State Medicaid Programs Respond to Meet COVID-19 Challenges: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2020 and 2021
Challenges and Priorities in FY 2021 and Beyond Reported by Medicaid Directors and Conclusion
Most state Medicaid officials remained heavily focused on their response to the COVID-19 public health emergency (PHE), taking action to assure health care access for a growing number of Medicaid beneficiaries while working to maintain the fiscal integrity of their programs. At the same time, many states also reported plans to move forward on other high priority initiatives.
Nearly all states reported significant adverse economic and state budgetary impacts driven by the pandemic, as well as uncertainty about the future. Many states commented on dramatic declines in state revenue collections leading to significant state budget shortfalls. While the full scope and extent of the economic downturn remains unknown, nine states indicated that its negative impacts were likely to exceed those of the Great Recession and nine states reported planning for or expecting future Medicaid budget reductions. At the same time, many states commented on the increased Medicaid enrollment expected to occur as a result of the economic downturn and high unemployment rates, placing added fiscal pressure on state Medicaid programs. Most responding states reported that dealing with state Medicaid budget and fiscal concerns was one of the biggest challenges facing the states in the coming year. Many states also commented on the great fiscal uncertainties that states currently face including how long the current enhanced FMAP will remain in place and how the course of the pandemic will continue to impact state economies and unemployment rates.
Many states reported the need for ongoing or greater fiscal relief as well as the need to strengthen the provider relief program for Medicaid-dependent providers to be able to continue to address the pandemic. Most states noted that state and federal responses to the pandemic were effective, but some states also identified needs related to improving or expanding federal communication efforts and guidance, further streamlining the emergency authority process, and receiving advance notice regarding when the PHE period will end. A few states were critical of the federal response regarding public health guidance (including mask wearing), the availability of personal protective equipment, and testing (e.g., supplies, distribution, inconsistent advice, and effectiveness of the tests).
At the time states responded to this survey in late July and early August, most indicated that the worst effects of the pandemic were likely still ahead or were unknown. Several states also commented on future challenges to treat the lingering impacts of COVID-19 infections as well as the population health impacts resulting from delayed health care utilization. A few states also expressed concern regarding the longer-term impact of the COVID-19 pandemic on the Medicaid provider network and access due, for example, to business closures. States also mentioned key priorities such as restoring utilization of preventive and routine care and transitioning from emergency authorities after the PHE ends.
Nearly half of responding states indicated that delivery system and payment reforms are a key priority. Efforts to better align payment with quality and improved health outcomes remain an important focus area for many states. States are pursuing these goals in part through managed care contract changes focused on value-based payment initiatives and the social determinants of health. States also mentioned efforts to integrate physical health and behavioral health, expand Health Homes1, reform provider reimbursement methodologies, implement substance use disorder initiatives, and develop maternal health initiatives. Ten states also reported that assessing and/or expanding telehealth was a priority. Other priorities mentioned by multiple states include: implementation or pursuit of Section 1115 demonstration waivers, waiver amendments, or waiver renewals; technology projects (e.g., Medicaid Management Information System replacements and integrated eligibility and enrollment systems); improving quality metrics and eliminating health disparities and inequities; long-term services and supports reforms; and implementing or advocating for the ACA Medicaid expansion in states that have not adopted the expansion.
In the face of the COVID-19 pandemic, states continue to encounter challenges to provide Medicaid coverage and access for a growing number of Americans, while also facing plummeting revenues and deepening state budget gaps. State Medicaid officials highlighted swift and effective state responses to the pandemic, such as the rapid expansion of telehealth, as well as ongoing efforts to advance delivery system reforms and to address health disparities and other public health challenges. In these ways, the pandemic has demonstrated how Medicaid can quickly evolve to address the nation’s most pressing health care challenges. However, the ability of states to sustain policies adopted in response to the pandemic (including through emergency authorities) may be tied to the length of the public health emergency (PHE) as well as the availability of additional federal fiscal relief and support. Looking ahead, great uncertainty remains regarding the future course of the pandemic, the scope and length of federal fiscal relief efforts, and what the “new normal” will be in terms of service provision and demand. Results of the November 2020 elections could also have significant implications for the direction of federal Medicaid policy in the years ahead.