Robin Rudowitz Associate Director Kaiser Commission on Medicaid and the Uninsured

1. Medicaid Provisions in Health Reform Robin Rudowitz Associate Director Kaiser Commission on Medicaid and the Uninsured Henry J. Kaiser Family Foundation for Alliance for Health Reform Washington, DC April 23, 2010

2. Medicaid Today and Tomorrow Health Insurance Coverage for Certain Categories Minimum floor for Health Insurance Coverage to 133% FPL MEDICAID Additional Federal Financing for Coverage Shared Financing States and Federal Govt. Additional Options Long-Term Care / Coordination for Duals Support for Health Care System Assistance for Duals / Long-Term Care

3. Median Medicaid/CHIP Income Eligibility Thresholds, 2009 Federal Poverty Line for a family of three ($18,310 per year in 2009) Note: Medicaid income eligibility for most elderly and individuals with disabilities is based on the income threshold of Supplemental Security Income (SSI). SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for KCMU, 2009.

4. Expanding Medicaid is the Foundation for Coverage in Health Reform • Medicaid expansion to create national floor of coverage at 133% FPL • Subsidies to purchase exchange coverage for low- to moderate-income individuals (133% - 400% FPL) • Individual mandate • Employer requirements and incentives/ provisions for small employers • Health insurance market reforms

5. Estimated Changes in Coverage in 2019 SOURCE: CBO estimates, March 18, 2010

6. Key Medicaid / CHIP Coverage Provisions Provides state option to expand Medicaid coverage to childless adults with regular match starting April 1, 2010 Expands Medicaid to individuals with incomes to 133% FPL in 2014 Maintain Medicaid coverage for adults >133% FPL until 2014 Provides enhanced federal funding for new eligibles Full federal funding for 2014-2016 phases down to 90% by 2020 Phases in increased FMAP for some states with Medicaid coverage for childless adults so FMAP is 90% in 2020 Extends funding for CHIP through 2015 (2 year extension) Maintains Medicaid/CHIP coverage for children through 2019 Simplifies enrollment processes and coordinate with exchanges

7. Changes prior to 2014 Improves coverage of smoking cessation programs (2010) Establishes “Health Home” state plan option for persons with chronic conditions (2011) Provides a 1 percentage point FMAP increase if states provide recommended prevention services and eliminate cost sharing (2013) In 2014, provides all newly-eligible adults with a benchmark benefit package that meets the minimum essential health benefits available in the Exchanges Appears that states can define the benchmark to provide full Medicaid benefits to new eligibles Key Medicaid / CHIP Benefits Provisions

8. Expands scope and funds Medicaid and CHIP Payment and Access Commission Creates of Center for Medicare and Medicaid Innovation to test both payment and health care delivery methods Fund demonstration programs and grants related to delivery system and payment reform Accountable Care Organizations for pediatric providers Bundled Medicaid payments for episodes of care (8 states) Global capitated payments to safety net hospital systems (5 states) $100 million in grants to encourage healthy behaviors in Medicaid Increase Medicaid payments for primary care to 100% of the Medicare rates for 2013 and 2014 with 100% federal financing for the increase Key Medicaid / CHIP Payment Reform Provisions

9. Federal Medicaid Savings Provisions Changes to Drug Rebates (2010) Increases the rebate from 15.1% to 23.1% of AMP on most brand drugs Increases the rebate from 11% to 13% of AMP on generic drugs Allows states to bill federal rebates for drugs paid by capitated Medicaid MCOs CBO estimates $38.1 billion in federal savings 2010-2019 All increase in rebates paid to federal government States may lose some supplemental rebates but may save with managed care changes Reduces DSH Allotments starting in 2014 Requires Secretary to develop a methodology to distribute reductions with the largest reductions for states with the lowest percentage uninsured CBO estimate $14 billion in federal savings 2010-2019

10. Federal Coordinated Health Care Office (CHCO) in CMS to coordinate policies for duals (2010) Community First Choice Option in Medicaid (2011) Attendant services to individuals with incomes up to 150% FPL with no caps or waitlists permitted 6 percentage point increase in FMAP for services State Incentives Balancing Program (2011-2015) $3 billion available with enhanced match for administrative and structural changes to increase community based long-term care Community Living Assistance Services & Supports - CLASS Program effective in 2011 and benefits paid in 2017 Spousal impoverishment protections for HCBS (2014) Key Medicaid Long-Term Care Provisions

11. Outlook • State budget pressures will persist even as the economy starts to recover • Expiration of ARRA funds on 12/31/2010 could mean even deeper cuts to providers and benefits • Near-term cutbacks in Medicaid can impact implementation of health reform • Medicaid plays a large role in health reform • Large increases in eligibility (especially in the South and the West) • Federal government will pay 96% of the costs of new coverage 2010-2019 • States responsible for much of health reform implementation • Private Insurance: Creating Exchanges and enforcing new regulations on insurers and employer requirements • Medicaid: Outreach and enrollment; integrating Medicaid with the Exchanges; applying new income standards; access and building provider networks; increasing infrastructure and capacity