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Medicaid Expansion and Payment Reform

The expansion of state Medicaid programs is accompanied by a wide use of updated payment systems, a timely service delivery, and modernized managed care regulations. The introduction of innovative delivery and comprehensive payment has become possible owing to new programs and plans, developed by state authorities after the passage of the healthcare law called the Patient Protection and Affordable Care Act. Healthcare providers and other competent bodies received significant opportunities to promote citizens’ health through such fundamental principles as management, accountability, and the provision of care, centered on patients and their needs. Due to the explosion of Medicaid enrollment, many states face an unprecedented pressure on their budgets, and it is often argued that the expansion of access to care will not bring a favorable outcome without radical changes in delivery and caregiving processes. Therefore, the reformation of Medicaid payment policies, accompanied by the improvement of quality, the formation of cost for services, and the expansion of program itself, have become the tasks of top priority for federal/state officials and healthcare providers.


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What Is Medicaid?

Medicaid is a federal program, based on the promotion of health and the provision of necessary services for a particular group of people, including families with insufficient resources and low income. Although federal authorities oversee the execution of this program, states have a right to establish their own eligibility standards, determine the scope and type of provided services, set the payment rate, and develop Medicaid programs to fit the needs of states’ population (Rosenbaum, Shin, & Sharac, 2016). Although states make a final decision in regards to the provision of Medicaid plans, they still should follow mandatory requirements and acquire matching funds from federal authorities. Services provided to the patients qualifying for Medicaid include inpatient, outpatient, physician, nurse-midwife, family nurse practitioner, ambulatory, and pediatric hospital services as well as prenatal care, vaccines for infants, and nursing facility services for those who are 21 and older (Shin, Sharac, Barber, & Rosenbaum, 2016). Rural health clinic and family planning services, home healthcare for eligible patients, x-ray, ambulatory, laboratory services, early diagnostic, periodic screening, and treatment of young people under the age of 21 are also available under Medicaid.

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Who Is Covered?

Medicaid covers the healthcare needs of millions of American citizens who are eligible for the program. They include disabled individuals, the elderly, pregnant women, children, and adults with low-income. Both federal and state authorities are responsible for funding this program. After the introduction of a healthcare reform, Medicaid has already covered the needs of 69 million Americans (Jacobs & Skocpol, 2016). Through innovative and valuable strategies, states maximize purchasing leverage, which enables them to deliver cost-effective and high-quality care. Despite states setting their own eligibility requirements, the program does not significantly differ from the one, introduced by federal authorities. Therefore, it still focuses on low-income individuals and considers age, citizenship, assets, disability, and pregnancy when deciding who is eligible for it.

Other individuals, qualified for a program, include pregnant women with low income and infants up to the age of 1, low-resource individuals under 21, poor institutionalized individuals, disabled, blind, and employed people whose income is below the federal poverty level. Moreover, Medicaid also covers TB patients as well as women who have been screened for cervical and breast cancer. Approximately 60% of poor people living in the United States are not covered by Medicaid (Brooks, 2017). Therefore, despite numerous opportunities, the federal healthcare program does not provide medical aid to all poor individuals.

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Federally Qualified Health Center Payment Rules

As of January 2016, all Federally Qualified Health Centers (FQHC) were paid under the prospective payment system. Final rate can be applied to all FQHCs. In 2016, the base rate was $160.60, while in 2017, it reached $163.49 (Rosenbaum et al., 2016). These rates are updated annually. FQHC PPS rate depends on the geographic adjustment factor, and the further adaptation of practice cost index is utilized for clinicians’ fee schedule. Adjusted PPS rate is calculated by multiplying the base rate of particular year on FQHC. The competent bodies also expect that payment rate will increase by 1.3416% for the new consumers of healthcare services (Rosenbaum et al., 2016). Finally, geographic adjustment factor, which is also annually updated, is considered when locating services.

What Is Medicaid Expansion?

In order to cover the healthcare needs of low-income Americans, some states have decided to expand their Medicaid programs, while others did not follow their example. To learn whether a person qualifies for the Medicaid coverage, it is important to see whether the program has been expanded in a particular state. If the state officials have not done it and one’s income is below the federal poverty level, while current rules do not allow them to qualify for Medicaid, they will not be able to use and benefit from health insurance savings program (Shin et al., 2016). Despite different eligibility rules, officials should consider one’s family status, disability, income, household size, and other important factors when identifying one’s qualification for this service. Thus, residents of the states that have expanded coverage qualify for Medicaid. Consequently, officials look at their income, and if it is below 133% of the federal poverty level, one can qualify for the program (Jacobs, Kenney, & Selden, 2017). Sometimes, the ways of calculating the level are different. Therefore, this percentage may vary and constitute 138% of the FPL since various states use different income limits.

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Who Benefits?

