HHS: With permits, states can privatize Medicaid expansion

Announcement may allow more states to follow Arkansas's lead

Topics: Reimbursement, Finance, Access to Care, Quality, Performance Improvement, Appropriateness, Patient Experience, Readmissions, Safety

April 1, 2013

States that want to use federal funds to shift Medicaid-eligible residents into private health plans—an approach that several states are considering as an alternative to participating in the Affordable Care Act's Medicaid expansion—would have to obtain a waiver from HHS to do so, the department announced Friday.

The private coverage option has gained steam in recent weeks following the federal government decision to grant preliminary approval to an Arkansas proposal. Under the state's plan, more than 200,000 uninsured state residents with incomes up to 138% of the federal poverty level would obtain private coverage through the insurance exchange that the state will operate in partnership with the federal government. Arkansas was the first state to be granted such a request.

Republicans in several other states—including Florida, Louisiana, Ohio, Pennsylvania, Tennessee, and Texas—also have expressed interest in the option and are in talks with the Obama administration.

In guidance issued Friday, HHS said it will approve a "limited number" of such private coverage proposals. HHS officials added that they will use the outcomes to "inform policy for the State Innovation Waivers that start in 2017."

In order to receive a waiver, a state must guarantee beneficiaries a choice between two or more qualified health plans and offer coverage that is "closely aligned with the benefits available" in the ACA's insurance exchanges, HHS said.

Final rule for expansion

Meanwhile, HHS on Friday issued a final rule for the Medicaid expansion. The rule will take effect on Jan. 1, 2014.

Meanwhile, HHS on Friday issued a  for the Medicaid expansion. The rule will take effect on Jan. 1, 2014.

HHS said it will accept comments on the rule for another 60 days, to determine if further guidance is required for states to effectively implement the provision.

Medicaid expansion will not overwhelm physicians, study finds

In related news, the Medicaid expansion might not overwhelm health care providers as much as previously believed, according to a report by the Government Accountability Office (GAO) and the Center for Studying Health System Change (HSC).

The report examined state-level data on CHIP enrollment and pediatricians' self-reported annual work hours. It found that CHIP—launched in 1997—did not create an overwhelming deluge of patients for physicians. In fact, the study found that a 5% increase in the share of children enrolled in the program was linked to a 14% drop in pediatrician work hours.

Authors Fang He, of GAO, and Chapin White, of HSC, wrote, "These findings are clearly inconsistent with the hypothesis that physicians will work longer hours to accommodate an influx of demand following a coverage expansion."

The researchers noted that the Medicaid expansion differs from the creation of CHIP in that the ACA temporarily increases Medicaid reimbursements and imposes penalties on those without insurance coverage. He and White recommended that physician availability predictions under the ACA be based on financial incentives for physicians (Baker, "Healthwatch," The Hill, 3/29; Blesch, Modern Healthcare, 3/31; [subscription required]; Goad, "RegWatch," The Hill, 3/29; Block, Modern Healthcare, 3/29 [subscription required]; Robeznieks, Modern Physician, 3/29 [subscription required]).

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