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

      

 

How States Can Make More Patients Eligible for Part D’s Full Low Income Subsidy/Extra Help at Little or Even No State Cost 

By Thomas P. McCormack,  Public Benefits Policy Consultant,  TIICANN   7/5/06

Medicare patients with incomes (using the SSI income counting rules and disregards) under 135% of the Federal Poverty Level, or FPL ($1103 monthly for one) and with assets (other than a home of any value; any vehicles of any value; and a separate burial fund up to $1500 per person) under $6.000 ($9,000 per couple) qualify for full Low Income Subsidy (LIS) Extra Help Medicare Part D prescription coverage: No deductible or premium; no donut hole; co-pays of only $1/$2 per generic and $3/$5 per brand name drug. Co-pays and income and asset levels will rise with inflation yearly, as will the non-Extra Help Part D premiums, deductibles and donut hole and catastrophic thresholds.

QMB, SLMB and QI Eligibles Are Also “Deemed” Full Part D Extra Help Eligibles

The Medicare Part D regulations [42 CFR 423.773(c)(1)(iii)] also specifically, automatically deem Medicare patients who are eligible for the Medicare Savings Programs, or MSPs---Qualified Medicare Beneficiaries (QMB) ;Specified Low Income Medicare Beneficiaries (SLMB); and Qualified Individuals (QI)---to be full subsidy Extra Help (LIS) Part D eligibles as well. Federal statutes and regulations set the QMB income level at 100% FPL (using SSI’s income counting rules and disregards), SLMB’s at 120% and QI’s at 135%. For all three MSP groups, assets are limited (not counting a home of any value; one vehicle of any value; and a separate burial fund up to $1500 per person) to $4,000 per individual and $6,000 per couple.

SLMB and QI eligibles are entitled to have their Medicare Part B premiums ($88.50 monthly in 2006), but not any other medical costs, paid by their states. However, the QMB program not only must pay patients’ Part B premiums, but also all their Medicare deductibles and coinsurance. States get federal Medicaid matching funds for these MSP program costs at their regular Medicaid matching rate—which for QMB and SLMB is 50% for the richest states, and up to nearly 80% for the poorest states; but is a full 100% for QI eligibles (but only up to a capped annual federal allocation for each state).

States Can Liberalize Their QMB, SLMB and QI Income and Asset Rules

Section 1902(r ) (2) of the Social Security Act allows states to alter eligibility provisions of their state Medicaid plans---without a waiver!—to make income and/or asset levels more liberal than under the ordinary, minimum federal income and/or asset eligibility rules. Specifically, the states can amend their Medicaid state plans to liberalize their QMB and SLMB income and asset rules---and even their rules for the 100% federally-funded QI program. However, federal regulations do require that such liberalizations apply to reasonably broad classes, such as all aged, all disabled, all families or—as is applicable to this particular issue---all Medicare patients. (In other words, a state can’t get federal approval for a Medicaid state plan eligibility amendment that treated some Medicare patients better than others in QMB, SLMB and/or QI eligibility determinations.)

States have already received approval of plan amendments---without needing waivers!—liberalizing their QMB, SLMB and even QI income and asset rules. For example, New York waived any asset test for QMB; and others liberalized income and asset rules in various ways. See http://www/kff.org/medicaid/4105-index.cfm and the related studies it cites. These previously-approved, flexible, pick-and-choose (QMB-only changes, SLMB-only changes, etc.)  state MSP liberalizations are described in a paper by Patricia Nemore at: http://healthassistancepartnership.org/assets/docs/chart_-_more_liberal_state_rules-rev033a.doc  (if this URL fails, one can also request a copy by emailing cparcham@familiesusa.org ; this draft contains some out-of-date discussion, but is still essentially relevant).

The Current Strict Federal Part D Full LIS/Extra Help Asset Level Unfairly Prevents Eligibility For Many Needy

Liberalizing access to full Extra Help Part D through state asset level liberalization changes to QMB and SLMB rules can get coverage for many more income-eligible persons with slightly too much in assets.  At least one study found that Part D’s own federal minimum LIS/Extra Help liquid asset eligibility levels--a liquid asset level of $6,000 per single/$9,000 per couple for the full subsidy, with $1/$2 and $2/$5 co-pays; and a liquid asset level of $10,000/$20,000 for the partial subsidy, with 15% coinsurance--exclude many persons with slightly higher assets whose incomes alone would qualify them. See www.kff.org/medicare/7304.cfm. Yet DC (see below) curiously failed to also liberalize its asset levels.

