Medicaid Round-Up: State Expansion, Mental Health Parity and Consumer Protections Assessed

Tuesday, April 21, 2015
Michael Gomes
BenefitMall

Medicaid, the social health insurance program for low-income Americans, has been around for decades.  Funded by both the federal government and the states, the program has seen its ups and downs over the years. Almost every American agrees that poor and disabled individuals deserve health care; the big question is to how to pay for it. 

This blog provides the latest snapshot of how the current Medicaid expansion is going, highlights the new Medicaid mental health parity regulations and summarizes some of the key consumer protections available through different health plan offerings, including Medicaid managed care.  

Expanding Medicaid Coverage

One of the hallmarks of the Affordable Care Act (ACA) was the promise to expand coverage for key targeted individuals who were uninsured or underinsured because they did not qualify for Medicaid coverage pre-ACA. The ACA now allows the federal government, along with states who decide to expand their program, to cover adults under 65 with income up to 133% of the federal poverty level (because of the way this is calculated, it’s effectively 138% of the federal poverty level). Minors are eligible up to that income level or higher in all states. Healthcare.gov provides additional overall details about the new coverage options and benefits.  

According to the Kaiser Family Foundation, 28 states and the District of Columbia have opted to expand Medicaid coverage through the ACA. Of the remaining 22 states, 16 states have opted not to expand their Medicaid programs and 6 states are on the fence.  

In those states with a more Republican influence, taking advantage of the ACA’s Medicaid expansion opportunities is not as clear cut because state-leaders see the ACA reform as an unfunded federal program. For example, in Florida, after previously supporting Medicaid expansion, Governor Rick Scott (R) recently stated that he no longer supports it in an effort to prioritize K-12 education and funding. And in Montana, state senators for Medicaid expansion are facing tough hurdles, including a Republican declaration that the bill is “worse than the governor’s”, or not worth approving.

Several states are still actively considering how to enhance their existing state Medicaid programs. For example, in Alaska, Governor Bill Walker (R), who took office in December 2014, has announced implementation of the Medicaid expansion as a top priority for his administration. Utah's Governor Gary Herbert (R) is proposing an alternative program called the Healthy Utah plan, although the state has not formally submitted its new program to CMS yet.  

Medicaid Seeks to Expand Mental Health Coverage

After the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was enacted, the federal agencies only promulgated regulations over the next five years directed at commercial health plans. Now, a newly proposed rule has just been issued that seeks to expand parity to 70 million people on Medicaid managed care plans and 8 million children covered by the Children’s Health Insurance Program. According to news reports, this proposed rule is similar to one released in November 2013 for private insurers; however, it will not cover fee-for-service Medicaid.

The Wall Street Journal also reported that patients who live in states that put limits on mental health coverage would earn parity through Medicaid. In fact, “states would be required to include provisions requiring parity in contracts for Medicaid managed care. The rule would also ensure that states couldn’t carve out mental health or substance-abuse treatment from managed care contracts.”

“It’s significant,” said Timothy Jost, a professor at the Washington and Lee University School of Law. “The mental health parity law preceded the ACA and it’s an issue people have been battling about for some time. A significant number of people with mental health problems are on Medicaid.”

Patrick Kennedy, founder of the Kennedy Forum, which advocates for mental health care, said, “Even if this rule goes forward, it’s going to be at least another 18 months to implement it. We’re going to be a decade … between when the law was passed and when it’s going to be effective. It’s very emblematic of what we’ve always faced in mental health. We’re always secondary and an afterthought in health care.”

In cases like this, it is evident that mental health care has been an afterthought. After all, advocates of mental health care say that commercial insurance plans have been slow to implement the parity law, even though they’ve known about the rule for over a year, and the federal government does not aggressively enforce the law. In addition, patients seeking mental health care and treatments for substance abuse still regularly face discrimination.  

“We have a lot of lessons learned already on the failure of parity to be enforced in commercial plans. We definitely will be carrying over those same problems [into Medicaid plans] if we don’t correct them in time,” Kennedy said.

If passed, the responsibility for enforcing the new rule will fall to state Medicaid agencies. It will also result in increased costs—up to $150 million in the short term, according to the Wall Street Journal. 

Evaluating Consumer Protections

Despite the lack of expansion, recent research by the Kaiser Family Foundation discussed consumer protections in three health insurance markets—Medicare Advantage plans, Qualified Health Plans (QHPs) and Medicaid Managed Care Organizations (MCOs)—and found that Medicaid has some notable consumer protections.

According to the research, “Medicare Advantage plans, QHPs and Medicaid MCOs are all required to provide a certain core set of benefits. All three markets require plans to cover a range of similar services, and have similar exclusions from coverage, but state Medicaid programs generally provide greater coverage of long-term services and supports than Medicare Advantage plans or QHPs.”

Among other findings, the Kaiser Family Foundation found that:

  • Medicaid has the most comprehensive drug coverage requirements of plans in the three markets and requires coverage of all FDA approved drugs (provided that the state opts to cover prescription drugs and to deliver that benefit through MCOs, which all currently do).
  • Medicare Advantage plans and Medicaid MCOs limit enrollees’ financial liability for out-of-network balancing billing, while QHPs are not required to include such protections.
  • All three types of plans provide for caps on enrollees’ in-network out-of-pocket expenses.
  • While both Medicare and QHPs provide low-income subsidies, subsidy eligibility for QHPs has higher income limits and does not impose an asset test.
  • One notable difference in SEPs between Medicare Advantage plans and QHPs concerns individuals enrolled in certain low-income programs.
  • In the Medicare Advantage program, federal network adequacy standards and oversight are more developed than those for QHPs, while QHPs and Medicaid MCOs may be subject to more stringent state specific network adequacy requirements.
  • Because Medicaid MCOs and Medicare Advantage are built on the foundation of federal entitlement programs, their appeals processes are more federally standardized than those in QHP.

Stay Tuned

Stay tuned as we continued to report on issues related to health insurance costs and Medicaid expansion, as well as any other issues affecting Brokers.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.