New Mexico Medicaid Buy-in: An Examination of House Bill 400

On March 16, 2023, New Mexico Governor Michelle Lujan Grisham signed House Bill 400. Though the initial house bill authorized a Medicaid buy-in program in the state, named Medicaid Forward, the final bill only sanctions the study of a new Medicaid buy-in for state residents with incomes exceeding 133% of the federal poverty level.

The bill passed the state House 58-10 and the state Senate by a 24-15 vote. Here’s a look at what a potential New Mexico Medicaid buy-in may look like.

What will the study authorized by House Bill 400 examine?

The authorization directs the Secretary of Human Services to study the operational needs and potential effects that could occur should the state administer a Medicaid buy-in program. Among the items the bill authorizes the Secretary to investigate:

  1. The impact the Medicaid buy-in program may have on individual, group, and self-insured health insurance markets. 
  2. How the program impacts health care providers and facilities and what reimbursement rates may be necessary.
  3. How the state will enroll and collect premiums.
  4. Determine how the state will fund the New Mexico Medicaid buy-in program, including expenditures and revenue.
  5. How the Medicaid buy-in may impact the state budget.
  6. Determine the steps required to gain federal waivers and maximize federal spending.

When must the report authorized by New Mexico House Bill 400 be submitted to the legislature?

The Secretary of Human Services must submit a report to the Finance Committee and Health and Human Services Committee by October 1, 2024. The initial House Bill language included January 1, 2026, implementation date. The final bill only authorized a study of a potential Medicaid buy-in program, removing January 1, 2026, implementation date. Medicaid Forward could still go live by January 1, 2026, though that may change based on the results of the study authorized by House Bill 400.

Should it become effective, who would be eligible for the New Mexico Medicaid Buy-In program?

The initial House Bill 400 offered clues as to what the final Medicaid Buy-in program may look like. In that bill, Medicaid buy-in would be available to those who are under 65 years old, are not otherwise eligible for mandatory health coverage or full Medicaid coverage, and have a household income greater than 133% of the federal poverty level. 

The state would likely leverage its existing state exchange infrastructure, BeWellnm, to enroll residents in the Medicaid buy-in program. The initial version of the bill indicated the state exchange would enroll residents. Consumer outreach would also help individuals make a health plan choice.

Of note: The bill specifically calls for the study to examine the impact a Medicaid buy-in may have on the state or local public employees. The state likely believes it can shift its public employees from a self-funded plan to a Medicaid buy-in plan and save money.

How much would it cost to buy into New Mexico Medicaid?

The study authorized by House Bill 400 will include a sliding scale for premiums and cost-sharing based on household income. Though the state has not set billing premiums, an analysis at ACASignups indicates that the monthly premiums could be comparable to the average ACA policy available on the state exchange. The difference: Because the Medicaid program pays lower rates to providers, the Medicaid buy-in program could have much lower total out-of-pocket costs – with limited or no deductibles and lower co-pays. According to a brief analysis, the total expense could be as much as 30% lower than an ACA plan.

How will New Mexico collect premiums?

New Mexico is one of the few states that uses a premium billing solution in its ACA exchange. Most states merely pass enrollment data to health insurers to bill members. New Mexico’s exchange bills members directly and remits payments to carriers.

Though this arrangement typically leads to a more unified, better member experience, New Mexico recently indicated it might join other states with state-based exchanges and transition billing to the health plans

New Mexico hasn’t indicated how those health plans will bill Medicaid premiums. Today, four health plans manage the state’s Medicaid population but don’t charge a premium. 

Though there’s much to solve, New Mexico’s House Bill 400 moves its Medicaid Buy-in program closer to fruition. It could be a model other states follow to create a public option based on existing infrastructure.

Certifi helps states with Section 1115 Medicaid waivers or Medicaid buy-in programs bill and collect payments thanks to a premium billing and collections module that is R3 certified for Medicaid.

Download a Guide to Premium Billing Software for Health Insurers

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