Congressional Research Service: 'Medicaid – An Overview' (Part 1 of 2)
The report was written by health care financing specialists
Here are excerpts:
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Summary
Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports (LTSS) to an estimated 85 million people at a cost to states and the federal government of
Participation in Medicaid is voluntary for states; all states, the
Historically, Medicaid eligibility generally has been limited to low-income children, pregnant women, parents of dependent children, elderly individuals, and individuals with disabilities. Since 2014, states have had the option to cover nonelderly adults with income up to 133% of the federal poverty level (FPL) under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) Medicaid expansion.
Medicaid coverage includes a variety of primary and acute-care services as well as LTSS. Not all Medicaid enrollees have coverage for the same set of services. An enrollee's eligibility pathway determines the services within a benefit package. Federal law provides two primary types of benefit packages for state Medicaid programs: (1) traditional benefits and (2) alternative benefit plans (ABPs). Beneficiary cost sharing (e.g., premiums and co-payments) is limited under the Medicaid program.
Medicaid enrollees generally receive benefits via one of two service delivery systems: fee-for-service (FFS) or managed care. Under FFS, health care providers are paid by the state Medicaid program for each service provided to a Medicaid enrollee. Under managed care, Medicaid enrollees get some or all of their services through an organization under contract with the state. Most states use a combination of FFS and managed care.
The federal government and the states jointly finance Medicaid. The federal government reimburses states for a portion of each state's Medicaid program costs. Federal Medicaid funding is an open-ended entitlement to states, which means there is no upper limit or cap on the amount of federal Medicaid matching funds a state may receive.
Medicaid provider payment rates are set by states within federal rules. In some cases, states make supplemental payments to Medicaid providers that are separate from, and in addition to, the payment rates for services rendered to Medicaid enrollees.
State Medicaid programs, through their program integrity initiatives, have primary responsibility for preventing and, when necessary, recovering improper payments due to fraud, waste, and abuse.
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Contents
Introduction ... 1
Eligibility ... 4
Categorical Eligibility ... 5
Financial Eligibility ... 7
Additional Eligibility Requirements for LTSS Coverage ... 8
Medicaid Enrollment ... 8
Share of Enrollment Versus Expenditures, by Population ... 10
Benefits ... 11
Primary Benefit Packages ... 12
Traditional Medicaid Benefits ... 12
Alternative Benefit Plans ... 12
Comparing Traditional Medicaid Benefits to ABPs ... 13
Other State Plan Coverage Options ... 14
Medicaid Service Spending ... 15
Beneficiary Cost Sharing ... 15
Service Delivery Systems ... 16
Financing ... 18
Federal Share ... 19
State Share ... 20
Expenditures ... 20
Medicaid Program Waivers ... 21
Provider Payments ... 24
Program Integrity ... 25
Additional Medicaid Resources ... 26
Selected CRS Products ... 26
Overview ... 26
Eligibility ... 26
Benefits ... 26
Financing ... 27
COVID-19 ... 27
Laws ... 27
Regulations ... 28
More Information ... 28
Figures
Figure 1. Percentage of Medicaid Coverage of the Nonelderly Population by Race/Ethnicity ... 3
Figure 2. Past and Projected Medicaid Enrollment ... 9
Figure 3. Estimated Medicaid Enrollment and Expenditures for Benefits, by
Figure 4. Medicaid Medical Assistance Expenditures, by Service Category ... 15
Figure 5. Percentage of Medicaid Enrollees with Comprehensive Risk-Based Managed Care, by State ... 18
Figure 6. Federal and State Actual Medicaid Expenditures ... 21
Tables
Table 1. Examples of Medicaid Mandatory and Optional Benefits for Traditional Benefits and Alternative Benefit Plans (ABPs) ... 11
Table 2. Key Characteristics of the Primary Medicaid Waiver Authorities Compared to State Plan Requirements ... 23
Contacts
Author Information ... 29
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Introduction
Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older. State participation in Medicaid is voluntary; all states, the
Medicaid was enacted in 1965 as part of the same law that created the Medicare program (the Social Security Amendments of 1965; P.L. 89-97). Medicaid was designed to provide coverage to groups with a wide range of health care needs that historically were excluded from the private health insurance market (e.g., individuals with disabilities who require LTSS or indigent populations in geographic locations where access to providers is limited). Because of the diversity of the populations that Medicaid serves, Medicaid offers some benefits that typically are not covered by major insurance plans offered in the private market (e.g., institutional and home and community-based LTSS or early and periodic screening, diagnostic, and treatment [EPSDT] services)./2
At the federal level, Medicaid is administered by the
The Social Security Act (SSA) authorizes several waiver (e.g., Section 1115, Section 1915(b), and Section 1915(c)) and demonstration authorities that allow states to operate their Medicaid programs outside of federal rules./4
These flexibilities result in variability across state Medicaid programs.
