Health Reform Alert is a newsletter for state and territorial health department staff that provides brief and timely updates, analysis, and highlights on federal and state health reform activities. This newsletter is intended to inform state and territorial health department staff about ongoing health reform activities.

Health Reform Alert

July 15, 2013
Final Medicaid Essential Health Benefits Rule and What It Means for HIV/AIDS and Viral Hepatitis Programs

On July 5th, the Centers for Medicare and Medicaid Services (CMS) published its much-awaited final rule with regard to the Affordable Care Act’s (ACA’s) Medicaid Essential Health Benefit requirements. The rule also finalized provisions governing Marketplace eligibility systems and coordination of consumer notices and appeals between Marketplaces and Medicaid.  The final rule covers a lot of technical ground, but the most relevant provisions for HIV/AIDS and viral hepatitis programs are highlighted below. For questions, please contact Amy Killelea.

Final Medicaid Essential Health Benefits Rule

EHB Requirements for the Medicaid Expansion Population

The final rule allows states to provide newly eligible Medicaid beneficiaries an “Alternative Benefits Package” (ABP) that includes the same ten categories of EHB as required in the private insurance market (for a more thorough analysis of the ACA’s EHB requirements for both private insurance and Medicaid, see NASTAD’s EHB Issue Brief). This allows states to offer a Medicaid benefits package for the expansion population that could be very similar to the plan states chose as their benchmark plan for the private insurance market or could be very similar to the state’s traditional Medicaid benefits package.  States also have the flexibility to create multiple ABPs focused on different populations (e.g., an ABP that focuses on the needs of people with chronic conditions). Despite the advocacy community’s push for CMS to define the ten categories of benefits, the final rule does not provide a definition of the individual services that make up each category. Instead, just as for the private insurance EHB, the scope of the EHBs will be defined by a private insurance “benchmark” plan.  The rule does specify Medicaid-specific protections for the following:

Prescription Drugs

The final rule differs from the proposed rule, which had suggested that traditional Medicaid rules with regard to prescription drug coverage would trump ABP flexibility rules. Instead, the final rule makes clear that the private insurance EHB requirements (i.e., the requirement that formularies include the greater of one drug per United States Pharmacopeia category/class or the same number of drugs per category/class as the chosen “benchmark” plan) will apply. The final rule explicitly allows states a great deal of flexibility with regard to use of utilization management techniques for prescription drug coverage, including explicitly allowing states to offer prescription drug coverage that is closely aligned to the private insurance market as well as utilize monthly drug limits or other formulary restrictions.  However, states will need to adhere to non-discrimination requirements and ensure that there are procedures in place to allow beneficiaries to access clinically appropriate drugs not otherwise covered. In addition, Medicaid protections – such as a requirement that prior authorization requests be processed within 24 hours and at least a 72-hour supply of a covered outpatient prescription drug be dispensed in an emergency situation – apply to ABPs.

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Preventive Services

The preventive services that must be covered for Medicaid expansion populations are the same as those defined in the private insurance EHB (i.e., services with a United States Preventive Services Task Force (USPSTF) Grade A or B rating, Advisory Committee on Immunization Practices (ACIP)- recommended immunizations, as well as specified women’s preventive services). These services must be provided without cost sharing, which is a change from the proposed rule.  Importantly, the final rule also adopts a proposed change in Medicaid regulations, which will expand the scope of non-physician providers that can be reimbursed by Medicaid for providing preventive services. The final rule allows preventive services to be provided when “recommended by a physician or other licensed practitioner of healing arts within the scope of their practice under State law.” This shift in policy could increase the ability of non-physician providers to be reimbursed for providing HIV and HCV tests.

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Public Notice

CMS is developing a template for states to electronically submit a State Plan Amendment (SPA) that spells out their plan for ABP coverage.  States are required to provide the public with a “reasonable opportunity to comment” on all SPAs that define ABPs prior to submission to CMS. Health departments, providers, and advocates should monitor state proposals and be prepared to weigh in to ensure that ABPs are able to meet the care and treatment needs of people living with HIV and viral hepatitis.

