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“The only thing necessary for these diseases to the triumph is for good people and governments to do nothing.”

 
   


 

  

MISSOURI MEDICAID UPDATE: PRELIMINARY ANALYSIS OF KEY MEDICAID PROVISIONS IN SB 539 AS PASSED BY THE MISSOURI SENATE AND RELATED MEDICAID PROPOSALS 

March 29, 2005

by

Joel Ferber

Managing Attorney

Health and Welfare Unit

Legal Services of Eastern Missouri

4232 Forest Park Ave.

St. Louis, MO

63108

This paper provides a summary and analysis of the Medicaid provisions of Senate Bill 539, which was recently passed by the Missouri Senate.  SB 539 is the enabling legislation that would allow the State to implement many of the proposals that were included in the Governor’s proposed budget for the Missouri Medicaid program.  The bill also includes Medicaid proposals that go beyond the scope of what was proposed in the Governor’s budget and a number of provisions that do not relate to the Governor’s proposed Medicaid cuts.  For example, the bill revises Missouri’s Senior Rx Program to adapt to the new Medicare Modernization Act, which changes the way that “dually eligible” individuals (people who receive both Medicare and Medicaid) would obtain prescription drugs.  The bill also changes the way “personal care assistance” is provided and adds new financial eligibility requirements to Missouri’s Adoption Assistance program.[i]   This paper focuses on the Medicaid provisions of SB 539.  The primary Medicaid revisions in the bill discussed in this paper are as follows:


Eliminating coverage for several categories of elderly and disabled people;
Cutting the Missouri State Children’s Health Insurance Program (SCHIP) program by more than 23,700 children through new premium requirements (this was not in the original version of SB 539)
Eliminating a wide range of medically necessary services now required in Missouri law;
Making all coverage of optional eligibility groups “subject to appropriations” (this was not in the original version of SB 539);
Imposing new co-payments for most Medicaid-covered services and reducing provider reimbursement;
Allowing providers to refuse treatment to individuals who are unable to make their co-payments;
Requiring annual Medicaid reinvestigations and documentation of income in conjunction with these annual reviews;
Ending the Missouri Medicaid program by June 30, 1998 and establishing a Commission to decide what to put in its place (this was not in the original version of SB 539);
Imposing new restrictions on use of “annuities” by applicants for Medicaid; and
Modifying the Senior Rx program (Missouri’s State Pharmacy Assistance Program) to conform to the new Medicare Modernization Act.
This preliminary analysis of the SB 539’s Medicaid provisions does not address every aspect of the new legislation. Instead, it provides an overview of the bill’s key Medicaid provisions.
I. Who Would Become Uninsured Under SB 539?
The legislation directly eliminates health insurance coverage entirely for several groups of low-income Missourians, as discussed below. In total, 50,891 people would lose health insurance coverage as a direct result of SB 539.
Another 61,864 low-income parents would lose health coverage under the Governor’s Medicaid budget proposal, which would reduce the coverage to 30% of the federal poverty level and eliminate extended transitional Medical Assistance for low-income workers. This dramatic reduction in parent coverage is not a part of this legislation but will almost certainly be addressed in appropriations legislation and the ongoing budget process.
Figure 1: Breakdown of the Number of Uninsured under the SB 539 (based on state data)
 

 

Proposed Eligibility Change

 

 

Uninsured

Elimination of Medical Assistance for

General Relief Recipients

 

3046 people with temporary disabilities

Elimination of Medical Assistance for Workers with Disabilities (MAWD) recipients

 

9,529 working disabled individuals

Reduction of Income Eligibility to SSI Maximums

 

14,607 elderly and disabled individuals

Implementation of new Premiums in the State Children’s Health Insurance Program

 

 

23,709 children

 

Total Increase in Uninsured Missourians as a result of eligibility changes and new premiums

 

 

 

50,891 people

Figure 2: Total Number of Uninsured under SB 539 and the Governor’s Proposed Budget Cuts Combined

 

112,755 Missourians would lose health insurance under the proposals in SB 539 and the Governor’s proposed Budget cuts.

(Factoring in the 61,864 low-income parents who would lose health coverage from the  proposed reduction of income eligibility limits and elimination of Extended Transitional Medical Assistance for low-income workers.)

 

Figure 3: Additional Insured from Increase in Reinvestigations and Related Paperwork and Verification Requirements

The Department of Social Services estimates that 13,609 Missourians, including 8998 children, will lose coverage as a result of the annual reinvestigations and related paperwork and verification requirements that will accompany those reviews.  It is not clear how many of these individuals will actually be ineligible for the program or simply terminated for failure to comply with new paperwork burdens.  These additional uninsured are not included in the above totals.  If these individuals are included, then 126,364 Missourians will become uninsured as a result of SB 539 and the Governor’s proposed Medicaid budget cuts.

 

