CMS Official Voices Hope States Will Join Expansion as Panelists Outline Challenges

BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...

A key federal official in charge of Medicaid at the Centers for Medicare & Medicaid Services July 30 said the U.S. Supreme Court's recent ruling on Medicaid expansion is “all to the good,” adding that the importance of state decisions on whether to participate in the program “can't be overstated.”

Cindy Mann, director of the Center for Medicaid and Children's Health Insurance Program Services at CMS, said that the states “are working through the numbers and consulting with stakeholders.” Mann added, “But I believe when states look at all the factors involved ... they will decide it's in their state interest to take the expansion.” She spoke at an all-day program on “Our Health Care Future: What's Next After the Supreme Court Decision,” sponsored by the Bipartisan Policy Center.

Mann's comments come more than a month after the Supreme Court ruled June 28 that states cannot be required to join in the major expansion of Medicaid set to begin in 2014 under the Patient Protection and Affordable Care Act (125 HCDR, 6/29/12).

She confirmed that CMS will set no specific deadline for states to notify the agency whether they plan to participate in the expansion, which will open Medicaid eligibility to people--including single adults--with incomes up to 133 percent of the federal poverty level.

System Modernization Required in All States.

Apart from deciding whether they will join the Medicaid expansion, Mann said one of the most pressing issues for states is modernizing their Medicaid eligibility and enrollment systems by 2014, which she said continues as a requirement under PPACA regardless of whether a state participates in the Medicaid expansion.

The updated Medicaid enrollment and eligibility systems will connect with new state-based health insurance exchanges starting in 2014 to provide a one-stop, seamless entry point for the uninsured to obtain health insurance, Mann said.

CMS is covering 90 percent of all state costs associated with modernizing the Medicaid eligibility systems, she noted.

Sustainability of Federal Funds at Issue.

As governors grapple with the decision on whether to join in the Medicaid expansion, one of their major concerns “is what it means going forward” in terms of the availability of federal funding, according to Dan Crippen, executive director of the National Governors Association. He spoke on a separate panel discussing the “New Medicaid Complexity for States.”

Although the federal government will pay 100 percent of state Medicaid expansion costs from 2014 through 2016, Crippen noted the ongoing concerns about the federal deficit and how that could affect the sustainability of the enhanced federal expansion funding.

“Medicaid has been a growing struggle for state budgets,” Crippen said, adding that state Medicaid budgets “were the only thing that went up in 2011” despite increased revenues in most states.

Crippen said some states may try to negotiate with CMS for more flexibility in how they run their Medicaid programs in return for agreeing to participate in the expansion. He asked: “If they commit now, will they have some ability to adjust to new fiscal realities” later on to adjust their benefit packages and possibly reduce benefits?

Demo Projects Could Be New Focus.

Matt Salo, executive director of the National Association of Medicaid Directors, said one area for which states may ask for more flexibility is demonstration projects under Medicaid.

“The problem with Medicaid for decades has been the expectation that you always must be demonstrating something, even if it's demonstrating something that works,” he said.

“At what point can we say you don't have to prove it's working ... and create a culture where innovation is the norm and not the exception?” he asked.

Salo said “one real positive” impact of the Supreme Court's Medicaid decision is that it “raised the awareness of and appreciation for Medicaid, what it does, and the role of the states.”

The expansion of Medicaid eligibility guidelines constituted nearly half of all the new health care coverage made possible by PPACA, Salo said, “But nobody talked about it.”

All Safety Net Hospitals Face Cuts.

Bruce Siegel, president and chief executive officer of the National Association of Public Hospitals and Health Systems, noted that safety net hospitals are still facing cuts under PPACA regardless of whether their state opts in or out of the Medicaid expansion.

So-called disproportionate share hospital (DSH) allotments--federal bonus payments to hospitals treating large numbers of low-income patients--will gradually be reduced beginning in fiscal year 2014 through FY 2020. The cuts were enacted in part on the expectation that expanded Medicaid eligibility would go into effect in all states.

Siegel said both Congress and CMS will have to make “tough calls” in light of the Supreme Court's decision. He suggested that CMS might use the scheduled DSH cuts “to incentivize state behaviors regarding the expansion.”

States Also Should Factor Human Costs.

Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities, said states should be aware of the human costs of not participating in the expansion.

Low-income families can benefit from increased access to Medicaid, she noted, citing studies that show low-income families with uninsured parents are more likely to have children without health care coverage even though the children may be separately eligible for the Children's Health Insurance Program.

Also on the panel was Meg Murray, chief executive officer at the Association for Community Affiliated Plans, which represents nonprofit safety net health plans. She said ACAP's member plans, which now cover nearly one-third of all people on Medicaid, are hoping to eliminate certain obstacles that could impede their efforts to provide coverage to low-income enrollees on the state exchanges as well as in Medicaid.

One potential obstacle is the accreditation requirement for plans providing coverage on the state exchanges, she said, adding that ACAP is advocating a multi-year phase-in for the accreditation requirement.

By Ralph Lindeman  

More information about the Bipartisan Policy Center program, including videos of the presentations, is at