What the Medicaid Expansion Under the ACA Means for All MCOs

Medicaid plans in some states will expand, putting pressure on plans’ primary care networks

Before the Affordable Care Act was enacted, state Medicaid programs were required to provide coverage to certain categories of low income people, such as children, pregnant women, the disabled, and the elderly. Childless adults under age 65 who were not pregnant or disabled were not required to be covered. A state could extend coverage if it wanted to pay the full cost. There have been wide variations in state Medicaid eligibility standards. For instance, in 2009, Medicaid eligibility thresholds for working parents ranged from a national low in Arkansas of 17 percent of the Federal Poverty Level (FPL) to a high in Minnesota of 215 percent of the FPL, leading to further concern about inequities in access to health care coverage.

Beginning Jan. 1, 2014, the federal government will pay 100 percent of the costs for expanding Medicaid up to 138 percent of FPL for those who are defined as newly eligible — people who would not have been eligible for Medicaid in the state as of Dec. 1, 2009, or were eligible under a waiver but not enrolled because of limits or caps on waiver enrollment.

This increase was expected to add some 17 million beneficiaries to Medicaid, but the Supreme Court has ruled that states can opt out of this expansion. Several states may decide not to move forward with the original ACA Medicaid expansion for political reasons or because of the anticipated financial and administrative burden.

Expected Medicaid enrollment increase

Source: Kaiser Family Foundation

For managed care organizations (MCOs), this change in Medicaid has three significant potential implications.

Depending on the state, there could be significant expansion in membership in Medicaid managed care organizations, but the exact amount depends on whether the state will expand its Medicaid program based on the ACA.

MCOs may have difficulty providing primary care physician (PCP) access for their members because of the increased burden of the Medicaid expansion as well as a shift of other uninsured people into managed care plans through state insurance exchanges. This may be most significant for Medicaid MCOs, given a recently published study in Health Affairs (http://bit.ly/MfUNPX) that found that 31 percent of physicians were unwilling to accept any new Medicaid patients, but this may shift, given the 2013 increase in Medicaid payments required by the ACA.

In the end, all MCOs will need to understand fully the implications of the ACA, especially with regard to the decrease in the number of uninsured people, as this will affect not only enrollment but provider access as well, which could have unintended consequences for MCOs.