EMERGING TRENDS AND DEVELOPMENTS
IN MEDICAID PAYMENT
AHLA ANNUAL MEETING
June 29, 2015-July 1, 2015
Washington, D.C.
Jennifer L. Evans
Polsinelli P.C.
Joel M. Hamme
Powers Pyles Sutter & Verville, P.C.
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SYNOPSIS OF SESSION
 Overview of the Medicaid program
 Provider rights of action involving Medicaid
reimbursement
 Medicaid eligibility expansion under the
Affordable Care Act (ACA)
 Health insurance exchange subsidies and
Medicaid
 Developments and issues in Medicaid
managed care
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Medicaid (Title XIX of the Social Security Act, 42 U.S.C. §
1396 et seq.) enacted at same time as Medicare (Title XVIII,
42 U.S.C. § 1395 et seq.). Social Security Act Amendments
of 1965, P.L. 89-97 (July 30, 1965)
Unlike Medicare which is 100% federally funded and
administered, Medicaid is a cooperative federal-state
program, voluntary, and jointly funded by the federal
government and participating states
◦ United States Department of Health and Human Services (HHS) and
the Centers for Medicare and Medicaid Services (CMS)
◦ Single State Medicaid Agencies
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States must comply with federal Medicaid standards,
including requirements as to the contents of their
state plans, to qualify for federal financial
participation (FFP)
States are not required to participate but all states do
as well as the District of Columbia, Puerto Rico, U.S.
Virgin Islands, Guam, and American Samoa
There are significant variations in state Medicaid
programs in terms of
◦ Eligibility for benefits
◦ Covered services
◦ Program administration (e.g., reimbursement)
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Some contrasts with Medicare
◦ Eligibility
 Elderly (Medicare)
 Indigent (Medicaid)
◦ Funding and administration
 100% federal (Medicare)
 Federal-state collaboration (Medicaid)
◦ Coverage
 Broader post-acute coverage in Medicaid (long term
care services)
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Mandatory
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Physician services
Lab and x-ray services
Inpatient hospital
Outpatient Hospital
EPSDT for individuals under 21
Family planning
Rural and federally qualified health
center (FQHC) services
Nurse midwife services
Nursing facility (NF) services for
individuals 21 and over
Home health for certain
populations
Expansion Medicaid
 Essential Health Benefits
(“Benchmark Coverage” and
“Benchmark Equivalent Coverage”)
Optional
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Prescription drugs
Clinic services
Dental services, dentures
Physical therapy and rehab
Prosthetic devices, eyeglasses
Primary care case management
Institutions for individuals with
intellectual disabilities, formerly
intermediate care facilities for the
mentally retarded (ICF/MR)
services
Inpatient psychiatric care for
individuals under 21
Personal care services
Hospice services
Alcohol and Drug Treatment
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Different types of Medicaid include different
eligibility criteria and benefit coverage
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Mandatory Coverage Populations
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Optional Coverage Populations
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Medicaid Expansion Coverage (Optional with
states under Supreme Court’s decision in
National Federation of Independent Business
v. Sebelius –- NFIB, 132 S.Ct. 2566 (2012))
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Mandatory Categorically Needy With Various Income Guidelines
◦ Pregnant women
◦ Infants up to age 1
◦ Children ages 1-5
◦ Children ages 6 to 19
◦ Parents at state’s 1996 AFDC levels (likely less than 50% FP
Guidelines)
◦ Elderly and disabled persons receiving Supplemental Security
Income (SSI)
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Optional Categorically Needy: higher income, resources
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Optional Medically Needy: higher income, greater medical needs
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Medicaid Expansion Population – Non-Custodial Adults – Up to 138%
of Federal Poverty Level (FPL)
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Medicaid Beneficiaries – 69.7 million (2014) (more than one in five
Americans; Medicare enrollment was about 52.7 million at that time,
though the numbers overlap because some individuals are dually
eligible)
Medicaid Spending - $449.4 billion (2013) (about 15% of total
national health expenditures; Medicare spending was approximately
$585.7 billion or 20% of total national health expenditures)
Separately, the Children’s Health Insurance Program (CHIP) covers
about 8.1 million children who would otherwise be uninsured from
families with modest incomes too high to qualify for Medicaid. Title
XXI of the Social Security Act (42 U.S.C. § 1397aa et seq.), enacted
as part of the Balanced Budget Act of 1997, P.L. 105-33 (Aug. 5,
1997)
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Some Historical Background
◦ When enacted, Medicaid had no payment standards for
Medicaid rates. Unlike Medicare which utilized a
“reasonable cost” standard. 42 U.S.C. § 1395x(v)(1)(A)
◦ In 1968, statutory language was added to ensure that
Medicaid rates did not exceed “reasonable charges”
consistent with efficiency, economy, and quality of care
as established by Medicare. P.L. 90-248, § 237 (Jan. 2,
1968) (see 42 U.S.C. § 1396a(a)(30)). This established a
ceiling but not a floor for Medicaid rates
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Some Historical Background (Cont’d)
◦ In 1972, Congress added a minimum Medicaid rate
standard for Medicaid skilled nursing facilities and
intermediate care facilities effective July 1, 1976. It
required Medicaid rates to be set on a “reasonable costrelated basis” using cost finding methods developed by
the states and approved federally. P.L. 92-603, § 249
(Oct. 30, 1972) (formerly, 42 U.S.C. § 1396a(a)(13)(E))
◦ Federal regulatory efforts to postpone the effective date
of Section 249 were thwarted in the courts. E.g.,
Alabama Nursing Home Ass’n v. Califano, 433 F. Supp.
