Medicaid Expansion

• Additional Federal Funding for Expansion. Beginning in 2014, additional federal funding is provided to states for the newly eligible population. States that already expanded also receive enhanced federal funding for individuals who are not newly eligible but otherwise fit the definition of the expansion population. In later years, generally no state would receive less than 93% in 2019 and 90% in 2020 and beyond. Specific matching rates are as follows:
  • Enhanced Funding for Newly Eligible Population. From 1/1/14 through 12/31/16, states receive 100% federal funding for the newly eligible population. (PPACA § 2001) Federal government pays 95% of the cost in 2017, 94% in 2018, 93% in 2019, and 90% in 2020 and beyond. (HCERA § 1201)
  • Enhanced Funding for Expansion States
    • “Expansion states” are states that before 3/23/10 offered statewide coverage to parents and nonpregnant, childless adults up to 100% FPL that is not dependent on access to employer coverage or employment, and is not limited to premium assistance, hospital-only benefits, a high-deductible health plan purchased through an HSA or a health opportunity account demonstration program. A state which offers coverage to only parents or nonpregnant childless adults shall not be considered an expansion state. (PPACA § 2001)
    • Federal match increases by 2.2 percentage points in CY 2014 for individuals who are not newly eligible in any state that is an “expansion state” (as defined in preceding bullet), (HCERA, §1201), and HHS determines will not receive any additional federal payments for newly eligible individuals and has not been approved by HHS to divert a portion of disproportionate share hospital (DSH) allotments to the cost of providing Medicaid coverage under a waiver that is in effect in 7/09. (PPACA § 10201).
    • In addition, the matching rates for expansion states for nonpregnant childless adults are increased by an amount that consists of a transition percentage of the amount by which the federal matching rate for the state is less than the matching rate provided for newly eligible individuals. The transition percentage is 50% for 2014, 60% for 2015, 70% for 2016, 80% for 2017, 90% for 2018 and 100% for 2019 and thereafter. For example, in 2017, a state that has a 50% FMAP would get an additional 80% of the difference between 95 and 50, (0.8 x 45=36) for a total matching rate of 86%, with the state share 14%. (HCERA § 1201).
• Benefits. Expansion population required to receive benchmark-equivalent benefit packages under SSA § 1937 (PPACA § 2001), modified as follows:
  • New Benchmark Benefit Requirements. Effective 1/1/14, benchmark benefit requirements are modified, requiring such packages to be at least the essential health benefits offered through Exchanges. Modified upon enactment to include coverage of prescription drugs and mental health services, family planning services and parity with mental health services if offered by an entity that is not a Medicaid MCO and such entity provides both medical/surgical benefits and mental health/substance use disorder benefits. (PPACA §2001) Note the Mental Health Parity and Equality Act requirements already apply to Medicaid only insofar as a State’s Medicaid agency contracts with one or more managed care organizations (MCOs) or Prepaid Inpatient Health Plans (PIHPs), to provide medical/surgical benefits as well as mental health or substance use disorder benefits.
• Requirement to Not Lower Eligibility. Effective 3/23/10, maintenance of effort requirement precludes a state from lowering Medicaid eligibility levels before HHS has determined state exchange is fully operational and before FY 2020 for all children currently in Medicaid. Exempts states over the period 1/1/11 through 12/31/13 if state has or is projected to have budget deficits during that period, allowing such states to alter eligibility for non-pregnant, nondisabled adults whose income exceeds 133% FPL. (PPACA § 2001)
• New State Options
  • Earlier Expansion. Effective 4/1/10, states have a new option to provide Medicaid coverage to the expansion population through 12/31/13 and can phase in coverage by making lower income individuals eligible first. (PPACA § 2001) Federal funds would be provided under current law Medicaid match rates, which are 57% on average.
  • Expansion above 133% FPL. Effective 1/1/14, states also have a new option to expand Medicaid to non-elderly above 133% FPL. (PPACA § 2001) Federal funds would be provided under current law Medicaid match rates, which are 57% on average.
  • Presumptive Eligibility. States that provide presumptive eligibility to pregnant women or children may also do so for individuals meeting expansion eligibility requirements. Presumptive eligibility period not to exceed 2 months. (PPACA § 2001)
• Requirement to Cover Kids Before Parents. Individuals newly eligible as of 1/1/14 or between 4/1/10 and 1/1/14 (for states that elect the option to expand early) who are parents of children under the age 19 (or such higher age a state may have elected) must not be enrolled in Medicaid unless the child is enrolled in Medicaid or other coverage. (PPACA § 2001)

