Ever-changing Medicaid policies
Government, states show flexibility on expansion
Since the U.S. Supreme Court struck down the mandatory Medicaid provisions of the healthcare reform law in June, the federal government appears to be becoming more pliable when it comes to enticing reluctant states to expand their Medicaid programs. And states, which gained leverage with the high court’s ruling, are pushing for more concessions.
For providers, the fact that the federal government and states are willing to dance with each other is good news as they are counting on more formerly uninsured patients to become eligible for Medicaid. The health reform law would expand Medicaid eligibility in 2014 to legal residents with income up to 133% of the federal poverty level, with a 5-percentage-point leeway to 138%. Under that scenario, about 16 million uninsured could gain Medicaid benefits.
In Arkansas, Gov. Mike Beebe is in talks with the CMS over whether the state may scale back or undo expansion in future years if the state should face budget pressure from, for example, another economic downturn, Beebe spokesman Matt DeCample said.
“Are those options available?” DeCample asked.
Beebe perhaps got a hint at the answer last week, when Cindy Mann, director of the Center for Medicaid and State Operations at the CMS, said the agency will allow states that expand their Medicaid eligibility in order to receive 100% federal funding for the newly eligible in 2014-2016 to cut their rolls in the future. “That’s encouraging,” DeCample said. Still, he said, Mann’s comment doesn’t settle all of the governor’s questions. Beebe is scheduled to talk with Mann next week, DeCample said.
Democratic and Republican governors have expressed concerns about the cost of the expansion, which will be entirely federally funded through 2016 and then will gradually increase state financing to 10%. That has not stopped some states from pledging to expand Medicaid under the law. So far, 13 have said they will do so.
Meanwhile, other states—including Cali- fornia, Illinois and Ohio—have asked for flexibility to selectively expand Medicaid ahead of schedule using federal waivers.
Under a pending waiver for Illinois, about 250,000 uninsured adults in Cook County with income up to 133% of the poverty threshold would gain insurance if they seek care from the county’s three-hospital system. Of those, 100,000 already receive care at the Cook County Health and Hospitals System, said Dr. Ram Raju, CEO for the county-owned system.
Why let chronically ill adults with limited access to medical care potentially grow increasingly sick during the months before expansion, he asked. The federal government will eventually pick up the tab to care for chronically ill uninsured adults, he said, and it could potentially save money by helping patients access primary care to avoid costly complications from untreated illness, he said.
“It makes a lot of sense to give adequate access to these patients,” Raju said.
The proposal in Illinois would enroll patients into medical homes and seek to expand access to primary and preventive care, a plan that will require Cook County Health and Hospitals to hire and contract with primary-care doctors, physician assistants and nurse practitioners, Raju said. The system will also hire care coordinators for patients who have experienced highly fragmented medical care.
Ohio officials have similarly proposed expan- sion of Medicaid in Cuyahoga County, where about 21,000 uninsured adults would gain coverage under a pending waiver proposal. Newly insured adults would be required to seek care at the county-owned MetroHealth Medical Center, where an existing effort to better coordinate care for the uninsured has reduced hospital stays and emergency room visits, said John Corlett, vice president of government relations and community affairs. But the 559-bed hospital does not receive reimbursement for care of the uninsured, he said. MetroHealth wrote off $64 million last year on medical care for uninsured patients. Expanded Medicaid coverage would reduce those losses.
It’s unclear whether waivers could be used by states to pursue a more limited Medicaid expansion up to 100% of the federal poverty threshold, said Joan Alker, co-executive director at the Georgetown Center for Children and Families.
That would increase costs for those with incomes between 100% and 133% of the poverty line to the federal government, which will provide subsidies for commercial insurance for individuals with income between 100% and 400% of the poverty threshold, Alker said. She cited a Congressional Budget Office estimate that found an insurance subsidy costs the federal government $3,000 more per person than coverage under Medicaid.
Other states have asked the CMS for more latitude but stopped short of expanding Medicaid.
In New York, officials asked the CMS for $10 billion of projected federal savings from the state’s efforts to reform Medicaid, of which $1.5 billion would be invested in the state’s public hospitals. That includes the New York City Health and Hospitals Corp., the city’s 14-hospital public system, which would use extra funds to expand efforts to prevent emergency-room visits and improve care coordination.
One early initiative at two hospitals placed care coordinators inside hospitals and emergency rooms and reduced admissions by 2,000 over two years, said LaRay Brown, senior vice president of corporate planning, community health and intergovernmental relations at the New York City public system.
Efforts have expanded the initiative to other hospitals, but only during business hours of the workweek. HHC officials would like to expand hours to reach more patients but cannot for one reason, she said: “Money.”
About 500,000 of the system’s 1.4 million patients are uninsured, she said. “We are perennially challenged in terms of our financial condition.”