A final regulation giving states unprecedented flexibility in designing their own Medicaid programs, including adjusting their benefit package to more closely align with beneficiary needs was announced by the Centers for Medicare & Medicaid Services (CMS).

The rule implements provisions of the Deficit Reduction Act of 2005 (DRA). The rule is the latest in a series of regulations to implement the administration's goals of aligning Medicaid more closely with private market insurance and giving states more control over their Medicaid benefits packages. Many of those regulations, however, are the subject of a congressional moratorium.

"This new rule recognizes that states are in the best position to design plans that provide Medicaid beneficiaries better health care for the same or even lower cost," CMS Acting Administrator Kerry Weems said. "With this flexibility, beneficiaries will have more choices and greater control over their health care decisions."
Under the regulation, states can now offer their beneficiaries health care that has the same value as plans that are being offered to other populations in the state, through alternative benefit packages called "benchmark plans."

Benchmark plans are models states can use in designing new programs. These benchmark plans are similar to the flexibility provided to states under the State Children's Health Insurance Program (SCHIP). Benchmark coverage includes:

* The standard Blue Cross/Blue Shield preferred provider option service benefit plan under the Federal Employees Health Benefit Plan;

* State employee coverage;

* Coverage that is offered by the largest commercial health maintenance organization in the state; or

* Coverage that the Secretary of Health and Human Services approves.

These benchmark options provide states with the opportunity to target benefits to meet the specific needs of individuals. In some cases, state employee benchmark coverage may be more generous than the state Medicaid plan. Approved coverage may offer the opportunity for disabled individuals to obtain integrated coverage for acute care and community-based long term care.

For individuals who cannot afford the premiums associated with health insurance offered through their employer, states have the option of paying part of the employee premium to make it more affordable, so the employee can maintain private coverage. These proposed rules also give states the flexibility to provide wrap-around and additional benefits, such as dental coverage.

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