Blog | Medicaid Payment and Reimbursement

The yin-yang of Medicaid: Expected federal regulations will increase number of uninsured despite increase in states taking expansion dollars

Blog | Medicaid Payment and Reimbursement

The yin-yang of Medicaid: Expected federal regulations will increase number of uninsured despite increase in states taking expansion dollars

  • We continue to slowly see more states consider, and eventually take, the Medicaid expansion dollars.
  • To date, 37 states and the District of Columbia have expanded Medicaid.
  • Of the 15 other states that have not expanded thus far, Nebraska and Kansas are most likely to expand soon.

Similar to when the Medicaid program was initially introduced, we continue to slowly see more states consider, and eventually take, the expansion dollars. To date, 37 states and the District of Columbia have expanded Medicaid. Nebraska voters approved a ballot amendment extending coverage to those up to 138% of the federal poverty line (FPL) and are  waiting on CMS to approve a waiver to implement expansion.

Of the 14 other states that have not approved expansion thus far, Kansas is most likely to expand soon. In a joint press conference on January 9, Democratic Gov. Laura Kelly and state Senate Majority Leader Jim Denning, a Republican, announced a deal would expand Medicaid to cover as many as 150,000 more people. Behind Kansas are Wyoming (with a bill before its legislature that could eventually lead to expansion), and Oklahoma, South Dakota and Missouri, where efforts to put expansion on their 2020 state ballots are in various stages. The upshot of this activity is that coverage will likely be expanded in more than one state within the next year or so as states are having a hard time justifying not taking the federal dollars to provide coverage to their residents.

Takeaway

Despite efforts of individual states to expand their Medicaid programs, headwinds are building at the federal level to continued expansion, which could reduce the total number of individuals enrolled. These headwinds come in three forms:

  1. Public charge rule: Doctors and public health experts warn of poor health and rising costs from Trump administration changes that would deny green cards to many immigrants who use Medicaid. If it goes into effect, hospital payments at risk under the public charge proposed rule total an estimated $17 billion. Implementation of the rule, which was supposed to be effective in October is current but stayed pending a legal challenge. However, the administration is actively challenging that stay.
  2. Increased federal oversight of state eligibility and enrollment efforts: A proposed rule entitled “Strengthening the Program Integrity of the Medicaid Eligibility Determination Process” arrived at the Office of Management and Budget for review right before the holidays. The rule is in response to the administration’s concern that states are allowing individuals who aren’t eligible due to not meeting income thresholds to enroll. While the specific contents of the rule aren’t known (it will likely be released this spring), when finalized, it will put downward pressure on program enrollment.
  3. Scrutiny of supplemental payments: The Medicaid Fiscal Accountability Regulation, if finalized as proposed, would make modifications related to determining whether a tax is healthcare related, if the tax qualifies for a waiver of requirements as generally redistributive and whether a tax contains a prohibited hold-harmless provision. Given that many states have financed their Medicaid expansions using provider taxes, it may require states to restructure those provider taxes to comply with the new regulations or lose the matching federal payments those taxes “draw down,” which could endanger coverage expansion.

The recent increase in the uninsured is attributed to losses in the Medicaid population. Some have attributed these losses to the public charge rule as effected populations, and those who mistakenly think they’re covered under the rule, avoid the use of federal programs due to concerns about it later impacting their immigration status. As all three of these separate regulatory efforts come to fruition, they will likely accelerate the trend of increasing the uninsured.  

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.

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