NATIONAL ACADEMY OF ELDER LAW ATTORNEYS 1577 Spring Hill Road, Suite 220 Vienna, VA (703) (703) Fax

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1 NATIONAL ACADEMY OF ELDER LAW ATTORNEYS 1577 Spring Hill Road, Suite 220 Vienna, VA (703) (703) Fax To: From: Re: Board of Directors Charles P. Sabatino, Esq., Chair, Public Policy Committee Brian W. Lindberg, Public Policy Advisor Fay Gordon, Senior Associate, Grassroots and Public Policy Public Policy Update The Big Picture On August 2, after a summer of waiting, closed-door talks, and a failed 11th hour Gang of Six proposal, the deadline to a debt ceiling agreement arrived. The debt-deal (more of a congressional agreement to agree eventually) raised the debt ceiling, welcomed a new cast of deficit reduction negotiators, and introduced terms like firewall, sequester, and supercommittee into our national policy lexicon. The real impact of the debt deal is yet to be seen, as the supercommittee is approaching its Thanksgiving proposal and December 23 floor vote deadline. Hill staff and advocates continue to focus on the supercommittee and the debt reduction, while President Obama and GOP primary candidates have shifted their rhetoric to improving the economy and jobs. Chairman of the Congressional Budget Office, Douglas Elmendorf, summed up the conflicting goals of deficit reduction and economic improvement in his testimony before the supercommittee on September 13: Given the current state of the economy, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion. More information on the details of the Budget Control Act of 2011 (the debt deal) the progress of the supercommittee, and what this means for health and aging advocates is discussed below. Public Policy Committee, Grassroots Subcommittee, and Senior Rights PAC Public Policy Committee The Public Policy Committee organized and hosted a webinar, Medicaid: How Deficit Reduction Proposals and the Debt Limit Could Impact Your Clients, on July 17. The webinar featured Mary Alice Jackson, Grassroots Committee chair, Patricia Nemore, Senior Policy Attorney at the Center for Medicare Advocacy, and Cheryl Matheis, Senior Vice President for Health Strategies at AARP. The webinar is available on the NAELA website in the Advocacy section.

2 Page 2 of 12 The Public Policy Committee has discussed strategy for counteracting a tendency of Congress to look to Medicaid for savings. In September, the House Oversight Committee, Subcommittee on Health Care, DC and the Census, announced a hearing on Examining Abuses to Medicaid Eligibility Rules. Trey Gowdy (R-SC) chairs the subcommittee, and his staff invited the following witnesses to testify: Stephen Moses, President, Center for Long-Term Care Reform, David Dorfman, Attorney, Law Offices of David Dorfman, and Janice Eulau, Assistant Administrator, Medicaid Services Division. Danny Davis (D-IL) is the ranking member, and he invited Julie Hamos, Director, Illinois Department of Healthcare and Family Services to testify. When NAELA learned of the hearing, the Public Policy Committee acted quickly to compile stories on the real people who rely on Medicaid for long-term services and supports. NAELA collaborated with the minority staff and shared talking points and background information on Medicaid for long-term care. During the hearing, with the exception of Mr. Dorfman, the primary focus of questions and statements from Republican members and invited witnesses was on individuals and planners abusing the Medicaid system to pay for long-term care. The Democratic committee members focused on discrediting Mr. Moses and on other options to improve Medicaid, for example, through better coordination of dual eligibles and improving access to home and community based services. A full review of the hearing is attached. Recognizing the need to improve communications and contact with CMS, the Public Policy Committee has created a draft proposal for a CMS Task Force. Grassroots Subcommittee The Grassroots Subcommittee organized and hosted a webinar, Using