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Retiree Health Trends and Implications of Possible Medicare Reforms
Prepared by: Hewitt Associates LLC
Prepared for: Kaiser Medicare Policy Project
September 1997
Preparation of this report was supported by The Henry J. Kaiser Family Foundation Grant Number 96-1710B. The study consists of a review and analysis of recent trends in the provision of employer-sponsored health benefits to retirees, as well as an assessment of potential changes to employer-sponsored retiree health plans in the future, including the effects of certain proposed changes to Medicare. The views expressed in this paper are solely the responsibility of the authors and do not necessarily represent those of The Henry J. Kaiser Family Foundation.
Acknowledgments
This report was prepared by Frank B. McArdle, Ph.D., and Dale H. Yamamoto, F.S.A., of Hewitt Associates, a global management consulting firm specializing in human resource solutions. Saline Leckman prepared the tables allowing for a comparison of trends between 1991 and 1996. Libby Terry and Nancy Newman collaborated on many aspects of this report.
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Contents
Retiree Health Benefits Play an Important Role
Employer-sponsored retiree health benefits are a source of valuable coverage to individuals, both through the provision of coverage to early retirees before they become eligible for Medicare and as a supplement to Medicare for retirees age 65 and over. More than a third (approximately 12 million) of Medicare aged and disabled beneficiaries have employer-sponsored coverage.
In 1996, most large employers (1,000 or more employees) provided some form of retiree health benefits, of which the vast majority provided coverage both before and after age 65. However, because of rising health care costs and changes in accounting rules, and after years of expanding coverage and benefits, the prevalence of employers offering such coverage has been declining since the early 1990s; eligibility has been tightened; and more of the costs have been shared with retirees.
In addition, because Medicare pays a large portion of the costs for post-65 retirees, certain proposed changes to Medicare could potentially accelerate the decline in retiree health coverage by shifting financial liability to employers and to retirees.
The purpose of this study is twofold:
Key Trends
Part I of this report analyzes key trends in retiree health plans for a constant sample1 of large companies in the Hewitt database, finding that between 1991 and 1996, the vast majority of large employers continued to provide retiree health benefits, but there were significant changes in coverage, eligibility rules, and beneficiary contribution requirements. (Figure 1 summarizes selected key findings with respect to coverage of retirees.)
Availability of coverage declined for retirees ages 65 and over
More retirees charged premiums
Eligibility for postretirement medical coverage tightened through higher age and service requirements
Financial caps placed on future retiree health obligations
More employers encourage use of managed care for retirees
Implications of Medicare Reforms
Changing our focus from existing trends to possible future changes in retiree health plans, Part II of this report considers another potential wave of changes that might result from three significant Medicare reform proposals.
Option #1: Proposed increase in the Medicare age of eligibility
During the recent Medicare reform debate in connection with the Balanced Budget Act of 1997, the Senate included a provision that would have gradually raised the Medicare age of eligibility from 65 to 67, in tandem with the already scheduled increase in the Social Security eligibility age. Although dropped from the final bill, this issue will likely be revisited, and if enacted, could have a significant impact on retiree health plans. A few examples of the impact of raising the eligibility age include:
Option #2: Changes in Medicare payments to Medicare HMOs
With employers increasingly moving toward Medicare managed care to keep costs down and provide comprehensive coverage to retirees, the favorable financial impact of that strategy could be significantly affected by changes in the way Medicare pays health plans in the future.
The Balanced Budget Act of 1997 makes significant changes in payments to Medicare managed care plans, in part to increase payment rates in rural areas but also to reduce future Medicare spending increases. Employers will soon begin the process of assessing what the specific financial impact of these changes may be. The revised payment formulas may significantly alter the geography of Medicare managed care plan offerings to retirees, as well.
Smaller payment increases in certain areas of the country as a result of the 1997 legislation could potentially make managed care plans less attractive to employers and to retirees in those areas if HMO benefits are reduced or premiums rise. Alternatively, payment and other policies that support the expansion of Medicare managed care may help to stabilize retiree health benefit coverage by helping to manage employer costs over the long term.
