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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on the Judiciary, U.S. Senate: 

August 2012: 

Medicaid Expansion: 

States' Implementation of the Patient Protection and Affordable Care 
Act: 

GAO-12-821: 

Contents: 

Letter: 

Background: 

Summary of Findings: 

Concluding Observations: 

Agency Comments and Our Evaluation: 

Appendix I: States Must Expand Medicaid Eligibility Levels and 
Streamline the Enrollment Process: 

Appendix II: States Have Taken Some Steps to Prepare for Medicaid 
Expansion: 

Appendix III: States Expect Some Budgetary Impacts from Expanding 
Medicaid, and Expressed a Need for Additional Guidance: 

Appendix IV: Objectives, Scope, and Methodology: 

Appendix V: Comments from the Department of Health and Human Services: 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Description of Selected Provisions of PPACA Included in Our 
Review: 

Table 2: State Budget Director Views on Challenges Affecting Medicaid 
Expansion: 

Table 3: State Budget Director Views on Usefulness of CMS Guidance: 

Table 4: Characteristics of the Six Selected States Included in Our 
Review: 

Figures: 

Figure 1: Timeline for Selected PPACA Provisions: 

Figure 2: State Budget Director Views on Fiscal Implications of 
Medicaid Expansion Aspects: 

Abbreviations: 

CHIP: Children's Health Insurance Program: 

CMS: Centers for Medicare & Medicaid Services: 

FPL: federal poverty level: 

FMAP: Federal Medical Assistance Percentage: 

HCERA: Health Care and Education Reconciliation Act: 

HHS: Department of Health and Human Services: 

MAGI: Modified Adjusted Gross Income: 

PPACA: Patient Protection and Affordable Care Act: 

View GAO-12-944SP Key Components: 

Medicaid Expansion: States' Implementation of the Patient Protection 
and Affordable Care Act (GAO-12-944SP), an e-supplement to GAO-12-821. 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

August 1, 2012: 

The Honorable Charles E. Grassley: 
Ranking Member: 
Committee on the Judiciary: 
United States Senate: 

Dear Senator Grassley: 

The Patient Protection and Affordable Care Act (PPACA), signed into 
law on March 23, 2010, made significant changes to the way eligibility 
for the Medicaid program will be determined and who the program will 
cover.[Footnote 1] Under PPACA, eligibility for Medicaid—a joint 
federal-state program that finances health care for certain categories 
of low-income individuals—must be expanded to non-elderly individuals 
with incomes at or below 133 percent of the federal poverty level 
(FPL) beginning on January 1, 2014.Footnotes 2, 3] Through this 
expansion, states will provide Medicaid coverage to eligible low-
income parents and childless adults. PPACA also requires the 
establishment of American Health Benefit Exchanges (referred to as 
exchanges)-—marketplaces where eligible individuals can purchase 
private health insurance in each state.[Footnote 4] The Centers for 
Medicare & Medicaid Services’ (CMS) Office of the Actuary has 
estimated that, as a result of the expansion, the number of Medicaid 
enrollees will increase by 14.9 million in 2014 and by 25.9 million in 
2020.[Footnote 5] 

State governments will play a key role in implementing many aspects of 
this reform, which must be in place by the beginning of 2014. 
Specifically, states will need to make major changes to the way they 
conduct Medicaid eligibility determinations for individuals and 
families. States also will need to develop streamlined eligibility and 
enrollment systems that allow for the coordination of enrollment 
across Medicaid, the Children’s Health Insurance Program (CHIP), 
[Footnote 6] and exchanges. At the same time, states will need to 
address the financial implications of implementing this Medicaid 
expansion and accompanying enrollment systems. The federal government 
will initially provide states with full funding to cover the cost of 
adults who are newly eligible for Medicaid due to the expansion. 

You asked us to report on the actions states are taking to implement 
the Medicaid expansion. This report addresses the following questions: 

1. What are states’ responsibilities for implementing the Medicaid 
expansion provisions under PPACA? 

2. What actions have selected states taken to prepare for the Medicaid 
expansion provisions of PPACA and what challenges have they 
encountered? 

3. What are states’ views on the fiscal implications of the Medicaid 
expansion on state budget planning? 

To identify states’ responsibilities for implementing the Medicaid 
expansion, we reviewed selected PPACA provisions (see table 1). 

Table 1: Description of Selected Provisions of PPACA Included in Our 
Review: 

PPACA provision: Medicaid eligibility expansion; 
Description: States must expand Medicaid eligibility to non-elderly 
individuals with incomes at or below 133 percent of the federal 
poverty level. Through this expansion, states will provide Medicaid 
coverage to newly eligible low-income parents and childless adults. 

PPACA provision: Transition to modified adjusted gross income (MAGI); 
Description: States must begin determining income eligibility for 
Medicaid beneficiaries using a uniform methodology--modified adjusted 
gross income. 

PPACA provision: Medicaid early expansion option; 
Description: States may choose to expand coverage to those newly 
eligible prior to January 1, 2014. 

PPACA provision: Maintenance of effort requirement; 
Description: States must maintain its Medicaid eligibility standards 
until an exchange in the state is fully operational. 

PPACA provision: Increased federal matching rates for newly eligible 
adults; 
Description: States will receive an increased federal match for newly 
eligible adults at 100 percent for 2014 through 2016 and gradually 
decreasing to 90 percent by 2020. 

PPACA provision: Streamlined eligibility and enrollment systems; 
Description: States must provide a process for individuals to apply 
for or renew their Medicaid eligibility through a website that enrolls 
individuals in the appropriate program (Medicaid, CHIP, or exchanges) 
no matter to which program they originally apply. 

Source: GAO review of PPACA. 

[End of table] 

We also reviewed the implementing regulations and guidance from CMS, 
the agency within the Department of Health and Human Services (HHS) 
that oversees states' Medicaid programs at the federal level. During 
interviews with CMS officials, we obtained status updates on the 
development of additional regulations and guidance and discussed the 
ways CMS provided implementation information to states. We also 
discussed the implementation of these provisions with selected states. 

To identify the actions selected states have taken to prepare for the 
implementation of the Medicaid expansion and the challenges they 
encountered, we conducted semi-structured interviews with state 
Medicaid officials in six states: Colorado, Georgia, Iowa, Minnesota, 
New York, and Virginia. We selected these states on the basis of: (1) 
the relative size of expected enrollment expansion within Medicaid, 
(2) the state's Medicaid enrollment rates, (3) geographic dispersion, 
and (4) whether a state expanded insurance coverage to childless 
adults in the past. The findings from these interviews cannot be 
generalized to all state Medicaid offices. We obtained additional 
information from interviews with officials from state associations, 
including the National Association of Medicaid Directors, the National 
Association of State Budget Officers, and the National Conference of 
State Legislatures. 

To identify states' views on the fiscal implications of the Medicaid 
expansion on state budget planning, we administered a web-based survey 
of state budget directors from all 50 states, the District of 
Columbia, and 4 U.S. territories. Our survey response rate was 76 
percent. The survey document and counts of responses received for each 
question are reproduced in an e-supplement we are issuing concurrent 
with this report--GAO-12-944SP.[Footnote 7] To obtain additional 
narrative and supporting context, survey respondents were given 
multiple opportunities to provide additional open-ended comments 
throughout our survey. To limit possible data processing errors, 
survey response data were checked for inconsistencies and ineligible 
responses. We also obtained additional information from interviews 
with federal and state officials and relevant state associations. For 
more details on our scope and methodology, see appendix IV. 

We conducted our work from June 2011 to July 2012 in accordance with 
generally accepted government audit standards. Those standards require 
that we plan and perform the audit to obtain sufficient, appropriate 
evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the 
evidence obtained, and the analysis conducted, provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

We completed our field work prior to the U.S. Supreme Court's June 28, 
2012, decision on the constitutionality of certain PPACA provisions, 
including the Medicaid expansion provision discussed in this analysis. 
[Footnote 8] Given the timing of the court's decision, and the 
completion of our field work, we do not include an analysis of the 
impact of this decision. 

Background: 

Medicaid is a joint federal-state program that provides health care 
coverage for certain low-income individuals. At the federal level, CMS 
is responsible for overseeing the design and operation of states' 
Medicaid programs. States administer their respective Medicaid 
programs' day-to-day operations within federal requirements. To 
receive federal matching dollars for services provided to Medicaid 
beneficiaries each state must submit a state Medicaid plan for 
consideration, review, and approval by CMS.[Footnote 9] 

Medicaid is funded jointly by the federal government and states. The 
amount of federal funds states receive is determined by a statutory 
formula--the Federal Medical Assistance Percentage (FMAP). Under the 
FMAP, the federal government pays a share of Medicaid expenditures 
based on each state's per capita income relative to the national 
average. The FMAP for federal fiscal year 2012 for states ranged from 
about 50 percent to 74 percent. According to the National Governors 
Association and the National Association of State Budget Officers 
spring 2012 survey, Medicaid represents the largest portion of total 
state spending, accounting for an estimated 23 percent of state 
spending in fiscal year 2011.[Footnote 10] 

Under federal Medicaid law, states generally must meet certain minimum 
requirements for establishing eligibility for individuals. Eligibility 
for Medicaid is based on a variety of categorical and financial 
requirements. For example, Medicaid eligibility focuses on parents and 
children, individuals who are aged, and individuals with disabilities. 
Additionally, individuals who are eligible for Medicaid must have 
limited income and resources, and must meet immigration and residency 
requirements. State-to-state variation in Medicaid eligibility levels 
exists, particularly for low-income adults. According to the Kaiser 
Family Foundation, as of January 1, 2012, the median Medicaid 
eligibility threshold for working parents is 63 percent of FPL and 17 
states limit Medicaid coverage to parents earning less than 50 percent 
of FPL. Rules for counting income to determine eligibility vary from 
state to state, and can also vary by population within a state. 

