How Trump's CMS pick transformed Medicaid in Indiana—and drew both praise and condemnation

The appointment needs to be confirmed by the Senate

President-elect Donald Trump's selection of Seema Verma to lead CMS under his administration has been met both with praise for Verma's wide-ranging experience and concern that she would likely approve restrictions on access to Medicaid coverage.

Verma, the president, CEO, and founder of health care consulting company SVC, has worked in health care policy for more than two decades. With SVC, she helped craft Medicaid waiver proposals under the Affordable Care Act in Iowa, Indiana, Ohio, Michigan, and Tennessee.

Her nomination will need to be confirmed by the Senate.

Work in Indiana draws hospitals' praise

Verma may be best known for her work with the Indiana state government to reform its Medicaid program.

Verma first worked to reform Medicaid in the state in 2007 by establishing the Healthy Indiana Plan (HIP). Years later, after the Affordable Care Act (ACA) became law, Verma played a prominent role in expanding Indiana's Medicaid program under an alternate plan known as HIP 2.0—working alongside Gov. Mike Pence (R), who is now vice president-elect.

According to the Kaiser Family Foundation, under HIP 2.0, most beneficiaries with incomes below 100 percent of the federal poverty level (FPL) have the option of:

  • Obtaining basic health coverage; or
  • Making a monthly contribution of either $1 or 2 percent of their income—whichever is greater—to a health savings account in order to obtain more benefits, including dental and vision coverage.

Beneficiaries with incomes between 100 and 138 percent of FPL are required to contribute about 2 percent of their monthly income (up to a maximum of $27) to health savings accounts—and can be locked out of Medicaid for six months if they fail to pay premiums. All beneficiaries also face some cost-sharing requirements, including copayments of up to $25 for unnecessary ED use.

Former Indiana Gov. Mitch Daniels, who worked with Verma on the 2007 Medicaid reforms, said she was an "indispensable technician" in creating the proposal. In addition, the Indiana Hospital Association (IHA) supported the HIP 2.0 plan, which raised hospital and provider payments by an average of 20 percent and 25 percent, respectively.

Verma in Health Affairs earlier this year said other states should adopt HIP 2.0's provisions, writing that the program "has been successful in meeting its policy objectives, but it also continues to demonstrate the potential for consumer-driven health care as an alternative to the traditional Medicaid model."

Other work draws opposition from Obama administration

In her work on Kentucky's Medicaid wavier, Verma championed two policies that the Obama administration has so far rejected outright:

  • Requiring beneficiaries with incomes below the poverty level to pay premiums; and
  • Requiring beneficiaries who are not primary caregivers to either work or undergo job training in order to receive coverage.

Casey Ross reports for STAT News that "Verma's selection to head CMS will quickly change Washington's posture toward Kentucky's proposal and many others that seek to rein in spending."

"The selection of Verma is likely to embolden state proposals to cut Medicaid costs and institute changes that require low-income people put more 'skin in the game,'" Ross writes.

Reaction from stakeholders

IHA released a statement Tuesday praising the appointment, saying Verma has a "truly transformational vision for health care." The statement continued, "She also deeply understands the critical importance of coverage to those served by programs like Medicare and Medicaid, and is a superb choice" to lead CMS.

The Association of American Medical Colleges also praised her selection.

However, some stakeholders are concerned that her likely proposals could create more barriers to care access.

According to Judy Solomon, a VP at the Center on Budget and Policy Priorities, even small premiums, such as the ones in HIP 2.0, can prevent low-income people from enrolling in coverage. Solomon pointed to a recent evaluation of HIP 2.0, which found about one-third of eligible residents did not enroll in the program because they could not or did not want to pay a premium.

Joan Alker, the executive director of the Center for Children and Families at Georgetown University, said, "We can expect to see far-reaching changes contemplated for Medicaid that will erect many more barriers to coverage—and very punitive barriers." She added, "The vision of Medicaid under Verma is troubling" (Ross, STAT News, 11/29; Sanger-Katz, "The Upshot," New York Times, 12/1; Dickson, Modern Healthcare, 11/29; Frieden, MedPage Today, 11/29; KFF report, June 2008).

12 things CEOs need to know in 2017

12 things CEOs need to know in 2017

The continued growth of the consumer-driven health care market threatens the durability of patient-provider relationships—and, at the same time, the push toward population health management and risk-based payment is greater than ever.

Hospitals and health systems must adopt a two-pronged strategy to respond to these pressures and serve both public payers and the private sector.

At the core of that strategy? A formula of accessible, reliable, and affordable care that wins consumer preferences and drives loyalty over time. Below, we share 12 key insights for senior executives working to create a consumer-focused health system.

Download the research brief


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