Option #3: Proposed shift to a defined contribution program
Another option for reforming Medicare, supported by some experts in the health care community, is to shift away from having Medicare pay the cost of each beneficiary’s care, e.g., a defined benefit approach, toward a defined contribution approach in which Medicare would pay a fixed sum for each beneficiary, who would then use that sum, e.g., through a voucher-like mechanism, to select coverage from competing health plans. In fact, the Balanced Budget Act of 1997 creates a private fee-for-service option under Medicare+Choice. The conferees note that this private fee-for-service option “represents the first defined contribution plan in which beneficiaries may enroll in the history of the [Medicare] program.”4
Broad-based use of a defined contribution approach, while empowering retirees to choose their own health plan, also shifts financial risk to employers sponsoring retiree health plans and to retirees. In addition, that cost shift could grow over time if the defined contribution rate increases yet fails to keep pace with medical inflation. This is particularly worrisome to employers because Medicare coverage is already less generous than what large employers typically offer active employees. Comparing the plan value of Medicare benefits to those of 250 large employers participating in the 1996 Hewitt Health Value InitiativeTM database, 82 percent of the indemnity plans offered to active employees provide higher benefit levels than Medicare.
A broad-based defined contribution scheme for Medicare could also create administrative complexities for employers, in terms of the difficulty of coordinating the retiree plan with the specific Medicare health plans retirees choose, and determining an appropriate price for them.
The combination of financial and administrative impacts could thus lead employers to reassess the manner and the extent of coverage they offer to future retirees.
Summary
Retiree health benefits remain important to employees and retirees, even though the prevalence of such coverage has declined, eligibility has tightened, and more cost sharing is required of retirees. Potentially the biggest source of profound changes to employer-sponsored retiree health programs in the future would come from proposals to restructure the Medicare program. Depending on their specific nature, such changes could either create a safety net beneath employer-sponsored coverage for retirees or create additional incentives for employers to cut back. Policymakers focusing on potential reforms of Medicare would be well advised to take a more integrated look at the interactions between Medicare coverage and the employer-sponsored retiree health coverage on which millions of retirees still depend.
About the Hewitt Associates Database
Hewitt Associates has been tracking the salaried employee benefit provisions of major employers since 1972 through annual updates to its database of companies. The 1996 Hewitt database contains plan design information on 1,050 major employers, including 62 percent of Fortune 500 companies. Analyses of trends based on large employers (e.g., those with usually at least 1,000 employees) provides a reliable indication of the main sponsors of employer-provided coverage for retirees, because smaller firms are far less likely to provide such coverage. Ninety percent of the Hewitt database consists of companies employing 1,000 or more employees; 57 percent of the database consists of companies with 5,000 or more employees, representing roughly 25 percent of all public and private companies in the United States of that size.
Retiree Health Trends And Implications Of Possible Medicare Reforms:Press Release Fact SheetReport Part One Part Two Part Three Part Four Part Five Part Six Part Seven Part Eight
Retiree Health Trends And Implications Of Possible Medicare Reforms
September 1997
Approximately 12 million of Medicare’s 39 million beneficiaries receive employer-sponsored retiree health benefits as a supplement to their Medicare coverage. In addition, millions of retired workers under age 65 rely on retiree health benefits as their primary source of health insurance coverage. While employer-sponsored health insurance is an important source of coverage for current retirees, health benefits for future retirees are uncertain.
Retiree Health Benefits Decline, 1991-1996
A declining share of large employers offered health benefits to retirees in 1996 compared to 1991, and an increasing share implemented reforms to limit their financial liability for retiree coverage (Figure 1), based on an analysis of a constant sample of about 600 large employers (with 1,000+ employees) conducted by Hewitt Associates LLC.