CMS’ Changed Policy: State SLMB and QI Liberalizations Must Now Include Identical QMB Liberalizations

Yet a SLMB-only or QI-only liberalization (which would, of course, entail only the added Part B premium costs) as a cheap way for the states to thereby liberalize income and/or asset eligibility for full Extra Help Part D drug coverage is no longer allowed because of a recent, unwritten and still only verbally-expressed (but allegedly General Counsel-approved) CMS eligibility policy (conversation of Roy Trudel of CMS with Cheryl Parcham of FamiliesUSA, 4/15/05; email from Roy Trudel to Thomas McCormack of TIICANN 4/04/06) that states’ MSP eligibility liberalization plan amendments can now be approved only if they include a QMB liberalization at least as generous as for SLMB or QI:  

http://healthassistancepartnership.org/medicaid/other-medicaid-resources/eligibility/goodideas.html is a paper explaining, endorsing and justifying DC’s liberalization of its SLMB and QMB income levels and offers footnotes and links to other documents (including the first, earlier 150% FPL version of the DC Medicaid plan amendment) with further details. But  do note that CMS has since removed from its website the URL for the Medicaid eligibility policy materials which this paper cites and which it formerly used to approve earlier, more flexible---and still-in-force!---MSP income and asset liberalizations by other states. As noted above, these previously-approved, more flexible state MSP liberalizations are described in a draft paper by Patricia Nemore at: http://healthassistancepartnership.org/assets/docs/chart_-_more_liberal_state_rules-rev033a.doc; (if either these URLs cited just above fail, one can also request copies from cparcham@familiesusa.org; both pieces have some out-of-date discussion, but are still essentially relevant).     

DC’s Medicaid Plan Amendment Liberalizing Its QMB and SLMB Income Level and What That Means

In spring, 2006, CMS approved a District of Columbia Medicaid state plan amendment to raise both its QMB and SLMB income levels—first to 150%  FPL, but later increased to 3 times the SSI payment level ($603 X 3 = $1809 monthly for one). But, curiously and unaccountably, DC failed to raise or eliminate its QMB and SLMB asset levels at the same time. This QMB and SLMB income level liberalization will have the indirect effect of making large numbers of additional limited income Medicare patients in DC eligible for the very valuable full subsidy LIS Extra Help Part D drug coverage---at a cost to its budget equal to DC’s 30% non-federal percentage of the $88.50 monthly Part B premium cost (which is $26.55) that its Medicaid program will have to pay for each new QMB and SLMB eligible---plus whatever the further, and potentially even greater, costs there may be of paying 30% of QMB patients’ Medicare deductibles and coinsurances.

Because of DC’s relatively high (70%) matching rate and a current local budget surplus, it found these limited added costs to be a worthwhile, affordable price to pay for making many more limited income DC Medicare patients eligible for QMB and SLMB---and thus for full subsidy Part D LIS Extra Help. Even though DC does not even have a locally-funded State Pharmacy Assistance Program (SPAP), it still felt able to handle the new eligibles’ Medicare premium, deductible and coinsurance costs---for one thing, like most states, it sets its Medicaid provider rates well below the full Medicare rate level. That minimizes, and even partially eliminates, whatever its secondary payer liability might be for QMB patients.

States With Substantial SPAPs Can Offset Much or Even All of Their QMB and SLMB Liberalization Costs

But some states can make such ingenious MSP income and asset eligibility level liberalizations to bring

Part D LIS/Extra Help to many more of their limited income Medicare patients without facing even the small net costs of

paying the state share of the newly-added patients’ Part B premiums, deductibles and coinsurance. This is particularly true

 for the 14 states with substantial State Pharmacy Assistance Programs (SPAPs) with more than minimal benefits—almost

all of which allow higher incomes than Part D full Extra Help does and which also have higher (or even no) asset levels.

See http://www.ncsl.org/programs/health/SPAPCoordination.html  SPAP income limits, as percentages of the FPL, are:

CT 150%+; DE 200%; IL 200%; ME 150%+; MA 188%; MO 150%; NV 225%; NJ 300%+; NY 350%+; PA 175%; RI

 300%+; SC 200%; VT 175%; and WI 225%. See  SPAPs, Part D and Coverage of the Disabled  at www.healthlaw.org .

 

By liberalizing their MSP income and asset limits enough to make most or even all of their current SPAP-covered Medicare patients also eligible now for MSP (and thus for Part D full subsidy LIS/Extra Help too) they’d shift almost all of such patients’ drug costs from the state SPAP budget to the federal Part D budget---likely with enough savings to finance the small added costs of the state matching share of the added eligibles’ Part B premiums and, in many cases, even the QMB eligibles’ Medicare deductibles and coinsurance! The state SPAP would remain liable only for those drugs not covered by individual Part D plan formularies; the 6 drug classes excluded by the Part D law; and any Part D LIS Extra Help $1/$2 and $3/$5 co-pays that more generous states might then choose to defray for such jointly-covered patients.

