State AIDS Drug Assistance Programs: A National Status Report on Access

Acknowledgments

This report would not have been possible without the generous financial support of the Henry J. Kaiser Family Foundation and their continuing commitment to be at the forefront of HIV/AIDS policy issues. The authors would especially like to thank Dr. Mark D. Smith, who assisted with initiating the project and Dr. Sophia Chang and Tina Hoff of the Kaiser Family Foundation for their support, encouragement and expert advice in shaping this report.

We owe a great deal of gratitude to our project advisory committee members who reviewed and provided suggestions for this report and our national ADAP survey. They are: Moises Agosto, National Minority AIDS Council; Dr. Roxanne Cox-Iyamu, Whitman Walker Clinic; Anne Donnelly, Project Inform; Anita Eichler, Division of HIV Services (HRSA); T. Randolph Graydon, Health Care Financing Administration; Tracey Hooker, National Conference of State Legislatures; David Mulligan, Massachusetts Department of Public Health; Tracey Orloff, National Governors’ Association; Valerie Reeder, Heaven in View, Inc.; Gary Rose, formerly of AIDS Action Council and now with IssuesSphere; and Jane Silver, American Foundation for AIDS Research.

We also wish to express our gratitude to the members of the National Alliance of State and Territorial AIDS Directors (NASTAD) and the AIDS drug assistance program (ADAP) coordinators across the country for completing the national ADAP survey that was the basis for this report. We are truly grateful that, in the midst of a time of crisis, and often with minimal or non-existent staff support, these individuals took the time to respond to our survey and numerous follow up telephone calls.

Finally, special thanks to the state AIDS directors, ADAP program managers, state and federal officials and HIV/AIDS policy advocates who devoted additional time to review and provide feedback on the draft of this report. Their contributions, along with those of our project committee, have helped to make this summary report and its companion technical report among the most comprehensive and useful documents on the status of ADAPs ever published.

The principal authors of this report are Arnold Doyle, Richard Jefferys and Joseph Kelly.

The National ADAP Monitoring Project

In an effort to monitor the rapidly changing fiscal and scientific environments in which state AIDS drug assistance programs (ADAPs) are operating, and the impact of these changes on the programs and the individuals that they serve, the National Alliance of State and Territorial AIDS Directors (NASTAD) was commissioned by the Henry J. Kaiser Family Foundation, Menlo Park, CA to conduct a two-year National ADAP Monitoring Project. NASTAD is uniquely qualified to monitor the situation of state ADAPs as it is an association of the individuals who direct AIDS prevention, care and treatment services at the state level. NASTAD’s co-funded partner in the project, the AIDS Treatment Data Network (ATDN), is one of the most highly respected HIV/AIDS treatment information centers in the nation; ATDN maintains an on-line information library of the most recent treatment advances in HIV/AIDS, as well as detailed information on publicly- and privately-funded sources of reimbursement for HIV/AIDS treatments, including ADAPs.

Through the National ADAP Monitoring Project, NASTAD and ATDN will produce summary and comprehensive technical annual reports on the status of state ADAPs, with follow-up reports at six-month intervals, over the next two years. This July 1997 report provides a summary of the major findings of a national ADAP survey completed in March 1997. A longer, more comprehensive technical report based on the national survey is available through NASTAD at (202) 434-8090 or the Kaiser Family Foundation (800) 656-4533. Both the summary report and the technical report are also available for downloading from the Internet at http://www.aidsnyc.org/adap/. This Internet site, developed by ATDN, also contains detailed descriptive information about every state ADAP including program eligibility, application procedures, access and drug coverage. NASTAD and ATDN can also be reached at the following addresses:

The National Alliance of State and Territorial AIDS Directors444 North Capitol Street, NWSuite 339Washington, DC 20001(202) 434-8090(202) 434-8092 (FAX)

AIDS Treatment Data Network611 Broadway, Suite 613New York, NY 10012-2809(800) 734-7104(212) 260-8869 FAX

Executive Summary

State AIDS drug assistance programs (ADAPs) provide access for people living with HIV/AIDS to medications that treat HIV disease and prevent the onset of opportunistic infections. State ADAPs serve as a critical lifeline for many low-income individuals living with HIV/AIDS in the United States who do not have public health insurance or adequate private health insurance. These state-administered drug reimbursement programs form one link in the continuum of publicly-funded HIV care and services available to low-income individuals supported by the Ryan White CARE Act, Medicaid, Medicare, and local indigent health care programs. The critical role that ADAPs play in improving access to HIV/AIDS treatments have made these programs the subject of increasing public scrutiny and debate.

