New bill would make big changes to Idaho’s Medicaid program

BOISE — Idaho lawmakers are considering a new proposal that would dramatically impact the state Medicaid program.

Idaho Rep. Jordan Redman, R-Coeur d’Alene, this week introduced House Bill 328, which requires the Idaho Department of Health and Welfare to seek a number of significant changes to Medicaid — including adding work requirements for Medicaid expansion participants, requiring patient cost-sharing for using Medicaid, and moving administration of the entire program to a Managed Care Organization (known as an MCO). On Friday, he introduced a slightly amended version of HB 328.

The bill comes after HB 138, which Redman also sponsored that would have triggered a full repeal of expansion if the health department were unable to meet 11 strict conditions — many said the timeline and waivers required would be impossible to fulfill, and repeal would be guaranteed if it passed.

Redman said the new bill was based on testimony and concerns expressed on the House floor about the law with the repeal trigger. He co-sponsored it with Sen. Julie VanOrden, R-Pingree, who is chairperson of the Senate Health and Welfare Committee. HB 138 is sitting in VanOrden’s committee awaiting a hearing.

“I can’t say it was a compromise bill,” VanOrden told the Idaho Press in an interview. “I think we felt like there was a need for some kind of reform. ... We felt like the Legislature had spoken, and so there was a need for some kind of change.”

HB 328 would make a number of changes to Idaho’s entire Medicaid program, including moving to a third-party MCO that would administer and oversee benefits. Other changes include ending the practice of automatically renewing eligibility based on information the department has from other programs, ending nearly all presumptive eligibility that’s available to some people who arrive at a hospital for treatment and are likely eligible for Medicaid, and giving the health agency director broad authority to start cutting costs in the event the federal government reduces its payment match on expansion while the Legislature is out of session.

Redman said the goal was to contain costs on the program. Those who supported Redman’s previous bill that would likely repeal Medicaid expansion also cited rising costs over the years as a reason to reevaluate the program.

Health care advocates strongly opposed the previous bill and expressed similar concerns about HB 328, which they say may add unnecessary bureaucratic hurdles and ultimately limit health care access.

Move to managed care

The provision of the bill related to managed care would affect the entire Medicaid program, not just the expansion population — which includes those in the expanded eligibility category approved by Idaho voters in 2018.

The bill would move administration of the entire Medicaid program under management of one or more third-party MCOs. It would repeal provisions of the VCO model that had been in place since 2022, in which physician-led value-care organizations managed benefits and care coordination for Medicaid participants with an emphasis on primary care.

Managed care would mean the state goes with a third-party organization to administer the program. Idaho has been using VCOs, which are a number of hospital and physician organizations formed in Idaho.

Idaho uses MCOs for some of its programs, for instance, overseeing behavioral health care. The state contracts with the MCO Magellan of Idaho to oversee its comprehensive behavioral health plan — this $1.2 billion contract with Magellan marked the largest in state history.

This bill signals a change in direction after an interim task force in 2023 recommended not moving toward an MCO “for the time being,” and instead sticking with its current program of hospital- and provider-led value care organizations. The 2023 recommendation was not unanimous, and four committee members, including Redman, recommended switching to an MCO.

VanOrden said that, at the time of the interim task force, she didn’t feel the state was prepared to make the big shift to an MCO. The VCO model had only launched in Idaho in 2022, and the head of the health agency was set to retire at the end of 2023, she said.

She said that now with the new director, Alex Adams, who previously served as head of the Division of Financial Management, she felt more confident that a change like this could be made.

She also said she hasn’t seen enough to demonstrate the benefits sought under the value-based care program.

“I felt like we’ve probably given it enough time that we could probably see some data, but we haven’t seen any,” VanOrden said.

The process of making the change could take years, she said.

During the 2023 interim task force hearings, a number of physicians told legislators that they were wary of moving to an MCO over concerns around administrative burdens and adding a “middleman,” the Idaho Press reported.

However, at least one of those physicians who previously helped lead efforts toward value-based care has recently come around.

Dr. Ted Epperly, president and CEO of Full Circle Health and co-chairperson of the board for Healthcare Transformation Council of Idaho, told the Idaho Press that he had worked for 15 years to get Idaho toward a system like value-based care.

But the COVID-19 pandemic and its total upheaval of the health care system has helped changed his mind.

“I was in favor of the VCO model, very much so, I wanted it to run its course,” Epperly said. “And now we’re faced with the aftermath of the pandemic, which is high-cost care, especially in the Medicaid population.”

