By Kathleen B. Vega

Through a Medicaid demonstration waiver, The MetroHealth System aims to improve care management for low-income individuals, while reducing costs and recovering dollars currently spent on charity care. 

This past spring, The MetroHealth System and the state of Ohio requested a Section 1115 Medicaid demonstration waiver to create a special program for low-income individuals who are not currently eligible for Medicaid. The covered patients would have benefits similar to traditional Medicaid in Ohio?but they would need to obtain all their care through a narrow network run by MetroHealth, which includes a flagship hospital and 16 health clinics and specialty locations.

Ohio is following the lead of other states, including California, Texas, Massachusetts, and Florida, that have sought 1115 waivers to help cover uncompensated care costs and improve the safety-net delivery system. "Section 1115 Medicaid demonstration waivers provide states an avenue to test new approaches in Medicaid that differ from federal program rules," according to a May 2012 Kaiser Family Foundation brief on 1115 waivers.

The MetroHealth waiver is unique in that a health system is spearheading the initiative. The Cleveland-based organization worked closely with Cuyahoga County officials and the state of Ohio's Medicaid organization to craft the proposal to the Centers for Medicare & Medicaid Services (CMS). If the waiver is approved, MetroHealth stands to help more than 20,000 uninsured obtain coverage while gaining a source of reimbursement for care that is now given for free or at a significant discount.

The Impetus for Seeking a Waiver

A key reason why MetroHealth began pursuing a waiver was mission-oriented:  "First, we could significantly drive down the uninsured rate in Cuyahoga County," says John Corlett, vice president of government relations and community affairs. "This, in turn, could improve the health status of qualifying adults who currently receive intermittent or no proactive care."

The special Medicaid program will also help MetroHealth and the state Medicaid organization prepare for 2014, when the requirements of the Accountable Care Act (ACA) come into play. "The program will serve as a test run, so we can see how this population accesses care and manages health," comments Corlett. "We also hope to discover ways to effectively engage this population in care management."

Program Details

If granted, the waiver will give more than 20,000 uninsured adults in Cuyahoga County the opportunity to go on Medicaid. To be eligible for the program, individuals must be between the ages of 19 and 64 and have an income of less than 133 percent of the federal poverty level. They also must be U.S. citizens or legal aliens.

While a portion of the eligible population-those individuals for whom the health system has income and citizenship information-will be auto-enrolled in MetroHealth's program, the health system will also reach out to local health and social service organizations to get the word out. The health system plans to create an online application to further streamline enrollment.

Should the waiver go through, it could have a significant impact on the patients served. MetroHealth is gearing up to ensure patients have access to all the services that they need, including behavioral health. In addition, patients with chronic diseases will be enrolled in a care management program that helps them get needed preventive care and treatment. "By beefing up proactive care, we hope the program improves health outcomes for this population," says Corlett. "The pharmacy benefit and the behavioral health benefit should also enhance outcomes, since there is currently limited access to this type of care for low-income individuals."

Potential Impact of the Program

Under its proposal, MetroHealth and other community partners will provide physicians' visits, hospitalizations, pharmacy benefits, dental services, and behavioral health services. To do this, the health system will need to hire additional staff, including care coordinators, physicians, and advanced practice nurses. The health system estimates spending approximately $800,000 a year on care coordinators with additional funds for other staff. While an added expense, the extra care providers will be useful after the ACA requirements take effect. 

MetroHealth will use its $36 million annual county subsidy to enroll and provide care to patients who meet the aforementioned criteria. For every $100 million MetroHealth spends, the federal government will also reimburse the health system $64 million.

The federal funding should reduce net program costs as well. "Last year we spent $127 million on charity care," says Corlett. "Even with assistance from county government, there is still a sizeable gap between spending and reimbursement. The waiver will help us close the gap."

MetroHealth hopes to make up any remaining difference by reducing the overall cost of care for these patients. In theory, more preventive and primary care should reduce patient reliance on the emergency department, which should lessen expenses for the health system.

With that said, the program may be a balancing act for the health system. "Although we will have additional funds coming in, we are also going to be providing services we haven't before," comments Corlett. "We don't have a lot of claims experience with this population, so it's hard to exactly pinpoint what utilization will be."

The Application Process

MetroHealth followed a multi-step process in applying for the waiver. First, the organization reviewed other state waivers that had similar goals to glean any lessons learned. The health system also worked with an actuarial firm to project patient utilization and predict the financial implications of the program. "This was critical because we wanted to ensure the program would be budget neutral," comments Corlett. "The firm was able to estimate what the costs were going to be per member per month using claims experience and national benchmarks." 

MetroHealth also involved individuals from across the health system-including physicians, administrators, government relations staff, communications staff, and budget analysts-in  developing and fleshing out the concept. "Since a waiver represents a marriage of policy and operations, you need to involve people from both sides of an organization throughout the process," says Corlett. As a group, we spent a lot of time sketching out how the program would work. We thought about who the program would cover, what the costs would be, and what the impacts would be to our patient population and financial operations."
A key factor in the waiver development process was the outside support that the health system received. "We had enthusiastic backing from our county government and also strong interest from the state Medicaid director," says Corlett. "Both groups were interested in developing a program that focused on proactively managing care. We worked closely together to develop a draft, figure out the financials, and present the waiver to the federal government."

Next Steps

As of this writing, The MetroHealth System is still waiting for approval from CMS for the demonstration waiver. The entire process has taken about a year so far and the health system hopes to receive approval this fall.

"We are going through the review process and then will address terms and conditions," says Corlett. The health system remains confident that its request will be approved. Corlett and his colleagues anticipate a dynamic program that will enhance the health of low-income individuals throughout the county.

Kathleen B. Vega is a freelance healthcare writer and editor who contributes regularly to HFMA Forums (

Interviewed for this article:
John Corlett is vice president of government relations and community affairs at The MetroHealth System in Cleveland (

Publication Date: Tuesday, September 18, 2012