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States Face Challenges in Outside-the-Box Medicaid Expansion

For most states expanding their Medicaid program in response to the opportunity afforded by the Affordable Care Act, expansion has been fairly straightforward:  they simply let more people into their existing Medicaid programs.

But several states – Arkansas, Iowa, and Michigan – have tried something different:  pursuing fundamental changes in their Medicaid programs.

Health Care Reform/FlagAmong the nearly half of the states still holding out against Medicaid expansion, the “something different” approach appears likely to be more common in the future, and in particular, those that do pursue expansion appear likely to seek to do so through greater use of private health insurers.  Through such an approach, states seek to use new federal Medicaid money to purchase private health insurance for newly qualified Medicaid recipients.

Among the states pursuing, or preparing to pursue, Medicaid expansion through private option coverage or other approaches in 2014 are New Hampshire, Pennsylvania, Tennessee, Virginia, Indiana, Missouri, Montana, and Utah, and others may follow as well.  Many of the programs these and other states propose will require federal waivers to exempt them from current Medicaid law, so the fate of these programs will rest on the Obama administration’s willingness to grant such waivers.

Read more about what these states are considering and the challenges they face in seeking approval for their plans in this Kaiser Health News report.

New Approaches to Serving Dual Eligibles Set to Launch

Provisions in the Affordable Care Act that encourage states to take new approaches to serving their dually eligible residents – low-income seniors eligible for both Medicare and Medicaid – will soon translate into new state programs.

Massachusetts has already launched such an initiative, a new California program will begin in May, and 17 additional states are scheduled to begin new efforts later this year and next.

WheelchairNew federal policies encourage state Medicaid programs to work with Medicare in service to their dually eligible population, with the states and Medicare sharing in the savings they produce.  Currently, dually eligible patients constitute 15 percent of the Medicaid population but account for 40 percent of Medicaid’s costs and 20 percent of the Medicare population but 30 percent of Medicare’s costs.

Because they serve communities with greater-than-average proportions of low-income residents, private safety-net hospitals serve especially large numbers of dual eligibles.

How are states tackling this challenge?  Learn more in this Stateline report.

Some Hospitals Stand to Lose Medicaid Expansion, DSH Money

When the Supreme Court made Medicaid expansion optional rather than mandatory for states, its decision affected the delicate balance of one aspect of the Affordable Care Act.

Hospitals that serve large numbers of low-income and uninsured patients receive special supplemental payments from Medicare and Medicaid to help subsidize the care they provide to these patients:  disproportionate share payments, or DSH payments.

And because Medicaid expansion was expected to reduce the number of uninsured patients such hospitals serve, the Affordable Care Act calls for reducing over a period of years both the Medicare DSH and Medicaid DSH payments hospitals receive.

iStock_000005787159XSmallBut in states that choose not to expand their Medicaid programs, hospitals that qualify for Medicare DSH and Medicaid DSH payments will continue to serve similar numbers of low-income and uninsured payments but now face the prospect of doing so with smaller Medicare DSH and Medicaid DSH payments as the Affordable Care Act requirement begins reducing those payments.

This could prove especially troublesome for private safety-net hospitals located in states that do not expand their Medicaid program because such hospitals serve especially large numbers of low-income and uninsured patients.

The Wall Street Journal has taken a look at how this situation will affect hospitals in just one state that is not expanding its Medicaid program.  See its story here.

ACOs Show Encouraging Signs

Provider groups that just completed their first year in Medicare’s ACO programs are showing encouraging signs of producing health care savings.

Medical EquipmentIn all, the Centers for Medicare & Medicaid Services (CMS) reports $380 million in savings for first-year participants.  Nearly half of the ACOs participating  in the Shared Savings Program had lower spending than projected but less than half of those  saved enough to qualify to keep any of their savings – one of the program’s main incentives for participants.

Pioneer ACOs, which take greater risks, generated $147 million in savings, with nine of the 23 participating groups spending less than projected.

To learn more about the first-year performance of ACOs and the different types of program participants, see this Kaiser Health News report and this CMS news release.

States Using Medicaid Expansion to Pursue Innovation

While many of the states that have chosen to expand their Medicaid programs under the terms of the Affordable Care Act did so by embracing those terms, others are viewing Medicaid expansion as an opportunity to pursue wholesale changes in how they serve their low-income residents.

Arkansas and Iowa have already received federal waivers to expand their Medicaid programs – exemptions from selected aspects of existing Medicaid law.  Under these waivers, the states operate demonstration programs to test the effectiveness of their variations on ordinary Medicaid practices.

Health Care Reform/FlagIn addition to Arkansas’s and Iowa’s successful waiver applications, Pennsylvania, Virginia, New Hampshire, Indiana, and possibly a few other states are expected to seek federal waivers in 2014.

Many states remain opposed to expanding their Medicaid programs under any conditions.  The National Association of Urban Hospitals (NAUH) supports Medicaid expansion everywhere.

Learn more about Medicaid waivers, how states pursue them, the challenges states face in pursuing them, and the kinds of innovations they can make possible in this Stateline report.

CMS Offers Advice on Managing Expected Upsurge in ER Visits

With Medicaid enrollment rising because of eligibility changes introduced through the Affordable Care Act, hospital emergency rooms expect to see an increase in the number of emergency room visits as new Medicaid enrollees seek care for long-neglected health problems.

In anticipation of this rise in ER visits, the Centers for Medicare & Medicaid Services (CMS) has issued an informational bulletin with suggestions for hospitals on how to manage the expected increase in ER utilization.

iStock_000000522737XSmallAmong CMS’s suggestions are for hospitals to broaden access to primary care services (because much of the increased utilization will be because the newly insured still do not know where to turn for care); focus on helping especially frequent ER visits find more appropriate sources of care; and target the needs of people with behavioral health problems.

This influx of new ER patients will especially be a challenge for the nation’s private  safety-net hospitals because they serve low-income communities in which Medicaid enrollment increases should be significant.

To learn more about CMS’s recommendations for addressing this ER challenge, including some of the legal and reimbursement-related challenges this will pose, see the CMS informational bulletin “Reducing Nonurgent Use of Emergency Departments and Improving Appropriate Care in Appropriate Settings.”

Providers Receive Expanded Authority to Extend Presumptive Medicaid Eligibility

While hospitals and providers in 33 states have long enjoyed the ability to extend presumptive eligibility for Medicaid to children or pregnant women, that authority is now being extended in some states to any adults whose income appears likely to fall below 138 percent of the federal poverty level.

The extension of this authority comes via the Affordable Care Act, which also offers states the option of expanding Medicaid eligibility for their residents.  Individual states decide whether to extend this authority, which is typically wielded by hospitals, schools, clinics, other providers of care to the Medicaid and CHIP population, Head Start programs, and others.

This policy could benefit many private safety-net hospitals because they serve much higher proportions of low-income patients than the average hospital.

To learn more about changes in extending presumptive eligibility to low-income patients, see the policy briefhealth affairs “Hospital Presumptive Eligibility” from the Robert Wood Johnson Foundation and the publication Health Affairs.