Nebraska Uses State Medicaid Managed Care Excess Profit Fund to Leverage New Federal Home Visiting, Medicaid Dollars

While its neighbor Iowa cut access to prenatal care, Nebraska invested in new supports for maternal and early childhood health.  Nebraska is one of the 37 managed care states with a state Medicaid Medical Loss Ratio (MLR). MLRs help limit public dollars’ support of exorbitant profits for the private, for-profit managed care organizations (MCOs), the insurance companies that contract with state Medicaid agencies to, in effect, serve as Medicaid for those enrolled. Without strong guardrails and oversight, for-profit MCOs like those contracting with Nebraska Medicaid have an economic incentive to restrict direct services for Medicaid beneficiaries in pursuit of profit. Nebraska created the Medicaid Managed Care Excess Profit Fund in 2020 to park excess MCO profits that can be reinvested by the state to “provide for services addressing the health needs of adults and children” in Medicaid. (See Andy Schneider’s blog for more on the Fund’s structure). Last month, Nebraska lawmakers successfully dedicated a portion of the Excess Profit Fund to draw down new federal matching funds through the Maternal Infant and Early Childhood Home visiting program (MIECHV) and Medicaid.

First, home visiting programs. Created by the ACA, the Maternal Infant and Early Childhood Home Visiting program (MIECHV) provides grants to states to fund select home visiting models based on the population of children under age 5. The 2022 MIECHV reauthorization not only increased MIECHV’s base grants to states, it also allowed for additional federal funds to be secured through a state match, paying $3 for every $1 the state invests up to a specified cap. The ceiling for the additional match-based grant is based on the state’s population of children under age 5 in families living in poverty. States seeking any MIECHV funding—base or matching grants- must meet a maintenance-of-effort requirement to ensure federal funds don’t replace prior years state investments. Nebraska invested state dollars in prior years, so state funds used to secure additional federal matching dollars only count for match above the required state MOE levels detailed here.  The additional matching fund grants became available in FY 2024 with the federal maximum increasing each year through FY27.  With its new state match from the Fund, directed by the state’s budget bill, Nebraska could pull down more than $1 million in 2025. If the Excess Profit Fund continues to supply funding in future years, even more federal funds will be available as shown below.

Home visiting wasn’t the only recipient of new state dollars. LB857 also tapped the Excess Profit Fund to fund a new Nebraska Prenatal Plus Program, modeled after a similar initiative in Colorado, to provide to pregnant women covered by Medicaid who are at risk of poor birth outcomes with additional mental health care, health education and promotion, nutrition and lactation support and case management services. The bill directs the state Medicaid agency to submit a state plan amendment or waiver for these additional services by October 1 to pull down available federal Medicaid match.

This is a triple win for children and families in Nebraska: If the state’s Medicaid MCOs receive excess profits, the state portion is reinvested in the Excess Profit Fund rather than padding shareholders’ pockets. In turn, the Excess Profit Fund is tapped for state programs that serve pregnant and postpartum Nebraskans and their young children during a time-sensitive period of family change and early brain development. And these dollars then allow the state to pull down additional federal funds to scale these critical services. Other states would do well to follow Nebraska’s example.

Elisabeth Wright Burak is a Senior Fellow at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.