Medicaid, the federal and state program that provides health coverage to low-income and elderly adults, children, pregnant women and people with disabilities, is countercyclical by nature. During an economic downturn, reliance on the safety net rises, driving increased spending at times when state and federal budgets are stretched thin.
We saw this over a decade ago when the 2007–2009 financial crisis drove more than 10 million additional people to enroll in Medicaid, according to the Center on Budget and Policy Priorities. Today, as we face the greatest economic crisis since that Great Recession, we’re seeing the countercyclical effect play out yet again — except this time, it’s a health crisis fueling the demand on one of our nation’s most critical healthcare programs. As millions of people became unemployed and lost employer-sponsored coverage during the pandemic, Kaiser Family Foundation estimates an additional 6-plus million people enrolled in Medicaid between February and September 2020.
The current pandemic crisis is an extreme example of the importance of protecting Medicaid as the payer of last resort — a process facilitated by third-party liability rules requiring all other payers, including commercial insurers and Medicare, to pay for medical services before Medicaid. But beyond determining third-party liability at the claim level, the extraordinary circumstances in which we find ourselves has created new challenges and opportunities to protect Medicaid program integrity for the benefit of beneficiaries and taxpayers. Here are five recommendations for state and federal stakeholders to consider.
1) Enroll People in COBRA
Under the Consolidated Omnibus Reconciliation Act (COBRA), newly unemployed workers may choose to continue their employer-sponsored insurance at the full cost of the premium. Because this is often a cost prohibitive option, many may instead turn to Medicaid for coverage, especially in a time of health and economic crisis. If COBRA was made more accessible, which a proposed federal subsidy promises to help facilitate, more unemployed Americans and their families could continue their health coverage with the providers they know and trust. At the same time, expanding COBRA coverage would help to reserve taxpayer funds for those who rely solely on Medicaid for healthcare.
Another option, particularly for individuals with healthcare needs that are likely to be high cost over the long term, is to implement a premium assistance model under the Health Insurance Premium Payment Program. If the cost of providing medical assistance under Medicaid is projected to be higher than the cost of paying the premium for COBRA, it may be more prudent for Medicaid programs to subsidize the cost of COBRA.
Whether access to COBRA is expanded through a federal subsidy or program-level premium assistance program, making eligible individuals aware of these options is critical to participation. As we learned in 2009 when COBRA was last, albeit partially, subsidized by the federal government, people aren’t likely to opt for free or reduced-cost continuation coverage they don’t know exists.
2) Make Premium Assistance Part of the Exchange Eligibility Process
Speaking of premium assistance and making more people aware of it, there is an opportunity to make this happen at the exchange level. With the federal government reopening Healthcare.gov for a special enrollment period and allowing state-based exchanges to follow suit, this could be an opportune time and place to assess COBRA eligibility and weigh the cost of premium assistance — and to implement this as a permanent process.
Under normal circumstances, the special eligibility period for the health insurance marketplace is 60 days following a qualifying life event — generally, the same amount of time workers are eligible to enroll in COBRA after losing employer-sponsored coverage. Assessing the applicant’s eligibility for COBRA and the cost effectiveness of premium assistance during the application process could generate significant cost savings, while preventing gaps in coverage and care for unemployed Americans and their families.
3) Streamline Coordination of Benefits for COVID-19 Testing and Vaccine Services
In the unprecedented effort to conduct widespread COVID-19 testing and vaccinate all Americans against the coronavirus, the federal government, through Congress’ Provider Relief Fund and FEMA has stepped in to largely cover the costs
The reality is, there are only so many funds available to cover these services — and as vaccination efforts ramp up over the coming months, neglecting to identify third-party liability where applicable puts us on an unsustainable trajectory. Federal and state directives regarding coordination of benefits are needed to maximize health insurance when available and preserve limited government dollars for those individuals who are truly uninsured or enrolled in a government program. Alongside these efforts, implementing post-payment review processes can recover costs that should have been the responsibility of a commercial insurer or other third party without interfering with the critical vaccine rollout.
4) Prohibit Out-of-Network and Administrative Denials
Right now, and always, protecting Medicaid as the payer of last resort is vital to the program’s ability to serve our nation’s vulnerable populations as it was designed to do. Currently, HMS data is showing an increasing trend of Medicaid claims being denied on the basis that a service was rendered out of state or out of network, or due to a lack of prior authorization.
To be frank, our current environment does not allow for these types of denials. We can surmise, for instance, that the rise of telehealth in response to COVID-19 has increased the prevalence of care being provided outside of network or state lines. Medicaid members who may have unstable living arrangements may have relocated or been displaced during this crisis. Staffing challenges, combined with the unprecedented demand on the healthcare system during the pandemic, has inevitably impacted prior authorizations. All of these factors should be considered in prohibiting liable parties from denying claims and requiring reimbursement of the amount that Medicaid paid.
5) Reinstate Medicaid Coordination of Benefits with TRICARE
Third-party liability rules dictate that most other coverage sources must pay for medical claims primary to Medicaid. This includes commercial insurers and even government programs like Medicare; however, for the last several years, there have been significant gaps in coordination of benefits between Medicaid and TRICARE, the U.S. Department of Defense’s healthcare program for military personnel and their families.
These gaps are resulting in substantial cost-shifting to the Medicaid program. According to the Medicaid and CHIP Payment and Access Commission (MACPAC), approximately 900,000 TRICARE beneficiaries are also covered by Medicaid, whose funds are paying for care that should be the responsibility of TRICARE.
There is an urgent need to resume coordination of benefits activities between Medicaid and TRICARE — both on a prospective and retroactive basis — as the safety net faces increasing demand and financial pressure. In its June 2020 report, MACPAC outlined recommendations to Congress for protecting Medicaid as the payer of last resort with regard to TRICARE claims. HMS supports these recommendations alongside other programmatic and policy-level solutions that help to sustain our public healthcare infrastructure through this critical period.
Read more from HMS on reducing healthcare costs and improving health outcomes at Health Ideas.