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 )
