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  • Washington Highlights

    MACPAC Discusses Per Capita Caps and State Medicaid Responses to Fiscal Pressures


    Len Marquez, Senior Director, Government Relations

    The Medicaid and CHIP Payment and Access Commission (MACPAC) Mar. 2-3 held a meeting to discuss financial and policy issues in implementing a per capita cap model and state Medicaid responses to fiscal pressures.

    MACPAC staff discussed challenges in Medicaid managed care rate setting and budget neutrality for Section 1115 waivers to highlight potential challenges in implementing a per capita cap model. Challenges include:

    • State exclusion of complex populations and services due to methodological challenges;

    • Data sources are often incomplete and national per capita cap proposals rely on national data, which is often less detailed than data available to states;

    • Difficulty in accounting for future costs and less opportunity for state-by-state negotiation under national per capita model; and

    • Difficulty in accounting for anticipated savings.

    MACPAC staff also analyzed effects of recent per capita cap legislative proposals and reports. Specifically, the analysis examined state-level effects of excluding Medicare and Medicaid dual eligibles and limited benefit enrollees, and risk adjusting for age, long-term services and supports, and geographic wage. Staff also compared basing per capita caps on the national average, which would reallocate federal funding to low spending states. Commissioners suggested that MACPAC staff focus on administrative costs in addition to programmatic costs in future analyses.

    Finally, staff reviewed how several states have responded to Medicaid cuts and reductions, as Medicaid accounts for a substantial portion of state spending. States’ responses ranged from decreasing payment rates for providers, increasing hospital provider taxes, and modifying eligibility requirements for beneficiaries.