The federal government and the states jointly finance the Medicaid program. Federal Medicaid spending is an entitlement, with total expenditures dependent on state policy decisions and use of services by enrollees. Medicaid is an entitlement for both states and individuals. The Medicaid entitlement to states ensures that, so long as states operate their programs within the federal requirements, states are entitled to federal Medicaid matching funds. Medicaid also is an individual entitlement, which means that anyone eligible and enrolled in Medicaid under his or her state's eligibility standards is guaranteed Medicaid coverage.
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1 The five territories are
2 The early and periodic screening, diagnostic, and treatment (EPSDT) program is a required benefit for nearly all children (under the age of 21) who are enrolled in Medicaid that provides comprehensive and preventive health care services.
3 The Medicaid state plan is an agreement between the state and the federal government that details how the state will administer its program (e.g., eligibility requirements, benefit coverage, provider reimbursement, delivery systems) and certifies that the state has met program requirements set forth in federal statute and regulations. If a state wants to change how its program operates (e.g., by adjusting eligibility levels or benefit coverage) or if
4 States submit waiver applications for CMS approval before implementing a waiver program. For Section 1115 demonstration waivers, the Special Terms and Conditions is the formal document outlining the arrangements agreed to under the demonstration program. Other waiver programs operate under the conditions specified in the waiver agreement as approved by CMS.
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In FY2021, Medicaid is estimated to have provided health care services to an estimated 85 million individuals at a total cost of
In comparison, the Medicare program provided health care benefits to nearly 63 million individuals in that same year at a cost of roughly
Medicaid provides a health care safety net for low-income populations,/7 with approximately 21% of the total
Medicaid plays a more significant role for other certain subpopulations. For example, in 2021, Medicaid provided health coverage for 39% of all children in
The percentage of individuals covered by Medicaid varies by race, ethnicity, or both, with Medicaid providing coverage as shown in Figure 1. Among the nonelderly population (i.e., individuals under 65 years of age), Medicaid provided coverage for 17% of White individuals, 35% of Black individuals, 17% of Asians/Native Hawaiians and Pacific Islanders, 38% of
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5 This enrollment figure is the average monthly enrollment from the
6 CBO, "Medicare - CBO's
7 The health care safety net consists of those organizations and programs, in both the public and private sectors, with a legal obligation or a commitment to provide direct health care services to uninsured and underinsured populations.
8
9
10
11 Persons in the multiple race category provided two or more races in their response to the 2021
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Figure 1. Percentage of Medicaid Coverage of the Nonelderly Population by Race/Ethnicity (2021)
Source:
Notes: KFF estimates based on the 2021
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For some types of services, Medicaid is a significant payer. For instance, in 2020, Medicaid accounted for about 42% of national spending on LTSS./12
Medicaid paid for 42% of all births in
In 2019, Medicaid paid for 26% of behavioral health services, including mental health and substance use disorder services, which made Medicaid the single biggest payer of behavioral health services./14
Medicaid also pays for Medicare premiums and/or cost sharing for low-income seniors and individuals with disabilities, who are eligible for both programs and referred to as dual-eligible beneficiaries. For other Medicaid enrollees, cost sharing (e.g., premiums and co-payments) generally is nominal, which may not be the case with coverage available through the private health insurance market. The Medicaid program is a significant payer for services provided by special classes of providers, such as federally qualified health centers (FQHCs), rural health clinics (RHCs), and
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12 Based on CRS analysis of National Health Expenditure Account (NHEA) data obtained from CMS,
13
14 CMS, "Medicaid and CHIP Access: Coverage and Behavioral Health Data Spotlight," at https://www.medicaid.gov/medicaid/access-care/downloads/coverage-and-behavioral-health-data-spotlight.pdf. See also,
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This report describes the basic elements of Medicaid, focusing on who is eligible, what services are covered, how enrollees share in the cost of care, and how the program is financed. The report also explains waivers, provider payments, and program integrity activities. At the end of the report is a section with additional Medicaid resources.
