M edicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports, to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older. Medicaid is financed jointly by the federal government and the states. Federal Medicaid spending is an entitlement, with total expenditures dependent on state policy decisions and use of services by enrollees. State participation in Medicaid is voluntary, although all states, the District of Columbia, and the territories choose to participate. States are responsible for administering their Medicaid programs. States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute's basic framework. This flexibility results in variability across state Medicaid programs. Most Medicaid beneficiaries receive services in the form of what is sometimes called traditional Medicaid—an array of required or optional medical assistance items and services listed in statute. However, states also may furnish Medicaid in the form of alternative benefit plans (ABPs), referred to in the Social Security Act as benchmark or benchmark-equivalent coverage. Congress originally provided for ABPs in the Deficit Reduction Act of 2005 (DRA 2005; P.L. 109-171 ) to give states flexibility to provide a Medicaid benefit that more closely resembles commercial health insurance than traditional Medicaid does. Congress modified the ABP provisions in subsequent legislation, both by expanding the scope of states' service obligations in furnishing Medicaid through ABPs and by requiring that most Medicaid beneficiaries who first became eligible as a result of the Medicaid expansion in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) receive ABPs as their mandatory form of Medicaid coverage. One key difference between ABPs and traditional Medicaid benefits is that ABP coverage is defined by reference to an overall coverage benchmark that is based on one of three commercial insurance products or a fourth, "Secretary-approved" coverage option rather than as a list of discrete items and services. The commercial health maintenance organization (HMO) with the largest insured commercial, non-Medicaid enrollment in the state. Benchmark-equivalent coverage must meet statutory requirements including the following: 
The coverage must include benefits within each of the following categories: inpatient and outpatient hospital services; physicians' surgical and medical services; laboratory and x-ray services; prescription drugs; mental health services; well-baby and well-child care, including age-appropriate immunizations; and other appropriate preventive services. Coverage under an ABP must include at least the EHBs, which non-grandfathered individual and small-group plans in the private health insurance market are required to furnish. Do States Have the Option to Require Other Medicaid Eligibility Groups to Receive Services via ABPs? The categories of ABP-exempt beneficiaries include the following: 
pregnant women who qualify for Medicaid as a result of having household income below 133% of the federal poverty level (FPL); individuals who qualify for Medicaid on the basis of being blind or disabled, including members of the "Katie Beckett" eligibility group (certain children under the age of 19 who require an institutional level of care and receive home- and community-based services); individuals entitled to Medicare benefits; terminally ill individuals receiving hospice benefits under Medicaid; individuals who qualify for Medicaid institutional care on a spenddown basis; individuals who qualify as medically frail; individuals who qualify for long-term care services (including nursing facility services and home- and community-based services); individuals who qualify for Medicaid because they are children in foster care or are former foster care children under the age of 26; parents and caretaker relatives whom the state is required to cover under Section 1931 of the SSA; women who qualify for Medicaid based on breast or cervical cancer; those who qualify for Medicaid on the basis of tuberculosis infection; and noncitizens who receive Medicaid only in the form of a limited emergency medical assistance benefit. Finally, the ACA added a requirement that any coverage provided through ABPs (i.e., either benchmark or benchmark-equivalent coverage) must include coverage of family planning services and supplies for individuals of childbearing age. May States Use a Premium Assistance Model to Furnish ABP Coverage? How Many States Have Implemented ABPs? How Have States Designed ABPs for the ACA Medicaid Expansion Population? States have most commonly used ABPs to furnish Medicaid to ACA Medicaid expansion enrollees. Kansas has used ABPs to help working individuals with disabilities. The Basic ABP is available to children and adults who do not have special health needs. Under traditional Medicaid, states may choose which optional benefits to cover, in addition to the mandatory Medicaid state plan services. Under ABPs, states choose the ABP benchmark on which to base the benefit package.
Medicaid is a federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports, to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older. Medicaid is financed jointly by the federal government and the states. Federal Medicaid spending is an entitlement, with total expenditures dependent on state policy decisions and use of services by enrollees.
State participation in Medicaid is voluntary, although all states, the District of Columbia, and the territories choose to participate. States are responsible for administering their Medicaid programs. States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute's basic framework. This flexibility results in variability across state Medicaid programs.
Most Medicaid beneficiaries receive services in the form of what is sometimes called traditional Medicaid. However, states also may furnish Medicaid in the form of alternative benefit plans (ABPs). ABPs were first introduced in the Deficit Reduction Act of 2005 (DRA 2005; P.L. 109-171 P.L. 109-171) and are referred to in the Social Security Act (SSA) as benchmark or benchmark-equivalent coverage.
In general, under traditional Medicaid benefit coverage, state Medicaid programs must cover specific required services listed in statute (e.g., inpatient and outpatient hospital services, physician's services, or laboratory and x-ray services) and may elect to cover certain optional services (e.g., prescription drugs, case management, or physical therapy services). Under ABPs, by contrast, states may furnish a benefit that is defined by reference to an overall coverage benchmark that is based on one of three commercial insurance products (e.g., the commercial health maintenance organization (HMO) with the largest insured commercial, non-Medicaid enrollment in the state) or a fourth, "Secretary-approved" coverage option rather than a list of discrete items and services. The 33 states and District of Columbia that have implemented the state option to expand Medicaid to low-income adults under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) are required to cover the ACA Medicaid expansion population using ABPs, and states also may elect to require other Medicaid populations to receive care through ABPs. States cannot require certain vulnerable populations to obtain benefits through ABPs.
ABPs must qualify as either benchmark, where the benefits are at least equal to one the statutorily specified benchmark plans, or benchmark-equivalent benefits, which means the benefits include certain specified services and the overall benefits are at least actuarially equivalent to one of the statutorily specified benchmark coverage packages. In addition, ABPs must include a variety of specific services, including services under Medicaid's early and periodic screening, diagnostic, and testing (EPSDT) benefit and family planning services and supplies. Unlike traditional Medicaid benefit coverage, coverage under an ABP must include at least the essential health benefits (EHB) that most plans in the private health insurance market are required to furnish. States choose whether to furnish ABPs through managed care or a fee-for-service delivery system. The Medicaid limitations on beneficiary premiums and cost sharing apply to services furnished through ABPs.
To date, states have chiefly used ABPs as the benefit package for the ACA Medicaid expansion population. However, several states have elected to use ABPs to serve other Medicaid populations (e.g., working individuals with disabilities or children and adults who do not have special health care needs). States can have more than one ABP coverage option to serve different target populations operating concurrently with traditional Medicaid benefit coverage. States have largely used the ABP design flexibility to align their benefit coverage with the traditional Medicaid benefit coverage.