ADAPs were developed to serve those who are uninsured and those who are underinsured and lack coverage for medications. Potential clients include those individuals who may not be disabled and therefore cannot qualify for government-sponsored health insurance programs like Medicaid. Within general federal guidelines established through the CARE (Comprehensive AIDS Resources Emergency) Act, states set unique program financial and medical eligibility criteria for their ADAPs, determine the type and number of drugs covered by the program (the ADAP formulary), and establish how covered drugs will be purchased and distributed to clients. This has led to wide variability among ADAPs from state to state vis-a-vis their structures, eligibility criteria, accessibility and the type and scope of prescription drug coverage available to clients.

In March of 1997, the National Alliance of State and Territorial AIDS Directors (NASTAD) in collaboration with the AIDS Treatment Data Network (ATDN) conducted a comprehensive survey for the Kaiser Family Foundation of all 52 AIDS programs in the United States that receive funds through Title II of the Ryan White CARE Act. The following is a summary of the major findings of this national study:

What’s Recently Been Happening With ADAPs?

• There has been a great leap forward in HIV/AIDS treatment over the past year driven largely by the advent of combination anti-HIV regimens containing protease inhibitors. But these new drug therapies come with a high price tag. Faced with rising expenditures, a burgeoning number of clients, and finite resources, many states were forced to take drastic measures to avoid bankrupting their ADAPs. Thirty-five states reported taking at least one emergency measure in the last year in response to the crisis in ADAP funding and increased demand for combination therapies. Among these measures were:
  • capping program enrollment
  • restricting access to certain formulary medications
  • reducing drug coverage, and
  • delaying or indefinitely suspending coverage of the new drugs.

• Despite the emergency measures undertaken to prevent funding shortages, eleven states responded that they predict a shortfall in FY 1997: Alabama, Arizona, Arkansas, Colorado, Montana, New Mexico, Puerto Rico, Texas, Vermont, Washington State and West Virginia. Three other states have been forced to severely limit services in 1997 in response to increased demand and costs: Florida, Mississippi and South Dakota.
• The total national ADAP budget for FY 1997 is $385 million. The majority of funds are from federal sources, including $167 million which are specifically designated for ADAP. That amount increased by 221% over the FY 1996 budget. Other federal Ryan White CARE Act dollars also contribute to the program.
• Although 30 states have supplemented federal support for ADAPs with state spending, 22 states have not contributed to the program in FY 1997. Almost two-thirds of the total state contributions to ADAP are provided by California, Louisiana, New York, and Illinois.
• Nationally, from July to December 1996, the number of ADAP clients served increased by 23% — an average increase of approximately 1,000 utilizing clients per month. Forty-two state ADAPs reported increases in the number of clients served during the last six months of 1996. Six of those states reported an increase in utilizing clients of 50% or more: Arkansas, Connecticut, Kentucky, Maryland, Oklahoma and Utah.
• Monthly program expenditures increased 37%, from $14.9 million in July 1996 to $20.4 million in December 1996. Forty-four of the state ADAPs reported increases in their monthly expenditures during the same time period; fourteen of those states reported expenditure increases of 50% or greater. The average per client expenditure among ADAPs nationally over the last six months of 1996 was approximately $506 per month or $6072 annualized.
• ADAP budgets grew nationally by 85% from 1996 to 1997, and increased over 314% since 1995. Despite the growth in ADAP budgets, many states have been unable to meet the demand from higher numbers of clients for a greater number of drugs, especially the newer antiretroviral agents.
• In the month of December 1996, 38,500 clients were served by ADAP programs nationally, according to the most current available data. During calendar year 1996, the national estimate of the cumulative number of clients served by ADAP was 80,000. (Annual estimates are limited due to monthly reporting and variable lengths of client tenure in the program.)

How Accessible and Comprehensive Are ADAP Services?

• There is wide variation among state ADAPs in their drug coverage. Access to both antiretrovirals and drugs for AIDS-related opportunistic infections (OIs) remains uneven among state ADAPs.
  • All state ADAPs except Louisiana provide coverage for basic antiretroviral treatments. (In Louisiana, a separate state program provides these drugs.)
  • In 1996, thirteen states restricted access to protease inhibitors.
  • In 1997, four state ADAPs do not cover protease inhibitors on their formularies and two state ADAPs cover only one protease inhibitor.
  • Only five state ADAPs cover the thirteen basic drugs recommended by the Infectious Disease Society of America (IDSA) and Public Health Service (PHS) in 1995 for the prevention of opportunistic infections (OIs).
  • Five state ADAPs do not cover any of the strongly recommended prophylactic drugs in the updated 1997 IDSA/PHS opportunistic infection prevention guidelines. Only two state ADAPs have the full complement of fourteen strongly recommended drugs on their current formularies.

• There is also wide variation among state ADAPs in their eligibility criteria:
  • Financial eligibility cutoffs range from 100% to 400% above the federal poverty level, though the majority of ADAP clients are below 200% of poverty.
  • Most states use HIV infection as the basis for medical eligibility, though twelve states also require CD4 count and/or viral load information.