Eligibility
Eligibility for Medicaid is determined by both federal and state law, whereby states set individual eligibility criteria within federal minimum standards. As a result, there is substantial variability in Medicaid eligibility across states. Therefore, the ways that an individual might qualify for Medicaid are largely reflective of state policy decisions within broad federal requirements. In general, individuals qualify for Medicaid coverage by meeting the requirements of a specific eligibility pathway offered by the state. Some eligibility pathways are mandatory, meaning all states with a Medicaid program must cover them; others are optional. Within this framework, states are afforded discretion in determining certain eligibility criteria for both mandatory and optional eligibility groups. In addition, states may apply to CMS for a waiver of federal law to expand health coverage beyond the mandatory and optional eligibility groups specified in federal statute (see the "Medicaid Program Waivers" section for more information).
An eligibility pathway is the federal statutory reference(s) under SSA Title XIX that extends Medicaid coverage to one or more groups of individuals./15
Each eligibility pathway specifies the group of individuals covered by the pathway (i.e., categorical criteria), the financial requirements applicable to the group (i.e., financial criteria),/16 whether the pathway is mandatory or optional, and the extent of the state's discretion over the pathway's requirements. Individuals in need of Medicaid-covered LTSS must demonstrate the need for long-term care by meeting state-based eligibility criteria for services, and they also may be subject to a separate set of Medicaid financial eligibility rules in order to receive LTSS coverage. All Medicaid applicants regardless of their eligibility pathway must meet federal and state requirements regarding residency, immigration status, and documentation of
For more information about noncitizens, see the textbox entitled "Noncitizen Eligibility for Medicaid."
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15 Although most eligibility pathways are specified in Title XIX of the Social Security Act (SSA), some pathways are specified in other parts of the SSA, in other federal laws, or in regulations prescribed by CMS pursuant to authority provided in the SSA. See SSA Sec.1939.
16 Some groups, such as young people under the age of 26 who have aged out of foster care and individuals eligible through the breast and cervical cancer treatment pathway, are eligible for Medicaid coverage without regard to income and assets.
17 Federal Medicaid residency requirements can be found at SSA Sec.Sec.1902(a)(16), 1902(a) and 1902(b)(2). Federal Medicaid eligibility requirements for noncitizens generally can be found at SSA Sec.Sec.401, 402(b), 403, 1137, and Sec.421 of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA; P.L. 104-193). Federal Medicaid citizenship documentation requirements can be found at SSA Sec.Sec.1902(a)(46), 1902(ee), 1903(x), and 1903(a)(3)(H).
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Often an applicant's eligibility pathway dictates the Medicaid state plan services that a given program enrollee is entitled to (e.g., women eligible due to their pregnancy status are entitled to Medicaid pregnancy-related services). When applying to a state's Medicaid program, an individual may be eligible for the program through more than one pathway. In this situation, an individual is generally permitted to choose the pathway that would be most beneficial in terms of the treatment of income and sometimes assets when determining Medicaid eligibility, but also in terms of the available benefits associated with each eligibility pathway.
Medicaid eligibility determinations generally apply for 12 months before an eligibility redetermination must occur. Individuals may be retroactively eligible for Medicaid up to three months prior to the month of application, if the individual received covered services and would have been eligible had he or she applied during that period./18
The following sections describe Medicaid's categorical and financial eligibility criteria as well as additional eligibility requirements for Medicaid covered-LTSS.
Categorical Eligibility
Medicaid categorical eligibility criteria are the characteristics that define the population qualifying for Medicaid coverage under a particular eligibility pathway; in other words, the nonfinancial requirements that an individual must meet to be considered eligible under an eligibility group. Medicaid covers several broad coverage groups, including children, pregnant women, adults, individuals with disabilities, and individuals 65 years of age and older (i.e., aged). There are a number of distinct Medicaid eligibility pathways within each of these broad coverage groups.
Historically, Medicaid eligibility was limited to poor families with dependent children who received cash assistance under the former Aid to Families with Dependent Children (AFDC) program, as well as poor aged, blind, or disabled individuals who received cash assistance under the Supplemental Security Income (SSI) program. Medicaid eligibility rules reflected these historical program linkages both in terms of the categories of individuals who were served and in that the financial eligibility rules were generally based on the most closely related social program for the group involved (e.g., AFDC program rules for low-income families with dependent children and pregnant women, and SSI program rules for aged, blind, or disabled)./19 Over time, Medicaid eligibility has expanded to allow states to extend Medicaid coverage to individuals beyond those who were eligible based on receipt of cash assistance.
