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CMS Officials Postpone Basic Health Program for One Year

By Rebecca Adams, CQ HealthBeat Associate Editor

February 7, 2013 -- Federal officials are delaying until 2015 the Basic Health Program, a health care overhaul option that would allow states to use federal tax subsidies to help cover low-income people whose income is too high to qualify for Medicaid.

The program is an alternative to offering that population coverage in the exchanges that will begin operating in January 2014 under the overhaul (PL 111-148, PL 111-152). It is intended to help those with incomes between 139 percent and 200 percent of the federal poverty level. The delay in the start of the program was explained in a "frequently asked questions" document from the Centers for Medicare and Medicaid Services (CMS).

CMS officials cited as the reason for delay "the scope of the coverage changes that states and the federal government will be implementing on January 1, 2014, and the value of building on the experience that will be gained from those changes."

People who get their insurance through this program would not have to reimburse the federal government if their income fluctuates during the year, unlike under other health programs where a change in circumstances could change their eligibility. For example, without the basic program, if someone's income increased slightly, he or she could become eligible for private insurance through the exchange markets, while a slight decrease could shift them into the population that is eligible for Medicaid. People not in the basic program who get their coverage through the exchanges also would have to pay back any subsidies that they received during the year if it was determined later that they had not actually qualified for them.

The benefit to the federal government is that the Basic Health Program would simplify and perhaps reduce the costs of overseeing the care of this population. A state that decided to use this option would receive 95 percent of the amount of the premium tax credits and cost-sharing reductions that would have been provided in the exchange for this group of people.

CMS officials said they will release proposed rules for the basic health program for comment in 2013 and final guidance in 2014, so that the program will start in 2015.

In the meantime, state officials who want to create a system for the population whose income is near the dividing line between eligibility for Medicaid and the exchanges are encouraged to talk to CMS officials about other options in 2014. For instance, CMS officials have said in the past that states can use Medicaid funds to buy coverage in the exchange market for Medicaid beneficiaries. And some states that already have expanded their Medicaid coverage for adults could offer to help that population pay their premiums in the exchange.

The document covers a wide range of other topics, as well. It provides technical details about the higher federal matching rate for the people who become newly eligible for Medicaid in 2014 if a state expands and how states should transition to a system that uses modified adjusted gross income as a method of figuring out individuals' eligibility. The memo also answers detailed questions about coverage for pregnant women and children.

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