CHIP

• Federal Allotment. $19 billion in FY 2014 and $21 billion in FY 2015. FY 2015 includes 2 semiannual allotments of $2.85 billion and a one-time allotment of $15.4 billion. (PPACA § 10203)
• Matching Funds. Effective 10/1/15 through 9/30/19 increases current law state matching rates by 23 percentage points up to 100%, excluding children in families with incomes above 300% FPL. (PPACA § 2101)
• Eligibility. Effective 3/23/10, requires states to maintain CHIP eligibility through 9/30/19. (PPACA § 2101)

• In FY 2010, the enhanced federal matching rate is provided (instead of the regular federal match) to any state that has an approved state plan amendment effective 1/1/06 to provide child health assistance through Medicaid for children up to age 5 whose family income does not exceed 200% FPL. (PPACA § 2102)
• Makes other technical changes related to the CHIPRA enrollment and citizenship verification process, altering funds available for state performance payments by removing certain unexpended grants for coverage of childless adults from the available bonus pool, and other minor technical changes. (PPACA § 2102)

Medicaid/CHIP and Exchanges

• HHS Requirements. By an unspecified date, HHS is required to develop a single form that will allow individuals to apply for enrollment in Medicaid, CHIP or Exchange subsidies and receive a determination of eligibility. Exchanges are required to inform individuals of eligibility requirements for Medicaid and CHIP. If an Exchange determines that such individuals are eligible for any such program, Exchanges are required to enroll such individuals in such program. (PPACA §§ 1311, 1413)
• State Requirements for Web-Based Enrollment in Medicaid or CHIP. Effective 1/1/14, states are required to develop an Internet site and procedures for individuals to enroll through the Internet in Medicaid or CHIP. Website must allow individuals to enroll or reenroll in Medicaid with an electronic signature. Must also allow for enrollment in Medicaid or CHIP without any further determination by a state if an Exchange identifies the individual as eligible for Medicaid or CHIP. Website must also be linked to any website of an Exchange established by the state and allow an individual to compare the Medicaid and CHIP benefits, premiums and cost-sharing with those of an Exchange plan. (PPACA § 2201)
• Additional State Requirements. Effective 1/1/14, states are required to ensure individuals determined ineligible for Medicaid or CHIP are screened for eligibility in an Exchange plan and subsidies. States must also coordinate coverage for individuals enrolled in Medicaid or CHIP and an Exchange plan. States can use Medicaid and CHIP agencies to determine Exchange subsidy eligibility if such agencies enter into an agreement with an Exchange and the agreement complies with Treasury’s conditions for reducing administrative costs. (PPACA § 2201)
• CHIP Enrollment in Exchange. Effective 10/1/15, states can enroll CHIP-eligible children in Exchange plans. States must certify with HHS that such coverage is comparable in benefit and cost-sharing levels to CHIP coverage in the state. (PPACA § 10203) CHIP-eligible children who cannot enroll in CHIP because of federal allotment caps are deemed ineligible for CHIP and eligible for federal tax credits in Exchanges. (PPACA § 2101)

Medicaid/CHIP Income Determinations

Medicaid Payment to PCPs

Medicaid Payments to Hospitals

• Reductions in Disproportionate Share Hospital (DSH) Payments. Reduces aggregate Medicaid DSH allotments by $0.5 billion in 2014, $0.6 billion in 2015, $0.6 billion in 2016, $1.8 billion in 2017, $5 billion in 2018, $5.6 billion in 2019 and $4 billion in 2020. Requires HHS to develop methodology for reducing state allotments that reduces most states that have low rates of uninsured and do not target DSH payments to hospitals based on volume of
• Hospital Presumptive Eligibility. Effective 1/1/14, subject to HHS guidance, hospitals that are participating Medicaid providers may elect to presume individuals are Medicaid eligible for up to 2 months and provide Medicaid coverage regardless of whether the state has elected a presumptive eligibility option for the expansion population, women screened for breast and cervical cancer, family planning services, pregnant women or children. Payments to such hospitals would not be considered erroneous payments for purposes of states receiving matching payments. (PPACA § 2202)

