CMS Finalizes Medicaid/CHIP Eligibility Rules

The Centers for Medicare and Medicaid Services (CMS) issued final rules on March 23 on provisions of the Affordable Care Act (ACA) on determining eligibility under Medicaid and the Children’s Health Insurance Program (CHIP). The final rules are effective January 1, 2014 but have been issued in advance to give states time to complete planning and implementation of eligibility policy, operations, and systems changes. Proposed rules were published last August 17. 

The final rules include a comprehensive redesign of eligibility categories and requirements as well as adoption of “modified adjusted gross income” (MAGI) as a new financial eligibility standard for individuals and families beginning in January 2014.  CMS is allowing another  45 day comment period on several provisions that it has designated as “interim final” (42 CFR 431.300(c)(1) and (d), 431.305(b)(6), 435.912, 435.1200, 457.340(d), 457.348, and 42 CFR 457.350(a),(b), (c), (f), (i), (j) and (k)) pertaining to timely determinations of Medicaid/CHIP eligibility, eligibility information safeguards, and coordination of eligibility determinations among programs under interagency agreements. Additional comments on those interim final rules are due May 7.    

CMS did not address states’ methods of quantifying “newly eligible” persons (persons who would not have been eligible before the ACA) for purposes of determining enhanced federal matching under the ACA. The August 17 proposed rules offered three options for states: a “threshold” methodology; a CMS-approved statistically valid sampling methodology; or a CMS calculated enhanced federal matching proportion. CMS now says that topic will be addressed in a separate rule.   

The final rules define a new Medicaid eligibility category that states must cover in 2014 consisting of persons aged 19-65 with incomes at or below 133 percent of the Federal poverty level (effectively 138 percent of the FPL after accounting for income disregards). The ACA requires states to 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. States are also permitted the flexibility to cover such persons with incomes above 133 percent of the FPL. The final rules also consolidate many pre-ACA eligibility categories into groups for parents and other caretaker relatives, pregnant women, and infants and children under age 19. The final rules clarify numerous definitions in the proposed rules in response to excellent questions and comments from states and other Medicaid/CHIP eligibility experts. CMS received 814 comments on the proposed rules.

The final rules require use of MAGI as the financial eligibility standard to measure income for most Medicaid and CHIP applicants beginning in 2014 (the same standard for calculating advance tax credits for taxpayers with incomes up to 400 percent of the FPL who will purchase coverage through the Exchanges beginning in 2014). The final rules reflect Public Law 112-56, enacted last November 21, which changed the MAGI definition of income to include all Social Security benefits. CMS estimates that 51 million persons will be enrolled in Medicaid and CHIP based on the MAGI income eligibility standard.   The final 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.       

The final 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 may adopt a federal form 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 final rules also require acceptance of electronic signatures, increase reliance on electronic verification of eligibility information, allow states to delegate eligibility determinations to private contractors if contracts are available to the public upon request, revise provisions in the proposed rules about how MAGI rules will apply to individuals with disabilities, clarify that the family size in determining eligibility for a pregnant woman includes the expected child, clarify provisions on counting support payments and awards used for education, and prohibit the state from requiring an individual to complete an in-person interview as part of an application or renewal in most instances. 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.