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  • Washington Highlights

    MACPAC Meets to Discuss Future of CHIP and DSH Payments

    Jason Kleinman, Senior Legislative Analyst, Govt. Relations

    The Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC) Sept. 17 met to begin its 2015-2016 meeting cycle. The commission outlined its agenda for the upcoming year and discussed the future of CHIP and Medicaid Disproportionate Share Hospital (DSH) payments.

    MACPAC Chair Diane Rowland provided an overview of topics the commission plans to study this year, which include: the impact of the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) on Medicaid and CHIP, transitioning coverage from CHIP to Medicaid, a congressionally-required report on DSH payments, improving delivery reform and payment systems, and identifying where more data is needed to reduce administrative burdens.

    The meeting continued with several sessions focused on adequate and affordable coverage for children. Commission staff identified five potential approaches to providing coverage to low and moderate income children when CHIP funding expires at the end of fiscal year (FY) 2019:

    • Enhance exchange coverage;
    • Expand the minimum Medicaid eligibility level for children;
    • Replace CHIP with a new bridge program;
    • Extend CHIP permanently; and
    • Retain the current law with no changes.

    Commission staff then provided an analysis of a recent study on ten states that transitioned children from separate CHIP to Medicaid coverage, known as “stairstep children.” The study identified several strategies and best practices that states used in their transitions, including: proactively addressing continuity of care, engaging in early and coordinated planning, communicating early with families, and engaging a variety of stakeholders. The study also noted that the biggest challenge was getting information systems and technology ready for the transition, especially changes to eligibility systems.

    The meeting continued with estimates of children’s coverage in calendar year (CY) 2016 under different policy approaches. According to MACPAC’s March 2015 Report to Congress, approximately 1.1 million children would become uninsured if separate CHIP funding ended in CY 2016 [see Washington Highlights, March 20]. Using modeling, the commission found that number would decrease to 1 million children if the “family glitch” was fixed, and by 476,000 children if the glitch was fixed and there were no premiums for CHIP-eligible children. Additionally, the modeling found the number of uninsured children would drop to 717,000 if mandatory Medicaid was expanded to 175 percent of the federal poverty level (FPL) and 445,000 children if it was increased to 200 percent FPL.

    The commission also delved into its upcoming report to Congress on DSH payments, an annual requirement starting Feb.1, 2016. The report will focus on the relationship of DSH allotments to the following factors:

    • Changes in the number of uninsured individuals;
    • The amount and sources of hospitals’ uncompensated care costs; and
    • Hospitals with high levels of uncompensated care that also provide essential community services.

    Almost half of all hospitals received DSH payments in 2010, and 25 percent of DSH hospitals must receive DSH payments since they have either high Medicaid volume or large low-income utilization rates.

    The commission discussed potential data and payment related issues that may be addressed in the report. There are concerns that the primary source of Medicaid related cost information is the Medicaid DSH audit data, which does not include intergovernmental transfer (IGT) payments and can be delayed by up to five years. Concerns were also raised regarding how DSH payments are calculated for hospitals. Draft recommendations for the DSH report are expected in October, with final recommendations by December.