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18 SSA Sec.1902(a)(34); 42 C.F.R. Sec.435.916.
19 42 C.F.R. Sec.435.601.
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Noncitizen Eligibility for Medicaid
Noncitizens' eligibility for Medicaid and CHIP largely depends on (1) an applicant's immigration status; (2) whether they arrived in
Notes: See CRS In Focus IF11912, Noncitizen Eligibility for Medicaid and CHIP and
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Eligibility expansions include new groups of individuals who are less likely to have access to and/or are able to afford health insurance coverage, such as foster care youth through the age of 26 without regard to annual income, and the ACA Medicaid expansion population (i.e., nonelderly adults with income up to 133% of FPL)./20 Medicaid's financial eligibility rules also have been modified over time for certain groups./21
As a condition of state participation in Medicaid, the following are examples of eligibility groups that must be provided Medicaid coverage:
* certain low-income families, including parents, that meet the financial requirements of the former AFDC cash assistance program;
* pregnant women with annual income at or below 133% of FPL;
* children with family income at or below 133% of FPL;
* aged, blind, or disabled individuals who receive cash assistance under the SSI program;/22
* children receiving foster care, adoption assistance, or kinship guardianship assistance under SSA Title IV-E;
* certain former foster care youth;/23
* individuals eligible for the Qualified Medicare Beneficiary program;/24 and
* certain groups of legal permanent resident immigrants./25
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20 The poverty guidelines (also referred to as the federal poverty level) are issued each year in the
21 For more information, see CRS Report R43861, The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs.
22 For SSI recipients, states have the option to use certain eligibility criteria for Medicaid that are more restrictive than SSI but no more restrictive than those criteria in effect on
24 Under the Qualified Medicare Beneficiary (QMB) program, Medicaid helps pay premiums, deductibles, coinsurance, and co-payments for Medicare Part A, Medicare Part B, or both for dual-eligible individuals (i.e., individuals eligible for both Medicare and Medicaid) with annual income less than 100% of the federal poverty level.
25 These groups also must meet all other Medicaid eligibility requirements and include refugees for the first seven years after entry into
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Examples of eligibility groups to which participating states may provide Medicaid include the following:
* pregnant women with annual income between 133% and 185% of FPL;
* infants with family income between 133% and 185% of FPL;
* certain individuals who require institutional care and have incomes up to 300% of the SSI federal benefit rate;
* certain medically needy individuals (e.g., children, pregnant women, aged, blind, or disabled) who are otherwise eligible for Medicaid but who have incomes too high to qualify and spend down their income on medical care;/26 and
* nonelderly adults with income at or below 133% of FPL (i.e., the ACA Medicaid expansion)./27
Some individuals who are eligible for Medicaid are also eligible for Medicare. Individuals enrolled in both Medicaid and Medicare are referred to as dual eligibles. For more information about this population, see the textbox entitled "Dual Eligibles."
Financial Eligibility
Medicaid is also a means-tested program that is limited to those with financial need. The criteria used to determine financial eligibility - income and sometimes resource (i.e., asset) tests - vary by eligibility group.
For most eligibility groups the criteria used to determine eligibility are based on modified adjusted gross income (MAGI) income counting rules. There is no resource or asset test used to determine Medicaid financial eligibility for MAGI-eligible individuals./28
While MAGI applies to most Medicaid-eligible populations, certain populations such as older adults and individuals with disabilities are statutorily exempt from MAGI income counting rules. Instead, Medicaid financial eligibility for MAGI-exempted populations is based on the income counting rules that match the most closely related social program for the group involved (e.g., SSI program rules for aged, blind, or disabled eligibility groups). For MAGI-exempt eligibility groups, income disregards and assets or resource tests may apply.
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26 For these groups, individuals may qualify for Medicaid by meeting the medically needy income standard or spend down to the medically needy income standard by incurring and paying for medical expenses.
27 For more information about the ACA Medicaid expansion, see CRS In Focus IF10399, Overview of the ACA Medicaid Expansion.
28 In addition, for some groups, such as former foster-care youth who have aged out of foster care, no income eligibility test is applied. For more information on the use of modified adjusted gross income (MAGI) as well as MAGI-exempt groups, see CRS Report R43861, The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs.
