Transcript Medicaid and the Uninsured - State Coverage Initiatives

Figure 0
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Medicare Modernization Act of 2003:
Implications for Low-Income People and
State Medicaid Programs
Jocelyn Guyer
Kaiser Commission on Medicaid and the Uninsured
October 7, 2004
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 1
Implications for People on Medicare and
Medicaid (“Dual Eligibles”)
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 2
Characteristics of Dual Enrollees
Compared to Other Medicare Beneficiaries, 2000
Fair/Poor Health
Status*
52%
24%
Income Below
$10,000
Reside in LTC
Facility
71%
13%
22%
2%
24%
Diabetes
17%
14%
11%
Stroke
Alzheimer's
Disease
Dual Enrollees (Medicare
Beneficiaries with Medicaid)
Other Medicare Beneficiaries
6%
3%
*Community-residing individuals only.
SOURCE: KCMU estimates based on analysis of MCBS Cost & Use 2000.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 3
Treatment of Dual Eligibles in the Medicare Law
• As of January 1, 2006, full benefit dual eligibles no longer are
eligible for Medicaid-financed prescription drug coverage
– Loss of Medicaid coverage applies even if a dual eligible is not enrolled in
a Part D plan
• Instead, full benefit dual eligibles are expected to enroll in
subsidized Part D coverage
– Full benefit dual eligibles will be autoenrolled in a Part D plan if necessary;
proposed MMA regulations leave unclear who will handle
– All dual eligibles are deemed automatically eligible for a Part D low-income
subsidy
• Dual eligibles will receive extensive Part D subsidies, but gaps
in their Rx coverage may remain
– Risk of no coverage during a transitional period
– The drugs they need may not be covered by their Part D plan, particularly
because full subsidies are limited to average or low-cost plans
– Some co-payment obligations
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 4
Key Dates Related to Enrollment of Full Benefit
Dual Eligibles in Part D Plans
MMA regulations call for dual eligibles to begin to be autoenrolled in Part D
plans if they have not signed up on their own (date likely to change).
Federal Medicaid matching funds no longer available for
prescription drugs for full benefit dual eligibles.
January
1
2004
2006
2005
July
1
October
15
May
15
November
15
States must begin accepting applications for
the new low-income subsidy program
Deadline for HHS to provide information on the
Part D plans available to Medicare beneficiaries.
First day on which dual eligibles and
others can sign up for a Part D plan.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 5
Challenges in Helping Dual Eligibles Make the
Transition to Medicare Part D
• To avoid coverage gaps, 6.4 million dual eligibles will need to
be signed up for Part D plans in 6 weeks
• Dual eligibles unlikely to voluntarily enroll in the absence of
extensive counseling and additional time to make a choice
• Autoenrollment will require a number of steps
– Identify dual eligibles who need to be signed up for Part D plans
– Identify plans for which they are eligible
– Assign dual eligibles to plans and tell plans which dual eligibles they are
supposed to cover
• Once autoenrolled in a plan, dual eligibles still will need help
before they can use their Part D coverage
– Provide dual eligibles with enrollment cards
– Educate them about their Part D plans’ rules for filling prescriptions
– Switch their drugs to match those on their plans’ formularies (or try to
secure exceptions)
– Advise them of option to switch Part D plans
• Dual eligibles in nursing homes will require special assistance
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 6
Distribution of Medicare Beneficiaries in Long-Term Care
Facilities, by Insurance Status, 2000
Medicare risk
HMO
6.5%
Medicaid
(dual
eligibles)
59.9%
Private
insurance
19.9%
Other
0.3%
Non-dual
eligibles
40%
Medicare FFS
13.4%
Total = 2.3 million Medicare beneficiaries
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
SOURCE: Medicare Current Beneficiary Survey Access to Care File, 2000.
