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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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While SCOTUS Debates, The Rules Keep Coming: Medicaid Expansion

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April 24, 2012

On the second anniversary of the signing of the Patient Protection and Affordable Care Act ("PPACA"), the Centers for Medicare and Medicaid Services ("CMS") published a final and interim final rule ("Rule")[1] implementing PPACA's expansions to Medicaid and the Children's Health Insurance Program ("CHIP"). With most of the media's recent focus on the constitutionality challenges to PPACA that are currently pending before the Supreme Court of the United States ("SCOTUS"), little attention has been paid to the details of the Rule.[2] This issue of Health Reform IMPACT will summarize some of the Rule's noteworthy provisions. 

The Rule, which includes a number of changes from the proposed rule ("Proposed Rule"),[3] will go into effect on January 1, 2014.[4]  The Rule casts a wide net by insuring a larger population than is currently covered by traditional state Medicaid programs. In addition, the Rule creates a roadmap for state Medicaid programs to work seamlessly with the soon-to-be created health insurance exchanges ("Exchanges").  

Expansion of Eligibility

To establish a foundation for an increasingly simplified and streamlined Medicaid eligibility process, the Rule establishes four major eligibility groups. The first three categories include parents and caretaker relatives (including, at the state's option, domestic partners); pregnant women; and children.[5]  Children are currently, and will remain, eligible for either Medicaid or CHIP at higher income levels than otherwise allowed under Medicaid based on the eligibility standards already in effect in their resident state. The fourth, and most significant, category expands eligibility to all Americans under the age of 65 with household incomes at or below 133 percent of the federal poverty level ($14,856 for an individual and $30,656 for a family of four).[6]

Determining Eligibility

The Rule also attempts to simplify eligibility determinations for Medicaid and CHIP. Financial eligibility for the four eligibility groups will be determined using a single standard based on Modified Adjusted Gross Income ("MAGI"), as defined in the Internal Revenue Code.  Pursuant to the Rule, eligibility will be based on household MAGI. Numerous benefits, such as grants and educational expenses, will not be counted as income.  However, the Rule provides that some groups of Medicaid recipients will continue to have eligibility calculated by traditional income and resource tests. These groups include individuals with disabilities or blindness, Supplemental Security Income recipients, Medicare Savings Program participants,[7] those over the age of 65, the medically needy and those needing long-term care.

The Enrollment Process

The Rule also envisions a streamlined process by which individuals may receive instantaneous eligibility determinations without a waiting period. At a minimum, the Rule requires that applications be processed in 90 days or fewer for disability applications and 45 days or fewer for all other application types. Redeterminations must be completed annually. This real-time process will include the verification of eligibility requirements, including income, household composition and residency.

Following the general trend toward use of electronic health information, the enrollment process will primarily be completed online using electronic databases. The Rule clarifies that agencies may not require individuals to complete an in-person interview as part of the application process for a determination of eligibility using MAGI-based income or renewals. Consistent with current policy, state Medicaid agencies may accept self-attestation of all eligibility criteria, except for citizenship and immigration status. Where verification is necessary, it will be accomplished through a federal data services hub that links states to federal data sources (e.g., Social Security and Homeland Security). It is expected that the federal data services hub will be provided to states at no charge.

Coordination of Eligibility & Enrollment

The expansion of Medicaid is not the only new avenue for the uninsured to obtain coverage. Under PPACA, the uninsured may also obtain coverage from the Exchanges through the use of premium tax credits, with eligibility for such credits determined by the Exchanges. Frequently, individuals will be unsure whether they should apply for Medicaid or for products within the newly created Exchanges. To address this issue, the Rule details two methods by which the newly expanded Medicaid program will coordinate the eligibility and enrollment process with the Exchanges.[8]

In determining eligibility, if the applicant initially applies through an Exchange, but the Exchange determines that the applicant is eligible for Medicaid instead, state Medicaid agencies will have the option to either: (1) make their own final determinations of Medicaid eligibility based on the Exchange's initial review; or (2) accept a final eligibility determination made by an Exchange that uses state eligibility rules and standards. For individuals who have been screened as potentially Medicaid-eligible by another program, the state Medicaid agency must accept the electronic account, may not request documentation previously provided to the other program, and must determine the Medicaid eligibility of the individual according to the timeliness standards set forth in the Rule. Since these provisions underwent significant changes from the Proposed Rule, they are considered interim final provisions subject to further comment.

Funding

With the expansion of eligibility comes an expansion in the number of people who qualify for Medicaid.  For those qualifying for coverage based on current criteria, the states will get current federal matching rates.[9]  In 2014, 2015 and 2016, the federal government will pay 100 percent of the Medicaid costs of the newly eligible. The federal percentage gradually drops so that in 2020, it is 90 percent.

Conclusion

The fate of the Rule, along with others, is in the hands of the Supreme Court and the final landscape of the Medicaid program will be heavily affected by the Court’s decisions. Stay tuned for future editions of Health Reform IMPACT to keep updated on these developments.


[1] 77 Fed. Reg. 17144 (Mar. 23, 2012).
[2] In the final arguments of Florida v. Dept. of Health & Human Servs., before the Supreme Court on March 28, 2012, the justices looked at PPACA’s expansion of Medicaid. The transcript and audio recording from the final day of arguments are archived here. (last visited April 8, 2012).
[3] 76 Fed. Reg. 51148 (Aug. 17, 2011). 
[4] A portion of the 268-page Rule was issued on an interim basis. CMS will accept additional comments for 45 days for several provisions, including certain data reporting requirements, information safeguards, and timeliness standards for making eligibility determinations.    
[5] 77 Fed. Reg. at 17149.
[6] While the law specifies 133 percent, in practice it is actually 138 percent because states disregard 5 percent of income in determining eligibility. 
[7] The Medicare Savings Program, which is distinct from the Medicare Shared Savings Program (addressing ACOs),  is an umbrella term for state programs that help pay Medicare premiums, deductibles and coinsurance for people with limited income and resources.   
[8] Applicants with MAGI between the Medicaid eligibility level and 400 percent of the federal poverty level will be eligible for premium tax credits, with eligibility determined by the Exchanges. However, CHIP will continue to cover children from households with incomes above the Medicaid eligibility level.
[9] Historically, the federal match is between 50 percent and 80 percent. 

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