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PUBLIC MEETING Via Go-to-Webinar Thursday, September 24, 2020 10:35 a.m. COMMISSIONERS PRESENT: MELANIE BELLA, MBA, Chair CHARLES MILLIGAN, JD, MPH, Vice Chair THOMAS BARKER, JD TRICIA BROOKS, MBA BRIAN BURWELL MARTHA CARTER, DHSc, MBA, APRN, CNM FRED CERISE, MD, MPH KISHA DAVIS, MD, MPH TOBY DOUGLAS, MPP, MPH LEANNA GEORGE DARIN GORDON CHRISTOPHER GORTON, MD, MHSA STACEY LAMPKIN, FSA, MAAA, MPA SHELDON RETCHIN, MD, MSPH WILLIAM SCANLON, PhD PETER SZILAGYI, MD, MPH KATHY WENO, DDS, JD ANNE L. SCHWARTZ, PhD, Executive Director Page 2 of 375 AGENDA PAGE Session 1: Estimating the Effects of a Prototype Countercyclical Financing Adjustment for Medicaid Moira Forbes, Policy Director........................4 Chris Park, Principal Analyst.......................16 Session 2: Relief Funding for Medicaid Providers Affected by the COVID-19 Pandemic Michelle Millerick, Senior Analyst..................47 Rob Nelb, Principal Analyst.........................52 Session 3: Update on Medicaid’s Response to COVID-19 Joanne Jee, Principal Analyst.......................72 Public Comment...........................................98 Session 4: Update on Medicaid Estate Recovery Analyses Tamara Huson, Analyst..............................111 Kristal Vardaman, Principal Analyst................114 Session 5: Medicaid Drug Rebates and Medications Used For Opioid Use Disorder MACPAC September 2020 Page 3 of 375 Erin McMullen, Principal Analyst...................141 Chris Park, Principal Analyst......................143 Session 6: Behavioral Health in Medicaid: Work Plan and Initial Analyses Melinda Roach, Senior Analyst......................151 Erin McMullen, Principal Analyst...................157 Session 7: Federal Data Sources for Analyzing Racial and Ethnic Disparities in Medicaid and CHIP Anne Schwartz, Executive Director..................174 Public Comment..........................................193 Adjourn Day 1...........................................195 MACPAC September 2020 Page 4 of 375 1 P R O C E E D I N G S 2 [10:35 a.m.] 3 CHAIR BELLA: Welcome, everyone. Thank you for 4 joining our September MACPAC meeting virtually. We will do 5 our best to make this as normal as possible and as seamless 6 as possible but certainly appreciate all that have joined. 7 We're going to start the morning talking about 8 countercyclical. This is a continuation of work that the 9 Commission has been exploring. I think we have a lot to 10 get through. So I would like to turn it over to Moira and 11 Chris so we can jump right in. Welcome. 12 ### ESTIMATING THE EFFECTS OF A PROTOTYPE 13 COUNTERCYCLICAL FINANCING ADJUSTMENT FOR MEDICAID 14 * MS. FORBES: Okay. Can you all hear me? 15 CHAIR BELLA: Yes. Hi. 16 MR. BOISSONNAULT: Your slides are coming up. 17 MS. FORBES: While Jim is bringing those up and 18 handing those over to me, we're here today to talk about 19 countercyclical financing, following up on a presentation 20 from last April. 21 We had first started talking about the design 22 features of a countercyclical financing adjustment last MACPAC September 2020 Page 5 of 375 1 December, which was when an economic downtown was still 2 hypothetical. One of the things we had mentioned then was 3 that the GAO had developed a prototype after the last 4 recession. And so back in December, you had asked us to 5 come back in the spring with maybe some examples of what 6 the GAO model might look like under different scenarios. 7 Then before we did that, of course, in March, the pandemic 8 hit. The national emergency went into effect, and there 9 were these huge effects on the economy, and Congress acted 10 very quickly to actually put in this increase in the 11 medical assistance percentage for Medicaid spending. They 12 put in a 6.2 percentage point increase for the duration of 13 the national emergency. 14 So in April, instead of presenting something that 15 would sort of be out of date immediately, we talked in more 16 detail about policy choices and the technical 17 considerations that would need to be considered in 18 designing an automatic mechanism, and we showed how 19 different economic indicators could be used for this 20 purpose. 21 Over the summer, you saw we published a brief on 22 the effect the 6.2 percentage point FMAP increase could MACPAC September 2020 Page 6 of 375 1 have on states in terms of offsetting the cost of 2 additional Medicaid enrollment and what additional federal 3 support might be needed to provide a larger countercyclical 4 effect. And then when we did that, that was still early in 5 the pandemic, and very little data was available. So we 6 used the estimates of state spending and enrollment to 7 project these effects. 