By Sara Rosenbaum

Background

Family planning services and supplies for individuals of childbearing age (including sexually active minors) who desire such services is a required benefit under federal Medicaid law.^[1] Although all state Medicaid programs must cover family planning services, many states’ Medicaid eligibility standards for adults of childbearing age are so low that family planning (and other essential) Medicaid benefits reach only a fraction of the poor. Simply being low-income is not a recognized eligibility category for adults as it has been for children since Medicaid’s 1965 enactment.^[2] (Some states currently do provide at least some level of Medicaid coverage based on poverty alone,^[3] and beginning January 2014, Medicaid will be expanded to cover all adults with family incomes below 138% of the federal poverty level).

Furthermore, even in the case of adults who fall into recognized federal eligibility categories (parents of children, pregnant individuals, disabled individuals), financial eligibility standards can be remarkably low. For example, as of February 2011, 7 states maintain Medicaid eligibility standards for non-pregnant, non-disabled low income adults equal to one-third of the federal poverty level ($10,890 for a single adult in 2011 and $18,530 for a family of three) or less. Only 23 states cover non-pregnant, non-disabled adults with incomes of 75% of the federal poverty level^[4] (approximately the annual income of a full-time minimum wage earner).

Beginning several years ago, a number of states began to build on Medicaid eligibility expansions for pregnant women^[5] in order to extend this expanded eligibility to non-pregnant women for family planning and related services, rather than the full Medicaid benefit package. States were incentivized to do this because of the importance of family planning and related services to the health of women and children,^[6] the cost-effectiveness of planned pregnancies,^[7] and because since 1972,^[8] federal law has provided an enhanced federal payment of 90% for state expenditures for covered family planning services and supplies.

Under prior law, states could provide coverage only on a demonstration basis under §1115 of the Social Security Act. While §1115 can be invaluable in allowing states to introduce innovations not otherwise permitted under federal Medicaid law, the process is time-consuming and cumbersome. Furthermore, because of the complexities and burdens of the §1115 demonstration process, innovation may be stifled. Moreover, the need to treat the expansion as a demonstration had long passed. An impressive body of evidence has shown the positive impact of state family planning demonstrations: a significant expansion of the number of low-income women served; a reduction in unintended pregnancies and abortion rates; longer childbearing intervals (key to infant health), delayed initial births; an increase in the likelihood of timely prenatal care in the event of pregnancy; and major cost-savings from unintended pregnancies and resulting higher-risk births.^[9]

Under prior §1115 waiver demonstrations, states furnished both family planning services and supplies as well as related medical diagnostic and treatment services that commonly would be furnished in a family planning setting. This somewhat enhanced range of care, while highly connected to the underlying family planning service, also went beyond the more limited classes of services and supplies for which the enhanced federal payments were available. Examples of such services are immunizations against and treatment for sexually transmitted diseases as well as follow-up treatment and care for conditions related to sexual health.

Changes Made by the Affordable Care Act

The ACA:

• adds a new state Medicaid eligibility option consisting of individuals whose income does not exceed the state’s income eligibility standard for pregnant women under either the state’s Medicaid plan or its CHIP program.^[10] At their option, states may waive the use of an asset test;^[11]
• specifies that the services to which individuals eligible for Medicaid under this new category are entitled consist of family planning services and supplies as provided for under federal law, as well as “medical diagnosis and treatment services that are provided pursuant to a family planning service in a family planning setting”;
• permits states to extend “presumptive” (i.e., temporary) eligibility to persons eligible for family planning services and supplies and diagnostic and treatment services furnished in a family planning setting;^[12]
• clarifies that the “benchmark” coverage to which newly eligible individuals are entitled under the ACA includes family planning services and supplies.^[13]

Implementation

Agency

The Center for Medicaid, CHIP, and State Survey and Certification (CMCS) within the HHS Centers for Medicare and Medicaid Services is responsible for implementation of the family planning option. In July 2010, CMCS issued a State Medicaid Directors Letter (SMDL)^[14] implementing the ACA eligibility expansion. The SMDL, in clarifying the statute:

• provides that eligible individuals must include both men and women whose incomes do not exceed state-defined levels;
• provides that in determining income eligibility, states can consider only the income of the applicant or recipient as opposed to the income of the entire family;
• specifies that states may not restrict eligibility based on age but may restrict based on medical necessity;
• specifies that family planning services and supplies will be reimbursed at the enhanced federal matching rate, while medical diagnostic and treatment services furnished in a family planning setting and pursuant to a family planning visit will be paid at the state’s regular federal medical assistance rate;
• clarifies that family planning services and supplies must be covered, while also specifying the medical diagnostic and treatment services that will be considered related services and thus federally reimbursed if a state elects to cover them. These services are considered to fall within the range of services furnished in a family planning setting and pursuant to a family planning visit: annual exams, health histories, laboratory tests and contraceptive counseling, drugs for treatment of STDs and HIV/AIDS when discovered during a routine family planning visit, drugs to treat lower genital tract and urinary tract infections when the infection is discovered through a routine family planning visit, and treatment of certain major complications of family planning services such as a perforated uterus, severe menstrual bleeding, or treatment of surgical or anesthesia complications that develop as a result of a sterilization procedure; and
• provides guidance on converting from §1115 demonstration status to state plan status.

Key Dates

The family planning eligibility option became effective upon enactment of the ACA.

Process

CMCS has already issued informal guidance in the form of an SMDL. It is not yet known whether the agency will also issue formal regulations.

Key Issues

Because the evidence suggests that family planning services are cost effective,^[15] a key question is whether additional states will expand coverage.

As of February, 2011, 28 states had extended coverage for family planning services to individuals who otherwise would not be eligible.^[16] Of these, 22 extend coverage based on income alone. Nearly all of these states continue to operate their programs on a demonstration basis, but the Guttmacher Institute reports that several states, including one state (Ohio) that had not previously extended such coverage, have begun the process of developing state plan amendments that will allow them to continue their programs as a simplified state option.

Recent Agency Action

None beyond the SMDL.

Authorized Funding Levels

Medicaid is a legal entitlement and therefore authorized funding levels are not relevant.