HHS issues final rule on federal payment rates for new Medicaid beneficiaries

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House bill would create site-neutral payments for post-acute care, could save Medicare $100 billion
House bill would create site-neutral payments for post-acute care, could save Medicare $100 billion

The federal government will pay 100% of the Medicaid costs for certain newly eligible beneficiaries under the Affordable Care Act, the Department of Health and Human Services confirmed in a final rule last Friday.

The 100% federal funding for the new group of beneficiaries will last through 2016, then gradually decrease to a permanent 90% matching rate by 2020, the rule states. Under the ACA, states have the option to expand Medicaid coverage to people under 65 who are earning up to 133% of the federal poverty level. The federal government will also increase the Federal Medical Assistance Percentages (FMAP) rate for certain beneficiaries in states that expanded Medicaid coverage before passage of the healthcare reform law in 2010.

The final rule lays out who in these groups will be covered and how the corresponding FMAP rates will be determined.

An August 2011 proposed rule put forward three possible methodologies for determining FMAP rates in the newly eligible groups. After receiving comments on the proposed rule and conducting a feasibility study, HHS settled on the “threshold methodology” as the one that will be used.

“In general, under the threshold methodology, states will compare income levels of individuals eligible for the new adult group to equivalent December 2009 standards to determine if that individual could have qualified for Medicaid under the state's December 2009 income standards,” the final rule states.

The final rule will be published in the April 2 Federal Register. The full rule is available here. A blog by Cindy Mann, the CMS Deputy Administrator and Director, Center for Medicaid and CHIP Services, also was posted Friday to address additional questions on the final rule.

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