December 19, 2005
Details on Increased Cost Sharing for Medicaid Beneficiaries
Note: This page provides background information to NAMI E-News, 12/19/2005.
The final agreement on S 1932 creates certain rules and protections that state
Medicaid programs must provide for when developing higher cost sharing requirements.
They also distinguish between higher premiums paid by low-income beneficiaries,
and specific services under Medicaid such as "non-preferred" drugs
and non-emergency services delivered in emergency rooms. The legislation also
sets up protections for beneficiaries below 100% of poverty (about $11,000 for
an individual, $15,000 for couples).
In most states, the upper limit for Medicaid eligibility is below 100% of poverty,
especially in states that do not provide supplement payments to SSI. However,
in states that do supplement SSI (including those that offer such payments for
individuals in group homes and other congregate settings) beneficiaries can
be above 100% of poverty. In most states that do supplement SSI, it is done
to offset room and board costs in a group or adult care home and the state supplement
is not discretionary income to the individual beneficiary. Likewise, individuals
eligible for Medicaid through "spend down" (those who reach eligibility
standards through high medical costs) are at great risk of being above 100%
-- and therefore subject to higher cost sharing.
Most importantly, this legislation changes current Medicaid rules that prevent
a provider (physician, clinic or pharmacy) from withholding a service when a
beneficiary can not meet their cost sharing obligation. This legislation repeals
that requirement and allows providers (including pharmacies) to deny services
from beneficiaries who cannot make co-payments. Likewise, states would be able
terminate Medicaid eligibility for beneficiaries who fail to payment premiums.
Finally, another important qualification is that premiums and cost sharing would
be adjusted in the future by medical inflation -- a factor much higher than
the general cost of living adjustments made annually to SSI benefits.
Premiums and General Cost Sharing
For individuals below 100% of poverty, states cannot impose higher premiums
and can charge only "nominal" co-payments (currently defined as $3).
For individuals between 100% and 150% of poverty, higher premiums cannot be
charged, but cost sharing can be increased to as much as 10% of the cost of
an item or service. Above 150% of poverty, premiums and co-payments can be increased
to 20% of the cost of an item of service. All increased premiums and cost sharing
are limited to 5% of the individual's annual income (assessed either monthly
or quarterly).
The legislation maintains a list of exempted categories from higher premiums
and cost sharing that includes:
- Mandatory children (children with disabilities on SSI),
- Pregnant women,
- Institutionalized individuals (including individuals in nursing homes and
psychiatric hospitals),
- Individuals in hospice,
- Breast cancer patients,
- Preventive services for children, and
- Most emergency room services.
It is important to note that these exempt categories do NOT include mandatory
beneficiaries eligible for SSI, including individuals with severe mental illness.
Cost for "Non-Preferred" Drugs
The legislation establishes a new cost sharing structure for state Medicaid
programs with respect to prescription drugs. This would specifically allow higher
cost sharing for medications that are deemed by the state to be "non-preferred"
-- drugs that are not on a state's Preferred Drug List (PDL). NAMI is concerned
that medications to treat severe mental illness will be extremely vulnerable
to being designated by states as "non-preferred" and thus subject
to higher cost sharing. A number of states have moved in recent years to limit
anti-psychotic and anti-depressant medications on their PDL and more can be
expected to in the wake of this provision.
For individuals below 150% of poverty, only nominal co-payments could be charged,
adjusted by medical inflation. Individuals above 150% of poverty could be charged
as much as 20% of the cost of a medication. Further, the exempt groups listed
above could be charged higher cost sharing on "non-preferred" drugs.
The provision does include explicit waiver authority allowing a physician to
override the higher "non-preferred" co-payment. This would require
states to allow "non-preferred" medications to be available on the
same terms a "preferred" drug if the prescribing physician determines
that the drug on the state's preferred list would not as effective for an individual
or would have adverse effects on the individual. Further, states would be allowed
to exclude specific medications or classes of medications from their status
as "non-preferred."
Non-Emergency Services in Emergency Rooms
This provision -- originally in the House bill -- allows states to impose higher
cost sharing for individuals who use emergency rooms for routine care. The provision
is intended to allow states to clamp down on high cost emergency care that would
more efficiently be provided in physician offices and clinics. NAMI is concerned
that states would be allowed to impose these higher cost sharing requirements
on individuals with severe mental illness who present in emergency rooms with
suicidal ideation who may not be experiencing a "medical emergency."
This is especially the case for individuals who do not end up being admitted
to an acute care unit in the hospital.
For non-emergency care delivered in an emergency room, states would be able
assess a co-payment equal to twice the nominal co-payment for individuals below
100% of poverty. The exempt groups listed above could be required to pay a nominal
co-payment. Further, for individuals above 100% of poverty, there appears to
be no limit on cost sharing. As with the other new cost sharing requirements,
this would be subject to 5% of annual income.
Back to E-News, 12/19/2005
