By Emily Blanford
Often when state policymakers discuss Medicaid, the focus is on restraining costs, reducing waste and improving outcomes. With the emergence of the COVID-19 pandemic, the conversation is shifting to leveraging current Medicaid programs and infrastructure to meet the increasing demand for health care services.
As such a large provider of health coverage—covering nearly 1 in 5 individuals—Medicaid is in a unique position to help states respond swiftly to this global crisis.
With the declaration of a public health emergency on Jan. 31 and declaration of national emergency on March 13, states now have the option of using 1135 waivers to ease some Medicaid requirements and increase access to services.
The federal government has issued a blanket 1135 waiver, which applies nationally, that primarily applies to Medicare requirements for health care providers. States also have the option to seek waivers for their Medicaid programs with additional provisions. As of April 8, 48 states including the District of Columbia have received approval for 1135 waivers, easing requirements in general areas including prior authorizations for services, provider credentialing and reporting and oversight. The Kaiser Family Foundation is tracking these waivers and provisions.
In addition to 1135 waivers, states have the option of amending their Home and Community-Based Services (HCBS) waivers to ease requirements that relate to individuals using long-term services and supports.
Individuals enrolled in HCBS waivers are often older, people with disabilities and/or have chronic conditions, making them particularly vulnerable to COVID-19 infections. As of April 8, 19 states have approved waivers for temporarily expanding eligibility, exceeding service limits and modifying administrative requirements. For example, Washington is expanding allowable service settings to include hotels and churches. For additional examples of state actions in this area, please see this Health Management Associates overview.
Federal funding for Medicaid is provided based on need. When there are sudden or unexpected increases in Medicaid enrollment and costs, Medicaid provides guaranteed financing designed to grow automatically with increased need. Every state has a Federal Medical Assistance Percentage (FMAP), which varies based on relative per capita income and determines the federal share of Medicaid expenditures.
The Families First Coronavirus Response Act (Families First Act) provides a temporary 6.2% increase to regular FMAP rates. This FMAP increase does not apply to administrative expenses or the Medicaid expansion population authorized by the Affordable Care Act.
With Medicaid enrollment expected to increase due to growth in unemployment, the enhanced FMAP may help states meet the increasing demand on their Medicaid programs even as state revenues begin to dwindle. For example, the American Recovery and Reinvestment Act (ARRA) included a similar increase in FMAP to address the 2008 economic downturn that led to increases in Medicaid enrollment and depletion of state revenues. With the FMAP increase, states were able to increase overall spending in their Medicaid programs, while at the same time reducing the amount of general fund spent.
The enhanced FMAP allowed states to do a few different things with the increased federal funds, such as reducing Medicaid and general fund budget shortfalls, funding increases in Medicaid enrollment, and avoiding or reducing benefit cuts and provider rate decreases.
The FMAP increase authorized by the Families First Act provides a similar opportunity for states. There are some strings attached, however. To qualify for the increased federal matching funds, states must provide COVID-19 testing and treatment with no cost sharing requirements (e.g. no copays, deductibles, etc.).
In addition, states may not make changes to Medicaid eligibility that are more restrictive than requirements in place when the state of emergency was declared, nor can premiums be increased. States are also required to maintain eligibility for all individuals currently enrolled and any individuals that enroll during the emergency period. The only reason an individual’s Medicaid eligibility may be terminated is if the client requests termination or moves out of state.
The law also provides states with an option to cover COVID-19 testing and test-related visits for uninsured individuals. The federal government will provide 100% FMAP for this particular option, meaning the federal government will cover 100% of testing costs should states choose to adopt the option. On April 1, Arizona became the first state to receive approval to implement this option.
We are in the first wave of response to this pandemic and states are hard at work positioning their Medicaid programs to respond. States continue to modify policies and procedures to quickly increase access and leverage their Medicaid programs. Stay up to date by visiting NCSL's COVID-19 Resources for States.
Emily Blanford is a program principal in NCSL’s Health Program.