By Rebecca Adams, CQ Roll Call
January 27, 2015—Indiana officials and the Centers for Medicare and Medicaid Services (CMS) reached a deal on the state's unconventional version of Medicaid expansion.
The agreement makes Indiana the 28th state plus the District of Columbia to broaden eligibility for Medicaid, the federal–state health program for the poor.
The state received approval to continue using health savings-type accounts for Medicaid beneficiaries.
But officials didn't get everything they sought. Republican Gov. Mike Pence will have to use state money instead of federal money to connect Medicaid beneficiaries to state job search and training programs. Beneficiaries are not required to enroll in the programs to get Medicaid benefits, state and federal officials said.
The deal allows two benefit packages: HIP Plus and HIP Basic. Each covers the basic essential health benefits required by the health care law (PL 111-148, PL 111-152).
People who get HIP Plus will make monthly premium payments through contributions to their savings-type accounts. In return, they will get additional benefits and have no other out-of-pocket costs except for some emergency room copayments ranging from $8 for the first time someone has an inappropriate visit that could have been handled by a doctor's office to $25 for subsequent visits. Beneficiaries can reduce their premiums through incentives like receiving preventive care.
If people don't pay their monthly premiums, the consequences vary, depending on their income level.
Those whose income is above the poverty line, which this year is $11,670 for a single person, could lose their benefits and be unable to get back into the program for six months. People who do not make all of their required contributions to their accounts and have to leave the program are responsible for any medical debt they may have, said Pence's staff.
The monthly premiums cannot be more than 2 percent of household income. People who are very low-income, with income than 5 percent more than the federal poverty line, will have premiums of $1 per month.
If people below the poverty line do not put money into their HIP Plus accounts, they will not be forced to make the monthly payments in order to keep coverage but will instead get HIP Basic. They will be asked to pay copays. Their total cost sharing cannot be more than 5 percent of the family income.
Individuals with income below the poverty line who do not make an initial contribution into their accounts must wait 60 days after applying for their coverage to start, according to a state summary. Unlike other states who have not gotten a waiver, Indiana will not have to retroactively cover the health care costs of enrollees going back 90 days before their coverage started, according to a waiver letter from federal officials.
The plan also offers low-income workers a chance to get state help in buying insurance through their jobs. Indiana will be the first state to use health savings accounts as part of a Medicaid plan to offer extra benefits to people covered through their employers.
Pence had submitted the waiver request in July. Since then, he became frustrated with CMS Medicaid staff over the negotiations. The governor spoke to the president about his waiver during an Oct. 3 presidential visit to Indiana. He then talked by phone with Health and Human Services Secretary Sylvia Mathews Burwell a dozen times after that, most recently on Jan. 9, according to Pence's staff.
"This has been a long process, but real reform takes work," said Pence in a statement.
The state was eager to get approval quickly because some people, those whose income is between the poverty line and 38 percent above the poverty line, were eligible for marketplace plans until the expansion was approved and granted those people eligibility. Now the state will have to shift those people from private marketplace plans into the new Medicaid coverage.
The deal allows hospital foundations or non-profit organizations to help people pay for their care. Hospitals also will contribute to the overall budget for the program starting in 2017, when the federal matching rates begin to decline. The federal government pays all of the costs of people in the expansion category through 2016 and then the federal contribution phases down until it is 90 percent of those costs in 2020. The state will agree to pay hospitals higher rates, and the hospitals will send some of the money back to pay for coverage.
Pence will boost providers' pay by about 25 percent, his staff said. A temporary two-year increase in Medicaid primary care payments has expired.
The state will not have to meet a federal requirement for states to cover non-emergency transportation.
Federal officials want other governors, such as those in Tennessee, Utah, North Carolina, Idaho, Wyoming, Virginia, and other places, to convince legislators to expand Medicaid.
"I continue to be encouraged by interest from governors from all across the country who want to bring health care coverage to low-income people in their states by expanding Medicaid," said Burwell. "They understand both the economic benefits of Medicaid expansion and the health and financial security it brings to their residents. The Administration will continue to work with governors interested in expanding Medicaid to devise approaches that work for their states while keeping faith with the law's goals and consumer protections."
Children's advocates had mixed reactions to the agreement and had concerns about the premiums contributions that people will be asked to pay. The good news is that Indiana will extend Medicaid coverage, said Joan Alker, the executive director of the Georgetown Center for Children and Families. But she called the idea of creating health savings-type accounts for people whose income is barely above poverty, including some who are homeless, absurd. "The less than good news is that this is an enormously complicated program which will likely prevent some low-income adults from getting the health care services they need," she said.
