Medicaid Wrap-Around Drug Benefit for Dual Eligibles
In the Conference Committee on the Medicare Prescription Drug Legislation, House Conferees are pushing provisions that would deny dual eligibles access to Medicaid wraparound benefits that would provide access to medications not on the Medicare formualry, as well as provide assistance with cost-sharing requirements under the new Medicare drug benefit. NAMI advocates are urged to contact key conferees to support the continuation of Medicaid wraparound benefits because they are critically important for low-income beneficiaries.
House Republican Medicare conferees are pushing for a fundamental change to the Medicaid program and the structure of how Medicare and Medicaid currently work together.
Under current law, when a benefit is covered by both Medicare and Medicaid, Medicare serves as the primary benefit, and Medicaid wraps around that coverage. For example, Medicaid fills in the gaps in the Medicare benefit or pays for cost-sharing associated with the benefit. Thus, Medicaid would continue to play a secondary role if a Medicare drug benefit is enacted. Whatever the underlying Medicare drug benefit and low-income subsidies do not cover, Medicaid would fill in any gaps (to the extent they are covered under Medicaid’s drug benefit but not under Medicare) to ensure that dual eligibles get the full scope of the Medicaid drug benefit available to all beneficiaries.
The House Republican Medicare conferees are pushing to eliminate Medicaid’s role as a secondary payer whereby Medicaid "wraps around" the Medicare drug benefit. States would be prohibited from serving as a secondary payer, except for some limited wrap-around coverage for over-the-counter drugs like aspirin.
Talking Points for Advocates:
Just like the exclusion of dual eligibles would have violated the universality of the Medicare benefit, eliminating the Medicaid wrap-around would violate the principle that every Medicaid beneficiary is entitled to the full scope of a covered Medicaid benefit. Under the principle of comparability, the full scope of every benefit made available by the state to one group of beneficiaries must be provided to every other group (the medically needy are an exception to this rule). Eliminating the wrap violates this key provision of the Medicaid statute, and takes away a Medicaid benefit (in this case, drug coverage) from a Medicaid beneficiary just because they are also eligible for Medicare.
Many dual eligible beneficiaries would be made worse off. A number of states have Medicaid drug benefits that are more generous than those provided under the Medicare drug benefit (even with the low-income subsidies) now being considered by the conferees. Continuing current law, where states must wrap-around the Medicare benefit to ensure that beneficiaries are receiving the full extent of the Medicaid drug benefit (that is, if the Medicaid benefit is more generous), ensures that no beneficiary now receiving drug coverage through Medicaid would be worse off.
Eliminating the wrap would mean that many dual eligible beneficiaries would end up paying higher cost-sharing. For example, under the new Medicare drug benefit, a medically needy person with Alzheimers in a nursing home who technically has income below 150% but above the 135% low-income subsidy threshold would have to pay 15% cost-sharing under the 135% to 150% subsidy category. Yet, under Medicaid, nursing home residents are exempt from cost-sharing. That is because their income really is irrelevant, since nearly all income they receive goes to the nursing home. Not allowing Medicaid to supplement the Medicare drug benefit for dual eligibles would leave a prohibitive cost-sharing burden for that senior.
Eliminating the wrap would also mean that beneficiaries may end up losing access to prescription drugs they need. For example, currently, a dual eligible may enroll in a Medicare drug plan that uses a formulary that does not include a drug needed by the individual to treat their chronic illness. If the dual eligible is denied coverage of the drug under Medicare, but the drug is covered by Medicaid, the individual will still be able to get that drug covered. Taking away Medicaid’s wrap-around role could leave that beneficiary unable to access the drugs they need.
Dual eligibles are generally the sickest and most vulnerable seniors and people with disabilities on Medicare who disproportionately need drug coverage. Undermining the current structure where Medicare serves as the primary payer and Medicaid provides wrap-around coverage as a secondary payer would substantially undermine the ability of these seniors and people with disabilities to meet not only their prescription drug needs but also all other medical needs. This provision could serve as a terrible precedent for how all new Medicare benefits are treated and/or how the entire structure of the two programs should be fundamentally changed.
Advocates are strongly encouraged to contact their House Member and Senators to urge them to reach out to leaders of the House/Senate Medicare Conference Committee and express opposition to the elimination of Medicaid wrap-around benefits. Key members of the Conference Committee include the following:
Click here to send a letter to your Senator or Representative.
Or you can reach Senators and Representatives by calling the Capitol Switchboard toll free at 1-800-839-5276 or at 202-224-3121.