Per Capita Caps: Been There, Done That, They Don't Work

February 17, 2017

Per Capita Caps: Been There, Done That, They Don't Work

History shows the pitfalls of transforming current open-ended federal funding of the Medicaid program into “per capita cap” financing. The program will inevitably shrink, requiring cuts to vital health care services and forcing vulnerable Floridians out of the program.

Governor Rick Scott has indicated his interest in radically changing the financing formula for Florida’s Medicaid program through “per capita caps.”

Florida currently has access to open-ended federal funding, which pays more than half (61 percent) of Medicaid costs. Using per capita caps, the federal government would no longer reimburse the state based on the full cost of care. Instead, the state would only receive a portion of the cost up to a capped amount per beneficiary.

Such a financing scheme is fraught with pitfalls, as highlighted in a recent New England Journal of Medicine article. The authors looked at publicly financed medical care in the late ‘50s, prior to the adoption of the Medicaid program. At that time, states were directly reimbursing providers for care through per capita cap reimbursement called “medical vendor payments” (or MVPs).

With MVPs, the states had strong incentive to minimize per-enrollee spending. But what were the true costs of this funding scheme?

States kept spending low by excluding broad categories of vulnerable populations from medical care (e.g. millions of poor children) and either excluded or severely limited coverage for vital services (e.g. hospitalization, doctor visits and prescriptions). As a result, the sickest patients in need of the most care were shut out. A House Committee on Ways and Means report from that time analyzed per capita cap spending and concluded that “a majority of the states are not spending enough through their assistance programs to provide adequate medical care…”

Florida lawmakers must not let history repeat itself. Medicaid per capita caps would be an extremely “bad deal” for the state.

No Medicaid terminations from March 2020 through the end of the federal public health emergency. The national public health emergency has existed since January 27, 2020 and has been renewed by the Secretary of the U.S. Department of Health & Human Services in 90-day increments since that time. The most recent renewal is effective January 16, 2022.

On March 31, 2020, AHCA alerted providers and DCF posted on the ACCESS website that:

No Medicaid recipient will lose Medicaid eligibility during the COVID-19 public health emergency (unless the individual is no longer a state resident or request voluntary termination); under the newly enacted Families First Coronavirus Response Act, a state is prohibited from ending coverage for recipients enrolled as of March 18th for the duration of the public health emergency if the state opts to obtain an enhanced federal Medicaid match.

AHCA is working to notify recipients who may have received a termination notice in the month of March that their benefits will be reinstated.

An FAQ released by federal CMS provides some examples of Medicaid eligibility groups protected under these "no termination" requirements including: former foster care youth aging out when they turn 26; youth aging out of children's eligibility when they turn 19; individuals who become ineligible for SSI; individuals no longer qualifying for Qualified Medicare Benefits (QMB). In a May 5, 2020 update, CMS states that this “no termination” requirement also applies to medically needy individuals determined eligible during the public health emergency even if they do not continue to meet their monthly share of cost in subsequent months. This protection extends through the last day of the month the public health emergency ends.

On October 28, 2020, federal CMS issued a new interim final rule weakening the continuous coverage, “no termination” requirement. In states like Florida that have opted to cover full benefits for lawfully residing children in the first 5 years after entry into the United States, once they turn 18, states are now required to limit their coverage to emergency services. In addition, states are now permitted to reduce optional benefits such as dental coverage or increase cost-sharing such as requiring nursing home residents to contribute more to their costs of care. But in Florida this type of change would require the Legislature to amend state Medicaid law.

Redetermination/recertification times are reinstated. As of October 1, 2020 AHCA's website is alerting recipients that the Department of Children and Families is now mailing letters for case reviews to check if a household is still eligible for Medicaid and/or Medically Needy. AHCA is urging people receiving these letters to take steps now to re-apply. But note, Medicaid coverage will not end during the COVID-19 Public Health Emergency. In January 2021 DCF conducted one-year “automated renewals” for people whose sole income is social security and SSI and are enrolled in an SSI-related Medicaid program (e.g., MEDS/AD, Medically Needy and Medicare Savings Programs). People getting VA income were not included in the automated renewal.

