State Medicaid Policy Choices
Under the Deficit Reduction Act Provisions
Affecting Children and Adults with Mental Disorders
Background: The Deficit Reduction Act
Overview of State Implementation
Benchmark Medicaid Plans
Expanded Access to Home- and Community-Based
Services for the Elderly and Disabled
Opportunity for Families of Children with Disabilities to Purchase
Medicaid Coverage for Their Children
Demonstration Projects on Home- and Community-Based Alternatives
to Psychiatric Residential Treatment Facilities for Children
Money Follows the Person Rebalancing Demonstrations
DRA Cost-Sharing Changes
Conclusion
Notes
Background: The Deficit Reduction Act
The Deficit Reduction Act of 2005 (DRA), signed into law in February
2006, set the stage for some of the most significant changes to
Medicaid since the program’s inception in 1965. It amended
a number of other federal programs and aimed to achieve savings
of nearly $100 billion for the federal government over a 10-year
period, netting an estimated $28 billion or more from adjustments
to Medicaid.
Some of the DRA changes to Medicaid involve across-the-board revisions,
requiring all states to comply with new federal rules. Some will
affect people with mental illnesses. These include a tightening
of rules on Targeted Case Management and the requirement that individuals
prove their citizenship status.
However, many other provisions of the DRA create new options for
states, allowing them greater flexibility in the design of their
programs. These include options to:
- create different benefit packages for different groups
of Medicaid beneficiaries;
- increase cost-sharing;
- institute initiatives or policies intended to encourage healthy
behavior;
- create home- and community-based services for people with
disabilities through a state plan amendment; and
- allow certain families of children with disabilities to buy into
Medicaid.
Finally, the DRA includes authority for the federal government
to promote demonstration initiatives. Important demonstrations
for people with mental disorders are the Home and Community-Based
Alternatives to Psychiatric Residential Treatment Facilities for
Children and the Money Follows the Person Rebalancing Initiative.
The first expands services for children in or at risk of placement
in residential treatment facilities; the second provides incentives
to states to move people out of institutions and into the community
with appropriate supports and services.
This report and the accompanying tables summarize ways in which
states have responded to the new flexibility provided by the DRA.
It does not address the provisions of the law that give states
no options. Each section of the report summarizes the law1 and
then describes how states have implemented it as of December 31,
2007.
Further details on state policies are provided in the tables.
Overview of State Implementation of the DRA
Two provisions in the DRA that might limit access to mental health
services for those in need are 1) the authority for states to create
benchmark plans with different (and lesser) benefits than traditional
Medicaid and 2) the provisions that allow increases in cost-sharing
for Medicaid benefits.
Generally, states have not rushed to take up these options. Eight
states have created benchmark plans, but some of these are very
limited in reach. Only four states have created significant benchmark
plans limiting access to traditional Medicaid services for some
populations. Three states have picked up the option to increase
cost-sharing requirements, primarily as part of the creation of
a benchmark plan, and three others have increased cost-sharing
for expansion populations.
Four states have adopted policies that are intended to encourage
healthy behavior among Medicaid beneficiaries. In one state, individuals
may lose access to benefits for failure to adhere to these new
requirements.
States have been quite responsive to the opportunities to create
new demonstration programs under Medicaid. There are now 10 state
demonstrations of home- and community-based services for children
at risk of placement in a psychiatric residential treatment facility
and 31 Money Follows the Person demonstrations, 13 of which include
people with mental illnesses.
Few states, however, have opted to expand home- and community-based
services through the Family Opportunity Act, the new state plan
option. Two states are using the Family Opportunity Act to cover
more children with disabilities under Medicaid.
Only one state has so far received approval for a state plan amendment
to offer home- and community-based services, although other states
have either begun negotiations or are working on the application.
The following summary describes how the states have implemented
the DRA options as of January 2008 and how this may affect people
with mental health care needs.
Benchmark Medicaid Plans
Federal Law
Section 6044 of the DRA makes a radical change to how
Medicaid operates, eliminating the principles of statewide coverage
and
identical benefit packages for all individuals covered in a state’s
plan.
The DRA allows states to modify the Medicaid benefit package for
some beneficiaries. States may amend their state plan to shift
some groups of individuals into what is called “benchmark
coverage” or “benchmark-equivalent coverage.” This
coverage parallels the coverage authorized under the State Children’s
Health Insurance Program (SCHIP). There are some restrictions on
which groups of Medicaid-eligible individuals can be required to
enroll in these more limited benchmark plans.
The health care plans that states may use as benchmarks for the
new, more limited Medicaid coverage are:
- the standard Blue Cross/Blue Shield preferred-provider
plan under FEHBP, the federal employees health benefits plan;
- a state employee plan;
- the HMO plan in the state that has the largest non-Medicaid enrollment;
or
- a benchmark-equivalent plan with coverage approved by the Secretary.
Benchmark-equivalent coverage is defined as a benefit that has
an aggregate actuarial value at least equivalent to one of the
above benchmark plans. The statute sets forth a standard to determine
the actuarial value. For mental health services and prescription
drugs (as well as vision and hearing services), the benchmark-equivalent
coverage need be at least 75% of the actuarial value of the benchmark
plan.
Services covered under any of these plans need only include:
- inpatient and outpatient hospital services;
-
physicians’ surgical and medical services;
- laboratory and x-ray services;
- well-baby and well-child care, including age-appropriate immunizations;
and
- other appropriate preventive services, as designated by the Secretary.
States have the option to provide additional benefits as “wraparound” coverage
to any of the beneficiaries who are moved into benchmark plans.
They must provide wraparound coverage to children under age 19
in order to ensure that children still have access to the Early
and Periodic Screening, Diagnosis and Treatment services (EPSDT)
as defined in existing Medicaid law. This means these children
must continue to receive any medically necessary Medicaid-covered
service, whether or not that service is covered or defined in the
state Medicaid plan.
The DRA leaves the EPSDT mandate intact for children who are not
enrolled in benchmark plans. Although there is no specific requirement
for EPSDT wraparound benefits for youngsters over age 19, the EPSDT
mandate in the law is not repealed and would appear still to apply
to those individuals.
States are limited as to whom they may require to enroll in these
new plans. The following populations may not be compelled to enroll
in a benchmark plan:
- pregnant women with mandatory eligibility for Medicaid;
- blind or disabled adults and children (including those on SSI or
SSDI);
- medically needy individuals;
- dually eligible (Medicaid and Medicare) people;
- institutionalized individuals and those qualifying for long-term
care services;
- hospice patients and people with terminal illnesses;
- medically frail people and those who have special medical needs;
- children in foster care who are receiving services under Title
IV-B of the Social Security Act and children receiving foster
care or adoption assistance under Title IV-E;
- TEFRA children (also known as Katie Becket option); and
- individuals who qualify for Medicaid on the basis of receiving
TANF in states that link Medicaid eligibility to TANF eligibility.
Generally, this leaves low-income, relatively healthy adults and
children as the groups that may be required to enroll in these
alternative plans.
In addition, states cannot now create new eligibility categories
and put those people into benchmark plans. Only people who meet
the state’s eligibility standards in place prior to enactment
of the DRA may be included on a mandatory basis.
According to CMS policy, states may also offer (but not mandate)
benchmark coverage to any group of Medicaid-eligibles (including
those exempted from the mandatory coverage), provided they
have the Secretary’s approval to do this through Medicaid’s
waiver authority. CMS guidance on this question is contained
in a letter to state Medicaid directors.2 This letter emphasizes
that
states:
… must inform the individuals that such enrollment is voluntary
and that such individuals may opt out of such alternative
benefit package at any time and regain immediate eligibility for the
regular Medicaid program under the State plan. The State
must inform the individual of the benefits available under the alternative
benefit package and provide a comparison of how they differ
from the benefits available under the regular Medicaid program.
