Hawaii Receives $70+ Million in Federal Medicaid Funds While Maintaining Service Cuts

According to the Federal Department of Human Services website, Hawaii received $70,573,033 in Federal Matching Funds (FMAP) for Medicaid prior to March 31, 2009. Hawaii's state medicaid Director, Dr. Ken Fink, has confirmed that Hawaii has been pulling on the funds available through the ARRA's section 5001, which will provide the state with an additional $360 million just for medicaid prior to October 2010. So why is Hawaii refusing to reinstate home and community based service cuts implemented since last July of 2008? Why are parents and caregivers being threatened with having a third round of cuts in the services that enable their children to remain at home and in their communities? Where is Hawaii spending the money? First, I want to clarify that Dr. Fink has stated I am wrong in my earlier posting suggesting Hawaii was violating the Maintenance of Effort (MOE) requirement for receiving the additional federal medicaid funds as stipulated in the American Recovery Act (ARRA) passed earlier this year. Second, I want to clarify that I continue to doubt the extent to which Hawaii's medicaid cuts are allowed under the MOE requirement. Hawaii needs to reinstate all the cuts made to home and community based services and waiver programs as soon as possible, since the deadline for compliance with the MOE is July 1. The latest word by CMS, the government agency responsible for policing and defining states' use of the 5001 federal funding, states clearly that:

several states have made or proposed changes to programs that help seniors and people with disabilities live independently; CMS guidance clarifies that any changes to such waiver programs that would result in fewer people being enrolled would violate the MOE requirement for the increased federal Medicaid funding. As a result of this guidance, states will have to reverse these cuts or rescind these proposals, at least until December 31, 2010

The state of Hawaii has eliminated all of its home and community based waiver services except for the program for the developmentally disabled, and radical service cuts in that program are placing the state in potential violation of the ADA and the rights granted under the Olmstead decision. Interesting, a Performance Report printed by the DDMR division of the Hawaii state department of health in September of 2008, showed FY 2009 expenditures dropping 65% from FY 2008, from more than $20 million annual to only $7.2 million annually. That's a $14 million cut in the services that enable adults and children with special health care needs to remain at home, with their families. On the other hand, the state seems to be requiring an additional $10 million over FY2008 for administrative positions, mostly related to what the state budget keeps referring to as the "proposed Division-wide reorganization." Do we know anything about this reorganization? Why is DDMR disappearing? Who is going to take over providing the financial supports for the home and community care our citizens with special health needs require? The only answer I can come up with is that Hawaii's two new medicaid managed care companies are supposed to be picking up the slack from the waiver programs. The only problem with that solution is that the definition of a "budget neutral program" is completely different for a medicaid program authorized under Section 1115 of the Social Security Act than it is for a medicaid program authorized under Section 1915. And that difference results in a shift in expenses from actual services to employee salaries and insurance corporation profits. Back in 2006, the UCSF National Center for Personal Assistance Services issued a simple explanation of the different budgetary ramifications for 1915(c) waivers as opposed to 1115 programs:

Like 1915(c) programs, 1115 programs must be budget neutral. However, for 1115 programs this means that the program cannot cost Medicaid any more than the state would have spent in the absence of the waiver1, 26 whereas 1915(c) programs should not cost more than providing state plan services, such as nursing home care, to the same population.

In other words, Hawaii's new 1115 Managed Care Medicaid Organizations can't spend any more funds than they would if there were no waiver participants. Excluding from the budget neutrality calculations any funds for an individual, say, with developmental disabilities on a 1915 waiver, is going to reduce precipitiously the budget compared with what would be allowed counting all those previous HCBS waiver participants back into the figures. But all of this was originally calculated before Obama was elected and the ARRA was even being dreamed about. So what is Hawaii spending the money on? It's not on the children and adults with disabilities who desperately need to remain at home with their families and communities. The CMS specifically states that:

To be in compliance with the MOE, a state cannot have done the following after July 1, 2008: ... Eliminated coverage for home- and community-based waiver care that costs more than institutional care, which could make it harder for some individuals to qualify for waiver coverage.

All of the 1915(b) waiver participants who have been switched to an 1115 program can no longer receive all the services they were entitled to previously. Which is why the insurance company giants operating Hawaii's medicaid MCOs are telling parents not to ask for more in home nursing care because if it's cheaper to throw the kid in an institution, that's what they'll do. This would seem to me to be about as blatant a violation of the MOE requirement as you can have.