Track new eligibles effectively, or lose out on higher federal match
Beginning in 2014, states will receive much higher federal reimbursement for newly eligible Medicaid beneficiaries, notes Judith Solomon, co-director of Health Policy at the Center on Budget and Policy Priorities in Washington, DC. States will receive 100% federal match for the first three years, which phases down to 90% in 2020.
"Medicaid will also use a new definition of income in determining eligibility," says Ms. Solomon. The challenge, she says, is developing a method that allows states to submit claims for federal matching funds at the appropriate matching rate for newly eligible beneficiaries, yet does not complicate the process of determining eligibility.
Alice Weiss, program director of the National Academy for State Health Policy in Washington, DC, says that states will need to accurately group Medicaid enrollees into two "buckets." These are "newly eligible," she explains, and those who would have been eligible for Medicaid prior to the Patient Protection and Affordable Care Act (PPACA)'s enactment.
This is necessary in order for states to claim the higher federal financial participation (FFP) rate for newly eligible individuals, explains Ms. Weiss.
"Errors in calculating the newly eligible group poses significant risks for states," says Ms. Weiss. "If states underestimate the number of individuals eligible for the higher match rate, they are leaving federal dollars on the table. If they overcount, they will likely have to repay the extra funds."
State efforts to accurately count newly eligible individuals are complicated by the fact that the PPACA directs states to use the simplified, modified adjusted gross income-based eligibility rules and processes for most Medicaid enrollees, adds Ms. Weiss. "This may make it harder for states to determine, after individuals are enrolled, whether they would have been eligible under prior Medicaid rules," she says.
Avoid duplicative process
"Concerns have been raised that states will have to determine eligibility twice once using old rules, and then again using new rules in order to determine whether an applicant would be eligible under the old rules," says Ms. Solomon. "Such a duplicative process would be extremely burdensome for applicants and for states."
The good news, says Ms. Solomon, is that a duplicative process can be avoided. The PPACA provides that states will develop an equivalent income standard for their current income level using the new rules, which will apply to Medicaid, she explains.
States can then determine whether an applicant's income falls below this equivalent income level, which would make the applicant eligible under old rules, or is above that level and below the new income standard of 133% of the poverty line, says Ms. Solomon. In this case, the applicant would be a newly eligible beneficiary, allowing the state to claim the higher matching rate, she explains.
"In this way, the state can determine an applicant's income just once, using the new rules," says Ms. Solomon.
Danielle Holahan, co-director of United Hospital Fund's Health Insurance Project in New York City, says, "The vision of a single national eligibility standard at 133% FPL is complicated by the need to track the groups who are currently and newly eligible for Medicaid."
Ms. Holahan adds, however, that this is not as big an issue for New York as other states, because few individuals only childless adults with income 100% to 133% of FPL will be newly eligible for Medicaid. "Further, as an 'expansion state,' New York will get an enhanced FMAP [Federal Medical Assistance Percentage] for our currently eligible childless adults, in addition to our newly eligible childless adults," says Ms. Holahan. These FMAPs differ in 2014 through 2019, but then align at 93% in 2019 and 90% in 2020.
"For the interim years of 2014 through 2019, there will be a need to track these groups for the purposes of determining which match we'll get," says Ms. Holahan.
Other states face a bigger challenge in this area, Ms. Holahan explains, because they will have to manage a variety of newly eligible populations along with their current eligibles.
"There could be the need to maintain questions on the application form for the purpose of tracking current eligibles that states would otherwise eliminate in an effort to streamline the application and enrollment process," adds Ms. Holahan.
Assets are issue
About half of states still have an asset limit for parents, which Ms. Solomon says presents an added challenge. Beginning in 2014, assets will not be considered in determining eligibility for most Medicaid beneficiaries.
"An additional question, then, is whether states will have to consider assets for those applicants whose income is below the state's current income eligibility levels, in order to make a final decision on whether these individuals would have actually been eligible under the state's old rules," says Ms. Solomon.
This extra step could be avoided, Ms. Solomon says, by sampling a state's caseload to determine what percentage of beneficiaries with incomes below the state's old eligibility standard have assets above the state's old limit, and therefore would not have been eligible under the state's old rules even though their income was below the old income standard.
"Sampling would avoid having to ask unnecessary questions about assets of most beneficiaries," says Ms. Solomon.
Time and budget constraints
Ms. Weiss says that to avoid losing out financially, states will have to develop back-end systems that can accurately categorize individuals after they are enrolled into the "newly eligible" and "previously eligible" buckets.
"States will need further guidance from CMS [the Centers for Medicare & Medicaid Services] on how they can comply with the streamlined enrollment requirements, while at the same time getting the data they need to make an accurate eligibility grouping, so they can accurately claim the higher match rate for newly eligible individuals," adds Ms. Weiss. States are mandated to use a simplified application form and minimize documentation burdens for applicants, she explains.
"One model CMS might want to consider would allow states to perform an audit on a smaller sample of beneficiaries to estimate the percentage of newly eligibles based on that sample," Ms. Weiss suggests. This might help states avoid having to create an entire new system that determines eligibility groupings on the "back end" once an individual is enrolled, she says.
States face major challenges in developing systems that can perform back-end eligibility analyses, and obtaining the data they need to make an accurate eligibility grouping, says Ms. Weiss. This is particularly challenging, given the new limits on how much data can be collected from individuals in the application process, she notes.
However, Ms. Weiss says that "a far greater challenge" for states is budget constraints, which are limiting their capacity to invest in Medicaid, and the aggressive timeline for implementing system changes. Ms. Weiss points to a joint guidance from CMS and the Office for Consumer Information and Insurance Oversight, proposing a higher match rate for eligibility systems improvements. "This could provide a much-needed shot in the arm to boost state efforts to develop new systems," she says. "However, states still face significant time constraints to plan and implement complex and substantial system changes."
If states fail to implement this eligibility grouping accurately, says Ms. Weiss, they risk missing out on the opportunity to simplify the eligibility and enrollment process that the PPACA provides.
Also, while states risk either leaving much-needed federal dollars on the table for newly eligible populations, or having to repay the federal government if they overestimate, says Ms. Weiss, "there is also an important pitfall for individual enrollees if states don't get the 'newly eligible' determination right."
Newly eligible individuals must receive either benchmark or benchmark-equivalent coverage, explains Ms. Weiss, which provide less comprehensive benefits than standard Medicaid benefits.
"For individuals who are inappropriately classified as newly eligible, they may be wrongly denied access to a more comprehensive benefit package," says Ms. Weiss.