State Implementation
Prior to enactment of the DRA in October of 2005, CMS approved
an 1115 waiver submitted by Florida that presaged the passage of
Section 6044 of the DRA. In fact, Florida was cited during debate
on the DRA as an example of how a state might wish to change its
Medicaid program. Although not resulting from enactment of the
DRA, the Florida waiver is sufficiently similar to make it a useful
study. This waiver allows mandatory enrollment of certain groups
of Medicaid-eligible individuals (children, parents, those on Supplementary
Security Income but not Medicare, and pregnant women) in a participating
managed care organization (MCO). The state provides a defined contribution
to each beneficiary by paying a risk-adjusted premium based on
an individual risk score. Individuals use this to purchase health
care from one of the participating MCOs. If they wish, beneficiaries
may opt out of Medicaid altogether and use their premiums to purchase
individual or employer-sponsored private coverage.
The benefit rules in the waiver are similar to those in the DRA
benchmark provision. Each plan must offer all of the mandatory
Medicaid services, but may choose which optional services to provide.
Plans also have the flexibility to determine the amount, duration
and scope of the benefits. The only requirement is that the benefit
package of each plan must be actuarially equivalent to Florida’s
current Medicaid package for the average member of the target population.
Additionally, plans must cover 45 days of inpatient hospital care,
EPSDT for children and all medically necessary care for pregnant
women.
Florida also sets annual maximum benefit limits for adults. Once
adult beneficiaries (except pregnant women) reach this limit, there
is no further Medicaid coverage and individuals must cover the
costs of their own care. Co-payments for adults may also be increased
under this waiver, although they must remain nominal.
Florida’s waiver also offers “Enhanced Benefit Accounts” for
beneficiaries who participate in state-defined healthy activities.
Money in these accounts may be used for cost-sharing, medical expenses
not covered by the MCO and “extras” such as weight-loss
programs. Individuals who lose their Medicaid eligibility but whose
income remains below 200% of federal poverty can maintain their
access to these accounts for three years after losing Medicaid
eligibility.
Evaluations of the Florida Medicaid waiver have identified some
problems. For example, the HMO benefit packages became less generous
in the second year and co-payments increased as well. Beneficiaries
reported problems in getting access to medications, and this was
seen to be the most serious problem facing people with disabilities.3 Provider
participation in Medicaid also appears to be declining.4 In
an attempt to protect themselves from these adverse effects,
people with disabilities were more likely to sign up with the provider-sponsored
networks that are not permitted to limit benefits in the same way
as HMOs.5
For these and other reasons, Florida has announced that it will
not expand this program statewide, although it will continue its
initial pilot projects in five counties.
States Using the DRA Option: Overview
As of December 2007, eight states had approved state plan amendments
that implement this section of the DRA (see Table 2). Idaho, Kansas,
Kentucky, South Carolina, Virginia, Washington, West Virginia and
Wisconsin have approved benchmark plans for some (or all) groups
of Medicaid beneficiaries. Texas and Missouri have announced plans
to create reforms to their Medicaid program which may include benchmark
plans.
Of these states, Idaho, Kentucky and West Virginia have made substantial
changes to their Medicaid programs. In addition, South Carolina
has created significant change for a pilot population in one county.
Four of the states used the benchmark-plan option to improve coverage
for specific populations: Kansas, Virginia, Washington and Wisconsin.
In these states there is no reduction in basic Medicaid.
Mental health coverage in the benchmark plans of the three states
with comprehensive changes is limited, emphasizing basic inpatient
and outpatient services with limits for most populations, although
those with disabilities generally have broader coverage.
Covered Populations
While most states are implementing their new state plan option
statewide, West Virginia is phasing in the benchmark plans beginning
with a pilot in three counties. Idaho, which has three benchmark
plans, is operating two on a statewide basis and the other in 13
counties. Kentucky is offering benchmark-plan services statewide
and phasing in a disease-management program in select counties.
South Carolina’s plans are limited to 1,000 people in one
county. Washington is phasing in its program by large groups.
The states have taken very different approaches in terms of the
target populations for their benchmark plans. Kentucky and Idaho
have targeted the widest group of Medicaid beneficiaries. Kentucky
has redesigned its entire Medicaid program so that now all beneficiaries
fall into one of four plans: Global Choices, Family Choices, Comprehensive
Choices and Optimum Choices. Global Choices is the new name of “regular” Medicaid,
and the remaining three plans are all benchmarks intended for different
populations. Family Choices is designed for children, while Comprehensive
and Optimum Choices are for the elderly and individuals with disabilities.
Idaho has developed three benchmark plans, a basic plan for children
and working adults, an enhanced plan for individuals with disabilities
and a coordinated plan for dual eligibles.
West Virginia’s redesigned Medicaid program, Mountain Health
Services, is also broad. It covers healthy adults and children
in one of four plans (a basic or enhanced benefit package for both
adults and children). The two basic plans cover mandatory services
while the enhanced plans also cover some optional services and
provide wellness benefits. West Virginia’s pilot emphasizes
a medical home and uses outreach and other strategies to engage
people who fail to show up for appointments.
South Carolina has created two new programs that can enroll up
to 1,000 people in one county. Low-income families and children,
as well as individuals with disabilities and dual eligibles, can
receive coverage based on the state employees’ high-deductible
health plan. All Medicaid-covered individuals, except those who
are dually eligible for Medicare and Medicaid and foster care children,
will also be offered the option of setting up a virtual Health
Savings Account to use for services in addition to those covered
under the state employees’ benchmark plan.
Other states have targeted narrower populations for their benchmark
plans. Kansas has a benchmark plan that offers Personal Assistance
Services (PAS) to individuals eligible for the state’s Ticket
to Work and Work Incentives Improvement Act (TWWIIA) Medicaid buy-in
program. Virginia covers disease-management services for Medicaid
beneficiaries with asthma, congestive heart failure, coronary artery
disease and diabetes through its newly approved benchmark plan
(covered individuals remain eligible for all regular Medicaid services
as well). Washington is providing disease-management (on an opt-in
basis and in addition to other Medicaid benefits) for categorically
needy aged, blind and disabled individuals. These three states
have focused on expanding services for small groups without altering
the Medicaid program for other beneficiaries.
Wisconsin has also retained Medicaid benefits for all populations
while creating two specific plans: a standard plan which provides
full Medicaid coverage for certain low-income children and pregnant
women and a new benchmark plan for children, pregnant women and
families with higher incomes.
Mental Health Benefits
Most states are providing beneficiaries with “Secretary-approved
coverage” instead of opting to use an existing benefit package
from one of the authorized benchmark plans defined in the law (see
summary above). Exceptions are Kentucky and South Carolina, which
are using state employee plan coverage for some populations.
Idaho, Kentucky, South Carolina, West Virginia and Wisconsin include
mental health benefits in their benchmark plans. The plans in Virginia,
Kansas and Washington have not changed mental health coverage,
which remains part of the traditional Medicaid program. All states
with benchmark plans indicate that children will also have access
to EPSDT-mandated services.
Idaho has the most restrictive mental health coverage for children
and working-age adults, while providing more generous coverage
for adults who are dual-eligibles. Idaho’s basic and enhanced
plans both cover limited inpatient hospitalization, outpatient
psychotherapy, case management, psychological evaluations and clinic
services (with slightly higher limits for the enhanced plan). The
enhanced plan also includes limited psychiatric rehabilitation,
partial hospitalization and psychiatric hospital services for children.
For dual-eligibles, Idaho covers inpatient and outpatient services
to the same degree as for physical health care, along with clinic,
rehabilitation and crisis support.
Kentucky’s plans for low-income children and adults offer
inpatient and outpatient services with no limits, but with increased
co-payments. No other mental health services are included. The
plans for the elderly and people with developmental disabilities
who meet institutional level of care criteria provide full Medicaid
coverage with the addition of home- and community-based services.
Adults in West Virginia’s basic plan have access only to
mandatory Medicaid services, but with no inpatient psychiatric
care. Children have coverage for limited inpatient and outpatient
services. In the enhanced plan, adults have limited inpatient and
outpatient mental health benefits, while children have unlimited
inpatient and outpatient coverage and full EPSDT services.
In South Carolina, participants in plans based on the state employees’ coverage
will have access only to inpatient hospital care and outpatient
services, although children will have EPSDT “preventive,
dental and vision services” as well.