Extended application time. Effective with applications filed in February 2020, the time for submitting documentation required to process an application is extended for 120 days from the date of the application and eligibility will still be effective the first day of the month the application was received. Effective July 1, 2021, this policy has been rescinded. Medicaid applications submitted on or after July 1, 2021 may be denied on the 30th day after application or the day after verification information is due. Applications filed prior to July 1, will be allowed 120 days to provide requested verification to establish Medicaid eligibility.

‍Exclusion of additional unemployment payments in determining eligibility. The $600/week of additional unemployment insurance payments under the CARES Act will not be counted as income in determining Medicaid eligibility. (However, these payments will be counted as income in determining marketplace subsidy calculations.)

Coverage of Medicaid services during the state of emergency

Coverage of all medically necessary services to COVID-19 testing and treatment.

Waiver of limits on services that must be exceeded to maintain the health and safety of recipients diagnosed with COVID-19 or when necessary to maintain a recipient safely in their home

Waiver of prior authorization requirements for hospital, physician, advanced practice registered nursing, physician assistant, home health services and durable medical equipment and supplies. As of June 19, 2020, AHCA reinstated prior authorization requirements for all of these services.

Waiver of copayments for all services

Waiver of limits on early prescription refills, except for controlled substances

Coverage of a 90-day supply of maintenance prescriptions when available at the pharmacy

Reimbursement of out-of-state providers providing medically necessary services to Florida Medicaid beneficiaries. As of July 1, 2021, the availability of provider “provisional enrollment” for in-state and out-of-state providers will end.

120 day extension of time to request fair hearings. As of July 1, 2021, the extended timeframe ends and the standard timeframes available to recipients to submit an appeal or request a hearing will be reinstated.

Delay of fair hearings only in those instances when the recipient is continuing to receive services pending the outcome of the hearing

COVID-19 Vaccines for Medicaid Enrollees. In an executive order published March 16, 2021 Governor DeSantis revised the vaccine distribution plan, which applies to the general public including Medicaid enrollees, to lower the age requirement to 40 effective March 29, 2021 and then effective April 5, 2021 all Floridians are eligible to receive any COVID-19 vaccination approved by the Food and Drug Administration.

Medicaid enrollees eligible to receive the vaccine may visit myvaccine.fl.gov to find a location distributing the vaccine and to schedule an appointment.

On March 12, 2021, AHCA published instructions for Medicaid enrollees on how to obtain Medicaid transportation once they have scheduled an appointment for a vaccine. AHCA states: "Florida Medicaid will take you to get the COVID-19 vaccine at no cost. All you need to do is set up a time to get your vaccine. Next, let your Medicaid plan know you need a ride and they will take care of the rest. If you are not enrolled in a plan, call the Medicaid Helpline at 1-877-254-1055 to find out the name and phone number for a transportation service."

The state has also recently launched a new email system to help bring COVID-19 vaccines to homebound seniors. Seniors will be able to sign up to have the vaccine come to them by emailing a request to HomeboundVaccine@em.myflorida.com.

AHCA has posted Medicaid Alerts and FAQs providing more detail on Medicaid service changes in response to COVID-19. They address a wide range of topics including, but not limited to: telemedicine guidance for medical, behavioral health, and early intervention services providers; long-term care provider network flexibilities allowing more types of providers to deliver specified long term care services; and continuity of care for adult day care center enrollees during the time these centers are closed.

AHCA is loosening coverage restrictions for behavioral health services. Effective May 5, 2020, all prior authorization requirements for mental health or substance use disorder treatment are waived and service limitations (frequency and duration) are lifted. For behavioral analysis services, current authorizations will be extended through an "administrative approval process" which does not require providers to reassess beneficiaries currently getting services. Effective July 1, 2021 service limits will be reinstated for behavioral health services and effective July 15, 2021 Medicaid prior authorization requirements will be reinstated for behavioral health services.

