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MACPAC Meets to Discuss Future of CHIP funding, Medicaid Premium Assistance, and Mandated DSH Study

September 19, 2014— The Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC) September 18-19 met to discuss their 2014-2015 agenda, along with a number of pertinent topics including the future of CHIP funding, Medicaid expansion via premium assistance, and plans for a new study on disproportionate share hospital (DSH) payments.

At the outset of the meeting, Chair Diane Rowland outlined key topics that the commission plans to address during its 2014-2015 work year, including: policy and budgetary implications of the future of CHIP funding, updates on the expansion of Medicaid, a mandated study on DSH payments, the role of managed care for disabled Medicaid beneficiaries, greater focus on the dual-eligible population, and additional review of the primary care provider Medicaid payment increase.

Commissioners and staff began the meeting by reviewing the current status of CHIP and outlined key policy questions and implications of the program moving forward. Federal CHIP funding was extended under the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) into 2015, and states were required to maintain eligibility standards through 2019. Final CHIP allotments from the federal government will be distributed to the states starting October 2014. Unless Congress extends the program, states will begin to exhaust their CHIP balances by October 2015.

Legislation has been introduced in both the House and Senate to extend CHIP funding for an additional four years. Over the next year, MACPAC plans to discuss alternative sources of coverage for CHIP enrollees, CHIP enrollee experiences with network adequacy, and the future impact of state and federal budgets if CHIP funding is renewed or not renewed.

To prepare for the possibility of transitioning up to 8 million children to other sources of coverage if CHIP is not extended, the commission heard from three panelists from states that recently made similar transitions in their CHIP populations. Arizona and California both used Section 1115 waiver authority to transition children to Medicaid-expansion CHIP, while New Hampshire’s transition was through a State Plan Amendment. Each state had different transition and monitoring plans, but all three made ensuring provider capacity and continuity of care a priority.

The commission continued its discussion from May 2013 on the “private option,” or the use of Medicaid funds to purchase health coverage on the private market (see Washington Highlights, May 24, 2013). Three panelists spoke about their experiences using waivers to expand Medicaid in Arkansas and New Hampshire. Over the year, the commission will consider if the federal government should ensure that states provide adequate oversight, the extent to which benefits and provider network rules for Medicaid and qualified health plans should be aligned, and whether premium assistance programs are cost effective compared to traditional Medicaid coverage.

The meeting also included a discussion of a MACPAC report on the Medicaid DSH reductions. Staff provided a review of the ACA-required reductions to Medicaid DSH allotments based on the expected decline in the number of uninsured. While the reductions were supposed to begin in fiscal year (FY) 2014 and end after FY 2020, subsequent legislation has delayed the cuts so they will now go into effect between FY 2017 and FY 2024. Under current law, annual reductions start at $1.8 billion in 2017 and then increase to reductions of $4.7- $5 billion annually between FY 2018 - FY 2024.

Starting in FY 2016, MACPAC has to submit an annual report to Congress regarding Medicaid DSH that includes data relating to changes in the number of uninsured, sources of hospitals’ uncompensated care costs, and that would identify hospitals with high levels of uncompensated care.

Staff discussed the extent to which existing data sources can be used and the need to identify appropriate sources for data necessary to answer policy questions regarding the effects of Medicaid DSH reductions on states and hospitals, and whether the estimated DSH reductions align with increased numbers of uninsured and reductions in uncompensated care. MACPAC plans to consult with stakeholders including providers, federal agencies, states, and researchers, throughout the process of identifying and evaluating data sources and estimating DSH allocations as needed to draft the required report to Congress.


Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806

Scott Wetzel, M.P.P.
Lead, Quality Reporting
Telephone: 202-828-0495

Allison M. Cohen, J.D., LL.M.
Senior Policy and Regulatory Specialist
Telephone: 202-862-6085


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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806