Kansas provides traditional Medicaid state plan services in addition
to personal assistance and other independent living services for
the state’s ticket-to-work buy-in population. There are no
specific additional mental health treatment benefits.
The disease-management programs in Virginia and Washington focus
on populations with chronic physical health conditions.
Benefits in Wisconsin’s plan for higher income groups are
similar to those offered under the state employees' HMO plan and
include inpatient and outpatient mental health benefits, prescription
drug coverage and early childhood development services, as well
as EPSDT coverage for children.
Status of “Exempt” Populations
Most of these state plans do not affect populations listed in
the law as exempt from inclusion in benchmark plans. However, Kentucky’s
Comprehensive and Optimum Choices plans and Idaho’s Enhanced
Plan all cover exempt groups. (Also, Virginia’s disease-management
program is an opt-out program for those who have the covered chronic
illnesses.)
Kentucky and Idaho automatically enroll these individuals, while
allowing them to opt out if they believe it is in their best interest.
Kentucky sent a letter to its Medicaid members who are eligible
for the Comprehensive and Optimum Choices plans, informing them
that they had been enrolled in one of the two new benefit packages.
The letter went on to say that they could opt out of the plan and
enroll in Global Choices but would have to pay higher co-payments.
The “Frequently Asked Questions for Participants” section
of Idaho’s Medicaid website states that applicants will be
enrolled in one of the two plans, depending on their needs, and
that current beneficiaries will also be enrolled in one of the
new plans at their renewal date and that they “don’t
have to do anything.”6 However,
the participant section of the website only lists the two benchmark
plans, so it’s not
clear to beneficiaries that regular Medicaid is still an option.
To confuse matters more, Idaho recently changed its regular Medicaid
plan to mandatory services only.7
These two states may be violating the law by not providing full
information about their options as required by CMS. Kentucky’s
approach penalizes those who choose to opt out by charging them
higher co-payments and Idaho’s exempt groups may not even
know they can opt out. Furthermore, Kentucky and Idaho appear to
have provided insufficient information regarding the differences
between regular Medicaid and the benchmark packages to their beneficiaries.
By doing so, the states have failed to fulfill a second requirement
in the CMS guidance letter for enrolling exempt groups in benchmarks.
EPSDT
States with benchmark plans that include children have to address
how EPSDT benefits will be administered, since the law requires
that children continue to have access to these services. Most states
included only statements of assurance on their state plan applications,
without providing details of how they will do this. For example,
Kentucky said that “EPSDT services will be provided by the
State to insure that the full EPSDT benefit is available when medically
necessary.” Some states are more specific. Idaho allows children
in the basic plan who develop needs beyond their covered benefits
to opt into the enhanced plan. However, any Medicaid-covered service
not covered even under the enhanced plan will require pre-authorization
and be subject to amount, scope and duration limits set by the
state.
West Virginia’s benchmark plans have generated the most
questions regarding EPSDT. The principal concern is that there
are two different benefit packages for children, distinguished
only by the level of services they provide. How can the basic plan,
which does not cover certain services, claim to provide all medically
necessary benefits? Children in the enhanced plan have a wider
range of benefits, but in order to stay in this plan they have
to comply with the member agreement. For many of the items on this
agreement, such as “I will show up on time when I have appointments,” compliance
is out of a child’s control. Despite the obvious complexities
of the system, West Virginia has provided assurances that children
will have access to EPSDT through their medical home.
Encouraging Healthy Behavior
Florida’s waiver led the way in encouraging certain behavior
on the part of Medicaid beneficiaries. Low-income parents, children,
the elderly and people with disabilities can earn enhanced benefits
for complying with a list of healthy behaviors. Benefits are in
the form of resources (up to $125 a year) that can be used to purchase
health-related products and supplies.
Following Florida’s lead, some states have added provisions
to some of their benchmark plans that focus on consumer responsibility
and preventive services. Only West Virginia requires members to
meet behavioral expectations set forth in the member agreement.
Individuals who fail to make and keep these agreements lose their
access to the enhanced-benefit plan. Beneficiaries who do not adhere
to the agreement will be put back in the basic plan, although they
can appeal that decision. After 12 months on the basic plan, they
can re-sign the member agreement and re-gain the enhanced-benefit
package.
The West Virginia member agreement includes 12 requirements such
as, “I will do my best to stay healthy,” “I will
take the medicines my health care provider prescribes for me,” and “I
will use the hospital emergency room only for emergencies.” The
medical home established through the West Virginia benchmark plans
will, among other things, monitor beneficiaries’ compliance
with the member agreement.
On a smaller scale, Idaho and Kentucky are also using the new
benchmark packages to encourage healthy behavior among Medicaid
beneficiaries. Idaho is offering two Preventive Health Assistance
(PHA) programs: one focusing on behavior and the other on wellness.
The former addresses tobacco cessation and weight management while
the latter aims to help keep children up to date with wellness
exams and immunizations. Beneficiaries who fulfill their obligations
can receive vouchers or coverage for delinquent premiums.
Kentucky rewards participants in one of its new disease-management
programs with access to additional benefits—such as $50 of
dental services, $50 of vision hardware, five nutritionist’s
visits and smoking-cessation services—if they fulfill screening
requirements and maintain participation for a year.
Further Applications Pending
Texas has submitted a proposal for the Texas Health Care Reform
program that comprises pilot projects for promoting healthy lifestyles,
Health Savings Accounts and a Health Opportunity Trust Fund. Many
of the provisions in the Texas proposal will require a waiver (Section
1115), but Texas may also rely on the DRA for some changes. For
example, Texas is planning to develop new optional-benefit packages
for children with special health care needs and may expand the
concept to other Medicaid eligibility groups. The state also plans
a program to encourage Medicaid recipients to lead healthy lifestyles,
with value-added services and individual health rewards accounts.
The DRA authority for higher co-payments for non-emergency use
of emergency rooms is one of the changes contemplated.
Missouri is revamping its Medicaid program and is considering
a premium offset program, Health Improvement Plans (with a required
medical home) and a health assurance program for Ticket to Work
recipients.
Impact on People with Mental Health Care Needs
These changes alter the way Medicaid has operated in the past,
in that for the first time different groups of eligible beneficiaries
in a state can have different service coverage without the state’s
having to apply for a special waiver. Moreover, the coverage for
groups in the benchmark plans can not only be limited in scope
(such as limiting mental health coverage to inpatient care and
outpatient therapy/medications) but also in duration, with limits
imposed on certain services—for example, 20 outpatient mental
health visits per year. The DRA cites the need for states to include
full access to all Medicaid services for children under age 19,
whether or not the service is included in the state plan or the
benchmark plan. However, it is silent on those ages 19-22, who
are also protected by the EPSDT mandate.
Expanded Access to Home- and Community-Based Services for the
Elderly and Disabled
Federal Law
Section 6086 of the DRA creates a new Section 1915(i) in Medicaid
law giving states the option to provide home- and community-based
services (HCBS) to elderly individuals and people with disabilities
as a state plan service. Previously, states had to apply for a
waiver and demonstrate cost neutrality before they could include
this option under Medicaid.
An important aspect of the state plan option compared with a home-
and community-based waiver is that states do not have to demonstrate
budget neutrality. It has been nearly impossible for states to
secure HCBS waivers for adults age 22-64 with mental illnesses
due to the Medicaid rule that prohibits federal financial participation
for services provided in Institutions for Mental Diseases (IMDs).
States could not show that community care would be budget neutral
since IMD expenditures were disallowed.
Unlike a HCBS waiver, this state plan option is also not limited
to individuals who are in or at risk of placement in a Medicaid-covered
institution. Instead, eligibility will be determined based on need.
However, states must apply stricter level-of-care eligibility criteria
for admission to an institution than are applied to those seeking
home- and community-based services. States can modify these criteria
without federal approval if enrollment exceeds projected capacity.
States also have the option to have stricter income and resource
eligibility rules for home- and community-based services than for
institutional services.
States have more flexibility under this option than they do for
other state plan services. The DRA allows states to limit the number
of people to be served and to maintain waiting lists for participants.
