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Thursday, May 20, 2010

Medicaid and the State Children’s Health Insurance Program (CHIP) Provisions in PPACA

Julie Stone, Coordinator  
Specialist in Health Care Financing  

Evelyne P. Baumrucker  
Analyst in Health Care Financing  

Cliff Binder  
Analyst in Health Care Financing  

Elicia J. Herz  
Specialist in Health Care Financing  

Elayne J. Heisler  
Analyst in Health Services  

Kelly Wilkicki  
Presidential Management Fellow  

Alexandra J. Rothenburger  
Analyst in Health Policy

The President signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) on March 23, 2010. Seven days later, a second bill, H.R. 4872, was signed into law by the President to modify P.L. 111-148. This second law, the Health Care and Education Reconciliation Act of 2010 (hereinafter referred to as the Reconciliation Act or HCERA; P.L. 111-152), was signed on March 30, 2010. Together these laws constitute what we now refer to as health reform law. Health reform law makes many significant changes to the private and public markets for health insurance, as well as modifies aspects of the publicly financed health care delivery system. It represents the most significant reform in health care financing since the establishment of Medicaid and Medicare in 1965. This report provides a summary of the Medicaid and CHIP provisions in health reform laws P.L. 111-148 and P.L. 111- 152. 

Regarding Medicaid eligibility, beginning in 2014, or sooner at state option, nonelderly, nonpregnant individuals with income below 133% of the federal poverty level (FPL) who were previously ineligible for Medicaid will be newly eligible for Medicaid. This change represents a significant expansion of eligibility under Medicaid. From 2014 to 2016, the federal government will cover 100% of the Medicaid costs of newly eligible individuals. In 2017, the federal share will be 95%, in 2018 it will be 94%, in 2019 it will be 93%, and in 2020 and beyond, the federal share for this population will be 90%. 

The health reform law also adds new mandatory benefits to Medicaid, including, for example, coverage of services in free-standing birthing centers. Further, it expands state options for providing home and community-based services as an alternative to institutional care, and provides financial incentives to states to do so. Among the financing changes, the law reduces Medicaid disproportionate share hospital (DSH) payments. It also increases prescription drug rebates, certain pharmacy reimbursements, primary care physician payment rates for selected preventive care services, and federal spending for the territories, among other payment system reforms. 

This report provides a summary of the Medicaid and CHIP provisions in P.L. 111-148 and P.L. 111-152. To help highlight the most important Medicaid and CHIP changes, applicable provisions are grouped into the following seven major issue areas: eligibility, benefits, financing, program integrity, demonstrations and grant funding, CHIP, and miscellaneous. The Appendix provides a cross walk between the provision titles and the amending sections of P.L. 111-148 and P.L. 111- 152. 

Another appendix will be added to the report, in an update, to include the effective dates of each provision. A forthcoming CRS report will include a more detailed timeline based on effective dates for all of the Medicaid and CHIP provisions.

Date of Report: May 13, 2010
Number of Pages: 75
Order Number: R41210
Price: $29.95

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