HMS Provides Comments On What The Supreme Court Decision On The Affordable Care Act Means For States

HMS, Inc., a wholly-owned subsidiary of HMS Holdings Corp. (NASDAQ: HMSY), today released its comments on what the Supreme Court Decision on the Affordable Care Act (ACA) means for States.

On June 28, 2012, the Supreme Court upheld the Affordable Care Act and most of the law’s provisions as constitutional. The long-awaited decision resolved many issues, but created several more — especially for states that now need to move forward.

What does the decision mean for states?

Answering that question requires revisiting the Act. Upheld provisions include the individual mandate, implementation of state health insurance exchanges, and such program integrity requirements as Medicaid Recovery Audit Contracts — the vehicle for states to contract with a vendor in order to identify and to recover improper Medicaid payments.

Though the Medicaid expansion provision of the Act was found to be constitutional, the Court ruled that the federal government could not withhold funding for existing Medicaid populations if a state elected not to expand its Medicaid qualification requirements to 133% of the Federal Poverty Level (FPL). The ruling also created a potential gap in subsidies between Medicaid and state health exchanges. In a no-expansion state with an income threshold for Medicaid eligibility that falls below 100% of the FPL, people who don’t qualify for Medicaid but fall short of 100% of the FPL — typically adults with no dependents — would not be eligible for federal subsidies in the exchange. In an expansion state, there would be seamless integration of subsidies between Medicaid and the exchange.

In short, states can choose to expand their Medicaid populations as per the Affordable Care Act guidelines or not. Now states must weigh the arguments for and against the expansion of their Medicaid populations.

On the pro side, Medicaid expansion would mean many of the state’s most needy uninsured would have health insurance coverage paid for almost exclusively by the federal government from 2014 to 2016. Supporters argue this would result in better care, close the subsidy gap outlined above, and reduce uncompensated expenses that are currently borne by states and providers.

On the con side, Medicaid expansion would be funded completely by the federal government only through 2016. In 2017, federal funding for new Medicaid members would fall to 95%, phasing down to 90% in 2020 and beyond. Opponents note that states — already under pressure from a weak economy — would be required to step up spending as the feds step back.

Finally, expanding Medicaid is not a one-time decision for states. In theory, states could expand and receive the extra federal funding until 2016, and then contract if this funding changes. Service roll-backs may prove difficult.

For more information on how the Supreme Court’s decision on the Affordable Care Act affects states, contact

About HMS

HMS is the nation's leader in coordination of benefits and program integrity services for healthcare payers. HMS's clients include health and human services programs in more than 40 states; commercial programs, including commercial plans, employers, and over 120 Medicaid managed care plans; the Centers for Medicare and Medicaid Services (CMS); and Veterans Administration facilities. As a result of the company's services, clients recovered over $2 billion in 2011, and saved nearly $7 billion through the prevention of erroneous payments.

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