Medicaid

Origins of the Medicaid Program

Medicaid was enacted in 1965, in the same legislation that created the Medicare program, the Social Security amendments of 1965 (P.L. 89-97). [Note 2]. A history of Medicaid’s evoluation is recounted in Wilbur Cohen’s article Reflections on the enactment of Medicare and Medicaid. “The program is designed to provide medical assistance to persons whose income and resources are insufficient to meet the costs of necessary care and services.” See O. Ahmad, Medicaid Eligibility Rules for the Elderly Long-Term Care Applicant: History and Developments, 1965-1998, 20 J. Legal Medicine, 251, at 252 (1999). Unfortunately, Medicaid in many ways has too many cooks inthe kitchen. As noted in one article, [t]he incremental policy changes resulting from federal legislation, state decisions, and litigation (in some instances) have created very complicated Medicaid eligibility rules in most of the states. Though well intentioned, these rules create barriers to program participation by making the eligibility process difficult for Medicaid applicants and beneficiaries, as well as staff, to understand. See M. Ellwood, The Medicaid Eligibility Maze: Coverage Expands, But Enrollment Problems Persist (Urban Institute 1999).

The Medicaid program grew out of and replaced two earlier programs of Federal grants to States that provided medical care to welfare recipients and the aged. State participation is voluntary; but once a State elects to join the program, it must administer a state plan that meets federal requirements.” (Citation omitted.) Frew v. Hawkins, 540 U.S. 431, 433, 124 S.Ct. 899, 157 L.Ed.2d 855 (2004). Those requirements, however, must be unambiguous to bind States to and conditions attached to a state’s acceptance of such funds. Arlington Cent. School Dist. Bd. of Edn. v. Murphy, 548 U.S. 291, 296, 126 S.Ct. 2455, 165 L.Ed.2d 526 (2006), quoting Pennhurst State School and Hosp. v. Halderman, 451 U.S. 1, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981). Legislation under the “Spending Power” is in the “nature of a contract: in return for federal funds, the States agree to comply with federally imposed conditions.” Pennhurst at 17. “Fund recipients are bound only by those conditions that they accept `voluntarily and knowingly,’ and states cannot knowingly accept conditions of which they are `unaware’ or which they are `unable to ascertain.'” Arlington.

Note 2: Federal Medicaid law is codified at 42 U.S.C. § 1396 et seq. The Federal regulations relating to Medicaid are found at 42 C.F.R. Parts 430 through 456. CMS also publishes the State Medicaid Manual and various other guides relating to the program which are online at www.cms.gov. MACPAC’s website includes a list of Federal Legislative Milestones from 1965 through the present. The U.S. Supreme Court has described Medicaid as follows: The Medicaid program, enacted in 1965 as Title XIX of the Social Security Act, “is designed to provide medical assistance to persons whose income and resources are insufficient to meet the costs of necessary care and services.” Atkins v. Rivera, 477 U.S. 154, 156, 106 S. Ct. 2456, 2458, 91 L. Ed. 2d 131, 137 (1986). The program is a cooperative federal-state endeavor in which the federal government provides “financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.” Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671, 2680, 65 L. Ed. 2d 784, 794 (1980). “In return, participating States are to comply with requirements imposed by the [program] and by the Secretary of Health and Human Services.” Atkins, supra, 477 U.S. at 157, 106 S. Ct. at 2458, 91 L. Ed. 2d at 137. Each state must develop a plan that includes “reasonable standards . . . for determining eligibility for and the extent of medical assistance . . . [that is] consistent with the objectives” of the Medicaid program. 42 U.S.C.A. § 1396a(a)(17)(A). An applicant is entitled to Medicaid benefits “if he [or she] fulfills the criteria established by the State in which he lives.” Schweiker v. Gray Panthers, 453 U.S. 34, 36-37, 101 S. Ct. 2633, 2636, 69 L. Ed. 2d 460, 465 (1981).

Medicaid is a means-tested welfare program. [Note 3]. It is jointly financed by Federal and State funds. Federal contributions to each State are based on a State’s willingness to finance covered medical services and a matching formula. [Note 4]. Each State designs and administers its own program under broad Federal rules. [Note 5]. The Centers for Medicare and Medicaid Services (CMS), within the U.S. Department of Health and Human Services (HHS), is responsible for Federal oversight of the program. Recent data available at Medicaid.gov indicates that federal and State spending on Medicaid and CHIP exceeded $632 billion, sometimes exceeding total outlays for Medicare (in FY2020 Medicaid accounted for 7% of all federal outlays; in 2019 Medicaid spending totalled $604 billion before accounting for administrative costs; one-half of Medicaid spending is on the elderly and disabled). No other means-tested cash or noncash program comes close to approaching this spending level.

