Highlights of Changes to the Medicaid Act

Two recent pieces of federal legislation affect the Medicaid program. 
The Deficit Reduction Act. Signed by President Bush on February 8, 2006, the Deficit Reduction Act of 2005 (DRA), Pub L. No. 109-171, 1 affected many aspects of the Medicaid program, including eligibility (e.g. resource and asset rules, citizenship documentation, third party 
liability), scope of benefits (prescription drug coverage; non-emergency transportation services, case management), state purchasing of long term care insurance, fraud and abuse, and program integrity. The DRA also introduced a range of home and community-based care options for children and adults with disabilities. At its core, the DRA dramatically expanded states? flexibility to operate their Medicaid programs, often by allowing them to make individuals ineligible for Medicaid or limit the scope of Medicaid benefits. The National Health Law Program published an in depth analysis of all of the DRA changes to Medicaid, State Children?s Health Insurance Programs, and health-related Hurricane Katrina funding. This analysis will not be repeated here. The reader is referred to that publication: National Health Law Program, The Deficit Reduction Act of 2005: Congress Targets Beneficiaries for Cuts (May 16, 2006), available at http://www.heathlaw.org. 
Tax Relief and Health Care Act. The Tax Relief and Health Care Act of 2006 (TRHCA), Pub. L. No. 109-432, enacted on Dec. 20, 2006, includes a handful of Medicaid provisions.2 For the most part, these provisions clarify DRA changes. 
This memorandum updates the explanations contained in The Deficit Reduction Act of 2005: Congress Targets Beneficiaries for Cuts, to account for the TRHCA provisions and state activities regarding benefit packages. The memorandum addresses: 
  • citizenship documentation, 
  • cost sharing, 
  • benefit packages, and
  • transitional medical assistance.

Citizenship Documentation Requirements
To be eligible for full Medicaid benefits, an individual must be a citizen or national of the United States or a qualified alien. Before the DRA was enacted, U.S. citizens in most states were able to establish Medicaid eligibility by attesting to their citizenship under penalty of perjury. See 42 U.S.C. §§ 1320b-7(d), 1396a(b)(3). Most states required documentation of citizenship when there was a reason to question an applicant?s attestation. 
A 2005 report by the HHS Office of the Inspector General found no substantial evidence that undocumented immigrants are fraudulently getting Medicaid coverage by claiming they are citizens. The report did not recommend requiring the documentation of citizenship. State officials interviewed for the report noted that such a requirement would add significant administrative costs and burdens, requiring the hiring of additional eligibility personnel. See HHS, OIG, Self-Declaration of U.S. Citizenship for Medicaid (July 2005), at http://oig.hhs.gov/oei/reports/oei-02-03-00190.pdf. Nevertheless, the DRA amended the Medicaid Act at the request of Georgia Republican Representatives Charlie Norwood and Nathan Deal who said they wanted to prevent undocumented immigrants from enrolling in Medicaid. 
Using the potential denial of federal funding as the ?stick,? section 6036 of the DRA requires states to document U.S. citizenship of program participants. Effective July 1, 2006, the provision prohibits federal payments for new Medicaid applicants and current recipients (at the time of recertification/redetermination), who ?declare[] under section 1137(d)(1)(A) [42 U.S.C. § 1320b-7(d)] to be a citizen or national of the United States for purposes of establishing eligibility for benefits under this title [Medicaid]? unless the documentation requirements called for by the statute are met. 42 U.S.C. § 1396b(i)(22). Regulations implementing section 6036 were published on July 12, 2006. See 71 Fed. Reg. 39214-39229 (July 12, 2006). 

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