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Medicaid (Title XIX of the Social Security Act)​

Categories: Medicaid, Social Security

The Medicaid program was authorized by Title XIX of the Social Security Act Amendments of 1965 (Public Law 89-97), which was signed into law by President Lyndon Johnson. Medicaid is a joint state-federal program. Its purpose is to provide health care to individuals who have low incomes, including persons who are blind or disabled. States, territories, and the District of Columbia must meet certain requirements to receive matching funds from the federal government to participate. The match rate is based on the poverty level within the state.

Medicaid Basics

The governor in each state designates a Medicaid agency responsible for developing and submitting a State Plan, which is a binding document describing how the state will administer its Medicaid programs. The State Plan lists groups of individuals to be covered, health care services to be provided, methods for paying providers, provider qualifications, and the administrative activities necessary to carry out the program. States send State Plan Amendments (SPAs) to the Centers for Medicare and Medicaid Services (CMS) for review and approval. States also submit SPAs to request permissible program changes, make corrections, or update their plans with new information.


Certain groups of people are automatically eligible for Medicaid. These include children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments. Additionally, states have the option to establish a “medically needy program” for individuals with significant health needs whose income is too high to otherwise qualify for Medicaid under other eligibility groups. Thirty-two states and the District of Columbia provide Medicaid eligibility to people who are eligible for Supplemental Security Income (SSI) benefits. In these states, the SSI application is also the Medicaid application, and Medicaid eligibility starts the same months as SSI eligibility.

Covered Services

All state plans must provide eligible beneficiaries with these core services:

  • Inpatient hospital care, not including care in hospitals for mental illness or tuberculosis,
  • Outpatient hospital care,
  • Laboratory and X-ray,
  • Skilled nursing home services for those over age 21, and
  • Physicians’ services

Other mandatory services include: Early and Periodic Screening, Diagnostic and Treatment (EPSDT); family planning and supplies; federally qualified health centers; freestanding birth centers; home health services; nurse midwife services; certified pediatrics or family nurse practitioners authorized to practice under state law; rural health clinic services; tobacco cessation counseling and pharmacotherapy for pregnant women; and non-emergency transportation to medical care.

Optional services include: prescribed drugs; ICF-IILs; clinic services; chiropractic services; critical access hospital services; hospice; inpatient psychiatric services for individuals under age 21; dental services; dentures; eyeglasses; emergency hospital services in a hospital; health homes for enrollees with chronic conditions; home and community-based services; inpatient hospital and nursing facility services for individuals age 65 or older in mental health institutions; occupational therapy services; optometry services; personal care; physical therapy services; private duty nursing; program for All-Inclusive Care for the Elderly (PACE); primary care case management; prosthetic devices; respiratory care for ventilator dependent individuals; speech, hearing and language disorder services; targeted case management services; other licensed practitioners’ services; and other diagnostic, screening, preventive and rehabilitation services.

States may provide optional services via a fee-for-service method or through a managed care organization or other reimbursement methodology.


Over the years, the Medicaid program has been changed through legislative and regulatory methods to meet the needs of individuals with low incomes.

The Social Security Amendments of 1967 added the Medicaid benefit for children and adolescents up to age 21, known as Early and Periodic Screening, Diagnostic and Treatment (EPSDT), as a mandated service. The goal of this benefit is to ensure that children under the age of 21 who are enrolled in Medicaid receive age-appropriate screening, preventive services, and treatment services that are medically necessary to correct or ameliorate any identified conditions.

In 1971, Intermediate Care Facilities for the Mentally Retarded (ICF-MR program – now referred to as individuals with intellectual disabilities – ICF-IID) was added as an optional Medicaid service to allow states to receive matching federal funds for institutional services (Section 534.001). The first Medicaid Home and Community Based Services (HCBS) waiver was authorized in 1981 as an alternative to the institutional standards of the ICF-MR program.

The Omnibus Budget Reconciliation Act (OBRA) of 1993 gave states permission to create Drug Utilization Review (“DUR”) boards to manage state specific drug purchasing and formulary decisions for state purchased care under the Medicaid program. OBRA 1993 requires states to recover, at a minimum, all property and assets that pass from a deceased person to his or her heirs under state law.

The Balanced Budget Act of 1997, the Children’s Health Insurance Program (CHIP) builds on Medicaid to provide insurance coverage to uninsured, low-income children above Medicaid income eligibility thresholds. States may use CHIP funds to create a separate CHIP program, expand their Medicaid program, or adopt a combination approach.

On July 1, 2003, Medicaid coverage was expanded to working individuals with disabilities with incomes up to 250 percent of the Federal Poverty Level. Congress authorized the Medicaid Buy-In option for States in the Balanced Budget Act of 1997 (Section 4733) and enhanced the option in the Ticket to Work and Work Incentive Improvement Act of 1999. The program is optional for states.

The Patient Protection and Affordable Care Act (ACA) of 2010, signed by President Barrack Obama, authorized states to expand Medicaid eligibility to individuals under age 65 in families with incomes below 133 percent of the federal poverty level to provide coverage to the working poor. The ACA incentivized states to provide options to beneficiaries to receive long-term care services and supports in their home or the community. These provisions include:

  • Home and Community-Based Services State Plan Option: The ACA enable States to target home and community-based services to particular groups of people, to services accessible to more individuals, and to ensure the quality of the services provided.
  • Community First Choice: Provides enhanced federal funding to States that elect to provide person-centered home and community-based attendant services and supports to help increase individuals with disabilities’ ability to live the community.
  • State Balancing Incentive Payments Program: Authorized State grants to increase access to non-institutional long-term services and supports (LTSS). The program ended September 30, 2016.
  • Money Follows the Person (MFP): Providing individuals with long-term services and supports that enable them to move out of institutions and into their own homes or other community-based settings. The MFP program was set to expire in Fiscal Year 2011, but was extended by the ACA for an additional five years, ending September 30, 2016.