Future Opportunities and Challenges

• It is very difficult to estimate the precise number of persons with HIV who may be eligible for state ADAP programs. One estimate would be a range between 140,000 and 280,000 persons with HIV nationally. This range is based on the Centers for Disease Control and Prevention’s estimated number of individuals with HIV disease in the U.S. (650,000 to 900,000 people), and the 1992 Agency for Health Care Policy and Research study estimate of persons in care with symptomatic HIV who are uninsured (21.4%). This estimate represents between a two- to four-fold increase in potential ADAP clients. It should be noted that this estimate does include persons who may not know their HIV status and/or may not be in a system of care.
• Recently released federal guidelines for HIV antiretroviral therapy recommend that patients start on a combination regimen earlier in the course of HIV disease. Although the implications of implementing these new guidelines have not been established, they will likely increase pressure on state ADAPs to expand drug coverage and keep pace with expected client growth. Unfortunately, many state ADAPs are unprepared to offer this standard of care to eligible patients who may be candidates for triple combination therapy.
• There is room for improvement for many ADAPs to squeeze additional cost containment out of existing mechanisms like federal drug discount pricing and rebates by improving drug distribution systems. The challenge will be in the effective implementation of initiatives to enhance the purchasing power of ADAPs, including pharmaceutical rebates and a prime vendor system.
• Enhancing the ADAP interface with state Medicaid programs also presents opportunities and challenges. There will likely be increased pressure to assure that ADAP represents the payer of last resort and that Medicaid programs are not inappropriately limiting prescription drug coverage. Limitations on Medicaid drug coverage applies increased pressure on financially strained ADAPs to pick up the burden of paying for drugs for underinsured Medicaid-eligible populations.
• Many states are exploring innovative strategies for broadening access to HIV/AIDS therapies such as health insurance continuity programs and purchasing insurance through state risk pools. For states such as Minnesota and Oregon, insurance purchasing and continuity programs represent the bulk of their efforts to provide access to medications for low-income people living with HIV/AIDS. These and other initiatives may narrow the gap that state ADAPs fill to provide uninterrupted medication coverage for eligible individuals with HIV/AIDS.
• Significant additional federal and state resources will be needed to enable ADAPs to maintain pace with demand to deliver the standard of care for HIV therapy. Diversity of federal, state and other resources is a likely predictor of fiscal stability for ADAPs in the future.

Background

Why Does ADAP Exist?

ADAP exists because there is a gap in access to coverage for medications for low-income people living with HIV/AIDS in the United States. ADAPs are intended to serve those who are uninsured, and those who are underinsured (lacking coverage for medications). These groups include those individuals who may not be disabled and therefore cannot qualify for government-sponsored health insurance programs like Medicaid. Since 1991, the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act has provided federal funding to states, localities, and community health centers to provide services for individuals with HIV/AIDS. Specifically, the funds are targeted to those who lack access to or insurance for primary medical care, medications, early diagnosis and treatment, and supportive services. The CARE Act allocates federal Title II funding directly to states and requires them to use a portion of these funds to provide HIV therapeutics, including prophylaxis and treatment of opportunistic infections, for low-income individuals.

The need for ADAP was first identified in 1987 when Congress provided an emergency appropriation of $30 million to states to establish a reimbursement mechanism for low-income individuals with HIV/AIDS to access AZT (Retrovir) — the first anti-HIV drug approved by the Food and Drug Administration (FDA). The rationale for public funding of AIDS drug assistance for low-income individuals was rather straight-forward. AZT was not cheap and individuals living with HIV/AIDS needed access to therapies to prolong and improve the quality of their lives regardless of their ability to pay. The need continued to be apparent and has more recently been placed into sharp focus with the advent of combination antiretroviral therapies, which include protease inhibitors. But these promising treatments are out of reach for many low-income individuals who lack public or private health insurance. That is precisely the reason why ADAPs exist and why they are currently struggling to keep pace with treatment advances, increased costs and client demand.

What is ADAP?

Currently, ADAPs are authorized under Title II of the Ryan White CARE Act, funded at the federal level by the Health Resources and Services Administration (HRSA) and managed by states. It is important to recognize that ADAPs are one piece of a larger health care puzzle for people living with HIV/AIDS. In fact, many state ADAPs are structured to wrap around public health care programs — Medicaid, Medicare and local indigent care programs — to ensure some continuity of access to outpatient HIV medications. Most state ADAPs are administered by the state public health departments, however, a few programs are administered by the state Medicaid agency, regional CARE-funded consortia, or by a contracted administrative agency.

