Medicaid in an Era of Health & Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015

Eligibility and Enrollment

The ACA included a number of significant changes for Medicaid eligibility and enrollment. One of the most significant changes extends Medicaid coverage to nearly all non-elderly low-income adults with incomes up to 138 percent of the federal poverty level (FPL) ($16,104 per year for an individual in 2014), ending the Medicaid eligibility exclusion for adults without dependent children or childless adults regardless of their income. However, the June 2012 Supreme Court ruling on the ACA effectively made the decision to implement the Medicaid expansion optional for states. The ACA also required states to transition to the use of Modified Adjusted Gross Income (MAGI) to determine Medicaid financial eligibility for children, pregnant women, parents and low income adults; eliminate asset limits for these same groups; transition children with income between 100 and 133 percent FPL from the Children’s Health Insurance Program (CHIP) to Medicaid; and to use new streamlined application, enrollment, and renewal processes. In addition, Medicaid agencies were required to coordinate enrollment processes with the new Marketplaces. Altogether, the eligibility changes in 2014 represent historic program changes.

Eligibility Standards

A total of 31 states reported at least one eligibility expansion in FY 2014 and eight states reported planned eligibility expansions in FY 2015; the ACA Medicaid expansion was the most commonly reported change. In contrast, four states made eligibility restrictions in FY 2014; no states reported restrictions in FY 2015. However, many states (24 in FY 2014, 6 in FY 2015) made changes to existing Medicaid eligibility pathways due to the availability of new coverage through the Marketplace; these changes are not counted as restrictions or expansions in this report.

Adult Coverage Changes Under the ACA

In FY 2014, 26 states including the District of Columbia expanded Medicaid for low-income adults, either under the direct provisions of the ACA or through waivers (Arkansas, Iowa, and Michigan). For FY 2015, New Hampshire implemented the Medicaid expansion in July 2014, and Pennsylvania received CMS approval of the Healthy Pennsylvania waiver that will expand Medicaid eligibility for low-income adults as of January 1, 2015. As of September 2014, the total number of states implementing the Medicaid expansion is 28 (including DC.) (Figure 4) Two states (Indiana and Utah) continue discussions about implementing the Medicaid expansion. Indiana has submitted a formal waiver application that is under review at CMS; elements of this waiver proposal are discussed throughout the report in relevant sections. Utah’s Governor continues to negotiate with CMS but has not yet made a formal submission. Medicaid officials in several states noted that expanding Medicaid to more low-income adults would be discussed in the next legislative session.

Figure 4: Current Status of State Medicaid Expansion Decisions

With more coverage options available across the income spectrum, some states made changes to existing Medicaid eligibility pathways to better conform to those options. These changes are included in Tables 1 and 2, but are not regarded as restrictions unless individuals previously covered through these pathways would not be expected to have access to coverage through these new options. States making these changes largely fall into three groups: 1) Medicaid expansion states changing Medicaid waiver coverage over 138 percent FPL; 2) States that have not adopted the expansion reducing Medicaid coverage over 100 percent FPL; and 3) States reducing or eliminating certain optional eligibility groups.

Medicaid expansion states changing Medicaid waiver coverage over 138 percent FPL

A few states had expanded eligibility to adults above 138 percent FPL prior to the ACA under waiver authority. With the availability of new coverage options in the Marketplace, seven states (California, Iowa, Massachusetts, New Mexico, New York, Rhode Island and Vermont) eliminated Medicaid coverage in their waivers for adults with incomes over 138 percent FPL. Three of these states (Massachusetts, New York and Vermont) have received or are seeking approval under a Medicaid waiver to use Medicaid funds to provide premium assistance that further subsidizes Marketplace coverage for individuals previously covered under their waiver.

In contrast, three states (Connecticut, DC and Minnesota) maintained coverage of adults with incomes over 138 percent FPL at the state’s regular match (FMAP.) Connecticut is maintaining its eligibility level for parents at 201 percent FPL.¹ The District of Columbia is shifting its waiver for adults with income between 138 and 200 percent FPL to its state plan. Minnesota, which previously covered adults up to 275 percent FPL in MinnesotaCare, is maintaining waiver coverage for those up to 200 percent FPL and plans to shift this group to the new Basic Health Plan option in 2015.