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Dual Eligibles
Individuals eligible for both Medicare and Medicaid (dual eligibles) are an important Medicaid subgroup because, due to their substantial health care needs, they account for a disproportionate share of Medicaid expenditures. Dual eligibles experience high rates of chronic illnesses, many need LTSS, and they often have social risk factors; 60% of dual eligibles have multiple chronic conditions, 49% receive LTSS, and 41% have at least one mental health diagnosis. Dual eligible enrollment has increased from 2006 to 2019 by an annual average of 2.8%, growing from 8.6 million in 2006 to 12.3 million in 2019.
Dual eligible beneficiaries generally are Medicare beneficiaries whose low-income makes them also eligible to receive Medicaid benefits. Depending on their income and resources, dual eligibles may be fully or partially eligible for Medicaid. Partial-benefit dual eligibles receive full Medicare benefits plus state Medicaid program assistance with some or all Medicare premiums and cost sharing. Full-benefit dual eligibles receive full Medicare coverage, full Medicaid benefits, and coverage of Medicare premiums and cost sharing. In 2019, about 8.8 million of dual eligibles were fully eligible for Medicaid, while about 3.6 million received partial Medicaid benefits (does not add to 12.3 million due to rounding).
Source:
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Additional Eligibility Requirements for LTSS Coverage
Medicaid enrollees, many of whom qualify based on aged or disabled categorical criteria, may also have long-term care needs. In general, individuals in need of Medicaid-covered LTSS must also meet state-based functional and/or disease or condition-specific eligibility criteria. In other words, they must demonstrate the need for long-term care. There are certain pathways that establish eligibility to Medicaid-covered LTSS either for individuals receiving institutional care or for those who need the level of care provided in an institution and opt to receive Medicaid-covered home and community-based services (HCBS)./29 Most states offer HCBS under waiver programs that operate outside of Medicaid state plan requirements (see the "Medicaid Program Waivers" section for more information).
Applicants seeking certain Medicaid-covered LTSS are also subject to a separate set of Medicaid financial eligibility rules in order to receive such services (e.g., limits on the value of home equity, asset transfer rules). These additional financial rules attempt to ensure that program applicants apply their assets toward the cost of their care and do not divest them to gain eligibility sooner than would occur otherwise.
In addition, Medicaid specifies rules for equitably allocating income and assets to non-Medicaid-covered spouses for the purposes of determining LTSS coverage eligibility for nursing facility services and some HCBS. Commonly referred to as spousal impoverishment rules, these rules are intended to prevent the impoverishment of the spouse who does not need LTSS./30
Medicaid Enrollment
Figure 2 shows historical and projected Medicaid enrollment for FY1970 through FY2021. The figure shows steady enrollment growth over this period. During periods of economic downturn, Medicaid programs face enrollment increases at a faster rate because job and income losses make more people eligible./31
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29 There are certain optional eligibility pathways for older adults and individuals with disabilities - Special Income Level,
30 Historically, these rules have applied to the spouse of participants receiving institutional care. However, under ACA Sec.2404, these rules were extended for a limited time to the spouse of participants receiving certain home and community-based services and are scheduled to sunset on
31 For information about when
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Figure 2. Past and Projected Medicaid Enrollment, (FY1970-FY2021)
Source: Medicaid and
Notes: Enrollment is measured by average monthly enrollment. For fiscal years prior to FY1990, Medicaid enrollment was estimated from Medicaid enrollees who received covered services to individuals enrolled in Medicaid. Enrollment data for FY2013-FY2021 are projected. Enrollment for FY1999-FY2021 include estimates for the territories.
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The implementation of the ACA Medicaid expansion in 2014 contributed to Medicaid enrollment increasing by an estimated 8.8% in FY2014 and 7.2% in FY2015. The growth in Medicaid enrollment is estimated to have slowed to 3.3% in FY2016, 1.7% in FY2017, 0.7% in FY2018, and 0.0% in FY2019./32 States attribute the slowing in Medicaid enrollment growth from FY2016-FY2019 to improving economic conditions and barriers to enrollment (e.g., periodic eligibility checks between renewals) in some states./33
During the Coronavirus Disease 2019 (COVID-19) public health emergency period, Medicaid enrollment has increased by 1.9% in FY2020 and 14.6% in FY2021./34 Initially, the recession at the beginning of the pandemic increased the rate of growth for Medicaid enrollment./35
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32
33
34 The percentage change in Medicaid enrollment has varied by state. (MACPAC, MACStats: Medicaid and CHIP Data Book, Exhibit 10,
