States Focus on Quality and Outcomes Amid Waiver Changes: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2018 and 2019

Eligibility and Premiums

Changes to Eligibility Standards

Eligibility Restrictions

A growing number of states are pursuing Section 1115 waivers that include policies that would result in eligibility restrictions in FY 2018 and FY 2019 (Exhibit 1). Some of these policies are in response to January 2018 CMS guidance¹ indicating the agency’s support for Section 1115 waiver proposals that would require certain Medicaid enrollees to meet a work requirement in order to maintain coverage. Policies that have or are likely to result in enrollment declines are counted as restrictions in this report.

Six states reported implementing restrictions in FY 2018 and 11 states reported restrictions already implemented or planned for implementation in FY 2019 (Exhibit 1 and Table 1). This year’s survey reports changes that states plan to implement in FY 2019, even if the changes are in Section 1115 waiver proposals that are still pending approval² at CMS. Waiver provisions that states plan to implement in FY 2020 or after are described later in the “Challenges and Priorities” section of this report.

Eight states reported implementing or plans to implement work requirements under Section 1115 waiver authority in FY 2018 or FY 2019 (Table 2).³ These policies generally require beneficiaries to verify their participation in approved activities, such as employment, job search, or job training programs, for a certain number of hours per week or month to receive health coverage or qualify for an exemption. Data show, however, that most Medicaid enrollees are already working or would qualify for exemptions from these requirements, yet these individuals would still need to navigate a reporting or exemption process to retain their Medicaid coverage. In this report, work requirement policies are counted based on the initial date of implementation rather than the date on which the first coverage terminations will occur.

• Three states have approved waivers to implement a work requirement, including one state (Arkansas) that implemented the policy in June of FY 2018 and two states (Indiana and New Hampshire) that plan to implement in FY 2019.
• Five additional states reported pending work requirement proposals that they plan to implement in FY 2019. Four of these states (Alabama, Maine, Ohio, and South Dakota) have proposals pending approval by CMS and one state (Kentucky) received approval for a work requirement waiver that was set aside by court order. That waiver is now back with CMS for reconsideration (see the Kentucky HEALTH waiver box below). Kentucky’s waiver is referred to as “pending” throughout the rest of this report.

Many of these states reported new administrative requirements or costs associated with implementation of work requirement policies, including those related to vendor contracts for call centers, systems modifications, increased state and local office staff, outreach to beneficiaries and providers, and increased MCO personnel costs.

Eight states indicated that they have eliminated or propose to eliminate or restrict retroactive eligibility for one or more groups in FY 2018 and FY 2019 (Table 2).⁴ In FY 2018, Arkansas limited retroactive eligibility from 90 to 30 days, Iowa eliminated retroactive eligibility for all groups other than children under age one and pregnant women (but restored retroactive eligibility for nursing facility residents in July 2018), and Utah eliminated retroactive eligibility for Primary Care Network (PCN) waiver adults. In FY 2019, five states (Florida, Kentucky, Maine, New Hampshire, and New Mexico) plan to eliminate retroactive eligibility or limit it to a single month for most enrollees.

Other examples of reported eligibility restrictions in FY 2018 or FY 2019 include:

• In FY 2018, as part of their HIP 2.0 waiver renewal (a waiver that already included other eligibility restrictions), Indiana⁵ imposed a three-month lock-out from coverage on expansion adults who fail to comply with redetermination. Enrollees who do not verify eligibility at renewal are disenrolled but can re-enroll without a new application if they provide necessary documentation within 90 days. After 90 days, individuals are subject to a three-month lock-out before they can re-enroll.⁶
• In FY 2019, New Mexico plans to implement proposals included in a pending waiver application to disenroll and lock-out expansion adults who do not pay required Medicaid premiums and a “reasonable promptness” waiver that would delay coverage until the first day of the first month following receipt of required premiums.
• In FY 2019, Maine⁷ plans to implement (if their pending waiver is approved) several restrictions on their traditional Medicaid populations in addition to their planned waiver of retroactive eligibility and the work requirement. These include applying a $5,000 asset test to all coverage groups that currently do not have an asset test and eliminating hospital presumptive eligibility for all coverage groups. The state’s pending waiver application proposes to implement these initiatives within six months of demonstration approval.

Eligibility expansions

Aside from planned implementation of the ACA Medicaid expansion in two states in FY 2019, most other eligibility expansions for FY 2018 and FY 2019 are narrow in scope. Overall, ten states implemented Medicaid eligibility expansions in FY 2018, and seven states plan to implement expansions in FY 2019.