New Cuts to the Missouri State Children’s Health Insurance Program (SCHIP) (Amending Mo. Rev. Stat. § 208.640)
A. Premiums
SB 539 would require families with incomes above 150% of the federal poverty level (just over $24,100 for a family of three) to begin paying premiums for their children’s Medicaid coverage. The Department of Social Services estimated that 23,709 children in more than 14,000 families would lose coverage because their parents would not be able to pay the premiums. This calculation is based on the current rate at which premiums are paid in the one category of the Missouri SCHIP program that now requires premiums (children in families with incomes above 225% of the federal poverty level –about $36,204 annually for a family of three) and is consistent with other evidence that families drop out of state Medicaid programs at a very high rate when premiums are imposed. Research examining the impact of premiums in public health insurance programs has found that participation falls off sharply as the premium amount increases.[ii] For example, one study found that participation in three states’ publicly funded health insurance programs declined from 57% to 18% as premiums rose from 1% to 5% of family income.[iii] There is no doubt the imposition of additional premiums on lower income families in Missouri’s SCHIP program would cause substantial numbers of children to lose health care coverage. In fact, this loss of coverage is the basis for the savings that would be achieved through this proposal.
B. Affordability Test
SB 539 will deny health coverage to children in families with incomes above 150%of the poverty level who are deemed to have access to “affordable” health insurance – now defined as coverage that costs $335 per month, or $4020 per year.[iv] This amount is 133% of the average monthly premium for children in the Missouri Consolidated Health Plan. Medicaid coverage would be denied whether or not these families are actually able to obtain private health insurance for their children (e.g., if they could not find coverage for their children at this price or their financial circumstances precluded them from purchasing insurance at this cost). At this point, the Department has not estimated the number of additional children that will lose coverage under this provision beyond the 20,000 children that will lose coverage as a result of the new premium requirements.[v]
Under this provision, a family of three earning just over $2012 per month would be ineligible for Medicaid if they could purchase private insurance for $335 per month — nearly 17% of their income – even though policy experts and federal SCHIP law recognize that poor families cannot afford to pay more than 5% of family income for health insurance and still have money available to cover food, rent, and other necessities. See 42 C.F.R. § 447.560. This provision would undoubtedly result in poor children whose families are unable to afford private insurance losing Medicaid and becoming uninsured. This provision also would deny families access to SCHIP coverage even where the only available employer-sponsored coverage offers a far more limited benefit package (e.g., it does not include well-child visits or mental health care). The application of this “affordability” test to lower income families will certainly cause additional children to lose health coverage above and beyond those children that will lose coverage due to new premium requirements.
· Medical Assistance for Workers with Disabilities (MAWD) (Deleting Mo. Rev. Stat. § 208.146)
The legislation would entirely eliminate the Medical Assistance for Workers with Disabilities (MAWD) program, which provides health coverage to persons with disabilities who are attempting to transition back into the work force or who are able to work a small number of hours to supplement their limited incomes. The bill accomplishes this by deleting the entire section (§ 208.146) of current Missouri law that provides the statutory basis for this program in Missouri.
People enrolled in MAWD have an array of disabling conditions just like other persons qualifying for Medical Assistance based on disability. To be eligible for MAWD, these individuals have proved that they are permanently and totally disabled through either a federal or state disability determination process. This means that they have severe, medically documented impairments. Many of these individuals have work histories that establish they have been tax-paying citizens; however their limited ability to work often does not provide health coverage.
MAWD allows these individuals to obtain health coverage without having to meet administratively burdensome spenddown requirements. Medicaid coverage allows them to obtain necessary health care while they try to transition back to the workforce. Without MAWD, disabled individuals who wish to return to work will have to choose between employment and health insurance. Because they need health insurance to maintain their health, and because people with disabilities are often unable to obtain private insurance, dismantling the MAWD program will force many disabled individuals to forego work in order to retain necessary access to health care. Forcing disabled individuals to forego work will render them more dependent upon other public benefits programs and support services. Thus, it is entirely possible that cutting this program will cause Medicaid-related costs to rise.
The Department of Social Services has estimated that more than 9529 working disabled people would lose all health care coverage as a result of eliminating the MAWD program.[vi]
Low-Income Elderly and Disabled Missourians (Amending Mo. Rev. Stat. § 208.151.1(21))
The legislation cuts eligibility for low-income elderly and disabled residents with incomes above the SSI income limits (currently $579 per month for an individual and $869 for a couple). The legislation eliminates current statutory provisions that mandate coverage up to 100% of the federal poverty level. This would reverse the three-year statutory phase-in of coverage for this population to 100% of the federal poverty level that was just completed in July 2004. Instead, the Senate bill would allow the Department of Social Services to adopt a higher income limit (than the SSI limit) only “if authorized by annual appropriations.”
Elderly and disabled Medical Assistance recipients who would lose health coverage suffer from a wide range of disabling conditions ranging from physical disabilities (such as diabetes or heart disease) to mental health impairments (such as depression) to disabilities caused by injuries or accidents. Many of the diseases will rapidly become acute without access to medical care. Treatable illnesses like diabetes or hypertension can become life-threatening or can render someone totally dependent upon society when such illnesses go untreated.  
In addition to the individuals who will lose coverage altogether, a number of individuals will be transferred to the Medicaid spenddown program while those already in the spenddown program will have even higher spenddown amounts than they have now. Moving to the Medicaid spenddown program will require these elderly and disabled recipients to spend substantial portions of their meager incomes on prescriptions, co payments, and other services.
Those beneficiaries that lose Medicaid coverage altogether (because they cannot meet their spenddown amounts) may be forced to forgo routine preventive health care and turn to emergency room visits for the most serious of illnesses. The budget proposal would effectively impose additional expenses—medical bills—on single individuals with monthly incomes above $579 and couples with monthly incomes above $869, thereby forcing them to choose between medical care and rent, prescriptions and food, diabetic supplies and electricity.
The Department of Social Services has estimated that 14,607 elderly and disabled people would lose coverage altogether as a result of cutting eligibility back to the SSI maximums.[vii]
Special Exception for People who are Eligible for Medical Assistance based on “Blindness” (Amending Mo. Rev. Stat. § 208.151.1(21))
The legislation would retain the eligibility standard of 100% of the federal poverty level for persons who are eligible for Medical Assistance based on blindness rather than their disability or age. Thus, the legislation sets up two different income eligibility standards for different classes of persons who fall within the same category of coverage.
State-funded health coverage for people with temporary disabilities
(Deleting Mo. Rev. Stat. § 208.162)
The legislation would eliminate the state-funded medical assistance program for recipients of General Relief benefits. The legislation implements this change by deleting the entire General Relief section of the statute (§ 208.162). The Department has previously estimated that this change would cause 3046 people to lose their health coverage.
General relief recipients are in some respects the “poorest of the poor” in that individuals can only qualify for this program if they have almost no income. Individuals are only eligible for this program if the state has determined them to be disabled or unemployable for ninety days or more. Their disabilities are similar to those on Medical Assistance, ranging from hypertension to diabetes, to heart conditions to various mental impairments. The program provides them with health care coverage until they are able to return to work or until they become eligible for regular Medical Assistance should their disabling conditions become permanent. General Relief enables them to receive medically necessary health care which they could not otherwise afford. It also provides access to treatment that may ensure that temporary disabilities do not become permanent.
Medicaid Eligibility would be “Subject to Appropriation” (Adding Mo. Rev. Stat. § 208.151.6)
In addition to eliminating coverage of certain eligibility groups, the Senate-passed version makes it clear that all other eligibility groups are now “subject to appropriations” every year except where those groups must be covered by federal law. Therefore, eligibility groups like “blind persons over the SSI limits,” which are still covered by the bill, presumptively eligible pregnant women and anyone else not required to be covered by federal law will only be covered if appropriations are made available for those coverage groups.[viii] Each year, Medicaid coverage for any of these groups will be dependent on the annual appropriations process rather than guaranteed in law.
Thus, in addition to directly eliminating coverage for a wide range of eligibility groups and services, the legislation essentially makes all Medicaid eligibility (to the extent allowed under federal law) subject to the annual appropriations process, similar to last year’s HB 1566, which the legislature was not able to pass. This change removes the certainty and predictability that exists under current Missouri law, that Medicaid coverage and services will be provided to those groups that are specified as “covered” under state law and replaces that with the uncertainty of the budget process each year.
II. Elimination of Medicaid Services (Amending Mo. Rev. Stat. § 208.152)
The legislation would do away with an array of health care services that are currently required in Missouri law, including the following services:

  



dental services
dentures
podiatry
optometric services
orthopedic services
prosthetics
hearing aids
hospice
wheel chairs
eyeglasses
comprehensive day rehabilitation services
These provisions affect nearly 400,000 low-income Missourians – essentially all Medicaid recipients who are not blind, pregnant or children (see below).
These services are critical for the individuals who rely on those services for their health care. To cite a few examples, it is widely acknowledged that preventative dental care can forestall greater health problems and more costly medical expenses which can mean higher costs in other parts of the Medicaid budget later on.[ix]
Vision services help facilitate employment opportunities for low-income adults who need to see in order to perform such job functions as reading, driving, using a computer or a cash register, avert work-related injuries, and prevent permanent disabilities and blindness (which can occur if conditions like glaucoma go unidentified or untreated).[x]
Hospice services are a less costly and more humane way of providing care to individuals than providing in-patient hospital care (a mandatory service) before they die. Podiatry services are medically necessary for diabetics who often could lose their limbs without these services for foot ulcers from diabetic neuropathy.
Wheel chairs allow for greater independence, mobility and enhanced life skills and work possibilities for people with disabilities.
Again, these provisions would eliminate a broad array of medically necessary services if implemented.
As indicated above, SB 539
 would eliminate wheel chairs as a covered service, and the Governor’s budget proposal would eliminate all “durable medical equipment” including, but not limited to, oxygen, respirators, colostomy bags, and feeding tubes.   These proposals violate federal law and regulations which mandate that Missouri cover "[m]edical supplies, equipment and appliances" for all Medicaid recipients for whom such services are medically necessary. 42 C.F.R. §§ 440.70(b)(3); 440.210(a)(1); Letter from Sally K. Richardson to State Medicaid Directors, September 4, 1998.  See also Esteban et al. v. Cook et al., 77 F.Supp. 1256, 1259 (S.D.Fla 1999); Bell v. Agency for Health Care Administration, 768 So. 2d 1203 (Fla. Ct. App. 2000). 

