By Rebecca Adams, CQ HealthBeat Associate Editor

October 30, 2014 -- Election Day could jolt the dynamic in a handful of states that have not embraced an expansion of Medicaid.

Twenty-three states have yet to expand Medicaid eligibility under the health care law. Two, Indiana and Utah, have governors who support some type of expansion but are either mired in negotiations with the Obama administration or trying to persuade holdout state legislators to support the idea.

Governors' races in a handful of other states could shift policies on the federal–state health program for low-income people. In most states, governors also have to work with the legislature, which could make implementation difficult if legislators don't agree with eligibility changes.

That's already been the case in Utah, where Republican Gov. Gary R. Herbert recently struck a deal on a memo of understanding with federal officials to expand the program but encountered resistance from House Speaker Becky Lockhart. Lockhart is leaving the legislature and health policy advocates are watching closely to see who will replace her. Expansion advocates are rooting for Republican Greg Hughes.

The legislature and existing state laws would be an obstacle in two tight governors' races where Democrats have a chance to defeat the GOP incumbent.

If state Sen. Jason Carter, a grandson of former President Jimmy Carter, were to unseat Republican Gov. Nathan Deal in Georgia, Carter would have to persuade a Republican-controlled legislature to change a recently-passed state law blocking Medicaid changes.

The Democratic challenger in Kansas, House Minority Leader Paul Davis, would face a similar challenge in the Republican-dominated legislature if he were to defeat Republican Sam Brownback.

In many states, Republicans supporting expansion have argued that accepting the federal money available for such changes is different than endorsing the health care law completely. Nine GOP governors have already gotten federal approval to bring more people into the system under the statute (PL 111-148, PL 111-152), which permits states to broaden eligibility to people with income of up to 138 percent of the federal poverty level. The poverty level is $11,670 for an individual this year and $23,850 for a family of four this year.

A number of other GOP governors, including those in Tennessee and North Carolina, have said they are willing to consider expansion.

The federal government will cover all of the costs of people who become eligible because of the expansion through 2016. After that, the federal share phases down until it is 90 percent of costs in 2020 and thereafter.

A look at other states with Medicaid policies in play:

Florida. Democratic candidate Charlie Crist has said that he'll push for expansion and would resort to executive action if the Republican-led legislature balks, as in the past. If he were to succeed, about 1 million Floridians would gain coverage. 

Political science professors in the state doubt that Crist has the authority to carry through on the threat, but said that because Crist elevated the issue, he may feel compelled to fight for it, if elected.

"It's not clear that he does" have that power, said Sean Foreman, associate professor of political science at Barry University in Miami. "But it wouldn't stop him from trying."

Crist may find, as Virginia Democratic Gov. Terry McAuliffe did this year, that he has less authority to expand Medicaid benefits unilaterally than he first thought.

Crist cited the experience of Ohio Gov. John Kasich, who circumvented the opposition of lawmakers by tapping an arcane budgetary board, known as the controlling board, to approve the decision a year ago. In states such as Pennsylvania, the governor did not need legislative approval to move forward on expansion. Foreman said that Florida has a relatively weak gubernatorial office and does not have a controlling board.

"It's not likely that Crist could do the same thing, but he may have another creative method of implementing this if he's determined to do it," said Foreman. Crist previously served as state attorney general and as governor.

"Sometimes governors take an 'I'm going to do it and sue me later' approach," said Drew E. Altman, president and CEO of the nonpartisan Henry J. Kaiser Family Foundation.

The outcome in Florida for Medicaid will take some time to sort out.

"Coverage for a lot of people is at stake—hospitals want it, the new governor would want it —but you're still dealing with a pretty conservative legislature," said Altman.

If current GOP Gov. Rick Scott wins another term, it's unlikely that the state would broaden eligibility, said Florida State University political science professor Carol S. Weissert. Scott has said that he supports expansion. But Weissert said Scott has "not lifted a finger" to push the legislature to accept it, "and I've seen no evidence he'd change his mind. Most of the advocates are banking on Crist."

Weissert said that the election might result in a somewhat more favorable atmosphere in the conservative state House, which stood in the way of discussions about expansion. The Florida state Senate had been exploring the type of expansion in which Medicaid dollars are used to pay for private plans in the marketplace. Arkansas, Iowa, Michigan and Pennsylvania have won federal approval for such an approach. Virtually all of the states that might consider expansion in the future would be most interested in that type of plan.

"Medicaid expansion will depend on whether Paul LePage wins reelection," said University of Maine political science professor Amy Fried.

The legislature is controlled by the Democrats. In the Senate, Democrats currently have a four-seat margin, but some Republicans have crossed over to support expansion.

"The legislature has tried to override his veto and came close," said Georgetown Center for Children and Families Executive Director Joan Alker.

In the most recent override attempts in June, the House held a pair of votes designed to win the two-thirds supermajority needed to pass the bill without LePage's signature. In the first effort, the House fell two votes short; in the second, three votes short.

Maine is the only state in New England that has not widened Medicaid eligibility to more adults. Neighboring New Hampshire, the most recent to win approval from federal officials, began its expansion this summer.

