Inside Health Reform Turns to Deborah Bachrach on Medicaid Expansion

"States' Medicaid Expansion Plans Expected to Take Shape By June 2013"
Inside Health Reform

December 5, 2012 - Inside Health Reform turned to Manatt's Deborah Bachrach, a special counsel in the firm's Healthcare Transaction & Policy Practice, for insight into states' options as they decide whether to expand their Medicaid programs.

As reported by Inside Health Reform, decisions by states on whether to expand their Medicaid programs should crystallize in the first half of 2013. States that choose not to expand Medicaid may have to make up the difference in disproportionate share hospital (DSH) payments to help keep hospitals afloat, said industry experts.

Bachrach, former New York Medicaid director, said the law leaves little leeway for the federal government when it comes to cutting DSH payments, as the ACA clearly makes those cuts a matter of statute. But the HHS secretary will have a little wiggle room as she can decide how to allocate those DSH cuts, and one of the factors to consider is the number of uninsured in a state, Bachrach said.

States are also questioning whether they will have flexibility to expand Medicaid to a rate lower than 138 percent of the federal poverty level or how a decision to delay an expansion might affect federal matching rates.

But Bachrach said it will be hard for CMS to allow a state to expand to less than 138 percent and still receive a full matching rate, saying the law most likely will be read as allowing for an all or nothing approach.

She also said the law is clear on setting the 100 percent federal matching rates to 2014-2016, not as a rolling three years for the highest matching rates. If states delay an expansion, they will simply miss out on the higher rates, Bachrach predicted.