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.