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Thursday, June 2, 2011

Medicaid and CHIP Maintenance of Effort (MOE): Requirements and Responses

Evelyne P. Baumrucker
Analyst in Health Care Financing

State revenues declined during the recent economic recession (December 2007 through June 2009) and have not fully recovered. At the same time, the recession increased the number of individuals meeting Medicaid’s income eligibility standards. States are faced with tough decisions about where to direct their increasingly limited funds.

This state fiscal condition is a reason the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5; and subsequently extended in P.L. 111-226) included a temporary increase to Federal Medical Assistance Percentage (FMAP) rates. As a condition of the receipt of the federal Medicaid matching funds made available under ARRA, states were required to maintain their Medicaid programs with the same eligibility standards, methodologies, or procedures for Medicaid through June 30, 2011. This provision is referred to as the ARRA Maintenance of Effort (MOE) requirement.

The ARRA MOE provisions were extended and expanded in the Patient Protection and Affordable Care Act as modified by the Health Care and Education Reconciliation Act of 2010 (PPACA, P.L. 111-148 as modified by P.L. 111-152). PPACA’s MOE provisions were designed to ensure that individuals eligible for Medicaid or the State Children’s Health Insurance Program (CHIP) did not lose coverage in the period between the date of enactment of PPACA (March 23, 2010) and the implementation of the state health insurance exchanges (expected in 2014).

Because states are prohibited from curbing the cost of Medicaid through restricting eligibility standards due to the MOE requirements included in ARRA and PPACA, states have focused cost containment strategies on reducing provider rates, making changes to their benefit packages, or implementing limitations on the use of benefits. However, states want greater flexibility to restrain their Medicaid expenditures through eligibility restrictions.

This report summarizes the MOE requirements enacted under ARRA and PPACA and what these requirements have meant for states in terms of their actions to restrict Medicaid and/or CHIP eligibility. It also summarizes recent legislative activity to repeal the MOE requirements.

Date of Report: May 25, 2011
Number of Pages: 10
Order Number: R41835
Price: $29.95

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