Medicaid/CHIP Premium Assistance

• Effective 1/1/14, expands the state Medicaid option regarding premium assistance for qualified employer sponsored coverage as a voluntary alternative to traditional Medicaid for all enrollees (not only children), amending § 1906A of the Social Security Act (SSA) enacted in CHIPRA for children. Precludes states from requiring individuals to apply for employer coverage as a condition of Medicaid eligibility. (PPACA § 2003)
• Applies to Medicaid premium assistance offered under § 1906 and § 1906A of the SSA, the CHIPRA requirements related to determining costeffectiveness that allow the measurement to be determined on a case-by-case or aggregate basis. Repeals CHIPRA provision deeming qualified employer coverage as meeting the cost-effectiveness requirement. Effective as if included in CHIPRA, effective 2/4/09. (PPACA § 10203(b)(1),(2)(A), and (3))
• Although PPACA § 2003 is labeled as requiring states to implement Medicaid premium assistance, PPACA § 10203(b)(2)(B) declares the requirement null
• and void which appears to maintain premium assistance as optional.

Medicaid Drug Provisions

• Drug Rebates for Medicaid MCO Enrollees. Effective 3/23/10, requires drug manufacturers with Medicaid rebate agreements to pay rebates to states for outpatient drugs provided to Medicaid managed care plan enrollees. Requires Medicaid MCOs to report to the state, on a periodic basis to be specified by HHS, information required by HHS to determine rebate amounts including the total number of units of each dosage form and strength and package size by National Drug Code of each covered outpatient drug dispensed to Medicaid enrollees and for which the entity is responsible for coverage. Capitation rates paid to Medicaid MCOs required to be based on actual cost experience related to rebates and subject to federal regulations requiring actuarially sound rates. Exempts covered outpatient drugs dispensed by HMOs and drugs subject to discounts under the 340B program (for public hospitals and community health centers) from the new requirements. (PPACA § 2501(c))
• Increased Drug Rebates. Effective 1/1/10, increases the minimum manufacturer rebates as follows:
  • Brand Name Drugs. Increase from 15.1% of average manufacturer price to 23.1%. (PPACA § 2501)
  • Generic Drugs. Increase from 11% of average manufacturer price to 13%. (PPACA § 2501)
  • Exceptions. From 14.1 to 17.1% for certain brand name or generic drugs that have a clotting factor with a separate payment under Medicare or are approved exclusively for pediatric indications. (PPACA § 2501)
• HHS “Clawback” of Rebate Savings. Effective 1/1/10, directs HHS to reduce payments to states in the amount of the state share for rebates attributable to the increase in the minimum rebate percentage for brand name and generic drugs, taking into account the drugs provided by Medicaid MCOs. (PPACA § 2501)
• Generic Drug Payments to Pharmacists. Effective 10/1/10, calculates Medicaid payments to pharmacists for such drugs to 175% of the weighted average manufacturer price (AMP). Excludes from AMP in this calculation certain price concessions, including those provided to pharmacy benefit managers and MCOs. (PPACA § 2503)
• Rebates for New Formulations. Effective 1/1/14, applies additional Medicaid rebate to new formulations of brand name drugs, including new formulations of orphan drugs. Removes loophole that allowed manufacturers to provide lower rebates for new formulations of existing drugs. Now requires rebate to be the greater of the new rebate level or the product of the AMP, the highest additional rebate (compared to the original drug’s rebate as a percentage of AMP) and the total number or units of each dosage form and strength. (PPACA § 2501; HCERA § 1206)
• Requirement to Cover Certain Drugs. Effective 1/1/14, does not permit Medicaid coverage exclusions of smoking cessation drugs, barbiturates and benzodiazepines. (PPACA § 2502)

