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Affordable Care Act Proposed Regulations Involving Medicaid Expansion, Essential Health Benefits, Notice & Appeals and Cost-Sharing Released

- YOUR Comments Are Invited (Time-Sensitive)

The Administration for Community Living (ACL) wants you to be aware of newly proposed regulations on the continued implementation of the Affordable Care Act (ACA), involving the 2014 Medicaid expansion and both flexibilities and safeguards being built into the Medicaid program. These proposed regulations were announced on Monday, January 14, 2013, and are published in the Federal Register today.

On January 14, Health and Human Services (HHS) Secretary Kathleen Sebelius released a proposed rule related to the Medicaid expansion that promotes consistent policies and processes for eligibility notices and appeals in Medicaid, the Children's Health Insurance Program (CHIP), and Exchanges and gives states more flexibility when operating their Medicaid programs – particularly around cost-sharing. HHS encourages all Americans to review and submit comments on the proposed rule.

Please note that time to comment is limited to a 30-day deadline from the date of online publication, meaning that comments are due at 5 PM on February 13, 2013. ACL has prepared the following summary which identifies relevant highlights of the proposed regulation, provides links to fact sheets, and lists issues for which HHS is seeking further clarification that ACL believes may be especially of interest to you and your colleagues.

How to Submit Comments:

Comments may be submitted to the Department of Health and Human Services or CMS offices, or electronically at by 5:00 p.m. on February 13, 2013. Please refer to file code: CMS-2334-P. See the NPRM for more details.

Medicaid Cost Sharing:

This rule proposes to update and simplify policies around Medicaid premiums and cost-sharing requirements to promote the most effective use of services and to assist states in identifying cost sharing flexibilities. Specifically, CMS proposes to update the maximum allowable cost-sharing levels and to consolidate redundant provisions in order to create one streamlined set of rules for all Medicaid premiums and cost sharing. Additionally, the rule proposes to allow states to establish higher cost sharing for non-preferred drugs, and to impose higher cost sharing for non-emergency use of the emergency department.

Relevant Pages of the Rule:
Preamble: pages 223-231
Regulation text: 385-396

Outpatient Cost Sharing (section 447.52) (not including pharmacy or emergency department services):

CMS proposes that States may charge up to $4.00 per outpatient visit for people with incomes under 100% of the Federal Poverty Level (FPL).

CMS proposes that States may charge up to 10% of the cost of services or people with incomes above 100% to 150% of the federal poverty level.

CMS specifically seeks comments on whether to define cost sharing limits differently for people receiving Home and Community Based Services and Supports. Considerations include the definition of long term supports and services and appropriate units of service for which cost sharing would be charged, etc.

Inpatient Cost Sharing (section 447.52):

CMS proposes that States may charge up to 50% of cost of the 1st day of an inpatient visit for people with incomes below 100% of the federal poverty level.

CMS is considering alternatives for the maximum allowable cost sharing related to an inpatient stay because this is a relatively high cost for very low income people and not a service that consumers have the ability to avoid or prevent. Options under consideration include the $4 maximum applied to outpatient services, $50, or $100, which would encompass the majority of hospital cost sharing currently in effect.

Non-Emergency Use of the Emergency Department (section 447.54):

CMS proposes allowing cost sharing of up to $8 for non-emergency use of the emergency department for people with incomes from 100% to 150% of FPL.

For individuals with family income above 150 percent of the FPL, per section 1916A(e) of the Act, there is no limit on the cost sharing that may be imposed for non-emergency use of the ED.

If an emergency condition does not exist the hospital must provide screening and referral to ensure that beneficiaries have appropriate access to other sources of care, before cost sharing is imposed.

Cost Sharing for Drugs (§447.53):

CMS proposes to allow states to implement cost sharing of up to $8 for non-preferred drugs, and $4 for each preferred drug for individuals with income equal to or less than 150% of the federal poverty level. This in addition to any other cost sharing requirements. However, if a doctor specifies that a non-preferred medication is in the best interests of the consumer, the consumer will be able to receive the medication at the preferred drug rate.

For individuals with family income above 150 percent of the FPL cost sharing for non-preferred drugs may not exceed 20 percent of the cost the agency pays for the drug.

Please note: CMS’ above stated request for input about the impact of the increased cost-sharing on persons with disabilities also applies to the prescription drug provisions..

