The COVID-19 Pandemic and Medicaid (UPDATED)

The global pandemic caused by the novel corona virus has certainly shaken up our normal way of life and will do so for the foreseeable future.  Times like this reinforce the importance of public health insurance programs like Medicare and Medicaid.  Our post today addresses many of the ways that CMS and Congress are bolstering the Medicaid program to respond to the unique challenges posed by the pandemic.  We’ve updated this post to reflect the fact that, on March 18, President Trump signed another emergency supplemental legislative proposal dealing with the pandemic.

We’ve divided our post into two sections.  First, what is CMS doing?  Second, what is in the new law?

The CMS Response:  Waivers

Shortly after the 9/11 terrorist attacks, the department of Health and Human Services (HHS) realized that it lacked sufficient flexibility to address an immediate threat to the public health.  Congress responded by enacting section 1135 of the Social Security Act.  Section 1135 allows the Secretary of HHS to waive various provisions of the Medicare and Medicaid programs, as well as program integrity provisions of the law, in order to ensure that the government has sufficient flexibility to address a public health emergency.  The statute is triggered when two things happen:  first, the President of the United States has to declare a national emergency or disaster.  Second, the Secretary of HHS has to declare a public health emergency.  On January 31, 2020, Secretary Alex Azar declared a public health emergency in response to the corona virus outbreak.  On March 13, President Trump triggered the second leg of the statute by declaring a national emergency.  With his declaration, the waiver authority took effect.

Section 1135 gives HHS the authority to waive provisions of Medicare, Medicaid, or other provisions of the Social Security Act with respect to seven discrete provisions of law.  Of most significance to the Medicaid program, the Secretary can waive provider licensure requirements; permit providers to bill Medicaid even if they are not enrolled in a particular State’s Medicaid program; and modify (but not waive) deadlines and timetables for performing certain activities.  On March 17, CMS issued its first § 1135 waiver for the state of Florida.  If experience from the George W. Bush or Obama Administrations is any guide, Florida will not be the last to request and receive such a waiver.

One thing about § 1135 waivers that’s important to keep in mind:  they are not going to solve every challenge that a state Medicaid program faces in the middle of a public health emergency.  Not by a long shot.  And as time goes by, states will discover additional issues that need to be addressed, quite possibly before Congress has a chance to respond.  Fortunately, and as we have noted in the past, CMS has significant flexibility to waive other operational requirements of the Medicaid program under separate statutory authority.  We would not be surprised to see, in the coming weeks and months, states requesting these waivers as well.  In fact, in the past, other Administrations have issued model waiver templates in order to rapidly address challenges in the Medicaid program.  It will likely happen in this Administration as well.

The New Pandemic Law

Congress passed one emergency supplemental appropriations bill to address the pandemic that President Trump signed it into law on March 5.  Late last week, on March 13, the House of Representatives passed a second emergency supplemental bill (H.R. 6201) dealing with the pandemic, and it has several Medicaid provisions that we thought were important to note.  The Senate passed this legislation on March 18, and the President signed it later that night.

First, H.R. 6201 treats testing for COVID-19 as a mandatory benefit under the Medicaid program.  This means that state Medicaid plans must cover testing – it’s not an optional benefit.  In addition, the statute specifies that a state cannot impose deductibles or cost sharing for testing for the virus or for a related office visit, notwithstanding a state Medicaid program’s general authority to permit cost sharing for some Medicaid beneficiaries and some Medicaid benefits.

Second, the legislation permits states to cover uninsured individuals under their Medicaid programs for testing for COVID-19 during the period of the national emergency, even for individuals who do not otherwise qualify for Medicaid.  Under the new statute, an “uninsured individual” is any individual who does not have another source of health insurance coverage.  Importantly for states, Congress has provided full funding for this benefit; it is not subject to the normal federal medical assistance percentage (FMAP) rules and the FMAP rate is 100%.  With respect to this new Medicaid benefit, even the Department of Homeland Security has gotten into the act; notwithstanding that agency’s public charge rule, the Citizenship and Immigration Services has announced that receipt of testing by an individual who is not a U.S. citizen would not be treated as part of a public charge inadmissibility determination, even if it is paid for by the Medicaid program.

Next, the new law increases each state’s FMAP by 6.2 percentage points during the period of the national emergency.  States will likely welcome this increase at a time of increased costs for state Medicaid programs.  This is especially true if the economic consequences of the pandemic lead to a recession.  The Medicaid and CHIP Payment and Access Commission (MACPAC) has prepared an analysis of issues surrounding a countercyclical FMAP, acknowledging that during an economic downturn, states are least able to afford the likely increased need for Medicaid as more people turn to the program for medical insurance.  The House likely designed the FMAP increase with this thought in mind.  Along these lines, the legislation also increases the Medicaid allotment for the territories for the same reason.

Importantly, however, Congress has imposed conditions on states being able to access the higher FMAP rate.  Specifically, a state may not tighten its eligibility standards to a level more restrictive than they were on January 1, 2020.  The limitation applies to “eligibility standards, methodologies, or procedures under a State plan,” including those adopted via a waiver.  My colleague Ross Margulies has noted that Oklahoma is the first state to request a waiver under the Health Adult Opportunity waiver initiative of the Trump Administration, and here at the Medicaid and the Law Blog, we wonder whether the state would be able to adopt this waiver (if it is approved) and still qualify for the FMAP increase, given the language of H.R. 6201.

Now that the Senate has acted on this legislation and the President signs it, it’s on to yet another emergency supplemental legislative initiative, maybe as soon as this week, to deal with the pandemic.  We are hearing that this legislation will also contain some additional Medicaid provisions and if so, we’ll keep readers updated.  We wish all of our readers good health in these troubled days!

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