35 For more information about Medicaid and recessions, see CRS In Focus IF11686, Impact of the Recession on Medicaid.
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Since then, the continuous coverage requirement for the Family First Coronavirus Response Act (FFCRA; P.L. 116-127) federal medical assistance percentage (FMAP) increase has driven the Medicaid enrollment increases (see the "Federal Share" for more information about FMAP and this increase)./36
Share of Enrollment Versus Expenditures, by Population
Different Medicaid enrollment groups have different service utilization patterns. Larger enrollment groups account for a smaller proportion of Medicaid expenditures, while some smaller enrollment groups are responsible for a larger proportion of Medicaid expenditures. Individuals with disabilities and the aged populations tend to be sicker and use more health care services, including LTSS, than the children, non-expansion adults, and expansion adults populations. As a result, the expenditures for the individuals with disabilities and the aged populations are relatively higher.
As shown in Figure 3, for calendar years 2018 and 2019 together, Medicaid enrollment for children, non-expansion adults, and expansion adults comprised 77% of Medicaid enrollment but accounted for 44% of Medicaid's total benefit spending. In contrast, together individuals with disabilities and the aged populations represented less than a quarter (23%) of Medicaid enrollment but accounted for more than a half of Medicaid benefit spending (56%)./37 Although these statistics vary somewhat from year to year and state to state, the patterns described above generally hold true across years.
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Figure 3. Estimated Medicaid Enrollment and Expenditures for Benefits, by
Source:
Notes: CMS calculated these figures for calendar years 2018 and 2019 using Transformed Medicaid Statistical Information System (T-MSIS) data to determine the percentage of total Medicaid expenditures accounted for by each beneficiary category, then applied that percentage to the net total Medicaid expenditures (federal and state) states reported to the Medicaid Budget and Expenditure System (MBES) in form CMS-64. These national estimates include state-reported data from the 50 states, DC,
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36 The federal government's share of most Medicaid expenditures is established by the federal medical assistance percentage (FMAP) rate. (CMS,
37 Dual-eligible individuals are primarily included in the individuals with disabilities and the aged populations.
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Benefits
Medicaid coverage includes a wide variety of preventive, primary, and acute care services as well as LTSS./38 Not everyone enrolled in Medicaid has coverage for the same set of services. An enrollee's eligibility pathway determines the available services within a benefit package. Federal law provides two primary benefit packages for state Medicaid programs: (1) traditional benefits and (2) alternative benefit plans (ABPs). Each of these packages is summarized in Table 1. For the medically needy subgroup, states may offer a more restrictive benefit package than is available to other enrollees. States also have statutory options to include other types of coverage that targets specific benefits to targeted groups through certain state plan options. In addition, states can use waiver authority (e.g., SSA Section 1115) to tailor benefit packages to specified Medicaid subgroups as well as offer services outside traditional or ABP coverage, such as LTSS (see "Medicaid Program Waivers" for more information about Section 1115 waivers).
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Table 1. Examples of Medicaid Mandatory and Optional Benefits for Traditional Benefits and Alternative Benefit Plans (ABPs)
Sources: Title XIX of the Social Security Act and related federal guidance.
Notes: ABP = alternative benefit plan; EPSDT = early and periodic screening, diagnostic, and treatment services; FQHC = federally qualified health center.
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In general, when Medicaid enrollees have other sources of insurance/payment (including Medicare), Medicaid is the payer of last resort. States can provide Medicaid coverage to individuals whose existing health insurance is limited (sometimes referred to as underinsured). In these cases, Medicaid wraps around that coverage (i.e., additional coverage for services covered under Medicaid but not under the other source of coverage)./39
Primary Benefit Packages
The following sections summarize the primary benefit packages: Medicaid traditional benefits and ABPs. Then, there is a section comparing benefits included in traditional Medicaid coverage and those that are commonly included in ABPs.
Traditional Medicaid Benefits
Traditional Medicaid benefits include primary and acute care as well as LTSS./40 The traditional Medicaid program requires states to cover a wide array of mandatory services (e.g., inpatient hospital care, lab and x-ray services, physician care, nursing facility services for individuals aged 21 and older). In addition, states may provide optional services, some of which commonly are covered are personal care services, prescription drugs, clinic services, physical therapy, and prostheses.
