Medicaid is jointly financed by the federal and state governments, but each state designs andadministers its own version of the program under broad federal guidelines. The complexity ofMedicaid can present an enormous challenge in meeting the needs of Hurricane Katrina's victims,especially when evacuees cross state lines. State variation in eligibility, covered services, and thereimbursement and delivery of services is the rule rather than the exception. Furthermore, althoughMedicaid is targeted at individuals with low income, not all of the poor are eligible, and not all thosecovered are poor. While some of the federal rules governing Medicaid are flexible enough to allow states toact without federal intervention in the wake of Hurricane Katrina, certain issues raised by the disastermay be addressed only through administrative or legislative action by the federal government. Onthe administrative front, the Centers for Medicare and Medicaid Services (CMS) has developed avoluntary Medicaid waiver option to address some of the hurricane-related eligibility and benefitissues raised in this report. On the legislative front, congressional action may be required if enhanced federalreimbursement is to be provided to states for Medicaid costs incurred as a result of HurricaneKatrina. Congress may also consider the desirability of uniform treatment of hurricane victimsacross states (rather than relying on participation in the waiver program developed by CMS). Anumber of bills that would provide Hurricane Katrina Medicaid and SCHIP relief have beenintroduced. This report begins with a discussion of Medicaid's rules on eligibility, benefits, and financingin the context of current questions and issues raised by Hurricane Katrina, many of which could arisein the wake of other emergency situations (e.g., Hurricane Rita). It then provides information onrecent actions taken by states, discusses federal Medicaid waiver authority, and describes currentfederal legislation dealing with Medicaid and hurricane relief efforts. In general, to qualify for Medicaid coverage, an individual must meet both categorical andfinancial eligibility requirements. Categorical eligibility requirements relate to the age orcharacteristics of an individual. Categories of individuals that may qualify for Medicaid generallyinclude aged persons (65 and over), certain persons with disabilities, children and their parents, andpregnant women. In addition, within federal guidelines, states set functional requirements forindividuals seeking Medicaid-covered long-term care services. Financial requirements govern the amount of income and assets that categorically eligibleindividuals may have and still qualify for Medicaid, as well as how these amounts are calculated(e.g., whether a portion of earned income or the value of a car may be disregarded). The specificincome and asset limitations that apply to a particular group are determined through a combinationof federal requirements and state options. Consequently, different standards apply to differentgroups, and the standards themselves may vary considerably among states. Individuals who do not meet categorical eligibility requirements (e.g., non-elderly adultswho are not disabled and do not have children) generally cannot qualify for Medicaid coverage evenif they are poor. However, as discussed later in this report, Section 1115 waivers (which allow theSecretary of Health and Human Services (HHS) to waive certain statutory Medicaid requirementsfor purposes of conducting research and demonstration projects) provide exceptions to theseeligibility rules for states that have obtained an approved waiver. People who are currently eligible for their state's Medicaid program may face difficultyaccessing health care services if they have lost their Medicaid cards and other identification or havebeen evacuated from their home state. In addition to creating problems for those who are currentMedicaid enrollees, the large losses of Hurricane Katrina's victims may also swell the numbers ofpeople who are financially eligible for Medicaid, either in their home state or in the state to which they have been evacuated. Residency. Current federal Medicaid rulesgoverning residency help in understanding which program is the right one for evacuees to appeal toif they believe they are Medicaid eligible. State Medicaid programs are required to provide coverageto all state residents who are otherwise eligible for Medicaid. An individual is generally considereda resident of a state if he or she is living in it with the intention of remaining there permanently orindefinitely. Eligibility may not be denied because an individual has not resided in the state for aspecified period or because the individual is temporarily absent from the state. A state is alsoprohibited from denying coverage to an individual who satisfies residency rules but who did notestablish residence in the state before entering a medical institution. For currently enrolled Medicaid recipients who have been displaced from their home state,the home state is required under certain circumstances to pay for covered services (i.e., coveredunder the home state's Medicaid program) furnished in another state to the same extent that it wouldpay for services furnished within its boundaries and may opt to pay for out-of-state services underother circumstances (see the Payment and Financing section of this report for