Within general guidelines established by the federal government through the CARE Act, states set unique program financial and medical eligibility criteria for their ADAPs, determine the type and number of drugs covered by the program (the ADAP formulary), and establish how covered drugs will be purchased and distributed to clients. This has led to wide variability among ADAPs vis-a-vis their structures, eligibility, accessibility and the type and scope of prescription drug coverage available to eligible clients. There are several variables in each state which have led to this reality: 1) the size and demographics of the HIV/AIDS epidemic; 2) the traditional structure of public health and indigent health care systems; 3) the availability of state resources; 4) variations in Medicaid programs — including eligibility criteria, the type and extent of pharmacy benefits, and the existence of a managed care waiver which may limit drug coverage; and 5) state insurance regulations and economies which may affect private health insurance availability.

While there were relatively few treatments available to treat HIV/AIDS until recently, state ADAPs were relatively benign — albeit important — programs within the context of health care for people living with HIV/AIDS. However, in mid-1995, ADAPs began to experience explosive growth in the number of enrolled and utilizing clients, and in monthly expenditures. This growth was due mainly to the development of new treatments, including antiretrovirals and opportunistic infection prophylaxis/treatment.

What’s Recently Been Happening With ADAPs?

The great leap forward in HIV/AIDS treatment over the past year has been driven largely by combination anti-HIV regimens containing protease inhibitors. These therapies are known as antiretrovirals and attack HIV at different points during the virus’ replication process. The first rapid period of growth in ADAPs began with the approval of 3TC (Epivir) — a reverse transcriptase inhibitor, which was marketed shortly before the first protease inhibitor, saquinavir (Invirase), was approved in late 1995. In early 1996, two additional protease inhibitors, ritonavir (Norvir) and indinavir (Crixivan), received FDA approval. The licensure of these new drugs and their reported efficacy in slowing the progression of HIV disease sparked a resurgence of interest in antiretroviral therapy.

Faced with rising expenditures, a burgeoning number of clients, and finite resources, many ADAPs were forced to take measures to avoid bankrupting their programs. Among these measures were: capping program enrollment, restricting access to certain formulary medications, reducing drug coverage, and delaying or indefinitely suspending coverage of the new drugs. Increasingly, ADAPs were only able to fill a smaller portion of the gap between private insurance and Medicaid. Especially vulnerable were lower- and moderate-incidence states (states with relatively few reported AIDS cases) that receive less federal Ryan White CARE funding and often no state support. Other “safety net” programs — including drug manufacturer-sponsored patient assistance programs — were also inadequate to the task of ensuring continuity in prescription drug coverage for lower income individuals living with HIV/AIDS.

The appropriation of $52 million in federal emergency ADAP funding in fiscal year (FY) 1996 provided some relief to the programs. Many programs, however, were forced to continue waiting lists for enrollment, reduce formularies and restrict drug coverage. Throughout 1996, three major factors would continue to influence the ability of ADAPs to provide drugs to intended client populations: the emergence of combination antiretroviral therapy as a standard of care; increasing ADAP utilization; and the financial resources of the programs.

The Emerging Standard of Care

From November 1995 through April 1996 four new antiretroviral agents were approved by the FDA for the treatment of HIV; three of these new drugs belonged to a potent new class of antiretrovirals known as protease inhibitors. In the space of six months, the arsenal of antiretroviral drugs doubled. These new agents were also found to be more effective when used in combination, specifically the simultaneous use of three antiretrovirals.

The promise of these new drugs, however, has come with a steep price. The estimated cost of triple combination therapy, including a protease inhibitor, ranges from $10,000 to $15,000 per year. In June 1997, the U.S. Department of Health and Human Services (DHHS) released draft guidelines for the use of antiretroviral agents in HIV-infected adults and adolescents developed by the Panel on Clinical Practices for Treatment of HIV Infection convened by DHHS and the Henry J. Kaiser Family Foundation. These recommendations represent the current state of knowledge regarding the best strategies for implementing antiretroviral therapy for individuals with HIV/AIDS and may drive increased attention to and demand for HIV/AIDS therapies.

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State AIDS Drug Assistance Programs: A National Status Report on Access:Press Release Report Part One Part Two State Data

A State-by-State Profile of ADAPs: Key Access & Budget Categories (as of July 1997)

