The Coronavirus pandemic and the resulting economic recession accentuated the importance of the Medicaid program last year. By February, the Medicaid enrollment rate increased to 7.4 percent, and 76.5 million people were enrolled in the jointly funded program. In 2021, the new Biden administration, economic climate, and ongoing public health crisis are sure to impact the safety net program. Some of the crucial areas to monitor in the new year will be enrollment, coverage, eligibility, Section 1115 demonstration waivers, and program financing. Here is an overview of what to expect and what state Medicaid plans can do to curb costs.
MEDICAID PROGRAM ENROLLMENT, COVERAGE, ELIGIBILITY
Millions of Americans became unemployed and lost their employer-sponsored healthcare coverage as a result of the pandemic. In response to the public health emergency, the Families First Coronavirus Response Act (FFCRA) was implemented to protect eligibility standards and provide continuous coverage to current Medicaid beneficiaries. The provisions of the FFCRA are due to expire in April but can be extended by Congress.
President Biden has proposed changes to the ACA that would expand coverage. The first proposal is to increase ACA marketplace premium assistance, and the second is to introduce a public option plan similar to Medicare. This plan would provide coverage automatically to low-income individuals in states that did not expand their Medicaid programs. Additionally, the new administration has plans to reduce the coverage gap by substituting the 90% Medicaid federal match rate with a temporary 100% increase.
Along with the Biden administration's initiatives, there are two bi-partisan efforts to expand Medicaid coverage in Congress.. H.R. 4996, Helping MOMS Act of 2020, will enable states to provide one year of postpartum coverage under Medicaid. It also removes the cap on the total rebate amount for single source and innovator multiple source drugs under the Medicaid Drug Rebate Program. H.R. 1329, Medicaid Reentry Act, will allow Medicaid payment for medical services provided to an incarcerated individual during the 30-day period prior to the individual's release.
SECTION 1115 DEMONSTRATION WAIVERS
Section 1115 demonstration waivers make it possible for states to forgo key provisions of federal Medicaid law and the flexibility to shape their own Medicaid policies to accommodate their unique priorities. These waivers must adhere to statutory requirements, are required to be budget neutral to the Federal government, and are permitted for an initial five-year period. Under the Trump administration's time in office, demonstration waivers included changes such as work requirements and eligibility restrictions. The new administration will most likely undo these waivers and rework the demonstration waiver policy while issuing new state guidance. Under the new administration, Section 1115 wavers are expected to advance public option proposals, make coverage more affordable, and broaden program eligibility.
STATE MEDICAID FINANCING
The pandemic driven recession has caused significant budget strains for states. To offset these deficits, states depend on the Federal government for relief to preserve their Medicaid programs. In the current public health crisis, the federal match percentage was raised to 6.2 percent. This provision was featured in the FFCRA and was extended through June 2021. While President Biden supports increasing the FMAP, it cannot be accomplished exclusively by administrative action. To raise the FMAP, the new administration will need legislation from Congress or a simple majority vote from the Senate in a budget reconciliation bill.
FURTHER EFFICIENCY AND COST AVOIDANCE
In addition to federal assistance and budget cuts, states generally curb costs by reducing Medicaid benefits, decreasing provider rates, and introducing restrictions. However, these approaches to lowering costs are prohibited due to MOE protections under the FFCRA. With that said, states should focus on cost avoidance technology solutions and additional efficiency in their Medicaid plans.
One area in particular where states could realize significant savings is in program oversight and mitigating improper payments. According to CMS, FY 2020 Medicaid improper payments totaled $86.49 billion. The vast majority of these improper payments take place in the coordination of benefits because Medicaid plans struggle to identify liable third parties of pharmacy and medical claims. Medicaid plans do not have access to reliable, complete, and accurate data, so they cannot help but make claims payments in error, and it costs them millions.
Medicaid enrollment has surged over the last year, and because of the ongoing public health emergency, it's not clear as to when enrollment numbers will taper back. As dependence on the safety net program increases, the new administration and states will need to consider policy and program changes to ensure healthcare coverage for the most vulnerable while also preserving the program's resources. States must look to improving efficiency and cost avoidance before reducing access to care and benefits.
Until recently, Medicaid administrators have struggled with ensuring that pharmacy and medical claims are paid properly. With the introduction of ProTPL, Medicaid plans no longer have to struggle with TPL discovery. If you are interested in details on how you can greatly improve the efficiency of your plan and save on claims paid in error, contact Syrtis Solutions.
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