Services Maintained for Pregnant Women, Children and Persons Receiving Medicaid Based on Blindness (Adding Mo. Rev. Stat. § 208.152.2)
The legislation includes a separate section that would continue all of these services for children, pregnant women and people who are blind. (§ 208.152.2). Of course, children are entitled to these services anyway under the EPSDT provisions of federal and Missouri law and pregnant women can receive these services under separate provisions that provide for coverage of services that are related to the pregnancy. See, e.g., 42 C.F.R. §§ 440.210(a)(2) (regarding the requirement that states provide “pregnancy-related services and services for other conditions that may complicate the pregnancy”) and 441.50 (regarding the requirement that states provide early and periodic screening and diagnosis and treatment services to eligible Medicaid recipients under age 21).
III. New Co-payment Provisions (Mo. Rev. Stat. § 208.152.4)
New co-payments for all Medicaid-covered services
The legislation includes a substantial expansion of co-payments in comparison to current Missouri law. Instead of limiting co-payment to certain services, co-payments could be imposed on all Medicaid-covered health care services and prescription drugs.[xi] Medicaid co-payments range from .50 to $3.00 per service pursuant to federal requirements regarding the maximum co-payments that states can charge Medicaid recipients.[xii] Blind people, pregnant women, and children would be exempt from these new co-payments.
The bill would allow co-payments well beyond what is already permitted by current Missouri law. Section 208.152.3 of current Missouri law permits Medicaid co-payments for certain specified services, including “dental services, drugs and medicines, optometric services, eye glasses, dentures, hearing aids and other services” to the extent authorized by Title XIX of the Social Security Act (many of these services would be eliminated by SB 539). In addition, current state regulations require co-pays on all of these services and some additional services, including physician services rendered in a hospital outpatient clinic or emergency room, inpatient hospital services, outpatient hospital clinic/emergency room services, and podiatry services.[xiii]
SB 539 would expand co-payments well beyond these existing provisions – authorizing the Division of Medical Services to require cost sharing by adults for “all Medicaid-covered Medicaid services” to the extent allowed under federal law (emphasis added). Federal law excludes from cost-sharing emergency services, and services provided to children and pregnant women, and to “institutionalized individuals.[xiv]
Under this legislation, all physician visits would be subject to co-payments, not just those provided in an outpatient or hospital setting. Among the many other services that would be now subject to co-payments under the legislation are:
ambulatory surgical care;
certified nurse practitioner services;
lab tests and x-rays;
non-emergency medical transportation;
clinic services including services provided by federally qualified health centers and rural health centers;
mental health treatment; and
home and community-based services.
If any of the other services that are slated for elimination (such as durable medical equipment, diabetic education, and dental services) are reinstated, most of those services also would be subject to co-payments. [xv]
Figure 4
Maximum Allowable Co-payments
 

State’s Payment for the Service

Maximum

Co-payment

Chargeable to

Recipient

$10 or less…………………………..

$0.50

$10.01 to $25 ………………………

$1.00

$25.01 to $50 ………………………

$2.00

$50.01 or more …………………….

