The Commonwealth of Massachusetts' new Medicaid waiver

November 21, 2014

Recently Massachusetts received approval from CMS to extend their §1115 Medicaid waiver demonstration project (also known as MassHealth). Through a Medicaid waiver, the state aims to continue creating delivery system transformations and to better align the Commonwealth’s programs with the Affordable Care Act. But more on that later. First lets take a look at all the promising health reforms Massachusetts has achieved up to this point.

A brief timeline of events:


  • Created the Uncompensated Care Pool (also known as “Free Care” Pool). Funds from the pool were used to pay hospitals and community health centers for all uncompensated care to low-income residents and emergency care for non-residents.


  • Enacted a “play or pay” mandate for employers with 25 or more employees. Although enacted, it was never implemented.


  • Introduced insurance market reforms that included guaranteed issue and modified community ratings in the small group and individuals markets. Plans were also required to offer standard benefit packages.


  • Initial implementation of MassHealth. The demonstration expanded Medicaid income eligibility for pregnant women, parents, adult caretakers, infants, children, and individuals with disabilities. Medicaid coverage was also extended to certain non-categorically eligible populations (e.g. persons with HIV). Certain beneficiaries were required to enroll in managed care plans to generate cost savings. Additionally, the Insurance Partnership program, which offers premium subsidies to qualifying small business employers and their low-income employees, was implemented.


  • The Safety Net Care Pool (SNCP) was created through the 2005 MassHealth waiver renewal (enacted in 2006).


  • Governor Mitt Romney signed into law a new health insurance reform. Some key components include:
    • Nearly universal health insurance for all residents
    • Implementation of an individual mandate
    • Merger of the individual and small group market into a single risk pool
    • Expanded Medicaid coverage to adults without minor children living at home
    • Creation of a health insurance exchange (Commonwealth Connector or The Connector)
    • Insurance market reforms: coverage and affordability standards

Does any of this look familiar? Well it should.

The 2006 health reform law in Massachusetts, affectionately referred to as Romneycare, was used as a model for Obamacare. This means that the Commonwealth was strategically placed to implement key provisions of the Affordable Care Act. Not only were most residents insured, but there was also a strong safety net system already in place to support the newly insured and uninsured populations.

Even more importantly, this timeline shows that Massachusetts has been a national leader in health reform time and time again. So it is only fitting that we pay attention to how they have decided to maintain their ‘leader’ status on this next go around.

Massachusetts’ demonstration waiver was approved for renewal on October 30, 2014 for $41.4 billion. It includes $20 billion for delivery system transformations, with about $230 million a year (for 3 years) dedicated to safety net hospitals. The new extension period will last through June 30, 2019, giving the Commonwealth 5 years to really implement delivery system reforms and see some positive (or negative) gains.

Governor Deval Patrick proposes to continue to improve Massachusetts’ ability to provide affordable coverage and improve the quality of care through a number of ways. The approved waiver extension does the following:

  • Continues streamlined redeterminations for families enrolled in the Supplemental Nutrition Assistance Program (SNAP) and extends express lane eligibility to adults receiving Medicaid and SNAP benefits
  • Continues pilot programs for pediatric asthma and early intervention services for children with autism
  • Gives authorization to continue the use of state subsidies to provide premium assistance through the Connector for individuals with incomes up to 300% of the Federal Poverty Level (FPL).
  • Develops a Primary Care Payment Reform Initiative (PCPRI) and Accountable Care Organization (ACO) model.
    • Gives the authority to set shared savings/risk targets for providers and to make shared savings payments under an alternative payment structure.
  • Continues delivery system transformations that include:
    • Improved integrated and coordinated care for individuals under the age of 65 that qualify for Medi-Medi through a duals demonstration (known as One Care).
    • Integration of behavioral health into primary care
    • Expansion of SNCP to help safety net hospitals develop payment reforms and move from a fee-for-service model to a disease prevention and health maintenance approach

This seems like a substantial undertaking. Not only is Massachusetts attempting to sustain near universal coverage, but contain healthcare spending as well. Alternate payment models are a good idea, but always tough to execute. I for one will be interested to see how Massachusetts fares on these ambitious value purchasing measures.

Good luck to Massachusetts, as I’m sure all eyes are watching what they will do next.