Polls show the race is extremely tight. Michaud may get a boost from recent comments by third party candidate Eliot Cutler, who is now telling his supporters to vote for one of the other candidates if they don't think he can realistically win, and from Independent Sen. Angus King, who switched his endorsement from Cutler to Michaud last week.

Wisconsin. One of the first issues that Democratic challenger Mary Burke raised after announcing a challenge to GOP Gov. Scott Walker was Medicaid. However, she would probably have to work with GOP majorities in the House and Senate.

Last year, Walker staked out a unique position on the program. Wisconsin had expanded Medicaid under then-Gov. Jim Doyle, a Democrat. Walker scaled back eligibility guidelines so that the state would cover people up to the federal poverty level but no one above that. As a result, tens of thousands of Wisconsin residents lost BadgerCare, the state's Medicaid coverage.

The state is paying about 40 percent of the costs for some adults that the federal government would initially cover entirely if the state were to accept the expansion.

Although Burke has prioritized an expansion, it is unlikely that legislators will allow her to scuttle Walker's policies.

"Even if Mary Burke were to be elected, there's not much chance of reversing Scott Walker's policy on Medicaid extension," said University of Wisconsin at Madison political science professor David Canon. "Given that political reality, the status quo is basically what we're looking at."

Dan Mendelson, CEO at the Avalere Health consulting firm, called this year's campaigns "a key election for the future of the Medicaid program."

"Expansion will depend on both the outcomes of the governors' races, as well as state legislative balance, as state legislatures often hold the keys," said Mendelson.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 28, 2014 -- Federal Medicaid officials will permanently pay 90 percent of the costs for technological upgrades to enrollment and eligibility systems, according to a recent letter from the Centers for Medicare and Medicaid Services (CMS). The share of funding, which every state in the country has taken advantage of, had been expected to drop to 50 percent of states' costs on Jan. 1, 2016.

The money was available through a 2011 rule that also increased the federal matching rate for maintaining or operating the electronic enrollment and eligibility systems from 50 percent to 75 percent of costs.

"We intend to issue new regulations that will codify the availability of the 90/10 federal matching funds for Medicaid eligibility and enrollment systems on a permanent basis," wrote CMS Deputy Administrator Cindy Mann in a letter to the National Association of Medicaid Directors and the American Public Human Services Association.

Federal officials will be proposing updated criteria that states will need to meet in order to qualify for continued funding, Mann said. One requirement will be that states will have to show that they finished updating their systems to use a different measure of income than was typically used in the past.

The agency also will provide a three-year extension of a waiver option that allowed states to build integrated eligibility systems with human services programs, without having to make the human services programs cover part of the costs. The human services programs still have to pay for anything that was designed exclusively for their use.

The integrated systems can handle eligibility for Medicaid as well as the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families programs. Most states received a waiver for the streamlined systems. That money will now be available through December 2018.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 27, 2014 -- Part of the online version of the health law's small business insurance marketplace was activated in five states last week. The rest of the system will open when the next marketplace sign-up period begins on Nov. 15.

Small business owners will not yet be enrolling their workers in specific health insurance yet because plans' pricing won't be available until November. But employers can take other steps to get ready. Those include creating an online account, assigning a broker or agent to their account, completing an employer application, and uploading an employee roster.

In two of the states, Missouri and Ohio, businesses are able to choose the coverage level they will offer employees but allow workers to decide which insurance company's coverage is best for them. The other states testing the online small business exchange before the official start of open enrollment are Delaware, Illinois, and New Jersey.

Once the small business marketplace is implemented across the nation, 14 states in 2015 will be allowing employers the ability to let their workers choose which insurer's plan they prefer.

Last year, the federal website healthcare.gov failed to work when it launched on Oct. 1 across the entire country. This year, the Centers for Medicare and Medicaid Services (CMS) is taking the advice of many IT professionals by testing the small business exchange, known as SHOP, before attempting to use it nationwide. That would give CMS officials and their contractors time to fix any problems that are revealed.

The small business website was supposed to start when the individual marketplaces were launched last year, but CMS officials delayed it. Paper applications were available for small businesses instead.

The small business marketplace coverage is available for companies with 50 or fewer full-time employees. Once the website is fully activated, it will be available for employers year-round, unlike the individual marketplace's regular enrollment procedures. Individuals can only sign up during open enrollment periods, unless their circumstances change in ways that are specified by federal officials.

By John Reichard, CQ HealthBeat Editor

October 29, 2014 -- Applications to medical school rose 3.1 percent in 2014 while enrollment increased 1.4 percent to an all-time high of 20,343, the Association of American Medical Colleges (AAMC) announced last week.

Interest was particularly strong in the Hispanic population, where the number of applicants increased 9.7 percent, to 4,386. The number of applications by African-American candidates rose by 3.2 percent.

AAMC officials said it's time for Congress to increase residency training positions for aspiring doctors, adding diversity in the nation's medical schools was on the rise.

The lobby wants Congress to lift a 17-year cap on residency training slots that was written into the Balanced Budget Act (PL 105-33). The group says predicts there will be a shortage of 130,600 physicians by 2025 as baby boomer generation ages. Medical school capacity has increased, with a new school at Western Michigan University in Kalamazoo, among other communities. But the number of residency slots has been capped at 26,000.