Note 3: Entitlement programs bring with them due process rights. This right is explained as follows, in Board of Regents v. Roth, 408 U.S. 564, 577 (1972): “Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law — rules or understandings that secure certain benefits and that support claims of entitlement to those benefits. Thus, the welfare recipients in Goldberg v. Kelly, supra, had a claim of entitlement to welfare payments that was grounded in the statute defining eligibility for them. The recipients had not yet shown that they were, in fact, within the statutory terms of eligibility. But we held that they had a right to a hearing at which they might attempt to do so.”

Note 4: Federal matching rates are posted at State Health Facts (Kaiser Family Foundation). In Moore v. Noggle, Civil Action No. 1:19-CV-3296-TWT (N.D.G.A. 1/24/2022), the court stated: “Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals.” Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502 (1990). States manage and administer their Medicaid programs through a single agency…”

Note 5: The various State Plans are on-line at Medicaid.gov. Information about various waivers is available at CMS.gov.

To many, Medicaid is an enigma. [Note 6]. The program’s complexity surrounding who is eligible, what services are paid for, and how those services are reimbursed and delivered is one source of this confusion. Variability across State Medicaid programs is the rule, not the exception. In recent years, more and more States have implemented a variety of major program changes using special waiver authority.[Note 7]. However, as pointed out recently in Moore v. Noogle, there is no clear right to demand services approved, but not yet implimented.

Note 6: In Cherry v. Magnant, 832 F. Supp. 1271, 1272, n.4 (S. D. Ind. 1993), the Court wrote: The federal and state Medicaid statutes have been described as the regulatory equivalent of the “Serbonian bog.” See John Milton, Paradise Lost, bk. 2, 1.592 (“A gulf profound, as that Serbonian bog Betwixt Damiata and Mount Casius old, Where armies whole have been sunk.”). The Medicaid rules have also been characterized as “almost unintelligible to the uninitiated,” Friedman v. Berger, 547 F.2d 724, 727 n.7 (2nd Cir. 1976) (Friendly, J.), cert denied, 430 U.S. 984, 52 L. Ed. 2d 378, 97 S. Ct. 1681 (1977); as an “aggravated assault on the English language, resistance to attempts to understand it”; Friedman v. Berger, 409 F. Supp. 1225, 1225-26 (S.D.N.Y. 1976); and by this circuit as “labyrinthian.” Roloff v. Sullivan, 975 F.2d 333, 340, n. 12 (7th Cir. 1992).

Note 7: There are three primary federal Medicaid waivers: freedom of choice waivers, home and community-based care waivers, and demonstration waivers. Each is described in more detail in J. Perkins & S. Somers, An Advocate’s Guide to the Medicaid Program, pages 2.5 to 2.8 (NHeLP June 2001). TennCare is a demonstration waiver (or Section 1115 Waiver). “Section 1115 of the Social Security Act grants the Secretary of Health and Human Services broad authority to waive certain laws relating to Medicaid or SCHIP for the purpose of conducting pilot, experimental or demonstration projects which are “likely to promote the objectives” of the program. Section 1115 demonstration waivers allow states to change provisions of their Medicaid or SCHIP programs, including: eligibility requirements; the scope of services available; the freedom to choose a provider; a provider’s choice to participate in a plan; the method of reimbursing providers; and the statewide application of the program. Demonstration waivers are granted for research purposes, to test a program improvement, or investigate an issue of interest to CMS. Projects must usually include a formal research or experimental methodology and provide for an independent evaluation. Most projects run for a limited time, no more than 5 years, and are usually not renewable. Information regarding TennCare is available at Medicaid.gov. Also at Medicaid.gov is a list of State Waivers.

Income eligibility levels, services covered, and the method for and amount of reimbursement for services differ from State to State. Furthermore, Medicaid is a program that is targeted at individuals with low-income, but not all of the poor are eligible, and not all those covered are poor. For populations like children and families, primary and acute care often are delivered through managed care, while the elderly and disabled typically obtain such care on a fee-for-service basis.

Nationwide, Medicaid finances the majority of long-term care services. Such services include, for example, nursing home care and community-based services designed to support the elderly and disabled in their homes. Recently, some States have begun to integrate Medicare and Medicaid financing and/or coordinate acute and long-term care services for these populations.

The complexity of Medicaid presents an enormous challenge for anyone attempting to make generalizations about the program. Here, we are limiting our discussion to Georgia Medicaid rules and, to some extent the Tennessee Medicaid rules, governing: (1) who is eligible and (2) how eligibility might be accelerated. Other issues may be addressed as they relate to, or explain, our primary objectives.