On February 25, 2011, CMS issued a letter and accompanying Questions & Answers (Q&As) to state Medicaid directors clarifying certain aspects of the maintenance of effort (MOE) provisions in the Affordable Care Act. The Act’s MOE provisions generally prohibit states from altering their Medicaid and CHIP coverage rules, pending implementation of the changes mandated by the Affordable Care Act in 2014 (Medicaid) and 2019 (CHIP). Recently, some states have requested waiver of the MOE requirements, in light of financial pressures faced by many states, but the HHS Secretary has stated that she lacks the authority to do so. The February 25 letter and Q&As, which are available by clicking here, provide guidance as to ways states may be able to reduce expenditures while still complying with the MOE requirements.

Specifically, the Q&As address three aspects of the MOE provisions: (1) the MOE exemption for higher-income adult populations in states experiencing budget deficits; (2) the implications of the MOE provision on Section 1115 demonstration projects; and (3) how premiums are treated under the MOE requirements.