In recent days, multiple stories about COVID-19’s disproportionate impact on African Americans have emerged, and from these stories, it is becoming increasingly clear that the nation’s medically underserved communities and populations are at the highest risk for coronavirus and its worst effects.
Congress has now enacted three pieces of legislation related to COVID-19: The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (CPRSA); the Families First Coronavirus Response Act (FFCRA); and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). A fourth bill is expected in the coming weeks. In addition, the HHS Centers for Medicare and Medicaid Services (CMS) has issued a series of Frequently Asked Questions (FAQs) that, among other things, deal with federal Medicaid policy.
Here we summarize the elements of the measures that address: Medicaid eligibility and coverage; coverage standards for private insurance; direct funding for community health centers; direct health funding to hospitals and other health care providers; and state and local grant funding.
1. What are the key changes in Medicaid eligibility and coverage policy?
The legislation makes a number of changes in Medicaid eligibility and coverage; some of these changes are direct, while others are conditions with which states must comply if they wish to receive enhanced federal Medicaid funding during the duration of the emergency.
Mandatory Testing without cost-sharing. The test to detect COVID-19 is covered under Medicaid’s mandatory laboratory benefit, but states have a good deal of latitude to impose cost-sharing even for mandatory benefits. Section 6004 of the Families First Coronavirus Response Act (FFCRA) mandates COVID-19 testing without cost-sharing for all Medicaid beneficiaries and defines testing to include the provider visit associated with testing. (Note that states always have the option to suspend all cost-sharing during the emergency period in recognition of the greater hardships facing low-income families. States can do this whether they operate through the normal state plan process or via a Section 1115 demonstration or a combination of the two.)
Testing and testing-related services. CMS guidance clarifies that in vitro diagnostic testing also includes serological tests. These tests are used to detect antibodies and are intended to determine whether a patient has already been infected with COVID-19. CMS also clarifies that “testing-related services” include services that are “directly related to the administration of an in vitro diagnostic product … or to the evaluation of a beneficiary for purposes of determining the need for such product, such as an X-ray.”
State option to cover the uninsured for COVID-19 testing. FFCRA creates a state option to cover all uninsured people for COVID-19 diagnostic testing and testing-related services. For purposes of being uninsured, the legislation classifies people enrolled in short term limited duration plans (that offer extremely limited coverage with high cost-sharing) as uninsured. The Federal government will cover 100% of the costs of testing and testing-related services for this optional population. States may request a retroactive effective date to adopt the optional COVID-19 group as early March 18, 2020. To date, only 4 states have received approval to extend coverage to this population.
Enhanced federal Medicaid funding. FFCRA provides for a 6.2 percentage point increase in federal Medicaid funding, applicable to state expenditures for most covered populations and services. This special funding increase is applicable to medical care expenses states incur between January 1, 2020, and the end of the quarter in which the public health emergency ends. In order to receive this enhanced federal funding, states must comply with a series of “maintenance of effort” requirements that establish extremely important protections for program beneficiaries.
First, states may not use more restrictive eligibility criteria, methodologies, or eligibility determination procedures than were in effect as of January 1, 2020. Furthermore, CMS guidance has clarified how these states should treat beneficiaries who are set to transition to a different eligibility group because they have, for example, aged out of their current group. States must continue providing coverage to these beneficiaries in their current eligibility group if transitioning to another group would result in a reduction in benefits. Second, states that require premium payments from some beneficiaries may not increase premiums above their January 1, 2020 levels (states without premiums, therefore, would not be able to introduce them either). Third, states are barred from terminating eligibility for anyone enrolled in the program as of the date of FFCRA’s enactment (March 18, 2020) or who become eligible during the declared emergency period. Disenrollment may happen only on a voluntary basis or only if someone is no longer a resident of the state. Thus, beneficiaries cannot be terminated for failure to pay premiums, and the state cannot seek recovery of unpaid premiums after the emergency ends. Finally, a state that accepts enhanced federal funding during the emergency may not impose any cost-sharing for either COVID-19 testing or treatment (including vaccines).
