The COVID-19 Pandemic and Implications for Medicaid

Since the COVID-19 pandemic began to seriously affect the United States in March, Congress has passed four major pieces of legislation to address the public health crisis.  CMS has also jumped into action and has issued a series of waivers designed to ensure that the American health care system can function without bureaucratic obstacles preventing the appropriate delivery of care.  Today, we want to highlight some of the major Medicaid provisions of those four pieces of legislation; discuss some key CMS decisions affecting Medicaid; and also say a bit about how Medicaid is likely to change in the months and years ahead to address the fallout from the pandemic.  A lot has happened in a short period of time.


Congress has passed and President Trump has signed four pieces of legislation addressing the pandemic:  the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 (Public Law 116-123); the Families First Coronavirus Response Act (Public Law 116-127); the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136) and finally, the Paycheck Protection Program and Health Care Enhancement Act (Public Law 116-139).  More legislation may be coming.  We have previously written about the Medicaid provisions in the Families First Coronavirus Response Act.  That law provided coverage for testing for COVID-19 under state Medicaid programs as a mandatory benefit; increased the matching funds that states receive under Medicaid; and also created a Medicaid benefit for otherwise-uninsured COVID-19 patients.

The CARES Act also contained some Medicaid provisions of note.  In addition to making some technical corrections to address drafting errors in the Families First law, the Congress also delayed the effective date of some pending reductions in Medicaid spending.  For example, last year we described our testimony before Congress on the pending reductions in payments to disproportionate share hospitals.  In the CARES Act, Congress delayed the scheduled reductions in payments to DSH hospitals until November 30 of this year.

But in our practice, the real focus of the CARES Act and the Health Care Enhancement Act has been the $175 billion appropriation that Congress made to the Public Health and Social Services Emergency Fund over both laws.  These funds are designed to help health care providers and suppliers who have dealt with both lost revenue and increased expenses related to the pandemic.  So far, the Department of Health and Human Services (HHS) has announced distributions from the fund totaling roughly $80.4 billion:

  • $30 billion to providers and suppliers based on those entities’ Medicare revenues in 2019.
  • $20 billion to providers and suppliers based on those entities’ net patient revenues in 2018.
  • $10 billion to acute care hospitals in COVID “hot spots.”
  • $10 billion to rural health care providers and suppliers.
  • $400 million to Indian Health Service facilities.
  • $10 billion in providers or suppliers that test and treat uninsured COVID-19 patients.

If a health care provider or supplier receives funds from these programs, they must attest that the funds will be used “to prevent, prepare for, and respond to coronavirus” and must accept a series of terms and conditions specified by HHS.

One of the issues that we and others have wondered about is: why has there not been a specific allocation to providers that treat a large number of Medicaid patients under the CARES Act funding?  Although HHS has said that they intend to focus on high-Medicaid providers, such as pediatric hospitals and nursing facilities, they have not done so yet.  We do understand that on May 1st 2020, CMS asked state Medicaid agencies for data on Medicaid spending by provider class, so perhaps the information that the agency receives in response to that survey will help trigger a new allocation for high-Medicaid providers.

CMS Activities

As we noted in our earlier article, CMS has used its authorities under section 1135 of the Social Security Act to issue a series of waivers to help the American health care system respond to the pandemic.  As we mentioned, CMS’s legal authority to issue waivers under § 1135 is somewhat limited, although the agency has gone much further than we would have expected when the Secretary of HHS issued the pandemic public health emergency in January.  Among other provisions, CMS has issued a section 1135 waiver checklist to states to make it easier for them to receive federal waivers and administer their Medicaid programs during the pandemic.  Some of the examples of waivers that CMS has granted to states have included the ability of a state to treat an out-of-state Medicaid beneficiary; suspension of provider enrollment and revalidation requirements; and medical professional licensure requirements.

CMS has also issued two interim final rules that would temporarily amend existing Medicare and Medicaid regulations during the period of the public health emergency.  One of the changes that CMS is temporarily making to its Medicaid regulations would make it easier for state Medicaid agencies to administer laboratory testing for Medicaid beneficiaries.  CMS has also taken steps in the interim final rule to improve care planning for Medicaid beneficiaries in need of home health services.  Another provision would effectively expand the home health workforce during the period of the public health emergency by allowing licensed health care practitioners, acting within the scope of their license, to order home health services for Medicaid beneficiaries.

Future of Medicaid

In the coming weeks, we’ll try to keep you updated on Medicaid developments as they happen.  A couple of issues that have interested us that need more in-depth discussion and analysis are the program that HHS has announced for uninsured COVID patients as well as issues surrounding serology testing for patients who had been infected by the coronavirus.  Another fascinating topic is the explosion in telehealth since the pandemic began.  How is that affecting Medicaid?  We’ll be addressing all of these issues in the coming weeks.

But for now, we want to conclude by speculating on the future of the Medicaid program post-pandemic.  To choose February of this year – before the closure of large parts of the American economy to address the need for social distancing – there were approximately 70 million Americans enrolled in Medicare, making it, by far, the largest public health insurance program in the United States.  As people lose their jobs due to the closure of the economy and its anticipated slow reopening, more and more people will be turning to Medicaid for health insurance coverage.

What might Medicaid look like if, rather than 70 million enrollees, the number of Medicaid beneficiaries approaches 100 million?  Will states be able to afford their share of the federal match?  What will happen to provider payment rates?  Will states impose enrollment restrictions (to the extent they’re able to do so and retain the temporary enhanced federal match)?  Will the federal government need to assume a larger role in financing and regulating Medicaid?  What will happen to the proposed rule that CMS is considering that would end what it perceives to be state financing abuses?

The aftermath of the pandemic has the potential to fundamentally alter the 55-year old Medicaid program in ways that President Johnson could have never foreseen when he signed the program into law on July 30, 1965.  Here at the Medicaid and the law blog, we’ll be watching closely as it’s a source of great interest to us as well.

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