Focus on Health System Reform: Expanding Role of Medicaid

The Patient Protection and Affordable Care Act expands state Medicaid eligibility to almost anyone under the age of 65 with income up to 133% of the Federal Poverty Line (FPL).  As of 2009, this percentage equals $29, 327 for a family of four.  A family of four with an income of 400%  of the FPL (approximately $88,000 per year)  will also be eligible for subsidies.  This drastically changes the current face of the Medicaid program, especially due to the inclusion of many childless adults. Taking into account the drastic mandate for eligibility and other new requirements of the law, the ultimate reach of the program will be heavily dependent upon implementation at the state level.

The North Carolina Institute of Medicine, together with the NC DHHS Secretary Lanier Cansler and NC Insurance Commissioner Wayne Goodwin, has convened a Medicaid Work Group to begin looking at the major changes ahead for the NC Medicaid program.

By 2014, the Department of Health and Human Services estimates over 500,000 new Medicaid enrollees due to expanded eligibility as well as current eligibles who are not enrolled at this time. Half of this influx will be comprised of childless adults.  Other sources have projected this number to be even higher based on past enrollment trends.

The Act allows states to implement the new eligibility category options today, but only at the original NC FMAP rates.  At this time the state does not plan to implement this option due to the loss of future federal matching funds.

The law as currently written requires the federal government to finance the majority of spending for newly eligible Medicaid enrollees.  States will receive 100% funding from 2014-2016, 95% in 2017, 94% in 2018, 93% in 2019 and 90% thereafter.  However, the state will be financially responsible for those who are currently eligible but who have not enrolled in the past. The law also requires states to maintain eligibility standards that were in place as of the date of passage (March 23, 2010).  

The Kaiser Family Foundation estimates that the state of North Carolina will spend anywhere from $1.02 to $1.8 billion during the first five years of Medicaid expansion. This will increase total spending on Medicaid from the current $12 billion to over $17 billon.  This range is based upon expected enrollment of the total eligibility ranging from 57-75%.  The federal government will pay the remaining 93-95% of costs, totaling $21-25 billion in North Carolina alone.  Under the new law states must also increase reimbursement for primary care procedures to 100% of Medicare payment rates. The federal government will cover the cost of the enhanced rate in 2013 and 2014.

The mass expansion of Medicaid coverage to over half a million new patients and the pending provider rates cuts at both the state and federal levels threatens patient access to care more than ever before. To address this challenge, we must stand together to ensure that the value of your services provided under the physician fee schedule is preserved.  State budget shortfalls and fallout from the recession should not be borne on the backs of the physicians and PAs that are providing the highest quality and most cost effective medical care to our Medicaid population.


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