8 Now we're six months in, and of course, it's 9 looking like even if additional treatments for the virus 10 are identified soon, it's possible that the country may 11 still be facing an extended economic downtown. And the 12 experience of past recessions is that job growth tends to 13 lag well behind an official economic recovery. 14 So some policymakers have suggested that Congress 15 could still consider a mechanism to automatically adjust 16 the FMAP formula once certain economic conditions are met 17 or create one that wouldn't necessarily have to be tied to 18 something like a public health emergency or a national 19 disaster. 20 So although there's a countercyclical FMAP 21 adjustment still in effect, we're going to go back to some 22 of that earlier work. Chris and I looked at some of those MACPAC September 2020 Page 7 of 375 1 prototypes for automatic stabilizers and used some data 2 from the current situation now that we have some, to see 3 what we can learn about how well those models could work in 4 real time. 5 I just have to wait a second for my mouse to 6 catch up here. 7 MR. BOISSONNAULT: It's coming now. 8 MS. FORBES: All right. Ah, there we go. 9 Excellent. 10 So I'll recap how Medicaid financing works. I 11 know we've been over this, but there may be some folks in 12 the audience, just to catch up, focusing obviously on how 13 it functions as an automatic countercyclical program during 14 economic downturns and go over some of those policy issues 15 regarding how it could be used formally as a 16 countercyclical financing approach. 17 I'll walk through the specific prototype model 18 that was proposed by the Government Accountability Office, 19 and then Chris will walk through our estimates of the 20 effects of the formula if implemented this year. We tried 21 to see if we could implement the model using currently 22 available data. The GAO developed it using historical MACPAC September 2020 Page 8 of 375 1 data. 2 And finally, because Congress did act to give 3 states an increased FMAP associated with the national 4 health emergency, we looked at the effects of the automatic 5 GAO model on state share and then compared it to what they 6 actually got under the Families First Coronavirus Relief 7 Act. 8 So as we've discussed before, Medicaid is a 9 public assistance program, and demand for assistance is 10 countercyclical to economic growth. Enrollment and 11 spending increase when there's a downtown in the economic 12 cycle. 13 The program is designed to automatically offset 14 these cyclical changes in economic activity without 15 additional governmental intervention. 16 Financing this additional program cost is 17 complicated by the requirement for states to contribute a 18 fixed percentage of program expenditures. States can face 19 steep revenue declines in a downturn, but they can't run 20 deficits. They can't take on debt for program expenses. 21 The federal government can run deficits and can contribute 22 additional share but only through congressional action. MACPAC September 2020 Page 9 of 375 1 Another approach is to have an automatic offset 2 for cyclical changes in the economic activity through a 3 statutory countercyclical FMAP adjustment formula that 4 would account for the increased enrollment and spending and 5 make up for the decreased state revenue. This could help 6 do away with the need for one-off congressional actions. 7 Of course, creating an automatic FMAP adjustment 8 that would go into effect under specific economic 9 conditions requires a number of design decisions. There's 10 a lot of options for each element. Each choice affects the 11 timing and magnitude of changes in federal expenditures and 12 the amount of money that goes to states, so those are 13 political decisions. For example, Congress would have to 14 decide whether to provide an increase to states based on 15 national- or state-level economic conditions, whether an 16 increase should go to all states or only those that meet a 17 certain threshold level of need, whether an increase should 18 be triggered easily in order to function as a stimulus, or 19 whether an increase should be based on robust trend data in 20 order to function more as an additional stabilizer on top 21 of the FMAP formula. 22 Last April, we talked about some of those policy MACPAC September 2020 Page 10 of 375 1 considerations and some of the data that would be needed to 2 implement various options. You may recall we had a lot of 3 charts. We looked at GDP, sales taxes, and unemployment as 4 potential indicators; we looked at the factors that make an 5 economic measure relevant to the design of an automatic 6 FMAP adjustment, like the degree to which changes in the 7 measure correlate to changes in state revenue and changes 8 in Medicaid enrollment; and we looked at the timeliness and 9 availability of the data for trend analysis.

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