Editor’s Note: In a new issue brief for the State Health Reform Assistance Network, a program of the Robert Wood Johnson Foundation, Manatt Health examines the “presumptive eligibility” (PE) option for hospitals, allowing them to use preliminary information to enroll people temporarily in Medicaid and facilitate their enrollment into ongoing coverage. The brief is summarized below. Click here to download the full paper.

The Affordable Care Act (ACA) allows hospitals to use preliminary information to enroll people who appear eligible for Medicaid coverage on a temporary basis. While this “presumptive eligibility” (PE) option is not a new concept in Medicaid, the ACA for the first time gives hospitals—rather than states—the authority to decide whether to participate.

While states are obligated to allow hospitals that participate in Medicaid to conduct PE determinations, they have the authority to oversee the quality of those determinations. States may require hospitals to participate in training and to meet ongoing performance standards. If a hospital fails to meet a state’s performance standards, it must be allowed to take corrective action. If a hospital continues to fall short, however, the state may revoke its authority to conduct PE determinations.

Background on Presumptive Eligibility

Beginning on January 1, 2014, the ACA allowed hospitals participating in Medicaid to enroll Medicaid-eligible individuals temporarily into coverage based on preliminary information. This temporary coverage or PE period lasts until the last day of the month the person applies or, if earlier, the date on which he or she receives a determination of Medicaid eligibility. For example, if a person is found eligible for temporary coverage in January and never files a full Medicaid application, it will end on the last day of February.

People found presumptively eligible are covered for all Medicaid services—not just those provided by the hospital—during the PE period. Among other things, this allows people who are discharged from the hospital to fill prescriptions, attend follow-up visits and receive any other needed services covered by Medicaid. If PE enrollees are later found to be ineligible for Medicaid or fail to complete an application by the PE deadline, they lose coverage. Neither they nor their providers, however, are required to reimburse Medicaid for the cost of services provided during the PE period.

When hospitals conduct a PE assessment, they rely on information the individual provides to conduct a simplified assessment of whether the applicant meets the state’s income requirements. After a hospital performs the PE determination, it must provide the applicant with a full Medicaid application and, depending on the state, may be expected to help the person complete it, submit it and provide required documentation. Unlike the simplified PE application, the full application gathers all of the data needed to determine ongoing Medicaid eligibility.

Suggested Performance Standards

To take advantage of the PE option, hospitals must be enrolled in the state’s Medicaid program, inform the state of their intention to conduct PE determinations, participate in training, follow the state’s policies and procedures and meet the state’s performance standards. In general, the Department of Health and Human Services (HHS) gives states broad flexibility in developing standards. HHS has provided, however, two examples of performance standards that states may want to adopt. Both encourage hospitals to connect people to Medicaid on an ongoing basis, not just for a short PE period.

  1. Percent of PE enrollees who file a regular application. HHS suggests that states evaluate hospitals based on the percent of people enrolled in Medicaid on a PE basis who ultimately submit a full Medicaid application. This measure allows states to assess the extent to which hospitals are encouraging PE enrollees to submit applications for ongoing medical coverage.
  2. Percent of PE enrollees who enroll in Medicaid on an ongoing basis. HHS recommends monitoring the percent of people who enrolled in Medicaid on a PE basis who eventually file a regular Medicaid application and are found eligible for the program.

HHS has not established any appropriate target goals for these suggested standards. It will be important for states to create realistic targets, tailored to their specific circumstances.

Additional Performance Measures for States to Consider

In addition to the measures HHS recommends, state officials and other experts have identified additional metrics states may want to consider. Some seek to ensure that hospital-based PE is used to increase ongoing enrollment and use of other services, while others aim to reduce administrative complexity.

Measures meant to strengthen ongoing coverage include:

  • Assessing the percent of PE applicants identified through outpatient clinics to ensure the hospital’s focus extends beyond inpatient care
  • Evaluating the extent to which PE applicants continue to use coverage after enrollment to capture whether hospitals are effectively educating people on how to use their Medicaid coverage

Measures intended to reduce administrate complexity include:

  • Verifying individuals are not enrolled in Medicaid prior to submitting a PE application to prevent PE from generating duplicate enrollments
  • Establishing performance measures that assess whether hospitals are taking the necessary steps to prevent people from presumptively enrolling too frequently
  • Determining whether hospitals are conducting PE determinations in accordance with Medicaid eligibility rules to ensure accuracy

Considerations for Establishing Appropriate Targets

Along with selecting performance standards, states must determine appropriate targets for their measures. Unfortunately, little data exists to help states identify the right targets. In light of the lack of existing benchmarks, states may want to consider the following strategies when establishing targets:

  • Base targets on data gathered during initial implementation. States may want to gather data from hospitals on their experiences with PE for a period of time in 2014 to identify firm targets.
  • Increase benchmarks over time. States may want to increase benchmarks over time, as they learn how to implement the hospital-based PE option.
  • Use an outlier approach. Identify those hospitals whose outcomes are one or two standard deviations or more away from the mean or median of the state as a whole.

Conclusion

Both states and hospitals have a strong interest in facilitating the enrollment of eligible individuals into coverage and ensuring PE is working as intended. HHS allows states to establish and apply performance standards, but there is little data to guide them in informing goals and expectations. Therefore, states may want to rely initially on more modest performance measures and raise them over time to assess hospitals’ effectiveness in connecting people to ongoing coverage.