Availability of retiree coverage has declined:
Based on a constant sample of large employers, the share of employers offering retiree benefits to retirees age 65 and over declined from 92 percent in 1991 to 87 percent in 1996. Coverage for pre-65 retirees remained relatively stable. By comparison, the proportion of all large firms offering retiree coverage declined from 80% in 1991 to 71% in 1996, based on the Hewitt database.
Required payment of premiums has increased:
The share of large employers requiring post-65 retirees to pay premiums increased from 72 percent in 1991 to 88 percent in 1996; for pre-65 retirees, the share increased from 85 percent to 95 percent.
Use of financial caps has grown:
Dollar caps on future employer obligations for retiree health costs has emerged as a new feature of retiree benefits. In 1991, virtually no large employers had such caps; by 1996, 39 percent had caps on post-65 retiree coverage and 36 percent had caps on pre-65 coverage.
Other reforms have been implemented:
Between 1991 and 1996, a growing share of large employers tightened eligibility requirements, increased deductibles, raised contributions for dependent coverage, and increased enrollment of retirees in managed care plans.
The trend toward declining retiree benefits in the 1990s is due to a number of factors including: the pressure to control increasing health care costs; new accounting rules (FAS 106) which require companies to report accrued future retiree health benefit liabilities on their current financial statements; and employer concerns about the future financial impact of an aging population.
Medicare Reforms Affect Employer-Sponsored Retiree Coverage
Because retiree health benefits generally supplement Medicare for retirees age 65 and older, changes in the Medicare program are likely to affect health care costs incurred by both employers and retirees. For example, raising Medicare’s eligibility age gradually from 65 to 67 (linking the Medicare and Social Security eligibility age) would increase the actuarial costs for lifetime retiree benefits by 12 percent for large employers with a younger workforce and by 8 percent for employers with an older workforce (Figure 2). When fully implemented at age 67 (no phase-in), this change would increase costs by 16 percent for employers with a younger workforce and by 18 percent for employers with an older workforce. This is because the average per person cost of health coverage for a retiree before Medicare eligibility is about three times the cost of a retiree with Medicare coverage ($4,000 vs. $1,350, respectively) (Figure 3).
Changes in Medicare HMO payments could also impact retiree health costs. Higher Medicare HMO payments in rural areas, as enacted under the Balanced Budget Act of 1997, could encourage the migration of plans to rural areas and allow employers in these areas to move additional retirees into managed care plans. However, reductions in future Medicare payments to HMOs in other areas could make managed care a less attractive option for employers and retirees if HMOs respond to payment changes by offering fewer benefits or charging higher premiums.
More comprehensive Medicare reforms under discussion, such as a shift to a defined contribution program, could also impact employer-sponsored retiree coverage. Under a defined contribution approach, Medicare would pay a fixed sum on behalf of each beneficiary and beneficiaries could apply the amount to the cost of coverage from a variety of Medicare-approved private health plans. If Medicare’s defined contribution rate does not keep pace with medical inflation, additional costs are likely to be shifted to employers, retiree with employer-sponsored coverage, and other beneficiaries.
Issues
Employer-sponsored retiree health plans play an important role in covering retirees both before and after Medicare eligibility. Retirees are generally at an age when health problems tend to increase, annual incomes decline, and coverage for medical expenses becomes more critical. Since 1991, there have been declines in the availability and generosity of retiree health benefits offered by employers. Employers and retirees face significant financial risks from potential changes to the Medicare program because of the strong interaction between employer-sponsored retiree health benefits and the Medicare program.
This fact sheet is based on Retiree Health Trends and Implications of Possible Medicare Reforms, prepared by Hewitt Associates LLC with support from the Kaiser Family Foundation, September 1997. This study analyzed key trends in retiree health plans from 1991 through 1996 using a constant sample of large companies (generally those with at least 1,000 employees) in the Hewitt Associates database. The 1996 Hewitt database contains plan design information for 1,050 major employers. The study also analyzed the potential impact of Medicare reform options on retiree health plans.
