Medicaid and Children’s Health Insurance Program (CHIP) Provisions in America’s Affordable Health Choices Act of 2009 (H.R. 3200)

Summary

The 111th Congress has devoted considerable effort to health reform that seeks to increase health insurance coverage for more Americans and help to control increasing costs, while improving quality and patient outcomes. Health reform legislation, America’s Affordable Health Choices Act of 2009 (H.R. 3200), was introduced in the House on July 17, 2009, and ordered reported by the Committee on Energy and Commerce on July 31, 2009. H.R. 3200 proposes sweeping reforms of the health care delivery system, which are described in the three major components of H.R. 3200 designated Divisions A, B, and C. Division A, “Affordable Health Care Choices,” focuses on reducing the number of uninsured, restructuring the private health insurance market, setting minimum standards for health benefits, and providing financial assistance to certain individuals and, in some cases, small employers. Division B, “Medicare and Medicaid Improvements,” proposes modifications to the largest two health insurance programs to make them consistent with the changes proposed in Division A and to amend other provisions in existing federal statute. Division C, “Public Health and Workforce Development,” would amend and expand existing health professions and nursing workforce programs.

This report summarizes the 34 Medicaid provisions in Division B of H.R. 3200. Due to the breadth of the changes proposed in H.R. 3200, some provisions of Divisions A and C also could affect Medicaid, but these are not Medicaid-specific. Division B also introduces a number of technical changes intended to improve quality of care, reduce federal and state expenditures, and address coverage gaps. The Division B provisions would introduce changes or new provisions to Medicaid eligibility; benefits; financing; waste, fraud, and abuse; payments to territories; demonstrations and pilot programs; and other miscellaneous Medicaid components. A major provision in Division B would expand Medicaid eligibility for traditional and non-traditional (mostly childless adults) beneficiary categories to 133¿% of the Federal Poverty Level. States would receive 100% federal medical assistance percentage (FMAP) matching rates for these expanded beneficiary categories for two fiscal years (FY2013-FY2014) and then 90% thereafter (FY2015 and beyond). Another eligibility expansion would permit states the option of covering extremely high prescription drug expenditures for individuals already eligible for Medicaid when their incomes exceeded customary levels. Under benefits, Medicaid programs would be required to cover preventive services, receive higher FMAP rates to cover translations or interpretation services, and tobacco cessation products would be removed from Medicaid’s excluded drug list.

There are a number of financing changes that would affect Medicaid under H.R. 3200, including reducing Medicaid disproportionate share hospital (DSH) payments by $10 billion by FY2019, increasing prescription drug rebates, and extending prescription drug discounts to Medicaid-managed care enrollees. There are a number of additional waste, fraud, and abuse provisions affecting Medicaid and the Children’s Health Insurance Program (CHIP). These provisions include requirements to deny payment for health care acquired conditions, require new Medicaid Integrity Program evaluations and reports, increase the amount of time states would have to repay overpayments to one year when the overpayments were due to fraud, and require states to implement a national correct coding initiative, similar to the Medicare program. Under H.R. 3200, spending caps for the territories would be increased, and a series of demonstrations would be approved for Medicaid, including a medical home program, an accountable care organization program, and a program for stabilization of emergency medical conditions by privately owned or operated mental disease institutions.