State Financial Eligibility *1(% above federal poverty level) Medical Eligibility *2(CD4=CD4 cell count, vl=viral load) Protease Inhibitors Covered *3(4 drugs approved) Non- nucleosides Covered(2 drugs approved) OI Prophylaxis Covered *4(14 drugs recom- mended) Other Medications Covered Total Est. Budget(FY 1997) State Contri- bution as % of Total Est. Budget(FY 1997) ADAP Clients Served Per Month *5(December 1996) Emergency Cost-Containment Measures (1996- 1997) * = measure in place as of July 1997 Alabama 250% CD4 <500 3 0 5 0 $3,190,000 5% 700 Capped enrollment*, waiting list Alaska 200% 4 1 0 0 $122,917 0% 9 Capped enrollment*, transferred funds from other accounts, waiting list Arizona 200% 4 0 2 2 $2,300,027 0% 354 Transferred funds from other accounts Arkansas 100% 0 0 3 3 $1,254,013 0% 389 Capped enrollment California 400% 4 1 13 28 $87,111,105 46% 7,342 Colorado 185% 4 0 0 0 $2,904,932 10% 423 Transferred funds from other accounts Connecticut 300% 3 0 12 42 $3,814,283 0% 548 Delaware 230% 3 1 6 27 $979,000 0% 62 D.C. 300% 3 1 11 25 $4,363,341 3% 699 Access to protease inhibitors capped*; capped enrollment*; reduced formulary*, transferred funds from other accounts, waiting list Florida 200% CD4 <500 4 1 6 2 $24,317,997 0% 4,565 Access to protease inhibitors capped* Georgia 125% CD4 <500 3 0 0 0 $9,379,959 3% 984 Capped enrollment*; restricted access to protease inhibitors*, waiting list Hawaii 400% 4 1 12 13 $1,112,403 27% 66 Idaho 400% CD4 <500 1 0 2 2 $193,000 0% 30 Illinois 200% 4 1 14 36 $14,514,522 57% 1,211 Per client dollar limits on drug costs*; reduced formulary*, transferred funds from other accounts, access to protease inhibitors capped Indiana 300% CD4 <500 4 1 5 4 $2,310,710 3% 225 Capped enrollment*; reduced formulary*, waiting list Iowa 200% 3 0 6 6 $292,680 0% 39 Kansas 300% 4 0 8 14 $738,196 0% 56 Transferred funds from other accounts, capped enrollment, access to protease inhibitors capped Kentucky 300% CD4 <550 4 1 5 7 $994,321 9% 173 Access to protease inhibitors capped*, waiting list Louisiana 200% 3 0 0 0 $19,371,330 83% 115 Transferred funds from other accounts Maine 200% CD4 20k 4 0 5 1 $389,426 15% 45 Access to protease inhibitors capped*, transferred funds from other accounts, waiting list Maryland $8,750 – $29,400 4 1 11 11 $6,259,239 10% 406 Massachusetts <$27,000 p.a. 4 1 10 9 $7,970,714 46% 1,074 Transferred funds from other accounts Michigan 185% <500 CD4 4 1 6 5 $3,258,921 0% 178 Minnesota 300% 4 1 10 22 $841,003 0% 231 Mississippi 200% CD4 30k 1 0 6 2 $2,040,326 0% 415 Access to protease inhibitors capped*, reduced formulary*, transferred funds from other accounts Missouri 185% 4 1 12 47 $2,575,652 23% 842 Access to protease inhibitors capped*, waiting list Montana Need-based 4 0 0 1 $204,000 0% 18 Capped enrollment*, waiting list Nebraska 200% 4 1 6 12 $300,000 0% 59 Reduced formulary Nevada 200% CD4<500 0 0 5 0 $1,534,199 0% 151 Capped enrollment*, waiting list New Hampshire 300% 4 1 10 16 $403,500 0% 40 Restrictions on some formulary drugs*, access to protease inhibitors capped New Jersey <$30,000 p.a. 3 1 11 19 $16,753,868 4% 1,325 Reduced formulary* New Mexico 300% 4 1 9 20 $1,340,212 55% 375 Transferred funds from other accounts New York <$44,000 p.a. 4 2 14 182 $82,501,058 15% 6,183 Transferred funds from other account, reduced formulary North Carolina 125% 4 2 10 7 $3,710,201 20% 310 North Dakota 150% 4 0 13 37 $94,390 0% 14 Ohio 281% 4 1 6 5 $6,600,000 45% 424 Oklahoma 150% 3 0 6 2 $1,690,187 12% 243 Access to protease inhibitors capped*; per client dollar limits on drug costs*, waiting list Oregon 250% 0 0 2 2 $2,035,136 0% 99 Pennsylvania <$30,000 p.a. 3 0 13 30 $9,871,022 47% 1,125 Puerto Rico certified as indigent CD4 10k 3 0 13 87 $15,619,324 46% 2,320 Rhode Island 400% 4 1 9 5 $792,972 0% 57 South Carolina 300% CD4 <500 3 0 6 6 $3,386,578 15% 198 Capped enrollment*, transferred funds from other accounts, waiting list South Dakota 300% 0 1 8 19 $105,343 0% 30 Per client dollar limits on drug costs*; capped enrollment*; reduced formulary* , waiting list Tennessee 300% 3 0 7 4 $1,830,152 0% 147 Restrictions on use of protease inhibitors* Texas 200% 4 1 8 4 $17,088,684 16% 2,727 Reduced formulary*; restrictions on formulary drugs*, transferred funds from other accounts Utah 100% 4 1 0 0 $843,006 14% 79 Transferred funds from other accounts Vermont 200% 4 1 12 14 $374,611 20% 43 Reduced formulary*, waiting list, access to protease inhibitors capped Virginia 200% 4 0 7 1 $6,457,969 11% 700 Reduced formulary*, waiting list, access to protease inhibitors capped Washington 370% 3 1 10 42 $6,863,160 61% 430 transferred funds from other accounts, access to protease inhibitors capped, capped enrollment West Virginia 300% 4 1 2 5 $361,000 7% 39 Transferred funds from other accounts Wisconsin 200% 4 1 6 3 $1,500,001 20% 139 Wyoming 300% 4 0 13 36 $80,940 0% 44 Per client dollar limits on drug costs*, waiting list, capped enrollment