$3.00

These new co-payments would have a profound impact on individuals’ access to care, especially when one considers the sweeping array of services that would now be subject to co-payments. For low-income people, having to pay even a “nominal” co-payment for each medical appointment, lab test, x-ray and mental health visit is going to be financially burdensome and could cause them to forego needed care. This is going to be particularly problematic for elderly and people with disabilities who use a large number of medications and other health care services.
The State has indicated that it would charge co-payments for each 15-minute increment of home and community based services, including personal care attendants and other in-home services. Thus, a person receiving three hours per day of personal care attendant services, for five days per week who is charged the minimum .50 co-pay for each unit of service would pay approximately $130 per month in co-payments. People whose disabilities cause them to have greater health needs will have even higher co-payments. Persons whose only income is Supplemental Security Income (SSI) benefits would have to make these co-payments with monthly incomes of $579 per month, and still be able to pay for food, rent, clothing, utilities and additional co-payments for other services. Couples on SSI who both need services would be paying the co-payments out of only $869 in combined monthly income.
If these new co-payments put independent living out the reach of persons with disabilities, the alternative is more costly institutionalized care, which these services are designed to avoid. Imposing co-payments on these types of services certainly raises questions about whether the State would violate its obligations under Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999). In Olmstead, the Court held that the Americans with Disabilities Act prohibits states from unnecessarily institutionalizing persons with disabilities in their public programs.
Studies show that Medicaid beneficiaries’ access to health care is diminished when co-payments are imposed. This is especially true for individuals with chronic health problems for whom the cost of co-payments are more financially burdensome because they need more health treatment and will be subject to a co-payment for each visit or service needed. For example:
A study by the RAND Corporation found that low-income children’s use of effective health care services fell by more than 40 percent when co-payments were introduced, and they had greater health problems than children who were not subject to cost-sharing. Moreover, because those low-income children avoided necessary health care, they had poorer health (e.g., they were more likely to be anemic and to have dental problems).[xvi]
A 2001 study published in the Journal of the American Medical Association found that emergency room use rose by 88 percent for poor adults with cost sharing, while adverse health problems (including institutionalization, hospitalizations and death) rose by 78 percent.[xvii] Other studies demonstrate similar negative consequences from the imposition of cost-sharing on low-income people.[xviii]
Low-income Medicaid recipients already spend a greater portion of their income on out-of-pocket medical expenses than middle class, privately insured, adults and thus have less disposable income to spend on health care than their middle class counterparts.[xix] In other words, Medicaid beneficiaries simply cannot absorb increased out-of pocket costs from new cost-sharing requirements.
Reducing Provider Payments
In addition to imposing a wide array of new co-payments, the legislation changes current Missouri law by requiring that payments to providers be reduced by the amount of the co-payments. Under current Missouri policy, the co-payments paid by recipients are in addition to the payments already made to providers. Mo Rev. Stat. 208.151.3. This is presumably where the bulk of the savings in the Governor’s proposed budget would be achieved – by reducing provider reimbursement. The Governor’s budget included over $64 million in cuts due to new co-payment requirements.
Exception for Prescription Drug “Dispensing Fee”
While in nearly all cases, provider reimbursement will be reduced by the amount of the co-payment, pharmacy “dispensing fees” paid by Medicaid recipients will still be paid in addition to the Medicaid payments already paid to pharmacists by the state. While the State and pharmacists do not refer to these dispensing fees as “co-payments” or “cost-sharing,” the financial burden for a low-income elderly or disabled person is the same regardless of the label. Nevertheless, pharmacists will not see the same “cut” in reimbursement that will be borne by other providers.
Denying Services to Individuals who are unable to make their co-payments
SB 539 would allow providers to refuse treatment to individuals who are unable to make their co-payments in certain circumstances. The bill initially states that a provider may not refuse treatment when the client is unable to pay but then allows the provider to deny “future services” to Medicaid recipient with an unclaimed debt resulting from these same unpaid co-payments (as long as it is the “routine business practice” of the provider to terminate services in these circumstances). The bill would require approval from the Centers for Medicare and Medicaid Services (CMS) to implement this change.
This provision violates federal law and could well be found to be illegal, even if the Centers for Medicare and Medicaid Services (CMS) were to approve the new policy. Current federal law prohibits states from allowing providers to deny health care services, including prescription drugs, based on failures to make co-payments. 42 U.S.C. §1396o(e). The statute simply does not permit a state to operate its Medicaid program without conforming to Section 1396o(e), and courts have invalidated state provisions allowing these types of practices even where states secured federal waivers. Spry et al. v. Thompson et al., 2003 U.S. Dist. LEXIS 24051, *25 (2003). Newton-Nations, et al. v. Rogers, et al., 315 F.Supp. 883 (D. Ariz. 2004).
IV. Annual Reviews and Verification (Inserting Mo. Rev. Stat. § 208.147)
The bill requires the Department of Social Services to conduct annual reinvestigations in the Medicaid program. While annual reviews are already required by federal law, the Department of Social Services has indicated previously that it would cost almost $14 million and require over 250 additional staff to conduct annual reinvestigations in all cases.[xx] However, the legislation does not provide for any additional staff needed to conduct these annual reviews and still comply with all of the Family Support Division’s other legal responsibilities in administering state and federal programs.[xxi]
It is questionable that an Agency which is already staffed at less than 50% of need will meet this requirement and still comply with all of its other legal responsibilities, including processing applications within federally mandated time frames. If this legislation increases pressure to conduct these reviews in all cases without additional staff, it is likely that the Department will evade other Medicaid requirements that will have the ultimate effect of denying access to health care for people who are eligible for the program. In fact, the fiscal note for SB 539 assumes that staff can simply be “redirected” from their other responsibilities to do the annual reviews, but does not specify which responsibilities will no longer be covered. [xxii]
The bill also includes verification and documentation requirements as a component of the annual review process. While it is unclear how these provisions would be implemented, they are clearly a cause for concern. The bill requires the Family Support Division to send verification request letters to all Medicaid beneficiaries requesting updated information and specific documentation regarding their income. This may include but is not limited to current wage stubs, W-2s, statements from the recipient’s employer, wage matches from the division of employment security, and bank statements.
If the recipient does not respond and/or provide the requested documentation within the 10 days, then the individual has another 10 days to request a hearing or have his/her benefits terminated. While it is customary for the agency to send such “ten day” letters, there is no specific requirement in the Agency’s current recertification rules that would require individuals to produce documentation within ten days or risk termination of benefits. One can certainly foresee problems in implementing this proposal for low-income people who may not receive the letter on a timely basis, or may have difficulty a specific piece of documentation demanded by a caseworker such as a bank statement or employer’s statement especially within the ten-day time period.
And, of course, depending on how the new provisions are implemented, many Medicaid recipients who are elderly and disabled could find the income and documentation requirements to be particularly burdensome. Requiring additional documentation from Medicaid applicants and recipients would create barriers to coverage and ultimately deny access to health care for people who are unable to meet these requirements.
The bottom line is that additional procedural barriers, including more frequent recertifications, have the impact of eliminating coverage for eligible individuals as has been demonstrated in a number of other states. Additional paperwork burdens have caused many thousands of eligible people to lose coverage in other states and would likely have the same effect in Missouri. In fact, the Department of Social Services estimates that 13,609 Missourians would lose coverage as a result of the new reinvestigation provisions. As indicated earlier, about 9,000 of those losing coverage from the increase in reinvestigations are children.
New procedural barriers caused enrollment of children to drop by more than 149,000 in the Texas SCHIP program.[xxiii] While these types of cuts are intended to save money, there is substantial research that imposing additional procedural obstacles, such as new verification requirements, causes eligible people to lose Medicaid coverage.[xxiv] Moreover, requiring families to comply with added paperwork and reporting procedures which reduce the number of people participating in the program increases the cost of uncompensated care when uninsured people seek needed medical attention and results in serious financial burdens for low-income families who pay for treatment on their own.[xxv] Thus, more low-income Missourians who are in fact financially eligible for coverage would become uninsured if the state makes the verification process more stringent than it is now. Thus, if additional paperwork and verification is required as a result of SB 539, it is likely that many thousands more low-income Missourians will become uninsured than the 112,000 that the bill and the Governor’s budget would otherwise terminate from Medicaid coverage.

  



