The CARES Act: A Missed Opportunity to Help State Medicaid and CHIP Programs Protect People and Public Health

Today (March 27) the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was approved by the House of Representatives by a voice vote after clearing the Senate by 97-0. It is now on its way to the President’s desk to be signed into law.  This is the third Congressional response (to date) to the COVID-19 pandemic, and by far the largest in terms of federal spending (an announced $2.2 trillion, with a “T”) and programs affected.  Despite its massive scale, the changes it makes to Medicaid and CHIP are, in the grand scheme of things, relatively modest.  They do not include an additional increase in the federal share of Medicaid spending, which should be central to an economic stimulus package like this; they do not extend Medicaid coverage for uninsured individuals to include treatment for COVID-19 disease (only testing is covered pursuant to law enacted last week); and they do not block the Administration’s proposed regulation to undercut state’s ability to finance their share of Medicaid.  Lawmakers missed a critical opportunity to build on the foundation laid by the Families First Coronavirus Response Act enacted on March 18.

That said, the CARES Act contains some important provisions affecting Medicaid.  These fall into two groups: clarifications of some of the Medicaid changes in the Families First Act and extension of some Medicaid provisions scheduled to expire on May 22.  There are also a few miscellaneous provisions.  We’ve updated our Families First Act explainer to reflect these changes.  The CHIP provisions in the Families First Act are not amended.

The Families First Act made three changes to Medicaid and CHIP designed to help these programs better protect people and support states in the face of the pandemic.  First and foremost, it increased the federal Medicaid matching rate (FMAP) by 6.2 percentage points during the COVID-19 public health emergency (the increase applied indirectly to CHIP as well).  Critically, the Act conditioned receipt of that increase on, among other things, freezing Medicaid disenrollments during the emergency period.  Despite last-minute efforts to unwind these maintenance of effort requirements, the CARES Act leaves them in place (with a 30-day exception for one state’s premium increase per section 3720).   Section 5001 of the Act provides for state fiscal relief not through an additional increase in the FMAP but through a $150 billion fund for states, localities, and tribes to cover unbudgeted costs incurred due to the COVID-19 public health emergency between March 1 and December 30 of this year.

Secondly, the Families First Act requires states to cover COVID-19 testing in Medicaid and CHIP without cost-sharing.  Section 3717 of the CARES Act eliminates the requirement that the COVID-19 tests be “approved, cleared, or authorized” by the FDA in order for Medicaid payment to be made.

Finally, the Families First Act gives states the option to extend Medicaid coverage for testing (and the costs of administration of the test) to uninsured individuals at 100 percent federal expense.  Section 3716 of the CARES Act clarifies that individuals in some optional Medicaid eligibility groups qualify as “uninsured individuals” despite being enrolled in Medicaid  because of their limited Medicaid benefits packages; these include TB-infected individuals, women with breast or cervical cancer, women receiving family planning services only, and pregnant women receiving pregnancy-related services only.

The CARES Act also extends Medicaid provisions that were scheduled to expire May 22.  The scheduled $4 billion reduction in payments to Disproportionate Share (DHS) hospitals is postponed from May 23 to December 1, 2020 (section 3813).  Other expiring Medicaid authorities are extended to November 30, 2020, including Money Follows the Person Rebalancing Demonstrations (section 3811), spousal impoverishment (section 3812), and the Community Mental Health Services Demonstration (section 3814).

The CARES Act contains two other provisions of note.  Section 2104(h) makes clear that the $600 additional weekly Unemployment Insurance payments authorized by the Act are to be disregarded in determining income for purposes of Medicaid or CHIP eligibility.  And section 3715 of the Act allows States to pay for home and community-based (HCBS) services for beneficiaries who are patients in acute care hospitals if the services are “designed to ensure smooth transitions” between the hospital and community settings.

This latter change, unlike the other Medicaid provisions discussed above, is not limited in duration to the COVID-19 public health emergency.  We will continue to update our readers on the rapid health policy developments. Here’s hoping that the emergency ends sooner rather than later.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.