*1 Financial elgibility requirements listed are for a household of one. For more financial eligibility information, including asset limits and sliding scale co-pays, see the full NASTAD/ATDN Technical Report.

*2 All states require a diagnosis of HIV infection for ADAP enrollment.

*3 All state ADAPs cover the five nucleoside analog antiretroviral drugs (AZT, ddI, ddC, d4T, 3TC), except Louisiana where a separate state program provides these drugs through ambulatory care sites.

*4 Based on 1997 USPHS/IDSA Guidelines for the Prevention of Opportunistic Infections for Persons Infected with HIV (released June 27, 1997 MMWR, Vol. 46, No. RR-12).

*5 The number of clients served is usually fifty percent or less of the total enrollment for the month (percentage varies from state to state).Return to top

State AIDS Drug Assistance Programs: A National Status Report on Access:Press Release Report State Data

The ADAP Survey

Survey Methods

In an effort to monitor the impact of the environment on ADAP programs and the individuals they serve, the Henry J. Kaiser Family Foundation funded a two-year project, the National ADAP Monitoring Project, with the National Alliance of State and Territorial AIDS Directors (NASTAD). NASTAD is an association of the individuals who direct AIDS prevention, care and treatment services at the state level. NASTAD’s partner in the project is the AIDS Treatment Data Network (ATDN), a highly respected HIV/AIDS treatment information center, which maintains both an on-line information library as well as detailed information on publicly- and privately-funded sources of reimbursement for HIV treatments.

NASTAD/ATDN developed a written survey for distribution to state AIDS directors and ADAP program managers in the fifty states, the District of Columbia and Puerto Rico. An eleven-member project advisory committee provided input on the survey design, implementation, and reporting. The survey contained thirty-six questions to assess program operations/trends in the following areas:

• Program Administration
• Drug Purchasing and Distribution Mechanisms
• Program Eligibility Requirements/Client Access
• Drug Formularies
• Program Budget (FY 1996 and FY 1997)
• Program Cost-containment Strategies
• Program Monthly Enrollment, Utilization, and Expenditures
• Barriers to the Provision of Service

The survey was fielded in mid-January 1997 and a total of 52 responses were received by mid-March. Follow-up telephone interviews were conducted to clarify submitted information and verify reported budget, expenditure, and utilization figures. States were asked to provide the total number of ADAP enrollees, the total number of utilizing ADAP clients and total monthly expenditures on pharmaceuticals for the months of July 1996 and December 1996. A “utilizing client” was defined as a client who received at least one prescription through the program during the given month. Actual and percentage increases/decreases in program client utilization and expenditures were calculated over the six month period.

NASTAD/ATDN took a snapshot of all state ADAPs in terms of clients served and program expenditures for the months of July 1996 and December 1996. In future surveys, we will be examining utilization trends by gathering information on the number of prescriptions filled and specific drug expenditures.

Recent Trends Among ADAPs: Clients Served and Expenditures

Based on the survey, the 52 ADAPs served 31,317 individuals during July 1996; that number increased by 23% to 38,500 individuals in December 1996. During the last six months of 1996, forty-two state ADAPs experienced increases in the number of utilizing clients (clients actually having prescriptions filled through the program). Some state ADAPs experienced a 50% percent or more increase in the number of clients served, including Arkansas (50%), Connecticut (64%), Kentucky (53%), Maryland (67%), and Utah (68%). During calendar year 1996, the national estimate of the number of clients served by ADAP was 80,000. (Annual estimates are limited due to monthly reporting and variable lengths of client tenure in the program.)

