Medicaid Eligibility Changes

Posted on April 15, 2010 | Comment (1)

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Background

The Medicaid program, which was enacted in 1965, is the primary source of insurance coverage for certain low-income individuals, including children, pregnant women, individuals with disabilities, and parents of minor children. Medicaid also provides coverage to low-income Medicare beneficiaries for services not covered by Medicare, such as cost-sharing and long-term care. Some populations are mandatory populations that the states are required to cover, while others are optional.

Despite the perception that Medicaid covers all poor people, the program has never recognized all low-income adults as a coverage group in its own right. Moreover, Medicaid’s financial eligibility standards for parents can vary widely, causing extreme disparities in eligibility from state to state. In one state, Medicaid eligibility for a parent is less than 17 percent of the federal poverty level (FPL),   and in ten states eligibility levels are under 33 percent. In those ten states a single parent with one child who earns $5,000 per year earns too much to qualify for Medicaid. Conversely, some states provide coverage to parents at up to or exceeding 185 percent of the FPL, which covers a single parent with one child with nearly $27,000 in annual income.[1] For adults without minor children, most states provide no coverage, while a handful provide Medicaid or provide coverage without federal assistance.

In deciding who qualifies for Medicaid, states also have tremendous flexibility in determining what income, assets, and resources count as income. One state may, for example, decide not to count certain types of income so that more people qualify for Medicaid coverage, while others states seeking to limit those who can qualify will count assets, such as a car. This flexibility contributes further to the variation in eligibility from state to state.

Changes Made by the Health Reform Law
P.L. 111- 148, §§ 2001, 2002, 2004, 2202, and P.L. 111-152, § 10201

Generally, the health reform law expands Medicaid to provide a uniform level of coverage to all U.S. citizens and legal immigrants with incomes below 133 percent of the FPL by 2014. In the interim, the law permits states to phase in coverage, to improve certain benefits, and to begin moving toward uniform income and eligibility standard. Without some uniformity in who qualifies for Medicaid, it will be difficult to assure that low-income families have access to either the Medicaid program or to the tax credits to purchase coverage. According to the Congressional Budget Office (CBO), an estimated 16 million additional individuals will receive coverage through Medicaid and the Children’s Health Insurance Program (CHIP) when fully implemented.[2]

Effective Date of Enactment

  • Includes maintenance of effort provisions requiring states to maintain Medicaid coverage of adults at their current income and resource levels through December 31, 2013, and for children enrolled in Medicaid and CHIP through September 30, 2019. Provides an exemption for coverage of adults for states experiencing budget deficits.
  • Establishes a new category of eligibility for family planning services and supplies for individuals who are not otherwise Medicaid-eligible with incomes below the highest level covered for pregnant women under Medicaid and CHIP.
  • Applies spousal impoverishment protections to home and community-based services, allowing the Medicaid beneficiary’s spouse to retain sufficient resources to continue living at home.

April 1, 2010

  • Permits states to expand Medicaid eligibility to individuals not otherwise eligible for Medicaid with incomes below 133 percent of the federal poverty level (FPL).[3] States are permitted to phase in coverage of expansion population with states and the federal government paying their current shares of the cost.

Effective October 1, 2011

  • Allows states to expand home and community-based care to individuals with incomes below 300 percent of Supplemental Security Income Limit eligibility levels.

Effective January 1, 2014

  • Requires states expand Medicaid to cover “newly eligible”  individuals with incomes under 133 percent of the (FPL). These individuals are primarily childless adults and parents who were not eligible for Medicaid coverage on December 1, 2009. Newly eligible individuals will be eligible for a narrower range of benefits, known as “benchmark coverage.”  States have the option of phasing in coverage for these populations beginning April 1, 2010.
  • Allows states to cover parents and childless adults with incomes over 133 percent of FPL.
  • Expands Medicaid to cover children under age 26 who were enrolled in foster care. Before enactment of the health reform law, these children lost eligibility for Medicaid once they aged out of foster care, unless states chose to cover them through age 21 under a state option.
  • Establishes uniform eligibility requirements under Medicaid by directing states to use “modified adjusted gross income”  standards to determine Medicaid eligibility. States may implement earlier, subject to maintenance of effort provisions.
  • Permits states to expand Medicaid “presumptive eligibility”  to newly eligible individuals if they have adopted presumptive eligibility for other Medicaid eligible populations including children, pregnant women, and women with breast or cervical cancer.
  • Adds hospitals that participate in Medicaid to the list of qualified providers permitted to make presumptive eligibility determinations.

Implementation

Agency and Timeline

The Centers for Medicare and Medicaid Services (CMS), Center for Medicaid and State Operationswithin the Department of Health and Human Services will implement this program as part of its authority over the Medicaid program. The Secretary is directed to submit an annual report to Congress beginning in April of 2015 on total enrollment and new enrollment in Medicaid.

Process

The health reform law does not provide specific direction to the Secretary regarding the administrative process used to implement the law. The agency therefore has the discretion to use a range of tools to implement the statute, such as publishing regulations in the Federal Register with a public notice and comment period or using other types of approaches such as posted policy instructions, announcements of funding availability announcements (where applicable), official letters to affected entities (such as letters to state Medicaid agencies) and posted rulings and notices. Agency websites can be regularly checked for updates.

