National Alliance on Mental Illness
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HIFA Waivers Raise Concerns

There are certain categories of individuals, and certain types of services, for which federal Medicaid funds are not ordinarily available.  As a general rule, states may cover these individuals and pay for those services through their Medicaid programs if they so choose, but they must do so entirely with their own funds. The Secretary of Health and Human Services has authority to grant exceptions to these limitations on federal funding on a state-by-state basis through federal Medicaid waivers.

Broader use of financing waivers to restructure Medicaid health insurance coverage and an expedited administrative process for individual states to obtain waivers will undoubtedly be at the center of Medicaid policy in the coming year.

Through the "Health Insurance Flexibility and Accountability" (or HIFA initiative) individual states are offered the flexibility to expand health insurance coverage but also to reduce benefits (including mental health benefits), increase cost sharing, and set limits on the number of lower-income people served.  All waivers must be budget-neutral to the federal government.

The HIFA waiver policy raises a number of concerns: 

  • Nearly 12 million Medicaid beneficiaries, many of whom have incomes well below the federal poverty level (FPL), could be at risk for reduced benefits and many of these beneficiaries have mental illnesses.
  • Optional beneficiaries, especially those with special health needs such as people with mental illnesses, may lose critical Medicaid benefits such as Early and Periodic Screening Diagnosis and Treatment (EPSDT) and long-term care services.
  • Greater cost-sharing could discourage optional Medicaid beneficiaries from accessing medically necessary services.Increased cost-sharing could adversely affect access to needed mental health services for these optional groups.
  • Whether or not a waiver includes a coverage expansion, people with very limited incomes, including many with serious mental illnesses, may be left with fewer benefits and higher costs.  Some people could lose their coverage and their access to needed treatments and services.  NAMI advocates should meet with Medicaid officials frequently to identify potential waiver activity and applications.

The NAMI Policy Research Institute has just recently released a report entitled "What Lies Beneath the Medicaid Waivers: A Guide for Consumers and Families."