Report Highlights Changes In State Medicaid Programs


Report Highlights Changes In State Medicaid Programs

The Kaiser Family Foundation issued a report entitled “Results from a 50-state Medicaid Budget Survey for State Fiscal Years 2016 and 2017” (“Report”). As noted in the Report, the purpose was to “examine the reforms, policy changes, and initiatives that occurred in FY 2016 and those adopted for implementation for FY 2017 (which began for most states on July 1, 2016).” The Report provides an extensive analysis of Medicaid programs and the changes taking place in each of the fifty states and District of Columbia based on information provided by Medicaid officials.
Medicaid is a significant part of the U.S. healthcare system. In total, the Medicaid program accounts for one-sixth of overall U.S. healthcare expenditures and provides one in every five Americans with coverage. Since the inception of the Affordable Care Act (“ACA”) in 2010, many states have opted to expand Medicaid.

Some of the key finding areas as presented in the Report are outlined below:

Eligibility and Enrollment

As part of the ACA, Medicaid coverage has and is available to more individuals. As outlined above, due to Medicaid expansion opportunities provided by the ACA, many states changed their respective eligibility requirements to result in more individuals receiving Medicaid coverage. According to the Report, as of October 2016, 32 states had adopted Medicaid expansion. In addition, some states are now providing Medicaid to Americans who are incarcerated. Prior to the ACA, incarcerated citizens covered under Medicaid had this coverage terminated. Currently, under the ACA’s Medicaid expansion rules, incarcerated American’s Medicaid coverage is now only “suspended” as opposed to terminated.

Managed Care Organization

As noted in the Report, currently 39 states are using Managed Care Organization (“MCO”) arrangements. The Report states that “In 28 of the 39 MCO states, at least 75 percent of all Medicaid beneficiaries were enrolled in MCOs”. A MCO is a collection of healthcare organizations and professionals that coordinate their efforts together in order to provide healthcare at more affordable rates. Since these organizations work collectively, they generally are able to influence the cost of providing healthcare services. According to the Report, the goals of MCOs are cost containment, increased access, improved outcomes, and improved population health.

Provider Rates and Taxes

In addition to government subsidies, Medicaid is also funded by provider taxes. Provider taxes are mandated by each respective state, and require providers of certain services, inclusive of healthcare services, to pay a designated fee. In the last fiscal year, 45 states implemented provider rate increases. All states with the exception of Alaska utilize provider taxes to finance Medicaid costs. Effective January 2017, eight states including Arkansas, Arizona, Colorado, Illinois, Indiana, Louisiana, New Hampshire and Ohio, are financing their respective Medicaid expansion solely from provider taxes. Additionally, states are now required to finance five percent of Medicaid expansion costs.

Benefits and Prescription Drugs

States are also expanding Medicaid benefits to new areas. In total, 21 states have expanded benefits to include behavioral health, substance use disorder services, telemedicine and tele-monitoring services, and dental service for adults. One of the most significant costs associated with Medicaid are the prices of prescription drugs. The Report notes that 31 states have implemented pharmacy cost containment efforts. Medicaid benefits have also been expanded in response to the increased abuse of opioids.

2017 and Beyond

As Medicaid expands to cover more individuals and provide more benefits, the program faces several challenges to overcome. States are introducing major delivery system reforms, facing new Federal regulations, and implementing new information technology systems. Medicaid priorities for 2017 and beyond include implementing payment and delivery system initiatives that control costs and achieve providing better healthcare benefits to Americans.

To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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