Professional Lobbyists to Enhance Your Chapter s Capacities, for NAELA Chapter Presidents on August 31, featuring Heidi Abegg, Lauchlin Waldoch and Brian Lindberg. The webinar is available on the NAELA website. NAELA worked with PAELA on their summer conference to create a session on Deficit Reduction and the Elder Law Practice. NAELA invited the following speakers to the conference: Patricia Nemore, Center for Medicare Advocacy, Ellen Niessenbaum, Center on Budget and Policy Priorities, and Tricia Neuman, Kaiser Family Foundation. During its September meeting, the Grassroots Committee decided that in addition to its current work to protect Medicaid and Medicare funding, NAELA needs an advocacy strategy to respond to the Supercommittee proposal, after it either fails or succeeds. NAELA will prepare a strategy for a national response in the event of sequestration, and a strategy for advocacy before state and federal agencies in the event the supercommittee proposes severe reductions to programs of importance to older Americans and individuals with special needs. To create a strategy, the NAELA policy committees will hold a discussion during the NAELA UnProgram in Dallas, January Members of the Public Policy Committee, Senior Rights PAC Board, NAELA Board, and Grassroots Committee will be invited to participate in the planning discussion, which will be Sunday, January 22. The discussion will be from 9:00 a.m. to 5:00 p.m., during which time the participants will evaluate the current state of deficit reduction and draft a plan for NAELA s response at

3 Page 3 of 12 the state and federal level. Charlie and Mary Alice will coordinate a planning committee to set an agenda for the day. Senior Rights PAC The NAELA Board approved new members of the Senior Rights PAC Board, and the PAC welcomed the following members during its September meeting: Bob Anderson Brad Frigon Howie Krooks Michael Cohen Mary Schmitt Smith The Senior Rights PAC s Fundraising Committee, led by Tim Takacs, met to discuss a fall fundraising plan. The group has contact information of Senior Rights PAC contributors for the past four years and will be contacting previous donors and asking for donations for the 2012 election. After the fall requests, the committee is planning a broader fundraising ask to culminate at the annual meeting in Seattle. The Senior Rights PAC recognizes the need for a Hill Day in advance of the 2012 election. The National Aging and Law Conference will be in Washington D.C. in 2012, however, it falls right after the election. The Senior Rights PAC is working with staff on a possible Hill Day in March At the May 2011 Annual Meeting, Kerry Peck, Senior Rights PAC Chair, asked the NAELA Board of Directors to approve including Senior Rights PAC donation requests in the membership renewal forms. A brochure requesting support for the Senior Rights PAC will be included with member renewals. The PAC will also be stepping up its fundraising requests at state chapter meetings. The Budget Fiscal Year 2012 Fiscal year 2011 ended on September 30. The Senate approved only three of its 12 appropriations bills, while the House Appropriations committee approved nine. In order to prevent a government shutdown, on October 4 President Obama signed a stopgap bill to fund the federal government through November 18 at fiscal year 2011 levels. From now until November 18, Congress will likely work on an omnibus spending bill with all appropriations bills rolled into it. The omnibus spending bill will provide funding for the rest of fiscal year In September, the Senate Labor/HHS Appropriations Committee passed an appropriations bill. The committee recommended an appropriation of $1.534 billion for the Administration on Aging (AoA), compared to $1.549 billion for fiscal year The committee also transferred $17 million from the Prevention and Public Health Fund to AoA, and charged AoA with administering programs through the aging network. Title III supportive services received level funding from FY 2011, or $367 million.