1325 (M.D.Ala. 1977)
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Some Historical Background (Cont’d)
◦ Section 249 was replaced in 1980 by the Boren
Amendment which required states to make findings and
assurances that their Medicaid rates for skilled nursing
facilities and intermediate care facilities were
“reasonable and adequate to meet the costs which must
be incurred by efficiently and economically operated
facilities in order to provide care and services in
conformity with applicable state and federal laws,
regulations and quality and safety standards.” P.L. 96499, § 962 (Dec. 5, 1980, effective October 1, 1980)
(formerly, 42 U.S.C. § 1396a(a)(13)(A))
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Some Historical Background (Cont’d)
◦ The Boren Amendment was extended to Medicaid
rates for inpatient hospital services in 1981. P.L.
97-35, § 2173(a)(1) (Aug. 13, 1981) (also requiring
consideration of hospitals serving disproportionate
numbers of low income patients with special needs)
◦ Boren Amendment contained both procedural
(findings and assurances) and substantive (rate
adequacy) duties for state Medicaid agencies and
triggered a significant amount of litigation over
Medicaid rates. See also 42 C.F.R. §§ 447.205-.256
(reflecting Boren Amendment standards)
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Some Historical Background (Cont’d)
◦ Meanwhile, in 1989, Congress amended 42 U.S.C.
§ 1396a(a)(30)(A) to specify that Medicaid rates be
adequate to enlist sufficient providers to assure
that Medicaid beneficiaries have equal access to
services. P.L. 101-239, § 6402(a) (Dec. 19, 1989)
◦ In 1990, the Supreme Court ruled that providers
had a private right of action to enforce the Boren
Amendment. Wilder v. Va. Hosp. Ass’n, 496 U.S.
498 (5-4 decision) (enforcement under 42 U.S.C.
§ 1983 -- violation of federal rights under color of
state law)
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Some Historical Background (Cont’d)
◦ In 1997, Congress repealed the Boren Amendment
and replaced it with language as to state Medicaid
agencies’ duties to furnish public notice regarding
rates. P.L. 105-33, § 4711(a) (Aug. 5, 1997). At
the same time, Congress left 42 U.S.C.
§ 1396a(a)(30)(A), the “equal access” provision,
untouched
◦ Medicaid providers mounted court challenges to
Medicaid rates under the “equal access” provision
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Some Historical Background (Cont’d)
◦ Issues arose as to whether Medicaid providers had a
private right of action to enforce the “equal access”
statute either through § 1983 or under the
constitutional Supremacy Clause
◦ More recent Supreme Court case law as to § 1983
private rights of action in non-Medicaid cases had
created questions as to whether it could be a
vehicle for enforcing the “equal access” standard
against states. E.g., Gonzaga Univ. v. Doe, 536 U.S.
273 (2002)
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Some Historical Background (Cont’d)
◦ In Douglas v. Indep. Living Ctr. Of S. Cal., Inc., 132 S.Ct.