States define the specific features of each covered benefit within four broad federal guidelines:
* Each service must be sufficient in amount, duration, and scope to reasonably achieve its purpose. States may place appropriate limits on a service based on such criteria as medical necessity.
* Within a state, services available to the various population groups must be equal in amount, duration, and scope. This requirement is the comparability rule.
* With certain exceptions, the amount, duration, and scope of benefits must be the same statewide, referred to as the statewideness rule.
* With certain exceptions, enrollees must have freedom of choice among health care providers.
The breadth of coverage for a given benefit can, and does, vary from state to state, even for mandatory services. For example, states may place different limits on the amount of inpatient hospital services a beneficiary can receive in a year (e.g., up to 15 inpatient days per year in one state versus unlimited inpatient days in another state)--as long as applicable requirements are met regarding sufficiency of amount, duration, and scope; comparability; statewideness; and freedom of choice. Exceptions to state limits may be permitted under circumstances defined by the state.
Alternative Benefit Plans
As an alternative to providing all the mandatory and selected optional benefits under traditional Medicaid, the Deficit Reduction Act of 2005 (DRA; P.L. 109-171) gave states the option to enroll state-specified groups in what was referred to as benchmark or benchmark-equivalent coverage at the time of enactment but currently are called alternative benefit plans (ABPs)./41 Under ABPs, states must provide comprehensive benefit coverage that is based on a coverage benchmark rather than a list of discrete items and services as under traditional Medicaid./42
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38 LTSS benefits are available in institutional and home and community-based (HCBS) settings, and they include nursing facility services, home health, case management services, personal care services, and private duty nursing, among others.
39 For related details, see federal regulations at 42 C.F.R. 433.135, 433.138, and 433.152.
40 In general, traditional Medicaid benefits are listed under the definition of medical assistance at SSA Section 1905.
41 See generally SSA Section 1937.
42 For more information on Medicaid Alternative Benefit Plan Coverage, see CRS Report R45412, Alternative Benefit Plan Coverage: Frequently Asked Questions.
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ABPs must qualify as either benchmark or benchmark-equivalent coverage. Under benchmark coverage, ABP benefits are at least equal to one of the statutorily specified benchmark plans (i.e., one of three commercial health insurance products, or a fourth "Secretary-approved" coverage option)./43 Under benchmark-equivalent coverage, ABP benefits include certain specified services and the overall benefits are at least actuarially equivalent to one of the statutorily specified benchmark coverage packages.
Unlike traditional Medicaid benefit coverage, coverage under an ABP must include at least the essential health benefits (EHBs) that most plans in the private health insurance market are required to furnish./44 In addition, ABPs must include a variety of specific services, including services under Medicaid's EPSDT benefit;/45 family planning services and supplies; and both emergency and nonemergency transportation to and from providers. In general, the EHBs do not include LTSS. However, states may choose to include LTSS in their ABPs.
Under ABPs, states are permitted to waive the statewideness and comparability requirements that apply to traditional Medicaid benefits. This flexibility permits the state to define populations that are served and the specific benefit packages that apply.
States that choose to implement the ACA Medicaid expansion are required to provide ABP coverage to the individuals eligible for Medicaid through the expansion (with exceptions for selected special-needs subgroups). Specific populations are exempt from mandatory enrollment in ABPs (e.g., those with special health care needs such as disabling mental disorders or serious and complex medical conditions). These individuals must be offered the option of a benefit plan that includes traditional Medicaid state plan services, which may include LTSS.
Comparing Traditional Medicaid Benefits to ABPs
It is difficult to draw comparisons about the ways in which traditional Medicaid benefits are similar to and different from ABP benefits, because the scope of each type of benefit package varies from state to state. This variability is largely a reflection of state choices in covering optional benefits, in addition to the mandatory Medicaid state plan benefits, as well as state choices for the base-benchmark for the EHBs that must be covered under ABPs.
Differences in the federal laws regarding the scope of required benefits under traditional Medicaid and those required under ABPs highlight some common differences between the two types of benefits packages. For example, care in a nursing facility for individuals over the age of 21 is a required benefit under traditional Medicaid, whereas nursing home care is not a required benefit under ABPs.