4 Page 4 of 12 On the House side, the House Labor/Health and Human Services Appropriations Committee released its draft funding bill on Thursday, September 29. The overall bill provides $153.4 billion in discretionary spending, which is 2.5% less than what was enacted in fiscal year The bill prohibits funds to implement the Affordable Care Act. The House Appropriations Committee requested $1.41 billion to fund the Administration on Aging, compared to the Senate s request of $1.534 billion, and the President s request of $1.79 billion. By releasing the draft bill, the House Labor/HHS Committee has demonstrated where it stands on appropriations in anticipation of negotiations over an omnibus spending bill. Neither the House nor Senate included funding for the CLASS program or the Elder Justice Act in their bills. For your reference, an appropriations chart for key programs is attached. Deficit Reduction President Obama signed the Budget Control Act of 2011, also known as the debt ceiling deal, into law on August 2. The deal requires the congressional leadership to create a 12-member, bicameral, bipartisan committee on deficit reduction. This supercommittee is required to draft a plan to reduce the federal deficit by $1.2 trillion in the next 10 years. The committee must present the plan to Congress by November 23, so that Congress can vote on the proposal by December 23, If at least seven supercommittee members approve a proposal by November 23, the committee will quickly turn the proposal into legislation and it will be fast-tracked for a vote in the House and Senate by December 23. The consequence of the failure of the supercommittee or Congress will result in a mechanism known as sequestration. Sequestration was included in the law to further motivate the committee to draft a proposal that can pass in Congress. Under sequestration, if the supercommittee fails to agree to a plan or Congress votes down the legislation, automatic, across-the-board cuts will take effect in January These automatic cuts would represent approximately a nine percent annual cut in non-defense programs, along with roughly a nine percent cut in defense programs. With programs of importance to all lawmakers on the line, the supercommittee faces extra pressure to craft a workable proposal. The supercommittee: Membership Under the law, the four leaders in Congress were required to select three members of their caucus to serve on the committee. The draft began on August 9 when Senate Majority Leader Harry Reid (D-NV) made the first pick and appointed Senators John Kerry (D-MA), Max Baucus (D-MT), and Patty Murray (D-WA). Senate Minority Leader Mitch McConnell (R-KY) and Speaker of the House John Boehner (R-OH) announced their selections the next day, appointing Senators Pat Toomey (R-PA), Rob Portman (R-OH), Jon Kyl (R-AZ), and Reps. Jeb Hensarling (R-TX), Dave Camp (R-MI) and Fred Upton (R-MI). House Minority Leader Nancy Pelosi (D-CA) rounded out the 12, when she selected Reps. Xavier Becerra (D-CA), Jim Clyburn (D-SC), and Chris Van Hollen (D-MD). Rep. Hensarling and Senator Murray co-chair the committee. The four leaders selected party loyalists, creating a challenging environment for negotiation. However, most of the committee members are veteran lawmakers with a

5 Page 5 of 12 background in tax and health policy; both a key focus of debate. Seven of the 12 members already served on a budget commission in the past year. Senator Baucus and Reps. Becerra, Camp, and Hensarling all served on the Bowles-Simpson commission, and all voted against the final plan. Four of the committee members chair the House Ways and Means, House Energy and Commerce, Senate Finance, and Senate Veterans Affairs Committees. Each of these four committees have jurisdiction over issues of importance to older Americans. Also, the appointment of Rep. Camp and Senator Baucus, chairs of the House Ways and Means Committee and Senate Finance Committee, the two top tax writers, could signal either a high likelihood of tax changes, or that they will protect their jurisdiction from the supercommittee. The supercommittee: Power Should the members agree to a proposal they can sell to their caucuses, the next few years could usher in extraordinary changes to health and aging policy. It is critical to note that the supercommittee has no boundaries. The committee can propose reductions to any federal program, and can usher in any tax changes. There is nothing in the Budget Control Act dictating what they can and cannot change; their only direction is to reduce the deficit by $ trillion. The supercommittee is looking at ways to reform both mandatory and discretionary spending. Mandatory spending encompasses programs that the government is required to spend money on under the