Two states (Maine and Virginia) plan to implement the ACA Medicaid expansion in FY 2019. These expansions will add to the 32 states that had already implemented the ACA Medicaid expansion as of July 2018 (Figure 1). In Virginia, the expansion was adopted as part of the FY 2019-2020 Medicaid budget, with implementation planned for January 1, 2019. Maine voters adopted the Medicaid expansion through a ballot initiative in November 2017 that required submission of a state plan amendment (SPA) within 90 days and implementation of expansion within 180 days of the measure’s effective date.⁸ After failing to meet the SPA submission deadline (April 3, 2018), Maine’s Governor complied with a Maine Supreme Judicial Court order to submit an expansion SPA on September 4, 2018 but also sent a letter to the federal government asking CMS to reject the SPA. The expansion had not yet been implemented at the time of the survey, and implementation will fall to the new governor after the November 2018 election.

Figure 1: Medicaid Expansion Decisions by Year of Implementation

Three additional states (Idaho, Nebraska, and Utah) will have referendum initiatives to adopt the Medicaid expansion on the November 2018 ballot. Montana also has an expansion-related initiative for voters on the November ballot that would eliminate the state’s June 2019 expansion program sunset date and raise tobacco taxes to fund the state’s share of expansion costs.

Ten states implemented more narrow eligibility expansions in FY 2018 and five states plan to implement more limited expansions in FY 2019. In contrast to eligibility restrictions, which states are primarily implementing under Section 1115 authority, most states implementing or planning eligibility expansions in FY 2018 or FY 2019 are doing so through optional authority using a state plan amendment (SPA) (Exhibit 2). Some examples of these other expansions include the following:

• In FY 2018 under Section 1115 waiver authority, Utah implemented coverage for individuals with income below 5% of the federal poverty level (FPL) who are chronically homeless, justice-involved, or in need of substance use and/or mental health treatment. The state also has approval to implement 12 month continuous eligibility for this population.
• Missouri increased asset limits in both FY 2018 and FY 2019 for aged and disabled beneficiaries and Vermont increased asset limits in FY 2018 for their Working People with Disabilities Program.
• In FY 2018, Arkansas and South Carolina eliminated the five-year waiting period on Medicaid eligibility for lawfully-residing immigrant children and pregnant women.⁹

Premiums

The Medicaid statute generally does not allow states to charge premiums to most Medicaid beneficiaries. Historically, premiums were limited to special higher income categories of beneficiaries such as expanded Medicaid for the working disabled. However, some states have obtained waiver authority to charge higher premiums and/or copayments than otherwise allowed.

Only Indiana reported activity related to Medicaid premiums in FY 2018 (Table 2). Effective January 1, 2018, the state changed its monthly premiums (which are paid into a health account) for expansion adults from 2% of income to tiered amounts based on income ranges (expressed as a percentage of the FPL). The result is reduced fluctuation of premiums. This report considers the change neutral from the beneficiary’s perspective.

Seven states report proposed implementation of new premium programs or changes to existing premiums for FY 2019 (Table 2). Three of these states (Idaho, Indiana, and Iowa) have already received approval for these changes, while they are still pending as part of Section 1115 waiver requests in four states (Kentucky, Maine, Michigan, and New Mexico). Notable FY 2019 premium policy changes include an approved waiver provision in Indiana to implement a premium surcharge for tobacco users and a pending waiver request in Michigan to require premiums of up to 5% of income (a higher amount than CMS has ever approved for any state) for expansion adults after 48 cumulative months of expansion eligibility.

Coverage Initiatives for the Criminal Justice Population

In recent years, many states have implemented new policies to connect individuals involved with the criminal justice system to Medicaid, as the Medicaid expansion extended new coverage to these individuals in many states (especially childless adults who were not previously eligible in most states). Connecting these individuals to health coverage¹⁰ can facilitate their integration back into the community upon release. While individuals may be enrolled in Medicaid while they are incarcerated, Medicaid cannot cover the cost of their care during incarceration, except for inpatient services. Nearly all states have policies in place to cover inpatient care under Medicaid for eligible, incarcerated individuals (Exhibit 3 and Table 3). Most states are also working with corrections agencies and with local jails to facilitate Medicaid enrollment prior to release. The majority of states do not terminate Medicaid coverage for enrollees who become incarcerated: states either maintain the eligibility of the incarcerated individual with benefits limited to inpatient hospital care, or they suspend eligibility. When coverage is suspended, it can be reinstated more easily and quickly upon release from incarceration or when an inpatient hospital stay occurs.

As this report was being finalized, the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act was expected to be signed into law. Beginning in October 2019, the Act would prohibit states from terminating Medicaid eligibility for an individual under age 21 or former foster care youth up to age 26 while incarcerated. States would also be required to redetermine eligibility prior to release without requiring a new application and restore coverage upon release.

While both Medicaid expansion and non-expansion states have adopted strategies to connect justice-involved individuals to Medicaid coverage, these initiatives affect many more people in expansion states compared to non-expansion states where Medicaid eligibility for adults remains restrictive.

Table 1: Changes to Eligibility Standards in all 50 States and DC, FY 2018 and FY 2019