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About those global waiver savings…

December 14, 2011

It turns out Rhode Island’s overhaul of its Medicaid program didn’t save the state $110 million dollars. It didn’t even save $50 million dollars. According to an independent report by The Lewin Group, the so called global Medicaid waiver saved a much smaller $22.9 million dollars over the course of three years.

Steven Costantino, Secretary of RI’s Executive Office of Health and Human Services, isn’t surprised by the report.  Back when he was the chair of RI’s House Finance Committee he was skeptical of the administration’s claims that the waiver could save all that money.

In an interview today, Costantino said he commissioned the study in response to the growing myths about Rhode Island’s waiver.  You heard about those myths here first, when I wrote about an unauthorized report written by former Secretary of the Executive Office of Health and Human Services, Gary Alexander.

In the paper, first published on the website of the The Galen Institute, a free-market think tank, Alexander claimed that Rhode Island’s global waiver saved more than $100 million dollars in its first 18 months. He then used these numbers to justify the use of Medicaid block grants in other states.

The problem is, RI’s global waiver isn’t a block grant. It gave the state some flexibility over how it spent its Medicaid money, but RI didn’t just get a huge chunk of cash. It still had to spend state dollars to get federal matching funds.

But the facts didn’t get in the way of Alexander’s claims. His numbers sprouted up in other conservative posts, and even earned Rhode Island’s waiver some praise in the Wall Street Journal.   I had a quick telephone conversation with Steven Costantino to see if he thinks the Lewin report will finally quiet those articles.

The Pulse:  Give me a sense of the kinds of inquiries you were getting in your office about the waiver.

Steven Costantino:  Many of the inquiries nationally and locally were about this national discussion on whether or not it was a block grant. And whether or not this should be the poster child of what a block grant is. And the study confirmed what I had previously said which is this is not a block grant. It was not a block grant for many, many reasons… It wasn’t where the state of Rhode Island got a bunch of money and could do whatever they wanted to with it. That was not what this was. In many ways it was not a block grant. Not at all a block grant! So the discussion nationally how this was being referred to an example of a block grant was not really based on fact or reality.

The Pulse: So does this put to rest the claims that the waiver saved more than $100 million dollars?

Steven Costantino: Yeah, I think it puts to rest that issue. Did it save money? Yes, but not nearly as much as was originally put in the budget in terms of savings. But it does give us a realistic sense of what the savings were.

The Pulse: When you were the Chair of House Finance Committee in the general assembly, it was your job to analyze the global waiver proposal and you were skeptical.

Steven Costantino: I was skeptical. And I was mostly skeptical not on the policy, because I thought the policy- re-balancing, giving our elderly more choices for their care- was an extremely, extremely important policy and we had to go there. I firmly believe that the global Medicaid waiver was the catalyst of changing that thinking. But the numbers, the savings numbers, I was always skeptical. At the end of the day, those numbers weren’t achieved, although it did save some money, and it slowed down the growth trend, which is important.

The Pulse: Let me read you something that you said to Gary Alexander when the waiver didn’t save as much as it was supposed to in 2010. You said ‘We need real budgets.  This is a budget exercise and it’s a matter of knowing what the real numbers are. And not just putting in a number.  How do I know that this won’t happen again?’ How do the claims about what the waiver would save compare with the reality?

Steven Costantino: The claims of what it would save, based on the reality, there is a tremendous disconnect. And what happens is it puts more pressure on the budget, because when you have unachieved savings, at some point you have to balance the budget and you have to make up those unachieved savings, whatever the number may be, in other areas. So, you need a realistic number. And it’s one thing if it was a slow start up… the vetting on the numbers of the global Medicaid waiver could have been better and should have been better.

The Pulse: Do you think that it was worth it?

Steven Costantino: Yes. And I do because there has been a transformation of long term care. We are a model now across the country on transforming a system and rebalancing a system for long term care. We’re also a model in terms of coordinating many of our managed care programs. This is the non-long term care piece of it. So we have models of care management which the waiver allows us to do with CMS [Centers for Medicare and Medicaid Services] approval.  That’s one of the things about a block grant, that you don’t need CMS to approve things. They’ll give you all this flexibility.

The global Medicaid waiver is really a partnership between the state and the federal government- you need to have them engaged and approving what you put through. So, we were able to do that. We’ve been purchasing health care in a different way that I think has benefited the citizens of Rhode Island. That’s the policy. The policy behind it is very, very valid and I believe it’s moving the system forward. Again, the numbers, the savings, just were not there as expected.

The Pulse: Anything else people should know about the report?

Steven Costantino: What’s important about the report is it is an honest report about what the global Medicaid waiver is. And it’s not driven by ideology; it’s driven by the facts. And that’s really what the most important thing for me is.

The Pulse: Are you going to post this report on the Galen Institute’s webpage?

Steven Costantino: (Laughs) It is on our website.

What does The Lewin’s Group report mean for Gary Alexander? He now has a new post as Pennsylvania’s Secretary of Public Welfare. Will he withdraw his articles? Does the validity of his work affect his job? I’ll be reaching out tomorrow to find out.

3 Comments leave one →
  1. Smart Alex permalink
    December 19, 2011 9:46 pm

    So where’s the followup? What is Gary’s explanation for his savings estimate being off by more than $77 million?

    • December 19, 2011 9:47 pm

      So far, I’ve received no response for Alexander’s office. I’ve called twice and called Governor Corbett’s office as well. I’ll continue to call and let you know if I get a response.

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