Retiree Health Trends And Implications Of Possible Medicare Reforms:Press Release Fact Sheet Report
With the assistance of the First Nations Development Institute, the Henry J. Kaiser Family Foundation commissioned several studies of critical issues in Native-American health care. These studies examined the trends shaping the future of Native-American health care; the existing health systems and planning capacity in the Native-American health care system; the changes occurring in the IHS; the role of Medicaid in Native-American health care; the attitudes and preferences of Native American health care consumers; and the factors shaping the decisions being made by tribal leaders. The findings from these studies were presented at a Kaiser Forum on the “Implications of Changes in the Health Care Environment for Native-American Health Care,” in Washington, D.C., November 1996. The studies and a synthesis of the Forum discussion are published in this report.
“DSH” Provisions…the Balanced Budget Act of 1997, P.L. 105-33
This report was prepared by the Center on Budget and Policy Priorities for the Kaiser Commission on the Future of Mediciad.
HIV Capitation Risk Adjustment: Conference Report
This report provides an overview of conference proceedings which focused on developing managed care reimbursement strategies that will ensure quality care for people living with HIV and fair compensation for those providing care.
The August, 1997 Kaiser Family Foundation/Harvard Health News Index includes questions about major health issues covered in the news, including questions about the Non-profit and For-profit health care. The survey is based on a national random sample of 1,000 American conducted July 1- 31, 1997. The Health News Index is designed to help the news media and people in the health care field gain a better understanding of which health stories in the news Americans are following and what they understand about the health issues covered in the news. Every two months, Kaiser/Harvard issues a new index report.
The Kaiser Family Foundation is providing two resources on caring for an elderly relative produced by the American Association of Retired Persons (AARP) free of charge. They are being provided as part of a joint project with WCVB-TV in Boston, which aired a special series on this topic on July 28, 1997. The reports provided are: Nursing Home Life: A Guide for Residents and Families and Staying Home: A Guide to Long-Term Care and Housing.
A Special Series
The Kaiser Family Foundation and ABC/WCVB Local TV News Initiative:
Caring For An Elderly Relative
Growing numbers of families today are struggling with the challenges of getting and paying for long-term care for elderly relatives. As the population ages and more women enter the workforce, the problems of caring for elderly relatives will only worsen. There are 1.6 million elderly residents in nursing homes today, but long-term care issues touch millions more families. In fact, more than one in four Medicare beneficiaries has a long-term care need, most of whom are cared for by family members at home. Families are in need of information about what health care services are available and how to pay for and arrange for such care.
As part of a special series to look in-depth at health care issues affecting Americans today, the Kaiser Family Foundation, ABC News and WCVB (Boston) have formed the Local TV News Initiative, a project designed to help the public to better understand the complex health issues facing Americans today. The first in this series focuses on Caring for An Elderly Relative. Two free booklets — “Staying at Home: A Guide to Long-Term Care and Housing” and “Caregiver Support Groups in America” both produced by AARP — are available by calling the Foundation’s publication request line: 1 (800) 656-4533.
Additional resources available on the Web are listed below:
American Association of Homes and Services for the Aging
American Association for Retired Persons
Health Care Financing Administration (Medicare and Medicaid)
National Association for Home Care
SPRY: Setting Priorities for Retirement Years Foundation
Visit WCVB, the ABC affiliate in Boston who produced this specialseries on Caring For An Elderly Relative.