Summary of Findings: 

In summary, we found: 

* Under PPACA, states are responsible for making a number of changes 
to their Medicaid programs by January 1, 2014, including expanding 
eligibility levels and streamlining their enrollment processes. 
Specifically, states must expand Medicaid eligibility to non-elderly 
individuals with incomes at or below 133 percent of FPL.[Footnote 11], 
[Footnote 12]Under the newly eligible category, states will provide 
Medicaid coverage to eligible low-income parents and childless adults. 
States must also begin determining income eligibility for Medicaid 
beneficiaries, including newly eligible adults, using a uniform 
methodology--MAGI, which is a tax-based definition of income.[Footnote 
13] To implement these requirements, eligibility categories have been 
consolidated into four groups--adults, children, parents, and pregnant 
women. States may choose to expand Medicaid coverage to the newly 
eligible prior to January 1, 2014 (referred to as the early expansion 
option), but must cover lower income individuals before higher income 
individuals. These more uniform eligibility requirements will replace 
the current system where Medicaid eligibility and income rules may 
vary from state to state. Further, states must adopt a methodology for 
identifying the newly eligible in order to obtain the increased 
federal match. States will receive the enhanced federal match for 
newly eligible adults starting in 2014.[Footnote 14] States must also 
provide a simplified and streamlined eligibility process whereby 
individuals, through a website, may apply for and, if eligible, be 
enrolled in Medicaid. In addition, state eligibility determination 
systems will interface with a Federal Data Services Hub--an electronic 
service states will use to verify certain information with other 
federal agencies, such as an applicant's citizenship, immigration 
status, and income data. For additional information on our findings, 
see appendix I. 

* The six selected states included in our study (Colorado, Georgia, 
Iowa, Minnesota, New York, and Virginia) are taking some steps to 
prepare for the Medicaid expansion, including assessing changes that 
need to be made to their existing eligibility levels and eligibility 
determination policies. In an effort to streamline their eligibility 
and enrollment processes, the six states also are taking steps to 
upgrade or replace their Medicaid information technology systems and 
have submitted applications to CMS for enhanced federal funding for 
this purpose.[Footnote 15] In our interviews with selected states, 
officials noted that the enhanced funding provides the states with an 
opportunity to update outdated eligibility and enrollment systems. At 
the same time, state officials reported challenges to implementing 
PPACA's Medicaid expansion requirements, including the need for 
additional federal regulations and guidance in a number of areas. For 
example, state officials indicated that they need additional guidance 
on using MAGI[Footnote 16] to determine an applicant's eligibility 
under different scenarios involving household income levels, sources 
of income, and household composition. CMS has issued a final Medicaid 
rule[Footnote 17] and hosted webinars on this and other issues, and 
said that additional guidance is forthcoming. States also reported 
operational challenges that could affect their ability to meet 
Medicaid expansion and system development deadlines, such as lengthy 
state procurement processes, the complexities of developing new 
systems, coordination of multiple programs and systems, and resource 
limitations. For additional information on our findings, see appendix 
II. 

* In terms of states' views on the fiscal implications of the Medicaid 
expansion on states' budget planning, our survey found that across 
fiscal years 2012 to 2020, the majority of state budget directors 
believe that three aspects of Medicaid expansion will contribute to 
costs: (1) the administration for managing Medicaid enrollment, (2) 
the acquisition or modification of information technology systems to 
support Medicaid, and (3) enrolling previously eligible but not 
enrolled individuals in Medicaid. At the same time, state budget 
directors expressed uncertainty about how other aspects of expansion 
will affect their budgets, such as the impact of shifting existing 
Medicaid enrollees into health benefit exchanges. Further, most state 
budget directors reported that their fiscal capacity and the state's 
share of Medicaid expenditures create challenges for implementing the 
Medicaid expansion. A few state budget directors reported that CMS 
guidance was useful, while most commented that more guidance was 
needed to develop budget estimates in the following areas: Medicaid 
benefits packages (including essential and benchmark benefits), 
Medicaid eligibility determination, and the FMAP match for newly 
eligible adults. CMS officials indicated that the agency is planning 
to issue additional guidance or regulations at a later date in a 
number of areas, including clarification on eligibility groups, MAGI, 
and the FMAP methodology for the newly eligible population. For 
additional detail on our findings, see appendix III. 

Concluding Observations: 

It has been a little over 2 years since the enactment of PPACA, which 
included significant changes to the Medicaid program. The ultimate 
success of the implementation of these changes will depend heavily on 
both federal and state actions. States reported needing additional 
federal regulations or guidance in three areas: application of MAGI 
methodology, conversion of Medicaid eligibility standards, and 
eligibility data available to states through the Federal Data Services 
Hub. According to state officials, the release of regulations or 
guidance could affect their state's ability to meet implementation 
deadlines. CMS issued regulations and guidance on a range of topics 
regarding Medicaid expansion and has indicated that additional 
guidance will be forthcoming. Concerted and cooperative efforts on the 
part of CMS and the states will be critical to meeting the 
implementation deadlines for the Medicaid expansion. 

Agency Comments and Our Evaluation: 

We provided the draft for review and comment to HHS. HHS provided us 
with written comments and agreed with our conclusion that additional 
regulations or guidance is needed in various areas, such as MAGI 
conversion and the computation of FMAP. HHS said it plans to issue 
such guidance later this year. It also noted that our report was a 
helpful resource for purposes of targeting its ongoing technical 
assistance implementation efforts with states and outlined several 
areas in which additional guidance or technical assistance will be 
forthcoming. Regarding the Supreme Court's June 28, 2012, decision 
that states can make their own decisions about whether to expand 
Medicaid, HHS reiterated that (1) there is no deadline for a state to 
decide to undertake the expansion; (2) a state can receive enhanced 
administrative federal match for information technology costs, even if 
it has not yet decided whether to expand Medicaid, as long as it is 
modernizing its eligibility systems; and (3) a state will not have to 
pay back the extra funding if it ultimately decides not to expand 
Medicaid. HHS's written comments are reproduced in appendix V. 
Additionally, we provided excerpts of the draft report to officials in 
the six states we interviewed for this study and incorporated their 
technical comments as appropriate. 

We are sending copies of this report to the appropriate congressional 
committees and other interested parties. The report is also available 
at no charge on the GAO website at [hyperlink, http://www.gao.gov]. 

If you have any questions concerning this report, please contact 
Stanley J. Czerwinski at (202) 512-6806 or czerwinskis@gao.gov or 
Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. Key contributors to this report 
are listed in appendix VI. 

Sincerely yours, 

Signed by: 

Stanley J. Czerwinski: 
Director: 
Strategic Issues: 

Signed by: 

Carolyn L. Yocom: 
Director, Health Care: 

[End of section] 

Appendix I: States Must Expand Medicaid Eligibility Levels and 
Streamline the Enrollment Process: 

Under the Patient Protection and Affordable Care Act, States Must 
Expand Medicaid Eligibility Levels and Streamline the Enrollment 
Process: 

As of January 1, 2014, states must (1) expand Medicaid eligibility to 
non-elderly individuals with incomes at or below 133 percent of the 
federal poverty level (FPL)[Footnote 18],[Footnote 19] and (2) begin 
determining income eligibility for Medicaid beneficiaries, including 
those newly eligible, using a uniform methodology--modified adjusted 
gross income (MAGI),[Footnote 20] a tax-based definition of income. 
Prior to January 1, 2014, states may choose to expand eligibility to 
those newly eligible (referred to as the early expansion option), 
[Footnote 21] but must cover lower income individuals before higher 
income individuals. 

Under the newly eligible category, states will provide Medicaid 
coverage to eligible low-income parents and childless adults. In 
addition, these more uniform national requirements will replace the 
current system where Medicaid eligibility and income rules may vary 
from state to state. Currently under Medicaid, eligibility is based on 
a variety of categorical and financial requirements. For example, 
states must cover certain population groups, such as low-income 
children and pregnant women, but have flexibility to cover other 
groups, such as those same groups at higher income levels. Subject to 
federal minimum standards for income, states also have some 
flexibility in determining how to calculate income, such as by 
excluding certain types of income (e.g., child support payments) or 
applying asset tests (e.g., value of an automobile). Under the Patient 
Protection and Affordable Care Act (PPACA), however, states must 
uniformly cover all eligible individuals at or below 133 percent of 
the FPL and apply one income methodology using MAGI. To implement 
these provisions, the Centers for Medicare & Medicaid (CMS) has 
consolidated these individuals into four groups--adults, children, 
parents, and pregnant women.[Footnote 22] 

To make their current policies and processes consistent with these new 
coverage and income eligibility rules, state officials stated they 
will need to take legislative or regulatory action, and will need to 
receive federal approval for these changes from CMS. In addition, 
states' continued receipt of federal matching funds is contingent upon 
meeting PPACA's maintenance of effort requirement. In particular, 
states may not make any changes to their Medicaid eligibility levels, 
methodologies, and procedures for adults that are more restrictive 
than those in place at the time of PPACA's enactment (Mar. 23, 2010) 
until the Secretary of the Department of Health and Human Services 
(HHS) determines that an exchange in the state[Footnote 23] is fully 
operational.[Footnote 24] 

States Must Adopt a Methodology to Claim the Increased Federal Match 
for the Newly Eligible: 

In order to determine which beneficiaries are newly eligible and which 
are not, states must evaluate Medicaid applicants against the state's 
pre-PPACA eligibility rules. States will receive an increased federal 
match for newly eligible adults at 100 percent for 2014 through 2016, 
95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 
percent in 2020 and beyond.[Footnote 25] In general, states that had 
already covered parents and childless adults with incomes of at least 
100 percent FPL prior to PPACA may receive an increased federal match 
starting in 2014 for covering these individuals.[Footnote 26] 

States Must Simplify and Streamline Medicaid Enrollment Processes: 

By January 1, 2014, states must provide a process whereby individuals, 
through a website, may apply for or renew their eligibility for 
Medicaid.[Footnote 27] States must also participate in a coordinated 
eligibility and enrollment process for Medicaid and other health 
insurance programs, including the Children's Health Insurance Program 
(CHIP) and the health insurance exchanges.[Footnote 28] The systems 
for these programs are required to work together to ensure that 
eligible applicants are enrolled in the appropriate program no matter 
to which program they originally apply--referred to as the "no wrong 
door" policy. For each individual not eligible for Medicaid based on 
MAGI, the eligibility system will collect additional information to 
determine eligibility based on other factors. 

