Medicaid Expansion
What’s All The Fuss?
STATE BAR OF CALIFORNIA
BUSINESS LAW SECTION, HEALTH LAW COMMITTEE
Date: May 2, 2013
Time: 12:00 PM to 1:00 PM (PST)
Presenters: Craig B. Garner and Michelle L. Knowles
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MEDICAID EXPANSION
What’s All The Fuss?
Introduction
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MEDICAID EXPANSION
What’s All The Fuss?
The United States Supreme Court
“Congress never dreamed that any State would refuse to
go along with the expansion of Medicaid. Congress well
understood that refusal was not a practical option.”
-- National Fed. of Indep. Bus. v. Sebelius,
132 S. Ct. 2566, 2665 (2012)
(Scalia, Kennedy, Thomas and Alito, JJ, dissenting).
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MEDICAID EXPANSION
What’s All The Fuss?
United States Supreme Court (continued)
Chief Justice Roberts’ plurality decision on Medicaid coercion (joined by
Justices Breyer and Kagan) held that Congress acted within the scope of the
spending power.
However, Chief Justice Roberts limited Medicaid Expansion by denying
Congress the ability to threaten existing Medicaid funding. “Though
Congress’ power to legislate under the spending power is broad, it does not
include surprising participating States with post-acceptance or ‘retroactive’
conditions.”
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MEDICAID EXPANSION
What’s All The Fuss?
United States Supreme Court (continued)
Chief Justice Roberts argued the Court did “not believe Congress would
have wanted the whole Act to fall, simply because some [states] may choose
not to participate.”
Justices Scalia, Kennedy, Thomas and Alito disagreed: “We should not
accept the Government’s invitation to attempt to solve a constitutional
problem by rewriting the Medicaid Expansion so as to allow States that
reject it to retain their pre-existing Medicaid funds.”
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MEDICAID EXPANSION
What’s All The Fuss?
Medicaid Expansion
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MEDICAID EXPANSION
What’s All The Fuss?
What was Medicaid?
Medicaid was health insurance coverage for the “deserving” poor, including
women, their children, the blind, the disabled, and the impoverished elderly.
California created “Medi-Cal” during its 1965 Second Extraordinary Session
“in order to establish a program of basic and extended health care services
for recipients of public assistance and for medically indigent persons.”
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MEDICAID EXPANSION
What’s All The Fuss?
What is Medicaid Today?
Medicaid is health insurance for individuals who qualify financially, as well
as families with dependent children, the aged, blind or disabled.
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Hoosier Healthwise
KanCare
MassHealth
Medi-Cal
SALUD!
SoonerCare
TennCare
MEDICAID EXPANSION
What’s All The Fuss?
Medicaid Expansion
[77 FEDERAL REGISTER 17144 (Mar. 23, 2012) (Final Rule)]
The ACA establishes a new eligibility group that all states participating in
Medicaid Expansion must cover as of January 2014, including all nonpregnant individuals age 19 to 65, with the income eligibility level of 138% of
the Federal Poverty Level.
An estimated 21 million new beneficiaries will participate in Medicaid by
2022 if all states accept Medicaid Expansion under the ACA.
Also includes a new group of former foster care children up to age 26, as
well as all children age six and older with qualifying income.
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MEDICAID EXPANSION
What’s All The Fuss?
Medicaid Expansion (continued)
Those who qualify for coverage in 2014 will have affordable access to 29
different types of medical care, ranging from inpatient hospital services and
outpatient care to dental services and certain defined forms of respiratory
care.
Each state must coordinate ineligible Medicaid beneficiaries with potential
eligibility for advanced premium tax credits (and transfer to the state
exchange).
Medicaid applications may be submitted online, by telephone, by mail, in
person and by facsimile. States must provide practical assistance to those
in need.
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MEDICAID EXPANSION
What’s All The Fuss?
2013 Federal Poverty Guidelines
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Persons in
Family/Household
Poverty Guideline
138% of Guideline
1
$11,490
$15,856
2
$15,510
$21,403
3
$19,530
$26,951
4
$23,550
$32,499
5
$27,570
$38,047
6
$31,590
$43,594
7
$35,610
$49,142
8
$39,630
$54,689
MEDICAID EXPANSION
What’s All The Fuss?