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43 The three ABP benchmark commercial insurance products include (1) the standard
44 The 10 essential health benefits required under the ACA include (1) ambulatory patient services, (2) emergency services, (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services (including behavioral health treatment), (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care. For more information about EHBs, see CRS In Focus IF10287, The Essential Health Benefits (EHB).
45 The early and periodic screening, diagnostic, and treatment (EPSDT) program is a required benefit for nearly all children (under the age of 21) who are enrolled in Medicaid. It covers health screenings and services, including assessments of each child's physical and mental health development; laboratory tests (including lead blood level assessment); appropriate immunizations; health education; and vision, dental, and hearing services. The screenings and services must be provided at regular intervals that meet "reasonable" medical or dental practice standards. States are required to provide all federally allowed treatment to correct problems identified through screenings, even if the specific treatment needed is not otherwise covered under a given state's Medicaid plan.
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Conversely, rehabilitative and habilitative services and devices, preventive and wellness services, and mental health and substance use disorder services are all required benefits under ABPs. By contrast, these APB benefit categories do not correspond to specific benefit categories under traditional Medicaid. Rather, services in these benefit categories could be covered under different benefit categories, such as physician services or physical, occupational, and speech therapy services.
To further illustrate this point, behavioral health (or any similar term) is not explicitly included among the required benefit categories under traditional Medicaid. Instead, most types of behavioral health benefits (e.g., the services of clinical psychologists and licensed clinical social workers and prescription drugs) are optional. By contrast, behavioral health benefits are mandatory under ABPs because "mental health and substance use disorder services, including behavioral health treatment" are included among the EHBs.
Other State Plan Coverage Options
States also have statutory options to include other types of coverage that targets specific benefits for certain subpopulations. The Medicaid statutory authority for these coverage options falls under different sections of Title XIX of the SSA than those for traditional Medicaid benefits or ABPs, discussed above. For certain coverage options, states are not required to comply with specific federal requirements that apply to other state plan benefits (e.g., "statewideness," "comparability," any other Medicaid requirement as determined necessary by the HHS Secretary to implement the state plan option). These state plan options also may have additional requirements for state Medicaid program administration, financing, and delivery. The following provides selected examples of these coverage options:/46
* State Plan HCBS Option (SSA Section 1915(i)) - Allows states to offer a broad range of HCBS, similar to the Section 1915(c) HCBS waiver program authority (see section entitled "Medicaid Program Waivers"). States can make this option available to specific populations (e.g., children or adults with mental health and substance use disorders; individuals with developmental disabilities) and can vary the benefit package, as well as the amount, duration, or scope of the benefits for each population.
* Community First Choice (CFC) State Plan Option (SSA Section 1915(k)) - Allows states to offer community-based attendant services and supports to certain eligible beneficiaries who need LTSS and meet institutional care criteria. Among other requirements, states must provide these services on a statewide basis and in the most integrated community-based setting. States receive increased FMAP rates for this state plan option.
*
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46 For more information about these coverage options see CRS Report R43328, Medicaid Coverage of Long-Term Services and Supports.
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Medicaid Service Spending
Figure 4 below shows the nationwide distribution of Medicaid expenditures across broad categories of service for FY2021. These data illustrate that 55% of benefit spending was for capitated payments under managed care arrangements (see "Service Delivery Systems" for information about managed care). The remaining 45% of benefit spending was fee for service (FFS), and FFS spending on acute care services and LTSS each accounted for 18% of Medicaid benefit spending.
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Figure 4. Medicaid Medical Assistance Expenditures, by Service Category (FY2021)
Source: CRS analysis of CMS, Form CMS-64 Data as reported by states to the Medicaid Budget and Expenditure System, as of
Notes: DSH = disproportionate share hospital.
Medical assistance expenditures exclude Medicaid expenditures for administrative activities. Managed care includes capitated payments under which Medicaid enrollees get most or all of their services through an organization under contract with the state (see "Service Delivery Systems" for information about managed care).
Supplemental payments are Medicaid payments made to providers that are separate from and in addition to the standard payment rates for services rendered to Medicaid enrollees, and DSH payments are one type of supplemental payment. Acute care services include prescription drugs.
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Continues with Part 2 of 2
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The report is posted at: https://crsreports.congress.gov/product/pdf/R/R43357
Congressional Research Service: 'Black Lung Program, Black Lung Disability Trust Fund & Excise Tax on Coal' (Part 1 of 2)
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