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Medicaid Expansion Rule Aims for Vastly Simpler Enrollment Process

By John Reichard, CQ HealthBeat Editor

March 16, 2012 -- A final rule released Friday spells out the terms for the expanded Medicaid eligibility in 2014 under the health care law and requires “real-time” enrollment that documents income, citizenship, and other data without the applicant having to bring in paperwork.

The rule also collapses the many eligibility categories now in Medicaid into just four: adults, children, parents and pregnant women.

“I’ll guarantee you that Medicaid will look and feel like a very different program in 2014,” federal Medicaid director Cindy Mann told reporters on a telephone briefing.

The rule will make it much easier for states to run their Medicaid programs, she said. “We had overwhelmingly strong support from all stakeholders for the rule,” she said. It also will make a big difference for the many low-income Americans who now go without coverage, she added. “Think for a minute about a 55-year-old woman who works in a restaurant. Her kids have grown—left the home—she earns let’s say $12,000 a year. In most states, if she’s not getting affordable coverage through her workplace, she’s not going to be eligible for Medicaid even though she really has no options. The Affordable Care Act fills that gap by expanding eligibility to low-income adults for the first time in the program.”

The health care law extends Medicaid coverage to all individuals between ages 19 and 64 with incomes up to 133 percent of the federal poverty level. That’s $14,856 for an individual and $30,656 for a family based on the 2012 federal poverty level. (While the law specifies 133 percent, in practice it’s 138 percent since states disregard five percent of income in determining eligibility, Mann noted.)

Mann said that under the health law the application process will be completed “literally in real time.” As an example, she said an application filed online at nine in the morning would be processed and, if in order, approved an hour later.

Health and Human Services is simplifying this process for the states by serving as a single point of computer entry to federal data sources such as the Internal Revenue Service to determine income, the Social Security Administration to determine identity and the Department of Homeland Security to confirm legal status.

Under the health care law, the uninsured will obtain coverage through Medicaid or on insurance exchanges using tax credits to help them pay premiums. In many instances, people won’t know whether they should be applying for Medicaid or premium tax credits—or in the case of their children, for Medicaid or the Children’s Health Insurance Program (CHIP).

No matter, Mann said. Applicants will have to fill out just one application. They won’t have to know ahead of time whether they should apply to Medicaid, CHIP or insurances exchanges to get tax credits.

In response to comments on the proposed version of the rule, the final version provides two ways for exchanges to perform Medicaid-eligibility evaluations. They can determine themselves whether an applicant qualifies for Medicaid or make an initial determination of that and rely on state Medicaid and CHIP agencies for a final determination. If they choose the latter, applications have to be processed in “timely” fashion, Mann said.

When Medicaid expands, large numbers of uninsured people who qualify for the program based on current criteria but haven’t enrolled are expected to sign up for coverage. That is because of expanded outreach efforts and the requirement in the health law that individuals without coverage pay penalties.

But those qualifying for coverage based on current criteria, the states will get current federal matching rates, not the enhanced federal matching rate provided for those newly eligible for Medicaid under the health law. In 2014, 2015, and 2016, the federal government will pay 100 percent of the Medicaid costs of the newly eligible under the health law; then the federal percentage gradually drops so that in 2020 it’s 90 percent, where it stays.

Matt Salo, executive director of the National Association of Medicaid Directors, said in an email that “the provision about how to conveniently calculate the regular and enhanced match rates for enrollees is not included in this regulation. The Centers for Medicare and Medicaid Services (CMS) anticipates a final rule on these provisions around October 2012. We understand why it takes so long, because this is extraordinarily complicated. But the longer any piece takes, the more it stretches already tight time frames” for the health law. That’s especially the case “since many state agencies are or soon will be preparing budgets for the next fiscal year.”

Salo added that state Medicaid agencies will need flexibility on the deadlines for determining final Medicaid eligibility when they do it rather than the exchanges.

Separately, CMS released regulations Friday establishing a time frame by which participants in the

Early Retiree Reinsurance Program must use reimbursement funds; and standards relating to reinsurance, risk corridors and risk adjustment to eliminate incentives for insurers to avoid covering people in poor health.

John Reichard can be reached at j[email protected].

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