States that have not adopted the expansion reducing Medicaid coverage over 100 percent FPL

A few states that have not adopted the Medicaid expansion covered adults above 100 percent FPL before the ACA was enacted, largely through waivers. Some of these states made eligibility changes in response to the availability of new Marketplace coverage options in 2014. In states not adopting the Medicaid expansion in 2014, those with incomes above 100 percent FPL in most cases will be eligible for subsidies to purchase coverage in the Marketplace.

• Indiana² and Oklahoma reduced existing adult eligibility from 200 to 100 percent FPL in waiver renewals.
• Wisconsin reduced eligibility levels for its existing waiver for adults from 200 to 100 percent FPL and expanded coverage to childless adults by eliminating the waiting list for coverage under its existing waiver.
• Maine reduced state plan coverage for parents and caretakers from 133 to 105 percent FPL.

States reducing or eliminating certain optional eligibility groups

The availability of subsidized Marketplace coverage and expanded Medicaid coverage (in 28 states) provides new options for states to reconsider coverage policies for certain optional, limited benefit eligibility groups, such as the family planning group, some spend-down programs, and the Breast and Cervical Cancer Treatment (BCCT) program.³ While most states reported no current plans to change these eligibility pathways; a few states did report eliminations or reductions:

• Nine states reported ending family-planning only coverage (Arizona, Arkansas, Delaware, Michigan, and Oklahoma in FY 2014; Illinois, Louisiana⁴, New Mexico and Pennsylvania in FY 2015.) Virginia also reduced eligibility for this group to 100 percent FPL in 2014 but plans to restore coverage to 200 percent FPL in 2015.
• Five states (Hawaii, Illinois, and North Dakota in FY 2014 and Kentucky and Pennsylvania in FY 2015) reduced or eliminated eligibility for their medically needy programs for non-elderly non-disabled adults. In contrast, Minnesota increased the medically needy income limit for parents, children, and pregnant women.
• Three states (Arkansas, Maryland in FY 2014; Kentucky in FY 2015) ended or plan to end the BCCT program.

Other Eligibility Changes for Adults

Two states made additional changes to Medicaid eligibility levels for adults aside from the changes made in response to the ACA. Montana increased the cap on enrollment in its Mental Health Services Plan (MHSP) waiver from 800 individuals to 2,000 individuals in FY 2014 and to 6,000 in FY 2015. Maine allowed its existing waiver that covered childless adults up to 100 percent FPL to expire, leaving most of the 9,000 individuals affected by this change without a coverage option, since eligibility for subsidies through the Marketplaces is limited to individuals with incomes above 100 percent FPL.

Eligibility Changes for Elderly Individuals and Those with Disabilities

Few states reported eligibility expansions or restrictions for this group. Two states (Florida in FY 2014 and New Jersey in FY 2015) reported expanding eligibility by increasing income and asset limits while two states (Arkansas and Louisiana) reported reducing or eliminating buy-in programs that allow working individuals with disabilities with higher amounts of income and assets than other elderly or disabled individuals to obtain Medicaid coverage. Two additional states reported more complex changes:

• Indiana’s spend-down program was eliminated as a result of changing its methods for determining disability for Medicaid coverage.⁵ The spend-down program allowed those that otherwise qualified except for their income/assets to qualify after taking into account their medical expenses. Some of the 31,500 individuals affected by this decision obtained coverage in the Marketplace but some lost coverage. Some of the 31,500 that lost coverage also got assistance from the Medicare Savings Program (which provides Medicaid assistance with Medicare premiums and cost-sharing); the state increased the income limit for this program. Indiana also implemented a 1915(i) HCBS state plan amendment that will result in full Medicaid coverage for those with income up to 300 percent FPL and severe mental health conditions which will also cover some of those that lost spend-down coverage.
• Louisiana eliminated optional coverage for aged and disabled individuals with incomes up to 100 percent FPL. Those that qualify for Supplemental Security Income (SSI, about 74 percent FPL) remain eligible for Medicaid, but approximately 8,000 Medicaid cases were closed as a result of the decision. The state also added an optional coverage group which will provide interim Medicaid-only benefits for those awaiting an SSI determination. Separately, the state implemented spend-down eligibility for four HCBS waivers.