Medicaid Premiums:

Relevant pages of the rule:
Preamble: pages 231- 235
Regulation text: pages 390-396

Medically Needy Premiums (section §447.55(a)(5)):

CMS proposes to revise requirements related to premiums imposed on medically needy individuals whose income is under 150 percent of the FPL by providing states with the flexibility to determine their own sliding scale for establishing premiums for the medically needy up to maximum of $20 instead of the $19 in current regulation.

Premiums for People Receiving Home and Community Based Services (section §447.56(a)(1)(v)):

CMS proposes to allow a state option to include individuals receiving HCBS to be exempt from premiums. Since these individuals are only allowed to keep a personal needs allowance, similar to those residing in an institution, we propose to allow states to exempt these individuals from cost sharing in the same manner as those residing in an institution in accordance with the comparability requirements under section 1902(a)(19) of the Act.

Premiums for Indians (section 447.56(a)(1)(vii):

CMS proposes that those Indians who are currently receiving or have ever received an item or service furnished by the Indian Health Service, an Indian Tribe, Tribal Organization, or Urban Indian Organization (I/T/U) or through referral under contract health services are exempt from all cost sharing.

Essential Health Benefits/ Habilitation (page 132 of the preamble):

State Medicaid programs have to work within the bounds of habilitation as it is defined through the Essential Health Benefits (EHB). If a state chooses not to define habilitation then the issuer (in the case of Medicaid the issuer will be the state) will either have to provide habilitative services at parity with rehabilitation services or decide which habilitative services to cover and then report that decision to HHS. CMS will further define habilitative services after comments are received from the public. Accordingly space in regulations has been reserved for further definition of habilitative services under the Medicaid program.

Comments are being sought for several different areas for habilitation:

CMS asks whether the state defined habilitative benefit definition for the Exchanges should apply to Medicaid or whether states should be allowed to separately define habilitative services for Medicaid.

Comments are being solicited on the option for states to fully define the habilitative benefit and various approaches for doing so and whether the habilitative benefit should be offered in parity with the rehabilitative benefit


CMS clarifies that Medicaid will not limit medically necessary services, including dental and vision, as they are required under the Medicaid Early Periodic Screening, Diagnostic and Testing (EPSDT) benefit. However, individual and small group market plans are not held to the same requirement.

Notice and Appeals, Authorized Representatives, Application Assistance and Accessibility:

Notices. The rule proposes that notices to applicants and beneficiaries would include combined, clear, and accurate information about eligibility for all insurance affordability programs, including Medicaid, CHIP, advance payments of the premium tax credit and cost-sharing reductions, as well as eligibility to enroll in a qualified health plan through the Exchange. The final combined, comprehensive notice would be generated by the agency that completed the last step in making the eligibility determination (which could be the Exchange or the Medicaid or CHIP agency). This coordinated process would not be required to be in place until January 1, 2015, or, optionally, at an earlier date if all relevant agencies have the necessary systems in place.

Process for Appeals of Eligibility Determinations. The rule proposes a coordinated Exchange and Medicaid appeals process. The rule proposes that enrollees will first have the opportunity for a preliminary case review by appeals staff, referred to as “informal resolution.” If the enrollee is satisfied by the outcome of the informal resolution, the decision stands as an official appeal decision. All enrollees who remain dissatisfied with the outcome of the informal resolution process would have rights to a full appeal. As required by statute, a federally-managed appeals process would be available to all enrollees in the individual market.

State-based Exchanges would have the flexibility to implement their own appeals processes in accordance with the NPRM’s standards, with individuals retaining the right to a federal appeal at HHS after exhausting the state-based appeals process.

Authorized Representatives:

Since, authorized representatives have historically helped ensure access to coverage for seniors and those with disabilities, CMS outlines minimum requirements for the designation of authorized representatives in these proposed regulations at §435.923 and §457.340. Notably, individuals will be able to either select their own representative or have representation as provided by law (i.e. guardianship arrangements) and authorized representatives will have to abide by confidentiality and (in the case of providers or outside organizations) conflict of interest requirements. Authorized representatives will be able to help prospective beneficiaries in filling out and submitting applications, filing appeals and more….


The regulations on accessibility at §435.905(b) are clarified to extend to CHIP, and to require that people with disabilities be informed of the availability of accessibility services and how to access them.

Furthermore accessibility provisions are more closely aligned between the Medicaid Enrollment and Eligibility Regulation and the Exchange Regulation, and accessibility requirements are extended to notices and appeals procedures, including n involving the cost sharing provisions.

ACA Medicaid Expansion Fact Sheet