A Comparison of the Medicaid Provisions in the House and Senate Versions of the Balanced Budget Act of 1997 (H.R. 2015/S. 947) with Current Law
Prepared by Sara Rosenbaum, Julie Darnell, Center for Health Policy Research, The George Washington University Medical Center for the Kaiser Commission on the Future of Medicaid
July 1997
Table Of ContentsIntroduction iii A. Overview 1 B. Eligibility 2 1. General approach to eligibility 2 2. Poverty-level children 2 3. Disabled children 2 4. Continuous coverage of children 3 5. Presumptive eligibility of children 3 6. Legal immigrants 4 7. Undocumented aliens 4 8. Low-income Medicare beneficiaries 5 9. Disabled workers 5 10. Women with diagnosed breast cancer 6 C. Benefits 7 1. General approach to benefits 7 2. Early and Periodic Screening Diagnosis and Treatment (EPSDT) 7 3. Primary care case management services 7 4. Physician assistant services 8 5. Community-based mental health services 8 6. Home and community based care 8 7. Long-term care services 9 D. Premiums And Cost Sharing 10 1. General approach to premiums and cost sharing 10 2. HMO copayments 10 3. Cost sharing for qualified Medicare beneficiaries 10 4. Payment of Medicare premiums for specified low-income Medicare beneficiaries 11 5. Private health insurance premiums 11 E. Provider Reimbursement 12 1. General approach to provider reimbursement 12 2. Hospitals 12 3. Disproportionate share hospitals 13 4. Nursing facilities 14 5. Managed care entities 14 6. Federally qualified health centers and rural health clinics 14 7. Obstetrical and pediatric providers 14 F. Managed Care 15 1. General approach to managed care 15 2. Mandatory enrollment as a condition of coverage 16 3. Enrollment composition of Medicaid-qualified managed care organizations 16 4. Default enrollment 16 5. Guaranteed enrollment 17 6. Disenrollment 17 7. Conditions of participation for managed care entities 18 8. Prior approval of contracts with managed care organizations 19 9. Provider Plan protections 19 10. Payment of DSH hospitals 19 11. Quality assurance 19 12. Enrollment of Native Americans 19 13. Treatment of family planning services 20 H. State Administration Requirements 20 1. Privatization 20 2. Continuation of waivers 20 I. Federal Financial Assistance 21 1. Disproportionate share payments 21 2. Federal Medicaid assistance percentage (FMAP) 21 3. Federal financial assistance for care of aliens 21 Introduction
The following table compares current Medicaid law with the Medicaid provisions contained in the FY 1998 budget reconciliationmeasures (H.R. 2015, S. 947, The Balanced Budget Act of 1997) passed by the House and Senate on June 25, 1997.1 A House/SenateConference Committee has begun work on the key differences between the two measures. Most observers assume that the Conference willmove rapidly and will also entail negotiations with the White House in order to resolve remaining differences prior to the time that the ConferenceAgreement is finally approved by both Houses and sent to the President. When finally enacted into law, the legislation will make significantchanges in numerous federal health and welfare programs, including Medicaid.
While the House and Senate Medicaid provisions are highly similar, they contain certain notable differences that must be resolved. Bothmeasures would retain Medicaid as an individual entitlement with no caps to federal contributions to state Medicaid programs.2 Both bills wouldlimit federal contributions to states’ Disproportionate Share Hospital Payment (DSH) programs, with certain minimum DSH spending requirementsimposed on state agencies in the case of the Senate bill. Both measures would make numerous changes in federal requirements related toeligibility of non-citizens, benefits, the use of mandatory managed care arrangements, provider reimbursement, long-term care benefits, andstate administration. The Senate measure contains more provisions than the House in the area of state administration requirements for managedcare and on conditions of participation for managed care entities. The Senate bill also extends certain payment and participation protections tomanaged care entities that are not contained in the House bill.A. Overview Issue Current Law House (H.R. 2015) Senate (S. 947) 1. Summary Medicaid entitles individuals who meet eligibility conditions to coverage for a range of required and optional acute and long-term care services.
States are entitled to a federal contribution toward the cost of their programs calculated in accordance with a statutory formula.
Additional payments made to states for disproportionate share hospital (DSH) programs.
Certain providers, including hospitals, nursing homes, home health agencies, federally qualified health centers (FQHC), and rural health clinics (RHC) are entitled to reimbursements in accordance with certain rules.
Providers serving Medicare beneficiaries who also have Medicaid are entitled to the Medicare payment rate.
Copayments for Medicaid beneficiaries permitted only under limited circumstances.
States may offer managed care enrollment on a voluntary basis. Mandatory managed care enrollment requires states to obtain a waiver of the freedom of choice provisions (Section 1915(b) or Section 1115).
