So far, federal guidance has fallen short of what states need to implement the Affordable Care Act’s Medicaid expansion, according to a recent report by the Government Accountability Office (GAO). State officials questioned for the report said delays of meaningful direction from the Centers for Medicare and Medicaid Services (CMS), combined with limited state resources and slow approval for new plans, could cause them to miss the January 2014 deadline to implement the Medicaid expansion and related updates to enrollment systems. In a survey of state budget officials, 30 of the 42 states responding said CMS guidance to date had been slightly or not at all useful.

There is a lack of clarity on several issues integral to ACA Medicaid eligibility expansion, such as:

  • How to implement the new income eligibility metric, called Modified Adjusted Gross Income or MAGI, in a variety of possible scenarios. Although CMS released additional guidance and held a webinar on MAGI in March 2012, states said they need yet more information. One example of a potential scenario states still want advice about is how to determine eligibility of children who divide their time between two households with different parents.
  • How to convert old Medicaid eligibility standards to the new MAGI levels to determine whether an enrollee is newly eligible or was already eligible before the ACA expansion. The difference is significant because states receive much more federal money – a 100-percent federal matching rate, initially – for newly eligible Medicaid enrollees than for enrollees under pre-ACA Medicaid coverage (federal match of 50% to 77%, depending on the state’s per capita income).
  • How to integrate state systems with the new federal data hub, and what kinds of information to expect from the Internal Revenue Service (IRS) and other federal agencies. States will use the federal data hub to verify income and citizenship or legal immigrant status for new enrollees.

In each case, the report notes, CMS is aware of the need for more information and intends to issue new guidance later this year.

New guidance won’t remove all sources of delay and uncertainty. State officials said that limited resources, a lack of staff in state Medicaid offices, long procurement timelines, and slow approval at the federal and state level for planning documents all leach time from the process. Officials in Virginia, for example, expect to have less than a year before the 2014 deadline to work with a vendor to create and implement its new eligibility and enrollment system, once the documentation was approved, the RFP released, and the contract awarded.

The GAO’s findings do not reflect the Supreme Court’s ruling in NFIB v. Sebelius, which allowed states to opt out of the ACA Medicaid expansion. Though the issues this report highlights do not disappear, the Court’s ruling does give states more flexibility in when and how they expand Medicaid, which could alleviate some pressure from having to meet the 2014 deadline.  States may also opt out of ACA Medicaid expansion altogether, decide to implement expansion in a future year, and even limit expansion to, say, only 2014-2016, when the federal match is 100%.  All this adds to the complexity and uncertainty – political, fiscal, and administrative – states face.

In response to the GAO’s report, the Department of Health and Human Services “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 … and (3) a state will not have to pay back the extra funding if it ultimately decides not to expand Medicaid.”

The GAO interviewed Medicaid officials in six states – Colorado, Georgia, Iowa, Minnesota, New York, and Virginia – from January to May 2012, and conducted a web survey of state budget directors on the fiscal implications of Medicaid expansion implementation on state budget planning.  GAO posted the survey questions and aggregate results online.