"I don't see much of anything being done in this Congress" to lift the cap, Atul Grover, chief public policy officer at AAMC, said in an interview.

Grover said Congress could address the issue during a lame duck session if it also moved to permanently scrap the formula Medicare uses to pay physicians. That is considered a long shot, because lawmakers have yet to agree on a way to offset the estimated $150 billion 10-year cost of replacing the formula.

Grover says three bills in Congress would increase the number of residency slots by 15 percent over the next five years, thereby allowing 3,000 to 4,000 more doctors per year to be trained.

Democratic Senators Harry Reid of Nevada, Charles E. Schumer of New York, and Bill Nelson of Florida are backing one bill (S 577), while Rep. Joseph Crowley, D-N.Y., has introduced a measure (HR 1180) in the House. Reps. Allyson Schwartz, D-Pa., and Aaron Schock, R-Ill. have a bill (HR 1201) that in addition to increasing slots would reduce Medicare Graduate Medical Education payments by 2 percent if schools didn't meet certain training standards for team-based care or the use of information technology, for example.

Grover estimates that all three bills would add a total of $10 billion over 10 years to Medicare spending. Though that represents a small piece of overall program spending, he acknowledged, "we can't even find a billion bucks here and there to do anything these days."

"We certainly have a commitment from various House and Senate offices to continue working on the legislation in the next Congress. The real challenge is where are we in terms of our willingness to invest further in health care."

"Medical schools understand that an effective physician workforce is a diverse workforce," said AAMC President Darrell Kirch.

On diversity, applications were up not only among Hispanics but also among American Indians and Alaska Natives. The total among those groups rose 17 percent from 173 in 2013 to 202 in 2014. Grover said the increase in applications by Hispanic students probably reflected the increasing size of the Hispanic population.

But small percentage increases in enrollment by minorities still left them under-represented among new medical school students, with the exception of Asian Americans. Hispanics accounted for 9 percent of new enrollees and African Americans 7 percent, Women accounted for 48 percent of students enrolling in medical school in 2014 and men 52 percent.

By Kerry Young, CQ HealthBeat Associate Editor

October 27, 2014 -- Lacking clear signals from Congress on what Medicare will pay doctors after March 31, physicians say they are proceeding cautiously on initiatives such as a move to more coordinated care and increased use of technology.

Congress is expected to act again act to stop a 17-year-old budget mechanism known as sustainable growth rate (SGR) from taking effect and triggering deep cuts in doctors' Medicare reimbursements. Seventeen so-called 'doc fix' laws have been enacted since 2003 to block cuts, with the most recent patch (PL 113-93) holding off a mandatory reduction through March, according to the Congressional Research Service.

Doctors and executives making financial decisions about physician practices remain wary. Congress did allow the SGR mechanism, created as part of the 1997 Balanced Budget Act (PL 105-33), to trigger in 2002, resulting in a 4.8 percent payment cut. With repeated "patches," or bills that since have held the mechanism at bay, the level of scheduled cuts has risen to more than 20 percent.

"It doesn't make sound business sense to say 'We'll just assume that they are not going to do it and that it's going to be okay," said Michael L. Munger, a family practice physician at Saint Luke's Health System in Kansas. He said uncertainty prevented the system from hiring about seven nurses for a patient-centered medical home project.

There's deep bipartisan agreement that the formula needs to be replaced, but no agreement on how to cover the approximately $140 billion cost. As designed, the SGR underestimates the degree to which the volume and complexity of doctors' services increases, according to an analysis from the nonprofit Center on Budget and Policy Priorities. Discussions on a 10-year patch intended to help shift Medicare away from its heavy reliance on fee-for-service payments faltered earlier this year over the question of offsets.

Congress doesn't seem to fully appreciate how the continual questions about Medicare's payments to doctors take a toll on doctors, said Lloyd Van Winkle, a family-physician who practices in central Texas.

"They can sit around there and chit chat about it, but it is not without serious consequences," he said.

Lawmakers have a few times allowed a previous patch to expire before getting a new one in place, notably in 2010 when there was a gap of nearly a month. Congress in that case acted to make the SGR payment override retroactive.

Doctors say such delays prove costly. Van Winkle, for example, once had to talk with his bank about a line of credit in case a disruption in Medicare payments threatened his ability to make his payroll and say in good stead with his suppliers.

"I cannot get the creditors to allow me to pay them retroactively," as Medicare can do for doctors, Van Winkle said. "They want to be paid right now or they won't ship" supplies, such as doses of flu vaccine.

The annual challenge of managing around the doc fix, combined with other cost-drivers such as the push to adopt electronic health record systems, is helping drive some doctors away from running their own primary care practices, Van Winkle said. They may sell out and take jobs with hospitals or insurance companies, he said.

Van Winkle, who had to pay about $2,500 for a portal in his electronic health record system that allows enhanced communication with patients, said he can't bill for this service. The doc fix "comes along on top of everything else that has been piled on medicine in the last 10 years, and some doctors are just fed up," he said.