Of course, these types of policies also have the additional impact of increasing state administrative costs. As the Kaiser Commission has noted:
While requiring families to comply with added paperwork and reporting procedures may save money by reducing the number of people participating in the programs, it should be noted that costs also are incurred as a result of making such changes In addition to the large costs associated with uncompensated care when uninsured people seek needed medical attention, and the serious financial burdens low-income families must shoulder to pay for treatment on their own, there are expenses associated with the administrative tasks necessary to implement more labor-intensive procedures. Where financial pressures have already resulted in state workforce reductions or hiring freezes, it is important to keep in mind that changes such as increasing reporting and verification requirements are likely to require more staff time.[xxvi]
Among the costs that ought to be considered are the additional administrative costs of doing more redeterminations, cutting people off of assistance, conducting additional hearings based on such procedural terminations, and the costs of processing new applications for benefits when eligible people re-apply, quite likely when their medical needs (and the costs of their care) have become far more severe.
Such costs should be factored into any analysis of the “savings” from new verification proposals. So too should the fact that cutting eligibility in this manner will mean a loss of coverage and diminished health access for eligible families.
V. Annuities, Assets and related provisions
Annuities: (Inserting Mo. Rev. Stat. § 208.212.1)
The legislation includes provisions that are designed to prevent elderly individuals from “sheltering assets” to make them eligible for Medicaid. The provision would establish restrictions on the ability of individuals to place assets in certain types of “annuities” to avoid having these assets considered as resources in determining Medicaid eligibility. The bill includes a new “look-back” provision requiring the Agency to examine whether annuities that had been purchased in the previous sixty months were purchased with the intent to establish Medicaid eligibility. The bill also would require that for purposes of Medicaid eligibility, annuities be actuarially sound, and that they provided equal or near-equal payments for the life of the annuity (as opposed to “balloon-style” payments at the end of the annuity’s duration).[xxvii]  
While the issue of sheltering assets by “wealthy” people is often discussed by states as an area of potential abuse, it is unclear what the impact of the proposed “annuities” restrictions would be. Indeed, the Department of Social Services has estimated that only 12 people would be denied Medicaid eligibility each year under this provision, saving only $181,184 in the first year and $257,558 in subsequent years.[xxviii]
It should be pointed out that the final version of the Senate bill revised the “look-back’ period from seventy-two (72) months to sixty (60) months. The 72-month “look-back” period in the original version of the bill would have clearly violated federal Medicaid law, which provides for a maximum look-back period of 60 months for transfers of assets and only in the case of certain trusts or portions of a trust that are considered as assets and disposed of. Otherwise, the maximum look-back period is 36 months. 42 U.S.C. 1396p(c)(1)(B)(i)(2005). Thus, the 60-month look back period could still be found to violate the federal requirement.
“Income First” Approach to Division of Assets and Spousal Impoverishment (Adding §208.010.12)
The legislation includes a new provision requiring the “institutionalized spouse” applying for Medicaid who has a spouse in the community to divert income to the “community spouse” to raise the community spouse’s income to the level of the “minimum monthly needs allowance,” as described in 42 U.S.C. Section 1396r-5. This diversion of income must occur before a fair hearing can allow the community spouse to retain assets in excess of the community spouse's protected share described in 42 U.S.C. Section 1396-r. Under current policy, the couple is allowed to demonstrate at a fair hearing that the community spouse needs to maintain a greater level of assets than the “spousal share” amounts that are designated in 1396-r in order to produce income needed to reach the minimum monthly maintenance standard. The new policy would require consideration of the amount of the institutionalized spouse’s income that could be allotted to the community spouse prior to a greater “spousal share” of resources being protected a fair hearing to raise the community spouse’s income to the maintenance standard.
The practical effect of this provision is that this will lower the amount of assets that some married couples are allowed to retain in order for the institutionalized spouse to be covered by Medicaid, thereby requiring the couple to expend additional resources before the institutionalized spouse becomes Medicaid-eligible. House budget documents suggest that this change would cut $4 million from the Medicaid program ($2.5 million of which are federal funds) from switching to this “income first” methodology of conducting the “Division of Assets” for individuals entering a nursing home.[xxix]
Enforcement of Liens (Amending Mo. Rev. Stat. § 208.215.13)
This legislation changes provisions of current Missouri law regarding the Department’s ability to enforce liens on the property of institutionalized individuals who cannot reasonably be expected to be discharged and return home. The primary change is that instead of the current provision authorizing the Department to enforce liens in these circumstances, the legislation would require the Department to enforce these liens. The legislation does not appear to change any of the other existing rules for how these liens are applied.
VI. Changes in Waiver Authority (Amending Mo. Rev. Stat. § 208.151.5)
The bill would modify a provision of current law that allows the Department of Social Services to request Medicaid waivers under Section 1115 of the Social Security Act to implement the increased income limits for elderly, disabled, and blind individuals in § 208.151.1(25) of current Missouri law. In fact, waivers are not required to implement these changes in income limits.
The bill removes reference to the income limits, thereby allowing the Department to submit Medicaid waivers without regard to any particular Medicaid reform.
While the legislation expands the scope of waivers that the Department can request by removing the reference to “increased income limits,” it also limits the Department’s authority in two key respects. No waiver request could become effective without an Executive Order, which could be disapproved by the either the Missouri House or Senate. Second, the Department could not submit a waiver or amendment that would “exceed one million dollars in additional costs to the state.” 
VII. Modifying the Senior Rx Program in light of the Medicare Modernization Act (Inserting Mo. Rev. Stat. §§ 208.780 to 208.798)
The bill modifies Missouri’s State Pharmacy Assistance Program, known as the “Senior Rx program” to comport with the new federal Medicare Modernization Act and the new prescription drug benefit of Medicare Part D. In particular, the bill’s provisions would modify the Senior Rx program to address the circumstances of “dual eligibles” – those individuals eligible for both Medicare and Medicaid.
While these changes are not the focus of this paper, these changes would give the state the opportunity to partner with a specific Medicare part D provider to coordinate the Medicare pharmacy benefit through a modified Senior Rx program. It appears that these provisions are intended in large part to address a host of complicated issues involving the “dual eligibles” and the so-called “clawback” provision of the Medicare Modernization Act, under which the state must pay back the federal government for the cost of the federal government’s coverage of the dual eligibles’ prescription drug costs.
Allowing Missouri to partner with a specific Medicare Part D provider could provide a number of potential advantages to the state and to Medicaid beneficiaries, who could potentially retain access to the same drugs that they receive now under Medicaid but which will almost assuredly be more restrictive under the new Part D benefit. However, the bill does not include any explicit provisions to assure that “dual eligibles” are protected when Medicare Part D is implemented in Missouri. SB 539 does not assure that the State would fill in any of the gaps in Medicare D coverage for dual eligibles or other Medicare beneficiaries.
While the bill does not address many of the details of how Missouri will address the transition of “dual eligibles” to Medicare part D, it would revise state law in order to allow the state to coordinate benefits for this population. These changes to the statute would be required in order to modify the Senior Rx program because Missouri’s current statute is not designed to address the many issues created by the new Medicare Part D benefit. The legislation would also authorize the state to require pharmacy manufacturers to provide “Medicaid level or greater” rebates in order for the manufacturers’ products to be available to enrollees of Missouri’s Senior Rx Program, thereby providing additional revenue for Missouri’s Senior Rx fund.
As a related matter, the “services” section of Missouri law would be amended so that no person who is eligible for both Medicaid and Medicare will be eligible to receive prescription drug coverage under Medicaid on or after January 1, 2006 when the new Part D benefit begins. (Amending Mo. Rev. Stat. § 208.152 1(9)).
Again, these provisions are really an entirely separate issue from the bill’s other Medicaid provisions which are primarily designed to authorize the substantial cuts in the Missouri Medicaid program that the Governor has already proposed.
VIII. Elimination of the Nursing Home Reimbursement Increases (Amending Mo. Rev. Stat. § 208.225)
The legislation would eliminate provisions that were adopted last year to increase nursing home rates over a three-year period. The bill eliminates the provisions of state law that now require nursing home rate adjustments in July of 2005, 2006 and 2007. According to the fiscal note for the legislation, this would cut about $143 million from the Medicaid program over this three-year period.[xxx]

IX.              Restoration of “Presumptive Eligibility for Pregnant Women” and “Case Management Services” for Pregnant Women and Children at Risk

The version of this legislation passed by the Missouri Senate restored certain categories of coverage and service that would have been eliminated in the original version of the bill:

  • Presumptive Eligibility for Pregnant Women

(Deleting Mo. Rev. Stat. § 208.151.1(17))

The original version of the legislation would have eliminated the “presumptive eligibility” program for pregnant women, which provides temporary Medicaid coverage for prenatal care for pregnant women.  This program allows pregnant women to receive prenatal care on an immediate basis before their eligibility for regular Medicaid has been established.  Elimination of this temporary health coverage would remove access to prenatal care which could lead to problems with the pregnancy, failures to identify potentially life-threatening conditions for the mother or baby, premature deliveries and more costly medical care for the baby.

This Medicaid eligibility category was restored in the Senate-passed version of the bill.