In addition, state eligibility determination systems will interface 
with a Federal Data Services Hub (referred to as the federal hub). The 
federal hub is an electronic service under development by HHS that 
states will use to verify certain information with other federal 
agencies, such as an applicant's citizenship through the Social 
Security Administration, immigration status through the Department of 
Homeland Security, and income data through the Internal Revenue 
Service. States may receive an enhanced administrative federal match--
90 percent--for the design, development, and installation or 
enhancement of eligibility determination systems until December 31, 
2015.[Footnote 29] 

CMS Has Published Implementing Regulations and Guidance: 

CMS published a final Medicaid eligibility rule on March 23, 2012, to 
implement certain PPACA requirements.[Footnote 30] In finalizing the 
Medicaid eligibility rule, CMS considered public comments on the 
proposed Medicaid eligibility rule issued in August 17, 2011. The 
final Medicaid eligibility rule addresses the following: (1) expanding 
eligibility to adults with incomes at or below 133 percent FPL, (2) 
applying MAGI for income determination and clarifying MAGI exclusions 
such as individuals with disabilities and those needing long-term 
care, and (3) streamlining eligibility screening and enrollment. CMS 
held conference calls and webinars after issuing the proposed 
regulation and final rule to provide further clarification to states. 
See figure 1 for a timeline of the Medicaid provisions and milestones 
under PPACA described in this appendix. 

Figure 1: Timeline for Selected PPACA Provisions: 

[Refer to PDF for image: timeline] 

Until January 1, 2014 (or when the Secretary of HHS determines an 
exchange for the state is fully operational): 
With certain exceptions, states must maintain Medicaid eligibility 
standards, methodologies, and procedures for adults that are no more 
restrictive than those in effect on March 23, 2010. 

March 23, 2010: 
PPACA signed into law.  

April 1, 2010 until January 1, 2014: States may phase in Medicaid 
coverage for the newly eligible.   

August 17, 2011: 
CMS releases proposed rule on implementing Medicaid eligibility 
changes under PPACA.  

March 23, 2012: 
CMS releases final rule on implementing Medicaid eligibility changes 
under PPACA. 
   
January 1, 2014: 
States must provide to all individuals under age 65 up to 133 percent 
of the federal poverty level. 

January 1, 2014: 
States must use the modified adjusted gross income methodology to 
determine Medicaid eligibility for most beneficiaries. 

January 1, 2014
States must have procedures in place for a streamlined Medicaid 
eligibility and enrollment system and ensure it is integrated with the 
CHIP and exchange enrollment systems. 

Source: GAO analysis of CMS regulations and guidance. 

[End of figure] 

CMS acknowledged that the final rule does not fully address certain 
aspects of the states' implementation of Medicaid expansion 
requirements. For example, the final rule does not address the process 
by which states should claim the federal match for those newly 
eligible individuals or how states should implement income conversion 
to determine whether individuals are truly newly eligible or would 
have been eligible for Medicaid under the state's pre-PPACA criteria. 
CMS is continuing to solicit comments on certain aspects of this rule 
and may publish further regulatory changes at a later date. For 
example, in June 2012, CMS released a solicitation for public input on 
potential methodologies for converting current eligibility standards 
to MAGI-equivalent standards.[Footnote 31] 

[End of section] 

Appendix II: States Have Taken Some Steps to Prepare for Medicaid 
Expansion: 

States Have Taken Some Steps to Prepare for Medicaid Eligibility 
Expansion, but Face Implementation Challenges: 

The six selected states in our study (Colorado, Georgia, Iowa, 
Minnesota, New York, and Virginia) are identifying and assessing 
changes that need to be made to their existing Medicaid eligibility 
levels and categories, and eligibility determination policies, to 
comply with new requirements and options for Medicaid expansion 
addressed in the Patient Protection and Affordable Care Act (PPACA). 
For example: 

* Minnesota is identifying changes to eligibility levels to meet PPACA 
Medicaid expansion requirements. The state currently offers Medicaid 
to childless adults with incomes up to 75 percent of federal poverty 
level (FPL), but the state will need to extend coverage to those with 
incomes up to 133 percent of FPL. This expansion will require changes 
in state policies. 

* Iowa is determining if it will maintain or eliminate some of its 
current coverage, such as the coverage it offers for individuals who 
are medically needy.[Footnote 32] State officials are developing 
"Policy Option Papers" to outline necessary policy decisions and 
provide a list of options and recommendations for state decision 
makers. 

* New York has identified changes to its eligibility determination 
processes, which currently allow a number of income exclusions that 
will no longer be allowed under PPACA.[Footnote 33] To inform its 
decision making on the consolidation of eligibility categories, the 
state has also hired an outside research organization to compare the 
state's existing categories with the new consolidated categories for 
adults, parents, children, and pregnant women, and to outline options 
for ensuring alignment. 

After states have determined how they need to modify their policies 
and processes, officials stated that various changes to eligibility 
policies will require state legislative or regulatory action. State 
officials also said that they will need to submit amendments to their 
state Medicaid plans to CMS for review and approval.[Footnote 34] 

In an effort to streamline their eligibility and enrollment processes, 
all six states are taking steps to replace or upgrade their Medicaid 
information technology systems. These states have submitted 
applications to CMS for enhanced federal funding, known as advanced 
planning documents, to develop or upgrade their eligibility systems. 
State officials told us that they appreciate the enhanced funding in 
that it affords them an opportunity to modernize outdated eligibility 
and enrollment systems. Under this funding arrangement, CMS will pay 
the state a 90 percent match rate for the design, development and 
installation of Medicaid eligibility systems and a 75 percent match 
rate for maintenance and operations costs.[Footnote 35] The six states 
are also issuing new requests for proposals or modifying existing 
contracts to secure the services of vendors with the necessary 
technical expertise to develop these eligibility systems. 

Further, to facilitate communication and coordination between the 
state agencies that are developing the new eligibility systems, and 
direct efforts to develop new systems, the six states have formed 
interagency work groups. According to state officials, coordination is 
necessary because these systems are often used for multiple state 
programs, and must interface with state exchanges. These work groups 
often include representatives from the state Medicaid agency, state 
agencies responsible for other public assistance programs that use the 
same eligibility system, the state's office of information technology, 
and the entity responsible for developing the state's health benefit 
exchange. 

States Reported That the Need for Additional Guidance and Other 
Challenges Could Affect Their Ability to Meet Implementation Deadlines: 

State officials we interviewed said they need additional federal 
guidance in several areas to address certain requirements under PPACA, 
including using MAGI to determine an applicant's Medicaid eligibility, 
[Footnote 36] converting current net-income levels to MAGI-equivalent 
levels,[Footnote 37] and integrating with the federal data hub. 
[Footnote 38] CMS is taking action to issue regulations, guidance, and 
other types of assistance to states to support the implementation of 
these new requirements. 

Eligibility determination. Most state officials indicated that they 
need additional guidance on using MAGI to determine an applicant's 
eligibility, under different scenarios involving household income 
levels, sources of income, and household composition. In March 2012, 
CMS issued a final rule on Medicaid eligibility and subsequently 
hosted a webinar that provided states with guidance for determining 
household income and composition under various scenarios. For example, 
the final rule provided a scenario for how states would determine 
household composition and income in the event that a taxpayer claims 
an adult as a dependent who is not expected to file a tax return. In 
addition, the webinar provided examples for determining eligibility 
under scenarios that involved variations in income for one-parent, two-
parent, and multi-generational households. State officials said that 
while this guidance has been helpful, they need additional guidance to 
capture the range of possible scenarios that can arise in determining 
eligibility. For example, officials we interviewed from Colorado and 
Iowa noted that questions still remain about how to determine the 
eligibility of children who divide their time between two households 
with two different parents. State officials reported that until they 
receive sufficient guidance, moving forward with designing and 
implementing new eligibility determination systems will be a 
challenge. CMS officials told us that they are aware of the states' 
need for this information and plan to release additional guidance for 
determining eligibility in the summer of 2012. 