Early State Medicaid Expansion
At least seven states (including California) have already expanded Medicaid
through the ACA’s early expansion option or a Section 1115 waiver.
States can set the income eligibility standard at any level up to 133% of the
federal poverty level, but cannot cover higher income beneficiaries before
first covering those with lower income.
The ACA’s early expansion option allows states to “phase-in” coverage for
the new eligible group of Medicaid beneficiaries at any time after April 1,
2010.
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MEDICAID EXPANSION
What’s All The Fuss?
California’s “Bridge to Reform”
The Federal Government approved California’s Bridge to Reform Section
1115(a) Medicaid Demonstration Project Waiver in November 2010.
California’s early implementation makes up to approximately $8 billion in
federal Medicaid matching funds over a five-year period.
California extends coverage to low-income adults through individual county
programs, including Medicaid Coverage Expansion (MCE) adults and Health
Care Coverage Initiative (HCCI) adults.
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MEDICAID EXPANSION
What’s All The Fuss?
California’s “Bridge to Reform” (continued)
Additional funding supports 12 county hospital systems and 5 University of
California hospital systems to improve care through the Delivery System
Reform Incentive Pool (DSRIP), including infrastructure development,
innovation and a focus on the highest burden conditions in public hospitals.
California also began enrolling Medicaid-eligible seniors and those with
disabilities in Medicaid managed care programs that met certain plan
readiness requirements (excluding dual-eligibles).
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MEDICAID EXPANSION
What’s All The Fuss?
The Cost of Medicaid Expansion
The Federal Government will bear 100% of the added expense for newly
eligible Medicaid beneficiaries through 2016, 95% in 2017, 94% in 2018,
93% in 2019 and 90% in 2020.
States must pay “qualified” physicians Medicaid fees at least equal to
Medicare rates starting in 2013.
Pay increase applies to family physicians, internists and pediatricians
(and in some instances specialists) provided (1) they are Board-certified
or (2) at least 60% of the Medicaid codes they billed in the previous year
were primary care codes identified in the Affordable Care Act.
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MEDICAID EXPANSION
What’s All The Fuss?
The Cost of Medicaid Expansion (continued)
Does not cover rural health clinics and federally qualified health centers, as
these entities are governed by special payment rules.
Medicaid managed care organizations must comply with the new payment
standard in effect for 2013 and 2014, and the payment obligation must be
specified in the contract with the organization.
Establishes a “self-attestation” system by which physicians can certify that
they are members of one of the covered specialty groups.
Provides a formula for calculating the amount of federal funding owed for
the payment bump, tying the federal contribution to the difference between
the state’s rate as of 2009 and the 2013/2014 payment level.
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MEDICAID EXPANSION
What’s All The Fuss?
Medicaid Eligibility (as of January 1, 2013)
The median eligibility level for children (CHIP) is 235% of the federal
poverty level.
The median eligibility level for pregnant women is 185% of the federal
poverty level.
The median eligibility level for parents is 61% of the federal poverty level.
Only nine (9) states provide full Medicaid coverage to other adults without
dependent children.
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MEDICAID EXPANSION
What’s All The Fuss?
Medicaid Expansion, State By State
Although the Supreme Court upheld the constitutionality of Medicaid
Expansion, it also set limits on the ways in which the Federal Government
can enforce it.
If a state does not elect to expand Medicaid under the ACA, it will not be
entitled to new Medicaid funding.
Today, 33 states limit parent eligibility to less than 100% of the federal
poverty level, and 16 states limit eligibility to less than 50%. Most states do
not provide Medicaid coverage to low-income, childless adults.
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MEDICAID EXPANSION
What’s All The Fuss?
Medicaid in California
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MEDICAID EXPANSION
What’s All The Fuss?
What is Medi-Cal?
 CAL. WELF. & INST. CODE § 1400:
“The purpose [of Medi-Cal] is to afford to qualifying health care and
related remedial or preventative services, including related social
services which are necessary for those receiving health care under
[Medi-Cal].”
 Includes 25% of California’s population as of 2010.
