CMS grants New Hampshire Medicaid funding compliance extension

CMS has clarified that New Hampshire’s Medicaid expansion may end next year, but the current program can continue until the end of 2018. CMS stated that New Hampshire’s use of voluntary donations from health care providers and hospitals in the New Hampshire Health Protection Fund fails to comply with the federal requirements. CMS raised the possibility that federal funds may be withheld which would have resulted in a termination of the program.

The Medicaid statute in Section 1903(w) of the Soc. Sec. Act and implementing regulations at 42 CFR Sec. 433.54 and 433.66 establish a prohibition on provider-related donations, except in very limited circumstances. In a letter to New Hampshire officials, CMS indicated that there is a relationship between the donations and Medicaid payments, because Medicaid expansion is conditioned on the receipt of donations as articulated in New Hampshire legislation. The state’s use of voluntary donations from hospitals to supplement federal Medicaid funding violates federal law. The non-federal share financing of the New Hampshire Health Protection Program or Medicaid expansion through the use of provider-related donations to pay for Medicaid service-related costs violates the requirement that a bona fide provider-relation is a donation that has no direct or indirect relationship to Medicaid payments.

The 50,000 New Hampshire residents participating in the Medicaid expansion will not see any change in their coverage through the current re-authorization which continues until the end of 2018.New Hampshire’s next legislative session will need to address compliance with the federal law for the 2019 budget to bring the state’s non-federal share financing into compliance with the existing federal statute and regulations. Otherwise, Medicaid expansion in the state will lose federal funding. Governor Chris Sununu (R) stated that stripping coverage from Medicaid enrollees would have been “grossly unfair,” and will use the transition period to consider future changes.

Wrap-around Medicaid gives states administrative headaches

Medicaid premium assistance, where Medicaid acts as wrap-around coverage for a private health insurance plan, is administratively complex for states and may not work well. In an issue brief, the Kaiser Family Foundation (KFF) considered what is known about wrap-around Medicaid coverage, and looked at financial implications of such a program.

Wrap arounds

According to KFF, states with Medicaid premium assistance programs use Medicaid funds to purchase private coverage for Medicaid beneficiaries. Federal law requires these programs to make the purchased private coverage on par with what the state’s Medicaid program would cover, but private insurance generally covers less than Medicaid and requires more out-of-pocket payments. Therefore, states with these programs must provide supplemental benefits and cost-sharing protections, known as “wrap arounds,” to insure that cost sharing does not exceed Medicaid limits. In general, states with these programs have low enrollment rates, and therefore, there is limited data available to determine how well the programs work.

Administrative complexity

States have found that Medicaid premium assistance programs require a lot of administrative work to determine exemptions, track and manage cost sharing under multiple private plans, and track wrapped covered benefits. The administrative burden led multiple states to discontinue Medicaid premium assistance programs and to merely use their own managed care delivery systems. However, that burden can be minimized. When Arkansas created its Medicaid premium assistance program under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), it contracted with a limited number of standardized plans. The standardization made it easier for the state to track and manage the wrap-around payments.

Financing

KFF looked at legislative proposals that would expand wrap-around Medicaid coverage and noted that, in order for such a program to be effective, it would need adequate federal funding, because such programs are required to be cost effective compared with traditional Medicaid coverage. It also noted that, if these programs were done under a waiver program rather than through traditional Medicaid, the funding would be limited in duration and amount, leaving it uncertain whether the program would be able to continue in the future.

Senate urged not to proceed with BCRA by civil and human rights groups

One hundred sixty six civil and human rights organizations including The Leadership Conference on Civil and Human Rights, the National Health Law Program, and the National Partnership for Women & Families are urging senators to oppose the motion to proceed on the Better Care Reconciliation Act (BCRA) (H. R. 1628). The organizations sent a letter to senators on July 24, 2017, expressing their concern that the BCRA will “eliminate affordable quality health care for millions of Americans.” Specifically, the organizations said that the BCRA would gut the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and slash federal funding as well as transform Medicaid [funding] into a block grant or per capita cap; and eliminate Medicaid expansion (see ACA sec. 2001 and sec. 1201 of the Health Care Education and Reconciliation Act of 2010 (HCERA) (P.L. 111-152). In addition, the organizations pressed senators to support the Parliamentarian’s ruling excluding the defunding of Planned Parenthood from the bill.