States electing this new option may also chose to provide the services
in limited areas of the state without having to meet Medicaid’s
usual requirement that benefits be available statewide.
The law’s financial eligibility criteria for home- and community-based
services are more stringent than those that apply to HCBS waivers.
Participation is restricted to individuals with incomes at or below
150% of poverty. States that cover medically needy individuals
in their state plans, however, may elect to waive rules relating
to this group’s financial eligibility and instead use institutional
eligibility criteria. This means states can cover children in families
with incomes over 150% of poverty by disregarding their parents’ income.
States must conduct an evaluation to determine eligibility, including
an independent individualized needs assessment. This assessment
must be conducted in consultation with the individual, their providers
and, if appropriate, the individual’s family. Eligibility
must be
re-determined, at minimum, on an annual basis. Individuals are
assessed as to whether they are able to perform activities of daily
living (ADLs) and about their needs for significant support in
order to perform two or more ADLs. The law, however, does not limit
participation to those who cannot perform ADLs.
An individualized written plan of care must be developed, again
in consultation with the individual, providers and, if appropriate,
the individual’s family. States may provide to participants
the option of self-directing their services, including the option
to have an individual budget. The plan will identify necessary
services or, if the individual elects to self-direct, the services
that may be purchased. The plan of care must be reviewed at least
annually.
Services that may be covered under the state plan option are less
extensive than the service array permitted for home- and community-based
waivers. Covered services are those specifically authorized in
Medicaid law for waivers. (Additional services can be authorized
by the Secretary for a HCBS waiver, but not for the state plan
option.) This means that states can provide under the state plan
option:
- case management;
- home maker/home health aide services;
- personal care services;
- psychosocial rehabilitation;
- home health, private duty nursing;
- adult day care;
- habilitation;
- respite care; and
- day treatment.
Any state waiver under Sections 1915 or 1115 that will cover services
for individuals who are going to be covered by the new state plan
option must have expired prior to adoption of the option. States,
however, may continue to provide home- and community-based services
through existing Medicaid 1915(c) and 1115 waivers. If, in the
future, the state elects the state plan option and establishes
new eligibility criteria, beneficiaries who now receive services
but do not meet the new criteria would be grandfathered into the
program.
State Implementation
To date, only Iowa has an approved state plan amendment under
Section 1915(i), approved in April 2007. Iowa sets an important
precedent by using this option specifically for individuals with
serious mental illnesses.
Eligibility Criteria
Iowa has chosen not to limit service availability geographically
and services will be available statewide. However, it has set enrollment
caps, which could result in a waiting list for HCBS. The state
plans to serve 3,700 people in the first year, with the number
of participants increasing to nearly 4,500 in the fifth year.
Financial eligibility is connected to existing Iowa Medicaid eligibility
rules. Individuals who qualify for Medicaid because they are medically
needy will be eligible to participate.
The needs-based criteria are restrictive so as to limit services
to those with histories of serious mental illness. In addition,
the functional eligibility criteria are more restrictive than the
criteria states generally use for rehabilitation or clinic services.
Specifically, the individual must have at least one of two risk
factors:
- have undergone more than once (or be currently undergoing)
psychiatric treatment more intensive than outpatient care (e.g.,
emergency services, alternative home care, partial hospitalization
or inpatient hospitalization). Individuals currently receiving
inpatient hospital services demonstrate this risk factor, but
cannot receive 1915(i) HCBS State Plan Services while in the
institution.
Or
- have a history of psychiatric illness resulting in at least one
episode of continuous, professional supportive care other than
hospitalization.
Furthermore, the individual must have ongoing needs related to
his or her disability. The person must meet at least two of the
following five criteria on a “continuing or intermittent
basis” for at least two years:
• be unemployed, or employed in a sheltered setting, or
have markedly limited skills and a poor work history;
•
require financial assistance for out-of-hospital maintenance and
be unable to procure this assistance without help;
•
show severe inability to establish or maintain a personal social
support system;
•
require help in basic living skills such as self-care, money management,
housekeeping, cooking or medication management, or
•
exhibit inappropriate social behavior that results in demand for
intervention.
Person-Centered Planning
Although consumer-direction is permitted under the HCBS option
of the DRA, Iowa has chosen a provider-managed service delivery
method. The service plan will be person-centered. It will be developed
by the participant and his/her interdisciplinary team. This team
consists of the participant, a legal representative if applicable,
the case manager and anyone else, including providers and others
the participant would like to have involved. The interdisciplinary
team then develops a service plan based on the participant’s
strengths, needs and goals.
Services Covered
Iowa has elected to offer case management and habilitation as
its HCBS state plan services. Habilitation services are divided
in four components:
- home-based habilitation, which assists with skills
related to living in the community;
- day habilitation, offering support with socialization and adaptive
skills in a
nonresidential setting;
- pre-vocational habilitation, which helps prepare individuals for
employment and supported employment; and
- supported employment habilitation that provides assistance in work
settings to help individuals maintain their jobs.
All services must be provided by a specified provider who meets
certain qualifications. No payment may be made for any services
provided by relatives, legal guardians or legally responsible persons.
Iowa has placed limits on habilitation services for both the categorically
and medically needy. Supported employment habilitation services
are limited to 40 units of “supports to maintain employment” per
week (one unit being equal to one hour).
The state pays for the service components based on units of service.
Except for supported employment habilitation services, a unit of
service is hourly, half-day or a day. There is an upper limit for
these services per hour, per half-day or per day.
Impact on People with Mental Health Care Needs
This new option has great potential to expand the range of services
available to adults and children with serious mental disorders
under Medicaid. However, the population that could benefit does
not include all individuals who may be eligible for Medicaid in
a particular state, due to the tighter income requirements and
the provisions that allow states to limit access to a certain geographic
area and to cap eligibility based on creation of a certain number
of slots.
This service cannot be limited by diagnostic group, however, and
states may only have one Section 1915(i) benefit. States that choose
to limit the covered services to mental health interventions, as
Iowa has done, can control their costs and address the specific
needs of individuals who have mental illnesses. Other states may
choose to limit services to those benefiting another population
group (meaning that people who have mental illnesses will not have
access) or to cover all people with disabilities, in which case
the state, to control its costs, may limit the covered services
or impose a strict cap on the number of people who may participate.
It is too early to know exactly how Section 1915(i) may benefit
people with mental illnesses across the country, although a number
of states are reportedly considering this option specifically for
people with serious mental illnesses.
Opportunity for Families of Children with Disabilities to Purchase
Medicaid Coverage for Their Children
Federal Law
Section 6062 of the DRA creates a new state plan eligibility option.
It allows states to permit certain families of children with disabilities
to buy into their state Medicaid program by paying a premium and
meeting cost-sharing requirements.
Section 6062 is entitled the Family Opportunity Act because many
of its provisions were first introduced through a separate bill
with that title. It is designed to address problems faced by families
with incomes above the Medicaid-eligibility level who have children
with disabilities for whom they are unable to afford needed health
care. Because Medicaid covers a broad array of treatment and rehabilitation
services, its coverage is generally more appropriate for children
with disabilities than private plans.
States may offer this buy-in option to parents with incomes up
to 300% of the federal poverty level ($61,950 or a family of four).
States may then charge these families on a sliding-fee scale. To
be eligible, the child must be under age 19 and meet all the eligibility
criteria for disability in the SSI program, other than requirements
regarding income and resources. This would include children with
serious mental disorders if they meet the SSI standard.
States can phase in the program over four years:
- Children 0 to
6 years old can be eligible in 2008.
- Children 7 to 13 years old can be eligible in 2009.
- Children 14 to 18 years old can be eligible in 2010.
States may charge a premium up to the full cost of the coverage,
so long as it does not exceed 5% of family income for those with
incomes up to 200% of the federal poverty level, or 7.5% of family
income for those between 200% and 300% of the poverty level. In
cases of undue hardship, states may waive the premium. Also, states
are forbidden to terminate a child’s Medicaid eligibility
based on failure to pay the premium until the failure continues
for at least 60 days from the premium’s due date.