Medicaid Prevention

• Public Awareness of Preventive and Obesity-Related Services under Medicaid. By an unspecified date, requires HHS guidance and information to states and health care providers regarding Medicaid’s coverage for obesity-related services and preventive services. Requires states to design a public awareness campaign to educate Medicaid enrollees regarding the availability and coverage of such services. Requires HHS report to Congress by 1/1/11, 1/1/14 and 1/1/17 on status and effectiveness of outreach. (PPACA § 4004)
• Improved Access to Preventive Services for Eligible Adults. Effective 1/1/13, increases state matching rate by 1 percentage points for prevention services provided to eligible Medicaid adults. States must provide, with no cost-sharing, coverage for all USPSTF services graded A or B and certain vaccines to Medicaid adults. (PPACA § 4106)
• Tobacco Cessation Coverage. Effective 10/1/10, requires state coverage of tobacco cessation services, including with no cost-sharing for pregnant women in Medicaid. (PPACA § 4107
• Incentives for Chronic Disease Prevention. By at least 1/1/11, requires HHS to award grants to states to implement an evidence-based program that has been proven successful in helping individuals modify their lifestyle and improve their health status. Appropriates $100 million over 5 years and requires reports to Congress on 1/1/14 and 7/1/16. A state must participate for 3 years. (PPACA § 4108)

Medicaid Quality

• Adult Health Quality Measures. HHS recommends core set of quality measures for Medicaid-eligible adults by 1/1/2011. HHS will encourage states to report core measures by 1/1/2013. (PPACA § 2701)
• Payment Adjustment for Health Care-Acquired Conditions. HHS incorporates state practices preventing payment for health care-acquired conditions into regulations, effective 7/1/2011, that prohibit paying states for providing medical assistance for health care-acquired conditions. Uses Medicare as a guide to defining conditions. (PPACA § 2702)
• Home Health Option for Chronically Ill. Effective 1/1/11, permits states to provide health home (a provider or a health team designated by the beneficiary that provides health home services) for individuals with chronic conditions. (PPACA § 2703) Requires community health teams to support primary care practices that serve as patient-centered medical homes for Medicaid patients with chronic conditions. (PPACA §§ 3502, 10321)
• Integrated Care Around Hospitalizations. Effective 1/1/12 to 12/31/16, HHS demonstration in up to 8 states of bundled hospital and physician Medicaid payments for episodes of care that include hospitalizations. Does not appropriate funds. (PPACA § 2704)
• Medicaid Global Payment System Demonstration. Effective FY 2010 through FY 2012 for demo project period, HHS and Center for Medicare and Medicaid Innovation establish a project where a state adjusts payments to large safety net hospitals or networks from FFS to a global capitated payment model. Authorizes such sums as are necessary for project and limits demo to 5 states. (PPACA § 2705)
• Pediatric ACO Demonstration. Effective 1/1/12 through 12/31/16, allows pediatric providers meeting specified requirements to be recognized as ACOs and share in any savings if the ACO meets a state-established threshold of savings for Medicaid and CHIP covered services. Authorizes such sums as are necessary for project, with no limit on states; states must participate for 3 years. (PPACA § 2706)
• Medicaid Emergency Psychiatric Demonstration. 3-year demonstration under which a state could pay a private institution for mental diseases to stabilize emergency conditions for adult beneficiaries under age 65. Appropriates $75 million for FY 2011, available through FY 2015. (PPACA § 2707)

Medicaid and CHIP Program Integrity

• Provider Screening and Other Enrollment Requirements. HHS must establish pre- screening and other fraud control requirements for providers and suppliers enrolling in Medicare, Medicaid and CHIP. Adds new authority for HHS and states to control enrollment and implement compliance programs and to disclose the identity of terminated providers and suppliers. Gives HHS the authority to adjust payments to providers and suppliers to satisfy any past-due obligations. Effective 9/19/10. (PPACA §§ 6401, 10603)
• Enhanced Funding. Authorizes substantial new funding for enhanced Medicare and Medicaid Program integrity operations FYs 2011-2020. Effective date of enactment. Extends funding for Medicaid program integrity indefinitely after FY 2010, indexed at CPI. (PPACA § 6402; HCERA § 1304)
• Eliminating Duplication between Data Banks. HHS shall stop operating the Healthcare Integrity and Protection Data Bank and shall transfer all information to the National Practitioner Data Bank. HHS shall issue regulations to maintain a program to collect and furnish information about certain final adverse fraud-related penalty and sanction actions to the National Practitioner Data Bank. States shall create and maintain systems for reporting, licensing, certification and other adverse actions to the Data Bank. Adverse action information in the Data Bank shall be available for a disclosure fee. No person or entity shall be civilly liable for the reporting or disclosure of this information. Effective on date of enactment. (PPACA § 6403)
• Face-to-Face Encounter Prior to Ordering Home Health Services. Physicians or covered nurse practitioner specialists must document that there has been a face-to-face encounter with a Medicaid eligible patient prior to ordering DME or home health services. Effective 1/1/10. (PPACA §§ 6407, 10605)
• Expansion of Recovery Audit Contractor Program. Expands federal Recovery Audit Contractor (RAC) program to Medicaid and Medicare Parts C and D. Effective 12/31/10. (PPACA § 6411)

