Just three weeks ago, CMS came under severe criticism for failing to act expeditiously on Oklahoma’s 1332 reinsurance waiver and only approving part of Minnesota’s waiver. I was among the critics, suggesting that the agency’s action threatened the delicate bonds of trust between CMS and the states. Channeling the Oklahoma letter withdrawing its pending waiver, I said the agency had some serious fence-mending to do if it wanted states to continue pursuing 1332 waivers.
The agency has responded and I want to be among the first to commend CMS Administrator Seema Verma and her tireless staff for their prompt approval of Oregon’s waiver. It took the agency nine months to approve Alaska’s pioneering reinsurance waiver, three months to partially approve Minnesota’s waiver, and just 40 days to approve Oregon’s proposal. This is precisely the streamlined process that the Alexander-Murray bipartisan bill envisions for relatively simple “look-alike” waivers. (To be clear, this process should not apply to complex waivers that raise new issues meriting more extended review.)
While the Oregon approval is important, I expect a residue of doubt will remain as states soak in the news. Were the Oklahoma and Minnesota decisions the new norm and Oregon an aberration? Or does the Oregon decision represent a return to the consistent support that CMS had provided to states on reinsurance waivers?
Most importantly, can states rely on the checklist published in May 2017? Can they be confident that if they go through the hard work of identifying a state funding source and standing up a state-based reinsurance program, they can count on the federal government to “pass through” the federal cost savings? Even better, will Congress follow through on fixing the statutory ambiguity that caused CMS to backtrack on passing through the federal savings related to Minnesota’s Basic Health Plan (BHP)?
A Step CMS Could Take To Reassure States
CMS cannot control whether Congress and the President enact the Alexander-Murray bill that would clarify a state’s right to get BHP savings as well as tax credit savings. But there is one more step the agency could take that would go a long way to removing the ongoing concerns that states have about the processing of reinsurance waivers.
CMS could invite Oklahoma to immediately reinstate its waiver application, expeditiously approve it, and then work with the state to adjust 2018 rates. I recognize that it is late in the day to be adjusting 2018 premiums, but this past week’s experience with CSRs suggests that late adjustments are possible, and doing so for a single state with a single carrier should be manageable. If it is truly impossible, CMS should approve the waiver for 2019-2022.
I do not know how Oklahoma would respond to such an invitation, but I do know that Oklahoma should be offered the same expeditious treatment that Oregon received. Unless there are substantive flaws in Oklahoma’s application that only came to CMS’s attention after the pre-approval materials were prepared and shared with Oklahoma, there is nothing that distinguishes Oklahoma from the other three approved states.
The Complications Presented By Oklahoma’s Waiver Are Not Unique To That State
The fact that the current projections in Oklahoma’s application are outdated is not a distinguishing feature, since that is emphatically the case for all three approved waivers given the President’s recent termination of CSR payments. CMS did not include a pass-through funding number in Oregon’s approval letter, presumably because it depends on how the CSR complications are resolved this fall. Those complications include last-minute rate increases to load CSR costs into Oregon rates, as well as the potential that Congress will restore CSR payments or act in some other way that requires adjusting the numbers yet again. The same complications may require adjustments for Alaska and Minnesota.
CMS would have to work through those complications with Oklahoma too, but nothing is gained from requiring Oklahoma to start over from scratch with a 2019 waiver. Indeed, Oklahoma should have the same legal rights to work through whatever adjustments are necessary in the same way that Alaska, Minnesota, and Oregon will — within the context of an approved five-year waiver that requires mid-course corrections.
As a former state regulator with an abiding faith in state innovation, my hope is that CMS and Oklahoma can patch up any misunderstandings from last month and put Oklahoma back on the path to expedited approval of its waiver. The beneficiaries would be not just Oklahomans but also the dozen or more states with their eyes on 2019 reinsurance waivers, not to mention a much larger audience hoping for constructive state-federal partnerships in the next phase of bringing health security to all Americans.