ADAPs also experienced significant increases in monthly expenditures during the last half of 1996. Program expenditures were reported to be $14.9 million in July 1996; expenditures grew 37% to $20.4 million. From June 1996 through December 1996, forty-four state ADAPs saw increased monthly program expenditures. Thirty-two ADAPs experienced increases of 20% or more and fourteen state programs saw expenditures rise by 50% or more in the last half of 1996. Several state ADAPs’ monthly expenditures rose by more than 100%, including Arkansas (104%), Connecticut (137%), Idaho (113%), Kentucky (103%), Maryland (116%), Mississippi (411%), North Dakota (101%), Texas (114%) and Utah (114%). The average per client cost among ADAPs nationally over the last six months of 1996 was approximately $506 per month or $6072 annualized.

These significant increases in program utilization and monthly expenditures occurred within the context of the discovery and approval of new treatments. They also occurred, at least initially, within the context of stable or incrementally increasing ADAP budgets. By mid-1996, it was apparent that the increasing demand for access to new therapies through ADAP would outstrip the financial resources of many of these programs.

ADAP Budgets: Federal and State Resources

The FY 1997 national ADAP budget totals $385 million and is composed of a variety of funding sources. These sources are:

• Ryan White CARE Act Title II grants to states — including dedicated federal ADAP support ($167 million) and discretionary Title II funding ( $59.9 million) which states may allocate to ADAP — totaling an estimated $226.9 million;
• State funding which 30 states draw from their general revenue and contribute to their ADAP — totaling an estimated $109 million;
• Ryan White CARE Act Title I funding which Eligible Metropolitan Areas (EMAs) in 13 states opt to contribute to state ADAPs totaling an estimated $22.7 million;
• Pharmaceutical manufacturer rebates for drug purchases/reimbursement in 21 states totaling an estimated $18.5 million;
• Private health insurance recovery of costs was reported by 3 states totaling $7.4 million;
• Other funding sources such as transfers from other discretionary sources and back-billing of Medicaid for the period for which an ADAP client is in the process of applying for state Medicaid eligibility was reported by 4 states — totaling $0.5 million.

In response to the shortages and the new demands for HIV/AIDS therapies, the national ADAP budget increased by $174 million (85% growth) between FY 1996 and FY 1997. The two most significant developments in the national ADAP budget picture in FY 1997 were the substantial increase in dedicated ADAP supplemental funding ($167 million total, representing a 221% growth over the previous year) and the doubling of state general revenue contributions nationally ($109 million total reported to NASTAD/ATDN, representing a 103% growth over FY 1996).

National ADAP Funding Source Changes Between 1996 and 1997 Funding Source FY 1996 FY 1997 % Change Title II Base (Federal): $58.2 million $59.9 million +3% Title II ADAP (Federal): $52.0 million $167 million +221% State Funds: $53.7 million $109 million +103% Title I (Federal): $25.9 million $22.7 million -12% Drug Rebates: $11.9 million $18.5 million +55% Insurance Recovery: $5.0 million $7.4 million +48% Other: $0.8 million $0.5 million -37% Total: $207.5 million $385 million +85% Congress appropriated an additional $115 million for Title II ADAP dedicated (or “supplemental”) funding for FY 1997. Federal ADAP supplemental funding has become the single most significant source of funding for most of the nation’s ADAPs, representing 43% of the national ADAP budget in FY 1997. As a line item, it represents the majority of state ADAP budgets in 32 states; in three states (Iowa, Minnesota and Tennessee) ADAP supplemental funding represents 100% of the total ADAP budget.

Thirty states contributed state-specific funding to ADAPs in FY 1997 totaling $109 million and representing 29% of the national ADAP budget. California is expected to provide the most substantial level of funding from its state general revenue fund to ADAP — $40.2 million. California’s state ADAP contribution represents 46% of its total FY 1997 ADAP budget of $87 million.

While at least 30 states are expected to provide funding for ADAP in FY 1997, at least 22 jurisdictions will not be providing state funding or are uncertain about contributions for FY 1997. The substantial growth in overall state funding of ADAPs nationally in FY 1997 is largely occurring within states that have previously provided state ADAP support. Variability in prescription drug benefits in state Medicaid programs — in terms of monthly limits on the number of prescriptions — represents an additional issue which complicates the ADAP budget picture in some states where ADAPs fill in the gaps in Medicaid coverage.

Emergency Measures to Sustain Programs

Despite the growth in ADAP budgets, the increase in client demand detailed in the survey has led numerous states to take emergency measures to sustain coverage of existing clients or make newer antiretroviral agents available. Thirty-five states reported taking at least one emergency measure in the last year in response to the crisis in ADAP funding and increased demand for combination therapies. Among the major emergency actions reported by state ADAPs:

• Seventeen states transferred funds from other AIDS-specific services or other discretionary health department funds to ADAP;
• Sixteen states instituted waiting lists (formal or informal) for access to their ADAP and/or access to protease inhibitors;
• Thirteen states capped ADAP client enrollment;
• Fifteen states capped or restricted access to protease inhibitors for active clients;
• Eleven states reduced the number of drugs covered by ADAP formularies;
• Seven states capped or restricted access to other formulary drugs (besides protease inhibitors);
• Seven states revised ADAP financial eligibility criteria by lowering income levels; and
• Six states canceled planned drug formulary expansions.