• Termination of Provider Participation. Providers terminated under Medicare or any federally funded state health programs are also terminated under Medicaid and CHIP. (PPACA § 6501)
• Exclusion from Participation. Medicaid shall exclude any provider that owns, controls, manages or is affiliated with any entity or individual that has been suspended, terminated or excluded or has unpaid overpayments. (PPACA § 6502)
• Registration Requirements for Medicaid Claims Submitters. Medicaid program billing agents, clearinghouses or other alternate payees are required to register with HHS and the state. (PPACA § 6503)
• Fraud and Abuse Reporting Requirements. States are required to provide HHS-specified data through MMIS that is necessary for program integrity, oversight and administration, and Medicaid managed care organizations are required to provide patient encounter data to HHS at a frequency that HHS shall set. Effective 1/1/10. (PPACA § 6504)
• No Payment to Entities Outside of U.S. States shall not make Medicaid payments to financial institutions or entities located outside the United States. (PPACA § 6505)
• Overpayments. For purposes of the federal Medicaid matching payment to states, extends to one year the time a state has to retrieve overpayments before the federal payment to the state can be adjusted by the unrecovered overpayment amount. Also bars such adjustments until such time as any final determination of the overpayment is made, including a determination on appeal. Effective on date of enactment. (PPACA § 6506)
• Mandating Medicaid Apply the National Correct Coding Initiative (NCCI)
  • HHS must identify and notify states of the NCCI methodologies (or other correct coding methodologies) applicable to Medicaid and CHIP claims by 9/1/10. (PPACA § 6507(2)(A))
  • States must apply HHS-identified NCCI methodologies to their Medicaid automated claims systems. Effective 10/1/10. (PPACA § 6507(1))
  • HHS must file a report with Congress on the identified coding methodologies and notice to states by 3/1/11. (PPACA § 6507(2)(B))
• General Effective Date and Delay for State Legislation. Except as otherwise specifically provided, amendments in PPACA §§ 6501 through 6508 are effective on 1/1/11 unless HHS determines state legislation is required to give them effect. Under such circumstance, Medicaid and CHIP programs will not be regarded as out of compliance until the first day of the first calendar quarter following the close of the first regular session of the state legislature following passage of this Act. Effective 1/1/11 (with exceptions). (PPACA § 6508)

MACPAC Reports

Puerto Rico and State Specific Provisions

• Puerto Rico and Territories. Effective 7/1/11 through 9/30/19, an additional $6.3 billion is available for payments to territories. Payments increase in proportion to the amounts that are applicable to such territories on the date of enactment. Beginning 7/1/11, increases FMAP applicable to territories from 50% to 55%. With respect to Exchange coverage, permits territories to elect whether to establish an Exchange, with funds available for premium and costsharing assistance. Territories that elect not to have an Exchange are entitled to an increase in Medicaid funding. Puerto Rico to receive $925 million of the $1 billion allotted to all territories over the 5-year period 2014-2019 for that purpose. (HCERA § 1204)
• Hawaii. Provides a disproportionate share hospital (DSH) allotment to Hawaii for the second, third and fourth quarters of 2012 of $7.5 million. Specifies that Hawaii will be treated as a low DSH state for purposes of calculating the annual DSH allotment for fiscal year 2013 and succeeding years. (PPACA § 10201)
• Tennessee. Allots $100 million in DSH funds over FY 2012 and FY 2013. (HCERA § 1201)
• Louisiana. Effective 1/1/11, prevents reductions in federal matching rate. (PPACA § 2006)