Figure 7
Implications for Other Low-Income Individuals
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 8
The New Part D Low-Income
Subsidy Program
• Establishes a Medicare Part D low-income subsidy
program
– Eligibility is extended to individuals with income below 150 percent of
poverty who meet an asset test
– Subsidies are particularly generous for those below 135% of poverty
who meet an asset test
• To secure subsidized Part D coverage, beneficiaries
must complete a two-part process:
– Sign up for a Part D plan
– Enroll in the low-income subsidy program
• Special eligibility, enrollment, and cost-sharing rules
apply to dual eligibles
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 9
Eligibility for the Low-Income Drug Subsidy
Among Part B Medicare Beneficiaries,
Calendar Year 2006
Eligible for
Part D subsidy
(14.2 million)
36%
59%
5%
Ineligible due to
income > 150%
poverty
(23.8 million)
Income <150%
poverty, but ineligible
due to assets
(1.8 million)
Medicare Part B Beneficiaries = 39.9 Million
SOURCE: KCMU analysis of CBO’s cost estimate of the Medicare prescription
drug benefit, July 2004. Due to rounding, percentages may not total 100% and
data may not sum to 39.9 million.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 10
Characteristics of Subsidy-Eligible
Individuals, Calendar Year 2006
Non-duals Eligible
for Partial Subsidy
(1.9 million)
13%
45%
Non-duals
Eligible for
Full Subsidy
(6.0 million)
Eligible for Part
D subsidy as a
dual eligible
(6.4 million)
42%
Subsidy Eligible Individuals = 14.2 Million
SOURCE: KCMU analysis of CBO’s cost estimate of the Medicare
prescription drug benefit, July 2004. Due to rounding, percentages may not
total 100% and data may not sum to 39.9 million.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 11
The New Part D Low-Income Subsidy Program:
Application and Enrollment Procedures
• People can apply for Part D subsidies at Social Security
Administration offices or State Medicaid agencies
– Treatment may vary depending on site of application (e.g., verification
requirements, appeals rights, redetermination procedures, “backdoor” access
to subsidies via Medicaid eligibility could depend on application site)
• States must screen applicants for Medicaid eligibility under
Medicare Savings Programs and, if eligible, offer them enrollment
• Some details of enrollment process beginning to emerge in HHS’s
proposed MMA regulations
–
–
–
–
States required to begin accepting applications on July 1, 2005
All QMBs, SLMBs, and QI-1s will be eligible for the full low-income subsidy
Asset test will consider only “liquid assets” and non-primary residences
For people who apply at SSA, automated data matches will be used to verify
income and assets as much as possible
• SSA expected to issue proposed regulations shortly
– States likely to be encouraged to forward low-income subsidy applications to
SSA for processing, creating a system under which SSA “owns” the
K A I S E R C O M M I S S I O N O
applications
N
Medicaid and the Uninsured
Figure 12
Implications for State Medicaid
Programs
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 13
Key Elements of the Medicare Law with
Implications for State Medicaid Budgets
• Elimination of Medicaid drug coverage for “dual eligibles”
– Will states end up supplementing Part D coverage for dual eligibles?
– How will “losing” Rx spending on dual eligibles affect Rx cost
containment efforts for other Medicaid populations?
• The “clawback” -- mandatory payments to the federal government
to help finance the Medicare drug benefit for dual eligibles
• Responsibilities for administering Medicare’s low-income subsidy
program
• The “screen and offer” requirement – requirement to screen
people who apply for a Part D subsidy for Medicaid and, if eligible,
offer them coverage
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 14
Spending on Dual Eligibles as a Share of
Medicaid Spending on Benefits, FY2002
Non-Rx Spending
for Dual Eligibles
($82.7 Billion)
36%
59%
42%
Spending on
Other Groups
($136.7 Billion)
6%
Rx Spending
for Dual Eligibles
($13.4 Billion)
6%
Total Spending on Benefits = $232.8 Billion
Note: Due to rounding, percentages do not total 100%.
SOURCE: Urban Institute estimates prepared for KCMU based on an analysis
of 2000 MSIS data applied to CMS-64 FY2002 data.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 15
Total Medicaid Spending on
Prescription Drugs, 2002
Drug
Spending
48%
on Dual ($11.3 Billion)
Eligibles
52%
($12.1 Billion)
Drug
Spending
on Other
Groups
Total Spending = $23.4 Billion
SOURCE: Urban Institute estimates prepared for KCMU based on MSIS
data for FFY2000 and Form 64 FFY2002 data. Data reflect expenditures
on outpatient prescription drugs only and are net of Medicaid rebates.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 16
Estimated Impact of the Medicare Law (H.R. 1)
on State Medicaid Spending, FY2004-2013
Medicaid Savings
Retained by States
($17.2 billion)
Additional Spending
for New Enrollment of
15%
Medicaid Beneficiaries
Due to H.R. 1
5%
($5.8 billion)
3%
New Administrative
Costs for Medicare’s
Low-Income
Subsidy Program
($3.1 billion)
77%
Mandatory State
Payments to the
Federal Government
(“Clawback”)
($88.5 billion)
Reduction in State Spending Due to Eliminating the Medicaid Drug
Benefit for Dual Eligibles = $114.6 billion
K A I S E R C O M M I S S I O N O N
Note: Estimates do not include the effects of Medicaid provisions in Title X of H.R. 1.