 Provides public health care for 9.2 million beneficiaries in California.
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MEDICAID EXPANSION
What’s All The Fuss?
Medi-Cal Also Includes:
 Medi-Cal Disproportionate Share Program (Cal. Welf. & Inst. Code §
14105.98)
 Private Hospital Supplemental Fund (Cal. Welf. & inst. Code §
15166.12)
 Distressed Hospital Fund (Cal. Welf. & Inst. Code § 14166.23)
 Construction and Renovation Reimbursement Program (Cal. Welf. &
Inst. Code § 14085.5)
 Hospital Quality Assurance Fee Program (Cal. Welf. & Inst. §
14169.31)
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MEDICAID EXPANSION
What’s All The Fuss?
California and the US
2010-11 Statistics
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CA percentage
US percentage
AGE
Children (0-18)
Poor Children
Adults (19-64)
Poor Adults
Elderly (65+)
26%
31%
62%
22%
16%
25%
27%
61%
19%
12%
RACE/ETHNICITY
White
Black
Hispanic
Other
40%
6%
39%
15%
63%
12%
17%
8%
NON-CITIZEN
14%
7%
MEDICAID EXPANSION
What’s All The Fuss?
Dual Eligible Beneficiaries
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MEDICAID EXPANSION
What’s All The Fuss?
Dual Eligible Beneficiaries
 Dual eligible beneficiaries receive both Medicare and Medicaid benefits.
 Among the poorest and sickest beneficiaries, this includes over 9.1
million seniors and younger individuals (1.1 million in California).
 CMS favors team-based programs that regularly monitor and update
patient care plans, place beneficiaries, family members and informal
caregivers at the center of the team, utilize technology (including
electronic health records) to coordinate care.
 Dual eligibles account for 15% of Medicaid beneficiaries.
 Dual eligibles account for 39% of total Medicaid spending.
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MEDICAID EXPANSION
What’s All The Fuss?
Memorandum of Understanding
[CMS] and [California] will establish a Federal-State partnership to
implement the Demonstration to Integrate Care for Dual Eligible Individuals
(Demonstration) to better serve individuals eligible for both Medicare and
Medicaid (“Medicare-Medicaid Enrollees” or “dual eligibles”). The FederalState partnership will include a three-way contract with Demonstration
Plans (“Prime Contractor Plans”) that will provide integrated benefits to
Medicare-Medicaid enrollees in the targeted geographic area(s). . . .The
initiative is testing an innovative payment and service delivery model to
alleviate the fragmentation and improve coordination of services for
Medicare-Medicaid enrollees, enhance quality of care and reduce costs for
both the State and the Federal Government.
Memorandum of Understanding Between The Centers for Medicare &
Medicaid Services and The State of California (March 27, 2013)
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MEDICAID EXPANSION
What’s All The Fuss?
Cal MediConnect Program
California’s Medi-Cal program and the federal Medicare program
partnered to launch a three-year demonstration beginning in 2013 that
would promote coordinated health care delivery to seniors and people
with disabilities who are eligible for both programs.
CalMediConnect hopes to create a seamless service delivery experience
for dual eligible beneficiaries while improving the quality of care and a
more efficient delivery system.
The program will start in October 2013, throughout eight California
counties (Alameda, San Mateo, Santa Clara, Los Angeles, Orange, San
Diego, Riverside and San Bernardino).
No more than 456,000 dual eligible beneficiaries will participate in the
program.
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MEDICAID EXPANSION
What’s All The Fuss?
The Expanding Controversy
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MEDICAID EXPANSION
What’s All The Fuss?
The Medicaid Expansion Puzzle
June 28, 2012: “If Congress had thought that States might actually refuse to
go along with the expansion of Medicaid, Congress would surely have
devised a backup scheme so that the most vulnerable groups in our society,
those previously eligible for Medicaid, would not be left out in the cold.”
National Fed. of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2665 (2012)
(Scalia, Kennedy, Thomas and Alito, JJ, dissenting).
March 25, 2013: A Wall Street Journal article estimates that 17 states
planned to opt out or appeared to lean in that direction, while 27 states
planned to participate in Medicaid Expansion.
