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CMS Releases Medicaid Health Reform Final Rule

Erin Hertzog

Lindsey Murtagh

Melissa Bianchi

Donna Boswell

Margia K. Corner

Natalie Morris

06 July 2013

On July 5, 2013, the Centers for Medicare & Medicaid Services (CMS) released the long-awaited final rule, implementing provisions of the Patient Protection and Affordable Care Act (ACA) and the Children’s Health Insurance Program Reauthorization Act.  This rule finalizes provisions of the proposed rule, entitled “Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing,” published in the Federal Register on January 22, 2013.

The several hundred page rule and related preamble discussion:

  • Builds on CMS’s efforts to streamline eligibility determinations, enrollment processes, and appeals for individuals seeking to obtain health insurance coverage through their state’s Medicaid program, Children’s Health Insurance Program (CHIP), or through a qualified health plan (QHP) offered through the state’s Exchange.
  • Provides states with greater flexibility to impose cost-sharing on Medicaid enrollees with incomes over 100% of the Federal Poverty Level, while also providing this Medicaid population with cost sharing protections that differ from those provided to the Exchange population. The final rule gives state Medicaid programs the flexibility to target cost sharing, charge higher amounts than previously allowed, and enforce cost sharing requirements.
  • Amends requirements applicable to Medicaid benefit packages that provide benchmark or benchmark-equivalent coverage, now called Alternative Benefit Plans (ABPs), to require these plans to provide Essential Health Benefits. Newly eligible individuals in States that expand their Medicaid population under the ACA optional expansion will receive coverage through these plans.
  • Adds additional requirements regarding eligibility and enrollment of health insurance through Exchanges. 

We note that the preamble includes extended discussion of comments and responses relating to the applicability of the requirements of the federal Medicaid rebate statute, including both the rebate and the access requirements.  Although these will bear further study, taking a cue from the language of the regulation itself it appears that CMS has granted states considerable discretion in this matter.  The only relevant provision of the regulation, 42 C.F.R. § 440.345(f), states “To the extent states pay for covered outpatient drugs under their Alternative Benefit Plan’s prescription drug coverage, states must comply with the requirements under section 1927 of the Act.”

Erin Hertzog

Lindsey Murtagh

Melissa Bianchi

Donna Boswell

Margia K. Corner

Natalie Morris

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