Second Article in The House of Medicaid Series
As the U.S. House of Representatives returns from its District Work Period, its top priority will be to assemble its budget reconciliation package. The House Budget Resolution has charged the Committee on Energy and Commerce to produce $880 billion in savings over the next 10 years. The Congressional Budget Office (CBO), the nonpartisan scorekeeper for Congress, has informed leadership and members this level of savings cannot be achieved without reductions in spending levels to the Medicaid program.
The Five Pillars
Medicaid, along with all forms of health insurance products, can be organized and visualized according to the following five pillars:
Eligibility
Benefits
Service Delivery
Financing
Administration
The challenge for Brett Guthrie (KY-02), Chairman of the House Energy and Commerce Committee, will be to find savings among the pillars without causing the House of Medicaid to collapse. This series will examine each of the five, focusing on 2030, the mid-point in the 10-year budget window.
Benefits
Medicaid (Title XIX of the Social Security Act) provides the most expansive benefit package in the nation in comparison to Medicare or commercial insurance due to the populations it serves.
Medicaid is the largest single source of coverage for paid long-term services and supports (LTSS) in the U.S. According to CBO, the federal share of payments for institutional care, primarily nursing facilities, will be $73 billion in 2030. Home and community-based services (HCBS) will reach $118 billion. Medicaid contains an “institutional bias,” meaning services provided through nursing facilities are mandatory services. HCBS services are provided as a state option, and most are provided under the authority of a Section 1915(c) waiver. The list of services that qualify as HCBS is expansive, with more than 30 different services identified. HCBS services are non-medical in nature. While they are not strictly “medically necessary,” participants must have an independent assessment to determine whether they have an unmet need for services to live safely at home or in the community.
Originally, Medicaid benefits were divided into “mandatory benefits,” which states were required to cover and “optional benefits,” which states could choose to cover and receive Federal Financial Participation (FFP or “matching funds”). The current list of benefits is shown in Table 1 below.
Table 1. Mandatory and Optional Medicaid Benefits[1]
| Mandatory Benefits | Optional Benefits |
| Transportation to medical care | Other licensed practitioner services |
| Inpatient hospital services | Private duty nursing |
| Outpatient hospital services | Clinical services |
| Rural health clinic (RHC) services | Dental services |
| Federal Qualified Health Center (FQHC) services | Physical therapy |
| Laboratory and x-ray services | Occupational therapy |
| Nursing facility services | Speech, hearing and language disorder services |
| Early Periodic Screening, Diagnostic, and Treatment (EPSDT) services (for children only) | Prescription drugs |
| Family planning services | Dentures |
| Tobacco cessation counseling for pregnant women | Prosthetics |
| Physician services | Eyeglasses |
| Home health services | Other diagnostic, screening, preventive, and rehabilitative services |
| Nurse midwife services | Services for individuals age 65 or older in an Institution for Mental Disease (IMD) |
| Certified pediatric and family nurse practitioner services | Services in an intermediate care facility for individuals with intellectual disability |
| Freestanding birth center services | Inpatient psychiatric services for individuals under age 21 |
| Medication assisted treatment (MAT) | Hospice |
| Routine patient costs of items and services for beneficiaries enrolled in qualifying clinical trials | Case management |
| TB-related services | |
| Respiratory care for ventilator-dependent individuals | |
| Personal care | |
| Primary care case management | |
| Primary and secondary medical strategies, treatment, and services for individuals with sickle cell disease | |
| Certified community behavioral health clinic (CCBHC) services | |
| State plan home and community-based services (Section1915(i) authority) | |
| Self-directed personal assistance services (Section 1915(j) authority) | |
| Community First Choice Option (CFC) (Section 1915(k) authority) | |
| Medical assistance for eligible individuals who are patients in eligible institutions for mental disease (1915(l)) | |
| Alternative Benefit Plan (ABP) mandatory for Affordable Care Act adults | |
| Health homes for enrollees with chronic conditions | |
| Other services approved by the Secretary |
States may set limits on the “amount, duration, and scope” of each service (excluding children due to the EPSDT benefit). They can also regulate who is eligible to provide services through licensing and certification, as well as determine the locations where services can be delivered.
The “big ticket” item on the list of optional benefits is prescription drugs. While technically optional, it is difficult to imagine the repercussions of reducing or eliminating access to prescription drugs. Moreover, rebates on prescription drugs, when applicable, significantly reduce the net cost of the benefit.
Overall, states choose to cover optional benefits because they provide a lower-cost alternative to services delivered in a more expensive setting. New models of intensive case management/care coordination have the potential for lowering costs by improving transitions between care settings, reducing preventable hospital admissions, and reducing readmissions.
The concept of the Alternative Benefit Plan (APB) was first introduced by the creation of the state Children’s Health Insurance Plan (CHIP). States were allowed to adopt a “benchmark” plan as the equivalent of a widely available commercial health plan or the state employee’s health plan. The state option to offer a benchmark plan was extended to adults through the Deficit Reduction Act of 2005. The Affordable Care Act (ACA) requires states to provide an APB to the new adult group in order to align Medicaid with commercial Marketplace plans.
Although changes to the benefit package are unlikely to achieve significant savings, administrative simplification would be welcomed.
Next up: Medicaid Service Delivery
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