States may use private contractors to administer Medicaid programs but not to determine eligibility.
Prohibits medical assistance beyond emergency coverage to undocumented aliens. Retains Medicaid as an individual entitlement with a continued state entitlement to federal financing without a cap.
No change to current law.
Reduces federal contributions for state DSH programs.
Repeals Boren Amendment payment requirements for hospitals, nursing facilities and home health agencies.
Revised payment rules for FQHCs and RHCs.
No change to current law.
Expands state options to require cost sharing.
Permits states to mandate managed care enrollment for all Medicaid beneficiaries except special needs children.
Permits states to use private contractors to determine eligibility.
Includes new funding for states with high numbers of undocumented aliens. Retains Medicaid as an individual entitlement with a continued state entitlement to federal financing without a cap.
No change to current law.
Similar provision, but requires targeting of DSH hospitals.
Similar provision.
No change to current law.
Permits states to pay Medicaid rates for Medicare beneficiaries.
Similar provisions.
Permits states to mandate managed care enrollment for all Medicaid beneficiaries except special needs children and Medicare beneficiaries.
No similar provision.
No similar provision. B. Eligibility Issue Current Law House (H.R. 2015) Senate (S. 947) 1. General approach to eligibility Conditions coverage on numerous financial and categorical conditions of eligibility.
Individuals who meet eligibility requirements are entitled to coverage for medical assistance items and services covered under a State’s Medicaid plan when furnished by participating providers. Retains the entitlement to coverage among eligible individuals.
Permits states to condition coverage for all beneficiaries on mandatory enrollment in a managed care entity. Exempts special needs children (those who receive SSI or are institutionalized) from mandatory managed care enrollment. Retains the entitlement to coverage among eligible individuals.
Permits states to condition coverage for all beneficiaries on mandatory enrollment in a managed care entity. Exempts from the mandatory enrollment requirements special needs children and Medicare beneficiaries. 2. Poverty-level children Mandates coverage of all children up to age 19 who meet financial conditions of eligibility and who were born after September 20, 1983, thereby phasing in coverage for children under 19 to the year 2002.
States can expand coverage to children under poverty under 1902(r)(2) or Section 1115 waivers. Clarifies state option to immediately extend coverage to all children under age 19. Similar to House provisions. 3. Disabled children Children who are disabled and receive SSI automatically receive Medicaid in nearly all states. Disability criteria for children restricted under 1996 welfare reform legislation to remove functionally disabled children and to tighten criteria for mental illness-related disability. Approximately 150,000 children are expected to be removed from SSI; CBO estimates that most will requalify for Medicaid as poverty-level children. Authorizes states to provide Medicaid to all children who lose SSI as a result of welfare reform and who do not otherwise qualify for Medicaid. No change to current law. 4. Continuous coverage of children Terminates eligibility for children who no longer meet conditions of eligibility. Permits states to guarantee 12 months of eligibility following a determination of eligibility up to an age specified by the state, but not exceeding 19 years of age. Contains similar provision. 5. Presumptive eligibility for children Provides states with the option to extend a period of presumptive (i.e., temporary) eligibility for prenatal care in the case of pregnant women who have applied for Medicaid and who, based on preliminary information, appear to be eligible for coverage. Adds a presumptive eligibility option for children under age 19 and identifies as potentially qualified to make presumptive eligibility determinations the following: Head start agencies, child care providers and WIC programs. Federal expenditures attributable to services provided during presumptive eligibility period would be deducted from the amounts available to the states under the Child Health Block Grant. No change to current law. 6. Legal Immigrants Authorizes, but does not require states to extend coverage to most qualified aliens (i.e., non-citizens who are legal U.S. residents) who are otherwise eligible for Medicaid and resided in the U.S. prior to August 22, 1996.
Optional Medicaid coverage groups include legally resident SSI recipients who received SSI benefits on August 22, 1996, but will lose assistance as non-citizens. As of Spring 1997, seven states had elected not to extend Medicaid to some or all former SSI recipients who were qualified aliens.
