Expanding Medicaid Round Four: Utah’s Costly Exercise in Futility - Families Usa Skip to Main Content

Expanding Medicaid Round Four: Utah’s Costly Exercise in Futility

It has been nearly one year since Utah voters passed Proposition 3, a ballot initiative to fully expand Medicaid. Unfortunately, the state Legislature overrode Proposition 3 with the passage of S.B. 96. The legislation rejected the will of the people by limiting Medicaid expansion and requiring the state to pursue a prescribed series of restrictive Section 1115 waiver proposals. This process has turned into a costly year-long exercise in futility, resulting in the now fourth iteration of a Medicaid expansion plan. Since S.B. 96 was passed, Utah has had:

  • Three expansion Section 1115 waiver proposals (“bridge,” “per capita cap,” and “fallback option” proposals), all of which fall short of the intent of Proposition 3.
  • Two embarrassing rejections by the Centers for Medicare & Medicaid Services (CMS) of enhanced funding for a partial expansion and an enrollment cap.
  • One implementation of a partial expansion that wastes $6.6 million of state funds every month the state does not fully expand Medicaid.
  • Zero individuals with incomes between 101% and 138% of the federal poverty level (FPL) newly enrolled in Medicaid coverage.

Thankfully, state advocates had the foresight to predict these events and managed to salvage a portion of the voters’ original intent. This is most evident in the recently released fallback option waiver application, which — in light of CMS’ rejection of the state’s per capita cap waiver — proposes to fully expand Medicaid. The fallback option is an upgrade from the prior per capita cap proposal, which would have devastated the state’s Medicaid program, but it still includes numerous alarming provisions.

Why Is Utah Submitting the Fallback Option Waiver?

S.B. 96 requires Utah to submit the fallback option since it’s per capita cap proposal did not receive the necessary CMS approval. Utah plans to implement the fallback option by January 1, 2020, which is earlier than the July 1, 2020, deadline. For the fallback option to be implemented, Utah must receive approval for two provisions — work requirements and employer-sponsored insurance, both further discussed in the next section. Without approval, S.B. 96 requires Utah to implement a clean full expansion similar to Proposition 3. Utah is still required to propose additional provisions in the fallback option in regards to presumptive eligibility, lockout periods, accountable care organization benefits, sun-setting Medicaid expansion under certain circumstances, and enrollment caps. Unlike the work requirements and employer-sponsored insurance provisions, though, failure to receive approval for these provisions will not trigger a new phase with a clean full expansion.

What Is Utah Proposing?

As mentioned above, this proposal has promising elements. These include:

  • Full Expansion to 138% of the FPL by January 1, 2020: Utah estimates that full expansion would serve over 115,000 individuals within the first six months after implementation. This includes approximately 40,000 newly enrolled individuals with incomes between 101% and 138% of the FPL, 60,000 individuals with incomes between 0% and 100% of the FPL (37,000 were already enrolled under the expensive “bridge” partial expansion plan that was implemented in April 2019), and approximately 14,000 “targeted adults” with complex needs, described in further detail below.
  • Expansion of the Targeted Adult Group: Utah’s targeted adult group includes individuals who are experiencing homelessness, are justice-involved with a behavioral health issue, or have serious behavioral health issues. This proposal would make an estimated 7,000 more individuals eligible for this group and would set aside additional funds to finance their higher needs. Finally, individuals in this group are eligible for 12 months of continuous eligibility and dental benefits if they are receiving substance use disorder treatment.
  • Housing-Related Services: This proposal would allow Medicaid funds to help individuals secure, establish, and maintain a safe and healthy living environment. This would include items such as education on tenant rights, one-time security deposits, purchase of basic household items, and coordination of services. The tenancy support services would benefit an estimated 5,000 individuals, community transition services would benefit an estimated 5,000 individuals, and supportive living/housing services would benefit an estimated 1,000 individuals. Initially, these services would be available only to the targeted adult group.

