates suggest on average each state will be able to fund one or two more months of CHIP, but this projection doesn’t take into consideration unanticipated costs, such as increased enrollment or high utilization.
Minnesota, which is the first state to exhaust its available 2017 carryover funds, has received a redistribution payment. Additional states have begun conversations with CMS to better understand what they can expect to receive. State officials report frustration at the prospect of receiving their portions of the redistribution funds on a monthly, piecemeal basis rather than a lump sum. It leaves them with limited capacity to plan the final weeks of their programs’ funding. And while the individual calls with CMS provide state-by-state technical assistance, the lack of formal guidance on the payment of redistribution funds lacks transparency and eliminates the capacity to plan with peers for contingencies, such as when or how states should notify families that the program may be ending.
State officials remain optimistic that Congress will take action to re-establish federal CHIP funding, but patience is beginning to wane as their remaining CHIP funds are depleted. The uncertainty around CHIP funding may also influence how families act – will people use more services now because they fear an end to the program? How will new enrollment and renewals be affected? These questions complicate a state’s ability to budget and predict when funds will be exhausted.
Additionally, states have legal obligations to notify families if the program is going to expire. State officials hope Congress will act soon, but in the meantime they must develop contingency plans, knowing that worst-case scenarios that would include dis-enrolling children need to be developed with a careful approach so as not to unnecessarily alarm families. But the clock is ticking, and states need the certainty only Congressional action can provide.
We are five weeks away from September 30th, the date current federal funding for the Children’s Health Insurance Program (CHIP) is set to end. Although states can use some of the unspent federal funds that were previously allocated to them, it is projected that those funds will be exhausted during the next fiscal year, beginning as soon as December 2017 for several states. As a result, there is mounting pressure on states to make decisions and take action regarding the operation of their CHIP programs.
Nearly all states have already finalized their FY2018 budgets, and the majority of them have assumed that funding for CHIP will be extended and will include the 23 percentage point federal match increase that is in current federal law. If federal CHIP funding is not extended soon states will need to set up processes for shutting down their separate CHIP programs. If funding is extended without the 23 percent bump, CHIP/Medicaid agencies along with state budget officers will need to assess the magnitude of their state’s funding shortfalls and determine the cost of maintaining coverage for children. For many states, involving the Governor or even convening a special legislative session may be necessary to move forward to establish policy and system changes or to allocate new funding to address the loss of the 23% bump, which would be costly.
Additionally, a growing number of state CHIP officials have reported to NASHP that they are further analyzing their state’s remaining federal CHIP funds. They are starting with the Medicaid and CHIP Payment and Access Commission’s (MACPAC’s) projections of when states will exhaust their federal CHIP funding, which assume all funds will be spent on covering services for enrollees. However, if Congress doesn’t extend federal funding soon, states will need to initiate contingency plans and there are costs associated with making programmatic changes. States assumed federal funding would continue for CHIP, so there are no funds allocated in state budgets to shut down their CHIP programs. As a result, states will need to use their remaining federal CHIP funds to help absorb those costs. It is hard to calculate exactly what those costs will be, but states will need to:
- Invest staff time and financial resources to develop communication plans, including notices to the public about program changes;
- Train call center staff to communicate with families;
- Review and in some cases terminate or change contracts with third party administrators or health plans;
- Make enrollment and eligibility systems changes, which are very costly;
- Develop a transition process, which may include starting with an enrollment freeze or disenrollment and transferring accounts to the Exchange;
- Submit waivers or state plan amendments to CMS; and
- Review and change state law and regulations.
States will also need to reserve a portion of their current CHIP funding to cover claims from fee-for-service medical providers as they have months (in some states up to a year) to file their claims after service is rendered. The amount of funds a state will need to withhold for future claims varies depending upon their service delivery structure, but it is a factor many states will need to consider.
Most importantly, the projections are made using data from previous months’ expenditures, which is the best information states have. But they are just projections. There are factors that could result in states spending more for their CHIP programs in the coming months that are not captured in the current projections. Such factors include increased enrollment as a result of stakeholders’ ‘back to school’ outreach and enrollment campaigns or unanticipated high costs or increased utilization of medical services.
And finally, there is language in some state statutes that requires federal participation to continue operating some portions or all of their state CHIP programs. So, in addition to weighing fiscal concerns, state officials are actively reviewing their own statutes to decide how soon they may have to initiate changes to CHIP. For instance, Colorado has already provided information to the public on their website about the current status of federal CHIP funding and explains that the enrollment in the state’s CHIP program may be affected if federal funding is not extended.
Many state officials have shared that to thoughtfully close their CHIP programs, they would have already begun to make changes and initiated transitioning children to other potential sources of coverage. However, even with the continued uncertainty about future federal funding for CHIP, state officials remain hopeful that Congress will act soon to extend the program. States do not want to unnecessarily disrupt children’s coverage and are doing everything they can to protect their continuity of care.
While anxiety levels differ across states because they have different rules about noticing and are projected to exhaust funds at different times, over half of the states are likely to run out of federal funds within the second quarter of FY2018. Officials from several of these states have said they can hold off on making any changes until perhaps October, in the hopes that Congress is able to pass a 5-year funding extension that will offer them some predictability to continue to successfully operate their programs.