CMS Releases Proposed Medicaid/CHIP Eligibility Redesign


The Centers for Medicare and Medicaid Services (CMS) issued proposed rules on August 17 on provisions of the Affordable Care Act (ACA) on determining eligibility under Medicaid and the Children’s Health Insurance Program after health care reform is fully implemented.    The proposed rules include a comprehensive redesign of eligibility categories and requirements, use of “modified adjusted gross income” (MAGI) as the new financial eligibility standard for individuals and families who will be “newly eligible” beginning in January 2014, enhanced Federal medical assistance percentages (FMAP) for state expenditures on medical services for such persons, and enhanced FMAP on state expenditures beginning in 2014 in “expansion states” offering a federal financial benefit to states that have already expanded such eligibility.  

FMAP for “newly eligible” persons who would have not been eligible in the state as of December 2009 will be 100 percent for 2014-2016, declining gradually to 90 percent in 2020.  The proposed rules indicate that states will not be required to make eligibility determinations for every individual using 2014 versus 2009 eligibility requirements to carve out the expenditures eligible for enhanced FMAP.   Instead, the proposed rules allow a “threshold” methodology, a CMS-approved statistically valid sampling methodology, or a CMS calculated enhanced FMAP proportion.   PCG can help states develop financial models to test each of these options in each state.   

The proposed rules define a new eligibility category that states must cover in 2014 including persons aged 19-65 with incomes at or below 133 percent of the Federal poverty level.    States must cover nearly all individuals in this category if they meet other requirements such as those pertaining to state residency and citizenship or legal immigration status.   The proposed rules also permit states the flexibility to cover such persons with incomes above 133 percent of the FPL.

The proposed rules also consolidate many traditional eligibility categories into groups for parents and other caretaker relatives, pregnant women, and infants and children under age 19.   PCG can help states map their existing state plan eligibility categories to these groups, amend state rules and procedures, and update their Medicaid Management Information Systems (MMIS), including eligibility subsystems that can qualify for enhanced MMIS funding under CMS rules issued in November 2010.

The proposed rules will require use of MAGI as the financial eligibility standard to measure income for most Medicaid and CHIP applicants beginning in 2014, just as it will be the standard for calculating advance tax credits for taxpayers with incomes up to 400 percent of the FPL who will be able to purchase coverage through the Exchanges beginning in 2014.   But the proposed Medicaid and CHIP rules permit point-in-time measurement of income and give states additional flexibility to take into account changes in income that can reasonably be anticipated, bridging the gap between MAGI, an annual measure of income used by the Internal Revenue Service since 1986, and the monthly income measures used by medical and cash assistance programs since their inception to help individuals and families needing temporary assistance due to catastrophic illness, unemployment, loss of a breadwinner, and other hardship.        

The proposed rules require a single, streamlined application to be used for all health coverage available under the ACA.   These applications may be approved through the Exchanges for Medicaid, CHIP, tax credit, cost-sharing reduction, state-established basic health programs, and health plan enrollment purposes.   States must adopt a federal form (to be developed) or a federally approved state form.    States must establish procedures to enable the applicant (or someone acting on his behalf) to submit an application via a website, by telephone, by mail, in person, or by FAX.   The proposed rules require acceptance of electronic signatures, including those telephonically recorded.    States must also provide assistance to applicants in person, over the telephone, and on-line, using methods accessible to persons with disabilities and persons with limited English language proficiency.

States should consider the proposed Medicaid and CHIP eligibility rules very carefully from a standpoint of operational feasibility, impact on their existing information systems, IT systems development, and implementation of the Exchanges in 2014.  Comments on these proposed rules are due October 31.   States should also note the proposed rules issued on August 22 by the U.S. Department of the Treasury, the Department of Labor, and the Department of Health and Human Services, requiring federally regulated group health plans and health insurance issuers to disclose uniform summaries of health plan benefits and glossaries of terminology to help consumers shop for the best coverage and make informed choices among plans that will be available to their families through the Exchanges.


Categories:CMS Regulations | Federal Health Care Reform | Eligibility Coordination


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