  • Case Management Services for Pregnant Women and Children at Risk

(Deleting Mo. Rev. Stat. § 208.151 (22))

A separate provision of the legislation would also eliminate a provision requiring the state to provide case management services for pregnant women and “young children at risk.”  Current state policy requires the Family Support Division to advise pregnant women, parents of newborns, and parents with children under the age of six of the availability of case management services.   The policy defines such case management as a method of providing and insuring receipt of comprehensive health services to pregnant women and newborns at risk, as well as children under the age of six.  A case manager is responsible for locating, coordinating and monitoring services.  See Missouri Income Maintenance Manual, § 0925.045.00.  These case management services seek to promote the good health of recipients and include referrals to various agencies for other needed services, such as Women Infant and Children (WIC).  See Missouri Physician Provider Manual, § 13.66. 

Under current policy, “[c]ase management services are available for Medicaid eligible pregnant women who are ‘at risk’ of poor pregnancy outcomes and are intended to reduce infant mortality and low birth weight by encouraging adequate prenatal care and adherence to the recommendations of the prenatal caregiver.”  Missouri Physician Provider Manual, § 13.66B. 

The original version of SB 539 would eliminate the state-law requirement that these services be provided to pregnant women and young children at risk.  

This Medicaid service was restored in the Senate-passed version of the bill.

ACTIONS OF THE HOUSE COMMITTEE ON APPROPRIATIONS -- HEALTH, MENTAL HEALTH AND SOCIAL SERVICES:  RESTORATIONS AND ADDITIONAL CUTS.

Apart from the Senate’s work on SB 539, a House Appropriations Committee voted to restore some of the services that the Governor proposed to eliminate, and which would be eliminated by SB 539.  The same committee voted for additional Medicaid cuts to pay for these restorations.  These proposals will now be taken up by the full House Budget Committee. 

What was restored?

  • Eligibility for Elderly and disabled Missourians up to 85% of the federal poverty level
  • Ambulance Services
  • Hospice Services
  • Wheel chairs (but not wheel chair batteries)
  • Prosthetics
  • Oxygen and respiratory equipment
  • Diabetic supplies
  • Elimination of co-payments for home and community based services

What was not restored?

Most of the Governor’s proposed cuts were not restored. For example, among the cuts that would still be implemented under these proposals are:

  • Coverage for elderly and disabled Missourians between 85% and 100% of the federal poverty level would still be eliminated.
  • Coverage for low-income parents above 30% of the federal poverty level would still be eliminated.
  • Dental care, optical care, podiatry, hearing aids and most types of durable medical equipment (e.g., colostomy bags, nebulizers, augmentative communication devices, etc.) would still be cut.
  • Most new co-payments would still be implemented.
  • Cuts related to annual reinvestigations and new verification requirements would still be implemented.

What Additional Cuts did the House Committee Adopt?

  • The Committee voted to implement premiums for the State Children’s Health Insurance Program for households making just over 24,100 per year.   As indicated earlier, this would cause 23,709 to lose coverage.
  • The Committee voted to increase the level of disability required for nursing home care and home and community based care (from 18 to 21 points).   A preliminary estimate from the Department of Social Services indicates that nearly 11,000 Missourians could lose access to home and community-based services from this change in the disability standard.

As indicated above, these cuts will now be taken up by the full House Budget Committee.[xxxi]

 

X.        Medicaid Reform Commission

The bill would establish a Commission to reform the Missouri Medicaid program  Under this legislation, the Missouri Medicaid program would sunset on June 30, 1998.  The commission would include ten members, five from the Missouri Senate and five from the House of Representatives.   Three of the five from each chamber could be from the same political party.  The Commission may contract with a consultant and must make its recommendations by January 1, 2006.  This proposal raises several concerns, including at least the following:

         The Commission has a pre-ordained result.  Medicaid would end whether or not an acceptable or legal alternative is developed.  The program would end without any plan for how low-income Missourians would receive health insurance or how seniors would receive their long-term care.  Finding ways to improve the existing Medicaid program is not one of the options to be studied by the Commission. 

         Because the Commission would be dominated by one party, it would not be bi-partisan, which is an important consideration for endeavors of this magnitude.

         No case has been made that the Medicaid program should be eliminated or replaced, making it even more troubling that the program would be eliminated under this proposal.

It remains to be seen how this component of the legislation will be implemented if the legislation is enacted in its current form.

XI.       REVIEWING THE IMPACT OF THE MEDICAID CUTS IN SB 539

A.        Increasing the Number of Uninsured Missourians

Medicaid and the State Children’s Health Insurance Program (SCHIP) have a significant impact on the number of Missourians without health insurance.[xxxii]  Census data show that Missouri’s rate of uninsured would have been far worse if not for the role of Medicaid and SCHIP in responding to increased need during the recent recession.[xxxiii]  For example, the Center on Budget and Policy Priorities found that from 2000 to 2002, the percentage of uninsured low-income Missouri children fell from 12.2 percent to 7.2 percent – a rate reduction that was entirely attributable to children being enrolled in Medicaid and SCHIP.[xxxiv]  Thus, it is no accident that Missouri’s rate of uninsurance is 4% below the national rate.[xxxv]  Missouri’s uninsured population, which is estimated to be over 620,000, would be significantly higher if not for Medicaid and SCHIP.[xxxvi]   

Making more than 112,000 more people ineligible for the Missouri Medicaid program will substantially increase the percentage of Missourians who are uninsured.  This increase in Missouri’s rate of uninsured will have a corresponding negative impact on the health of low-income Missourians, as explained below.

B.        Adversely Affecting Missourians’ Health

By causing families to lose health insurance, the proposed Medicaid cuts will negatively affect the health of low-income families who now rely on Medicaid for their health care. There is significant evidence that having health insurance improves access to health care and health outcomes.[xxxvii]  The uninsured receive less preventative care, are diagnosed at more advanced disease states and, once diagnosed, tend to receive less therapeutic care (drugs and surgical interventions) than people who have health insurance.[xxxviii]  Moreover, a wide array of studies demonstrates that Medicaid and SCHIP coverage improve access to health care and improve health outcomes.[xxxix]   Such coverage can decrease emergency room usage, reduce preventable hospitalizations, and improve access to primary health care.[xl]  Studies have found that Medicaid and SCHIP have had a number of positive effects on the health care of Missouri children, including reduced emergency room visits, reduced emergency room visits for asthma, a decline in preventable hospitalizations, and improved school attendance.[xli]  Meanwhile, studies also show that cutting Medicaid and SCHIP has a negative impact on the health of the people who lose coverage.[xlii]  It is clear that eliminating health insurance for more than 112,000 people will have a negative impact on the health of those losing coverage.

  1. Increasing Mortality

There is also an increased likelihood of mortality among Missourians who lose coverage for the program.  The Institute of Medicine has found that 18,000 people die prematurely each year as a result of being uninsured.[xliii]  For example, uninsured cancer patients are diagnosed later and die earlier than those with insurance.[xliv]  Based on a thorough review of health outcome studies, the Institute of Medicine also concluded that uninsured adults were 25 percent more likely to die prematurely than adults with health insurance coverage.[xlv]  Moreover, uninsured patients are three times more likely to die in the hospital than insured patients.[xlvi]  A study of proposed Medicaid cuts in Tennessee found that a reduction of 160,000 Tennesseans from the program would result in approximately 3,311 additional deaths over the next 15 years. (An average increase of 221 deaths per year).[xlvii]

It stands to reason that more Missourians will die prematurely as a result of becoming uninsured if the state eliminates Medicaid coverage for more than 112,000 people, while also removing certain life-saving health services from the Missouri Medicaid program.