    

States’ Medicaid Matching Percentages Can Further Reduce State Costs for QMB and SLMB Liberalizations

Surprisingly, only 12 states now have Medicaid matching rates of 50%: So they’d have to pay half—or $44.25—of the monthly Part B premium, plus half of Medicare deductible and coinsurance costs for any new patients they’d cover if they liberalized their SLMB and QMB eligibility rules by significantly raising the income level and/or raising or eliminating the asset level. But by contrast, at least 25 states have matching rates over 60%---so they’d have to pay only 40%  or even less of such a liberalization’s added premium, deductible and coinsurance costs. See Appendix I for states’ matching rates.

States’ Much-Reduced Cost Exposure For Medicare Deductibles and Coinsurance For Patients in Medicare HMOs

Except for the 15% of QMB-only eligibles enrolled in Medicare Advantage (MA) plans (Medicare HMOs and other managed care plans), states are liable for the significant secondary costs (even after excluding outpatient drugs and long term care) of the many remaining fee-for-service QMB eligibles. In theory, and at most, states can be at risk for up to $1,128 yearly just in Part B secondary costs for each such patient at if state payments are made at  full Medicare rates.  CMS itself, at www.cms.hhs.gov --on its Public Affairs pages, in a 9/16/05 news release fact sheet on 2006 Medicare premiums and deductibles--said these Part B-only secondary costs average $100 monthly at full Medicare rates.

But on the other hand--because of MA plans’ richer benefit packages and often-lower cost-sharing-- non-institutionalized MA QMB patients’ remaining non-long term care costs (costs that must otherwise be met by the patient or a secondary payer like full Medicaid) are only $30 yearly for both Part B and Part A!  See “Value of Medicare Advantage to Low Income and Minority Medicare Beneficiaries”, a September, 2005 study by Atherley and Thorpe at http://bcbshealthissues.com and “The Effect of Medicare Advantage Payments on Dually Eligible Medicare Beneficiaries” by Atherley and David in the Health Care Financing Review (Spring, 2005: 26(3); 93-103, available at http://cms.hhs.gov/review .

Fee-For-Service Deductible and Coinsurance Costs at Full Medicare Rates Are Very Low, per CMS Actuary

All this is underlined by the CMS Actuary’s formal FY 2007 budget estimate that all Medicare deductibles and coinsurance for both Part B and Part A amount to $127 monthly in 2006 at Medicare rates for each fee-for-service patient (5/31/06 email from Clare McFarland, CMS Office of the Actuary, to Thomas McCormack of TIICANN).

State Costs Are Even Less Since Most States Pay Deductibles and Coinsurance at Lower Medicaid Rates

But this savings potential doesn’t allow for, and doesn’t calculate-in, current state savings from the two-thirds of state Medicaid programs which now elect to not pay full (or, indeed, often any) Medicare coinsurance by the (possibly disingenuous) stratagem of setting their Medicaid rates well  below Medicare’s payment schedule. See the individual state charts on whether states pay full Medicare rates—or their own, lesser Medicaid rates---for QMB patients’ deductible and coinsurance payment, on pp.27-131 in Variations in State Medicaid Buy-in Practices for Low-Income Medicare Beneficiaries: A 1999 Update, by P. Nemore (the full text is  available by email from sneyazi@kff.org: but the paper’s state-by-state rate data is re-formatted as a single, concise listing in Appendix II below).

These states, in effect, artificially extinguish much, or even all, of patients’, and thus Medicaid’s, secondary-to-Medicare cost-sharing and secondary payment liability. So, where Medicare pays 80%, or $80, of its full allowable charge level for a $100 physician visit---ordinarily leaving the coinsurance of 20%, or $20, to be paid by the patient or a secondary payer like Medicaid—two thirds of the states can and do fix their Medicaid rate at $80 or even less, and then process but often pay nothing at all on such a bill (when they receive it as a provider’s secondary billing), on the grounds that the full Medicaid rate has already been met by Medicare’s $80 payment—which is 80% of Medicare’s full rate, but 100% or more of Medicaid’s artificially-depressed rate. So, through this clever secondary billing/claims processing charade, most states effectively avoid paying much, or often even all, of secondary payments for Medicare deductibles and coinsurance.

