Medicaid Expansion Under PPACA

[This is the first in an occasional series of postings about how health reform legislation is changing the landscape for coordinated public and human services transportation.]

President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law on March 23, 2010. With some further amendments as a result of the Health Care and Higher Education Reconciliation Act, which Pres. Obama signed into law on March 30, 2010, this is the legislation that the country has been calling "Health Care Reform."

Many aspects of PPACA affect the provision of transportation, but here's the most significant:

Section 2001 of PPACA establishes a new category of Medicaid eligibility. All persons with income at or below 133 percent of the federal poverty line who are not otherwise eligible for Medicaid or Medicare are entitled to participation in Medicaid. This will be a major shift for those states in which Medicaid coverage currently is provided only to persons with much lower income thresholds, in some cases as low as 17 or 24 percent of poverty. States are required to serve this expanded population on January 1, 2014, although they were allowed to begin serving this population as early as April 1, 2010. In fact, Connecticut and the District of Columbia already have made these changes, having moved thousands of their residents off non-federal coverage into their Medicaid programs.

People who fit this category of Medicaid eligibility (i.e., incomes up to 133 percent of poverty and not otherwise eligible for Medicaid or Medicare) are to be enrolled in “benchmark” or “benchmark equivalent” programs administered by state Medicaid agencies. “Benchmark” plans were first authorized by the Deficit Reduction Act of 2005 (DRA), and the Centers for Medicare and Medicaid Service (CMS) issued implementing regulations on April 30, 2010.

Two facts bear noting: one is that PPACA requires enrollment in benchmark plans, regardless of whether a state’s Medicaid agency was planning to provide benchmark-style coverage to any segments of its Medicaid population, and the second fact is that CMS regulations specifically require the provision of non-emergency transportation to all Medicaid enrollees, regardless of whether they are enrolled in a benchmark-style program of health coverage.

Estimates are that this expansion will add 20 million or more people to the country’s Medicaid rolls, in addition to the 40 million individuals currently enrolled in Medicaid programs. States have been concerned about the costs they would have to bear under this expansion. In response, PPACA establishes a special Federal Medical Assistance Percentage (FMAP) rate for this category of Medicaid coverage. In calendar years 2014 through 2016, the FMAP for this population is 100 percent; it scales downward in 2017 through 2019, and from January 1, 2020, onward, the FMAP for this category of Medicaid eligibility is 90 percent. In contrast, for enrollees traditionally enrolled in Medicaid, the FMAP varies by state, ranging from as low as 50 percent to no more than 83 percent (although all states had their FMAP increased temporarily under the American Recovery and Reinvestment Act).

At some point, CMS will be issuing regulations or other guidelines for this Medicaid expansion. However, since it does not become a requirement for states until 2014, they are likely to wait a bit, as there are numerous other Medicaid deadlines within PPACA that are much more urgent. For a fairly complete listing of PPACA implementation deadlines and other implementation milestones in the law, visit the Kaiser Family Foundation website.

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