Per a May 29, 2020 provider alert, during the state of emergency AHCA will be reimbursing providers for telemedicine well-child visits provided to children older than 24 months through age 20. Providers are directed to actively work to schedule follow-up in-person visits to administer immunizations and other physical components of the exam which cannot be accomplished through telemedicine.

The public charge rule will not be applied to immigrants’ use of Medicaid benefits for COVID-19 testing and treatment.

Coverage of home and community-based waiver services (HCBS) - In response to the public emergency, Florida obtained approval from the federal government to make changes in HCBS waiver programs, including the Long Term Care and Developmental Disabilities programs. The changes are effective retroactively from January 27, 2020 to January 26, 2021. Details can be found here. They include, but are not limited to:

permitting virtual evaluations, assessments and care planning meetings in lieu of face to face meetings and use of electronic signatures;

lifting service limits in order to address health and welfare issues of enrollees;

adjusting service prior authorization requirements;

temporarily expanding the settings where services can be provided;

allowing payments for support services provided to enrollees in hospital or short- term institutional settings; and

prohibiting visitors in certain residential settings to minimize the spread of infection.

Note on COVID-19 testing, treatment, and vaccines for the uninsured. Florida has not opted to receive 100 percent federal Medicaid funding for COVID-19 testing of people without health insurance. Under the 2021 American Rescue Plan Act this option has been expanded to cover COVID-19 treatment and vaccines for the uninsured as well. Since the state has not taken up this option Floridians must look to an uneven patchwork of free testing, treatment, and vaccine resources scattered around the state. AHCA advises that uninsured people may receive free testing from their county health department or a federally qualified health center and that “many communities provide testing for free for individuals who do not have insurance. Please [click here] to find a test site in your area. Uninsured individuals should ask before the test whether testing is free of charge." There are no state agency instructions on where uninsured people can receive free treatment. However, more information on possible sources for free treatment is available here.

Residency proof no longer required at some vaccine sites, “paving the way for migrants.” - On April 29, 2021 Surgeon General Rivkees issued a new public health advisory specifying that COVID-19 vaccines are available to “a Florida resident” or someone “who is present in Florida for the purpose of providing goods or services for the benefits of residents and visitors of the State of Florida.” This new policy applies to all state-run and federally supported vaccination sites. It rescinds an advisory issued in January that had restricted vaccinations to people who could show proof of Florida residency

2021 unemployment compensation claimants can access free or reduced cost health insurance through the ACA marketplace. The Affordable Care Act (ACA) Marketplace was re-opened in February 2021 to give people who need health insurance a new “special enrollment" opportunity to get covered. The 2021 American Rescue Plan eliminated or vastly reduced premiums for many people with low or moderate incomes.

Starting July 1, 2021, people who received or have been approved for unemployment compensation for any week beginning in 2021 can access free or reduced cost comprehensive health insurance plans through the ACA marketplace. This benefit is available regardless of someone's current income. To get this benefit, people must enroll in the marketplace no later than August 15, 2021. For help with enrollment, contact Covering Florida at 877-813-9115.

American Rescue Plan Act Changes. The American Rescue Plan Act of 2021 extended PEUC and PUA benefits through the week ending September 6, 2021. It also increased the maximum duration of PEUC benefits ($300 a week) to 53 weeks and the maximum duration of PUA to 79 weeks. Although PEUC and PUA did not end until September 6, 2021, Florida withdrew from the Federal Pandemic Unemployment Compensation Program (FPUC) effective June 26, 2021. FPUC provided persons who were out of work due to COVID-19 with an additional $300 a week in unemployment insurance.

Reemployment Assistance weeks reverted to 12 effective January 1, 2022. DEO determines the maximum number of weeks available to RA claimants based on a statutory formula that looks at the average unemployment rate for the most recent third calendar year quarter (i.e., July, August, and September). Based on the downturn in unemployment, the maximum number of weeks for RA reverted to 12 effective January 1, 2022.

