Proposed ACA repeal legislation would impose new restrictions on state Medicaid programs

On March 6, 2017, the U.S. House of Representatives released its initial draft legislation to “repeal and replace” the Affordable Care Act (ACA).  The initial draft legislation would impose significant new restrictions on state Medicaid programs.

The legislation would impose annual per capita caps on federal financial participation (FFP) in state Medicaid expenditures beginning with the federal fiscal year (FFY) 2020 (October 1, 2019 – September 30, 2020).   The Centers for Medicare and Medicaid Services (CMS) would impose separate per capita caps for six Medicaid eligibility categories: the aged, blind, disabled, children, Medicaid expansion adults, and non-expansion adults.
For FFY 2020, CMS would calculate each state’s per capita caps for each of the above Medicaid eligibility categories based on the state’s per capita expenditures as reported to CMS for FFY 2016, plus an adjustment for 2016-2020 inflation using the medical care component of the consumer price index (M-CPI).  

No Medicaid FFP would be available for state expenditures in excess of the annual per capita caps in FFY 2020 and subsequent years, with specified exceptions for Medicaid administrative costs, disproportionate share hospital (DSH) payment adjustments, costs associated with partial benefit enrollees, and other cost categories CMS would not include in its per capita cost calculations. 

The legislation would also restrict state flexibility in several other areas: 
  • it would limit Medicaid presumptive eligibility determinations to children, pregnant women, and women with breast or cervical cancer;
  • it would repeal the 6 percentage point increase in the state’s Federal Medical Assistance Percentage (FMAP) rate for community-based attendant services under the ACA’s Community First Choice Option;
  • it would repeal (as of December 31, 2019) a state option under the ACA to expand Medicaid eligibility to certain adults and to obtain enhanced Federal matching rates for such persons;
  • it would curtail an ACA provision that was designed to provide equivalent financial assistance to states which elected Medicaid eligibility expansion before the ACA was fully implemented in 2014;
  • and it would require, beginning October 1, 2017, that states re-determine Medicaid eligibility for all Medicaid expansion enrollees at least every six months.