law, including, but not limited to, Social Security, Medicare and Medicaid. Discretionary spending requires annual appropriations bills. Many aging programs fall under discretionary spending, such as the Older Americans Act, legal services, energy assistance, Section 202 housing, and much of the Affordable Care Act. Sequestration If the supercommittee, or Congress, fail to approve a proposal to reduce the deficit by $1.2 trillion, or if the President vetoes the legislation, then the sequestration process of automatic, across-the-board cuts will be triggered. The sequestrationinduced cuts would take effect in January Defense programs would be cut by $55 billion each year from 2013 through 2021, and non-defense programs would be cut by the same amount. The $55 billion in non-defense spending cuts comes from both mandatory and discretionary spending. For mandatory spending programs, the cuts will occur automatically each fiscal year. Medicare will face an automatic two percent reduction to provider payments. However, Social Security, Medicaid, veteran s benefits, and several other social insurance programs will be exempt. The Center for Budget and Policy Priorities (CBPP) estimates the total reduction to mandatory funding would be about $17 billion per year. On the discretionary spending side, the automatic cuts would be in addition to the reductions generated by the caps that are already in place for discretionary spending. The CBPP estimates this will be about $38 billion per year. The Appropriations Committees will decide how to allocate the remaining funds. As health policy expert and former NAELA consultant Chris Jennings points out in an opinion published in the New England Journal of Medicine on August 31, because of the certainty in sequestration, and the protection to Medicare, Medicaid and Social

6 Page 6 of 12 Security, sequestration may be the lesser of two evils. As he explains, Medicaid is exempt from reductions, and Medicare is limited to a two percent cut to providers. According to Mr. Jennings, it is unlikely that the supercommittee would be as generous to Medicare and Medicaid because they face such a daunting reduction task. Also, under sequestration, half of the reductions come from defense spending. It is unlikely that the supercommittee will expect defense programs to take half of the brunt of the reductions, and so Medicare, Medicaid and other programs will feel more of the deficit reduction burn. See the attached article. Health Reform the Patient Protection and Affordable Care Act At the time of this writing, the ACA is still law. The Department of Health and Human Services (HHS) continues to implement most provisions of the law, however, the CLASS program, the provision of greatest significance to improving long-term services and supports, has been suspended. Implementation This summer, the Centers for Medicare and Medicaid Services (CMS) Office of Innovation (CMMI) announced several new initiatives. CMMI was created in the ACA as a center to test new models of health care delivery. In August, CMMI launched the Bundled Payment for Care Improvement initiative, which will offer primary care practices an alternative payment method and promote more coordinated and patientcentered care. In September, CMMI introduced the Comprehensive Primary Care Initiative, a four-year demonstration that will award primary care providers who provide better coordinated care. Through the HHS Community Transformation Grant program, HHS announced it will provide $103 million to states and communities to help fight chronic disease. In August, HHS released proposed rules for the state-based health insurance exchanges. The proposed rules require states to establish an exchange by January 2013; however, HHS will grant conditional approval if states require extra time. Complications to Implementation Administration The most significant interruption to ACA implementation occurred this fall when the CLASS program began to unravel. The CLASS program, introduced in the Affordable Care Act, was championed by the late Senator Ted Kennedy and his staff. The legislation called for a new federal insurance program that would be funded by employee premiums. The program would pay enrollees $50 or more per day for longterm services and supports if they required assistance with activities of daily living. Congressional Republicans and some in the long-term care insurance industry target the CLASS Act as an unfunded mandate, and the program has been the source of congressional scrutiny. Legislation was introduced in both the House and Senate to repeal the program, and both Assistant Secretary for Aging Kathy Greenlee and HHS Secretary Kathleen Sebelius have been called to testify before Congress on the long-term solvency of the program.

