TABLE 11-1 Traditional Medicaid, Medicaid Expansion, and Exchange Plans Vary in Population Served and Benefits Offered

Traditional Medicaid Medicaid Expansion Exchanges

Population Varies (mandatory and optional) Uninsuredupto133%FPL Individualsabove133%FPL
Benefits Mandatory and optional benefits with EPSDT requirements for children Benchmark or equivalent that must include EHB and some traditional Medicaid services Essential health benefits as a floor for qualified health plans
Delivery System Mix of fee-for-service and managed care Same as traditional Medicaid Qualified health plans
EHB Issues Comprehensive EHB could be more or less generous than traditional Medicaid EHB promotes coordination with exchanges, but may be different from “benchmarks” Fine line between comprehensiveness and affordability

SOURCE: Ingram, 2011.

Understanding the Medicaid Landscape

Ms. Ingram first clarified the difference between three state programs for lower-income individuals. Traditional Medicaid has defined mandatory1 and optional2 benefits, including EPSDT (early periodic screening, diagnosis, and treatment) requirements for children. The Medicaid expansion mandated by the ACA will be layered on top of traditional Medicaid to provide coverage for individuals up to 133 percent of the federal poverty level (FPL),3 while the exchanges will provide subsidies for individuals between 133 and 400 percent of the FPL.4 These expansions might take the form of Medicaid benchmark,5 benchmark-equivalent,5 or state basic health insurance designs;6 these expansions, plus the plans offered in the exchanges, must all include the EHB.

Under the Deficit Reduction Act of 2005,7 benchmark plans were first authorized for state Medicaid programs as a method of cost containment by allowing slimmer benefits than traditional Medicaid. These plans could offer benefits benchmarked to the benefits offered to: (1) federal employees though the federal program’s standard Blue Cross Blue Shield plan, (2) state employees in the state, or (3) enrollees in the largest commercial health maintenance organization (HMO) in the state. Additionally, other plans could be used as a benchmark provided the plan is certified “actuarially equivalent” to one of the benchmark plans (these actuarial equivalence plans require a waiver from the Secretary of the U.S. Department of Health and Human Services [HHS]). Eleven states use a benchmark plan, and several others have actuarially equivalent plans (i.e., benchmark-equivalent plans) (CMS, 2009).

Ms. Ingram stated that benchmark plans are generally less comprehensive than traditional Medicaid plans as they “tend to be more commercial in their coverage.” Benchmark plans have historically included: inpatient and outpatient hospital services; surgical and medical services; laboratory and x-ray services; well-baby and well-child care, including age appropriate immunizations; other preventive services, as designated by the Secretary; and rural health clinic and FQHC (federally qualified health center) services. But when the ACA provisions go into effect in 2014, these benchmark plans will also have to include categories of care not in typical commercial employer plans, just as the exchange plans will have to do.

Ms. Ingram noted that most states have used benchmark plans not as an overall cost containment strategy, but rather, to expand coverage to previously uncovered populations (e.g., to childless adults, parents, or expanded


1 Mandatory benefits under Medicaid include physicians’ services, laboratory and x-ray services, inpatient and outpatient hospital services, family planning services and supplies, rural health clinic services, nurse midwife services, and long-term care services (nursing facility services and home health services) (KFF, 2001).

2 Optional benefits may include prescription drugs, dental services, prosthetic devices, eyeglasses, diagnostic, screening, preventive, and rehabilitative services, personal care services, hospice care (KFF, 2001).

3 Patient Protection and Affordable Care Act of 2010 as amended. Public Law 111-148 § 2001 (a)(1)(C), 111th Cong., 2d sess.

4 § 1401(a) amending Internal Revenue Code by inserting § 36B.

5 § 2001.

6 § 1331.

7 Deficit Reduction Act of 2005. Public Law 109-171 § 6044, 109th Cong., 2d sess. (February 8, 2006).

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