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State Medicaid Officials Consider Multi-Tiered Benefits, Cost-Sharing Under Overhaul

By Rebecca Adams, CQ HealthBeat Associate Editor

April 19, 2013 -- The benefits for Medicaid recipients already are different from state to state. And in those states planning to expand the health program for the poor under the health care overhaul, people on Medicaid who live next door to each other could pay different amounts to see a doctor and be entitled to different levels of care.

The health care law essentially creates two broad sets of Medicaid beneficiaries: those who qualify under the rules before the overhaul passed and those who are eligible through the law's expansion, most of whom will be adults.

Newly eligible enrollees in some states may have to pay more than current beneficiaries when they get medical services. State officials are just starting to grapple with questions about whether to require that group to pay more than the traditional Medicaid population.

States can charge newly eligible beneficiaries more than the minimal amounts allowed in the traditional program—up to 20 percent of the cost of services for people with incomes above the federal poverty level, which is $11,490 for an individual in 2013.

The Center for Medicare and Medicaid Services currently pay states an average of 57 percent of the costs of treating Medicaid recipients. But in an effort to curb the sticker shock states would feel by adding millions more recipients to their rolls, the health care law provides for CMS to pick up all the costs of the new Medicaid enrollees for the first three years and phase that share down to 90 percent in 2020.

Also at issue is what benefits different groups of Medicaid enrollees will get. Many states already use managed-care plans in their traditional Medicaid programs, and some officials had assumed that they could simply add the expansion population to those plans without any big changes. Some did not realize that they also have to make sure that those plans include the 10 essential benefit categories the health care overhaul (PL 111-148, PL 111-152) requires. State officials also must make sure that the benefits are at least equal to those in one of several plans that are already available in the state, so-called benchmark plans.

"That's where the disconnect comes in. States really did think if they had an accepted plan under Medicaid, which de facto has to be approved by CMS, that they could simply extend to the expansion population," said Kathleen Nolan, the National Association of Medicaid Directors director of state policy and programs. "We are beginning to hear questions."

The requirements for the expansion population "pulls from both of these other two buckets to create some new life form," said Nolan. "We don't know what it's going to look like right now."

The old-style Medicaid program has always allowed states to offer different kinds of optional benefits that are not required by the federal government. Because different states chose to offer different non-required benefits, each state's program is unique. That led to the adage, "If you've seen one Medicaid program, you've seen one Medicaid program." Under the new system, that might be updated to "If you've seen one Medicaid program, you've seen two Medicaid programs." Or more.

Sebelius Promises Flexibility

Health and Human Services Secretary Kathleen Sebelius said in a Jan. 14 letter that states also "may select different plans for different groups of individuals" within the expansion population.

One difference between the benefits for the expansion and traditional groups is that the newly eligible are not entitled to nursing home care and other institutional long-term care. States can choose a variety of ways to offer long-term care services, or they could decide not to cover long term care at all. But that doesn't necessarily mean that the newly eligible would never be able to get government-covered nursing home care; they could spend down their resources and become eligible for Medicaid through the traditional program.

Many experts—such as Alan Weil, the executive director of the National Academy for State Health Policy—say that because the benefits for the newly eligible may be less generous than what's available under the traditional Medicaid program, a two-tier Medicaid system might result. "The alternative package is not as comprehensive as the traditional Medicaid package," he said.

But others said that given that states have not made decisions on the types of benefit that will be available, it's too early to conclude that the newly eligible population will get skimpier benefits than those in the regular Medicaid program, or in which states the benefits between the groups might differ dramatically.

Officials from the state Medicaid directors' group said that commercial plans in some states might offer benefits that aren't required to be covered under the old Medicaid program, something that states now do voluntarily. Those include acupuncture or chiropractic services.

Under other circumstances, the coverage for the newly eligible has to be similar to what's offered in Medicaid but that is not typically part of commercial coverage. For instance, the expansion group will be entitled to transportation services, family planning services, and care provided by rural health clinics and federally qualified health centers, something traditional health insurance policies do not cover.

Some people are exempt from the requirements for the newly eligible and will have to be offered the full traditional Medicaid package. Those include people with disabilities, people enrolled in both Medicaid and Medicare, and the medically frail.

States are waiting for the release of a final rule providing more details on Medicaid under the health care law. A proposed rule was released in January. Once a final rule is issued, the discussions in states around the country will become more urgent and specific.

One thing is clear: The new law will not make Medicaid benefits more uniform.

"There really could be substantial variations not just between Medicaid beneficiaries in a given state, but also between the states in terms of what they're offering," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.

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