Income conversion and submitting claims for different Federal Medical 
Assistance Percentage (FMAP) rates. Most state officials reported that 
they need additional guidance on how to convert current net income 
eligibility levels to MAGI-equivalent levels, to be able to 
distinguish applicants who will be newly eligible following the 
expansion from those who were previously eligible under the state's 
Medicaid program prior to the expansion. This is important because 
states will receive different matching rates for newly eligible and 
previously eligible adults, and need to know how to assign the 
appropriate FMAP rate. Since 2011, CMS has been working on a pilot 
effort with the RAND Corporation, the State Health Access Data 
Assistance Center, and 10 states[Footnote 39] to identify MAGI income 
conversion option methodologies for claiming the appropriate FMAP 
rate. CMS officials indicated that this effort is ongoing and that 
additional publications--including regulations and technical 
assistance--will be forthcoming in 2012. For example, in June 2012, 
CMS released a solicitation for public input on potential 
methodologies for converting current eligibility standards to MAGI-
equivalent standards.[Footnote 40] 

System integration with the federal data hub. State officials said 
they need additional guidance to determine how their systems will 
interface with the federal hub, the types of information they will be 
able to access, and whether they will be able to retain this 
information for quality assurance purposes. For example, some state 
officials we interviewed told us there is still uncertainty about the 
kind of information that the Internal Revenue Service will provide for 
verifying applicant income. This information is important because the 
federal data hub will serve as a primary data source for verifying 
applicant information related to income and citizenship. States need 
to know what data will be available through the hub in order to design 
and implement eligibility verification. In response to questions about 
the status of this guidance, CMS officials said they have been working 
with the other federal agencies involved in providing data through the 
federal hub, and that the agency is close to releasing additional 
guidance. 

In addition to federal guidance, states reported that several state-
level operational issues may also challenge their ability to meet 
Medicaid expansion and system development deadlines. These issues 
include: 

Lengthy procurement processes. Some state officials we interviewed 
said that states must follow procurement processes to secure 
contractors to manage the development of new eligibility systems, 
which can take months to complete. The length of time can be 
exacerbated by delays in the approval of necessary documentation, such 
as advanced planning documents and requests for proposals, at the 
federal or state level. For example, officials from Virginia reported 
that once all necessary documentation has been approved at the federal 
and state level, a request for proposal is released, and a contract is 
awarded, the state will likely have less than 12 months remaining to 
work with a vendor to implement a new system. 

Complexity of developing new systems. Some state officials also 
reported that they must manage the complexity of developing and 
transitioning to a new eligibility system, which may take years to 
fully complete. For example, officials from New York reported that 
they must ultimately replace two outdated eligibility systems that are 
used for different parts of the state. In attempting to create a 
seamless operation, officials said that continuing to operate the 
existing program while simultaneously trying to develop and migrate to 
a new system will be challenging. 

Coordination of multiple programs and systems. Some state officials 
said that their eligibility systems can be used to manage eligibility 
and enrollment for multiple public assistance programs, in addition to 
Medicaid. In these situations, developing and implementing a new 
eligibility system becomes significantly more complicated because 
states must manage the transition of multiple programs to a new 
system. For example, officials from Colorado reported that they share 
an eligibility system among multiple departments--including the 
state's Department of Health Care Policy and Financing and the 
Department of Human Services. The state must determine how the new 
systems will accommodate the needs of these departments, and which 
components of the broader system modernization effort will take 
priority. 

Resource limitations. Understanding and implementing eligibility and 
system changes required by PPACA have placed new demands on state 
agencies that face limitations on staff resources. For example, 
officials from Georgia reported that due to a recent decline in the 
number of available staff, the state Medicaid agency has a limited 
pool of staff to plan and manage large projects. At the same time that 
staff are preparing to comply with the Medicaid eligibility policy and 
system changes required by PPACA, they are also managing several other 
major procurements and a large Medicaid program redesign project. 

To ensure key system changes are in place before 2014, state officials 
told us that they plan to use a phased approach to implementation. For 
example, in some states, this approach will focus first on ensuring 
that new systems are capable of determining Medicaid eligibility for 
applicants using MAGI beginning in 2014, while the integration of 
other public assistance programs is planned for later stages. Further, 
state officials told us that to help supplement existing staff 
resources, states are using vendors, consultants, and external 
organizations to access additional assistance and expertise. 

[End of section] 

Appendix III: States Expect Some Budgetary Impacts from Expanding 
Medicaid, and Expressed a Need for Additional Guidance: 

States Expect Some Budgetary Impacts from Expanding Medicaid, and 
Expressed a Need for Additional Guidance: 

Our survey found that across fiscal years 2012 to 2020, the majority 
of state budget directors believe that three aspects of Medicaid 
expansion will contribute to costs: (1) the administration for 
managing Medicaid enrollment, (2) the acquisition or modification of 
information technology systems to support Medicaid, and (3) enrolling 
previously eligible but not enrolled individuals in Medicaid (as shown 
in figure 2). 

Figure 2: State Budget Director Views on Fiscal Implications of 
Medicaid Expansion Aspects: 

[Refer to PDF for image: stacked horizontal bar graph] 

Administration for managing Medicaid enrollees (N=42): 
Fiscal years 2012-2014: 
Cost: 38; 
Savings: 1; 
Don't know/not applicable: 3; 
Fiscal years 2015-2017: 
Cost: 36; 
Savings: 1; 
Don't know/not applicable: 5; 
Fiscal years 2018-2020: 
Cost: 32; 
Savings: 2; 
Don't know/not applicable: 8. 

Acquisition or modification to enrollment systems (N=42): 
Fiscal years 2012-2014: 
Cost: 37; 
Savings: 1; 
Don't know/not applicable: 4; 
Fiscal years 2015-2017: 
Cost: 29; 
Savings: 3; 
Don't know/not applicable: 10; 
Fiscal years 2018-2020: 
Cost: 23; 
Savings: 5; 
Don't know/not applicable: 14. 

Enrolling previously eligible (N=41): 
Fiscal years 2012-2014: 
Cost: 35; 
Savings: 0; 
Don't know/not applicable: 6; 
Fiscal years 2015-2017: 
Cost: 35; 
Savings: 3; 
Don't know/not applicable: 3; 
Fiscal years 2018-2020: 
Cost: 32; 
Savings: 3; 
Don't know/not applicable: 6. 

Enrolling newly eligible (N=42): 
Fiscal years 2012-2014: 
Cost: 13; 
Savings: 9; 
Don't know/not applicable: 20; 
Fiscal years 2015-2017: 
Cost: 22; 
Savings: 13; 
Don't know/not applicable: 7; 
Fiscal years 2018-2020: 
Cost: 27; 
Savings: 9; 
Don't know/not applicable: 6. 

Reductions in uncompensated care (N=41): 
Fiscal years 2012-2014: 
Cost: 5; 
Savings: 8; 
Don't know/not applicable: 28; 
Fiscal years 2015-2017: 
Cost: 7; 
Savings: 12; 
Don't know/not applicable: 22; 
Fiscal years 2018-2020: 
Cost: 7; 
Savings: 12; 
Don't know/not applicable: 22. 

Shifting individuals from state coverage to Medicaid (N=41)[A]: 
Fiscal years 2012-2014: 
Cost: 2; 
Savings: 14; 
Don't know/not applicable: 26; 
Fiscal years 2015-2017: 
Cost: 4; 
Savings: 15; 
Don't know/not applicable: 22; 
Fiscal years 2018-2020: 
Cost: 4; 
Savings: 15; 
Don't know/not applicable: 22. 

Shifting existing Medicaid enrollees to exchanges (N=42): 
Fiscal years 2012-2014: 
Cost: 1; 
Savings: 10; 
Don't know/not applicable: 31; 
Fiscal years 2015-2017: 
Cost: 1; 
Savings: 12; 
Don't know/not applicable: 29; 
Fiscal years 2018-2020: 
Cost: 1; 
Savings: 12; 
Don't know/not applicable: 29. 

Source: GAO analysis of survey responses from state budget directors. 

Note: The "N" in the graphic above refers to the total number of 
survey respondents. 

[A] While 42 state budget officers responded to the survey question of 
whether shifting individuals from state coverage to Medicaid 
contributed a cost or savings in fiscal years 2012 through 2014, 41 
budget officers responded to the question for fiscal years 2015 
through 2017 and for fiscal years 2018 through 2020. 

[End of figure] 

Written comments provided in response to our survey, while not 
representative of all state budget directors, provide some insights 
about their views on these costs. For example, one state budget 
director said that in addition to the administrative costs for 
enrolling individuals and acquiring new information technology, 
[Footnote 41] the state will experience other increased administrative 
costs for processing claims and authorizing prior claims as a result 
of higher Medicaid enrollment. A number of state budget directors 
expressed concern about costs associated with insuring individuals who 
are currently eligible for Medicaid but are not enrolled. A number of 
state budget directors said currently eligible but unenrolled 
individuals may now apply for Medicaid benefits due to increased 
outreach and penalties for those who do not purchase insurance. 
[Footnote 42] 

Furthermore, our survey found that many states are uncertain about how 
certain aspects of the Medicaid expansion will affect their budgets. 
[Footnote 43] For example, across fiscal years 2012 to 2020, more than 
half of the state budget directors reported they did not know the 
impact of shifting existing Medicaid enrollees into health benefit 
exchanges--more so than any other expansion aspect we asked about. In 
addition, at least half of the state budget directors indicated they 
did not know if shifting individuals from state coverage into Medicaid 
would result in a cost or savings to their budgets across fiscal years 
2012 to 2020 (see figure 2). 

Figure 2 also shows that for some aspects of the expansion, several 
state budget directors perceived a budget savings. For example, some 
reported that reductions in uncompensated care and enrolling the newly 
eligible population would result in budget savings across all fiscal 
years. Several state budget directors reported also that shifting 
individuals from state funded coverage to Medicaid would result in 
budget savings for all fiscal years. However, as noted in figure 2, 
over half as many reported that they did not know whether this aspect 
would contribute costs or savings to their budgets. 