1204 (2012), the Supreme Court granted certiorari to
decide whether the “equal access” provision could be
privately enforced through the Supremacy Clause even
though the Court had never resolved the issue of
whether § 1983 furnished such a right of action
◦ Ultimately, due to changed circumstances (CMS had later
approved some challenged plan amendments and the
state withdrew others), the Court avoided (5-4) deciding
the issue and remanded the case to the Ninth Circuit
which had previously found private rights of action
under the Supremacy Clause
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Some Historical Background (Cont’d)
◦ In Armstrong v. Exceptional Child Center, Inc., No.
14-15 (U.S.), the Court granted certiorari to decide
the same question. The Ninth Circuit and a federal
district court in Idaho had found that the “equal
access” statute could be privately enforced through
the Supremacy Clause and that the state’s Medicaid
rates for habilitation services violated the “equal
access” provision
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Some Historical Background (Cont’d)
◦ 5-4 Decision in Exceptional Child Center (March 31,
2015) held that there was no right of action
through the Supremacy Clause for Medicaid
providers to sue state officials for alleged equal
access violations
◦ Majority Opinion (written by Justice Scalia with
concurrences by Chief Justice Roberts, Thomas,
Breyer [in part], and Alito)
◦ Concurring Opinion (Justice Breyer)
◦ Dissenting Opinion (written by Justice Sotomayor
joined by Justices Kennedy, Ginsburg, and Kagan)
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Implications of Exceptional Child Center
◦ What should HHS be doing?
1)
Implement “equal access” regulations. Currently, there are no
such regulations, though HHS proposed some previously. 76
Fed. Reg. 26,342 (May 6, 2011)
2)
Modify existing regulations to eliminate Boren Amendment
standards (42 C.F.R. §§ 447.205-.256)
3)
Since all of the provisions previously discussed apply to
Medicaid fee-for-service (FFS) providers, HHS should
strengthen standards and agency oversight of Medicaid
managed care rates. See later discussion on Medicaid
Managed Care
4)
Create procedures for Medicaid providers and beneficiaries to
be part of the plan amendment review, waiver review, and
general oversight process
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Implications of Exceptional Child Center
(Cont’d)
◦ Likely state efforts to use decision to bar
beneficiary and provider suits on wide array of
other Medicaid statutory requirements
◦ As a joint federal-state program, state statutes,
regulations, and contracts are relevant and may
create actionable rights in state tribunals
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Terms of Medicaid Eligibility Expansion
◦ Incomes of 138% or less of the FPL, not pregnant,
not entitled to or enrolled for Medicare Part A,
Medicare Part B, or Medicaid as of December 1,
2009 under state plan or waiver
◦ Mandatory expansion as of January 1, 2014
◦ Entitled to benchmark or benchmark equivalent
coverage
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Terms of Medicaid Eligibility Expansion (Cont’d)
◦ Enhanced federal match rates to cover the
expansion population. Basically, with some
exceptions:
 Calendar Year (CY) 2014 - 100%
 CY 2015 - 100%
 CY 2016 - 100%
 CY 2017 - 95%
 CY 2018 - 94%
 CY 2019 - 93%
 CY 2020 and thereafter - 90%
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Supreme Court Decision in NFIB
◦ 7-2 majority found mandatory Medicaid expansion
unconstitutionally coercive. But no bright line test or
limiting principle
◦ 5-4 majority concluded that voluntary Medicaid eligibility
expansion would be permissible
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HHS Guidance on Ensuing Medicaid Expansion Issues
◦ Timing of expansion?
◦ Implications of decision? Permanent? Changeable?
◦ Partial or phased expansion?
◦ Non-expansion states and the individual mandate?
