CMS announces transformative Medicaid Healthy Adult Opportunity

Feb. 3, 2020

The Centers for Medicare & Medicaid Services (CMS) announced the Healthy Adult Opportunity (HAO), which is an optional demonstration initiative. It is designed to give states unprecedented tools to design innovative health coverage programs tailored to the unique needs of adult beneficiaries, while holding states accountable for results and maintaining strong protections for our most at risk populations.

These innovations deliver on the Trump Administration’s promise to improve health outcomes and care for our most vulnerable. The Healthy Adult Opportunity puts patients first through state flexibility, accountability and patient protections. It is designed to provide states with an opportunity to meet the needs of their adult beneficiaries under age 65 who aren’t eligible based on a disability or their need for long-term care and for whom Medicaid coverage is optional for states. Other low-income adults, children, pregnant women, elderly adults and people with disabilities will not be directly affected – except from the improvements that result from states reinvesting savings to improve and sustain Medicaid for everyone.

For the first time, participating states will have more negotiating power to manage drug costs by adopting a formulary similar to those provided in the commercial market, with special protections for individuals with HIV and behavioral health conditions. In exchange for increased flexibility offered through the Healthy Adult Opportunity, states must accept increased accountability for the program’s results.

The Healthy Adult Opportunity also provides the opportunity for a full array of flexibilities that CMS has historically provided through section 1115 demonstrations – in addition to some that are entirely new – and outlines them in a streamlined application template. These include flexibilities to waive requirements like retroactive coverage periods and the ability to engage beneficiaries through nominal premiums and cost-sharing. Subject to comprehensive expectations for minimum standards for approval of a Healthy Adult Opportunity demonstration, states will also have the opportunity to customize the benefit package for those covered and make needed program adjustments. This will be in real-time without lengthy federal bureaucratic negotiations or interference.

Key federal benefit and eligibility protections, as well as due process and civil rights, remain in place and beneficiaries will still have important protections through minimum benefit requirements, eligibility protections, and limits on out-of-pocket expenses.

The Healthy Adult Opportunity establishes financial metrics to ensure states are driving affordability and quality, with savings shared between the federal government and state governments to protect taxpayers. States participating in the Healthy Adult Opportunity will be required to report on a set of key quality measures. In a new initiative specific to Healthy Adult Opportunity, states will report real-time performance indicators to CMS for detection of any potential beneficiary quality or access issues that need to be quickly addressed.

All proposals that states submit in response to this demonstration will still need to comply with existing transparency and public notice requirements, and states will need to ensure adequate public notice before any prospective changes are implemented.

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