States Reported That Their Fiscal Capacity and Share of Medicaid 
Expenditures Challenge Their Implementation of the Medicaid Expansion: 

Our survey asked state budget directors about their views on 
challenges that may affect their implementation of Medicaid expansion. 
Nearly all of the state budget directors reported that fiscal capacity 
and the state's share of Medicaid expenditures will be very or 
moderately challenging to implementing Medicaid expansion. Regarding 
other budget factors we asked about, nearly all states reported that 
federal funding for Medicaid expansion will be very or moderately 
challenging within the time period, of fiscal years 2017 to 2020, when 
the federal matching rate for the newly eligible enrollees will 
gradually decline from 95 percent to 90 percent.[Footnote 44] Further, 
as shown in table 2, many states reported they did not know the impact 
of the local or county share of the states' Medicaid expenditures on 
their budgets.[Footnote 45] 

Table 2: State Budget Director Views on Challenges Affecting Medicaid 
Expansion: 

Challenge: State fiscal capacity; 
Degree of challenge: 
Very: 28; 
Moderately: 4; 
Slightly: 4; 
Not at all: 2; 
Do not know/not applicable: 4; 
Total: 42. 

Challenge: State share of Medicaid expenditures; 
Degree of challenge: 
Very: 27; 
Moderately: 5; 
Slightly: 3; 
Not at all: 3; 
Do not know/not applicable: 4; 
Total: 42. 

Challenge: Local or county share of state Medicaid expenditures; 
Degree of challenge: 
Very: 3; 
Moderately: 3; 
Slightly: 5; 
Not at all: 6; 
Do not know/not applicable: 24; 
Total: 41. 

Challenge: Federal funding for Medicaid expansion implementation 
(fiscal years 2017 to 2020); 
Degree of challenge: 
Very: 16; 
Moderately: 10; 
Slightly: 5; 
Not at all: 5; 
Do not know/not applicable: 6; 
Total: 42. 

Source: GAO analysis of survey responses from state budget directors. 

[End of table] 

A Few State Budget Directors Reported CMS Guidance Was Useful While 
Many Reported Additional Guidance is Needed: 

Recognizing that the purpose of federal guidance is to help states 
implement Medicaid, we asked states how useful federal guidance was 
for developing budget estimates. As shown in table 3, a few state 
budget directors reported that the guidance was very or moderately 
useful, while most reported that the guidance was slightly or not at 
all useful. 

Table 3: State Budget Director Views on Usefulness of CMS Guidance: 

Usefulness: Very useful; 
Number of respondents: 2. 

Usefulness: Moderately useful; 
Number of respondents: 4. 

Usefulness: Slightly useful; 
Number of respondents: 20. 

Usefulness: Not at all useful; 
Number of respondents: 10. 

Usefulness: Don't know/not applicable; 
Number of respondents: 6. 

Source: GAO analysis of survey responses from state budget directors. 

[End of table] 

As part of our survey, we asked states what additional guidance, if 
any, they needed from CMS or other agencies to assist with developing 
budget estimates for Medicaid expansion. In response, 31 state budget 
directors provided written comments about what additional guidance 
they needed, which we have summarized: 

* Medicaid benefits packages. A number[Footnote 46] of state budget 
directors indicated they need additional guidance on definitions for 
essential and benchmark benefits for the newly eligible population. 
[Footnote 47] This guidance would help clarify the types and 
parameters of coverage required for ambulatory, emergency, and 
laboratory services. 

* Medicaid eligibility determination. Some state budget directors 
indicated they need additional guidance on Medicaid eligibility, 
including methodologies for calculating Modified Adjusted Gross Income 
(MAGI) for the newly eligible, definitions for household composition 
and income for caretakers and persons with disabilities. CMS's final 
rule made some changes to selected eligibility determination 
provisions; however, a few state budget officers indicated that 
clarification is needed to refine state budget estimates. 

* Federal Medical Assistance Percentage (FMAP). Several state budget 
directors indicated they need guidance from CMS on submitting claims 
for the federal match for newly eligible adults and that such guidance 
is necessary for developing accurate budget estimates. 

CMS officials indicated that the agency is planning to issue 
additional regulations or guidance such as operational bulletins at a 
later date in a number of areas, including clarification on 
eligibility groups, MAGI and the FMAP methodology for the newly 
eligible populations. 

[End of section] 

Appendix IV: Objectives, Scope, and Methodology: 

This appendix describes how we did our work to identify (1) states' 
responsibilities for implementing certain provisions under the Patient 
Protection and Affordable Care Act (PPACA),[Footnote 48],[Footnote 49] 
(2) actions selected states have taken to prepare for the Medicaid 
expansion provisions of PPACA and the challenges they have 
encountered, and (3) states' views on the fiscal implications of the 
Medicaid expansion on state budget planning. To address these 
objectives, we reviewed relevant PPACA provisions; regulations and 
guidance issued by the Department of Health and Human Services (HHS), 
the Centers for Medicare & Medicaid Services (CMS), and information 
regarding Medicaid expansion published by state associations; we 
conducted semi-structured interviews with Medicaid officials in six 
states regarding the details of their current plans for implementing 
the expansion and we administered a web-based survey of state and U.S. 
territory budget directors. We also interviewed CMS officials 
responsible for developing and issuing regulations and guidance to 
states on the expansion. 

Medicaid Expansion Provisions and Implementing Regulations and 
Guidance: 

To identify state responsibilities for implementing the Medicaid 
expansion provisions of PPACA, we identified relevant provisions of 
PPACA that impose new requirements related to Medicaid eligibility 
levels, modifications to eligibility determination systems, federal 
funding provided to support the expanded population, and changes to 
Medicaid enrollment processes to facilitate expansion. Specifically, 
we reviewed the following PPACA provisions: 

1. eligibility for Medicaid coverage expanded to individuals with 
income at or below 133 percent of the federal poverty level;[Footnote 
50] 

2. increased federal matching rates for costs associated with the 
newly eligible;[Footnote 51] 

3. state options to offer Medicaid coverage to the newly eligible 
earlier than January 1, 2014;[Footnote 52] 

4. requirement that a state maintain its Medicaid eligibility 
standards until an exchange in the state is fully operational; 
[Footnote 53] 

5. the transition to using Modified Adjusted Gross Income--a tax-based 
definition of income--to determine income eligibility for medical 
assistance for non-elderly individuals;[Footnote 54] and: 

6. the creation of streamlined eligibility and enrollment systems. 
[Footnote 55] 

Further, we reviewed certain implementing federal regulations and 
guidance, including rules, informational bulletins, State Medicaid 
Director and State Health Official letters, and questions and answers. 
Examples include the following: 

* CMS, Medicaid Program; Eligibility Changes Under the Affordable Care 
Act of 2010, Final Rule and Interim Final Rule, 77 Fed. Reg. 17,144 
(Mar. 23, 2012); 

* HHS/USDA/CMS Letter to State Medicaid and CHIP Directors, State 
Exchange Grantees and Health & Human Service Directors providing 
additional guidance on cost allocation for state eligibility 
determination systems (Jan. 23, 2012); 

* HHS/USDA/CMS Letter to State Medicaid & CHIP Directors, State 
Exchange Grantees and Health & Human Services Directors on cost 
allocation for state eligibility determination systems (Aug. 10, 2011); 

* CMS Letter to State Medicaid Directors on maintenance of effort 
provisions (Aug. 5, 2011); 

* CMS, Medicaid Program; Federal Funding for Medicaid Eligibility 
Determination and Enrollment Activities, Final Rule, 76 Fed. Reg. 
21,950 (Apr. 19, 2011); 

* Informational Bulletin on recent developments in Medicaid, including 
developing and upgrading Medicaid IT systems (Apr. 14, 2011); 

* CMS Letter to State Medicaid Directors on maintenance of effort 
provisions (Feb. 25, 2011); and: 

* CMS Letter to State Health Officials/State Medicaid Directors on new 
option for coverage of individuals under Medicaid (Apr. 9, 2010). 

In addition, we reviewed reports that summarized state 
responsibilities with regard to the Medicaid expansion required under 
PPACA from the Congressional Budget Office, Congressional Research 
Service, and relevant state associations, including: the Council of 
State Governments, National Association of Insurance Commissioners, 
National Association of Medicaid Directors, National Association of 
State Chief Information Officers, National Association of State Budget 
Officers, National Conference of State Legislatures, and National 
Governors Association. 

Selected State Studies: 

To identify what actions states have taken to prepare for the 
implementation of the Medicaid expansion and what challenges they 
encountered, we administered semi-structured interviews with officials 
in state Medicaid offices in six states: Colorado, Georgia, Iowa, 
Minnesota, New York, and Virginia. We selected these states on the 
basis of: 

1. the relative size of expected enrollment expansion within Medicaid, 
[Footnote 56] 

2, the state's Medicaid enrollment rates, 

3. geographic dispersion, and: 

4. whether a state expanded insurance coverage to childless adults in 
the past. 

Table 4 provides information on the characteristics of the states we 
selected. 

Table 4: Characteristics of the Six Selected States Included in Our 
Review: 

State: Colorado; 
Relative size of expected enrollment expansion: 109.5; 
Whether the state expanded insurance coverage to childless adults in 
the past: No; 
Number of Medicaid enrollees (as of June 2010): 526,200. 

State: Georgia; 
Relative size of expected enrollment expansion: 126.1; 
Whether the state expanded insurance coverage to childless adults in 
the past: No; 
Number of Medicaid enrollees (as of June 2010): 1,457,400. 

State: Iowa; 
Relative size of expected enrollment expansion: 82.8; 
Whether the state expanded insurance coverage to childless adults in 
the past: Yes; 
Number of Medicaid enrollees (as of June 2010): 407,300. 

State: Minnesota; 
Relative size of expected enrollment expansion: 90.4; 
Whether the state expanded insurance coverage to childless adults in 
the past: Yes; 
Number of Medicaid enrollees (as of June 2010): 712,700. 