What Will Happen if the Proposed Medicaid Cuts are Implemented? See Oregon.

 

A study of Medicaid cuts in Oregon revealed that people who lost Medicaid coverage had significant access problems:

  • 60% reported an unmet health need and nearly 80% reported an unmet mental health need.  Those with chronic conditions were particularly adversely affected. 
  • Cuts in coverage to elderly and disabled beneficiaries found that these “elderly and disabled people were having problems obtaining needed drugs, which, in light of  their significant medical needs, could result in considerable harm to their health and to higher costs due to compromised care.” 
  • 60% of those surveyed who had lost their coverage reported that they cut back on food purchases to pay for their medications.  Almost half (49%) reported having to skip paying other bills or paying bills late.  One fifth reported going into debt to pay for some of their prescriptions.
  • Emergency room visits increased by 17% in the three months after Medicaid cuts were implemented in the state of Oregon compared to the year before.[xlviii] Clinics also reported difficulties meeting patient needs stemming from both losses in coverage and, for those who remained covered, from reductions in benefits and increases in co-payments.[xlix] 

(Mann and Artiga, June 2004)  Studies from other states show similar results when significant Medicaid or SCHIP cuts are imposed.[l]

 

 

  1. Shifting Costs to Providers, Employers, and Individuals

A loss of insurance coverage increases the amount of “uncompensated care” -- care that is not paid for by private or public insurance.  These uncompensated care costs are transferred to other parts of the health system, driving up costs and straining health resources for people who are not covered by the Medicaid program.  The Division of Medical Services has estimated that the cost of providing health care to the uninsured in Missouri was $305 million in 2001.[li]  In testimony before the House Interim Committee, the Missouri Hospital Association pointed out the substantial “cost-shift” that would occur if Missouri’s rate of uninsured were higher.[lii] MHA estimated a cost shift of more than $144 million dollars if Missouri’s rate of uninsured were comparable to the higher national rate of uninsured.[liii]   

The St. Louis Regional Health Commission (RHC) has documented the uncompensated care burden that results when people become uninsured and the impact this cost-shift has on private insurers and the employers with whom they contract.[liv]  The RHC found that in fiscal year 2002, “St. Louis area hospitals had a net loss of approximately $160 million of the cost of uncompensated care for Medicaid and uninsured patients.”  The RHC found that “hospitals cover these losses by increasing their charges and contracted rates with private insurers who in turn pass the additional costs onto area employers.[lv]  The Georgetown Health Policy Institute estimated a $93 million annualized cost-shift from the implementation of proposed cuts to Medicaid in the state of Connecticut.[lvi]   Moreover, a recent Georgia study estimated that the cost of providing care to uninsured people caused health insurance premiums for people with private insurance coverage to be 9% higher than they would be if everyone in the state were insured.[lvii]

The Governor has already recognized this same cost-shifting impact in the context of discussing Medicaid’s low reimbursement rate.  The Governor’s health care plan includes the following discussion of the impact of the cost-shifting that results from uncompensated care:

Reduce Cost Shifting. Although many fail to see the connection, low physician reimbursement rates affect the cost of employer-provided and "private pay" insurance. When health care providers are forced to take a loss on Medicaid and Medicare patients, that loss is shifted to other patients. This increases costs for everyone.[lviii]

This cost-shift is that much more dramatic when health care providers receive no reimbursement and are forced to absorb the entire cost of care for patients who lose Medicaid coverage or for services that are no longer covered by Medicaid.  The proposed Medicaid budget would dramatically shift costs to health care providers, employers, and individuals without the benefit of federal matching funds that flow into the state when these service are paid for by Medicaid.

  1. Removing Federal Funds from Missouri’s Economy, Reducing Economic Activity and Jobs

Medicaid brings significant federal matching dollars into the state.  State Medicaid funds generate federal matching funds at almost a 62% rate for most individuals and a 73% rate for SCHIP children.  In FY 2006, Missouri Medicaid spending will generate more than $1.6 in federal matching funds for every state dollar spent while SCHIP spending will generate about $2.75 in federal matching funds.    Because the proposed budget would deny Missouri substantial federal funds, it would also cause a substantial loss of jobs and economic activity.   

An analysis of economic data by economists at the St. Louis University‘s John Cook School of Business found that every $1 million that the state spends on Medicaid spending generates over $3 million in business activity and 42 jobs.[lix]  Expenditures on SCHIP would have even larger effects.  The SLU Business School recently found that in fiscal year 2004, federal matching funds to the State of Missouri generated over $5.8 billion in economic activity, supported 79,892 jobs in the state, and increased wages and other income earned by Missourians by $2.8 billion, which generate $211 million in tax revenues (based on those wages).[lx]   

The St. Louis University analysis is consistent with seventeen other studies that are reviewed in a new Kaiser Commission report.   Kaiser concludes that, "[a]ll of the studies provide evidence that Medicaid spending has a positive impact on state economies.  It is clear from the studies conducted thus far that, in addition to providing valuable health coverage for low-income people, state Medicaid spending also yields significant economic benefits for states.  As a result of Medicaid's unique matching arrangements, these benefits may be larger than state spending alone."[lxi] 

These same St. Louis University economists recently found that the Governor’s proposed Medicaid cuts would cause Missouri to lose about 10,130 jobs and $737 million in economic activity.[lxii]  SB 539 would authorize the majority of these budget cuts, and would thus have a substantial adverse economic impact on the state.

In addition, the proposed SCHIP cuts would cause additional economic losses.  These losses are particularly significant, given the higher SCHIP matching rate.  Based on this loss of federal SCHIP funds, SLU economists have estimated that Missouri would lose an additional $30.4 million in economic activity and 417 jobs from the loss of federal SCHIP funds.[lxiii]

  1. Diminishing Financial Stability and Increasing “Medical Debt”

In addition to its positive impact on health, Medicaid promotes financial stability among low-income families by paying for the costs of their health care.  It is well-established that having health insurance, including Medicaid, improves families’ financial well-being.  “Families who are uninsured are at greater risk than the insured of high out–of pocket medical spending due to injury or illness and its consequences (e.g., risk of impoverishment, bankruptcy, inability to afford other necessities, such as rent, food, clothing and transportation.”[lxiv]  

It is increasingly acknowledged that uninsured families incur medical debt, which can cause serious problems.  According to a Commonwealth Fund report, 41% of adults had problems paying their medical bills in the previous year or were paying off medical debt accrued over the last 3 years.[lxv]  Among those who said they had such medical bill problems, 27% said it caused them to be unable to pay for basic necessities such as food and heat, 44% said they used all or most of their savings to pay medical bills, and 20% said they had run up large credit card debts or had to take out loans against their home to pay these bills.[lxvi]  A study by the Access Project of uninsured people found that 60 percent said they needed help paying for their medical care, and nearly half (46%) said they owed money to the facility where they received care. For those who received care in emergency rooms, the percentages were even higher.[lxvii]  Other studies show that about half of all personal bankruptcies result from health problems or large medical bills.[lxviii]

Providing health insurance through Medicaid and SCHIP combats these problems by paying for the medical care of individuals and families that can least afford it.[lxix]  Conversely, cutting Medicaid eligibility will negatively affect the financial well-being of low-income people by making them uninsured and thus unable to pay for the costs of their health care.