The Senate’s lack of transparency

The organizations noted that they were “seriously concerned about the lack of transparency of the discussions’ that lead up to the introduction of the BCRA and “the rush to vote on the bill without adequate time for analysis, hearings, and a discussion of a CBO [Congressional Budget Office] score.” The organizations stressed that such discussions, would allow the public to better understand the proposed legislation and participate in a discussion of their access to health care.

The impact of the BCRA

The organizations identified the issues that arise from the BCRA provisions that the organizations believe would have a serious impact on the communities that they represent including low-income families and people of color. These issues include:

  • The 15 million people that would lose their Medicaid coverage by 2026 under the revised version of the BCRA, as estimated by the CBO.
  • The repeal of Medicaid expansion, which will disproportionately affect the communities including Latinos, African Americans, Native Americans, Asian Americans, Native Hawaiians, and Pacific Islanders who have seen the largest gains in coverage under the ACA, and women.
  • The proposed cuts that could vastly reduce access to needed health care, reduction in needed services, increased medical debt, and persistent racial disparities in mortality rates.
  • The possible reduction in home and community-based services, which are cost-effective and keep individuals out of nursing homes and institutions.
  • The imposition of a work requirement as a condition of eligibility, which fails to further purpose of providing health care and undermines the objective.
  • The defunding of Planned Parenthood that would prevent more than half of its patients from getting affordable preventive care, including birth control, testing and treatment for sexually transmitted diseases, breast and cervical cancer screenings, and well-women exams.

Vanita Gupta, president and chief operating officer of The Leadership Conference noted that the letter reflects the widespread concerns of people, especially people of color, women, and low-income families, who currently “receive life-saving coverage because of the Affordable Care Act and the expanded Medicaid coverage” but will lose their access to quality affordable health care and will have higher health care costs “if the Republicans succeed.”

CMS updates Medicaid eligibility and payment oversight programs

CMS finalized changes to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs designed to improve payment oversight and state eligibility determinations in the Medicaid program. The changes—contained in an advance release of a Final rule set to publish in the Federal Register on July 5, 2017—implement provisions of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The Final rule ends a pilot phase for the two programs and resumes the eligibility measurement component of the PERM program and the MEQC program for Fiscal Year (FY) 2019.

PERM

The PERM program measures improper payments in Medicaid and the Children’s Health Insurance Program (CHIP) based on reviews of the fee-for-service (FFS), managed care, and eligibility components of Medicaid and CHIP. Due to changes in Medicaid eligibility law—including expansion under the ACA—CMS did not conduct the eligibility measurement component of the PERM program for FYs 2015 through 2018 (see CMS proposes updates to Medicaid eligibility and payment oversight, June 21, 2016). During that time, CMS conducted a pilot program known as the Medicaid and CHIP Eligibility Review Pilots to maintain oversight of state eligibility determinations. In addition to reestablishing the eligibility measurement component of the PERM program for FY 2019, the Final rule makes several updates to program requirements. Changes to the program include:

  • eligibility reviews for payments made by states between July and June of a given year (a change from the previous October through September review period);
  • federal contractor review of determinations;
  • sampled reviews based upon FFS and managed care payments;
  • inclusion of federal improper payments when the federal share is incorrect, even if the total computed amount is accurate;
  • the development of a national sample size; and
  • payment reductions in cases where a state’s eligibility improper payment rate exceeds the 3 percent threshold and the state does not demonstrate a good faith effort to meet the threshold.

MEQC

The MEQC program requires states to report to HHS the ratio of erroneous excess medical assistance payments to total expenditures for medical assistance. Under Section 1903(u) of the Social Security Act (SSA), HHS is required to withhold payments in excess of a 3 percent threshold for eligibility-related improper payments. Like the PERM program, CMS did not operate the MEQC program for FY 2015 through 2018 so that CMS could make updates to the program to reflect changes in eligibility. The Final rule aims to restructure the MEQC program to better compliment the PERM program. The changes include:

  • state flexibility to design MEQC programs unless states have consecutive improper payment rates over the 3 percent threshold;
  • requirements to conduct reviews beyond the scope of the PERM program; and
  • corrective action submission requirement for identified errors.