The Medicaid and CHIP Payment and Access Commission (MACPAC) held a virtual public meeting on March 2, 2023. The meeting included sessions on additional analyses of potential recommendation for countercyclical disproportionate share hospital allotments and updates on unwinding the continuous coverage requirements and other flexibilities. The full agenda for the meeting and presentations for additional sessions can be found here.
COMMISSIONERS DISCUSS DRAFT RECOMMENDATION ON COUNTERCYCLICAL DISPROPORTIONATE SHARE HOSPITAL ALLOTMENTS
Medicaid disproportionate share hospital (DSH) hospital payments offset hospital uncompensated care costs for Medicaid-enrolled and uninsured patients. Medicaid enrollment and the number of people who are uninsured increase during economic recessions. During recessions, Congress often increases the federal matching assistance percentage (FMAP) to offset declining state revenue and increased Medicaid enrollment, but applying an increased FMAP to DSH results in lower total state and DSH funding. Under the American Rescue Plan (ARPA), DSH allotments were temporarily increased to address this issue.
Following commissioner consensus from the October 2022 MACPAC meeting that an ARPA-like countercyclical DSH policy should be implemented during future economic recessions, commissioners discussed the effects of implementing such a policy only during economic recessions versus permanently.
MACPAC presented two policy options:
- Temporary policy that would only be applied during recessions
Congress should amend Section 1923 of the Social Security Act to increase federal DSH allotments during economic recessions so that total available state and federal DSH funding is the same as it would have been without the application of a countercyclical FMAP. If Congress makes future changes to improve the relationship between state DSH allotments and measures of need for DSH payments, this countercyclical adjustment should be applied after making these changes.
- Permanent policy that also applies during periods of normal economic growth
Congress should amend Section 1923 of the Social Security Act to adjust federal DSH allotments so that total state and federal DSH funding is not affected by changes in the FMAP. If Congress makes future changes to improve the relationship between state DSH allotments and measures of need for DSH payments, the methodology should be based on total state and federal DSH funding.
The goal of a policy recommendation is to avoid disruptions in funding for DSH hospitals and to improve the relationship between DSH allotments and measures of need, aligned with MACPAC’s previous DSH recommendations. The majority of commissioners supported a permanent recommendation. However, under a permanent policy, states with decreasing FMAPs during periods of normal economic growth would have reduced DSH funding, effectively creating “winners and losers,” and making some commissioners more hesitant to recommend a permanent policy. Some commissioners also noted flaws within the DSH system more broadly and suggested noting concerns within the chapter.
Commissioners will vote on a recommendation in the April meeting. The work will appear in a future MACPAC report that will also include a technical change to streamline annual DSH allotment calculations and conforming language for the countercyclical FMAP recommendation which would include DSH allotments within the automatic countercyclical financing adjustment, based on recommendations from the October 2022 meeting.
MACPAC DISCUSSES END OF CONTINUOUS ENROLLMENT CONDITION
In this session, MACPAC reviewed the continuous enrollment provisions under the Consolidated Appropriations Act (CAA) of 2023 as well as policy and operational guidance from the Centers for Medicare & Medicaid Services (CMS).
In March 2020, the Families First Coronavirus Response Act established the “continuous enrollment condition,” which provided states with extra federal Medicaid funding in exchange for maintaining enrollments for all Medicaid-enrolled individuals throughout the public health emergency (PHE). Many states implemented comparable policies that had a similar impact on the Children’s Health Insurance Program (CHIP). Up until the passage of the CAA, 2023 the ending of the continuous enrollment condition was linked with the ending of the PHE. When the CAA, 2023, was passed, the continuous enrollment condition end date was decoupled from the ending of the PHE and will now end on March 31, 2023. When the continuous enrollment condition ends, 15 million or more enrollees could lose their Medicaid or CHIP coverage.
To detect potential unwinding issues, MACPAC interviewed several national organizations representing states and beneficiaries. Interviews show that states have confirmed their unwinding plans, and several have begun processing redeterminations. CMS oversight will focus on meeting existing renewal requirements, and the Agency and states are strategizing to address shortfalls. Staffing shortages will continue to affect the speed of processing returned mail used to contact beneficiaries and unwinding implementation, and states are working to combat these limitations.
Commissioners shared various concerns over the looming end of the continuous enrollment condition. Some concerns included ensuring data transparency to inform decisions and recommendations, the future for dual eligible beneficiaries who lose Medicaid coverage, the process for returned mail, and the number of beneficiaries who do not know their coverage will end soon. They also discussed leveraging primary care and community health relationships to raise awareness, as it may be easier to have a conversation with a trusted provider than reading or translating numerous pieces of mail. One commissioner shared Medicaid beneficiaries’ worries about the competency and capacity of call centers.
MACPAC staff will continue to monitor state progress in unwinding the continuous coverage requirements. The Commission anticipates having additional state-level information by early April.
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This Applied Policy® Summary was prepared by Emma Hammer with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at ehammer@appliedpolicy.com or at 202-558-5272.