State: New York; 
Relative size of expected enrollment expansion: 57.6; 
Whether the state expanded insurance coverage to childless adults in 
the past: Yes; 
Number of Medicaid enrollees (as of June 2010): 4,722,200. 

State: Virginia; 
Relative size of expected enrollment expansion: 108.7; 
Whether the state expanded insurance coverage to childless adults in 
the past: No; 
Number of Medicaid enrollees (as of June 2010): 785,700. 

Source: GAO analysis of information provided by the Kaiser Family 
Foundation Commission on Medicaid and the Uninsured and the work of 
Leighton Ku, Ph.D., M.P.H.; Karen Jones, M.S.; Peter Shin, Ph.D., 
M.P.H.: Brian Bruen, M.S.; and Katherine Hayes, J.D. "The States' Next 
Challenge--Securing Primary Care for Expanded Medicaid Populations," 
The New England Journal of Medicine, vol. 364, no. 6 (Feb. 10, 2011). 

[End of table] 

We conducted initial interviews in-person and by telephone between 
January and March 2012, and follow-up interviews between April and May 
2012. The interview questions focused on: the states' policies and 
procedures in implementing the Medicaid expansion, guidance and 
technical assistance provided and needed for the implementation, 
interagency efforts with state governments and other agencies to 
prepare for the implementation, and communication between state 
officials. The responses to the interviews are not intended to be 
representative of all Medicaid offices. 

In addition, we conducted interviews with officials from CMS and 
relevant state associations, including the National Conference of 
State Legislatures, National Association of State Budget Officers, and 
National Association of Medicaid Directors. 

Web Survey of State Budget Directors: 

To identify states' views on the fiscal implications of the Medicaid 
expansion on state budget planning, we developed and administered a 
web-based survey to state budget directors in the 50 states, the 
District of Columbia, and 4 U.S. territories (American Samoa, Guam, 
Puerto Rico, and the U.S. Virgin Islands). Using e-mail addresses 
provided by the National Association of State Budget Officers, we e-
mailed each state budget director a link to a secure survey website, 
along with a unique identifier and password to control access to each 
state's questionnaire. Most survey questions were closed-ended, in 
which budget directors selected from a list of possible responses. To 
obtain additional narrative and supporting context, survey respondents 
were given multiple opportunities to provide additional open-ended 
comments throughout the survey. 

We received completed questionnaires from 42 of the 55 entities, for 
an overall response rate of 76 percent. We conducted the survey from 
February 29, 2012, to April 10, 2012. Several days before the survey 
period began, we notified recipients that they would be receiving it. 
We also followed up via e-mail and telephone with nonrespondents 
several times before the survey period ended. 

Estimates from our survey may be subject to errors from nonresponse, 
measurement, and data processing. We took steps in the design, data 
collection, and analysis of our survey to limit such errors. 

While our survey sample included all states and territories in our 
target population, and is therefore not subject to errors from 
population coverage or sampling, 13 states and territories did not 
respond to the survey. In addition, not all those responding to the 
survey answered all survey questions. To minimize errors from 
nonresponse, we made multiple followup contacts with complete or 
partial nonrespondents throughout the survey. However, to the extent 
nonrespondents would have answered a particular question differently 
from those who did answer, our survey estimate for that question would 
differ from the true value that would have resulted had all states 
responded. 

To limit the risk of measurement errors arising from deficiencies in 
questionnaire structure, question and answer wording, or respondent 
errors in reporting, our survey research specialists and staff with 
subject matter expertise designed the format and content of the 
questionnaire. 

We pretested the survey with officials from one state to ensure that 
questions were clear, comprehensive, and unbiased, and to minimize the 
burden the questionnaire placed on respondents. We also reviewed the 
survey with officials from the National Association of State Budget 
Officers. On the basis of these pretest results and comments, we 
revised the questionnaire for clarity and content. 

To limit possible data processing errors, survey response data were 
checked for inconsistencies and ineligible responses. An independent 
analyst checked all programs used to make edits to and analyze the 
survey results. 

In addition to the data from the survey provided in this report and 
its appendixes, each survey question along with responses to it is 
presented in GAO-12-944SP, an e-supplement to this report. 

We conducted our work from June 2011 to July 2012 in accordance with 
generally accepted government audit standards. Those standards require 
that we plan and perform the audit to obtain sufficient, appropriate 
evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the 
evidence obtained, and the analysis conducted, provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix V: Comments from the Department of Health and Human Services: 

Department of Health & Human Services: 
Office of the Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

July 23, 2012: 

Stanley J. Czerwinski: 
Director, Strategic Issues: 

Carolyn L. Yocom: 
Director, Health Care: 

U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Mr. Czerwinski and Ms. Yocom: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled, "Medicaid Expansion: States' Implementation of 
the Patient Protection and Affordable Care Act" (GAO 12-821). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

[End of letter] 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Medicaid Expansion: States' Implementation Of The Patient Protection 
And Affordable Care Act" (GAO-12-821): 

The Department appreciates the opportunity to comment on this draft 
report. 

The purpose of this report was to examine the actions that states are 
taking to implement the Medicaid expansion under the Patient 
Protection and Affordable Care Act of 2010, as revised by the Health 
Care and Education Reconciliation Act of 2010, hereafter referred to 
collectively as the Affordable Care Act. GAO's objectives were to 
address the following questions: 1) What are states' responsibilities 
for implementing the Medicaid expansion provisions of the Affordable 
Care Act? 2) What actions have selected states taken to prepare for 
the implementation of the Medicaid expansion provisions of the 
Affordable Care Act, and what challenges have they encountered? 3) 
What are states' views on the fiscal implications of the Medicaid 
expansion on state budget planning? 

To address these questions, GAO surveyed states, interviewed Medicaid 
officials in six selected states, sought information from state 
associations, and reviewed the provisions of the Affordable Care Act. 
GAO also interviewed CMS officials responsible for developing and 
issuing regulations and guidance on the Medicaid expansion, and 
reviewed the body of guidance and other technical assistance resources 
that CMS has provided to states over the past 2 years. While GAO 
acknowledged that CMS has been actively working to provide guidance 
and assistance to states in implementing the Affordable Care Act, it 
concluded that states need additional regulations and guidance in 
three areas: 1) application of Modified Adjusted Gross Income (MAGI) 
methodology; 2) conversion of Medicaid eligibility standards; and 3) 
data available to states through the Federal Data Services Hub. 

Since the passage of the Affordable Care Act, the Administration has 
worked steadily with states to implement the law. CMS has issued a 
number of guidance documents and answers to frequently asked 
questions. It has hosted dozens of meetings at the national and 
regional levels, conference calls, and webinars to directly engage 
state officials. CMS will continue to work closely with states. 

HHS and CMS acknowledge that additional guidance is needed and 
appreciates GAO's acknowledgment of our efforts and planning in this 
regard. To assist you in finalizing the report, below is a summary of 
the guidance that has been released this year and initiatives that are 
underway to convey and exchange information with states regarding 
Affordable Care Act implementation: 

* March 23, 2012 — Medicaid/Children's Health Insurance Program (CHIP) 
eligibility final rule published in the Federal Register; 

* March/April 2012 — Six webinars providing briefings of the 
eligibility final rule with approximately 500 participants per webinar; 

* March/April 2012 — Launch of State Operations and Technical 
Assistance (SOTA) initiative to provide individualized discussions for 
states with a multi-disciplinary team from CMS including 
representatives from the Office of the Center for Medicaid & CHIP 
Services (CMCS) Director, the Children and Adults Health Program 
Group, the Data and Systems Group, and the CMS Regional Offices. These 
SOTA calls will take place on a monthly basis with all 50 states; 

* April/May 2012 — Two conference calls focused specifically on how 
states can adopt the new eligibility standard of MAGI; two open 
Question and Answer sessions for states; 

* June 21, 2012 — Release of MAGI Conversion Solicitation of Public 
Input on two possible methodologies for converting income standards to 
MAGI, available at [hyperlink, http://www.medicaid.gov/State-Resource-
Center/Events-and-Announcements/Downloads/MAGI-income-conversion.pdf]. 
This document followed a  series of regular communications and data 
analysis work with 10 pilot states working through a contract with the 
RAND Corporation, CMS, and the Assistant Secretary for Planning and 
Evaluation; 

* July 6, 2012 — Release of proposed set of data elements for the 
single, streamlined application for enrollment in the Exchange, 
Medicaid, and CHIP, available at [hyperlink, 
http://www.medicaid.gov/State-Resource-Center/Events-and-
Announcements/Events-and-Announcements.html]; 

* Ongoing -- Conducting Medicaid and CHIP Learning Collaboratives with 
groups of 8-10 states on a range of topics. Information developed 
through these collaboratives is also being disseminated more broadly 
to all states; 

* Ongoing -- Monthly meetings with states via Technical Advisory 
Groups (TAGs), such as the Children's Coverage TAG and the Eligibility 
TAG, which provide forums for states to receive up-to-date information 
and to voice questions and concerns; 

* Ongoing — Ad hoc workgroups to discuss issues such as development of 
the single, streamlined application and verification and income 
counting rules; 

* Summer 2012 — Working with states undertaking systems modernization 
and offering a series of "accelerators" to help ensure that states 
have the resources they need to be ready for open enrollment by 
October 1, 2013. CMS and states have been sharing information through 
the Collaborative Application Lifecycle Management Tool (known as the 
CALT) and will be hosting numerous calls and webinars for states. 
These tools are complemented by the August 10, 2011, Tri-Agency Letter 
from CMS, the Department of Health and Human Services' Administration 
for Children and Families, and the Department of Agriculture providing 
states with information about a time-limited exception to the cost 
allocation requirements set forth in the Office of Management and 
Budget Circular A-87. The exception gives states the opportunity to 
consider the benefits of integrating the eligibility determination 
functions across health and human services programs, was effective 
immediately, and is available until December 31, 2015. The Tri-
Agency Letter is available at [hyperlink, 
http://www.cms.gov/smdl/downloads/tri-agency.pdf]. 

