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Partial Medicaid expansions won't get full funding: HHS


By Jessica Zigmond
Posted: December 10, 2012 - 6:45 pm ET
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States choosing to expand their Medicaid programs must broaden Medicaid eligibility to the full extent laid out in the healthcare reform law in order to get full federal matching funds to help pay for the new coverage, HHS announced Monday.

That directive came during a call with reporters when acting CMS Administrator Marilyn Tavenner said “there is not an option for enhanced match” for a partial or phased-in expansion. Instead, the law requires that the federal matching rate be used to expand Medicaid coverage to those earning at or below 133% of the federal poverty level. Under the law, states will receive 100% support from the federal government for newly eligible adults from 2014 through 2016. Then the match gradually declines until 2020, when it will hit 90% and remain at that level.

Medicaid expansion has been a complicated and contentious issue for governors after the U.S. Supreme Court decided in June that states could decide on their own if they would expand their programs. The explanation on the match was also laid out in a 17-page letter from HHS Secretary Kathleen Sebelius (PDF) to the nation's governors that included answers to nearly 40 of the most frequently asked questions HHS has received about the Medicaid expansion and state health insurance exchange provisions in the 2010 federal healthcare overhaul.

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Addressing the governors, Sebelius wrote that there is no deadline for states to alert HHS that they will expand their Medicaid programs, and that states wanting to broaden their programs must submit a state plan amendment that is used to indicate Medicaid changes. The CMS expects to update this process by implementing an online state plan amendment system early in 2013.

Meanwhile, HHS gave conditional approval to six states that applied early to establish their own health insurance exchanges, which indicates they are positioned to meet the required deadlines for the insurance marketplaces ready to begin in 2014. HHS gave a green light to Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington to move forward with their plans.

During a call with reporters, Gary Cohen, director of CMS' Center for Consumer Information and Insurance Oversight, said “conditional approval” means these states still have work to do between now and October, but that they “have demonstrated good progress and a path that we believe will get them to operate an exchange.” The CMS is currently reviewing other applications, and 14 states and Washington, D.C., have indicated their interest in establishing a state-based exchange, Cohen said.

Tennessee won't be added to the list of states interested in operating their own exchanges. On Monday, Republican Gov. Bill Haslam announced his state will not run its own exchange. “Since the presidential election, we've received 800-plus pages of draft rules from the federal government, some of which actually limit state decisions about running an exchange more than we expected,” Haslam said in his announcement. Haslam left the door open, however, as he said he'd consider a state exchange if conditions change in the future.

The correspondence from HHS comes at a time when states are navigating a host of deadlines and decisions regarding both the exchanges and Medicaid in 2014. It also includes some details on federally facilitated exchanges, such as how a government-run operation will incorporate state-specific laws, how it will be funded, and what restrictions there will be on a state regulator's authority to enforce state laws when consumers buy insurance on a federal exchange.

“We are all keenly aware that open enrollment is coming quickly and we will be ready to open our doors on Oct. 1,” Cohen said.


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