7 Page 7 of 12 The scrutiny reached a fever pitch this fall. In September, a CLASS actuary left his job, stating that HHS will close the CLASS office because the program will never be actuarially sound. The news sparked rumors of a CLASS program shutdown. In the same week, eight Administration on Aging (AoA) staff assigned to work on CLASS were transferred to other offices. Congressional Republicans responded with a request for a report on the CLASS program, and AoA compiled the findings of an 18-month comprehensive review of CLASS, looking at the legal and policy aspects of CLASS operations. On October 15, HHS Secretary Sebelius announced that her department will not implement the CLASS program. She announced that HHS does not see a viable path forward for CLASS implementation at this time. In response to the announcement, the House Energy and Commerce Committee scheduled a hearing, CLASS Cancelled: An Unsustainable Program and its Consequences for the Nation s Deficit, for October 26. Many are calling for Congress to officially repeal the program. Advance CLASS, the main advocacy group promoting the program, says the program is far from dead and they are advocating for the program to continue. An article is attached for your reference. Legislative Members of the House Appropriations Labor/HHS committee demonstrated their plan to strip the ACA of any funding in FY Their draft bill does not include any funding for the ACA, and it states that funding should be withheld until the Supreme Court makes a decision on the law. The Senate Appropriations Labor/HHS committee was more generous to the ACA, and proposed continued funding for implementation. However, neither the House nor Senate recommended funding for the CLASS Act or the Elder Justice Act (EJA). This is particularly troubling, as the EJA remains unfunded one and a half years after the passage of the ACA. The Independent Payment Advisory Board (IPAB) continues to receive criticism, now from both Democrats and Republicans. The IPAB was included in the ACA as a major cost containment provision. The IPAB is tasked with developing a report for reducing Medicare spending by July The Secretary of HHS must then implement the IPAB s proposal unless Congress enacts legislation to contain Medicare costs. The House Energy and Commerce Committee and the House Budget Committee hosted back-to-back hearings, IPAB: The Controversial Consequences for Medicare and Seniors, and Medicare s Future: An Examination of the Independent Payment Advisory Board, critiquing the board in August. All eight candidates for the GOP presidential nomination call for the repeal of the ACA. Legal Challenges The Department of Justice and the 26 states who were plaintiffs in an 11 th Circuit Court of Appeals decision against health reform filed a petition with the Supreme Court to review the law. The court is under intense pressure from both sides to make a decision on the law and to do it quickly. The timing of the decision could have

8 Page 8 of 12 tremendous implications for the 2012 election. Some argue a ruling against the health care law may actually help President Obama by giving him something to run against. On the other hand, the court s ruling before the election could further undermine the perception that the court is above politics if it rules right before the election. The court is expected to decide if it will hear the case by December, and issue a decision by summer The current scorecard of the status of the law is four Courts of Appeals decisions in favor of the law, and two decisions that the law is unconstitutional. The 8 th Circuit Court of Appeals will hear oral arguments on an ACA challenge on October 17. Older Americans Act The authorization for the Older Americans Act (OAA) expired on September 30, The Senate Health, Aging, Pensions and Labor (HELP) Subcommittee on Primary Health and Aging, chaired by Senator Bernie Sanders (I-VT) has jurisdiction over OAA reauthorization. During summer recess, the subcommittee and full committee held joint bipartisan stakeholder meetings on the OAA, in preparation to draft a reauthorization of the bill. The stakeholder meetings were: Title IV Demonstrations-8/18 Legal Services-8/18 Elder Abuse-8/23 (rescheduled to 10/12 after the earthquake) Nutrition-8/25 Supportive Services-8/25 Caregiving-9/9 Older Workers-9/9 The committee invited NAELA to present recommendations on improving legal services to the subcommittee, and NAELA staff presented at three of the sessions. The subcommittee is now compiling the OAA improvement recommendations and preparing a draft bill for OAA reauthorization. The committee hopes to mark up the bill in the full HELP committee at the end of November. There has been much less action on OAA reauthorization in the House of Representatives. The subcommittee and committee of jurisdiction have not held any hearings. NAELA helped plan an LCAO briefing on the Older Americans Act in the House, with speakers from the National Association of States United for Aging and Disabilities (NASUAD), Senior Service America, Meals on Wheels of America, the National Council on Aging, and the National Association of State Long-Term Care Ombudsmen. NAELA also drafted a letter, signed by over 45 LCAO member organizations, encouraging the House to preserve and protect the Older Americans Act in reauthorization. In addition, the Administration has failed to provide Congress with its recommendations for reauthorization. Overall, in the House and Senate Labor/HHS Appropriations committee recommendations for FY 2012, Older Americans Act programs generally received level funding. The Senate provided funding increases for elder falls prevention and chronic disease self management. The House eliminated funding for Title IV demonstration projects. The outcome of reauthorization and FY 2012 funding remains to be seen.

