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State signs $41b Medicaid agreement with feds

State and federal officials Friday announced a five-year agreement to spend more than $41 billion on Medicaid, the government health insurance program for the poor.

The so-called Medicaid waiver includes an increase of 10 percent for hospitals that serve large populations of low-income patients.

The $41.4 billion agreement includes $20 billion of federal funding. The state will pay the rest. The first three years of the contract include an 18 percent increase in funding.

“We were incredibly proud of what we were able to accomplish,” said Kristin Thorn, director of Massachusetts’ Medicaid program, known as MassHealth.

Thorn said the funds will help pay for a temporary rise in patients in the MassHealth program, who were assigned to receive subsidized coverage over the past several months after the state’s online insurance exchange broke down. This pool includes a broad mix of patients, because the state wasn’t able to determine which ones qualify for state assistance.

Massachusetts is getting less money in the waiver than state officials initially requested — they didn’t say how much — but Health and Human Services Secretary John Polanowicz said the agreement is significant because it is the first time the state has negotiated a five-year agreement, giving the budget more stability.


The agreement includes funding for new initiatives, including the development of alternative payment models, which give providers incentives to control costs by keeping patients healthy. Medicare, the government insurance program for seniors, is testing such programs. Many commercial insurers, such as Blue Cross Blue Shield of Massachusetts, are using similar models.

Several hospitals will receive 10 percent funding increases through a program that supports providers that treat high numbers of low-income patients. They include Boston-based Steward Health Care, Lawrence General Hospital in Lawrence, Mercy Medical Center in Springfield, Cambridge Health Alliance, Boston Medical Center, Holyoke Medical Center, and Signature Healthcare Brockton Hospital.


“Every day we hear from people who rely on MassHealth to keep their families healthy, and this waiver extension will play a crucial role in helping people throughout the Commonwealth access high quality, affordable health coverage,” Amy Whitcomb Slemmer, executive director of the consumer advocacy group Health Care For All, said in a statement.

But Congressman Michael Capuano called the agreement a bad deal, and said Massachusetts would not get as much support from the federal government as other states would.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.