February 3, 2011

Medicaid Cost-Savings Opportunities, a Letter from Department of Health & Human Services Secretary Kathleen Sebelius

On February 3, 2011, the federal Department of Health and Human Services (HHS) responded to states seeking guidance on ways to control Medicaid spending. This letter from HHS Secretary Kathleen Sebelius reminded state governors that states have substantial flexibility to design Medicaid benefits, service delivery systems, and payment strategies—all without a Medicaid waiver. The recommendations forwarded by Secretary Sebelius fell into six categories: 1) Increase beneficiary cost sharing, 2) Modify Medicaid benefits plans, with examination of mandatory versus optional benefits and use of the 'benchmark plan' concept, 3) Adopt specialized care management approaches for groups of high-cost beneficiaries, 4) Use new, more accurate benchmark data on which to base payments for pharmaceuticals, 5) Increase integration of financing and service delivery for dual eligibles, and 6) Expand program integrity initiatives