In addition to these positive provisions, there is a lengthy list of concerning provisions aimed at restricting coverage under the thinly veiled guise of cost containment, including the following:

  • Work Requirements: Utah continues to pursue work reporting requirements, which studies have shown to be ineffective. This administratively complex policy doesn’t promote work, doesn’t improve health outcomes, and would result in coverage losses for Medicaid beneficiaries. Utah’s analysis assumes that 70% of the expansion population will meet an exemption to the policy. Of those who must comply, Utah believes 75% to 80% will comply. As a result, Utah expects at least 6,000 individuals in the expansion group to lose Medicaid coverage.
  • Employer-Sponsored Insurance: As described earlier, S.B. 96 makes the implementation of the fallback option conditional on CMS’ approval of the state’s request to require Medicaid-eligible individuals with access to employer-sponsored insurance (ESI) to enroll in ESI and not Medicaid. Utah estimates approximately 14,000 to 19,000 individuals will be eligible for an ESI plan and will enroll in that plan instead of Medicaid.
  • Cost Sharing: Under this proposal, individuals in the expansion population with incomes above 100% of the FPL will be required to pay premiums and copayments for non-emergent emergency department (ED) visits. Single individuals will be required to pay $20 per month in premiums, and married couples will be required to pay $30 per month. Individuals who fail to pay their premiums face disenrollment from Medicaid. Utah estimates approximately 40,000 individuals will be required to pay a monthly premium and that the state will take Medicaid coverage from 3% of them, or 1,200 individuals, due to failure to pay the monthly premium. Additionally, the state will require a $25 copay for nonemergency ED visits, a provision that is historically difficult to implement compared to other less punitive ED diversion strategies. Utah estimates that the state will collect 2,500 copays per month.
  • Enrollment Caps/Limits: Utah proposed an enrollment cap in August 2019, and CMS denied the state’s request, likening it to “partial expansion” in its request for enhanced federal match without providing coverage for the entire Medicaid expansion group. As directed by S.B. 96, Utah is again requesting to limit enrollment when projected costs exceed annual state appropriations. This previously rejected proposal would offer Utah another way to cut off Medicaid to eligible individuals.
  • Presumptive Eligibility: Presumptive eligibility allows qualified entities to make a preliminary eligibility determination for uninsured patients who need care. Under the current bridge waiver, a hospital can make presumptive eligibility determinations for the adult expansion population, but not for the targeted adult population. Utah is proposing to eliminate presumptive eligibility for all expansion populations, restricting a pathway to Medicaid coverage for approximately 500 to 750 individuals per month.
  • Children’s Benefits: Utah seeks a waiver to cut Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefits for adults ages 19 and 20 in its expansion population and targeted adult population. EPSDT covers vision and hearing screening and treatment (e.g., glasses or hearing aids), as well as basic dental, medical, mental health, and developmental services for children and young adults. EPSDT is not a high-cost benefit. Children have the lowest per-enrollee costs of any group covered by the Medicaid program.
  • Lockout Periods for Program Violations: Utah is also proposing a “lockout,” a six-month suspension of eligibility, for beneficiaries who commit a program violation. The state anticipates 750 individuals per year losing Medicaid coverage as a result of committing a program violation.
  • Additional State “Flexibilities”: Utah is requesting numerous additional provisions that allow the state to limit coverage or benefits through the rulemaking process, instead of through the Section 1115 waiver process in order to streamline the cuts. These provisions include, but are not limited to, the following:
    • Eliminating retroactive coverage for individuals between 100% and 133% FPL
    • Changing the benefit package.
    • Suspending housing supports to stay within state funding limits.
    • Suspending enrollment.
    • Delaying the first month of enrollment by one month for expansion adults with incomes over 100% of the FPL.
    • Limiting federal oversight of managed care in regards to actuarial rate review, contract review, directed payment compliance, and access requirements.

Conclusion

Nearly one year after Utah voters decided to fully expand Medicaid, Utah’s exercise in futility may be winding down. If approved, the fallback option offers Utahans expanded Medicaid coverage, but at a significant cost to beneficiaries whose coverage gains may be compromised.