Medicaid conflicts ahead over ACA expansion, spending, dual-eligibles

With hospital leaders watching anxiously, 2015 promises to be a dramatic year of conflict over the healthcare reform law's Medicaid expansion.

A few Republican governors will be battling GOP state lawmakers to push through conservative-friendly expansion models, even as congressional Republicans move to repeal the law that made the expansion possible.

In addition, the fate of the Obama administration's initiative to streamline care and reduce costs for 9 million Americans eligible for both Medicaid and Medicare will be on the line, as will the survival of the successful Children's Health Insurance Program for low-income kids.

The Obama administration will continue to cajole Republican-led states in 2015 to expand Medicaid to lower-income adults under the Patient Protection and Affordable Care Act. But patient advocates fear beneficiaries may be discouraged from enrolling or using medical services by the concessions the administration may make to get these states to sign on.

With the hospital industry applying pressure, it's expected that Alaska, Montana, North Carolina, Tennessee and Utah will submit Medicaid waiver proposals to extend coverage to adults with incomes up to 138% of the federal poverty level. Details are still forthcoming. Tennessee's Republican governor Bill Haslam has indicated that hospitals would help pay the state's limited share for the expansion.

It's estimated that more than 4 million adults living in non-expansion states who have incomes below 100% of poverty fall into the coverage gap where they qualify for neither Medicaid nor subsidized coverage in private exchange plans. Hospitals' uncompensated-care costs have fallen significantly in states that have expanded Medicaid.

Enrollment in Medicaid is expected to grow an average of 13.2% nationwide through the end of fiscal 2015, which ends in June in most states, according to the Kaiser Family Foundation. For the District of Columbia and the 27 states that expanded Medicaid, total program spending is expected to rise 18.3% versus 6.5% for the 23 non-expansion states.

In other upcoming developments, the CMS plans to release new rules on Medicaid managed care in the first quarter, updating rules published in 2001. Currently, 37 states and the District of Columbia contract with Medicaid plans.

Major questions also remain about the fate of the Obama administration's initiative, mandated by the ACA, to better coordinate benefits and care for Americans who are dually eligible for Medicare and Medicaid and account for a disproportionate share of those programs' costs.

To date, California, Illinois, Massachusetts, Ohio and Virginia have launched dual-eligible demonstrations, which have experienced lower-than-expected enrollment and plan and provider participation. Demonstrations also are slated to begin this year in Michigan, New York, South Carolina, Texas and Washington state.

Congress will face bipartisan pressure to extend funding for CHIP, which expires Sept. 30. About 10.2 million children are now enrolled in the program. Of those, as many as 2 million may suffer loss of coverage or healthcare access if the program ends, researchers say.

As far as Medicaid expansion, advocates were worried at the start of the year when the CMS gave Arkansas permission to impose modest cost-sharing on individuals under the federal poverty level. The maximum monthly amount beneficiaries below the poverty level will pay is $5. It was previously thought the administration would not allow states to impose any costs on people under 100% of poverty.

“I understand the position of CMS is that they want to get states to expand, but we're seeing an erosion of the basic features of Medicaid that make it work for low-income people,” said David Machledt, a policy analyst at the National Health Law Program.

Follow Virgil Dickson on Twitter: @MHVDickson