Key Implementation Issues

Often CMS provides general guidance to states through letters to state Medicaid directors. States make changes to their programs through state plan amendments. States also make program changes through waivers. Implementation issues will likely arise in the discussions between CMS and the states.

  • Maintenance of effort:
    • How strictly will CMS interpret existing coverage standards when defining maintenance of effort?
    • What criteria will the Secretary use to approve of waivers maintenance of effort provisions for states operating at a deficit?
  • Relationship with Exchanges:
    • What guidance will CMS provide to states to facilitate identification and enrollment of Medicaid-eligible individuals who apply for private coverage through the exchange?
    • How will the federal exchange, which will cover people in states that fail to operate their own, interact with state-based Medicaid eligibility and enrollment systems?
  • Eligibility determinations:
    • What guidance, requirements or technical assistance will CMS provide to state Medicaid agencies to help them transition from their current eligibility processes to new ones based on modified adjusted gross income?
  • Approvals:
    • What steps will CMS take to assure timely review and approval of state plan amendments and waivers?
    • How will CMS treat existing waivers that are subject to renewal before January 1, 2014?

Recent Agency Action

On April 9, 2010, the Director for the Center for Medicaid and State Operations within CMS issued a letter to State Medicaid Directors providing guidance on § 2001 announcing the availability of state matching funds for low-income adults.

Authorized Funding Level

As an entitlement program, Medicaid is not limited to a specified appropriation level under federal law. Each year, Congress appropriates, “such sums as may be necessary” for the federal government to meet its federal matching obligations to states. According to CBO, coverage expansions in Medicaid and CHIP will result in an increase of $20 billion over 10 years, most of this cost will be in the form of additional funding to states to cover the cost of the newly eligible individuals. (See entry on Medicaid: FMAP for more information). CBO did not provide separate estimates for Medicaid and CHIP.


[1] State Health Facts, Income Eligibility – Low Income Adults, Henry J. Kaiser Foundation. Available online at: http://www.statehealthfacts.org/comparereport.jsp?rep=54&cat=4 (Accessed April 9, 2010).
[2] Letter from Douglas W. Elmendorf, Director, Congressional Budget Office to the Honorable Nancy Pelosi, Speaker, U.S. House of Representatives on an estimate of the direct spending and revenue effects of H.R. 4827 Reconciliation Act of 2010 (Final Health Care Legislation). March 20, 2010. Available online at: http://www.cbo.gov/doc.cfm?index=11379 (Accessed April 9, 2010).
[3] Beginning in 2014, “expansion states” will receive 100 percent federal assistance for “newly eligible individuals.” States that choose to expand early will receive regular federal matching dollars. Those that expanded coverage prior to enactment of the health reform law will receive enhanced federal funding that is phased in over time. For additional information, see entry on Medicaid financial assistance to states.

State Health Facts, Income Eligibility – Low Income Adults, Henry J. Kaiser Foundation. Available online at: http://www.statehealthfacts.org/comparereport.jsp?rep=54&cat=4 (Accessed April 9, 2010).
Letter from Douglas W. Elmendorf, Director, Congressional Budget Office to the Honorable Nancy Pelosi, Speaker, U.S. House of Representatives on an estimate of the direct spending and revenue effects of H.R. 4827 Reconciliation Act of 2010 (Final Health Care Legislation). March 20, 2010. Available online at: http://www.cbo.gov/doc.cfm?index=11379 (Accessed April 9, 2010).
Beginning in 2014, “expansion states” will receive 100 percent federal assistance for “newly eligible individuals.” States that choose to expand early will receive regular federal matching dollars. Those that expanded coverage prior to enactment of the health reform law will receive enhanced federal funding that is phased in over time. For additional information, see entry on Medicaid financial assistance to states.

Comment (1)

