State Implementation of the Patient Protection and Affordable Care Act

State governments must now step up to the plate and take on the key role in implementing expansion of the Medicaid program, as the deadline for completion nears in 2014. It is not without hesitation and concern that state budget directors are approaching this responsibility, and a recent report by the GAO highlights those issues. To get a glimpse into what is being done to prepare for the expansion, the GAO selected six states for its study Colorado, Georgia, Iowa, Minnesota, New York, and Virginia as they prepare to comply with the Patient Protection and Affordable Care Act’s  (PPACA’s) (P.L. 111-148) Medicaid expansion requirements, including assessing changes that need to be made to their existing eligibility levels and eligibility determination policies.

 The 42 state budget directors weren’t shy voicing concerns over the cost and complexity of the Medicaid expansion required from PPACA. On the forefront of everyone’s mind, of course, is the financial aspect, because even when the federal government picks up 100 percent of the expanded enrollment tab, directors are expecting an increase in their costs. (The federal government will pay 100 percent of the cost of covering new eligible individuals in fiscal years 2014, 2015, and 2016, with the federal match gradually reduced to 90 percent by 2020.) 

And of course, there’s technology. Health care coverage cannot be increased and expanded to more people without spending the money on upgrading information technology for eligibility determinations. To comply with PPACA, states must provide a simplified and streamlined eligibility process whereby individuals may apply for and potentially enroll in Medicaid online. The state eligibility determinations will interface with a Federal Data Services Hub, which is an electronic service available for states to use to verify certain information with other federal agencies, such as an applicant’s citizenship, immigration status, and income data.

In addition to the feared financial burdens and increase in technology, states reported that they would like more guidance from CMS, as the release of regulations or guidance could affect their state’s ability to meet implementation deadlines. And while CMS has already provided some guidance such as webinars, the state budget directors have indicated that they needed more information and training on developing budget estimates for benefits, eligibility determination and the FMAP (federal medical assistance percentage) match for newly eligible adults.

CMS has indicated that there will be more guidance released later this year, the deadline is looming. PPACA-required reform must be in place by the beginning of 2014. According to the GAO, “The ultimate success of the implementation of these changes will depend heavily on both federal and state actions… Concerted and cooperative efforts on the part of CMS and the states will be critical to meeting the implementation deadlines for the Medicaid expansion.”

After the U.S. Supreme Court upheld health reform as constitutional, HHS reminded states that there’s no deadline to decide to undertake the expansion. A state can receive an administrative federal match for IT costs, even if it hasn’t decided to expand, as long as it is considering modernizing its eligibility systems. If a state decides to pass, it will not have to pay back the extra funding, GAO noted. According to the Supreme Court, Congress had the authority to use new funding to encourage states to expand eligibility to individuals with incomes at or below 133% of the federal poverty level it can not force states to expand eligibility to threatening to withhold existing funding.