He said because many people put off a lot of preventive health care during the height of the pandemic, the system is still dealing with a higher severity of issues that went unchecked or untreated. Because of this, he said, the VCOs were unprepared to handle this high cost of care, as they were really designed to focus on primary care and prevention — which he said will need to continue to be a focus in the new system.

He said he believed that large MCOs will likely have more experience for “handling the complexities of the post-pandemic environment.”

The key to success, he said, will be the right contract to avoid the pitfalls that many providers worry about with MCOs, including a concern they may cut services or provider payments in order to maximize profits and save money.

“I think it’s an opportunity to move forward,” Epperly said. “As long as the vision is not just to slash and burn and cut expense, but to redesign for efficiency and support primary care, then I think we can get to a better place.”

Expansion eligibility determinations, work requirements

Some of the bill’s provisions are aimed just at the Medicaid expansion population, including adding work requirements and adding requirements around re-checking for eligibility.

The bill would require that able-bodied adults must work at least 20 hours a week to continue to be eligible for coverage. To meet the requirements they could also volunteer for 20 hours a week or work and volunteer for a combined 20 hours or more.

There would be exemptions for those younger than 19, older than 64, parents or caretakers responsible for children younger than 6, parents or caretakers caring for a dependent with a serious medical condition or disability, those receiving unemployment compensation, participating in a drug or alcohol treatment program, or attending college, university or vocational school at least part time.

Work requirements have received some of the most vocal pushback from opponents, who argue that it’s costly for the department to oversee them and a burden on Medicaid recipients.

“Most people who are on Medicaid expansion are working,” said Hillarie Hagen, healthy policy associate at Idaho Voices for Children. “All work requirements do is cut people off from accessing important health care services by removing them from Medicaid. Idahoans on Medicaid will only get tripped up in mountains of red tape and bureaucracy that has only proven to be expensive in other states without improving employment outcomes.”

There have also been legal questions about whether work requirements that would likely limit enrollment are in compliance with federal laws. Other states that have sought to implement them have found them held up in court. Idaho sought to add a work requirement in 2019 under the previous administration under Donald Trump, and that application was never acted upon.

HB 328 would also require the department to check for participant eligibility twice a year rather than once a year, and end a practice currently used in which information from other assistance programs, such as SNAP food benefits, is used to automatically redetermine eligibility or pre-fill forms with information already available.

The bill’s opponents, including those at the American Cancer Society Cancer Action Network, told the Idaho Press that, along with work requirements, these kinds of changes will increase agency staff time and can add barriers for participants.

“Policies like work-reporting requirements, increasing out-of-pocket health costs for low-income people and making it more difficult to enroll and maintain enrollment in Medicaid by eliminating use of state data sources and requiring more frequent paperwork from enrollees just adds to government red tape and confusion for Medicaid enrollees,” Meredith Wheeler, senior state and local campaigns manager at ACS CAN, said in an emailed statement.

Medicaid premiums and co-pays

The bill would require the Department of Health and Welfare to seek a change to require cost-sharing as a condition for participating in all of Medicaid — which can include monthly premium charges or co-payments.

The bill would require the costs to be “at least to the levels developed by other states and up to the maximum charged by other states.”

Right now, the agency does have authority to charge premiums for families with household incomes at or above certain thresholds — those earning 133% above federal poverty levels can be charged $10 a month, and those at 150% of federal poverty guidelines can pay $15 to the department monthly; the department also has a sliding fee schedule that continues with a percentage of income.

It’s unclear what the new payments and premiums would look like if the department were able to obtain the waiver and implement the change.

Mandating cost-sharing is another practice that Medicaid advocates argue would cost more in time and administration to the health department than it would be worth, and also create another burden to the people using the health care.

What’s next?

As of October, there were 294,664 Idahoans enrolled in all of Medicaid, and as of this month, there are around 83,000 people enrolled through expansion; these participants may see changes to their health care coverage if one of these bills moves forward.

The bill that would lead to the likely repeal of Medicaid expansion is “still alive,” according to VanOrden. No hearing has been scheduled for it yet.

The hearing for the HB 328 is likely to happen Tuesday.

Guido covers Idaho politics for the Lewiston Tribune, Moscow-Pullman Daily News and Idaho Press of Nampa. She may be contacted at lguido@idahopress.com and can be found on Twitter @EyeOnBoiseGuido.