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MEDICAID EXPANSION
What’s All The Fuss?
Advice From the Federal Government
The Federal Government maintains that the ACA does not provide for a
phased-in or partial expansion.
The Federal Government also confirmed that Section 1115 demonstration
waivers may be considered on a limited basis.
Section 1115 of the Social Security Act gives HHS the authority to waive
provisions of major health and welfare programs, including certain
requirements of Medicaid. Section 1115 also permits states to use federal
Medicaid funds in ways that are not otherwise allowed under federal rules.
HHS must first determine that the initiative is an “experimental, pilot, or
demonstration project” that “is likely to assist in promoting the objectives of”
the Medicaid program.
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MEDICAID EXPANSION
What’s All The Fuss?
The Arkansas Experiment
Arkansas tested the boundaries of Medicaid Expansion by focusing on
“premium assistance” options for Medicaid beneficiaries. The Federal
Government released a statement in March 2013 that it would consider
states’ ideas on cost effectiveness.
As of April 18, 2013, Arkansas’s proposal would accept the money intended
for Medicaid Expansion under the ACA, but instead use it to buy private
insurance for approximately 250,000 eligible low-income residents. Those
individuals who earn up to 138% of the poverty line – or $15,415 per year –
would purchase subsidized private insurance through the state’s insurance
exchange.
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MEDICAID EXPANSION
What’s All The Fuss?
Other States
As of April 8, 2013, Missouri was unable to reach an agreement to expand
Medicaid. According to Senate President Pro Tem Tom Dempsey: “We’re
going to be patient, we’re going to try to work through this and we’re going to
make sure that we don’t get into ourselves in the situation where the state of
Missouri is going to be on the hook for billions of dollars because the federal
government can’t meet its obligations.”
By March 2013, Tennessee was still undecided. “At the end of the day, huge
numbers of desperately ill people are being left out in the cold,” said Gordon
Bonnyman, the executive director of the Tennessee Justice Center.
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MEDICAID EXPANSION
What’s All The Fuss?
Other States (continued)
In March 2013, South Carolina was without a resolution. The state’s
Medicaid director emphasized a need to “put the brakes” on Medicaid
expansion and determine “who is benefiting from this.”
As of April 20, 2013, Michigan was undecided. Matt Lori, the chairman of the
subcommittee, noted: “People just need to be educated on the whole thing.
It’s very complicated.”
The April 18, 2013, budget passed by the Ohio House of Representatives did
not include the governor’s Medicaid Expansion proposal. Representative
Nickie Antonio commented: “It would be fiscally irresponsible, anti-business,
and harmful to more than 1 million Ohioans if we do nothing.”
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MEDICAID EXPANSION
What’s All The Fuss?
The Expanding Medicaid Expansion
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MEDICAID EXPANSION
What’s All The Fuss?
Expanding Preventative Services
Section 4106(b) of the ACA establishes a one percentage point increase in
the federal medical assistance percentage (effective January 1, 2013),
applied to expenditures for adult vaccines and clinical preventative services
to states that cover, without cost-sharing, a full list of specified preventative
services and adult vaccines.
For states to claim this increase they must cover all the recommended
preventative services and adult vaccines in their standard Medicaid benefit
package.
Effective January 1, 2014, these services must be included as part of
essential health benefits.
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MEDICAID EXPANSION
What’s All The Fuss?
Expanding Technology
Nearly every state has accessed federal funds (90% federal matching rate) to
improve their information technology infrastructure.
Most states have an electronic online application for prospective Medicaid
beneficiaries, over half allow families to renew online, and most utilize online
accounts.
Collaboration with the Social Security Administration allows for online
verification of citizenship to verify Medicaid eligibility.
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MEDICAID EXPANSION
What’s All The Fuss?
The Future of Medicaid Expansion
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MEDICAID EXPANSION
What’s All The Fuss?
Physician Demand For New Medicaid Patients
In 2011, 69.4% of physicians nation-wide accepted new patients with
Medicaid, compared with those physicians accepting new self-pay (91.7%),
Medicare (83%), or privately insured patients (81.7%).
