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Medicaid Coverage Remained Stable in 2012; Work Remains for States to Expand

By Rebecca Adams, CQ HealthBeat Associate Editor

January 23, 2013 -- Most states have started updating their Medicaid information technology and eligibility systems, as they must do by 2014 to comply with the health law, according to a survey the Kaiser Family Foundation released last week. But many states would have significantly more work to do in order to expand coverage to adults.

The health care law (PL 111-148, PL 111-152) requires states to use updated electronic-based systems starting in 2014 to determine eligibility and enroll people in Medicaid, regardless of whether a state plans to expand Medicaid coverage for adults as the overhaul allows. The Centers for Medicare and Medicaid Services is providing a federal matching rate of 90 percent for states to upgrade their IT infrastructure. As a result, 47 states had submitted plans to upgrade their systems and 42 of them had already started the system development work as of Jan. 1, according to the 88-page, 50-state survey, which is the organization's 12th annual report on Medicaid.

Regardless of whether a state expands, it will have to coordinate its Medicaid system with the new exchange markets to create a seamless "no wrong door" experience for people applying to programs so that individuals don't have to apply to separate programs.

And a number of states would have much work to do if they want to expand coverage to adults with income of up to 138 percent of the federal poverty level, which was $24,344 for a family of three in 2012. For instance, states that decide to expand cannot apply an asset test for the newly-eligible people. Most states don't use asset tests for children, but 27 states do impose an asset test for adults.

The law also will ban face-to-face interviews for people applying under the expansion. Six states now require those types of interviews for adults.

Those are just two examples of challenges for states that are weighing an expansion.

The expansion also would represent a major change in eligibility in most states. The median level of eligibility for parents was only 61 percent of the federal poverty line in 2012. The survey found that 33 states limit parent eligibility to less than the federal poverty line, and 16 states limit eligibility to people earning less than 50 percent of the poverty level, which was $9,545 for a family of three in 2012.

Coverage for adults who are not parents was more limited. The report found that just nine states—Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Minnesota, New York, and Vermont—provide benefits to other low-income adults that mirror the coverage for parents.

"As states face a shrinking timeline to be ready for 2014, much work remains to be done and many key decisions still need to be made," said the report.

About 20 states have decided to expand while 10 governors have said that they oppose expansion, said Kaiser Commission on Medicaid and the Uninsured Executive Director Diane Rowland at the event.

A policy analyst familiar with Kaiser's report said that all of the Medicaid changes underway, including those to simplify and expand the program, represent a significant change to the program.

"It is a heavy lift for Medicaid but not just because of the expansion," National Academy for State Health Policy Program Director Sonya Schwartz said in an recent interview. But Schwartz, who tracks Medicaid expansion decisions, said that she is optimistic states are up to the task.

Centers for Medicare and Medicaid Services Deputy Administrator Cindy Mann said at the Kaiser event that states are at varying stages of progress, since some jumped out of the gate early while others waited for a while. The agency is working closely with states in such tasks as sharing technical information and identifying vendors to help rebuild IT systems, a necessary element of simplification and expansion.

"There is a lot of accelerated activity going on," Mann said.

"We understand it's a lift," said Mann, but said that "we're all pulling together and we'll make it."

In other findings, the Kaiser report said that coverage in most states was fairly stable last year. Most states did not raise copays for families, even though many states were struggling with tight budgets. Nine states did raise copays, as the law allows, despite maintenance of effort restrictions on significant premium increases. The law also requires states to maintain eligibility rules except under limited exceptions, which led to few eligibility changes last year. Three states—Hawaii, Illinois and Minnesota—reduced eligibility for adults, while two states—Colorado and Utah—expanded coverage for adults in 2012.

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