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Kids' Advocates Worry About How State Exchanges Will Determine Medicaid Eligibility

By Jane Norman, CQ HealthBeat Associate Editor

May 14, 2012 -- Advocates for children's health warn that low-income families might slip through the cracks in the new state health benefits exchange system, according to a letter advocacy groups submitted in response to provisions in an exchange rule issued earlier this year.

In the rule, "many provisions would potentially undermine the ACA's [Affordable Care Act] clear intent to establish a simple, unified pathway to health coverage for consumers," wrote the groups, including the American Academy of Pediatrics. One major element of the rule would let state exchanges opt out of making final determinations on public program eligibility, they said.

There have long been concerns about making sure that families eligible for Medicaid, the Children's Health Insurance Program, or subsidized coverage in the exchanges understand how the new system works and that they are not frustrated by its complexities.

The idea of the exchange itself is that it is a one-stop shop. However, in its comments the group said that might not be the case for the poor, many of whom may be gaining health insurance coverage for the first time in their lives. Under the health care law (PL 111-148, PL 111-152), Medicaid will be extended to every adult under 65 who is earning less than 133 percent of the federal poverty level.

The groups are also concerned that states will be given too much time to ponder their final say-sos on whether people are eligible for insurance coverage, especially pregnant women in need of prenatal care and newborn babies who should be seen by doctors regularly.

While a final 644-page exchange regulation was issued in March, Department of Health and Human Services officials kept several provisions as interim final regulations, which meant they were still open to public input. Overall, the rule sets up a framework in which HHS will assist states in setting up their exchanges, though not every detail is available yet. Public comments were due on at the end of last week.

The coalition of children's health advocates, including the Children's Defense Fund, Children's Hospital Association, and March of Dimes, wrote that they were "very troubled" by a decision to allow the state exchanges to decide if they want to give up responsibility for making eligibility decisions on Medicaid. Instead, under the exchange rule, state Medicaid and Children's Health Insurance Program offices would make those determinations, the groups said.

Proposed rules published in 2011 said that Medicaid determinations would be made initially by the exchanges so they could ensure that people were enrolled in the right programs, said the children's advocates. However in the revised rule published in March, states can opt to have the exchanges make a preliminary "assessment" and hand off the final decision to Medicaid agencies. In the past it has been a problem when this responsibility was split among agencies even in states with the best of intentions, the groups said.

This could prove a problem for families in which different members may be covered by different programs, or where household income fluctuates month to month and eligibility changes. A February 2011 study in Health Affairs estimated that in a typical year, 28 million people will shift between being eligible for Medicaid and for subsidized health care through the exchanges. These families would then have to figure out how to navigate as many as three different systems during the course of a single benefit year: the exchange, Medicaid and CHIP, said the groups.

"Unfortunately, we know that families in this situation are at greater risk of falling through the cracks of coverage and that a fragmented eligibility system will exacerbate this risk," they wrote. "We are deeply concerned that it is the nation's children who will most frequently suffer if states fail to establish simple, user-friendly eligibility and enrollment systems."

States strapped for cash might even opt to split up the responsibility if they think it might slow down enrollment in Medicaid and CHIP, the groups said.

They suggest that "if a state is going to be allowed to adopt a more complicated eligibility system than is necessary, it should be required to first establish that it could do so without harming families." The groups said that states should have to demonstrate that their Medicaid agencies are capable of making eligibility determinations in full compliance with the final Medicaid eligibility rule issued by the federal government, that their health technology systems can work in tandem with the exchange systems and that they will comply with requirements that they not subject families to repeated verifications or requests for information.

The groups also said they are worried that the government would give states as many as 45 days to determine Medicaid eligibility for people without disabilities and as many as 90 days for people with disabilities. The groups pointed out that prompt prenatal care is important and newborns are supposed to see a health care provider three times in their first month. Given that the government is making massive investments in new health technology, eligibility decisions should be made within a few days when data is available and "under no circumstances" longer than 30 days, they said.

For all these exchange issues, deadlines loom. State exchange plans must have approval from HHS by Jan. 1, 2013, however conditional approval is allowed if a state is advanced in its readiness.

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