Imposes 5-year time limit on Medicaid coverage for emergency care only for otherwise eligible qualified aliens who enter the U.S. on or after August 22, 1996. Restores SSI and Medicaid benefits to all qualified aliens who received SSI and Medicaid as of August 22, 1996.
Extends from 5 to 7 years the time period for which refugees who are eligible for SSI may receive assistance, thereby increasing the period of mandatory Medicaid coverage for emergency care.
Adds Cuban and Haitian entrants to the group of legal immigrants covered by the exemptions for refugees.
Exempts legal immigrants who are members of an Indian tribe from the restrictions on SSI and Medicaid eligibility. Restores SSI and Medicaid benefits to all qualified aliens who received SSI and Medicaid as of August 22, 1996. Extends coverage to qualified aliens were in the country and who subsequently become disabled and eligible for SSI but were not receiving SSI as of August 22, 1996.
Exempts from the restriction on SSI benefits persons found eligible after July 1996, on the basis of very old applications, as well as SSI recipients who were too disabled to meet the conditions of naturalization by the September 1997, deadline.
Similar to House Provision and eliminates 5 year ban on full Medicaid eligibility in the case of qualified aliens who are children under age 19.
Similar to House Provision and adds Amerasians.
Similar to House Provision. 7. Undocumented aliens Prohibits medical assistance beyond emergency coverage to undocumented aliens. Authorizes a new entitlement-based state grant program of $100 million ($20 million per year) for FY 1998 through FY 2002 for emergency services to each of the 12 States with the highest number of undocumented aliens, with each state’s allotment ratio equal to the same percentage as the number of undocumented aliens in the state bears to the nation, based on estimates prepared by INS. No similar Senate provision. 8. Low-income Medicare beneficiaries Requires states to pay for the premiums, deductibles and coinsurance to Qualified Medicare Beneficiaries (QMBs) with resources at or below twice the SSI resource-eligibility standard and with incomes at or below 100% of the FPL.
Requires states to pay Medicare premiums for Specified Low Income Medicare Beneficiaries (SLMBs) with family incomes at or below 120% of the FPL and resources at or below twice the SSI resource-eligibility standard .
Federal contributions to the QMB and SLMB program are at the state’s federal medical assistance percentage rate (between 50% and 79% of total state outlays). No change to current law.
Raises the SLMB eligibility standard for Part B premium assistance to 135% of the FPL and adds home health care cost-sharing assistance for individuals with family incomes between 135% and 175% of the FPL.
Sets the federal contribution level for new Part B premium payment requirements at 100%. No change to current law.
Establishes a “low-income Medicare Beneficiary Block Grant Program” to states to pay Medicare Part B premiums to Medicare Beneficiaries with family incomes between 120% and 150% of the FPL (level set by states).
No similar Senate provision. 9. Disabled workers Mandates coverage of persons “who previously received SSI if they continue to have a disabling physical or mental impairment, continue to meet all SSI requirements other than income from earnings, do not have enough earned income to disqualify them from special SSI coverage, and would be seriously inhibited from continuing to work in the absence of Medicaid and do not have enough earnings to provide a reasonable equivalent to Medicaid.” No change to current law. Adds sliding scale premium-based Medicaid coverage option for disabled workers with family incomes < 250% of the FPL and who, but for excess earnings, would be considered to be receiving SSI (and therefore eligible for extended Medicaid) as disabled workers. 10. Women with diagnosed breast cancer Women with breast cancer must meet Medicaid income and categorical criteria to become eligible for medical assistance for treatment of diagnosed breastcancer under Medicaid. No change to current law. Adds optional coverage for a limited Medicaid benefit package of breast cancer-related services for women under age 65 who are not otherwise eligible for Medicaid, whose incomes and resources meet standards established by the Director of the CDC breast cancer screening program, and who are diagnosed with breast cancer as a result of participation in the CDC’s breast cancer screening program.
Low income women screened through other programs or non-participating providers would not be covered.