States may elect to cover children at a faster pace and to cover
families with higher incomes. But they must do so only with state
funds, with no federal financial participation.
Parents who are offered employer group health insurance (where
the employer pays 50% of the total cost of the annual premium)
must elect such coverage if they want to participate under this
provision. Medicaid then would pay for services that are not covered
by the private health plan but are covered under Medicaid. In these
cases, a state must reduce its premium by an amount that reasonably
reflects the contribution the family has paid for the private coverage.
If parents do not have access to employer group health insurance
that meets this criterion, then Medicaid would be the primary payer.
State Implementation
Despite the potential positive impact of the Family Opportunity
Act option, to date only two states have submitted state plan amendments
to implement this section of the DRA: North Dakota and Louisiana.
North Dakota
In North Dakota, families of children age 18 and under with disabilities
whose net income is not over 200% of poverty will be eligible to
buy into Medicaid. Their premiums will be set at 5% of the family’s
net income. The state estimates that premiums will average around
$117 a month. To calculate net income, the state will take into
account not only taxes but other relevant expenses such as child
care costs. There is no additional cost-sharing (beyond normal
Medicaid cost-sharing) for these families. North Dakota does not
have any current plan for phasing in additional children in later
years.
Louisiana
Louisiana has set a higher income cutoff. Children in families
whose net income does not exceed 300% of poverty will be eligible.
Their premiums will be $35 a month if they have no other insurance
and $15 a month if they have some insurance. Louisiana also does
not have a specific plan to phase in additional groups of children.
Impact on Families Whose Children Have Mental Health Care Needs
A significant problem in providing services for some children
with serious mental disorders has been the family and child’s
uninsured status or lack of coverage in their private insurance
policy for the intensive community services needed. As a result,
many parents have found themselves in the tragic situation of choosing
between giving up custody of their child to the state (a way to
get Medicaid coverage for children when family income exceeds eligibility
level) and having the child go without necessary care.
The service these children need are covered under Medicaid and
can be offered to children with disabilities through the Family
Opportunity Act. This section of the DRA could, therefore, be of
enormous importance to families with incomes too high for Medicaid
but who have a child with a very serious mental disorder for whom
private insurance coverage is woefully inadequate.
However, the option will not have a significant effect across
the country until more states choose to implement it. It is hoped
that, as time goes by and some states gain experience with the
Family Opportunity Act, more states may elect to provide this option.
Demonstration Projects on Home- and Community-Based Alternatives
to Psychiatric Residential Treatment Facilities for Children
Federal Law
Section 6063 of the DRA creates a five-year competitive demonstration
grant program, starting in FY2007, to allow up to 10 states to
test the cost-effectiveness of providing home- and community-based
alternatives to psychiatric residential treatment facilities (PRTFs).
The objectives of the demonstration are to:
- test the effectiveness of home- and community-based services
in improving or maintaining a child’s functional level
in the community;
- test the cost-effectiveness of providing coverage of home- and
community-based services for children and youth enrolled in the
Medicaid program compared to the costs of providing services
in a residential program; and
- maintain budget neutrality so that aggregate payments under the
demonstration do not exceed the costs estimated to have been
incurred had the demonstration not been in place.
The demonstration has been funded, and states will receive a total
of $218 million spread over the five years ($21 million in 2007;
$37 million in 2008; $49 million in 2009; $53 million in 2010,
and $57 million in 2011). Funds will be awarded in two phases:
a pre-implementation planning stage and a full implementation stage
based on submission of a Section 1915(c) waiver application. Implementation
funds will be used as federal Medicaid matching funds for the approved
home- and community-based services.
All demonstration projects funded are subject to the same requirements
as existing 1915(c) waivers. That is, they must be budget-neutral,
states may limit participation to a specified number of children,
services furnished must be those authorized under Section 1915(c),
and the regulations and income limits of 1915(c) waivers apply.
To participate, children must require the level of care provided
in a PRTF and be under the age of 21. At the end of the demonstration
period, a state may continue to receive federal financial participation
to continue the home- and community-based services for children
already enrolled.
The Secretary will conduct an interim and final evaluation of
the demonstration projects and report to Congress and the President.
Applicant states must provide evaluations of the project as required
by the Secretary.
State Implementation
The DRA authorized CMS to make 10 awards under this demonstration
program. In early 2007, 10 states were selected, based on an initial
application. These states were then required to develop and submit
a full Section 1915(c) Home and Community-Based Services Waiver
application, using the same template as CMS uses for all other
such waivers. All but two of these waiver applications (Florida
and Georgia) were approved before the end of 2007.
As a result of this design, the demonstration is a full test of
the impact (and the costs) of authorizing home- and community-based
services in place of psychiatric residential treatment facility
services.
The 10 successful states are: Alaska, Florida, Georgia, Indiana,
Kansas, Maryland, Mississippi, Montana, South Carolina and Virginia.
States' Use of PRTFs
In their applications, states were asked to provide information
about their use of PRTFs including the number of children in PRTFs,
the number of children in out-of-state facilities, the number of
PRTFs under contract to the state (meeting the demonstration definition
of a PRTF), the number of beds in these facilities and the average
length of stay. Taken together, the data present a picture of PRTF
utilization in the demonstration states.
Five states reported on the number of children in PRTFs prior
to the demonstration, ranging from a low of 253 to a high of 2,400.
Nine states provided data on the use of out-of-state facilities,
with three having no children placed out-of-state; two having only
a very few children out-of-state; three with between 100 and 200
in that situation; and one having an extremely high number of children
(749) placed out-of-state.
Generally, states contract with a number of PRTFs. Two states
contract with only a small number (three and six respectively),
while the rest contract with between 12 and 36. The number of beds
per state ranges from a high of 891 to a low of 25, with one outlier
state reporting 1,361 beds. Average lengths of stay range from
166 to 365 days, with an average of 264 days or over eight months.
Eligibility
States generally plan to provide home- and community-based services
to a significant number of children over the next five years as
an alternative to PRTFs, with four states planning to serve over
1,000 children. The state projected to serve the fewest children
will provide services to 256. Kansas plans to serve the greatest
number of children, with projected enrollment of 3,281. Kansas
had previously received a federal home- and community-based waiver
to divert children from psychiatric hospital placements and thus
was well-positioned to take advantage of a PRTF demonstration.
To be eligible for the demonstration, children in most states
need only have a serious emotional disorder and meet criteria for
placement in a PRTF. Additional criteria are that the child also
have Fetal Alcohol Spectrum Disorder (one state) or have received
PRTF services for at least 90 days (one state).
Services
The most frequently cited community services to be furnished under
the demonstration include respite care (all states), family services
(seven states), wraparound (six states), customized goods and services
(five states) and employment related services (six states). Four
states include consultative clinical and therapeutic services,
skills training (such as for independent living) and transition
services.
Three states will offer non-medical transportation, case management,
crisis services and mentoring. Habilitation, peer support and personal
care services will be offered in very few states.
In addition to direct services, three states included aspects
of wraparound (facilitation, child and family teams and flexible
funding).
Costs
States reported on their projected spending over five years, which
ranged from a high of over $60 million to a low of less than $5
million. On average, states planned to spend about $30 million
over the five-year demonstration. Average projected costs per child
vary considerably, although five states cluster at average costs
close to $20,000 per child. On the high end are Alaska and Maryland,
spending about $50,000 per child, while Kansas will spend the least
per child at $8,000.
Financial Eligibility
Although these demonstrations cannot solve that problem for all
families, they can be used to expand eligibility for Medicaid home-
and community-based services for some children. States have the
option (as they do under a home- and community-based waiver) of
setting income and resource limits for participating families.
Six states set the financial requirements at a level that is 300
percent of the federal SSI benefit level. One set income requirements
below that level and one included medically needy children without
a requirement for the family to spend down income in order to qualify.
All but three states include in the demonstration children who
would be eligible for Medicaid if they were institutionalized (and
their parents’ income was therefore not considered).
