Medicaid Expansion

States received more than $117 billion in enhanced federal funding during the COVID-19 pandemic’s Medicaid disenrollment pause, according to a new KFF analysis. With unemployment on the rise during the pandemic, Medicaid rolls surged, but state spending did not. States spent $231 billion on Medicaid in 2019; that figure dropped to $214 billion in 2020, KFF reported. Since then, state spending has yet to surpass 2019 levels. That’s because the federal government elected to increase the Federal Medical Assistance Percentage (FMAP) by 6.2 percentage points in exchange for states’ suspension of eligibility redeterminations for the duration of the Public Health Emergency (PHE). But instead of ending the enhanced FMAP funds with the expiration of the PHE, the Consolidated Appropriations Act of 2023 allowed for enhanced funding to begin a gradual decrease — to 5 percentage points higher than normal levels in April, 2.5 in June, and 1.5 in October.

Medicaid redeterminations resumed in recent weeks after years of pandemic-related policies that suspended income verification for the safety net health insurance program, and some states — particularly Florida — seem to be moving faster than others to remove beneficiaries from their rolls, prompting a warning from the Biden administration. Experts say that the pace of redeterminations will vary from state to state — and so will redeterminations’ possible negative effect on health equity, which could intensify if states are cavalier or overaggressive with disenrollments.

“We’re looking closely at the Medicaid renewal numbers released by several states today. Keeping eligible people covered is our #1 priority. States need to do their part to keep people from losing coverage due to red tape,” said CMS Administrator Chiquita Brooks-LaSure on Twitter on June 1. The CMS-controlled Twitter account for Medicaid, while retweeting Brooks-LaSure, said that “we are closely monitoring the Medicaid renewal numbers that states are reporting,” and added that “we will continue to work directly with states to help keep eligible individuals covered.”

A recently introduced bipartisan bill seeks to reduce Medicare Advantage plan overpayments by eliminating financial incentives to “upcode,” or make beneficiaries appear sicker than they may be in the name of higher Medicare reimbursement. Introduced by Sens. Bill Cassidy, M.D. (R-La.) and Jeff Merkley (D-Ore.), the No Unreasonable Payments, Coding or Diagnoses for the Elderly (No UPCODE) Act would eliminate those incentives by: developing a risk adjustment model that uses two years of diagnostic data instead of just one year; excluding diagnoses collected from chart reviews and health risk assessments for risk adjustment purposes; and including an adjustment that fully accounts for the impact of coding pattern differences between traditional Medicare and MA.

Ohio Attorney General Dave Yost filed a lawsuit accusing The Cigna Group’s Express Scripts, Blue Cross Blue Shield-owned Prime Therapeutics, Humana Pharmacy Solutions and Ascent Health Services of colluding to “illegally drive up drug prices” and push those higher costs onto patients. In a March 27 press release, Yost called PBMs “modern gangsters” who have been “scheming in the shadows to control drug prices on all sides of the market” rather than using their negotiating power to drive down prescription costs, as advertised. The suit accuses the PBMs of multiple violations of the Valentine Act, Ohio’s antitrust law, and was filed in the Delaware County Common Pleas Court. “In the case of Express Scripts, the company added insult to injury when it responded to mounting public criticism of PBMs by forming the ‘group purchasing organization’ Ascent Health Services in 2019 — purportedly to take over the company’s pricing and rebate negotiations with drug manufacturers,” Yost’s press release stated.

North Carolina at press time was close to passing legislation that would allow it to become the 40th state to expand Medicaid under the Affordable Care Act. The state transitioned to a Medicaid managed care structure in 2021, but recent public comments from one state official suggest that ongoing issues between MCOs and providers could pose challenges as the state prepares for expansion.

House Bill 76, Access to Healthcare Options, would require the state to extend Medicaid coverage to individuals with income at or below 133% of the federal poverty level (FPL) starting Jan. 1, 2024, and establish a fund allowing the state to provide direct payments to acute care hospitals based on assessments of hospital costs. Democratic Gov. Roy Cooper has been advocating for expansion, which could reduce the uninsured population by 30%, or 346,000 people, according to an Urban Institute analysis from November.

Legislative leaders in North Carolina have struck a deal to expand Medicaid in the state, although the measure won’t be voted on until later this month at the earliest. During a news conference on March 2, state House Speaker Tim Moore and Senate leader Phil Berger, both Republicans, touted the agreement as a major accomplishment for North Carolina, which is one of 11 states that has not yet expanded Medicaid eligibility under the Affordable Care Act. “What a huge policy direction this is that will provide help for so many in this state, but it’s going to do it in a way that’s fiscally responsible,” Moore said, according to the Associated Press. Under the agreement, which was still being drawn up at press time, the state’s 10% share of covering the Medicaid expansion population would be paid through assessments on hospitals. Previously, the Urban Institute estimated that expanding Medicaid could reduce the uninsured population by 30%, or 346,000 people, in North Carolina.

Almost 450,000 people in Georgia could gain health coverage if the state expands Medicaid eligibility to nonelderly individuals with incomes up to 138% of the federal poverty level, according to an Urban Institute analysis. The statewide uninsurance rate would fall from 14.7% to 10.0% with Medicaid expansion. By geographic area, decreases in uninsurance rates would vary from 3.9 percentage points in the Atlanta area to 6.3 percentage points in the southern area. However, Republican Gov. Brian Kemp’s victory over Democrat Stacey Abrams, who made Medicaid expansion a core pillar of her campaign in the midterm election, may stymie Georgia Democrats’ long-standing push for full Medicaid expansion. Currently, Centene Corp. dominates the state’s Medicaid managed care market, with more than 1.04 million members as of December 2022.

A South Dakota ballot initiative that would finally bring Medicaid expansion to the state triumphed in the midterm elections, passing with 56% of the vote. It’s the latest in a string of successful ballot initiatives in expansion holdout states — and perhaps the last. While there have been rallying cries of support for expansion in some of the 11 remaining holdout states, the efforts of Democratic governors and organizing committees working to get expansion on future ballots have been stymied for years.

At some point in the next year, it’s likely that Medicaid eligibility redeterminations will resume — a process that will be kicked off when the Biden administration declares an end to the COVID-19 public health emergency (PHE). Medicaid has hit record-high enrollment this year, meaning states and managed care organizations will have to contact more people than they ever have before in a short period of time; meanwhile, MCOs will also have to deal with looming cuts to reimbursement and rising provider rates.

Margins for MCOs seem likely to shrink. Provider rate increases are coming soon, though it’s likely that they will vary in timing and scope depending on market and contract cycles. However, the pricing effects of workforce shortages and inflation will impact every plan and provider, sources previously told AIS Health.

About 3.7 million people could gain access to health care if the current 12 nonexpansion states were to fully implement a Medicaid expansion in 2023, according to a recent Urban Institute analysis.

In the upcoming gubernatorial elections in November, Medicaid expansion could be a key issue in several nonexpansion states, including Wisconsin, Kansas and Georgia. All three states had several failed attempts to fully expand Medicaid eligibility.