Medicaid Waivers and the Rhode Island Model

Published April 1, 2011

As Congress considers a vote to repeal the Patient Protection and Affordable Care Act, discussion has ignited once again around the planned expansion of Medicaid and how it would bankrupt state budgets. But in Rhode Island, we have approached Medicaid in a unique way over the past two years—in a manner that does not include heavy federal oversight or micromanaging of how we care for the poor and disabled.

Since January 2009, we have earned an innovative waiver from the federal government called the Global Consumer Choice Compact. This waiver gives our state Medicaid funds in the form of a block grant. From there, we have set about to innovate and experiment, producing a high-quality program that provides an example for the rest of the Union.

Cap on State Funding

The centerpiece of Rhode Island’s waiver is that it provides budgetary certainty for the state—a cap of $12.075 billion through 2013. The cap forces Rhode Island to create cost containment strategies and medical models in the right place and right setting, whereas the traditional Medicaid spending plan is open-ended and encourages states to spend as much as they can in order to gain additional federal money.

The Rhode Island Compact is the most comprehensive attempt to fundamentally change the Medicaid system. It ends the existing form of entitlement and crafts a new system designed to engage consumers in their own health care and use taxpayer dollars wisely.

Rhode Island wraps its flexibility around five goals: rebalance and reduce institutional bias; mandate care coordination and implement a primary care medical home [PCMH] for all recipients; institute competitive and value-based purchasing approaches and ensure all payers and recipients contribute an appropriate and fair share; obtain federal matching funds to support the continuation of state-funded programs that delay high-cost institutional care; and focus on program integrity to combat waste, fraud, and abuse.

Incentives for Healthy Choices

The Global Waiver engages the recipient by encouraging and incentivizing healthy behaviors. Each recipient receives an electronic health report that engages him or her not only in the scope and cost of their health care but all human services benefits received. Each recipient then has certain performance measures based on leading a healthy lifestyle and avoiding inappropriate utilization. If he or she fulfills that healthy lifestyle, they could earn a premium assistance holiday, a gift card, a bonus payment, or a health club membership.

Through fiscal year 2011, the Global Waiver has saved approximately $100 million and is one of the reasons why Rhode Island possessed a state budget surplus in state fiscal year 2010. In regards to the aggregate budget cap, Rhode Island is on track to only spend approximately $9.3 billion of the allotted $12.075 billion.

Rhode Island is showing that more money is not the solution. Comprehensive reform and freedom from federal mandates and burdensome regulations work. Further, all of this work has been accomplished without reducing patient eligibility.

Model for Other States

The message is clear that the status quo is unacceptable. The Rhode Island experience is living proof that a fixed amount of federal and state funding and relief from onerous federal regulations will encourage states to tailor and design services in the most appropriate settings and place and keep recipients healthier by engaging them in their own healthcare.

Rhode Island is the only state to act and achieve success, proving that bigger government and more money are not the solution. Our state’s experience is quietly being noticed as the mother of innovation and a model for the nation.

Gary D. Alexander ([email protected]) was Rhode Island’s Secretary of Health and Human Services. This column originally appeared at and is reprinted with permission.