CMS Withdraws Block Grant Guidance – What’s Next?

We’ve posted previously the long-standing rumor (substantiated by several folks within the Administration) that CMS is working on a guidance document to states to receive their Medicaid funding through a block grant. In June, the Office of Management and Budget (OMB) received a guidance document entitled, “State Medicaid Director Letter: Medicaid Value and Accountability Demonstration Opportunity.” This document was widely reported by press as the block grant guidance document. Between June and November of this year, nine different organization (including the American Lung Association, ANCOR, the American Academy of Pediatrics, and the Leadership Conference on Civil and Human Rights) met with officials on OMB to express opinions on the forthcoming guidance. And, just last week, CMS Administrator Seema Verma referenced this guidance in a speech to the National Association of Medicaid Directors.

Today, in a surprise move, the pending guidance was listed as withdrawn from OMB. What does all of this mean? Is the block grant guidance dead?

While we don’t yet know, but offer a few preliminary thoughts to consider:

  • First, the guidance document may well be broader than block grants (indeed the name suggests as such) and so may be undergoing additional edits. In her recent speech to NAMD, Seema Verma suggested a much broader guidance, that is perhaps undergoing further revisions and will be reissued and reviewed by OMB. For example, the Administrator noted, in part:

Later this year, CMS will issue guidance to define this new direction and help states maximize opportunities to support value-based payment in Medicaid through our existing authorities. We will also provide more guidance on how states can address the social determinants of health as part of a value based strategy…Many states have expressed a willingness to be held accountable for improving outcomes in exchange for greater flexibility and budget certainty. Block grant and per capita cap proposals are two such alternative financing approaches. Some states have expressed a desire to explore such principles through section 1115 demonstrations. We are encouraged by this interest. You will soon see guidance from us that lays out initial opportunities to test new approaches to delivering and financing care for certain optional adult populations. The Medicaid Value and Accountability Demonstration won’t compromise important beneficiary protections, but it will inject rigorous accountability for outcomes, provide significant and unprecedented flexibilities for program operation, and offer opportunities for shared savings that can be reinvested back into Medicaid.

  • Second, we know that the block grant guidance is controversial, and potentially legally suspect. Given we are entering an election year, it may be that the Administration has decided to hold off for now.

We will update this post when we know more.