Outcomes Measured
States generally are measuring similar outcomes in terms of the
impact of the demonstration upon children and their families. Heading
the list are improvements in school-related functioning and avoidance
of juvenile justice contacts. Also to be measured in most states
are improvements in community living/integration, substance use,
mental health clinical status and functioning, as well as satisfaction
with the services. Residential placements and family issues will
also be tracked.
Less frequently mentioned as specific outcomes being measured
are abuse/neglect rates, environmental variables, social support/relationships
and access to health and mental health services, although these
items have some overlap with the outcomes described above.
One state tracks improved participation in vocational activities;
two monitor abuse/neglect and custody rates; and two measure fidelity
to the wraparound model.
Impact on Children Who Have Mental
Health Care Needs
While states have had authority to create home- and community-based
services waivers for children with mental disorders who would otherwise
be in a hospital setting, most children with mental health care
needs who are in a residential setting are not in a hospital. PRTFs
are widely used by state Medicaid programs to provide institutional
care to these children. The failure of Medicaid law to recognize
PRTFs as institutions for purposes of budget-neutrality calculations
under HCBS waivers has been a major impediment to providing access
to these services for children.
The demonstration project will test the feasibility and the cost-neutrality
of HCBS waivers for children who would otherwise be in a Medicaid-covered
PRTF. Congress enacted the demonstration in order to assess whether
or not a permanent change should be made to Medicaid law to permit
such waivers. The fact that the demonstration will be evaluated
yearly, and the results made available to the public and Congress,
may encourage Congress to address this issue earlier than 2013,
when the demonstration officially ends. This would greatly benefit
children with mental health care needs.
Money Follows the Person Rebalancing Demonstrations
Federal Law
Section 6071 of the DRA authorizes CMS to award competitive grants
to states, totaling $1.5 billion over five years, to help them
develop Money Follows the Person programs. These programs enable
Medicaid recipients who are elderly or who have disabilities to
transfer from institutions to home- and community-based long-term
care. States can target these initiatives to certain groups and
limit the number of participants.
The goal of the program is to eliminate barriers (in state law,
state Medicaid plans, state budgets or otherwise) that prevent
or restrict the flexible use of Medicaid funds so as to enable
individuals to receive appropriate long-term care services in the
setting of their choice. The demonstration project has four objectives:
- Rebalancing—to increase the utilization of home-
and community-based services in place of institutional care;
-
Money Follows the Person—to eliminate barriers that prevent
Medicaid recipients from using Medicaid funds for long-term care
services in the setting of their choice;
-
Continuity of Service—to ensure that individuals who are
moving from an institution to a HCBS system have needed services;
and
-
Quality assurance and quality improvement—to see that procedures
are in place to assess quality and promote quality improvement
in home- and community-based services.
To participate, individuals must be residing in a qualified institution
and continue to need the level of care provided in the institution.
Qualified institutions include hospitals, nursing homes and ICF-MRs.
Institutions for mental diseases can also be qualified institutions,
but only if services in the institution are covered under the state
Medicaid plan. This allows participation by individuals who are
over age 64 and are in psychiatric hospitals where the state has
covered these institutions in its state Medicaid plan.
Individuals participating in the demonstration program must do
so voluntarily. Individual assessments of need and personal preference
are conducted, and individualized service plans are developed through
a person-centered planning process. Service plans may include self-directed
services and an individualized budget under the control of the
individual.
Participants are able to choose a qualified residence in the community.
The state must continue to furnish home- and community-based services
to any individual who participates in the demonstration program
for as long as the person qualifies under the state’s rules
for home- and community-based services.
To apply for funds, states must:
- Assure a public development process.
- Operate the project in conjunction with a qualified home- and community-based
care program.
-
Assure continuity of the individual’s Medicaid coverage
for home- and community-based care;
- Specify the period for running the program, with a minimum requirement
of two consecutive fiscal years.
- Describe the method for calculating individual budgets.
- Demonstrate how it will rebalance its spending so as to increase
the percentage of long-term care expenditures used for home-
and community-based services.
- Demonstrate how it will eliminate barriers, including costs of
transition to the community, so that money can follow the person.
Priority in the award of these grants will be given to states
that cover multiple target groups and that give individuals the
opportunity to self-direct services.
States will receive an enhanced Medicaid match for one year for
certain services provided to individuals in the program who move
from institutional to community care. After the first year, the
match returns to its normal level.
HHS must report to the President and Congress on its findings
and conclusions regarding the effectiveness of the program.
State Implementation
There are two phases to MFP demonstration applications: application
for a pre-implementation stage of one-year and submission of an
operational protocol, which must be approved before states can
fully implement their programs.
A total of 30 states and the District of Columbia have received
awards from CMS for a pre-implementation stage of Money Follows
the Person (MFP). The first round of grants, awarded in January
2007, went to 17 states,8 and
the second round to another 13 states and the District of Columbia.9 The awards totaled $14.4 million
and were to assist 37,731 people making the transition to community
living. Thirteen of the states are specifically including people
with mental illnesses in their demonstrations (See Table 5).
Some states are already approved for their operational protocols.
Wisconsin and New Hampshire were approved in October. Other states
with pre-implementation awards are expected to receive approval
for their operational protocols soon.
Eligibility
In the program announcement issued by CMS, states were given flexibility
to determine the length of time a participant would need to have
resided in an institutional setting prior to the demonstration.
The minimum requirements for eligibility could be set between six
months and two years. The states serving people with mental illnesses
have almost uniformly set their minimum residency requirement at
six months, thus broadening the eligible population. The exception
to this is DC, where eligibility factors do not include a residency
requirement.
The other elements of eligibility (namely, being eligible and
receiving Medicaid benefits and requiring an inpatient level of
care) were specified in the program announcement and therefore
do not vary between states.
There is a very wide range in the size of the group of people
with mental illnesses that states are planning to include in these
demonstrations, from seven (Arkansas) to 735 (Illinois). The overall
average group size for the population of people with mental illnesses
is 205.
Services
States generally include services previously covered under their
1915(c) home- and community-based waivers for the MFP demonstration
participants. These services include housing, employment, and benefits-coordination
assistance, as well as a range of supports for independent community
living. In a number of states, respite care, peer support, habilitation
and specific mental health services (see below) are also covered.
For example, North Carolina includes assistance with housing, medical
equipment, adaptive aids and technology, consumer-managed personal
care, independent-living training, case management, counseling,
transportation, caregiver supports, assistance with one-time transition
costs, crisis services, disability self-management, residential
supports, peer counseling and peer advocacy, respite, supported
employment, and independent-living assessment and training.
Sixteen states have not added any supplemental services to their
MFP programs.10 Instead,
the services offered to their demonstration populations will be
only those offered under their home- and community-based
waiver program or state plan services.11
Mental Health Services
Although a substantial number of states (13) are including people
with mental illnesses in their target populations, few include
mental health services beyond their regular Medicaid program benefits
and/or home- and community-based waiver services. However, many
of the services covered by the state plans or waivers are relevant
for people with mental illnesses.
Those that add specific additional mental health services as part
of the MFP demonstration are Delaware, Georgia, North Carolina,
Ohio, Pennsylvania and Texas.
Delaware will provide pre-vocational training, community transition,
day treatment and other mental health services to demonstration
participants. Georgia will include mental health services, such
as specialized geriatric mental health, dual diagnosis crisis management,
sustaining behavioral supports and training for family caregivers.
Ohio will provide social work and counseling to each of its targeted
populations. Pennsylvania offers “one-to-one behavioral health
supports” for participants with mental illnesses. These supports
include symptom management, skill development and assistance in
accessing resources. Texas offers cognitive-adaptive training,
motivational interviewing and outpatient substance abuse treatment.
North Carolina focuses on children’s services, such as therapeutic
foster care and wraparound services.
Two states have, or will, include mental health services in new
waivers. New York will offer Positive Behavioral Interventions
and Supports (PBIS) as part of a new Nursing Home Transition and
Diversion Waiver. Through two 1915(c) waivers (Community Integration
Program and Community Options Program Waiver), Wisconsin already
offers counseling and therapeutic resources. This service is also
offered as part of a managed long-term care program. Furthermore,
both the managed long-term care program and the state plan include
mental health crisis stabilization, outpatient mental health services,
mental health day treatment and in-home psychotherapy.
