Medicaid Expansion in Montana

On November 2, 2015, the Centers for Medicare and Medicaid Services (CMS) approved Montana’s Section 1115 demonstration waiver to expand Medicaid under the Affordable Care Act (ACA) as of January 1, 2016.¹ The waiver implements the Montana Health and Economic Livelihood Partnership (HELP) program, which was adopted by the state legislature in April 2015. CMS also approved Montana’s § 1915(b) selective contracting waiver to use a managed fee-for-service (FFS) Third Party Administrator (TPA) to deliver services to the newly eligible adults.² Adults who are newly eligible for Medicaid under Montana’s expansion are parents from 50-138% of the federal poverty level (FPL) and childless adults from 0-138% FPL (up to $16,242 per year for an individual in 2015) – an estimated 70,000 beneficiaries.³

Under the waiver, enrollment began on November 1, 2015, with Medicaid expansion coverage effective on January 1, 2016. The waiver does the following:⁴

• Expands Medicaid coverage to newly eligible adults ages 19-64 through a managed FFS TPA (described below). In order to implement the TPA, the state has approval to waive freedom of choice requirements (except for family planning providers) so that newly eligible adults will receive services from the TPA’s provider network.
• Exempts certain groups of people from enrolling in the TPA and all of the Section 1115 waiver provisions except 12-month continuous eligibility including those with incomes at or below 50% FPL, American Indian/Alaskan Natives, individuals who are medially frail, those with exceptional health care needs as determined by the state, people who live in regions where there are an insufficient number of providers contracted with the TPA, and people who require continuity of coverage not available or effectively delivered through the TPA.
• Requires monthly premiums up to 2% of household income for newly eligible adults from 51-138% FPL receiving services through the TPA. Beneficiaries from 101-138% FPL may be dis-enrolled for failing to pay premiums after notice and a 90 day grace period. These beneficiaries may re-enroll upon payment of arrears or when the state Department of Revenue assesses the debt against income taxes, no later than the end of the quarter; re-enrollment shall not require a new application. The state shall establish a process to exempt beneficiaries from dis-enrollment for good cause.
• Subjects enrollees to premiums and copayments up to 5% of income, consistent with federal limits. Beneficiaries subject to premiums will receive a credit toward co-payments accrued up to 2% of income. Certain service categories are exempt from co-payments (including preventive health care, immunizations and medically necessary health screenings), and providers may not deny services for failure to pay copayments for individuals with incomes below poverty.
• Implements twelve month continuous eligibility for all newly eligible adults to reduce the effects of churning between Medicaid and Marketplace coverage as income fluctuates.⁵

As mentioned above, the state also was granted § 1915(b) selective contracting waiver authority to use a managed FFS TPA to deliver services to the newly eligible adults. According to the Section 1915(b) waiver application, the TPA must establish a provider network,⁶ reimburse providers on a fee-for-service basis on behalf of the state, collect beneficiary premiums, and assume other administrative functions for most newly eligible adults. The Section 1915(b) waiver application also provides that the TPA would also ensure that services provided are medically necessary,⁷ oversee case management and care coordination, and ensure continuity of care.

Given the low population density of the state, Montana will contract with a TPA to deliver services to the newly eligible population to use the provider network and administrative infrastructure of an insurer already providing services to individuals in the state. The state chose a company offering a qualified health plan on the Marketplace with the goal of decreasing churn and increasing continuity of care between Medicaid and the Marketplace. The Section 1915(b) waiver application defines network adequacy standards for the TPA. Currently, the state uses the TPA model to administer and deliver care for the state’s Children’s Health Insurance Program, Healthy Montana Kids.

To date, CMS has approved Medicaid expansion waivers in five other states (Arkansas, Iowa, Indiana, Michigan, New Hampshire⁸). A sixth state, Pennsylvania, initially had implemented the Medicaid expansion using a Section 1115 demonstration, but later changed to a traditional Medicaid expansion. Some provisions in Montana’s proposal are similar to provisions approved in other waivers,⁹ such as imposing premiums of 2% of income for beneficiaries between 51-138% FPL with the ability to dis-enroll those from 101-138% FPL for non-payment for up to 3 months. Montana’s waiver authority to implement 12-month continuous eligibility for the newly eligible population is unique among states seeking Medicaid expansion waivers. Table 1 describes the major elements of Montana’s proposed Section 1115 demonstration.