The benefit package includes prescribed drugs, physicians’ services, FQHC and RHC services, laboratory and X-ray services, case management services, and services (other than room and board) to encourage completion of treatment including directly observed therapy.
Inpatient hospital care is excluded. C. Benefits Issue Current Law House (H.R. 2015) Senate (S. 947) 1. General approach to benefits Medicaid beneficiaries are entitled to coverage for a defined set of benefits. States are required to cover certain benefits as a condition of program participation and may elect to provide other benefits. Coverage must be sufficient in amount, duration and scope to reasonably achieve the purpose of the benefit and states are prohibited from arbitrarily discriminating in coverage based on a condition or diagnosis. Retains the existing defined benefit structure while adding new benefit options. Similar to House provision. 2. Early and Periodic Screening Diagnosis and Treatment (EPSDT) Provides for mandatory coverage of EPSDT benefits for eligible children < 21, which consist of periodic and interperiodic health exams, vision, dental and hearing care, and all medically necessary treatment recognized under the Medicaid statute regardless of whether services are covered for adults. Coverage levels exceed usual benefits offered by most commercial insurance plans. Directs the Secretary to contract a study of the actuarial value of the EPSDT benefit, including the medically necessary treatment requirement. Contains similar provision, but requires the Secretary to conduct a study of the whole EPSDT benefit (broader than its actuarial value). 3. Primary care case management services Primary care case management services are not an explicitly recognized Medicaid benefit. States may cover case management services at their option (case management services are required for children if medically necessary). Case management is defined as a service which assists a beneficiary obtain necessary medical, educational, health or social services. Adds a new primary care case management (PCCM) coverage option; PCCM benefits are defined as “case management-related services (including coordinating and monitoring of health services) provided by a primary care case manager under a PCCM managed care contract. Primary care means services customarily provided by primary care practitioners (including medical, health and lab services). Similar to House provision. 4. Physician assistant services Authorizes states to pay for the services of any licensed practitioner furnishing covered services within the scope of his or her practice. Specifically authorizes optional coverage of physician assistant services to the extent that they are lawful under State law. No similar Senate provision. 5. Community-based mental health services Authorizes coverage of a range of ambulatory diagnostic, preventive aand treatment services relate to mental illness and addiction disorders but no single all-inclusive out-patient service benefit for persons with mental illness.
States that elect to cover preventive, diagnostic, rehabilitation and treatment services for persons with mental illness must provide such services to all persons who need them regardless of their condition or diagnosis. No change to current law. Authorizes optional coverage of outpatient and intensive community-based mental health services for Medicaid beneficiaries.
States may elect this option without covering comprehensive outpatient clinical and rehabilitation services for other conditions.
Services include psychiatric rehabilitation, day treatment, intensive in-home services for children, assertive community treatment, therapeutic out-of-home placements (excluding room and board), clinic services, partial hospitalization and targeted case management. 6. Home and community based care Limits coverage of habilitation services under Section 1915(c) home- and community- based demonstrations to individuals who previously were institutionalized. Eliminates prior institutionalization requirement for habilitation services in the case of individuals participating in home- and community-based care demonstration programs. No similar Senate provision. 7. Long-term care services Mandates coverage of nursing facility, home health benefits and hospital services for all beneficiaries (including frail elderly), and gives states the option to cover a broad range of other long-term care benefits.
Authorizes the Secretary to waive otherwise applicable limitations on benefits, statewideness and eligibility in order to permit states to cover home and community based services. Establishes a new “Program of All Inclusive Care For the Elderly (PACE)” authorizing coverage of integrated acute and long-term care services. Optional PACEprogram benefit consists of all items and services covered under Medicare and Medicaid without limitation or condition related to amount, duration and scope (within PACE specified protocal for benefits) and without copayment and coinsurance.
Enrollment would be voluntary.
PACE services furnished through certified PACE program providers who are paid on a prospective, capitated basis, who comply with a PACE protocol, and meet conditions of participation. PACE program-eligible persons are individuals ages