9 Page 9 of 12 Legal Services As mentioned above, the Senate Primary Health and Aging Committee and the HELP Committee invited NAELA to share recommendations for improving legal services in the OAA before staff of the Senate HELP committee on August 18. NAELA joined the ABA Commission on Law and Aging, NASUAD, and the National Senior Citizens Law Center to share its recommendations. NAELA recommended authorizing the Assistant Secretary of Aging to: establish a national services legal advisory committee; test new models for funding and delivery; collect qualitative and quantitative data; and establish uniform legal training standards for legal assistance developers. NAELA has met with the staff of Senator Herb Kohl (D-WI) and Senator Barbara Mikulski (D-MD) to discuss their proposed bill to enhance legal services in the OAA. The Kohl-Mikulski bill also recommends establishing a legal services advisory committee to recommend improvements to the Assistant Secretary for Aging. The House and Senate Appropriations Committees have different proposals for funding the Legal Services Corporation (LSC) in FY On September 15, the Senate Appropriations Subcommittee on Commerce, Justice and Science recommended $396 million for the LSC in FY 2012 funding, a reduction of $8 million, or two percent from the current funding. In July, the House Appropriations Committee approved the Subcommittee of Commerce, Justice and Science Appropriations bill s reduction of $104 million, or a 26 percent cut to LSC funding, bringing the level down to $300 million. Elder Justice Despite the efforts of NAELA and the Elder Justice Coalition, including many Hill visits, to include appropriations for the Elder Justice Act in FY 2012 bills, neither the House nor Senate recommended funding the act in their legislation. On June 23, Senator Herb Kohl (D-WI) and Senator Joe Manchin (D-WV) reintroduced S. 1263, the Silver Alert Action bill. Medicaid The battle to protect Medicaid in deficit reduction is much more difficult than for Medicare. NAELA is working with the Medicaid Coalition to inform members of the supercommittee about what Medicaid reform proposals could actually mean for individuals requiring Medicaid for long-term services and supports. In his deficit reduction proposal, President Obama recommends applying a single blended matching rate to Medicaid and CHIP, a proposal that would shift Medicaid costs to states and families. Currently, the federal government matches each state s

10 Page 10 of 12 Medicaid costs at a certain percentage using a formula based on a state s per capita income. The rate varies for different services and populations. Under a blended rate, each state would have one percentage for all of its Medicaid funding. The justification for the blended rate, to go into effect in 2017, is that it would reduce the administrative confusion of determining the FMAP, CHIP match and enhanced FMAP, with a single matching rate specific to each state. The concern is that in order to realize the savings that the President supports in his plan ($72 billion over 10 years, from this and other Medicaid reforms) states may end up receiving a lower overall reimbursement than they currently receive. The administrative expenditures exhausted on the current match do not fit the vast savings the proposal is trying to meet by creating a blended match. While a blended rate would not be nearly as devastating for Medicaid enrollees as a block grant, a lower overall match will impact the services states are able to provide, and the quality and availability of those services for beneficiaries. In addition to these long-term changes to Medicaid, the program was the subject of a House Oversight, Subcommittee on Healthcare, DC and the Census hearing in September, explained above. Republican governors in 29 states sent a letter to Representative Fred Upton (R-MI), Chairman of the House Energy and Commerce Committee, and Senator Orrin Hatch (R-UT), Ranking Member of the Senate Finance Committee, requesting more flexibility to administer the Medicaid program. The governors request demonstrates their interest in a Medicaid block grant. In October, the Supreme Court opened its term with oral arguments on Douglas v. Independent Living Center of California, a 9 th Circuit case that found that Medicaid recipients and health care providers cannot sue state officials to challenge cuts to Medicaid payments, even if such cuts compromise access to health care. Medicare Medicare continues to be the most difficult topic for consensus among the supercommittee. Although the presidential election is a year away, and changes to Medicare clearly had an impact on the 2010 election, it is possible that the supercommittee will propose Medicare reforms. President Obama indicated his support for Medicare reforms when he sent his recommendations, Living within our Means and Investing in the Future, to the supercommittee. President Obama recommends the following changes to Medicare: Encouraging efficient post-acute care o Adjusting skilled nursing facility payments to reduce hospital readmissions; Cutting waste, fraud and abuse in Medicare; Cutting erroneous payments to Medicare Advantage plans; Imposing provider penalties for failure to use electronic health records; Requiring prior authorization for advanced imaging; Increasing Medicare Part B deductibles; Introducing a $100 co-pay for home health episodes for older adults; Strengthening the IPAB; and Cutting $42 billion from skilled nursing facilities, long-term care hospital and inpatient rehab facilities.