SOURCE: KCMU analysis of Congressional Budget Office estimates, 2003.
Medicaid and the Uninsured
Figure 17
Estimated Impact of the MMA on State
Medicaid Spending, Year-by-Year
In Billions
Medicaid Prescription
Drug Savings
$20.9
$18.8
New State
Medicaid Costs
Due to MMA
$16.9
$15.3
$13.8
$12.4
$11.2
$9.9
$5.2
$10.9
$12.9
$11.8
$13.9
$16.4
$15.0
$6.2
$0.0 $0.1 $0.0 $0.2
2004
2005
2006
2007
2008
2009
2010
Note: Estimates do not include the effects of Medicaid provisions in Title X of MMA.
SOURCE: KCMU analysis of Congressional Budget Office estimates, 2003.
2011
2012
2013
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 18
Conclusion
•
Key Implications for dual eligibles
–
–
–
•
Key implications for other low-income individuals
–
–
•
Risk dual eligibles may end up without any Rx coverage during transition
Once enrolled, some may have problems getting drugs or meeting copayments
Complexities of the MMA are likely to be particularly difficult for dual eligibles
to understand and navigate
Millions of people have a new opportunity to secure assistance with Rx costs
Realizing the potential of the MMA will require aggressive outreach and
enrollment efforts and overcoming key challenges
•
Two-step enrollment process
•
Need for SSA and states to closely coordinate enrollment efforts
Key Implications for states
–
–
–
Less fiscal relief in Medicaid than expected; some states could possibly fare
worse as a result of MMA
Some states may have to fill in the gaps in coverage created by transition of
Rx coverage for dual eligibles to Medicare Part D
States have major responsibilities for administering Medicare’s low-income
subsidy program and, perhaps, autoenrolling dual eligibles
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 19
Additional Background Materials
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 20
Overview of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003
• In 2004 and 2005, beneficiaries have access to:
– Medicare-approved drug discount cards
– $600 annual drug subsidy if low-income (<$12,569/single) and no Medicaid
drug coverage
• Beginning January 1, 2006, beneficiaries have choice of:
– Traditional, fee-for-service Medicare, with access to private drug-only plans
(PDPs)
– Medicare Advantage (MA), integrated plans that cover Medicare benefits
and drugs
• Regional plans (PPOs)
• Local area plans (HMOs)
– Low-income beneficiaries may be eligible for subsidies to help pay
premiums and cost-sharing under Medicare drug plans
– Medicaid no longer provides drug coverage, affecting 6 million dual
eligibles
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 21
Medicare Beneficiaries’ Out-of-Pocket Drug
Spending Under New Medicare Rx Benefit, 2006
Beneficiary
Out-of-Pocket
Spending
Catastrophic
Coverage
5%
Medicare Pays 95%
$5,100
(equivalent to $3,600 in
out-of-pocket spending)
No
Coverage
$2850 Gap
$2,250
Partial
Coverage
up to Limit
25%
Medicare Pays 75%
$250
Deductible
New Medicare Legislation
+ ~$420 in annual premiums
Note: Benefit levels are indexed to growth in per capita expenditures for covered Part D drugs.
As a result, the Part D deductible is projected to increase from $250 in 2006 to $445 in 2013; the
catastrophic threshold is projected to increase from $5,100 in 2006 to $9,066 in 2013.
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 22
Formula for Determining Monthly State
Clawback Payments
Monthly
Per Capita
State
State = 1/12 X Expenditures X Match
Payment
(PCE)
(S%)
X
Dual
Eligibles
(DE)
Per capita
State share of
Number of
Medicaid
Medicaid
dual eligibles
expenditures
expenditures
enrolled in a
on prescription
Medicare Part
drugs covered
D plan in the
under Part D for
month for
dual eligibles
which
during 2003,
payment is
trended forward
made
Phase-Down
X Percentage
(PD%)
Phase-down
percentage for
the year
specified in the
statute (e.g.,
90% in 2006)
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
Figure 23
Income as a Percentage of the Federal
Poverty Line for an Individual and
Couple, 2004
Family Size
Percentage of the Federal Poverty Line
100% FPL
135% FPL
150% FPL
Individual
$9,310
$12,569
$13,965
Couple
$12,490
$16,862
$18,735
K A I S E R C O M M I S S I O N O N
Medicaid and the Uninsured
SOURCE: Federal Register.