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What’s the Story on Medicaid Block Grants?

In the executive order signed on his first day in office, President Trump instructed federal agencies to prepare to grant states more flexibility in managing their health care programs, possibly clearing the way for Medicaid block grants. How could block grants affect seniors housing and care?

Medicaid Funding & Block Grants
Medicaid is currently funded in part by the states and in part by the federal government. The amount states receive from the federal government for Medicaid is based on the number of people enrolled, and the funding is tied to rules and regulations that govern how the states administer their programs.

Under block grants, states would receive a single payment: the block grant. The grant amount would be determined by the federal government, a process that could be highly politicized.

Supporters of block grants say this approach could reduce fraud, waste, and abuse while giving states flexibility to experiment with programs that work for their residents. Opponents say block grants could shift administrative costs from the federal government to the states and lead to decreased federal funding over time.

Ultimately, the methodology for calculating the grant will be critical. For example, if the calculated amount is too small or does not grow proportionately to match an increase in enrollment because more people fall below the poverty line, then the states would have less flexibility to provide care because they would be restricted by a smaller budget. A calculation that includes administrative costs, on the other hand, could be more appealing to block grant opponents.

The Effect on Seniors Housing & Care?
Until the calculation methodology is determined, it’s difficult to speculate on how the seniors housing and care industry would be affected by block grants.

For example, we could see fewer nursing home residents if states embrace the home- and community-based services movements, or require Medicaid enrollees to pay copays for nursing homes, or change the eligibility requirements for Medicaid. States could also focus on programs for dual-eligible residents—those who qualify for Medicaid and Medicare. Block grants could enable states to privatize Medicaid, so nursing homes would work with private insurance companies rather than the state for reimbursements.

In short, as the block grant policy intends, states’ possibilities for administering their Medicaid programs are endless. There’s support for Medicaid block grants in the executive and legislative branches. By the time the 2017 NIC Spring Investment Forum starts on March 22, we hopefully will have a better understanding of the direction health care reform, including Medicaid, will take.

In-Depth Skilled Nursing Coverage at the Forum
Interested in learning more about current skilled nursing trends? Curious about emerging opportunities to unlock value through new collaborations? Check out these and other sessions at the 2017 NIC Spring Investment Forum, March 22–24 in San Diego:

  • The Medicaid Question: What’s Happening in Leading-Edge States: Learn about Medicaid’s approach to long-term services and supports in California, Texas, and North Carolina, and hear predictions for possible future changes to Medicaid, including the potential transition to block grants, the growing proliferation of home and community-based services, and the impact of the increasing reliance on managed Medicaid organizations. Skilled nursing operators and investors should not miss this session!
  • The Future of Senior Care in the New Administration: Hear former Senators Tom Daschle and Bill Frist discuss the political landscape and how a new president and Congress could influence health care policy, the move to value-based care, entitlement reform, and tax policy.

About the Author

Liz Liberman

Healthcare Analyst Liz Liberman provides policy, regulatory, and healthcare perspective to the dynamic environment surrounding the seniors housing and care market. Liz employs data visualization, analysis, and context to convey information about skilled nursing to stakeholders in the healthcare and seniors housing spectrum, delivering on NIC’s mission to increase transparency in the sector. She comes to NIC from the Department of Defense, where she served as a contractor in Acquisition policy, implementing statutes, executive orders, and updates into the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS). She also served as a health policy analyst for Bulletin Intelligence, where she crafted daily briefings for government agencies and trade associations in the healthcare field. Liz earned degrees from The George Washington University (B.S.) and George Mason University (M.S.), and is an M.B.A. candidate at Georgetown University. She volunteers through the Junior League of Washington and is an avid traveler.
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