Baker looks to erase Medicaid funding gap

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BOSTON – With billions of dollars on the line, Gov. Charlie Baker said Tuesday that he hopes to renegotiate a federal Medicaid waiver with the Obama administration by this summer.

In October 2014, then-Gov. Deval Patrick secured a five-year deal with the Obama administration worth $41.4 billion, but it didn’t fund the state’s safety net health-care pool in the fourth and fifth years.

“The Patrick administration didn’t get a five-year waiver. They got a five-year waiver with three years of funding – so we’ve known for a while that we needed to go in and basically negotiate the last two years of the waiver,” Baker said outside an event in Boston. “And the reason the feds only gave us three years is they were unhappy with the level of reform associated with the Patrick administration’s proposal.”

Kristen Lepore, Baker’s secretary of administration and finance, told lawmakers during testimony on Baker’s budget last week that the state must renegotiate the deal or it will lose $1 billion a year. According to the state Health and Human Services Office, the losses would start on July 1, 2017.

Baker, who served as health and human services secretary in the Weld administration and led the insurer Harvard Pilgrim Health Care through financial straits, said federal regulators want the state to move more toward accountable care organizations.

An alternative to the traditional fee-for-service model, accountable care organizations, called ACOs for short, transfer risk to providers who are generally given the holistic task of serving the health needs of a population.

“There were a lot of elements to it, but I think the larger piece was they were looking for something that moved a little more toward what I think everybody in today’s nomenclature calls accountable care organizations,” Baker said.

Baker, who is supporting Republican New Jersey Gov. Chris Christie in his somewhat longshot bid for the presidency, said he would prefer to renegotiate the deal with the administration of President Barack Obama, who is serving out his final months in office.

“In a perfect world we’d like to get it done by this summer, because obviously the closer you get to the election the harder it gets to get something like that done,” Baker said. “Since it was this administration that raised issues with the previous waiver, right, I’d rather get it done with this administration than have to start it all over again with a new one.”

The governor also expressed optimism that the next deal would extend beyond the five-year term of the current agreement.

“I feel pretty confident that we’ll be able to secure the last two years and maybe even – depending upon what we come up with – extend that out beyond that so we don’t have to go back and do it again in two years,” Baker said.

The Bay State’s hospital community is interested in the terms of the deal under negotiation.

“Obviously the federal waiver is a critical and complex matter that will affect hospitals, as well as others in the healthcare system in Massachusetts,” said Tim Gens, executive vice president of the Massachusetts Hospital Association, in a statement. “There is usually more than one way to design a waiver and it is important to engage healthcare stakeholders in the process to ensure that all the pieces work effectively. We are anxious to hear from the Administration what they are proposing in terms of the latest waiver negotiations.”

Congressman Michael Capuano, a Somerville Democrat, criticized the federal waiver negotiated in 2014 as a “bad deal” and said at the time that it would leave Massachusetts “at the mercy” of the next president.

“While this agreement will work for the first three years, it creates a dangerous and potentially devastating fiscal cliff for our hospitals, particularly those that serve our most vulnerable populations, and places the entire Massachusetts health insurance program in jeopardy starting in 2017,” Capuano said in a 2014 statement to the News Service.

The $41.4 billion five-year agreement succeeded a three-year $26.75 billion waiver that expired June 30, 2014. The deal represented about $640 million less per year compared to the previous waiver. Asked about the lower average annual support, former Health and Human Services Secretary John Polanowicz in 2014 explained the agreement does not include funding associated with the safety net care pool in the waiver’s fourth and fifth years because there’s an agreement and timetable in place under the agreement to redesign that pool.

Capuano in 2014 praised the waiver work of the Patrick administration and criticized the Obama administration, alleging “disparate treatment” of states by regulators who review Medicaid waivers.

Written by Andy Metzger