Much of the costing discussed above must be detailed state-by-state depending primarily on each state's Medicaid matching percentage, whether it has a substantial SPAP budget and what its payment rates are for Medicare deductibles and coinsurance. While at full Medicare rates states would at most pay $44.25 (50% of the Part B premium) + $63.50 (50% of Part A and Part B deductible and coinsurance costs) for a potential total of $107.75 monthly in added costs---but only in the dozen 50%-match states---in practice these costs would be much, much less for all states because of the factors outlined above, as well as the others listed just below:

1. At least 14 states have substantial SPAPs whose costs would be reduced by making more patients eligible for Part D Extra Help. See SPAPs, Part D and Coverage of the Disabled at www.healthlaw.org .

2. Most states have federal Medicaid matching rates much higher than 50%---which means that, even if they don't have SPAPs, their added costs would be much less than $107.75 monthly for each added patient.

3. Two thirds of states (from Nemore’s 1999 survey, as listed In Appendix II)  pay their QMB patients’ Medicare deductibles and coinsurance at their own Medicaid rates---which are  much less than Medicare's. Although it’s not known precisely and exactly how much less is paid in each and every state, Table 3-2 (p.3-5) and Table 3-7 (p.3-12) in a 2003 survey of 9 states (State Payments Limits, by Haber, et. al. at www.rti.org ) offer tabulations of the percentages of the full Medicare rate schedule that 9 states pay, respectively, for the Part B and Part A segments of their QMB patients' Medicare deductibles and coinsurance. These lesser state rates are calculated by the RTI study’s authors to be only 60% to 80% of what Medicare would have paid. On page 3-13 note the conclusory observation that "...states generally paid 60-80% of ..[their QMB patients' Medicare] cost-sharing amounts..." ---but also note that Table 3-7 on page 3-12 reports Colorado's paying only 25.3% !--- and that "..the full Medicare.. [Part A].. deductible.. [$952 per “spell of illness” in 2006]..accounts for the majority of cost-sharing for..hospital admissions.." 

4. Moreover, the 1999 Nemore survey occurred less than 2 years after Congress repealed a prior statutory requirement that state QMB programs must pay secondary costs at the full Medicare rates (and thus before interested states had much time to start using the newly-available option to pay at their own lower Medicaid rates instead). And, while states enjoyed generous tax revenues and budget surpluses in 1999 during the late 1990s’ economic boom, the 2001-04 recession caused almost all to face severe budget shortages: This, in turn, surely has since caused many more of them to drop the use of the full Medicare rate schedule and switch to their own lower Medicaid rates---or even cut their Medicaid rates further.  

5. The same RTI State Payments Limits study (at www.rti.org ), gathered unpublished, anecdotal and un-tabulated data which found that a very large minority of non-hospital Medicare providers (e.g., doctors, etc.) just write off QMB patients' balances and don't even bother to bill Medicaid at all, either because they aren't enrolled Medicaid providers or because the Medicaid red tape and low rates just aren't worth the hassle. This observation---while it is mentioned in passing once or twice in the report text---was made quite emphatically in a conversation with co-author Susan Haber shaber@rti.org (781) 434-1721. This apparently widespread phenomenon would further reduce the cost exposure of states that liberalize their MSP levels.

6. A large minority (as frequently announced by CMS itself in its statistical reporting on creditable, Part D-equivalent coverage since January, 2006) of as many as 30% of Medicare patients--even of those relatively "poor" ones just above the current QMB and SLMB income and asset levels---have private health coverage as retirees, retiree-dependents or survivors from their own or their spouses' former employers or are covered as dependents on their still-employed spouses' job health plans. Moreover, a survey published in CMS' own Health Care Financing Review (J. Rubin’s & V. Wilcox-Gok’s “Health Insurance Coverage Among Disabled Medicare Enrollees”, Table 1, p. 31, Vol. 12, No. 4; this issue isn’t available electronically; order copies through http://cms.hhs.gov/review ) found that over 40% of disabled Medicare patients have such private secondary coverage---typically as dependents of working spouses. This private secondary coverage would pay before Medicaid QMB coverage, and likely leave states with no liability at all. 

 7. The Census Bureau and the VA both have well-known, well-documented figures indicating that about 40% of men over age 65 are military veterans---almost all of whom have qualifying service and income and assets low enough for free, or very low co-pay, VA care. Since the universal military draft wasn’t abolished until 1973, many, many males who were young men before then (but who are now over 65), consequently served either as volunteers or draftees. The VA, by law, does not and can not bill Medicaid or Medicare for care it provides to those programs’ eligibles. Many veterans, because of service-connected disabilities, the lack of a “welfare” stigma at the VA, limited incomes and/or low VA cost-sharing (often even lower than Medicaid’s!), choose to get VA medical care and will continue to do so---even if they qualify for liberalized QMB coverage.

