We are approaching five years since the passage of the Patient Protection and Affordable Care Act (PPACA), and we’re one-year post implementation of many of the main provisions of the law. In the wake of these changes, one thing our team at OPEN MINDS has noted is that across the country, we are seeing the emergence of a varied system, where Medicaid looks different from state-to-state. In 2012, the U.S. Supreme Court ruled that while Congress can expand Medicaid, it can’t deny existing Medicaid allotments to those states that choose to not participate in that expansion – meaning that there is no punishment for non-participation in the Medicaid expansion (see Individual Mandate Stays – SCOTUS Puts State Medicaid Expansion In Play and Health Care Reform Update: State Medicaid Expansion Calculus).
Many states have been reluctant to expand coverage to this new expansion population due to financial, policy, and political concerns. Which states opted-out of expansion? The list of states is small, but represents a sizable proportion of the population: Alabama, Alaska, Florida, Georgia, Idaho, Kansas, Louisiana, Maine, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.
However, there are strong financial incentive for states to expand Medicaid – there is a 100% enhanced federal medical assistance percentage (FMAP) for the expansion population through 2016. After that, the enhanced FMAP gradually decreases, year-by-year, to 90% in 2020 (see Medicaid and CHIP FAQS: Newly Eligible and Expansion State FMAP). So compromise has become the rule of the day. There is a small group of states that have taken unusual approaches to Medicaid expansion; what we call the “non-Medicaid, Medicaid expansion.” These non-traditional Medicaid expansion plans allow states to gain the benefit of the enhanced FMAP, while maintaining some of their own financial and policy controls. And, to address political optics, many state legislatures will approve a “non-Obamacare,” Obamacare plan. Which states fall into this category?
There are five that currently have an approved waiver from the federal Centers for Medicaid and Medicare Services (CMS) for a “non-traditional” Medicaid expansion plan:
- Arkansas (see Feds Approve Arkansas’ Plan For Medicaid Expansion Via Private Option, Individuals With SMI Have Choice Between Traditional & New Plans)
- Indiana (see CMS and Indiana Agree on Medicaid Expansion)
- Iowa (see Iowa Senate File 446 Of 2013 To Authorize Medicaid Expansion & Creation Of The Iowa Health & Wellness Plan)
- Michigan (see Michigan Medicaid Expansion Plan Includes 70% Cut To State Funds For Mental Health Safety Net Services)
- Pennsylvania (see CMS Approves Healthy Pennsylvania 1115 Medicaid Waiver For Redesign & Medicaid Expansion)
So what are some of the non-traditional (for Medicaid) provisions that these unusual approaches to Medicaid share?
Consumer Cost-sharing – Typically, cost-sharing is not required in traditional Medicaid plans. In the five states with approved waivers (Arkansas, Indiana, Iowa, Michigan, Pennsylvania) there are new kinds of cost sharing that are imbedded in the design of the Medicaid program, including copayments, contributions to health savings accounts, and premiums. For example, in Michigan, beneficiaries are required to pay premiums and make copayments for services. Copayment amounts are based on the beneficiary’s past three months of copayments (during the first three months of enrollment, beneficiaries have no copayments). This means that every beneficiaries’ copayments are different, based on their utilization. Indiana, on the other hand, requires individuals to pay a set monthly amount into a POWER account (see POWER Account stands for “Personal Wellness and Responsibility” Account), which is modeled after a health savings account.
Premium assistance – While some states charge consumers with a Medicaid plan a premium (Arkansas, Iowa, and Pennsylvania), some (Indiana and Iowa) also offer help with the cost of premiums for an individual to receive coverage through employer sponsored insurance. For example, Indiana has created HIP Link, which pays premiums for an individual’s employer-sponsored insurance. The individual is still required to make monthly contributions to the state’s POWER accounts, although that money can be used for any out-of-pocket health care cost an individual might incur.
The creation of wellness plans – In three states (Iowa, Michigan, and Pennsylvania), the Medicaid plan has wellness requirements that resemble employer health plan models. For example, Iowa has launched the healthy behaviors program, in which individuals who complete a health risk assessment form, and have a wellness exam, will be exempt from premiums for the next year. Michigan and Pennsylvania also have wellness plans built into their non-traditional Medicaid expansion plan, although the plans have not yet been developed and still require approval from CMS.
In addition to these unusual approaches, many states have also proposed measures that CMS has already indicated won’t be approved. For example, the Utah plan contains a provision that individuals must participate in employment programs, despite the fact that CMS has repeatedly denied Pennsylvania and Indiana’s request that individuals must participate in programs that help them gain employment. But, most importantly (and what shocked many people) is that CMS approved a six-month lock-out period for individuals over 100% of the FPL in Indiana last week, despite forcing other states to compromise on the measure and publicly indicating that lock-out periods would not be approved. This raises questions about other provisions of the PPACA, including whether or not the individual mandate will apply to these individuals who are “locked-out” of Medicaid for six months. (The individual mandate states that individuals without health insurance for more than three months of the year will incur a penalty.)
My question – how will consumers fare in the brave new world of Medicaid design? This is a topic of concern not only for the consumers, but also for the executives of provider organizations and health plans that serve them. For more on this topic, premium members can check out our newest Market Intelligence report, What Is The Difference Between Traditional & Non-Traditional Medicaid Expansion? And for another great executive briefing, check out Medicaid Expansion: Bringing It Closer To Home.