Conclusion

SB 539 would enable Missouri to implement most of the dramatic cuts to the Medicaid program that are proposed in the Governor’s budget.  The legislation and the Governor’s budget cuts would directly cause more than 112,000 people to become uninsured, eliminate a wide variety of Medicaid services, greatly expand the use of co-payments and allow Medicaid providers to refuse service to individuals who are unable to make these co-payments.  These reforms would have a dramatic impact on people’s health, as well as the state’s economy and its health care system.

The legislation also includes an entirely separate set of provisions modifying the Senior Rx program to conform to the Medicare Modernization Act and the new Part D benefit. These provisions have the potential to benefit the State and dually eligible Missourians but could easily be addressed in separate legislation that does not make substantial cuts to the Missouri Medicaid program.

[i] For further discussion of changes to “personal care assistance” services and adoption assistance under this legislation, see Jennifer Hill, Senate Bill 539, Chipping Away at Medical, Adoptions, and Disability Service Protections, Missouri Budget Project, March 3, 2005. 

[ii] Julie Hudman and Molly O’Malley, Health Insurance Premiums and Cost-Sharing: Findings from the Research on Low-income Population, Kaiser Commission on Medicaid and the Uninsured, March 2003, at 5.

[iii] Id. at 4-6.

[iv] See Missouri Family Health Care Programs Manual, § 0920.020.10.05 (Affordable Insurance Definition).

[v] Last year, the Department indicated that 3000 additional children would lose coverage as a result of this new requirement. See Committee on Legislative Research, Oversight Division, Fiscal Note to HB 1566, March 17, 2004.

[vi] These estimates by the Department of Social Services assume that an additional 3,513 people will move to another Medicaid category and another 4,753 will either move to Medicaid spenddown or have a higher spenddown amount.  In other words, the Department is assuming that 8266 people with disabilities would still remain covered by Medicaid in some way.  If these assumptions prove to be incorrect, the number of people losing coverage through the elimination of the MAWD program could be higher.

[vii] These estimates assume that an additional 18,504 will remain covered by the Medicaid spenddown program or have a higher spenddown amount than they do now but would still be able to meet their spenddown amounts.  In other words, the Department is assuming that 18,504 low-income elderly and disabled individuals will remain covered in some way.  If these assumptions prove to be incorrect, the number of people losing coverage through the eligibility cuts for elderly and disabled individuals could be higher.

[viii] This provision exempts “classes of individuals listed in 42 U.S.C. § 1396a(a)(10)(A)(i) from the “subject to appropriations” requirement.

[ix] See, e.g., U.S. Dept. of Health and Human Services, Oral Health in America: a Report of the Surgeon General, 2000.

[x] See Leighton Ku, The Significance of Vision Benefits in Medicaid, Center on Budget and Policy Priorities, December 2002.

[xi] The state’s budget documents indicate that the state would cut the Department of Social Services’ Medicaid budget by $46 million dollars (including $28.4 million federal dollars) by increasing co-payments on certain health care services.  Additional savings would come from co-payments charged on services provided through the Department of Mental Health.

[xii] 42 C.F.R. § 447.54.

[xiii] 13 C.S.R. 70-4.050.

[xiv] See 42 C.F.R. § 447.53.

[xv] The detailed list of services subject to co-payments was obtained from the Division of Medical Services.  It is unclear how co-payments for HMO enrollees would be affected by the legislation.  Presently, most HMO enrollees are exempt from cost sharing for services provided by their health plans.  Department staff have indicated that the bill’s language requiring co-pays for “all covered services” does not mean that there would be new co-payment requirements for HMO enrollees.

[xvi] Joseph Newhouse, “Free for All: Lessons from the Rand Health Insurance Experiment,” Cambridge: Harvard University Press, 1996, discussed in Leighton Ku, “Charging the Poor More for Health Care: Cost-Sharing in Medicaid,” Center on Budget and Policy Priorities,  May 7, 2003 (hereinafter” Cost-Sharing”); MFH.

[xvii] Robyn Tamblyn, et al. “Adverse Events Associated with Prescription Drug Cost-Sharing Among Poor and Elderly Persons,” Journal of the American Medical Association: 285(4): 421-429, January 2001, MFH Report.

[xviii] See Ku, Cost-Sharing, supra, for an excellent overview of the research in this area.

[xix] See Id. and Joel Ferber, Economic and Health Benefits of Missouri Medicaid, Missouri Foundation for Health, April 2004, (“MFH Report”) and the citations therein.

[xx] See Committee on Legislative Research, Oversight Division, Fiscal Note for HS for HCS for HB 1566, L.R. No.: 4719-07, March 17, 2004; Department of Social Services Medicaid Eligibility, Performance Audit, from the Office of State Auditor Claire McCaskill, Report No. 2004-29 (“State Auditor’s Report”), April 27, 2004 at 12.  The recently-filed fiscal note for SB 539 now indicates that only 109 additional staff would be needed to conduct these reinvestigations.  Committee on Legislative Research, Oversight Division, Fiscal Note for SB 539, L.R. No. 1714-04, March 7, 2005 (“SB 539 Fiscal Note”).

[xxi] There is nothing wrong with conducting annual reviews, provided they are conducted in a fair manner.  It also makes sense, as the bill would allow, for the Agency to better utilize the information obtained from Food Stamp recertifications.  The Agency has indicated that it is automating its ability to use Food Stamp recertification information in performing Medicaid reinvestigations.  See SB 539 Fiscal Note”.

[xxii]  See SB 539 Fiscal Note.

[xxiii] Donna Cohen Ross and Laura Cox, Beneath the Surface: Barriers Threaten to Slow Progress on Expanding Health Coverage of Children and Families, Kaiser Commission on Medicaid and the Uninsured, October, 2004, at 6-8. 

[xxiv] See e.g., Donna Cohen Ross and Laura Cox, Preserving Recent Progress on Health Coverage for Children and Families: New Tensions Emerge, A 50 State Update on Eligibility, Enrollment, Renewal and Cost-sharing Practices in Medicaid and SCHIP (“New Tensions”), July 2003; Ellen O’Brien and Cindy Mann, supra, at 9; Laura Cox, Allowing Families to Self-Report Income: A Promising Strategy for Simplifying Enrollment in Children’s Health Coverage Programs, Center on Budget and Policy Priorities, December 28, 2001.

[xxv] Donna Cohen Ross and Laura Cox, New Tensions, at 16.

[xxvi] Id. (emphasis added).

[xxvii] While the language of SB 539 is not clear on this point, investments in annuities that did not meet these requirements would likely be counted as resources in determining Medicaid eligibility. 

[xxviii] SB 539 Fiscal Note.  Of course, 61% of these expenditures would be paid for by the federal government.