In 2014, Medicaid planning could take flight. (AP photos/Lefteris Pitarakis)

Officials in California say federal Patient Protection and Affordable Care Act (PPACA) regulations could help Medicaid planners squeeze more money out of Medicaid nursing home benefits programs.

The officials at the California Department of Health Care Services and Covered California, the state’s PPACA exchange program, talk about their fear in a comment sent to the federal Centers for Medicare & Medicaid Services (CMS).

The California officials were writing about the draft version of a new set of final CMS regulations“Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges: Eligibility and Enrollment” (CMS-2334-F).

CMS officials developed the regulations to explain how they think state Medicaid programs and other state health programs, such as the Children’s Health Insurance Program (CHIP), ought to interpret the PPACA “essential health benefits” (EHB) standards.

CMS officials have set “alternative benefit plan” (ABP) benefits standards for Medicaid and CHIP plans that are similar to commercial plan EHB standards but different in some respects.

PPACA opponents continue to try to block or delay implementation of the law. If the law takes effect on schedule and works as backers hope, it will provide extra money for states that agree to expand eligibility for Medicaid health programs to moderate-income adults.

When adults become eligible for Medicaid simply because of Medicaid expansion, states can use their older, possibly less generous benefits standards for those newly eligible adults rather than the EHB-like ABP standards.

But PPACA drafters exempted some groups of new enrollees, including “medically frail” people, from the provision that gives states flexibility about which benefits standard to use.

Medically frail adults who become eligible for Medicaid can choose whether to use a state’s old Medicaid benefits package standard or the new ABP standard, CMS officials said in a preamble to the new final rule.

Another PPACA provision requires exchanges and Medicaid programs to base program eligibility decisions solely on applicants’ income, without consideration of assets.

California health department and exchange officials told CMS that states “should be able to employ traditional Medicaid disability assessments in evaluating the medically frail exemption, and limit receipt of long-term care services and supports to those undergoing asset testing.”

Otherwise, Medicaid programs could end up having to provide long-term care (LTC) benefits for many new Medicaid enrollees, the California officials said.

Congress never intended PPACA to become a vehicle for dramatically expanding state Medicaid coverage of LTC costs, officials said.

“Access to the services not contemplated for the expansion population by Congress must continue to be subject to asset testing,” the California officials said. “We recommend revision to the medically frail exemption to align with the disability assessments already in use within Medicaid.”

CMS officials declined to change their draft regulation to reflect the California officials’ concerns.

CMS officials said they believe they have the authority under PPACA to expand the term “medically frail” to include many populations that have “high medical needs” resulting from conditions such as disabilities or other complex medical conditions.

CMS officials declined to let states use traditional Medicaid disability assessments to evaluate medically frail people and limit receipt of LTC services.

“We believe the current construct of the medically frail exemption category is in keeping with legislative construct,” officials said.

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