5 lesser-known Medicaid changes in Senate healthcare bill

Though much of the debate about the Better Care Reconciliation Act has centered on its repeal of Medicaid expansion and shift to a per capita cap financing system, the bill also includes other changes to the Medicaid program worth noting.

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A new issue brief from the Kaiser Family Foundation outlines some of these provisions, which include those that would:

  • Allow states the option to choose block grant financing for nonexpansion Medicaid adults. The BCRA allows the states to choose between a block grant or per capita cap for federal funding beginning in fiscal year 2020. The amount of the grant would be based on a different rate than the per capita caps, which would allow states that choose that route to impose certain conditions for eligibility and not comply with key elements of current law, like comparability. Block grants would not account for changes in Medicaid enrollment, which would likely decrease if there is an economic downturn.
  • Limit states’ ability to use provider taxes to finance their share of Medicaid by lowering the provider tax safe harbor threshold. Many states currently use provider taxes to finance Medicaid, and the BCRA proposes reducing the safe harbor threshold from 6% to 5% of patient revenue. This could shift additional costs for the Medicaid program to the states, potentially adding further costs to states or creating further cuts to Medicaid payment rates, services or eligibility.
  • Cancel scheduled disproportionate share hospital payment reductions for nonexpansion (but not for expansion) states. The bill would provide incentives to expansion states to end Medicaid expansion in 2020 by exempting nonexpansion states from disproportionate share hospital payment reductions included in the ACA. The BCRA would also provide $10 billion in safety-net funding to nonexpansion states between 2018 and 2022, the issue brief noted.
  • Change eligibility and enrollment processes. The bill includes elements that would impact what Medicaid plans cover and who can acquire a plan. It would prevent hospitals from temporarily enrolling potentially eligible patients in Medicaid and would give states the option to review eligibility every 6 months instead of annually.
  • Repeal the essential health benefit requirement in Medicaid alternative benefit plans. By doing this, the bill would not set a federal minimum requirement to ensure that Medicaid patients have access to certain types of care, like mental health or substance abuse treatments. However, the Senate parliamentarian may have spiked this element.

The Congressional Budget Office's initial score of the BCRA estimated the bill would result in the government spending 26% less on Medicaid than under current law, and a subsequent analysis predicted that spending cut would be even greater—35%—by 2036.