There is an advantage for consumers when states offer the mental
health services through a waiver or as part of their regular Medicaid
state plan program. These services will endure. The special services
offered as part of the MFP demonstration are only guaranteed to
be provided for 12 months.
Impact on People with Mental Health Care Needs
This demonstration will clearly affect individuals with mental
illnesses who are transitioning out of institutions because 13
out of 31 demonstration states are specifically targeting this
group. However, the demonstration does not provide a significant
incentive beyond the first year of community placement because
the enhanced federal match only applies for a year. While the demonstration
states clearly have a significant interest in money following people
from institutions to community (as indicated by their applying
for these funds), it is not certain that other states will similarly
consider such policies should the law be amended to make the rules
of this demonstration permanent. One year of enhanced match may
be a weak incentive, unless the demonstration clearly shows the
community services to be less expensive than the institutional
care they replace.
DRA Cost-Sharing Changes
Federal Law
Three sections of the DRA (Section 6041: State Option for Alternative
Medicaid Premiums and Cost-Sharing, Section 6042: Special Rules
for Cost-Sharing for Prescription Drugs and Section 6043: Emergency
Room Co-Payments for Non-Emergency Care), as well as Section 405(a)(1)
of the Tax Relief and Health Care Act of 2006, give states new
authority to impose new cost-sharing requirements. These sections
of law amend Section 1916A of the Medicaid statute with respect
to premium and cost-sharing requirements.
Section 6041 gives states authority to impose premiums (including
an enrollment fee or similar charge), deductibles and co-payments
for services to groups of Medicaid-eligible individuals. Moreover,
for the first time, Medicaid beneficiaries can be denied coverage
for failure to pay their premiums within 60 days and denied services
if they fail to make co-payments, including being unable to fill
a prescription if they do not meet the cost-sharing requirements.
Section 6042 authorizes states to impose higher cost-sharing for
some Medicaid-covered non-preferred drugs. States can waive these
higher cost-sharing requirements when a physician determines that
the preferred drug is not effective for the individual or causes
adverse effects.
Section 6043 authorizes states to permit hospitals to charge individuals
for non-emergency use of emergency rooms. However, before these
charges can be levied, the following conditions must be met:
- An alternate non-emergency services provider must be
available and accessible to the individual, and
- After a medical screening examination and determination
that the individual does not have an emergency medical condition,
the hospital must:
a) inform the person that a payment may be required;
b) supply the name and location of an alternate accessible
and available non-emergency services provider;
c) inform the person that the alternate provider can offer
services with a lower co-payment or none; and
d) provide a referral to coordinate scheduling of the treatment.
For states taking this option, the above information must be provided
by the hospital before it can provide non-emergency services to
an individual in the Emergency Room.
These provisions are in addition to the cost-sharing provisions
in the prior Medicaid statute. These allowed adults to be charged
a nominal co-payment for services (between $0.50 and $3.20 depending
on the cost of the service), or up to 5% of the cost of a service
(co-insurance). Children were exempt from any cost-sharing.
The new DRA cost-sharing provisions are complex, and there are
some protections for some groups of Medicaid beneficiaries. In
addition, the DRA does not permit these new charges to be imposed
on any beneficiary for certain services, including preventive services,
inpatient care and emergency services.
Certain groups of eligible individuals are exempt from premiums
and other cost-sharing authorized by the DRA (although they may
still be charged nominal cost-sharing, as authorized under prior
Medicaid law). These groups include:
- children under 18 years of age who are required to
be covered due to low family income;
- children in foster care or receiving adoption assistance;
- terminally ill individuals;
- institutionalized individuals receiving only a personal-needs allowance;
and
- children eligible for Medicaid through the state option for the
Family Opportunity Act buy-in. Cost-sharing for this group
is defined under Section 6061.
Total cost-sharing for any individual may not exceed 5% of family
income. In addition, allowable state-imposed charges are further
limited by law, based on family income:
- Individuals with family incomes at or below 100% of the federal
poverty level are exempt from having to pay premiums and from
most of the new cost-sharing provisions. These individuals:
- may not be charged more than the allowable nominal amount
($3.20) for non-preferred drugs and the new cost-sharing
for non-emergency
use of hospital emergency departments.
- Individuals in families with incomes between 100% and 150%
of the federal poverty level are exempt from having to pay premiums
and have some other protections. These individuals:
- may be charged up to 10% of the cost of most services;
- may be charged up to twice the allowable nominal amount
for non-emergency services in a hospital emergency department;
- may be charged the allowable nominal amount for preferred
and/or non-preferred drugs.
- Individuals in families with incomes over 150%
of poverty have the fewest protections. These individuals:
- may be charged premiums, and
- may be charged up to 20% of the cost of most
services, including non-preferred drugs;
States may set different rules on cost-sharing for different Medicaid
beneficiaries. The DRA allows states to vary these charges within
a group (as defined by the state), by geographic area or by type
of service. Under prior law, these distinctions could not be made
and all cost-sharing had to be applied program-wide.
These federal limits on the amount states can increase their cost-sharing
requirements each year will increase over time, as they are to
be indexed to the medical consumer price index.
State Implementation
States have not taken significant advantage of the DRA provisions
that allow them to charge premiums, institute higher co-payments
and charge individuals more for the non-emergency use of hospital
emergency rooms. States have had the authority to impose higher
fees for some populations under waivers and a number of states
have already used waivers to raise cost-sharing amounts beyond
the nominal Medicaid amounts for certain populations. These generally
are populations that would not be eligible for Medicaid under standard
eligibility rules.
The DRA authority has been used explicitly only by Kentucky, Idaho
and South Carolina—states that have also adopted benchmark
plans under Section 6044 of the DRA. Several states have recently
written waivers to cover expansion populations under Medicaid and
these waivers also include some of the concepts in the DRA, but
the DRA authority is not needed to charge additional fees to expansion
populations. (Some data on new waivers is also included in Table
7 and in the summary below.)
Emergency Room Use
All three of the states using the new DRA authority have picked
up the option to charge for non-emergency use of hospital emergency
rooms. Three new waivers in states apply a similar policy to an
expansion population that would not otherwise be eligible for Medicaid.
Idaho, Kentucky and South Carolina apply this rule to certain
populations for whom they have created benchmark plans, including
SCHIP children and certain groups of Medicaid beneficiaries, primarily
low-income children and adults. Kentucky also applies it to foster
care children and the elderly in benchmark plans, while South Carolina
applies it to people with disabilities (although South Carolina’s
plan is only being implemented as a pilot).
For example, Kentucky beneficiaries now must pay 5% co-insurance
for emergency room visits that are deemed non-emergency. Idaho
has also authorized a $3 co-payment for inappropriate emergency
room and inappropriate ambulance service use. However, beyond the
federal standards regulating emergency room co-payments, an individual
in Idaho is not responsible for a co-payment if “the physician
determines that a prudent layperson would have sought emergency
treatment in the same circumstances, even if the care rendered
is for a non-emergent condition.” Additionally, the hospitals
and ambulance providers have discretion both to impose the co-payment
and to require payment before the participant can receive services.
Arkansas, Indiana and Minnesota have policies for expansion populations
to pay for non-emergency use of hospital ERs.
Premiums
Idaho and Kentucky are using DRA authority to institute premiums
for some Medicaid populations. Using waivers, some other states
are charging premiums to children in certain income groups (including
SCHIP children) and expansion populations. In three states, some
individuals will lose Medicaid eligibility if they do not pay their
premium. In Idaho and Kentucky, this penalty kicks in if individuals
are 60 days or more late with their premium payments. In South
Carolina fees must be paid up front. Penalties apply only to certain
Medicaid populations in each of these states.
These fees are being charged only to families with incomes over
the federal poverty level, but some states have set these family
income levels quite low. For example, Kentucky will charge premiums
to children in Family Choices with family incomes over 150% of
poverty, and to the transitional Medicaid population with incomes
over 100% of poverty. Premiums are set at $20 to $30 a month.