* Fall 2012 — CMS has been working to develop a new, electronic State 
Plan Amendment submission system, known as MACPRo, to facilitate and 
improve the State Plan Amendment review and approval process. The 
system is slated to become available beginning in January 2013, and we 
have been consulting with states throughout the development process. 

As GAO notes in its report, additional rules and guidance are 
forthcoming and are expected to be finalized in the near future. 
Specifically, as noted in the appendix to the report, CMS anticipates 
issuing additional guidance on MAGI conversion in late summer 2012 and 
will be providing targeted technical assistance to each state to help 
them think through the conversion process. It is also working to 
develop final rules regarding the computation of the Federal Medical 
Assistance Percentage (FMAP), based on the August 2011 Notice of 
Proposed Rulemaking (76 FR 51148) and anticipate issuing a final FMAP 
rule in 2012. Additionally, CMS is developing a series of operational 
guidance "bulletins" to assist states in applying the policies and 
procedures discussed in the eligibility final rule. 

Importantly, the Supreme Court's June 28, 2012 decision on the 
Affordable Care Act allows states to make their own decisions about 
whether to undertake the Medicaid eligibility expansion concerning 
certain adults without jeopardizing their pre-existing programs. There 
is no deadline for a state to decide to undertake the Medicaid 
eligibility expansion. A state can receive extra funding for Medicaid 
IT costs, even if it has not yet decided whether to expand Medicaid 
eligibility, as long as it is modernizing its eligibility systems. 
And, if a state ultimately decides not to undertake the eligibility 
expansion, it will not have to pay those resources back. More guidance 
will be issued in the year and a half before the Medicaid eligibility 
expansion begins. 

Coverage under the Medicaid eligibility expansion is completely paid 
for by the federal government in the first three years, and the 
federal government will cover at least 90 percent of these costs in 
the years thereafter. We believe that these resources, and our rules 
and guidance, in addition to the interactive opportunities we continue 
to provide states, will enable states to implement the Medicaid 
eligibility expansion in an effective manner. 

GAO's report is a helpful resource for purposes of targeting our 
ongoing technical assistance implementation efforts with states. We 
look forward to working with GAO on this and other issues. Thank you 
for the opportunity to comment. 

[End of section] 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Stanley J. Czerwinski, Director, Strategic Issues, (202) 512-6806 or 
czerwinskis@gao.gov: 

Carolyn L. Yocom, Director, Health Care, (202) 512-7114 or 
yocomc@gao.gov: 

Staff Acknowledgments: 

In addition to the contacts named above, Michelle Sager, Acting 
Director; Brenda Rabinowitz, Assistant Director; Walter Ochinko, 
Assistant Director; Carl Ramirez, Assistant Director; Sandra Beattie, 
Analyst-in-Charge; Amy Bowser; Kisha Clark; Robert Gebhart; Catherine 
Hurley; Adam Miles; Cynthia Saunders; Hemi Tewarson; and Ann Tynan 
made key contributions to this report. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010) (PPACA), as 
amended by the Health Care and Education Reconciliation Act, Pub. L. 
No. 111-152, 124 Stat. 1029 (Mar. 30, 2010). 

[2] PPACA § 2001(a)(1),124 Stat. 271. In this report, we refer to this 
group as the "newly eligible." We use FPL to refer to federal poverty 
guidelines issued by the Department of Health and Human Services each 
year in the Federal Register. These guidelines provide income 
thresholds that vary by family size and for certain states, and which 
are updated using the Consumer Price Index. The national Medicaid 
minimum eligibility level of 133 percent of FPL was $29,700 for a 
family of four in 2011. 

[3] Under the Medicaid program, a failure by a state to comply with 
federal requirements may result in a termination of federal Medicaid 
funds by the Secretary of Health and Human Services. 42 U.S.C. § 
1396c. The U.S. Supreme Court recently ruled that any state that 
chooses not to expand Medicaid coverage to the newly eligible will not 
be subject to this penalty. Instead, the state will forego the 
enhanced federal matching funds associated with covering this 
population. See National Federation of Independent Business, et al., 
vs. Sebelius, Sec. of Health and Human Services, et al., 567 U.S._, 
2012 WL 2427810 (U.S. June 28, 2012). 

[4] PPACA requires the establishment of exchanges in each state by 
January 1, 2014. PPACA § 1311(b), 124 Stat. 173. Through each state's 
exchange, individuals can compare and select insurance coverage from 
among participating health insurance plans. PPACA § 1312, 124 Stat. 
182-183. Premium tax credits and cost sharing reductions for these 
plans will be available for eligible individuals or families with 
income from 100 to 400 percent of the FPL. PPACA §§ 1401(a),1402 124 
Stat. 213-24, as amended by HCERA § 1001, 124 Stat. 1030-32. In 
addition, if a state does not elect to operate an exchange, the 
Secretary of the Department of Health and Human Services, either 
directly or through an agreement with a nonprofit entity, will 
establish and operate an exchange within that state. PPACA § 1321(c), 
124 Stat. 186-7. 

[5] Office of the Actuary, Centers for Medicare & Medicaid Services, 
United States Department of Health & Human Services: 2011 Actuarial 
Report on the Financial Outlook for Medicaid (Mar. 16, 2012). 

[6] CHIP is a federal-state program and provides health care coverage 
to children 18 years of age and younger living in low-income families 
whose incomes exceed the eligibility requirements for Medicaid. 

[7] GAO, E: supplement: Medicaid Expansion: States' Implementation of 
the Patient Protection and Affordable Care Act, [hyperlink, 
http://www.gao.gov/products/GAO-12-944SP] (Washington, D.C.: Aug.1, 
2012). 

[8] National Federation of Independent Business, et al., vs. Sebelius, 
Sec. of Health and Human Services, et al., No. 11-393. 

[9] A Medicaid state plan describes the scope of a state's Medicaid 
program, including a list of eligibility categories and standards and 
the services covered. 

[10] National Governors Association and the National Association of 
State Budget Officers, The Fiscal Survey of States (Washington, D.C.: 
Spring 2012). 

[11] States must expand Medicaid coverage to non-pregnant individuals 
who are under 65, who have household incomes at or below 133 percent 
of the federal poverty level for the applicable family size who are 
not entitled to or enrolled in Medicare, and who are not already 
required to be covered under Medicaid. 

[12] PPACA also specifies that an income disregard in the amount of 5 
percent FPL be deducted from an individual's income when determining 
Medicaid eligibility. This income counting rule effectively raises the 
upper income eligibility threshold for new eligibly Medicaid 
recipients to 138 percent FPL. 

[13] Certain groups of individuals are exempt from this requirement, 
such as individuals who qualify for Medicaid on the basis of being 
aged, blind, or disabled, and their eligibility will continue to be 
determined based on existing criteria. 

[14] The federal government will pay 100 percent of the cost of 
covering new eligible individuals in fiscal years 2014, 2015, and 
2016, with the federal match gradually reduced to 90 percent by 2020. 

[15] The Secretary of Health and Human Services is authorized to 
provide enhanced administrative funding at a rate of 90 percent of the 
cost for the design, development, or installation of information 
technology enrollment systems that are likely to provide more 
efficient, economical, and effective administration, and 75 percent 
for the operation of those systems. CMS issued a final rule on April 
19, 2011, providing for enhanced funding through December 31, 2015, 
for states to upgrade their information technology systems to 
implement the improvements and changes to Medicaid enrollment under 
PPACA provided that the systems meet a number of standards and 
conditions. 

[16] As stated earlier, MAGI is the new methodology that states will 
use beginning in 2014 to calculate an applicant's income to determine 
whether or not they are eligible for Medicaid. 

[17] CMS, Medicaid Program; Eligibility Changes Under the Affordable 
Care Act of 2010, Final Rule and Interim Final Rule, 77 Fed. Reg. 
17,144 (Washington, D.C.: Mar. 23, 2012). 

[18] PPACA § 2001(a)(1), 124 Stat. 271. States must expand Medicaid 
coverage to non-pregnant individuals who are under 65, who have 
household incomes at or below 133 percent of FPL for the applicable 
family size, who are not entitled to or enrolled in Medicare, and who 
are not already required to be covered under Medicaid. In this 
section, we refer to this group as the "newly eligible." 

[19] Under the Medicaid program, a failure by a state to comply with 
federal requirements may result in a termination of federal Medicaid 
funds by the Secretary of Health and Human Services. 42 U.S.C. § 
1396c. The U.S. Supreme Court recently ruled that any state that 
chooses not to expand Medicaid coverage to the newly eligible will not 
be subject to this penalty. Instead, the state will forego the 
enhanced federal matching funds associated with covering this 
population. See National Federation of Independent Business, et al., 
vs. Sebelius, Sec. of Health and Human Services, et al., 567 U.S._, 
2012 WL 2427810 (U.S. June 28, 2012). 

[20] PPACA § 2002, 124 Stat. 279-82, as amended by the HCERA §§ 
1004(b),(e), 124 Stat. 1034, 1036. MAGI, is adjusted gross income, 
plus certain excluded foreign income and tax-exempt interest. See 26 
U.S.C. § 36B(d)(2)(B). Certain groups of individuals are exempt from 
this requirement, such as individuals who qualify for Medicaid on the 
basis of being aged, blind, or disabled. 

