New five-year MassHealth agreement will improve homeless insurance coverage, hospital funding

Massachusetts signed a $67 billion five-year agreement with the federal government on Medicaid reforms, increasing money to state hospitals.Carlin Stiehl for The Boston Globe

The state has signed a new $67 billion five-year agreement with the federal government on a number of reforms for Medicaid, an approval that will increase federal money to Massachusetts hospitals and fuel changes in how the state’s Medicaid program insures the homeless.

The agreement allows the state to make changes to its Medicaid program, known as MassHealth, outside certain federal standards. The agreement has been continuously renewed and updated since its initial approval in 1995.

Among the updates for Massachusetts, the plan will provide at least 12 months of continuous eligibility for those recently released from a correctional institution and for members experiencing homelessness.

“We know that many individuals eligible for Medicaid lose coverage at full month renewal not because they’re not eligible, but because they did not get a piece of paper in the mail,” said Daniel Tsai, deputy administrator at the Centers for Medicare and Medicaid Services. Tsai, who previously oversaw Massachusetts’ Medicaid program, spoke about the approval during a media briefing Wednesday.

The waiver also will provide additional federal funding to hospitals by agreeing to match dollars raised by an increased assessment on state hospitals. Ultimately, the hospital financing package will generate over $600 million in benefits to hospitals per year over the next five years, state officials said.

Dr. Eric Dickson, CEO of UMass Memorial Health and an early proponent of the plan, said the assessed hospital dollars and federal match will be used to increase Medicaid rates and fund quality improvement and health equity incentives.

Not all Massachusetts hospitals will see a net gain under the revised program. UMass itself will pay a $60 million assessment and earn back $50 million from enhanced Medicaid rates, but it will have the opportunity to earn more through quality measures.

However, the funding will be critical to institutions that serve a high population of Medicaid patients, known as “safety net hospitals.”

“Everyone in the state recognized the pressure the safety nets are under right now,” Dickson said. “If they fail, you’re going to have big problems in the other hospitals. The patients have to go somewhere.”

Dickson credited Steve Walsh, CEO of the Massachusetts Health & Hospital Association, with bringing together the many components necessary to make the agreement happen. In a statement, Walsh called the approval “a major victory for the patients and hospitals of Massachusetts.”

The waiver, additionally, will invest $115 million per year in primary care and invest more than $43 million over five years in loan repayment and residency training programs for the primary care and behavioral health workforce serving MassHealth members.

Governor Charlie Baker noted that the waiver would also support the state’s behavioral health reform initiative, expanding substance use disorder services and other behavioral health services.

“I can’t put too big an exclamation point on this capacity question,” Baker said at the news conference. “One of the biggest challenges we have with behavioral health is we haven’t funded it adequately for a very long time, which is one of the reasons why we don’t have enough clinicians in the field and why so many people have trouble accessing an appointment.”

The agreement will also bring changes to the “accountable care organization” model that MassHealth introduced in 2018. Under an ACO, a group of doctors, hospitals, and other providers agree to be accountable not only for the quality of a member’s care, but the cost. The waiver will subsequently launch a greater than $2 billion initiative over five years to hold ACOs and participating hospitals accountable for reducing disparities in health care.

The waiver also will continue and expand some programs under a new framework to address health-related social needs, such as nutrition and housing.

“These are not easy to negotiate. They cover a lot of territory, and a tremendous amount of money,” Baker said. “I can’t express how important getting this done in a reasonable, timely basis has been for us here in Massachusetts.”