The expansion of healthcare coverage to poor families is one of the landmark provisions of the Affordable Care Act that is fulfilled through the federal program Medicaid. If congressmen repeal the federal statute, signed into law by President Obama in 2010, the majority of Americans who received affordable coverage through Medicaid expansion will simply lose it (Rosenbaum & Westmoreland, 2012). The expansion of Medicaid by the majority of US states has brought many benefits to those hard-working American who receive low wages and who do not have health insurance. Despite lawmakers’ and policymakers’ assurance, it is still not clear what individual states should do and how they will act in case the law is repealed and the program’s expansion is canceled. Children from poor families, disabled individuals, and seniors benefit greatly from Medicaid and public health insurance that it provides. Moreover, hospitals in rural areas have gained more benefits from coverage expansion under the Affordable Care Act if compared to healthcare organizations, functioning in the states that have not provided such an expansion.

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The Medicaid Expansion Payment Reform

Payment reform has become an integral part of entire healthcare policy, reflecting the significant efforts of policymakers and lawmakers to reduce the expenses of all payers while still improving their health outcome. Thus, the Medicaid expansion payment reform seeks to meet the needs of low-income, vulnerable population. Furthermore, the increased enrollment in the states that have expanded expansion under the ACA is another reason for expansion (Jacobs & Skocpol, 2016). The fundamental goal of this reform is to use properly clients’ money and stimulate innovation for underserved Americans who highly depend on providers and their professional, medical assistance. Changes include a timely adaptation of comprehensive, integrated, and clear federal payment policies that apply to hundreds healthcare centers across the country.

New Policies for Payment

Despite the fact that alternative FQHC payment models have slowly evolved, efforts undertaken by healthcare providers, lawmakers, and policymakers are still encouraging. Therefore, these competent bodies urge Centers for Medicare and Medicaid Services to provide sufficient technical and funding support in the states with expanded Medicaid (Jacobs et al., 2017). Through cooperation, reformers and community health centers-partners promote health in underserved population and save money without compromising the quality of provided services and patients’ well-being. Furthermore, above-mentioned competent bodies seek to replace the traditional fee-for-service model with alternative options. As a result, they have developed and introduced various payment models that are supposed to produce better health outcomes. The first one is the accountable care organization that includes involving clinics, hospitals, and healthcare providers. The second alternative model is patient-centered medical home that provides monthly payment for services. The funding of a coordinated team of specialists depends on the needs of all parties involved in the caregiving process (Brooks, 2017). The third option is a pathway that has become widely popular in oncology care. Specifically, it provides a wide range of choices and tools to accelerate and ease the decision-making process as well as prescribe affordable and effective treatment. For example, two drugs have the same effectiveness and they do not have any varieties in sider effects. However, the cost of treatment may still differ.

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Challenges Facing Medicaid and Reform

Despite the fact that the Medicaid federal program provides safety net, it still faces challenges when controlling costs and providing care to the vulnerable population. Thus, cost control in Medicaid is an integral part of the state budget. However, beneficiaries may lack adequate political support in this regard. Expenses usually decrease during economic downturns, so enrollment increases when Americans lose their jobs and their healthcare benefits. In 2012, the Supreme Court ruled that states could personally decide whether to participate in Medicaid expansion or not (Rosenbaum & Westmoreland, 2012). Thus, Southern and some Western states refused to participate because of concerns and uncertainty in regards to cost and effectiveness. Over 4 million American citizens did not receive health insurance because they did not qualify for subsidies; thus, they had to buy private coverage (Jacobs et al., 2017). Consequently, they became ineligible for Medicaid. Another challenge is the provision of an adequate oversight of managed care. Over half of all Medicaid enrollees receive necessary services through private clinics (Bodenheimer & Grumbach, 2012). Although the insurers can predict the budget, it is still not clear how well they can control cost and improve the quality of provided services. Another challenge is to ensure access to physicians, and, particularly, dentists. Americans enrolled in Medicaid and those with private coverage can receive equally beneficial preventive and primary care. However, there are great difficulties in finding experienced specialists who express readiness to treat them in a proper manner. The last pressing challenge is to meet people’s growing demand for long-term, vital care.

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What Can Be Done to Help Evolve Medicaid?

In order to evolve Medicaid, US Congress should provide states with the flexibility to modify and amend the current law without obtaining special authority. Nevertheless, there is no clarity in congressmen’s actions in this regard as the choice can be made between the provision of relevant reforms and the reduction of federal funding. The modification of Medicaid’s traditional coverage for low-income households is another vital aspect that can lead to the program’s evolvement (Bodenheimer & Grumbach, 2012). Despite changes, modifications, and alterations, Medicaid should be able to cover all needs of poor Americans effectively and provide the flexibility of emerging healthcare demands as the nation needs nothing less.


The Affordable Care Act signed into law in 2010 forced the competent bodies to continue reforming the US healthcare system through modifications, initiatives, investment, and the expansion of federal programs. Some states have been provided with a great opportunity to expand their Medicaid program to the poor and vulnerable populations. The federal and state officials, policymakers, lawmakers, and advocates ensure that the program’s expansion will bring necessary changes and numerous benefits to meet the healthcare demands of poor individuals in the best way possible. Although states manage Medicaid, they still receive funding from the federal authorities to provide vital services to eligible Americans. Medicaid provides care not only to low-income residents but also disabled, pregnant, children, and adolescents. As the result of the ACA passage, more than a half of all US states have expanded coverage to low-income adults who do not have children. Despite challenges, healthcare payment reform and Medicaid expansion will help prevent risks and make the cost of services more affordable for the Americans seeking coverage.



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