[21] PPACA § 2001(a)(4), 124 Stat. 274, as amended by PPACA § 
10201(b), 124 Stat. 918. 

[22] CMS, Medicaid Program; Eligibility Changes Under the Affordable 
Care Act of 2010, Final Rule and Interim Final Rule, 77 Fed. Reg. 
17,144, 17,204-5 (Mar. 23, 2012). 

[23] PPACA requires the establishment of a system of American Health 
Benefit Exchanges--marketplaces where eligible individuals can 
purchase private health insurance. PPACA § 1311(b),124 Stat. 173. 
Through each state's exchange, individuals can compare and select 
insurance coverage from amongst participating health insurance plans. 
PPACA § 1312, 124 Stat. 182-3. 

[24] PPACA § 2001(b)(1)-(3), 124 Stat. 275-76. PPACA also requires 
states to maintain Medicaid eligibility levels for children from March 
23, 2010, through September 30, 2019. Exceptions to maintenance of 
effort requirements may be granted for Medicaid eligibility 
restrictions for non-pregnant, non-disabled adults with income above 
133 percent of the federal poverty level for states experiencing or 
projecting a budget deficit. 

[25] PPACA §§ 2001(a)(3),124 Stat. 272-3, as amended by PPACA 
§10201(c)(3)(B),124 Stat. 918-19 and HCERA § 1201(1)(B),124 Stat. 1051-
52. 

[26] PPACA § 10201(c), 124 Stat. 918-19, as amended by HCERA § 1201, 
124 Stat. 1051-2. These states are eligible for an increased federal 
matching rate for this population based on a formula that will vary 
based on their regular Federal Medical Assistance Percentage until 
calendar year 2019, at which point they will receive the newly 
eligible federal matching rate described earlier. 

[27] PPACA makes this requirement a condition for the receipt of 
federal funding for states' Medicaid programs. 

[28] PPACA § 2201, 124 Stat. 289-91. For example, PPACA requires that 
individuals who are determined ineligible for Medicaid or CHIP be 
screened for eligibility for the health insurance exchanges. Those 
that are uninsured with incomes from 100 to 400 percent of the FPL may 
qualify for premium tax credits and cost sharing reductions for 
insurance purchased through an exchange. 

[29] In order to qualify for this enhanced funding, CMS must determine 
that a state's system meets a number of standards and conditions, 
including seamless coordination with the exchanges. The 90 percent 
match is available only for these costs that are incurred from April 
19, 2011, through December 31, 2015. 

[30] CMS, Medicaid Program; Eligibility Changes Under the Affordable 
Care Act of 2010, Final Rule and Interim Final Rule, 77 Fed. Reg. 
17,144 (Mar. 23, 2012). 

[31] CMS, Center for Medicaid and CHIP Services, Solicitation of 
Public Input on Conversion of Net Income Standards to Equivalent 
Modified Adjusted Gross Income Standards, (Washington, D.C., June 21, 
2012). 

[32] In general, states have the option of extending Medicaid coverage 
to the medically needy. The medically needy are individuals who fall 
under a Medicaid category but whose income or resources exceed 
applicable levels. This coverage group includes individuals who are 
aged, blind or disabled, members of families with children, pregnant 
women, and children under 21 years of age. 

[33] Specifically, for the purposes of determining Medicaid 
eligibility, New York currently allows exclusions for certain types of 
income, such as child support received, room and board income, and 
cash assistance based on need. PPACA prohibits the use of any income 
exclusions for individuals whose financial eligibility will be based 
on modified adjusted gross income (MAGI), other than the income 
disregard of 5 percent of the FPL to be applied to every such 
individual. 

[34] Some states--including Colorado, Iowa, Minnesota, New York, and 
Virginia--have Medicaid waivers, authorized under Section 1115 of the 
Social Security Act, that allow states to expand eligibility to adults 
who are not otherwise eligible for Medicaid. If the waiver allows a 
state to cover those with income above 133 percent of FPL, states also 
will need to decide whether to maintain the waiver or allow it to 
expire. For example, New York already covers childless adults up to 
100 percent of FPL and parents up to 150 percent of FPL under a 
Section 1115 waiver. The state will need to decide whether to allow 
the waiver to expire, or to renew the waiver and continue coverage for 
parents above 133 percent of FPL. 

[35] In order to qualify for the 90 percent match, states must submit 
an advanced planning document to CMS for approval. In approving the 
advanced planning document, CMS must determine that the design, 
development, installation, or enhancement of a state's eligibility 
system meets a number of standards and conditions, including seamless 
coordination with the health insurance exchanges. The 90 percent match 
is available only for costs incurred after April 19, 2011, and before 
December 31, 2015. Beginning April 19, 2011, states may also qualify 
for a 75 percent match for the operation of eligibility systems that 
continue to meet applicable standards and conditions. This enhanced 
match is not available for systems that do not meet these requirements 
by December 31, 2015. See, CMS, Federal Funding for Medicaid 
Eligibility Determination and Enrollment Activities, Final Rule, 76 
Fed. Reg. 21950 (Apr. 19, 2011). 

[36] MAGI is adjusted gross income, increased by certain tax-exempt 
interest and excluded foreign income. 26 U.S.C. § 36B(d)(2)(B). 

[37] For those individuals whose eligibility will be determined using 
MAGI, states will need to convert their current net income standards 
to the new income standards under the MAGI calculation. 

[38] As noted earlier, the Federal Data Services Hub is an electronic 
service that states will use to verify information with other federal 
agencies, such as an applicant's citizenship (through the Social 
Security Administration), immigration status (through the Department 
of Homeland Security), and income data (through the Internal Revenue 
Service). 

[39] The 10 states included in the pilot project are: Arizona, 
California, Indiana, Nebraska, New Hampshire, New York, Oregon, 
Tennessee, Virginia, and West Virginia. 

[40] Center for Medicaid and CHIP Services Informational Bulletin, 
Solicitation of Public Input on Conversion of Net Income Standards to 
Equivalent Modified Adjusted Gross Income Standards (Baltimore, MD, 
June 21, 2012). 

[41] As we noted earlier in this report, states may receive an 
enhanced administrative federal match--90 percent--for the design, 
development, and installation or enhancement of eligibility 
determination systems until December 31, 2015. States may also receive 
a 75 percent federal match for the maintenance and operations costs 
associated with these systems. 

[42] Beginning in 2014, all United States citizens and legal residents 
and their dependents will be required to maintain minimum essential 
insurance coverage unless exempted, and will have to pay a financial 
penalty if they fail to maintain such coverage. PPACA § 1501(b), 124 
stat. 244-49. 

[43] For the purposes of this report, to characterize the 42 responses 
provided by state budget directors, we defined modifiers (e.g., 
"many") to quantify their responses as follows: "a few" or "a number 
of" refers to 8 or fewer responses, "several" or "some" refers to 9 to 
20 responses, "many" or "more than half" refers to 21 to 31 responses, 
and "nearly all" refers to 32 or more responses. 

[44] As explained earlier, states will receive an increased federal 
match for newly eligible adults at 100 percent for 2014-2016, 95 
percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 
percent in 2020 and beyond. 

[45] Some states require local or county governments to contribute to 
the state share of Medicaid expenditures. Of the states that require a 
local or county government contribution, the required contribution 
percentage varies and may include administrative, mental health, long 
term care, nursing home, and acute care costs. 

[46] For the purposes of this report, to characterize the 31 written 
responses provided by state budget directors, we defined modifiers 
(e.g., "a number of") to quantify their responses as follows: "a few" 
or "a number of" refers to 6 or fewer responses, "several" or "some" 
refers to 7 to 15 responses, "many" or "more than half" refers to 16 
to 21 responses, and "nearly all" refers to 21 or more responses. 

[47] Under PPACA, states are required to provide most people who 
become newly eligible under the Medicaid expansion with "benchmark" 
benefits. These benchmark benefits are the same level of benefits that 
must be provided to individuals signing up for exchange plans or who 
have coverage under individual or small group health plans, beginning 
in 2014. 

[48] Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), as amended by 
HCERA, Pub. L. No. 111-152, 124 Stat. 1029 (Mar. 30, 2010). 

[49] For purposes of this section, we refer to these provisions as the 
"Medicaid expansion provisions." 

[50] PPACA § 2001(a)(1), 124 Stat. 271. 

[51] PPACA § 2001(a)(3), 124 Stat. 272-3, as amended by PPACA 
§10201(c)(3)(B), 124 Stat. 918-19 and HCERA § 1201(1)(B), 124 Stat. 
1051-52. 

[52] PPACA § 2001(a)(4), 124 Stat. 274, as amended by PPACA § 
10201(b), 124 Stat. 918. 

[53] PPACA § 2001(b)(1)-(3), 124 Stat. 275-76. 

[54] PPACA § 2002, 124 Stat. 279-82, as amended by HCERA §§ 1004(b), 
(e), 124 Stat. 1034, 1036. 

[55] PPACA § 2201, 124 Stat. 289-91. 

[56] This refers to the Medicaid Expansion Index, a measure of the 
relative size of a state's potential expansion made up of the number 
of uninsured adults who will be eligible for Medicaid in each state in 
2014 and an estimate of the potential number of newly eligible 
Medicaid enrollees in each state. Values greater than 100 are higher 
than the national average and those less than 100 are lower than the 
national average. For additional information, see Leighton Ku, Ph.D., 
M.P.H.; Karen Jones, M.S.; Peter Shin, Ph.D., M.P.H.: Brian Bruen, 
M.S.; and Katherine Hayes, J.D. "The States' Next Challenge--Securing 
Primary Care for Expanded Medicaid Populations," The New England 
Journal of Medicine, vol. 364, no. 6 (Feb. 10, 2011). 

[End of section] 

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