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HHS Clarifies Medicaid and CHIP Eligibility Issues

April 1, 2011:
Confusion over something called the “maintenance-of-effort” rules as they relate to the Affordable Care Act prompted the Department of Health and Human Services to release a letter to state Medicaid directors February 25 clarifying the rules.

The Affordable Care Act includes stipulations pertaining to Medicaid and the Children’s Health Insurance Program (CHIP) that allow flexibility within the various states. The MOE provision in the Affordable Care Act maintains eligibility for adults in the Medicaid program during implementation of rule changes to be effective in January of 2014. The implementation of changes pertaining to children’s coverage is extended to 2019.

The letter, released by HHS Secretary Kathleen Sebelius, clarifies three issues:
  • MOE exemption for higher-income adults within states with budget deficits
  • Implication of the MOE provision on section 1115 demonstration projects
  • The handling of premiums under MOE requirements
First, any state that has or anticipates a budget deficit can apply for an MOE exemption that would give the state the flexibility to deny Medicaid eligibility to nonpregnant, nondisabled adults with incomes over 133 percent of the poverty level.

Second, MOE applies to groups covered by Medicaid via section 1115 demonstration projects. However, waivers and demonstrations under this guideline have established time limits. This clarification explains that, when a demonstration waiver expires, a state is not required to request an additional or renewed waiver but can begin a new demonstration or simply end the existing project. A reduction in eligibility for project participants once the project has expired and ended would not violate the MOE provision.

Third, premium increases, which significantly affect eligibility, have been considered to violate the MOE requirement under the Recovery Act. The HHS letter acknowledges, however, that the time period during which MOE requirements apply is significantly longer under the Affordable Care Act than under the Recovery Act and that some flexibility in raising premiums would be reasonable. More leeway would, for instance, enable states to adjust the premiums that apply to children in the CHIP program who also fall into the family income level above 150 percent of the federal poverty income amount.

Secretary Sebelius indicates these changes are needed to make sure “vulnerable populations” will continue to have access to health care through state-funded programs. She notes that the MOE provisions will require regular review under the Affordable Care Act with regular instructions being issued to the various states.

This letter, as well as the frequently asked questions document accompanying it, is available on the CMS website at http://www.cms.gov/smdl/downloads/SMD11001.pdf.

Kristin Bentley
Clinical/Technical Editor


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