How are the territories treated? Under federal Medicaid law, federal funding for the U.S. trusts and territories is subject to annual upper limits. FFCRA raises these allotments as follows:
- Puerto Rico: $93 million increase for FY 2020, $90 million in FY 2021
- Virgin Islands: $2.7 million increase for FYs 2020 and 2021 each
- Guam: $3.9 million increase for FYs 2020 and 2021 each
- Northern Mariana Islands: $3.1 million increase for FYs 2020 and 2021 each
- American Samoa: $2.3 million increase for FYs 2020 and 2021 each
2. What coverage policies apply to private insurers and employer-sponsored health plans?
FFCRA, as clarified by the CARES Act, requires private health insurers and employer-sponsored plans to cover COVID-19 diagnostic testing and testing-related services, including the cost of the visit to the physician or clinical provider needed in order to be tested. Coverage for testing must be provided at no cost. The requirement extends to tests whose application for emergency use may be pending at the FDA. Subsequent guidance has clarified that coverage of testing-related services “must be provided without cost-sharing, when medically appropriate for the individual, as determined by the individual’s attending healthcare provider in accordance with accepted standards of current medical practice.”
3. Will people in need of health insurance be able to enroll in the Marketplace because of the emergency?
Normally, people must wait for an annual open enrollment period to enroll in private insurance. However, the Affordable Care Act also allows “special enrollment periods” whose purpose is to accommodate changes in life circumstances that may affect coverage (e.g., death, divorce, loss of employer coverage, disasters). Among the 13 states (including the District of Columbia) that run their own marketplaces, 12 have established a SEP linked to the current public health emergency, although their specifics may differ from one another. By contrast, the Trump administration has declined to establish a COVID-related SEP, meaning that residents who live in one of the 38 states that rely on the federal exchange may have no access to coverage.
4. How has the COVID-19 pandemic affected health centers and what is being done to help them?
In 2018, 1,200 federally funded community health centers operating in more than 11,000 locations served nearly 30 million people. Health centers are a vital source of comprehensive primary health care in medically underserved rural and urban communities. Congress has given health centers additional funding while also extending the Community Health Center Fund through November 30, 2020; this fund provides basic operating grants to all health centers. However, like other medical practices, health centers have suffered a major economic blow; the Health Resources and Services Administration reports that patient visits have dropped by half, resulting in a precipitous decline in Medicaid revenue, health centers’ primary funding source. Other changes aimed at helping employers under the CARES Act may help to some degree, but like large community hospitals, health centers find themselves in an economically precarious position. Federal and state Medicaid policies play a crucial role in ensuring that health centers are able to remain open during the emergency, including full payment for telehealth services and enhanced payment rates during the COVID-19 epidemic. In addition, the federal and state governments could institute advanced payment for Medicaid providers, similar to Medicare Advance Payment for hospitals. Expansion of the Medicare Advance Payment program was included in the CARES Act and allows CMS to disperse funds for expected claims in advance of providers submitting claims, which will help bridge the cash flow crisis many medical providers find themselves in.
5. What assistance has been made available to hospitals and other providers?
The CARES Act appropriates $100 billion for a “Public Health and Social Services Emergency Fund” to reimburse Medicare and Medicaid enrolled providers “for health care related expenses or lost revenues that are attributable to coronavirus.” The funds can be used to build and retrofit temporary facilities and procure necessary supplies for treating patients. The Trump Administration has indicated that it intends to use the Fund to pay hospitals for the treatment of uninsured patients who require hospitalization due to the virus. Critics point out that this will favor states that have refused the Medicaid expansion and therefore have higher uninsured rates, and does not guarantee that the hardest-hit hospitals get the funds they need in time, while hospitals had expected the fund to cover their more immediate cash flow needs for getting supplies and paying personnel. Additionally, the Kaiser Family Foundation has estimated that reimbursing the uncompensated care costs of uninsured patients requiring hospitalization for COVID-19 could require more than 40% of this fund.
Section 3813 of the CARES Act delays Disproportionate Share Hospital Payment reductions from May 23, 2020, to December 1, 2020. The reductions will still be in effect through fiscal year 2025.
6. What more is needed?
a. Additional FMAP bump linked to an increase in unemployment
Because of its impact on the health care system and the need to effectively shut down the economy to curb the spread of the disease, the COVID-19 outbreak has also significantly impacted Americans from a financial perspective. The most recent jobs report indicates that over 22 million Americans have lost their jobs since the start of the pandemic. States with the highest increases in unemployment are also likely to see the highest increases in Medicaid eligible individuals. These states will need additional assistance to handle increased enrollment without compromising access to care and services. However, the enhanced FMAP provided for in the FFCRA applies the same percentage increase across the board. Given COVID-19’s overarching effects on the economy, Congress should seek to implement an additional enhanced FMAP that is tied to economic factors such as unemployment. As a guide, Congress can look to the enhanced FMAP provided to states as part of the larger congressional response to the 2007-2009 recession.
