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Medicaid, SCHIP, & Federal Authority

  • Section 1115 Waiver – In 1996, Maryland received approval from the Centers for Medicare and Medicaid Services (CMS) to implement a statewide mandatory managed care program, HealthChoice, under the authority of a section 1115 waiver. The main goals of the program are to control rising Medicaid costs and to improve care coordination. The HealthChoice waiver has undergone two renewals and numerous amendments.  HealthChoice expansion initiatives include: the Family Planning Program, Employed Individuals with Disabilities, and the Maryland Primary Adult Care program. The Employed Individuals with Disabilities program, implemented in April 2006, provides full Medicaid coverage to individuals with disabilities with incomes up to 300 percent of the federal poverty level (FPL). Program enrollment reached 160 individuals in November 2007.  Under the Maryland Primary Adult Care (PAC) program, adults over the age of 19 with incomes up to 116 percent of the FPL, who are ineligible for Medicaid and Medicare, receive primary care, outpatient mental health, and pharmacy services. The Maryland Primary Adult Care program began enrollment in July 2006.  As of December 2007, more than 28,000 adults were enrolled in PAC.

    On November 19, 2007, Governor Martin O’Malley (D) signed the Working Families and Small Business Health Coverage Act that will expand Medicaid eligibility up to 116 percent of the Federal Poverty Level (FPL) for parent and caretaker relatives with a dependent child living at home. The legislation also called for a four year phase-in of Medicaid eligibility up to 116 percent FPL for childless adults. Enrollment may be capped and benefits may be limited based on available funding. The state of Maryland expects to seek approval from CMS for this expansion in the spring of 2008.


High-Risk Pools

  • Since 2003, Maryland has offered a health insurance program, The Maryland Health Insurance Plan (MHIP), to residents who are considered uninsurable either because they are high risk or have a history of medical problems that makes it difficult for them to find affordable insurance coverage in the individual market. In December 2005, MHIP introduced a special premium subsidy program for low income enrollees. Called MHIP+, the program offers discounted premiums and deductibles to individuals with incomes under 225 percent FPL.

    MHIP also serves as the “fallback” option under the federal Health Insurance Portability and Accountability Act’s (HIPAA) guaranteed portability requirement for those individuals transitioning from group to individual coverage. Maryland’s risk pool is funded by assessments on Maryland hospitals’ net patient revenues, a subsidy mechanism that distributes the cost of the risk pool broadly.

    As of November 2006, MHIP has more than 9,500 enrollees. 

Limited-Benefit Plans

  • The Minimum Benefit Legislation (SB 570), enacted in 2004, requires carriers who insure >10 percent of the covered lives in the small group market to offer a limited-benefit plan. Other carriers may offer if they choose. The actuarial value of the limited plan cannot exceed 70 percent of the actuarial value of the comprehensive standard health benefit plan. The limited-benefit plan is only open to small employers with an average employee wage of less than 75 percent of the state average annual wage and who have not offered health benefits within the last 12 months. Limited-benefit plans became available to qualified small employers beginning July 1, 2005.


Dependent Coverage

  • Enacted legislation in 2007 (House Bill 1057) allows young adults (including child dependents of domestic partners) to remain eligible for insurance until the age of 25 if the individual resides with the insured policyholder and is unmarried.


State Specific Strategies

  • On November 19, 2007, Governor Martin O’Malley (D) signed the Working Families and Small Business Health Coverage Act which provides for subsidies to small employers and employees of small employers if the employer:

    •  has not offered a health benefit plan within the prior 12 months;
    • has two to nine eligible employees;
    • meets certain low-wage requirements to be established through regulation;
    • establishes a Section 125 payroll deduction plan to allow for pre-tax premium contributions; and,
    • agrees to offer a wellness benefit that is designed to prevent disease, reduce poor clinical outcomes, and promote health behaviors and lifestyle choices.

    The yearly allocation from the state for this program is scheduled to be $30,000,000.

    Maryland's Fair Share in Health Care Act – On January 12, 2006, the Maryland General Assembly over-rode Governor Robert Ehrlich's (R) veto and passed legislation requiring private-sector for-profit employers with 10,000 or more employees in the state to spend at least eight percent of their payroll (or six percent in the case of a nonprofit employer) on health care. Employers that fell below the required level would have to pay the difference between their health insurance expenses and the percentage threshold into a new Fair Share Health Care Fund, which would direct the funds into the state's Medicaid program.
    In February 2006, the Retail Industry Leaders Association (RILA) filed suit in the U.S. District Court for the District of Maryland seeking to invalidate Maryland 's Fair Share in Health Care Act. In response U.S. District Judge J. Frederick Motz struck down Maryland 's "Fair-Share" Act, declaring that the measure was pre-empted by ERISA and was therefore invalid. The ruling affirmed that since the passage of the Employment Retirement Income Security Act (ERISA) in 1974 the regulation of employee benefits resides with the federal government.
    Maryland AIDS Drug/Insurance Assistance ProgramMADAP is a statewide program which helps low-to-moderate income Maryland residents who are HIV-infected. The MADAP formulary covers a range of medication used to treat HIV infection and to treat, prevent, or relieve certain conditions associated with HIV infection. The income guidelines for MADAP, and MADAP-Plus, are based on 500 percent FPL. The income guidelines for MAIAP (Insurance) are based on 300 percent FPL.
    Hospital All-Payer Rate Setting System – Since 1977 Maryland has operated a hospital all-payer system. Under this system the Maryland Health Services Cost Review Commission (HSCRC) sets rates that Maryland's hospitals may charge.   This payment system distributes the cost of hospital uncompensated care among all purchasers including Medicare, Medicaid, commercial carriers, and self-paying patients. Medicare is required to pay these state-established rates for hospital services under a unique federal waiver. 
    Maryland Health Quality and Cost Council – In addition, Governor O’Malley, through an October, 2007 executive order, created the Maryland Health Quality and Cost Council. The Council is charged with:
    • Coordinating and facilitating collaboration on health care quality improvement and cost containment initiatives by the various stakeholders in the health care system;
    • Making recommendations on health care quality and cost containment initiatives and priorities to policy makers, state and local governmental entities, professional boards, the Maryland Patient Safety Center, industry groups, consumers, and other stakeholders;
    • Developing a chronic care management plan to improve the quality and cost-effectiveness of care for individuals with, or at risk for, chronic disease;
    • Facilitating the integration of health information technology in health care systems; and
    • Examining and making recommendations regarding other issues relating generally to the Council’s mission to improve health care quality and reduce costs.