Medicaid Managed Care - U.S. Senate Special Committee on Aging

Change in Federal
Rule Could Result in
Higher Caps and
Costs
434
A change in federal mrles could result in high waiver caps on enrollment
and therefore higher costs. Until August 24, 1994, HCFA limited the number
of waiver recipients in a state under the so-called cold bed rule. This rule
required that each state document for HCFA approval that it either had an
unoccupied <strong>Medicaid</strong>-certified institutional bed-or a bed that would be
built or converted-for each individual waiver recipient the state
requested to serve in its application However, in 1994, HCFA eased waiver
restrictions by eliminating the cold bed rule so that states were no longer
required to demonstrate to HCFA that they had 'cold beds.'
HCFA took this action because it believed that the cold bed rule placed an
unreasonable burden on states by requiring them to project estimates of
additional institutional capacity. HCFA now accepts a state's assurance that
absent the waiver the people served in the waiver program would receive
appropriate <strong>Medicaid</strong>-funded institutional services. As HCFA recognized
when it eliminated the cold bed rule, this change could result in higher
waiver costs if states elect to increase the number of waiver recipients
more rapidly than before. HCFA, however, recognized that the state budget
constraints could play a restrictive rule in waiver growth.
State officials told us that elimination of the cold bed rule allows them to
expand waiver services more rapidly than in the past, both to persons not
currently receiving services and to others receiving services from
state-only programs. State officials told us that converting state program
recipients to the waiver was particularly advantageous given the federal
<strong>Medicaid</strong> match)' Officials in Florida and Michigan told us that they are
planning to expand the number of people served in the waiver program
more rapidly than they could have under the cold bed rule. This could
increase costs more rapidly than in the past. Officials in Florida and
Michigan said that they will phase in increases in the number of waiver
recipients to stay within state budget constraints and to allow for a more
orderly expansion of services to the larger numbers of new recipients.
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