The American Recovery and Reinvestment Act (ARRA) in part provided an enhanced FMAP to states which resulted in $103 billion in federal fiscal relief to state Medicaid programs. Like the FFCRA, the ARRA’s enhanced FMAP was also temporary. However, it provided states with relief for a relatively long period of time, beginning on October 1, 2008, and, after one 6-month extension, expiring on June 30, 2011. The ARRA provided for a 6.2% enhanced FMAP for all states, but also provided for an additional FMAP enhancement based on the increase in a state’s unemployment rate. States with higher relative increases in unemployment received greater FMAP enhancement. Given that some states will be hit harder than others in terms of economic harm, unemployment, and unexpected increases in Medicaid eligible individuals, Congress should look to the ARRA’s framework to provide these states with much needed additional assistance.
b. Extension of the Medicaid option to cover coronavirus testing for the uninsured to include treatment
As it stands, states must cover testing for COVID-19, as well as any doctor visit necessary for such testing, with no cost-sharing. However, whether states must cover treatment and what kind of treatment, has been left somewhat of an open question. The FFCRA mandates coverage of COVID-19 treatment with no cost-sharing as a condition of receiving the enhanced FMAP. However, there is no language on a general obligation to cover COVID-19 treatment without cost-sharing. In its next phase of legislation, Congress should be clear that all state Medicaid programs must cover COVID-19 treatment with no cost-sharing to the patient. Furthermore, Congress should also specify the broad array of COVID-19 treatment that states must cover, much like it did with the CARES Act’s mandate that private insurance plans must also cover tests that have applied for but have not yet been approved for emergency use by the FDA.
c. General special enrollment period for the COVID-related pandemic
As noted, almost all of the states that operate their own insurance exchanges have opened special enrollment periods (SEPs) in response to the COVID-19 pandemic. However, the Trump Administration has declined to create a special enrollment period for the federal marketplace, depriving individuals who live in the 38 states that rely on the federal marketplace of a clear opportunity to sign up for coverage.
The ACA provides a SEP for individuals who have recently experienced a qualifying life event, such as the loss of a job making them ineligible for their workplace health plan, but this does little for individuals who were uninsured prior to this crisis. Furthermore, the Trump Administration has not conducted extensive outreach on this option. A comprehensive campaign promoting the availability of this special enrollment period could be vital in spreading the word to those who recently lost their jobs due to the economic downturn.
As for previously uninsured individuals, the Administration also has broad authority under the ACA to set the limits and qualifying factors for SEPs. The Administration could easily re-open special enrollment specifically designated for COVID-19. Refusing to independently open a SEP will ultimately have an enormous impact on individuals who have not experienced a qualifying life event, and thus have no other means to sign up for coverage.
d. Clarification that COVID-19 related testing and treatment is an “emergency” under the Medicaid statute
Most non-citizens are not eligible for Medicaid. However, Medicaid does cover emergency medical expenses for unqualified non-citizens who would be eligible for Medicaid except for their immigration status. The Social Security Act defines an emergency medical condition as a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in— (A) placing the patient’s health in serious jeopardy, (B) serious impairment to bodily functions, or (C) serious dysfunction of any bodily organ or part.
One-quarter of lawfully present immigrants and nearly half of undocumented immigrants do not have health insurance, making them more likely to avoid seeking testing and treatment (and therefore expose more people to the virus) and to face high medical bills when they do. To assure that non-citizens seek testing and treatment where appropriate, CMS could clarify that needing COVID-19 testing and treatment is an emergency, and therefore Medicaid will finance testing and treatment.
e. Additional, immediate funding for hospitals and community health centers
The CARES Act included a $100 billion appropriation for the Public Health and Social Services Emergency Fund. The Trump Administration has indicated that it plans to use this fund to reimburse hospitals for the treatment of uninsured patients, which the Kaiser Family Foundation estimates could require almost half of the fund. However, this does not meet the immediate cash flow needs of hospitals, who are struggling to get an adequate supply of reasonably priced personal protective equipment and expand capacity, especially for intensive care. With the cost of transforming one regular bed into an intensive care bed around $45,000, reimbursing hospitals for uncompensated care after the fact does not improve their ability to prepare for anticipated surges in COVID-19 patients.
Approximately $30 billion has now been dispersed to hospitals to meet short term funding needs, allocated according to the volume of 2019 Medicare fee for service claims by the hospital. However, this formula may not bee well suited to identify the hospitals most in need based on the volume of coronavirus cases or uninsurance rates in the hospital’s service area.
Community Health Centers are also expecting to be short on funds. The $1.4 billion appropriated to the nation’s nearly 1,400 health centers is expected to keep them afloat for just over a month, according to the National Association of Community Health Centers. Many health centers have already had to lay off or furlough staff, even as they expect to see more patients with the virus as hospitals reach capacity.