Healthcare Business News

HHS may sweeten offer on expansion efforts

By Rich Daly
Posted: November 10, 2012 - 12:01 am ET

More states are expected to expand their Medicaid programs following the Nov. 6 election, but it may require extensive deal-making.

The U.S. Supreme Court decision that upheld the Patient Protection and Affordable Care Act also upset its coverage goals by striking down HHS' authority to penalize states that don't participate in its Medicaid provisions.

Concerns about the costs of adding to their Medicaid rolls and political opposition to the underlying law led many states, including some led by Democrats, to decline to commit to an expansion before the election, but the resolution of the election may allow movement on both sides, according to policy experts.

“With the election behind us, states will be able to consider the question of whether to go forward with the expansion a bit more dispassionately or objectively,” said Andy Hyman, director of the coverage program at the Robert Wood Johnson Foundation.

Similarly, HHS is expected to offer details that it has so far declined to address regarding flexibility that might entice states to get on board. For instance, many governors have written HHS about whether they could still qualify for federal funding the law provides for new Medicaid beneficiaries if the income-eligibility level is short of the Affordable Care Act's threshold of 133% of the federal poverty level.

“You'll see governors—especially Republican governors—who will look at maybe expanding Medicaid, but maybe not going as high in the expansion as some people thought and looking for administrative dispensation from the Obama administration,” said Julius Hobson, a former lobbyist with the American Medical Association who now serves as a senior policy adviser at Polsinelli and Shugart.

Hyman and others said they expect HHS officials to begin substantive “conversations” with state officials on the matter.

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The Medicaid expansion has been a major focus of many providers, in part because they would still face the Affordable Care Act's cuts to disproportionate-share hospital payments, even if their states fail to move patients from indigent-care rolls to Medicaid.

“There probably will be momentum for implementation since the president was re-elected, and he's going to be obviously encouraging the states to move forward with the law,” said Chip Kahn, president and CEO of the Federation of American Hospitals.

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