As my colleague Elisabeth Burak blogged about last month, Secretary Sebelius released a letter to Governors with answers to 39 frequently asked questions related to ACA implementation on December 10th. Most notably, the FAQ addressed whether or not CMS would allow waivers for “partial expansions” now that the Supreme Court has rendered the expansion of Medicaid coverage a state option. As Elisabeth wrote, the short answer to that question is no, but like most things in life, AND certainly in health policy these days, the short answer is not the end of the story.
But before we get to that question, here are a few other notables from the Medicaid section of the FAQ. One question underscores that, unlike states’ decisions about establishing an exchange, states do not have a deadline to decide whether or not to extend Medicaid coverage, nor are they locked into the coverage levels in perpetuity once they have extended Medicaid to adults up to 133% FPL. A state moving forward would indicate that it wanted to pick up the enhanced federal funding by submitting an amendment to its Medicaid state plan (aka a “SPA”) through a new streamlined online process. CMS is working on a template to make this easy for states to activate.
As readers of Say Ahhh! know, individuals in a state that does not expand Medicaid are only eligible for tax credits if their incomes are above 100% of FPL. Hence, the question of whether a state could expand just to 100% rather than the 133% of FPL contemplated in the statute has arisen. So the answer, as Elisabeth pointed out, is no waivers if a state wants the extremely generous federal match (100% federal funding for the first three years, tapering down to 90%). However, HHS did indicate that it would consider a waiver for a partial expansion if a state sought to use the regular match rate.
Whether any state goes down that path remains to be seen. Given the generous match on the table and ongoing pressure on state budgets, it is hard to imagine many states doing a partial expansion at regular match rate. But I guess stranger things have happened!
The letter also includes a hefty section entitled Flexibility for States. A funny dynamic for us waiver watchers is that certain Governors like to talk about how unique their state is as an explanation for why they need to be able to do it their own way. However those “unique” states tend to gravitate to certain issues where these Governors want federal protections loosened. Certainly delivery system changes involving more managed care are the number one waiver issue these days. But typically Governors that want a lot of flexibility want waivers so they can reduce benefits or raise cost-sharing beyond what Medicaid permits.
The Secretary’s letter indicates in Question #33 that HHS will shortly be issuing new guidance to modernize and update cost-sharing rules and highlight cost-sharing flexibility that already exists for individuals above 100% of FPL. We will keep you posted as soon as this guidance is released.
With respect to benefits, Question # 33 also points out that states have considerable flexibility already with respect to the benefits package for the newly eligible. Specifically, “states can choose a benefit package benchmarked to a commercial package or design an equivalent package.” So a state can choose a different package for the new population and have quite a few options to work with.
Next week I will blog about some interesting developments raised in the Secretary’s letter with respect to premium assistance.