Eligibility Changes for Pregnant Women and Children

Two states (Oklahoma and Louisiana) reduced eligibility for pregnant women to 138 percent FPL in FY 2014. Pregnant women losing eligibility in both states are likely eligible for coverage either through the Marketplace or CHIP in Louisiana. (As such, neither of these changes is counted here as a restriction.) Additionally, California and Rhode Island are working on initiatives to assist pregnant women with incomes above 138 percent FPL to purchase Marketplace coverage using Medicaid funding.

For children, the ACA implemented new policies across all states to help strengthen children’s coverage, such as providing Medicaid coverage to children aging out of foster care up to age 26 and requiring states to maintain eligibility thresholds for children that are at least equal to those in place at the time the ACA was enacted through September 30, 2019. In addition, the law established a minimum Medicaid eligibility level of 138 percent FPL for all children up to age 19. Prior to the ACA, the federal minimum eligibility levels for children varied by age, and the federal minimum for older children ages 6 to 18 was 100 percent FPL. As a result of the law, 21 states needed to transition children from CHIP to Medicaid in 2014; states still receive the enhanced CHIP federal matching rate for coverage of these children. (This change was not included in this report as an eligibility change since coverage for these children continues to be financed with Title XXI funds.)

See Tables 1 and 2 for more information on eligibility changes in FY 2014 and FY 2015.

Enrollment Procedures

In addition to changes in eligibility standards, some states were adopting options to further streamline application and renewal processes beyond those required by the ACA. States were also asked to report on implementation of hospital presumptive eligibility, efforts to coordinate with the Marketplaces, status of application backlogs, and plans for the next open enrollment period for Marketplace coverage.

Streamlining Options

Beyond changes required by the ACA, CMS offered states (in a letter dated May 17, 2013) the opportunity for expedited waivers for several new options that would further streamline application and renewal processes and facilitate enrollment. A majority of states implemented one of these options, namely to delay the annual Medicaid eligibility redeterminations that would normally have occurred during the first quarter of calendar 2014. For individuals scheduled for eligibility redetermination during this period, this waiver allowed Medicaid coverage to continue while staff were adjusting to the new MAGI income counting rules in all states and were focused on implementing the ACA Medicaid expansion in about half of states. Several states asked for and received extensions beyond March 31^st that further delayed renewals for Medicaid enrollees. Also, as reported last year, about one third of states adopted an option to implement the MAGI rules before January 1, 2014. As of August 2014, CMS had approved the following states to use the remaining streamlining options:

• Seven states (Arkansas, California, Illinois, Michigan, New Jersey, Oregon, and West Virginia) were approved to facilitate enrollment into Medicaid through administrative data transfer using Supplemental Nutrition Assistance Program (SNAP) data.
• Four states (California, New Jersey, Oregon, and West Virginia) were approved to enroll parents based on income data available from their children’s eligibility application.
• No state had an approved waiver to adopt 12 month continuous eligibility for adults under this option.

States were asked about their plans to adopt these options in FY 2015. Washington reported plans to adopt the administrative data transfer option, and Kansas planned to implement 12 month continuous eligibility for adults. Several states noted that they have adopted strategies (e.g. express lane eligibility) that use SNAP data to facilitate Medicaid enrollment or target outreach. New York also reported having adopted 12 month continuous eligibility for adults, but under their existing 1115 waiver.⁶

Hospital Presumptive Eligibility (HPE)

Starting in January 2014, the ACA allows qualified hospitals to make Medicaid presumptive eligibility determinations in accordance with an approved State Plan Amendment. CMS issued HPE rules governing the state implementation of HPE on January 24, 2014, which delayed adoption in many states.⁷ Only 11 states reported implementing HPE in January (with later CMS approval). At the time of the survey, an additional 18 states had implemented HPE and three other states with approved plans expected to implement in the fall. Another 17 states reported that they had submitted state plan amendments to CMS but had not yet received approval; these states were in various stages of discussions with CMS and were also developing training materials. Four states indicated that their HPE plans were still under development. States reported a great deal of variation in hospital participation levels and in the volume of applications received through HPE. Among states that implemented HPE early, hospital participation ranged from only a few in some states to the majority of Medicaid hospitals. Some states indicated that hospitals were not interested in participating because it was easy to enroll individuals in Medicaid using “real time” on-line eligibility systems.