As I blogged about last week, our recent report with co-authors at the Kaiser Commission on Medicaid and the Uninsured looked at wrapped benefits and how they are working in selected Section 1906 premium assistance programs. The most startling discovery to me was the finding that families have no cost-sharing protections in the programs we examined unless they seek out a provider in their employer-sponsored insurance who is also a Medicaid provider.

I found this especially interesting because proponents of premium assistance often argue that it is an improvement over Medicaid to buy private coverage because a wider network of providers will be available. But if families have to pay the additional cost-sharing or meet a high deductible, that won’t work for many of them. It also wasn’t clear whether or not families were always aware of this restriction and that they would be subject to higher cost-sharing charges.

While our recently released report didn’t examine this particular question, the manner in which states are implementing the cost-sharing wrap raises questions for me about compliance with federal law. For example, federal rules governing premium assistance in the individual market (see 42 C.F.R. § 435.1015) applies the following condition:

“(3) the individual does not incur any cost sharing charges in excess of any amounts imposed by the agency under subpart A of part 447” (in other words the regular cost-sharing rules).

Federal guidance issued more recently around the time of the Arkansas waiver also noted that beneficiaries remain subject to cost-sharing protections afforded to all Medicaid beneficiaries.

Nowhere do the rules say Medicaid cost-sharing protections apply — “but only if the beneficiary receives services from a Medicaid provider.”

The cost-sharing component of the wrap seems to be the easier part to administer as compared to benefits. So it’s troubling that implementation of the cost-sharing protections is not happening in a way that protects families. As we look to the future of children’s coverage the stakes in getting wraparound benefits right could become much higher — as the final blog in this premium assistance trilogy will shortly address…