Reform Update: States scramble to submit application for Medicaid expansion following late CMS rule

A CMS rule issued in early July has set off a scramble among state officials to finalize and submit an application needed to implement their Medicaid expansions allowed by the healthcare reform law. The delay in the rule may push states hard up against the Oct. 1 start of the Medicaid enrollment process for 2014.

States were waiting for details provided by the July 5 rule before submitting state plan amendments required to expand eligibility for their Medicaid programs to all residents with incomes of up to 138% of the federal poverty level. The expansion—a central pillar of the Patient Protection and Affordable Care Act—is expected to add 8 million enrollees to Medicaid programs across the country, according to May estimates by the Congressional Budget Office.

“We anticipated—and everybody anticipated—that this rule would come down in late May and it didn't come down until July,” Penney Hall, a spokeswoman for the West Virginia Medicaid agency, said in an interview.

The federal delay has led West Virginia to push back its timeframe for submitting the required applications from June until late August or September. Traditionally, such applications take about 90 days for the CMS to review, although the process can be significantly longer. However, the CMS has told state Medicaid agencies that it plans to expedite its reviews and complete them in as little as 30 days.

The delays are pushing the states up against the deadline for expanding Medicaid in time for the Oct. 1 start of enrollment for coverage starting Jan. 1.

A CMS spokeswoman did not respond to questions about whether any states have yet to submit plans.

The CMS approval process is key because the eligibility expansion and many other new elements authorized by the healthcare law require formal approval of state plan amendments. For instance, the contracts for Medicaid managed-care companies that will serve all the 90,000 expected new enrollees next year in West Virginia will not be finalized until approved as part of the state plan amendment, Hall said.

But so far, the delay has not concerned West Virginia officials. “CMS is really telling states that unless you really throw them a big curve ball the approval should be right away,” Hall said.

New Mexico Medicaid officials are similarly optimistic that they will meet the new compressed timeframes required by the late rule, according to Matt Kennicott, a spokesman for the Medicaid program. That is because the state has already completed much of the detail of the state plan amendment as part of a recently approved waiver process.

Kennicott said New Mexico plans to send the state plan amendment to enroll 170,000 people next year in the state's Medicaid program “any day now.”

Dee Mahan, a Medicaid expert at Families USA, a group that supports the reform law and Medicaid expansion, said the rule indicated that the CMS will hold off on enforcement actions against states if they activate changes to their Medicaid programs without approved state plan amendments.

“CMS has indicated a real willingness to work with states to make sure that people get coverage Jan. 1, 2014, in states that are expanding,” Mahan told Modern Healthcare. “So before states say they don't have time, check with CMS and see what's possible.”

One managed-care insurer is adding a new tool to reduce movement of Medicaid beneficiaries in and out of its Medicaid plans: text messages.

Amerigroup, a subsidiary or WellPoint, has contracted for a new text message service from SafeLink, which part of Tracfone. The service, which is an expansion of an existing free phone and text message service provided to Medicaid beneficiaries, will remind the company's 200,000 Medicaid managed-care enrollees to re-sign with the program every year.

The service is available in 13 state markets served by Amerigroup's Medicaid managed-care plans. The insurer is discussing adding the service to its parent company's Medicaid plans, as well.

A Safelink spokeswoman said the company is in talks with other insurers to also provide it to their Medicaid enrollees.

A special commission has begun to explore whether expanding Medicaid under the federal healthcare overhaul is right for New Hampshire, the Associated Press reported. While the state's Democratic governor supports expansion, it has been held up by the Republican-controlled state senate.

On Tuesday, the state Department of Health and Human Services planned to review at a commission meeting the issues of who currently qualifies for Medicaid in the state, the pending change from fee-for-service to managed care and what program changes require federal waivers.

The department also will discuss what expansion might mean to the program.

New Hampshire's current Medicaid program covers low-income children, parents with nondisabled children under 18, pregnant women, senior citizens and people with disabilities.

The state budget passed in June established the special commission to examine a possible expansion. The legislature may vote on expansion in a late-in-the-year special session.

Follow Rich Daly on Twitter: @MHrdaly