8.. The 15% of QMB-only patients who are enrolled in Medicare Advantage plans have remaining, non-long term care annual secondary Medicare deductible and coinsurance costs of only $30 (a mere $2.50 monthly!), further greatly reducing state cost exposure. See the two Medicare Advantage studies cited above.

9. At least 39 of the states finance over 20% of their own AIDS Drug Assistance Program (ADAP) costs---and 20% or more of state ADAP clients are also Medicare-eligibles. See Charts 25 and 26 on pp. 41-42 in the National ADAP Monitoring Report, 2006 at www.kff.org and its data presentations on state ADAP income levels. Because many ADAP clients on Medicare have income and/or assets that now disqualify them for Part D’s full Extra Help, they face Part D premiums and higher cost-sharing, and quickly become stuck-- uncovered --in Part D’s donut hole. Since ADAP income and asset levels are higher than those of full Extra Help, state ADAPs (with state as well as federal funds) must then bear most of their very heavy drug costs. But state QMB/SLMB liberalizations would shift much of these state ADAP costs to Part D, further compensating for states’ cost exposure for added Medicare premium, deductible and coinsurance expenses.

    

TIICANN’s Executive Director, William Arnold, quickly grasped the promising coverage expansion possibilities here and then guided and promoted the researching and preparation of this report. Thanks are also due Patricia Nemore of the Medicare Advocacy Center; Cheryl Parcham of FamiliesUSA; Kim Glaun of the Medicare Rights Center;, Susan Haber of RTI;, Dr. Thomas Rice of UCLA: Jerry Simon of Missouri’s Department  of Social Services: Dick Cauchi, Donna Folkemer and Vic Miller of the NCSL: and Jim Firman, Howard Bedlin and Sara Duda of NCOA for their previous research, insights and advice.  Randy Boyle of the National Health Law Program and Jacqueline Ingber of TIICANN provided vital, last minute emergency first aid in research and editing. Any errors are mine alone. ---TM

Appendix I: Fiscal Year 2007 Federal Medicaid Matching Percentage, By State

(at http://aspe/hhs.gov/health/fmap.htm )

 

AL 68.85

AK 57.58

AZ 66.47

AR 73.37

CA 50

CO 50

CT 50

DE 50

DC 70

FL 58.76

GA 61.97

HI 57.55

ID 70.36

IL 50

IN 62.61

IA 61.98

KS 60.25

KY 69.58

LA 69.69

ME 63.27

MD 50

MA 50

MI 56.38

MN 50

MS 75.89

MO 61.60

MT 69.11

NE 57.93

NV 53.93

NH 50

NJ 50

NM 71.93

NY 50

NC 64.52

ND 64.72

OH 59.66

OK 68.14

OR 61.07

PA 54.39

RI 52.35

SC 69.54

SD 62.92

TN 63.64

TX 60.78

UT 70.14

VT 58.93

VA 50

WA 50.12

WV 72.82

WI 57.47

WY 52.91

 

Appendix II: States’ 1999 Practices for Paying Either the Full Medicare (Title 18) or a Lesser State Medicaid (Title 19) Rate for Their QMB-only Eligibles’ Medicare Deductibles and Coinsurance  (re-listed here from Nemore, 1999)  

AL 19 [64.0%*]

AK 18

AZ 18

AR 18 [62.2%*]

CA 18 [76.2%*]

CO 19 [25.3%*]

CT 19

DE 19

DC 19

FL 19

GA 19

HI 18

ID 18

IL 19

IN 18 [71.6%*]

IA 18

KS 19 [57.8%*]

KY 19

LA 18

ME 18

MD 19

MA 19

MI 19 [59.3%*]

MN 18

MS 19

MO No response

MT 19

NE 19

NV 19

NH 18

NJ 19 [68.8%*]

NM 19

NY 18

NC 19

ND 18

OH 19

OK 19

OR 19

PA 19

RI 19

SC 18

SD 19

TN 18

TX 19

UT 19

VT No response

VA 19

WA 19

WV 19

WI 19 [84.9%*]

WY 18

 

  • * This is the percentage of the full Medicare rate schedule which these 9 states (the only ones so far known to have been individually compiled or tabulated by researchers!) paid in 2002-03 for inpatient hospital deductibles and coinsurance billings under Part A for their QMB patients. From Table 3-7 (p.3-12) in State Payments Limits (2003) by Haber et. al. at www.rti.org .