Healthcare Reform: A Work in Progress

Mar 22, 2017 | Archive


House Republicans unveiled the American Health Care Act (AHCA) earlier this month, raising the curtain on the GOP’s first draft of the much-anticipated replacement bill for the Affordable Care Act (ACA). The AHCA debuted to mixed reviews from both Democrats and Republicans—but at this stage many, including President Trump, have stressed that the bill is just an “opening offer” to kick off negotiations.

One of the focuses of the bill is overhauling Medicaid. This includes two major aspects of the program: Medicaid’s federal funding structure and Medicaid expansion. Here is an overview of some of the proposed changes to the Medicaid program and how they may impact your patients.

  • Medicaid Federal Funding. The proposed bill would profoundly change the way Medicaid is funded by the federal government. Today, states receive federal funding based on a percentage of the amount they spend on Medicaid. When spending fluctuates to support public health needs, so does the amount of funding available to the states.

    Under the AHCA, federal funding for Medicaid would be capped per enrollee, with this amount based on each state’s 2016 Medicaid spend. This essentially would freeze funding based on a point in time. While funding to states would grow with more enrollees, funding would not increase to support fluctuating health care costs. As a result, states likely would have to cover the gap. The Congressional Budget Office (CBO) estimates $370 billion in financial risks would shift to the states in the next 10 years.

  • Medicaid Expansion. The AHCA does not immediately terminate Medicaid expansion, but it does put the wheels in motion to end expansion funding in 2020. To understand the proposed changes, it’s important to understand how Medicaid expansion works today.

    Under the ACA, states receive “enhanced” funding for individuals enrolled through Medicaid expansion. This covers almost 100% of costs for these beneficiaries. Under the proposed bill, enhanced funding for expansion enrollees would end Jan. 1, 2020. States could still choose to cover individuals under expansion criteria, but they would receive only the “regular” Medicaid funding payments for these individuals—making it unlikely many states would choose to continue expansion.

    Individuals enrolled as of Dec. 31, 2019 would be grandfathered in to Medicaid coverage at the enhanced rate, but if those individuals incurred a coverage gap of one month, states would no longer receive the enhanced funding. Instead, they would receive only the “typical” Medicaid funding rates. It is likely most would churn off of coverage at the enhanced funding rates.

  • Presumptive Eligibility. Under the AHCA, the hospital presumptive eligibility program would come to an end. This program enables hospitals to temporarily enroll patients in Medicaid if it appears they are eligible. This allows their care to be paid for by Medicaid while the full application is pending.

  • Retroactive Medicaid Eligibility. The new bill proposes changes to the retroactive Medicaid period available today. Currently, individuals are given retroactive coverage if it appears they would have been Medicaid eligible prior to submitting an application. Retroactive coverage is granted for up to three months prior to the month in which the application is submitted. The AHCA reduces the period for retroactive coverage to the month in which the application is made.

It’s unclear how these proposed changes will evolve in the coming weeks and months, but one thing we can count on is continued and strong focus on revamping the Medicaid program as we know it today.