New Jersey had lowest percentage of physicians accepting new Medicaid
patients (about 40.4%).
California had the second lowest acceptance rate for new Medicaid patients
(57.1%).
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MEDICAID EXPANSION
What’s All The Fuss?
Hospitals and EMTALA
Under the Emergency Medical Treatment and Active Labor Act (EMTALA),
hospitals must treat any patient who presents at an emergency department.
The hospital must provide an appropriate medical screening examination to
determine if the patient is suffering from an emergency medical condition.
The hospital must either provide treatment until the patient is stable or
transfer the patient to another hospital for a higher level of care.
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MEDICAID EXPANSION
What’s All The Fuss?
Immigration Limitations
Legal permanent residents may have eligibility restrictions for Medicaid
benefits (but can participate in the exchanges).
Unauthorized immigrants are excluded from Medicaid coverage.
According to a Robert Wood Johnson Foundation study, potential
recipients of Medicaid coverage under the expansion are immigrants who
will not qualify in 2014. This includes:
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Nevada (34%)
Arizona (31%)
California (26%)
Texas (26%)
MEDICAID EXPANSION
What’s All The Fuss?
Stigmas and Semantics
In Spring 2012 the Federal Government replaced the term “recipient” with
“beneficiary” throughout the Code of Federal Regulations to describe those
who receive assistance from Medicaid, because the previous term was
considered “unflattering.” (See 42 C.F.R. Ch. IV; 42 C.F.R. §§ 400.200
through 400.203)
Medicaid has historically been considered health insurance for the poor. Will
the increase in Medicaid beneficiaries change this historical stigma?
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MEDICAID EXPANSION
What’s All The Fuss?
Craig B. Garner
Craig is an attorney and health care consultant, specializing in issues pertaining to modern American health
care and the ways it should be managed in its current climate of reform.
Craig’s law practice focuses on health care mergers and acquisitions, regulatory compliance and counseling for
providers. Craig is also an adjunct professor of law at Pepperdine University School of Law, where he teaches
courses on Hospital Law and the Affordable Care Act.
Between 2002 and 2011, Craig was the Chief Executive Officer of Coast Plaza Hospital. He was responsible for
administration and oversight of this general acute care hospital providing services to the City of Norwalk and
surrounding communities in Southeast Los Angeles County.
Craig serves on the advisory board for the College of Osteopathic Medicine of the Pacific, Western University of
Health Sciences, the Board of Directors of the Los Angeles Opera and the Board of Visitors of Seaver College
at Pepperdine University. Craig is also a Fellow Designate with the American College of Healthcare Executives,
a Member of the State Bar of California, Business Law Section, Health Law Committee, and a Vice Chair of the
Healthcare Reform Educational Task Force of the American Health Lawyers Association.
Additional information can be found at www.craiggarner.com.
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MEDICAID EXPANSION
What’s All The Fuss?
Michelle Knowles
Legal Officer, Byram Health Care
Michelle leads the legal efforts of Byram Healthcare, a national medical supply.
She is based in their
Huntington Beach, CA office. Michelle joined Byram Healthcare in 2012, as part of the acquisition of A-Med
Health Care, where Michelle was integral in the development and implementation of corporate strategies taking
A-Med Health Care from a small to a medium-sized company with significant share in the California specialty
pharmacy and medical supply market, expanding business lines and building national opportunities. Michelle
joined A-Med Health Care in 2004, after working in private practice, having spent time as an associate with
Friedman Stroffe & Gerard, P.C. in Irvine, CA, and earlier as a Senior Tax Specialist at KPMG. Michelle’s
private practice experience spanned general corporate work, intellectual property (trademark and copyright),
and health care regulation.
Michelle graduated magna cum laude and valedictorian of the Class of 2000 of Chapman University School of
Law, and was the Editor-in-Chief of the Chapman Law Review. She earned her B.A. in Business Management
from California State University, Fullerton. Michelle is a member of the Health Care Law Committee, a
committee of the Business Law Section of the California Bar, and a Board Member of the California Association
of Medical Product Suppliers.
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MEDICAID EXPANSION
What’s All The Fuss?
Thank You
Craig B. Garner and Michelle A. Knowles
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