CMS: No Enhanced Match Available for Partial Medicaid Expansions

by Rebecca Farley on December 13, 2012

HHS Secretary Kathleen Sebelius

In a recent letter to State Medicaid Directors and accompanying FAQ, the Centers for Medicare and Medicaid Services issued clarifying guidance on a number of topics related to insurance exchanges, market reforms, and the Medicaid expansion under the Affordable Care Act.

Most significantly, the new guidance states that CMS will not allow states to receive the ACA’s enhanced federal match rate for any partial Medicaid expansion less than the ACA’s required income threshold of 133% of poverty. However, there are some circumstances under which states can access the enhanced Medicaid match if they had previously expanded Medicaid to certain populations prior to the enactment of the ACA (see Question 32 on page 13 of the FAQ). Additionally, states will be able to expand Medicaid in 2014 but drop the expansion in future years by submitting a State Plan Amendment to CMS. Even if a state chooses not to expand Medicaid, it will still have to transition to using the Modified Adjusted Gross Income scale to calculate eligibility as outlined in the ACA. In states that do not expand Medicaid, federal subsidies and tax credits will be available to individuals between 100% and 133% of poverty to help them purchase insurance on the exchanges.

The FAQ also noted that no more extensions will be given for the deadline for states to decide whether they are going to operate their own exchange. States currently have until December 14 to notify HHS whether they will run a state-based exchange and until February 15 to notify HHS if they plan to enter into a state-federal partnership. States may still receive federal funding when they provide supplemental services in support of a federally-operated exchange in their state.

The most recent guidance builds on a proposed rule and accompanying letter to State Medicaid Directors from last month, which provided initial guidance on Essential Health Benefits in the Medicaid Program. That letter makes the following points regarding benchmark coverage:

  • The State can choose to expand its current Medicaid state plan adult benefit package as its benchmark;
  • For children, EPSDT applies to all of the benchmark options
  • Benchmark options will have to include all 10 categories of the EHB
  • The Mental Health Parity and Addiction Equity Act applies to all benchmark plans
  • Certain populations, such as blind and disabled, are exempt from mandatory enrollment in benchmark coverage

CMS also indicates that a rule will be released offering more guidance on these important topics.


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