Editor’s note: The new issue of “Manatt on Medicaid” provides insights into two critical developments. First, we examine a new strategy for financing 12 months of continuous coverage for newly-eligible adults, including implications for stakeholders and procedures for implementation. Next, we look at growing state interest in Medicaid expansion. Summaries of key points are below. To download the full “Manatt on Medicaid” briefings, click here.

Manatt on Medicaid: New Strategy for Financing 12 Months of Continuous Coverage for Newly Eligible Adults

By Jocelyn Guyer, Director, Manatt Health | Tanya Schwartz, Manager, Manatt Health

The federal government recently issued sub-regulatory guidance that will allow states to receive 98.7 percent to 99.3 percent of the cost of providing 12 month continuous coverage to adults newly eligible for Medicaid in expansion states. In states that adopt the option, not only will consumers benefit, but issuers and providers can expect greater stability in their revenue streams and a greater return on investments in preventive services and care management.

Background

In May of 2013, the Centers for Medicare & Medicaid Services (CMS) issued guidance to states on strategies available to facilitate the enrollment and renewal of eligible people into Medicaid coverage. One strategy provides states the option to seek a Section 1115 waiver to provide 12 months of continuous Medicaid eligibility for adults regardless of changes in circumstances that occur during the year. Though states have had this option for children since 1997, the May 2013 guidance represents the first time that CMS has offered states the opportunity to implement 12 months of continuous eligibility for adults.

Until recently, however, no states had implemented 12 months continuous eligibility for newly-eligible adults, largely due to financing barriers. CMS informed interested states that they could not receive the 100 percent matching rate for 12-month continuous eligibility, but did not yet have details on what the available matching rate would be.

Enhanced Federal Medical Assistance Program (FMAP)

Recently, CMS announced a new, simplified formula for establishing the appropriate matching rate. Drawing on research conducted by George Washington University, CMS determined that 97.4 percent of the cost should be financed at the enhanced matching rate available for newly-eligible adults and the remaining 2.6 percent at a state’s regular Medicaid matching rate. As a result, states will receive a matching rate between 98.7 percent and 99.3 percent for the cost of 12 month continuous eligibility for newly-eligible adults in 2014.¹ Click to see state-specific data on the matching rate applicable to newly-eligible adults in states that elect this option.

Implications for Stakeholders

The new option offers the possibility of greater continuity of coverage for consumers, administrative simplicity for states and enhanced opportunities for issuers and providers to develop stable relationships with enrollees and patients. The potential advantages include:

• Greater continuity of coverage for consumers
• More reliable source of revenue for plans and providers
• Greater potential return on investments in prevention and care management
• Greater capacity to measure quality
• Administrative savings for states, issuers and providers

Ultimately, however, it is the states that must decide whether or not to pursue this option.

Implementation Procedures

To take up this policy option, states must submit a Section 1115 waiver to CMS or, if they already have a waiver, they must submit an amendment. As with all Section 1115 waivers, those aimed at the 12-month continuous eligibility option are subject to transparency requirements and must be made available for public comment. However, CMS has advised that it will review these waivers expeditiously and assist states in developing and submitting their applications or amendments.

_{¹In future years, a state’s matching rate for continuous eligibility will continue to depend on its regular Medicaid rate and on the enhanced matching rate for newly-eligible adults, which remains at 100 percent through the end of 2016, but then declines modestly in 2017 and future years until it reaches 90 percent in 2020.}

Manatt on Medicaid: Growing Interest in Medicaid Expansion

By Kinda Serafi, Counsel, Manatt | Mindy Lipson, Senior Analyst, Manatt Health

In just the last two weeks, at least four states have advanced Medicaid expansion discussions:

• On March 7, Governor Beebe (D) signed into law SB111, Arkansas’s fiscal year 2015 Department of Human Services budget bill containing the appropriation for the Private Option immediately after the Arkansas House passed the bill by the required three-fourths margin on its fifth vote. Arkansas’s Private Option uses Medicaid premium assistance to purchase Qualified Health Plan (QHP) coverage for all expansion adults except the medically frail who receive coverage through the State’s Medicaid fee-for-service program.
• On February 19, Governor Corbett (R) of Pennsylvania filed a waiver with CMS seeking to expand the state’s Medicaid program using premium assistance to purchase QHP coverage for new adults. The waiver included a request to impose cost sharing and premiums and also to impose work requirements as a condition of eligibility. On March 5, Governor Corbett changed course and advised CMS that the State will no longer include a work-search requirement in the Healthy Pennsylvania plan to expand Medicaid in the State and will instead use a voluntary incentive approach.
• On March 6, New Hampshire’s Senate approved a bill to implement Medicaid expansion through a combination of premium assistance for those with available employer-sponsored insurance—starting as soon as is practicable—and premium assistance for other newly eligible individuals to enroll in QHPs in the Marketplace, beginning January 1, 2016.
• Governor Mead (R) of Wyoming signed the state’s biennial budget bill on March 5, which includes a provision permitting the Governor, Director of the Department of Health, and State Insurance Commissioner to enter negotiations with the federal government regarding a Medicaid expansion demonstration waiver.