Other Medicaid

• Outreach and Enrollment. Grants for community health workers, among other requirements, require such workers to educate and provide outreach regarding enrollment in health insurance including Medicaid and CHIP. (PPACA § 5313)
• Public Review of Medicaid Waivers. Before roughly 9/19/10 (180 days from enactment), HHS must issue regulations requiring public review and input on section 1115 waiver applications and renewals. (PPACA § 10201)
• New Community Choice LTC Option. Effective 10/1/11, allows states to provide home and community-based support services to individuals below 150% FPL or with higher incomes if the individual requires a nursing home level of care. Increases state federal matching rate by 6 percentage points for services provided under such option. (PPACA § 2401; HCERA § 1205)
• Changes to Existing HCBS LTC Payment
  • Allows states to target coverage to certain groups and removes ability of states to place enrollment caps on home and community based services (HCBS) provided. Requires HHS to issue guidance for states to improve coordination and funding to encourage provision of HCBS. (PPACA §2402)
  • Extends for an additional 5 years, a demonstration, “Money Follows the Person,” that provides extra federal funding to states for moving individuals from nursing homes to HCBS settings. (PPACA § 2403)
  • Applies certain exceptions for counting spousal income for Medicaid nursing home eligibility to HCBS eligibility. (PPACA § 2404) Makes additional funding available for state Aging and Disability Resource Centers that help individuals become aware of HCBS options. (PPACA § 2403)
  • Provides no more than $3 billion over FY 2012 through FY 2015 to encourage states to increase the proportion of long-term care funding for HCBS as opposed to nursing home care. (PPACA § 10202)
• Medicare-Medicaid Dual Eligibles
  • 5-Year Demonstration Projects. Clarifies that state waivers for coordinating care for the dual eligible population may conducted for 5 years and renewed an additional 5 years. (PPACA § 2601)
  • Federal Coverage and Payment Coordination. Effective no later than 3/1/10, requires HHS to establish a new CMS office for dual eligibles. Responsibilities of the office include providing states, SNP MA plans, physicians and others with the education and tools necessary to align benefits for the duals. (PPACA § 2602)
• Foster Care Children. Effective 1/1/14, requires individuals below the age of 26 who were formerly in foster care under the responsibility of the state to be eligible for Medicaid. May not be required to enroll in benchmark or benchmark-equivalent coverage. Creates a state option to provide presumptive eligibility for this population. (PPACA §§ 2004, 10201)
• Eliminates Medicaid Improvement Fund. Rescinds $160 million that would have otherwise been available over the period FY 2014 through FY 2018. Fund was intended to improve Medicaid project management, oversight and evaluation within CMS. (PPACA § 2007)
• Coverage for Freestanding Birth Center Services. Effective 3/23/10 (unless state legislative action is necessary), requires states to reimburse providers at freestanding birth centers for Medicaid covered services provided to Medicaid eligible individuals. (PPACA § 2301)
• Concurrent Care for Children. Effective 3/23/10, clarifies that children electing to receive Medicaid hospice services are not waiving rights to be provided or have payment made for other Medicaid or CHIP services. (PPACA § 2302)
• Family Planning Option. Effective 3/23/10, allows states to provide family planning services and supplies to non-pregnant women and other individuals without a waiver. Benefits can be provided solely based on income, removing requirement that individuals be of childbearing age. Benefits include medical diagnosis and treatment services in a family planning setting. Requires benchmark benefit packages for expansion population to include family planning services. Creates a new 2-month presumptive eligibility period for such services. (PPACA § 2303)
• Clarification of Definition. Clarifies that the term “medical assistance” used in the Medicaid title of the Social Security Act and elsewhere refers to both the services and payment for such services. (PPACA § 2304)

Provisions Related to Native Americans

• Special Rules for Indians. Prohibits cost-sharing for Indians with income at or below 300% of FPL who are enrolled in coverage through an Exchange. Establishes that health programs operated by the Indian Health Service, Indian tribes, tribal organizations and Urban Indian organizations shall be the payer of last resort for services, notwithstanding other provisions to the contrary. Facilitates enrollment of Indians under the Medicaid Express Lane enrollment option. (PPACA § 2901)
• Reimbursement of Medicare Part B Services by Indian Facilities. Effective 1/1/10, removes the sunset provision in current law to allow Indian tribes, tribal organizations and urban Indian organizations to continue to receive reimbursement for Medicare Part B services furnished by certain Indian hospitals and clinics. (PPACA § 2902)