RA work-search and work registration requirements reinstated on May 30, 2021. Persons filing an application for RA benefits beginning March 15, 2020, are not required to complete work registration in Employ Florida through May 29, 2021. In addition, work search requirements for individuals requesting benefits for the weeks beginning March 15, 2020, were also reinstated on May 30, 2021.

RA biweekly reporting requirements reinstated. Although previously waived, biweekly reporting was reinstated effective May 10, 2020. DEO’s guide to claiming weeks is here.

Mobile app deployed. DEO has deployed a mobile app for RA applications.

‍DEO announces extended benefits. DEO announced implementation of Extended Benefits (EB).

Resources and guidance. For a list of resources and guidance from the United States Department of Labor on unemployment insurance and COVID-19, go here.

For DEO’s “Reemployment Assistance Frequently Asked Questions and Additional Resources,” updated 12/30/2020, go here.

For DEO’s latest claims data, go here.

‍

On March 31, 2020, AHCA alerted providers and DCF posted on the ACCESS website that:

No Medicaid recipient will lose Medicaid eligibility during the COVID-19 public health emergency (unless the individual is no longer a state resident or request voluntary termination); under the newly enacted Families First Coronavirus Response Act, a state is prohibited from ending coverage for recipients enrolled as of March 18th for the duration of the public health emergency if the state opts to obtain an enhanced federal Medicaid match.

AHCA is working to notify recipients who may have received a termination notice in the month of March that their benefits will be reinstated.

An FAQ released by federal CMS provides some examples of Medicaid eligibility groups protected under these "no termination" requirements including: former foster care youth aging out when they turn 26; youth aging out of children's eligibility when they turn 19; individuals who become ineligible for SSI; individuals no longer qualifying for Qualified Medicare Benefits (QMB). In a May 5, 2020 update, CMS states that this “no termination” requirement also applies to medically needy individuals determined eligible during the public health emergency even if they do not continue to meet their monthly share of cost in subsequent months. This protection extends through the last day of the month the public health emergency ends.

On October 28, 2020, federal CMS issued a new interim final rule weakening the continuous coverage, “no termination” requirement. In states like Florida that have opted to cover full benefits for lawfully residing children in the first 5 years after entry into the United States, once they turn 18, states are now required to limit their coverage to emergency services. In addition, states are now permitted to reduce optional benefits such as dental coverage or increase cost-sharing such as requiring nursing home residents to contribute more to their costs of care. But in Florida this type of change would require the Legislature to amend state Medicaid law.

Coverage of Medicaid services during the state of emergency

Coverage of all medically necessary services to COVID-19 testing and treatment.

Waiver of limits on services that must be exceeded to maintain the health and safety of recipients diagnosed with COVID-19 or when necessary to maintain a recipient safely in their home

Waiver of prior authorization requirements for hospital, physician, advanced practice registered nursing, physician assistant, home health services and durable medical equipment and supplies. As of June 19, 2020, AHCA reinstated prior authorization requirements for all of these services.

Waiver of copayments for all services

Waiver of limits on early prescription refills, except for controlled substances

Coverage of a 90-day supply of maintenance prescriptions when available at the pharmacy

Reimbursement of out-of-state providers providing medically necessary services to Florida Medicaid beneficiaries. As of July 1, 2021, the availability of provider “provisional enrollment” for in-state and out-of-state providers will end.

120 day extension of time to request fair hearings. As of July 1, 2021, the extended timeframe ends and the standard timeframes available to recipients to submit an appeal or request a hearing will be reinstated.

Delay of fair hearings only in those instances when the recipient is continuing to receive services pending the outcome of the hearing

Medicaid enrollees eligible to receive the vaccine may visit myvaccine.fl.gov to find a location distributing the vaccine and to schedule an appointment.

The public charge rule will not be applied to immigrants’ use of Medicaid benefits for COVID-19 testing and treatment.