In the case of families with transitional Medicaid, good cause
could prevent loss of coverage. For KCHIP families, coverage is
re-established once the payment is made and the overdue payment
is not required if the child has been without coverage for 12 months.
In Idaho, premiums of $10 are charged for a child in the basic
plan whose family income is between 133% and 150% of the poverty
level. Children in families whose income is between 150% and 185%
of poverty must pay $15 per child per month.
Cost-Sharing
States are adding deductibles, higher co-payments and additional
co-payments for certain drugs, as well as out-of-pocket maximums
that protect individuals somewhat from cumulative cost-sharing
requirements. Two states have new deductibles (Indiana and South
Carolina). Co-payments have been created by Kentucky.
Co-payment amounts vary by income level and sometimes also by
service (see table). For example, in the Kentucky Family Choices
plan, the amount of the co-payment and the services that require
it differ from plan to plan. Co-payments are generally small ($1-$3).
Co-payments are more burdensome for inpatient services. In the
Global Choices plan, members not exempt from cost-sharing must
pay $50 on admission for acute inpatient hospital services. In
the Comprehensive and Optimum Choices plans, a $10 co-payment is
required for inpatient hospital services. The Global Choices plan
requires co-payments for a larger number of services.
The DRA authority to deny services for those who do not pay their
co-payments has been adopted in Kentucky, while South Carolina
requires payment up front. In Kentucky, the various co-payment
provisions are enforceable so that providers may not waive a member’s
liability for a payment. However, only pharmacy providers can deny
services for failure to pay.
Expansion populations in Arkansas, Indiana and Minnesota will
also have deductibles and/or co-payments that are more than nominal.
Combinations of Charges
In Kentucky in particular, Medicaid beneficiaries could find themselves
paying out-of-pocket on many occasions, so that even when one cost-sharing
policy looks reasonable, the combined effect has a significant
impact on the individual or family.
In Kentucky, beneficiaries now must pay 5% co-insurance for emergency
room visits that are deemed non-emergency. Additionally, many groups
of beneficiaries must pay co-payments for some services. In all
groups the maximum for medical out-of-pocket payments is $225 per
year, as is the maximum for pharmacy out-of-pocket payments. However,
total cost-sharing cannot exceed 5% of a family’s quarterly
income.
Idaho has imposed a premium and charges for non-emergency use
of emergency rooms, but has not added other cost-sharing requirements.
South Carolina’s plan requires payment for all services,
with a high deductible and charges for non-emergency use of the
emergency room.
Expansion populations may also have significant cost-sharing,
but these populations would not otherwise have coverage, and all
have higher incomes than traditional Medicaid.
Impact on People with Mental Health Care Needs
Like the section authorizing benchmark plans, the sections making
changes to Medicaid cost-sharing rules represent a major departure
from prior Medicaid policy. Under previous law, children could
not be charged co-payments and charges for other populations were
strictly limited to nominal amounts unless the state obtained a
federal waiver.
This new expansion of state authority to increase cost-sharing
is likely to have a significant impact on the Medicaid population.
Low-income individuals are not in a position to contribute very
much toward the cost of their health services, and such cost-sharing
can be a disincentive to seek care. Particularly burdensome may
be the imposition of cost-sharing for using the emergency room
of a hospital for a non-emergency visit. In some communities, the
hospital emergency room offers the only access to care. Concern
about meeting co-payment requirements may keep some individuals
with genuine mental health emergencies from visiting the emergency
room.
States that have enacted benchmark plans, most of which severely
limit mental health coverage, have been the most enthusiastic about
increasing cost-sharing. Premiums, higher co-payments, emergency
room charges and limited benefits may seriously disadvantage low-income
people who need mental health care.
Conclusion
This study has found that few states have acted on the DRA options,
other than the states that responded to the two demonstration programs
for which CMS had more than sufficient applications. However, the
study covers only the first two years since passage of the DRA,
and there are signs that some other states still intend to make
use of some of these options.
The impact of some of the DRA changes on people with mental health
care needs could be severe. Unfortunately, the options that would
expand access have been taken up by fewer states than the options
that will limit access, although overall most states have not acted
on any of the state plan options.
The perception in Washington that states were anxious to alter
Medicaid appears erroneous—that they wanted to create new
benefit packages modeled on private insurance plans, to raise cost-sharing
requirements significantly or to require Medicaid beneficiaries
to engage in “healthy behaviors.” Over time, more flexibility
may creep into Medicaid state programs, but apparently most states
are relatively comfortable with the high degree of flexibility
they already have to design their own program. In particular, states
seem anxious to protect people with disabilities from cuts in service
or access, perhaps because these individuals would have nowhere
to turn but the state if their needs were unmet.
The longer term impact of the demonstration projects might be
the more significant outcome of these new state choices. The Family
Opportunity Act could greatly aid children and families with incomes
too high for Medicaid who are unable to access needed services
or pay for them out-of-pocket. The home- and community-based services
demonstration for children in PRTFs, should it show that these
community services are cost-effective, could result in a permanent
change to federal law that would benefit many children in many
states, opening up access to the community services they need.
The Deficit Reduction Act represents a dramatic shift in Medicaid
policy as it eliminates much of the uniformity in the program and
potentially weakens the entitlement to services for many populations.
Yet it remains to be seen how much these changes will actually
alter the program over the next several years.
Notes
1. The Deficit Reduction Act of 2005 and the Tax Relief and Health
Care Act of 2006, which made technical corrections to the DRA,
are the relevant statutes.
2. Centers for Medicare & Medicaid Services.
(March 31, 2006). State Medicaid Director Letter #06-008. Retrieved
November
28,
2007 from www.cms.hhs.gov/smdl/downloads/SMD06008.pdf.)
3. Jessie Ball DuPont Fund (July, 2007) Uncertain
Access to Needed Drugs: Florida’s
Medicaid Reform Creates Challenges for Patients. Briefing #3. Retrieved December
10, 2007 from www.dupontfund.org.
4. Jessie Ball DuPont Fund (July, 2007) Waving Cautionary
Flags: Initial Reactions
from Doctors and Patients to Florida’s Medicaid Changes. Briefing #2. Retrieved
December 10, 2007 from www.dupontfund.org.
5. Jessie Ball DuPont Fund (December, 2007) Medicaid
Pilots at One Year: How is the new Medicaid Marketplace Faring,
Briefing #4.
Retrieved December 10, 2007
from www.dupontfund.org.
6. Solomon, J. (September 14, 2006). The Illusion
of Choice: Vulnerable Medicaid
Beneficiaries Being Placed in Scaled-Back “Benchmark” Benefit Packages.
Retrieved November 28, 2007 from www.cbpp.org/9-14-06health.pdf.)
7. Families USA. (June, 2007). Idaho Medicaid Under
the DRA: Changing Benefit Packages for Participants. Retrieved
November 28, 2007
from www.familiesusa.org/assets/pdfs/state-medicaid-waivers/id-state
plan-amendment.pdf.)
8. Arkansas, California, Connecticut, Indiana, Iowa,
Maryland, Michigan, Missouri, Nebraska, New Hampshire, New York,
Ohio, Oklahoma,
South Carolina, Texas, Washington
and Wisconsin.
9. Delaware, District of Columbia, Georgia, Hawaii,
Illinois, Kansas, Kentucky, Louisiana, New Jersey, North Carolina,
North Dakota,
Oregon, Pennsylvania and
Virginia.
10. Connecticut, DC, Iowa, Louisiana, Nebraska,
New York, North Carolina, Pennsylvania
and Virginia.
11. Lipsom, D, Gruman, C., Schimmel, J., Colby,
M., Denny-Brown, N., Peterson, S., & Williams,
S. (August 31, 2007) Money Follows the Person Demonstration Grants: Summary of
State MFP Program Applications. page 32. Retrieved November 30, 2007, from www.cms.hhs.gov/DeficitReductionAct/downloads/StateMFPGrantSummaries-All.pdf.
12. Idaho Department of Health & Welfare, Medicaid
Information Release #07-03,
January 5, 2007
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