Manatt on Health: Medicaid Edition - Virginia Expands Medicaid

by Manatt, Phelps & Phillips, LLP
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On June 7, 2018, Virginia joined 32 other states and the District of Columbia in expanding Medicaid under the Affordable Care Act to adults with incomes at or below 138% of the federal poverty level (FPL). After rejecting Medicaid expansion for several years, Virginia’s Republican-led State Legislature passed a budget bill that authorizes expansion. Virginia’s Medicaid expansion will extend coverage to an estimated 400,000 Virginians.

A shift in the State Legislature’s composition was a significant factor behind the bipartisan legislative support. Democrats gained 15 seats in the House in the November 2017 elections, giving Republicans a one-vote majority in both chambers and positioning Lieutenant Governor Justin Fairfax (D) as the tiebreaking vote in the Senate. Newly elected Governor Ralph Northam (D) expressed strong support for Medicaid expansion throughout his campaign and made it a high priority of his first 100 days in office.

While the State will proceed with implementing Medicaid expansion under State Plan Amendment (SPA) authority, the legislation also requires that the Medicaid agency—the Department of Medical Assistance Services (DMAS)—submit an 1115 demonstration application seeking approval from the Centers for Medicare & Medicaid Services (CMS) to impose work and premium requirements as conditions of eligibility for some adult enrollees. The State must submit its waiver application by October 30, 2018. A summary of the coverage features that must be included in the 1115 demonstration application follows.

Work/Community Engagement Requirements: The legislation requires DMAS to institute work/community engagement requirements for “every able-bodied, working-age adult enrolled in the Medicaid program,” except for certain exempt populations, including children under age 18, pregnant women, primary caregivers for dependent children, medically frail individuals, and individuals with a serious mental illness, among others.1 Individuals subject to work requirements must participate in a qualifying activity, such as work, job skills training or job search activities, education, volunteering, or caregiving.

Individuals must engage in work/community engagement for a minimum number of hours per month based on an individual’s length of enrollment in Medicaid:

  • Beginning three months after enrollment, at least 20 hours per month;
  • Beginning six months after enrollment, at least 40 hours per month;
  • Beginning nine months after enrollment, at least 60 hours per month; and
  • Beginning 12 months after enrollment, at least 80 hours per month.

While the State may waive the work requirement in areas of the State with higher than average unemployment rates, enrollees in these areas must still complete training, education or other community engagement opportunities, unless otherwise exempt from these requirements. Enrollees who do not comply with work/community engagement requirements for three consecutive or nonconsecutive months within a 12-month period following enrollment will be dis-enrolled from coverage and not permitted to re-enroll until either the end of the 12-month period or upon compliance with the work/community engagement requirements.

Premiums and Cost-Sharing: Individuals with incomes between 100% and 138% FPL will be required to pay a monthly premium, set on a sliding scale not to exceed 2% of monthly income and not less than $1 per month. Medicaid coverage will begin on the first day of the month after an individual makes his or her first premium payment (or immediately in circumstances in which the enrollment is due to treatment of an acute illness). Individuals who do not pay their premiums will be dis-enrolled after a grace period and may not re-enroll until after a waiting period (the legislation does not set the parameters for either period). The legislation extends the same exemptions to premiums as apply for work/community engagement requirements.

DMAS also is directed to design a cost-sharing approach that will promote healthy behaviors (e.g., avoidance of tobacco use) and encourage personal responsibility and accountability (e.g., the appropriate use of emergency room services).

Health Savings-Like (HSA-Like) Accounts: The demonstration must include health and wellness accounts for eligible individuals with incomes between 100% and 138% FPL. Both enrollees and the State will make contributions to the HSA-like accounts, which will be used to fund health insurance premiums and ensure funds are available “to cover out-of-pocket expenses for the deductible.”

Healthy Behavior Incentives: The legislation authorizes the State to reduce premiums and cost-sharing by up to 50% for individuals with incomes between 100% and 138% FPL who comply with healthy behavior provisions under the demonstration. DMAS will have flexibility in defining the healthy behavior incentives.

What’s Ahead for Medicaid Expansion Nationally?

Unless the Trump Administration moves to permit partial expansion of Medicaid, Virginia is slated to be the only state that expands Medicaid via legislation this year. However, momentum to expand is building as four states—Idaho, Nebraska, Montana and Utah—seek to model Maine’s successful November 2017 ballot initiative with their own November ballot referendums to expand Medicaid. To date, Idaho and Utah have secured enough signatures to put Medicaid expansion on their ballots, and Nebraska has a few more weeks to collect the required number of signatures.

Montana expanded its Medicaid program through bipartisan legislation in 2015, including a sunset provision that would end the program on June 30, 2019, unless reauthorized. Debate on renewal of expansion, which now covers 96,000 Montanans, is ongoing in the Legislature, and supporters of a proposed voter initiative that seeks to extend expansion beyond 2019 recently secured enough signatures to qualify the measure for the November ballot. Last week, the Montana Healthcare Foundation released Manatt Health’s analysis that found that the State’s 2015 Medicaid expansion has saved more than $36 million in state funding, in addition to significantly reducing the State’s rate of uninsurance, slashing uncompensated care costs, and resulting in more than 65,000 Montanans receiving preventive health services.

November 2018 elections will be critical to determining the outcome of Medicaid expansion in these, and possibly other, states.

1. The full list of exempt populations outlined in the budget includes children under age 18 or individuals under age 19 participating in secondary education; individuals ages 65 and over; individuals who are disabled or blind; institutionalized individuals; medically frail individuals; individuals with a serious mental illness; pregnant and postpartum women; former foster children under age 26; primary caregivers for a dependent; and individuals who meet work requirements under SNAP/TANF. Virginia may include “other exemptions that may be necessary to achieve the … goals of community engagement and improved health outcomes.”

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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