11 Page 11 of 12 The President did not recommend increasing the Medicare eligibility age. Congressman Henry Waxman (D-CA), the ranking member of the House Energy and Commerce Committee, disagreed with some of these proposals and sent a letter to the supercommittee urging them to reject any proposal that increases Medicare costshifting to states, families and beneficiaries. At an August meeting with NAELA and other aging organizations, Rep. Nancy Pelosi (D-CA), Minority Leader, shared that she felt the Democrats advocacy in the debt deal led to a victory for Medicare. Despite calls for significant Medicare cuts, the final debt agreement did not impose any immediate reductions to Medicare, and in the event of sequestration, Medicare will only face a 2% reduction to provider payments. The supercommittee is not limited to this number, and can make any changes to Medicare. Meanwhile, as a result of improvements in the ACA, Medicare continues to provide enhanced care to older adults. In October, CMS announced that nearly 20.5 million individuals with Medicare received a free preventive service under Medicare, and 1.8 million individuals received discounts on brand-name drugs in the donut hole between January and August. State Issues The current national focus on austerity is old news to state governments that continue to face severe budget shortfalls. In fiscal year 2012, states worked to close approximately $103 billion in budget short falls, and budget gaps are expected to continue in the coming year as the temporary aid states received as part of the American Recovery and Reinvestment Act (the stimulus bill) is no longer available. As a result, as state legislatures look to tighten their belts, they are focusing reductions on Medicaid and health programs. In Texas, Governor Rick Perry signed S.B. 7 into law. This law expands Medicaid managed care and restructures the state payment system for Medicaid and CHIP. The law helps prepare the state for the Medicaid expansion under the health care reform law, and was mistaken in the media as moving the state to a block grant for Medicaid. In Washington State, Governor Christine Gregoire signed S.B into law, allowing Washington to ask CMS for flexibility in managing the state Medicaid program. If CMS approves the waiver, Washington will be able to replace their traditional matching formula with a negotiated capitated rate that varies based on a beneficiary s eligibility group, helping the state move more beneficiaries into managed care. Rhode Island received a block grant for Medicaid, and has been described by advocates as a model for Medicaid block granting. In reality, the block grant Rhode Island received was for an amount of money far greater per capita than what most states would receive under a block grant, and it is not a model that could be replicated in the rest of the country. Governor Chaffee has hired a private consulting firm to look into whether or not the block grant helped the state save any money. California received a Section 1115(a) waiver from CMS which establishes mandatory enrollment for older adults and individuals with disabilities into a Medicaid managed care program. In September, Florida submitted a 1915(b) and 1915(c) waiver to CMS, to expand its five-county Medicaid managed care demonstration project into a Medicaid managed

12 Page 12 of 12 care long-term care program for the whole state. One of the major points of contention in the proposal was that the managed care expansion did not require private health plans to adhere to the federal medical loss ratio (MLR). On September 23, CMS responded that Florida must include a provision requiring private health plans to adhere to at least an 85% MLR, meaning 85% of funds would have to be spent on patient care and not administrative expenses. On September 9, the Department of Human Services in New Jersey submitted a Section 1115 demonstration waiver to CMS. The waiver would consolidate a variety of previous waivers. According to the state, it would improve home and community based services. The New Jersey chapter plans to send comments recommending the state improve the fair hearing process for dual eligibles.