The Centers for Medicare and Medicaid Services (CMS) issued a bulletin and question-and-answer explaining hospital presumptive eligibility. The documents are intended to aid hospitals in determining individual eligibility for Medicaid, or presumptive eligibility, under the Affordable Care Act (ACA). The documents provide relevant information on eligible populations, entities that can make coverage determinations, qualification standards, and federal matching assistance that may be relevant for hospitals that may treat patients without insurance. All states are expected to include an amendment to their Medicaid State Plans implementing the new presumptive eligibility standards.
The Centers for Medicare and Medicaid Services (CMS) issued a new report chronicling the numbed of individuals deemed eligible for Medicaid or the Children's Health Insurance Program (CHIP) during the first three months of open enrollment. The report stated that 6.3 million Americans enrolled in Medicaid or CHIP in state-based Marketplaces or in-person at state Medicaid offices. The report does not, however, provide numbers for Medicaid enrollment in federally-facilitated Marketplaces, nor does it differentiate between individuals that are newly eligible for Medicaid as a result of expansion and those that were previously eligible under the original Medicaid criteria.
In a final rule released today, the Centers for Medicare and Medicaid Services (CMS) addressed several issues in implementing the Affordable Care Act (ACA), including subsidy eligibility. Below are key highlights from the 606-page rule:
  • The rule provided additional information regarding the administration's decision to delay the employer shared responsibility requirement. In order to determine if an individual is eligible for federal subsidies, the Exchange must be aware as to whether or not the individual has access to affordable health insurance from his or her employer. As a result of the delay, the Exchange will have no comprehensive database or official records reporting if an individual has access to affordable coverage, and thereby determine subsidy eligibility. The Exchange will therefore rely upon applicant self-reported information, verification against other information sources such as tax returns, and sampling of a group of applicants in which the Exchange will manually call the applicant's employer.
  • Individuals who are deemed eligible for a subsidy based upon their applications will receive subsidies during the time in which their eligibility review is being conducted. The audit period is reported to last for 90 days.
  • CMS outlined how the Exchange should coordinate with state Medicaid and CHIP officials to determine who is eligible for these programs.
  • The rule also describes key provisions of the Alternative Benefits Plan, Medicaid's benchmark plan for states that expanded Medicaid. In addition, the rule updates the cost-sharing and premium regulations for Medicaid plans. Specifically, states are now permitted to charge higher cost-sharing for prescription drugs and non-urgent visits to the emergency room.
  • CMS clarified that cost-sharing of plans offered on the Exchange must be considered in determining whether or not it would be cost effective to offer this plan to Medicaid beneficiaries through the premium assistance model.
A provision in the Affordable Care Act (ACA) incentivized state Medicaid agencies to design and develop new eligibility systems by offering a 90% federal reimbursement for the associated costs. A set of FAQ released by the Centers for Medicare and Medicaid Services (CMS) explains that state Medicaid programs will be eligible for an increased federal match rate of 75% for using and maintaining these upgraded eligibility system by January 1st, 2014. To qualify for the enhanced rate for the upgraded systems, states must meet operation and maintenance standards in the following categories:
  • personnel costs
  • forms
  • software maintenance
  • data entry
  • computer operators
  • coding clerks
States that choose not to expand their Medicaid program under the ACA will still be eligible for the increased reimbursement if they meet the specified upgrade requirements. In addition to these stipulations, the FAQ also stated they would not authorize 1115 demonstration waivers that placed enrollment caps or periods of ineligibility for the new Medicaid-eligible adult groups under the ACA.  
Today the Centers for Medicare & Medicaid Services (CMS) published an Informational Bulletin to provide information to state Medicaid and CHIP agencies on the verification plans required for both Medicaid and Children’s Health Insurance Program (CHIP) eligibility, the MAGI-based (Modified Adjusted Gross Income) Eligibility Verification Plan Template, and a review of the final verification regulations.
The U.S. Department of Health and Human Services (HHS) today released a proposed rule addressing essential health benefits and eligibility notices and the appeals process for Medicaid and exchange eligibility. The Centers for Medicare & Medicaid Services (CMS) also released a summary of the lengthy rule. HHS said the proposed rule would give states more flexibility when operating their Medicaid programs and sheds light on how consumers will receive coordinated communications on eligibility determinations and how they can submit appeals. The rule would also allow states to increase cost-sharing for beneficiaries, including for non-preferred drugs and the non-emergency visits to emergency rooms. The rule is set for publication in the January 22 Federal Register. Comments are due by February 13.
The Department of Health and Human Service’s (HHS's) Centers for Medicare & Medicaid Services (CMS) today announced new guidance to help states as they begin to plan converting current net income eligibility thresholds to equivalent modified adjusted gross income (MAGI) thresholds in the Medicaid program and Children's Health Insurance Program (CHIP). The CMS publication describes the conversion methodology and the timeframe for executing the conversions.
A new interactive feature released by the Kaiser Family Foundation indicates how the Affordable Care Act (ACA) may impact Medicaid enrollment and the uninsured demographic at the local community level. The interactive tool is accompanied by a report, as well as other interactive features, that describes how the Medicaid population will change after the ACA is implemented and how the uninsured population will decrease both in and amongst states post-ACA.
The State Health Reform Assistance Network, in conjunction with the National Academy of State Health Policy and the Robert Wood Johnson Foundation, released a checklist detailing Medicaid requirements that each state must meet by 2014, irrespective of whether or not a state expands Medicaid eligibility as described in the Affordable Care Act (ACA). To accompany the outlined requirements and optional provisions detailed in the report, State Health Reform Assistance Network has also included a resource list with tools and analyses that can be incorporated to aid in Medicaid requirement implementation. The checklist is divided into five categories that should be altered in response to pending Medicaid changes, each of which containing various requirements to satisfy the specified category:
  • Eligibility and Enrollment
  • Medicaid Operations
  • Medicaid Financing
  • Medicaid Benefits
  • Consumer Assistance
The National Association of Medicaid Directors (NAMD) recently published a white paper on Medicaid system reform efforts. Over the past year, NAMD has been working, with support from the Commonwealth Fund, to collect a growing catalog of "best practices" and innovative state initiatives. NAMD details the results of these efforts in the paper, which identifies and addresses the major barriers and the most likely pathways to Medicaid-driven and Medicaid-relevant health system reform.