No $$ for Partial Medicaid Expansion

By David Pittman, Washington Correspondent, MedPage TodayPublished: December 10, 2012

WASHINGTON -- States must cover all adults with incomes up to 133% of the federal poverty level in order to have the federal government pay for their expanded Medicaid program, the government said Monday.

While states can choose to set their coverage limits at less than 133%, if they do so, the federal government won't pay for 100% of the cost for those newly eligible enrollees as stipulated by the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services (CMS) announced.

"Consistent with the law, there is not an option for enhanced match for a partial or phased-in Medicaid expansion," acting CMS administrator Marilyn Tavenner told reporters on a call.

The expanded Medicaid program starts Jan. 1, 2014. The federal government will cover 100% of the cost of newly eligible individuals for the first 3 years and slowly drop that coverage to 90% by 2020.

The income limit set by the government -- 133% of the federal poverty level -- amounts to $30,657 for a family of four.

A state could expand its programs and add individuals to its Medicaid rolls up to, for example, 120% of the federal poverty level. However, those newly enrolled individuals won't be paid for by the federal government, and states will only receive the federal match they do now.

Questions remained before Monday's announcement as to whether a "partial expansion" of Medicaid was possible under the ACA.

The Supreme Court ruled in its landmark ACA decision in June that states had the option not to expand their Medicaid programs. The high court said the federal government couldn't force states to expand Medicaid or risk losing federal matching dollars.

Monday's announcement, which came in a question-and-answer document, addressed those questions.

While there is no firm deadline for states to opt into the expansion, states have varied in their decisions on the issue.

Deborah Bachrach, JD, New York's Medicaid director until 2010, said at a recent briefing hosted by the Alliance for Health Reform that she thought the June Supreme Court ruling was clear that states couldn't partially expand.

Meanwhile, the Urban Institute recently found states would save a combined $10 billion in the first 10 years of expansion by having care that is currently uncompensated be covered in the future by Medicaid.

If a state decides not to expand, individuals could still seek coverage and receive a subsidy to purchase insurance in their state's exchange.

CMS also answered a number of questions in the Q&A about state and federally operated exchanges under the ACA.

In addition, CMS announced Monday that six states -- Colorado, Connecticut, Maryland, Massachusetts, Oregon, and Washington -- had their state-run health insurance exchanges granted tentative approval. Those were some of the first states to apply for state-run exchanges and demonstrated they were far enough along to be operational by the open enrollment period next fall.

States have until Friday to tell the Department of Health and Human Services whether they are running their own exchanges, defaulting to a federally run program, or entering into a state-federal partnership. Friday is also the deadline for states to file blueprints on their exchanges if they do opt to run their own.