additionalinformation). However, the Medicaid recipient must find an out-of-state provider willing to acceptMedicaid payment from the home state (as well as enroll or otherwise enter into an agreement withthe home state's Medicaid program as a condition of receiving that payment), and not all providersmay be willing to do so. Regardless of whether they are enrolled in Medicaid in their home state, displaced individualsmight wish to be considered residents of the state to which they have evacuated, either to obtainMedicaid coverage (in the case of those who were not previously eligible) or to facilitate access tocare (in the case of those who were eligible for Medicaid in their home state but are having difficultyfinding a provider that will accept their out-of-state coverage). If an individual meets the residencyrequirements described above and is otherwise eligible for Medicaid in the state to which they haveevacuated, coverage cannot be denied. However, it should be noted that the eligibility and benefitrules of an individual's host state may be different than the rules of his or her home state. Income and Asset Documentation. In general,federal law stipulates few documentation requirements for Medicaid applicants. State policies onthis issue vary based on the eligibility group, but a considerable amount of documentation may berequired to determine whether an individual meets financial eligibility requirements forMedicaid. (1) Althoughstates have flexibility to collect income and asset information through self-declaration alone, theyalso have the ability to require supporting documentation. Federal law does require states to have an Income and Eligibility Verification System (IEVS),but states are not required to verify income and assets through the IEVS for every Medicaid recipientand may conduct these verifications after enrollment. Under these systems, state Medicaid agenciesuse information from a number of federal and state sources to verify financial eligibility, includingstate wage information maintained by the State Wage Income Collection Agency (SWICA) andinformation on net earnings from self employment, wages, and retirement benefits maintained by theSocial Security Administration (SSA). Look-Back Period for Financial Eligibility. Forevacuees who may have lost their homes and other assets and are now without jobs, willrequirements related to the period over which income is examined for the purpose of determiningMedicaid eligibility prevent Medicaid funds from being used to meet their needs? Here again,federal laws and regulations stipulate few rules for the look-back period used to determine anindividual's financial eligibility for Medicaid, leaving states with a great deal of flexibility. (2) For many eligibility groups,federal regulations require that states use income counting methods that are no more restrictive thanmethod used under the most closely related cash welfare program. (3) Such methods can be lessrestrictive at states' option. For certain other groups, such as the medically needy (generally peoplewho become eligible for Medicaid in part because they spend considerable amounts of their incomeon medical care), the budget period can be no longer than six months. Again, states have theflexibility to shorten such budget accounting periods. People Who Do Not Meet Current EligibilityRequirements. As previously noted, Medicaid eligibility is limited by two primarytypes of current law restrictions: financial and categorical. Individuals qualify for Medicaid byhaving income and assets that fall below certain thresholds and by falling into particular groups orcategories of individuals. In general those categories include the elderly, people with disabilities,dependent children, parents of dependent children, and pregnant women. Could exceptions to thesecategorical restrictions be made for people impacted by the Katrina disaster? Many states have usedSection 1115 Medicaid waivers (discussed later in this report) to allow categorical eligibilityrequirements to be waived. Many states have also exercised options that allow them to liberalizeeligibility without the use of a waiver, such as the option to disregard certain amounts of income orassets for particular groups. Medicaid's basic benefit rules require all states to provide certain mandatory services listedin federal statute. Examples of services that are mandatory for most groups of Medicaid recipientsinclude (1) inpatient and outpatient hospital services, (2) federally qualified health center (FQHC)services, (3) lab and X-ray services, (4) physician services, (5) certain nurse practitioner services,(6) pregnancy-related services (including postpartum care), (7) early and periodic screening,diagnosis, and treatment (EPSDT) for children under age 21, (8) nursing facility care for persons age21 and over, and (9) home health care for persons entitled to nursing facility care. The statute also lists additional services that are considered optional -- that is, available torecipients if states choose to include them in their state Medicaid plans. Some of these optionalbenefits are specific items, such as eyeglasses and prosthetic devices. Other benefits are defined asclasses of medical providers whose array of services are considered to be Medicaid covered benefits(e.g., psychologists, nursing facility care for persons under age 21, intermediate care facility servicesfor individuals with mental retardation (ICFs/MR)).