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State of the States
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MEDICAID ELIGIBILITY
EXPANSION STATUS 06/01/15
ME
WA
ND
MT
VT
NH
MI
MN
NY
OR
WI
ID
IA
NE
DE
MD/
DC
OH
IN
IL
NV
CA
NJ
PA
WY
UT
CT
MI
SD
MA
RI
WV
VA
CO
KS
MO
KY
NC
TN
OK
AZ
SC
AR
NM
MS
AL
GA
LA
TX
FL
AK
HI
Key
Red = Non-Expansion
Blue = Expansion (Traditional)
Purple = Expansion Alternate Model
NH Turns Purple On 01/01/16
MT Has Alternative Model Proposal Pending
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Medicaid Eligibility Expansion “Score Card” (as of 06/01/15)
◦ 30 expansion jurisdictions
 24 traditional expansion
 5 alternative model expansion (subsidies to purchase on exchanges)
 1 alternative model waiver proposal pending
◦ 21 non-expansion states
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Eligibility Expansion Litigation
◦ Low income and uncompensated care pools (LIPs and UCPs) used
in various states to compensate providers for furnishing
uncompensated care
◦ History of Florida’s LIP-spending ballooned from $1 billion
annually to $2.6 billion annually
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Eligibility Expansion Litigation (Cont’d)
◦ HHS statement of principles for reviewing further
LIP extensions
 Coverage preferable to uncompensated care payments;
LIPs and UCPs should not pay for costs that would be
covered by Medicaid eligibility expansion
 Medicaid payments should support provider services to
Medicaid and low income uninsured
 Payment rate sufficiency
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Florida’s Litigation
◦ Scott v. U.S. Dept. of HHS, Case Nos. 3:15-CV00193-RS-CSK and 00195-MCR-EMT (N.D. Fla.)
◦ NFIB rationale-coercion
◦ Kansas and Texas amici curiae in support of Florida
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The Irony
◦ Rejecting 90%-100% FFP for actual coverage while
fomenting state budget problems because LIPs and
UCPs are funded only at normal FFP rates
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ACA Health Insurance Subsidies
◦ Beginning in 2014, sliding scale tax credits to assist lower income
individuals not eligible for Medicaid to purchase health insurance
on the exchanges
◦ Eligibility group – 100% to 400% of FPL
◦ NFIB means that, in non-expansion states, those below 100% FPL
are not eligible for such subsidies but those between 100% and
138% of FPL are eligible
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Medicaid Maintenance OF Eligibility (MOE) Under The ACA
◦ MOE provisions
 CHIP – sunsetted as of October 1, 2019
 Medicaid – MOE terminates when exchange established by state is
operational
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Medicaid MOE Under The ACA (Cont’d)
◦ Effect of NFIB
◦ Maine’s challenge to Medicaid MOE
 Mayhew v. Burwell, No. 14-1300 (1st Cir. Nov.
17, 2014), cert. denied, No. 14-992 (U.S. June
8, 2015)
 Maine’s attempt to drop Medicaid coverage for
19 and 20 year olds rejected
 MOE provision not unconstitutionally coercive
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King v. Burwell, No. 14-114 (U.S.) and Medicaid
MOE
◦ Challenge in King is the use of tax subsidies in states
not operating their own exchanges
◦ If challenge prevails, Medicaid MOE would extend until
state establishes own exchange
◦ Only 14 jurisdictions operate own exchanges
◦ Only 1 non-expansion state operates its own exchange
◦ Three additional states received conditional HHS
approvals on June 15, 2015 to operate their own
exchanges. All are expansion states
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Purposes and Objectives of Medicaid Managed Care
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The Growth of Medicaid Managed Care
◦ In 1992, 24 million Medicaid beneficiaries (8% of beneficiaries)
were covered by managed care
◦ In 1998, 12.6 million Medicaid beneficiaries (41%) had managed
care coverage
◦ By FY 2011, 39 million Medicaid beneficiaries (58%) were in
managed care
◦ Estimated that, in 2015, 46 million Medicaid beneficiaries (73%)
will be in managed care
◦ 39 states and the District of Columbia use Medicaid managed care
and pay about $123.6 billion annually to managed care entities
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Proposed Medicaid Managed Care Rules. 80 Fed. Reg. 31,098
(June 1, 2015)
◦ The Basics
 Contract requirements
 Information requirements
◦ State requirements
 Enrollment
 Disenrollment
◦ Rights and protections for enrollees
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Informational rights
Dignity and privacy rights
Treatment options and alternatives
Participation in care decisions
Freedom from restraints and coercion
◦ Communication rights of health care professionals
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Proposed Rules (Cont’d)
◦ Managed Care Organization (MCO) fiscal obligations
 Restrictions on marketing efforts
 No enrollee liability
 Solvency requirements
◦ Quality Assessment and Performance Improvement
(QAPI)
 Access standards and care coordination
 Operational standards and quality programs
 External quality review
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Proposed Rules (Cont’d)
◦ Grievance system
 Fair hearings
 Enrollee appeals
◦ Program Integrity
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Identification and return of overpayments
Compliance programs
Provider enrollment
Sanctions
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QUESTIONS AND ANSWERS
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