Medicaid Expansion or Not, Expect Changes in Your State

While politicians in Washington DC struggle to relitigate the Affordable Care Act through a government shutdown, many key provisions and initiatives associated with the expansion of health insurance included in the ACA are continuing to march toward implementation. A key component of the ACA is the expansion of Medicaid eligibility criteria to 133% of the Federal Poverty Level ($15,826 in 2013). While the ACA initially mandated this increase to all states, the US Supreme Court overturned that mandate and allowed states to choose whether they wanted to expand their Medicaid enrollment. States that have chosen to expand Medicaid are eligible for increased federal matching funds for the newly eligible Medicaid recipients from 100-133% of FPL. Increased federal funds will cover 100% of the costs associated with the new enrollees from 2014-17, then will be reduced to 90%.

25 states have chosen to expand their Medicaid eligibility to date, and another 4 states are in the process of expanding. There are varying models being used in states choosing to expand ranging from traditional expansion, to increased managed care/Accountable Care Organizations, to a hybrid model of providing vouchers to the newly eligible population to purchase private insurance plans on the health exchanges. CMS must approve all expansion plans in order for the state to be eligible for increased federal matching funds.

At present Medicaid programs cover a total of 66 million Americans, including 32 million children,18 million adults and 16 million low income and disabled seniors. Medicaid accounts for 1 out of every 6 dollars spent on health care nationally. A recent report from the Kaiser Health Foundation examined the Medicaid expansions, both in states that are expanding, and in those that have chosen not to expand.

The report found a significant increase in Medicaid enrollment in both categories, though obviously a larger increase in the states that have chosen to voluntarily expand. In FY 2013, Medicaid programs saw the lowest increase in enrollment (2.6%) in many years, due mostly to state budget economics and preparing for the larger expansion. However, for FY 2014, enrollment is projected to increase 8.8% overall, while spending will increase by 10.4%. In states that are expanding Medicaid, enrollment will increase by 10.8% and spending up by 13%. States that choose not to expand enrollment will also see increased enrollment and spending due to more Americans becoming aware that they are eligible for the state/federal program due to the individual mandate. Enrollment will swell by 5.3% and spending by 6.8% in FY 2014 in states that have chosen not to expand Medicaid enrollment.

The report goes on to cite changes that have been made over the past year on benefits offered, and other initiatives by states to improve quality and coordination while reducing costs associated with treatment. From the report:

In FY 2013 and FY 2014, state Medicaid programs focused attention on delivery system and payment reforms designed to improve quality and minimize unnecessary costs. A total of 39 states (28 in FY 2013 and 25 in FY 2014) reported a policy change or initiative to expand managed care, or to improve care through a managed care focused quality initiative. States continue to expand managed care into new geographic areas and add eligibility groups (including those made newly eligible for coverage under the ACA), and expand managed long term care. In addition, states are developing more sophisticated quality metrics and performance measures within managed care programs. Such initiatives were implemented in 21 states in FY 2013 and 22 states adopted initiatives for FY 2014. Outside of managed care, new or expanded care coordination efforts were underway in 40 states (25 states in FY 2013 and 33 states in FY 2014.) These initiatives include health homes, patient-centered medical homes, and Accountable Care Organizations as well as other quality related initiatives.

The report also provides four major take aways for what to expect in FY 2014 for state Medicaid programs:

Improvements in the economy resulted in modest growth in Medicaid spending and enrollment in FY 2013. In FY 2014, national enrollment and spending growth are expected to rise. States moving forward with the Medicaid expansion are expected to see higher enrollment and total spending growth driven by increases in coverage and federal funds.

The implementation of the ACA will result in major changes to Medicaid eligibility and enrollment for all states whether they are implementing the ACA Medicaid expansion or not.

Nearly all states are developing and implementing payment and delivery system reforms designed to improve quality, manage costs and better balance the delivery of long-term services and supports across institutional and community-based settings.

Improvements in the economy have enabled states to implement more program restorations or improvements in provider rates and benefits compared to restrictions, but states also adopted policies to control costs and enhance program integrity.

Looking ahead, FY 2014 will be a transformative year for Medicaid.

So, whether you are a provider in a state that chose to expand Medicaid or not, you will be impacted by the ACA’s expansion of the program. All 50 states have also applied for waivers to the Medicaid program to facilitate increased managed care networks and other broad changes being made across the country on how Medicaid contracts with providers and pays for services. Independent O&P’s must be cognizant of these changes and guard against state wide or regional exclusive provider networks that seek to limit the providers that can bill Medicaid for many services and equipment categories.

Contact OPGA with questions about your state’s Medicaid expansion or proposed network changes. With many state legislatures reconvening early next year, now is the time to develop arguments and visit state legislators about the impact of qualified orthotic and prosthetic practitioners and how that will manifest itself in lower costs for state Medicaid programs.

The full Medicaid report completed by The Kaiser Commission on Medicaid and the Uninsured can be found here.

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