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Protections for “Medically Frail”

States are required to give Medicaid beneficiaries defined as “medically frail” the option to enroll in a traditional Medicaid benefits package instead of the ABP for newly eligible beneficiaries. The new definition of medically frail is fairly broad and should encompass people living with HIV, viral hepatitis, people with substance use disorders, or other chronic conditions that require access to traditional Medicaid services and supports. This will ensure that in states where the ABP for the Medicaid expansion population may not be as robust as traditional Medicaid, people living with HIV and viral hepatitis have the choice to enroll in traditional Medicaid instead of the ABP. States must develop appropriate application processes to screen for whether people fall into the medically frail category.

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Premium Assistance for Medicaid Coverage

The final rule clarifies the protections and requirements for states that implement a premium assistance program (where the state uses Medicaid funding to purchase private insurance through the Marketplace for Medicaid beneficiaries). Importantly, the rule clarifies that Medicaid beneficiaries may not be automatically enrolled into premium assistance programs and must be allowed to make an informed choice about whether to enroll in a premium assistance plan or to enroll in traditional Medicaid. Because Medicaid beneficiaries have to be able to access Medicaid benefits that may not be covered in the private insurance market and are also entitled to Medicaid as opposed to private insurance cost-sharing levels, the state must also provide beneficiaries with information about the process for accessing additional Medicaid benefits and how to obtain help with cost sharing.

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Increased Cost Sharing for Medicaid

The final rule adopts new cost-sharing rules for Medicaid (these new rules apply to both newly eligible and traditional Medicaid beneficiaries).  The most significant changes affect prescription drugs and non-emergency care sought in an emergency room:
  • For prescription drugs, the rule increases the amount of cost sharing states may charge to people with income below 150% of the federal poverty level (FPL). For non-preferred drugs, states may impose cost sharing of $8 per prescription and $4 per prescription for preferred drugs. This is an increase from current law. For individuals with family income above 150% of the FPL, states may establish a higher cost-sharing charge for non-preferred drugs, up to 20% of the cost the agency pays for the drug. However, the rule clarifies the protections in place to ensure access to necessary treatment, including a requirement that states provide a non-preferred drug at the preferred drug cost-sharing level if the prescribing provider determines that the preferred drug would be less effective or have adverse effects on the individual.
  • For inpatient stays, the final rule allows states to charge up to $75 in co-pays for people with income under 100% FPL (up to 10% of what the Medicaid agency pays for the service for people between 101 and 150% FPL and up to 20% for people with income over 150% FPL).
  •  The final rule also increases the amount that states may charge for non-emergency use of the emergency room to $8 for those with income under 150% FPL. However, for people with income under 100% FPL, hospitals cannot refuse services if the individual cannot pay. States may impose any cost-sharing amount for non-emergency use of the emergency room for people with incomes above 150% FPL.
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Modified Adjusted Gross Income (MAGI) Income Disregard

The final rule narrows the circumstances in which an across-the-board five percent disregard of income will apply to Medicaid applicants. Instead of being applied in all MAGI income determinations, the five percent disregard will only apply when doing so matters for purposes of income eligibility (i.e., where application of the disregard is the difference between someone being eligible or ineligible for Medicaid). For instance, a person who has an income of 138% FPL will receive the five percent income disregard, making them eligible for the ACA’s Medicaid expansion population (which requires an income of 133% FPL or below). However, the 5 percent disregard would not be applied if the applicant instead has an income of 100% FPL because doing so would not affect that person’s Medicaid eligibility.

For questions, please contact Amy Killelea.

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Health Reform Resources
For questions or for suggestions for NASTAD health reform resources that would be helpful to your program, please contact Amy Killelea.

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