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Marylou Sudders

BOSTON -- Gov. Charlie Baker's administration may consider expanding Medicaid coverage for mental health and substance abuse treatment but cutting other benefits for non-disabled adults, such as non-emergency medical transportation.

Secretary of Health and Human Services Secretary Marylou Sudders wrote a six-page letter last Wednesday to Seema Verma, the administrator of the U.S. Centers for Medicare and Medicaid Services, seeking a large amount of flexibility from the federal government in administering Massachusetts' Medicaid program. Included in the letter was a request for flexibility regarding benefits.

Sudders wrote that Massachusetts is looking for unspecified ways to "more closely align Medicaid benefits for non-disabled adults with those available in the commercial market."

Sudders wrote the letter at a time of great uncertainty about the federal health care landscape. Although President Donald Trump and the Republican-controlled Congress have promised to repeal and replace the Affordable Care Act, House Republicans pulled their health care bill on Friday when they could not muster enough votes to pass it.

That means the Affordable Care Act, former president Barack Obama's signature health law, will stay in effect. But Trump can make changes administratively.

Baker, a Republican, opposed the House Republican repeal plan because of its cost to Massachusetts.

But Baker has also criticized parts of the Affordable Care Act. In particular, he said the federal law made people with access to employer-sponsored health insurance eligible for MassHealth, which resulted in pushing up to 500,000 full-time workers onto state-subsidized plans.

Massachusetts has had near-universal health insurance coverage since former governor Mitt Romney's 2006 reforms. But MassHealth costs have been steadily increasing over the last several years, partially due to federal changes.

The Baker administration received a waiver from the Obama administration to move forward with a massive restructuring of MassHealth, primarily to move it away from a fee-for-service model toward a model with more coordinated care, where health care providers are paid a sum of money to keep a population healthy.

So far, state officials have largely avoided changing eligibility or benefits.

Sudders' letter does not offer many specific details on what the Baker administration wants to do. Rather, it is a request for flexibility that outlines several areas where administration officials hope to make changes.

With regards to benefits, Sudders wrote that she wants MassHealth to offer more robust benefits with regard to drug addiction and mental health services to combat the state's opioid epidemic. For example, she wants the federal government to lift a 15-day limit on coverage for some inpatient mental health care.

At the same time, state officials want to limit the number of people moving from commercial plans to MassHealth by potentially decreasing MassHealth benefits for non-disabled adults that are more generous than those on the commercial market. The only specific example Sudders gave of such a benefit is a federal requirement that MassHealth cover non-emergency medical transportation for a certain Medicaid population.

Another major potential change Sudders is asking the federal government for is permission to have the state impose its own employer mandate rather than using the one designed by the federal government. This could result in changes to the size of businesses that are required to buy health insurance for their workers or to the penalty they face for not offering insurance.

Under the Affordable Care Act, businesses with more than 50 workers face a penalty of $2,000 per employee for not providing insurance. Under Massachusetts' 2006 reform, businesses with more than 10 workers faced a $295 per employee penalty. Potentially, the state could return to the old model if it gets federal permission. Baker has also spent the last couple of months negotiating with businesses over a proposed new version of a fee on employers who do not offer adequate health insurance.

One issue that has been a priority for small business for years has been obtaining a waiver from part of the Affordable Care Act that determines how many factors, referred to as "rating factors," an insurer can use when setting the cost of a health plan for an individual or small group. The Obama administration gave Massachusetts time to transition to the new system, but denied the state a complete waiver. Sudders is asking again for a full waiver.

Sudders' letter asks for flexibility in numerous other areas, such as drug-related fees and pricing, and care for individuals who are eligible for both Medicare and Medicaid.

Administrator Verma Letter 3-22-2017 Final by Shira Schoenberg on Scribd