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SCHIP-Medicare-Medicaid Extension Package for FY '08 Funding

December 20, 2007

On December 19, the House cleared a scaled-back version of legislation staving off looming reductions to Medicare reimbursement rates for physicians and selected hospitals.  The vote was 411-3.  The package (S 2499) will prevent a 10.1% cut in reimbursement rates for the first 6 months of 2008, after which the cut will go into effect if Congress fails to act.  Added to this legislation were a number of extensions to current law including the State Childrens Health Insurance Program (SCHIP) through March 31, 2009.

Included in S 2499 is a 6 month moratorium (through June 30, 2008) on regulations proposed by the Centers for Medicare and Medicaid Services (CMS) that would severely limit the ability of state to utilize the Medicaid Rehabilitation Option to fund critical mental illness treatment and supportive services.  NAMI has fought all year for this moratorium.  This will provide additional time for Congress to clarify the appropriate use of the Rehabilitation Option.   Click here to view additional information on the proposed Medicaid Rehabilitation Option rules.

What was excluded from the SCHIP-Medicare-Medicaid package?

As the Senate Finance Committee worked over the past few months to develop this legislation, NAMI fought hard for a range of proposals that would make incremental improvements in the Medicare program, including the Part D prescription drug benefit.  Most of these improvement were part of legislation (known as the “CHAMP Act” HR 3162) that cleared the House last summer.  Unfortunately, all of these proposals fell out of the Senate bill and must be revisited by Congress next year.  Among these are:

  • Putting current “subregulatory” guidance for broad coverage of critical medications into the Part D law –This would make permanent existing guidance to drug plans that require inclusion of “all or substantially all” of the medications in 6 therapeutic classes including medications to treat mental illnesses,
  • Allowing drug plans to cover benzodiazepines in clinically appropriate circumstances such as treatment for acute mania in bipolar disorder and severe anxiety disorders, and
  • Expanding eligibility for the Low-Income Subsidy (LIS) by raising the limit on assets a beneficiary may hold and still be eligible for the subsidy (which thereby exempts them from the “doughnut hole” coverage gap), and
  • Allowing beneficiaries to switch drug plans in the middle of the year if a drug is removed from a plan’s formulary during the middle of a plan year.

In addition, the House CHAMP bill included a long awaited change to the current discriminatory 50% cost sharing requirement for outpatient mental health services under Part B.  The change would require parity for outpatient mental health cost sharing, moving it to the same level as all other medical outpatient services at 20%.

What was included in the SCHIP-Medicare-Medicaid package?

It is important to note that this slimmed down health care package was shaped largely by objections from the Bush Administration to the offsetting cuts that were proposed by congressional Democrats.  These “offsets” were required under “pay-go” rules adopted by Congress in January that require any increase in mandatory spending such as Medicare and Medicaid be accompanied by an corresponding reduction in that offsets the spending resulting in “budget neutrality.”  When the Bush Administration rejected the “offsets” proposed by Congress, the package had to be whittled down and shortened to as little as 6 months.  As a result, only the following provisions survived:

  • Extension of the SCHIP program through March 31, 2009 with an additional $700 million made available to prevent states from experiencing shortfalls in funding,
  • Extension of the qualifying individual (QI) program through June 30, 2008 – This program provides assistance through Medicaid to pay Medicare premiums for low-income beneficiaries
  • Extension of the Transitional Medical Assistance (TMA) program through June 30, 2008 – This program helps low-income individuals transition from welfare-to-work by maintaining health coverage for their children,
  • Replacement of the 10.1% scheduled reduction in the Medicare physician fee schedule for 6 months, with .5% increase, and
  • Extension of the authority for Medicare Advantage Special Needs Plans (SNPs) through December 31, 2009 – These Medicare plans are targeted to individuals dually eligible for Medicare and Medicaid or diagnosed with a chronic illness or disability (including serious mental illness).