Using new benefit design and cost-sharing options created by the Deficit Reduction Act (DRA), states are busy restructuring Medicaid programs. With recently announced approvals from HHS Secretary Mike Leavitt, Kentucky, West Virginia, and Idaho are the first states to take advantage of DRA flexibility.

With the help of top advisors, other states are working on their own Medicaid initiatives, using a mix of DRA options and creative Section 1115 waivers.

Here’s a quick summary of the new Medicaid reforms in Kentucky, West Virginia, and Idaho:

Kentucky Medicaid Reform:

Kentucky will offer benefit packages aimed at meeting the health care needs of three different groups: (1) children, (2) the elderly and people with disabilities who need institutional care, and (3) the general Medicaid population.

Through four new benefit packages, Medicaid enrollees will be offered the most appropriate benefit plan based on their needs:

1. The Family Choices program will serve healthy children.

2. Comprehensive Choices and Optimum Choices will serve individuals with complex health care needs.

3. Global Choices, which is most similar to Kentucky’s traditional Medicaid program, will serve other vulnerable populations.

Kentucky’s Medicaid restructuring includes a new disease management program with special incentives to encourage healthier behavior by chronically ill beneficiaries. After successfully participating in a disease management program for one year, participants will be eligible for services not otherwise available, such as dental or vision services.

The Kentucky reform program will also help Medicaid recipients buy employer-sponsored coverage. If a beneficiary chooses their employer’s plan instead of Medicaid, the state will help cover the premium.

West Virginia Medicaid Reform:

West Virginia will offer enrollees a choice of two benefit packages:

1. A Basic plan modeled after current Medicaid benefits.

2. An Enhanced plan that includes a broader range of health services in exchange for complying with all recommended medical treatment and wellness behaviors.

The new benefits under the Enhanced plan will include tobacco cessation, nutritional education, diabetes care, chemical dependency services, mental health services, cardiac rehabilitation, chiropractic services, and emergent dental services.

West Virginia’s Enhanced plan will also cover skilled nursing care, orthotics, and prosthetics for children. Both the Basic and Enhanced plans will cover Early, Periodic Screening, Diagnosis, and Treatment (EPSDT) services for children.

To enroll in the Enhanced benefit, beneficiaries must sign a member agreement stating they will comply with all recommended medical treatment and wellness behaviors. The Basic plan – with the standard Medicaid package – is the default benefit for those who chose not to join the Enhanced plan or who decide they want to leave the Enhanced plan.

Idaho Medicaid Reform:

Idaho will offer three new benefit packages aimed at meeting the health care needs of different groups: children, people with disabilities, and beneficiaries who are eligible for both Medicaid and Medicare (aka dual eligibles).

All three new packages – Basic, Enhanced, and Coordinated – are voluntary. Any enrollee who chooses one of the new plans can opt out and return to standard Medicaid at any time they wish.

Here are some details on Idaho’s three plans:

1. The Basic plan will serve healthy children and adults and will cover most of traditional Medicaid benefits, including EPSDT services for children. However, the Basic plan will not cover long-term care, organ transplants, and intensive mental health treatment.

2. The Enhanced plan is designed to serve individuals with more complex medical needs, most notably the elderly and disabled. The Enhanced plan will cover all the traditional Medicaid benefits, including long-term care. Beneficiaries enrolled in the Basic plan who need services not available in that plan will be moved to the Enhanced plan.

3. The Coordinated plan will serve dual eligibles. It will include all services now covered under Idaho’s traditional Medicaid program. For coverage under the Coordinated plan, dual eligibles must also be enrolled in Medicare Part B and Part D.

Each of these benefit plans will include new preventive services, including nutrition services and other benefits to help smokers, the obese, and others adopt healthier habits.

Idaho’s Medicaid restructuring includes several other important reforms:

1. The working disabled may purchase the basic benefit package.

2. Eligibility for children in Medicaid and the State Children’s Health Insurance Program (SCHIP) will be streamlined. This includes elimination of an asset test for some children.

3. Using SCHIP dollars, the state will help schools offer preventive health services to low-income children.