ADAP Budget Shortfalls

NASTAD/ATDN asked states if they expect to encounter a shortfall in their ADAPs before the end of the Ryan White Title II FY 1997 budget period (April 1, 1997 — March 31, 1998). Despite the emergency measures undertaken to prevent funding shortages, eleven states responded that they predict a shortfall in FY 1997. The states reporting anticipated shortages are: Alabama, Arizona, Arkansas, Colorado, Montana, New Mexico, Puerto Rico, Texas, Vermont, Washington State and West Virginia. Anticipated shortages reported by the eleven states total over $8.5 million in FY 1997.

It is important to note that some respondents are reluctant to report anticipated shortfalls in ADAP budgets since some state laws/regulations prohibit overspending of federal or state resources. In addition, state administrations may not wish to publicize program shortages before making formal appeals to state legislatures for increased appropriations. Instead, some states will scale back ADAP services — by limiting enrollment or drug coverage — rather than report budget shortfalls. Several states, including Florida, Mississippi and South Dakota, have recently been forced to severely limit access to their ADAPs or substantially cut back on client services in order to sustain limited program operations for the coming year.

Additionally, every state has recently received significant infusions of Ryan White Title II base and/or supplemental funding for FY 1997 programs. It may be too early to predict program budget shortfalls in FY 1997. Several factors may hasten additional states to report shortages before the end of 1997. These include: 1) failure to obtain proposed state and other funding increases for ADAPs; 2) approval of additional high-cost HIV/AIDS therapies before the close of the fiscal year; and 3) the impact of the federal HIV clinical practice guidelines which may drive a greater demand for expanded treatments.

How Accessible and Comprehensive Are ADAP Services?

This section examines the eligibility criteria states establish for client entry into ADAPs based on financial and medical need, as well as the extent of pharmaceutical drug coverage across the states. In addition, the variety of ADAP drug purchasing and distribution structures that exist are described — structures that often determine the accessibility and fiscal status of programs. Finally, barriers to client access — typically resource shortages — are illustrated, including a gross estimate of potential ADAP demand.

Program Eligibility Criteria

Eligibility criteria for access to ADAPs are developed by each state and, therefore, vary from program to program. Eligibility criteria are established at the local level within the guidelines established by the Ryan White CARE Act. Eligibility criteria generally fall into two broad categories: financial eligibility and medical eligibility. Some ADAPs, however, have developed additional eligibility requirements for access to specific formulary drugs. All of these factors contribute to a picture of uneven access to ADAPs across the nation.

Financial Eligibility

The majority of ADAPs use federal poverty guidelines when assessing financial eligibility. The exceptions are Maryland, Massachusetts, New Jersey, New York, Pennsylvania and Puerto Rico. These programs have specific income criteria that do not change annually unlike the federal poverty levels. Montana requests that an applicant provides evidence that the cost of the covered medications will create a severe financial burden on his/her household.

All other state ADAPs specify a percentage of the current federal poverty levels for determining financial eligibility. These percentages can be absolute, or eligibility can be tiered to allow sliding-scale co-payments based on the applicant’s income. Some programs will take into account out-of-pocket medication expenses when determining income, a practice known as “spenddown.”

The ADAPs with the most restrictive income criteria are Arkansas and Utah, which specify an income below 100% of the federal poverty level for full admission to their programs. This would currently mean an annual income of $7,890 or less for one person. However, Arkansas takes into account medical expenses when assessing financial eligibility for their program. Utah operates a sliding scale co-payment system which relates to how much over 100% of the federal poverty level (FPL) the applicant earns.

Other programs with a low financial threshold for admission are Georgia and North Carolina, both requiring an income at or below 125% of the federal poverty level (FPL). In both states, this requirement is absolute and there is no provision for sliding scale co-payments or the consideration of out-of-pocket medical expenses. This is in contrast to the next most restrictive states, North Dakota and Oklahoma, which both require income to be at or below 150% of FPL. North Dakota allows sliding scale co-payments up to 200% of FPL. Oklahoma allows out-of-pocket medication costs to be taken into account when determining income. Florida reports that the income requirement for their program is 200% of FPL, but notes that applicants with incomes between 100% and 200% of FPL will be assessed for a sliding scale co-payment.

At the opposite end of the spectrum, ADAP programs in California, Hawaii, Idaho and Rhode Island require an income at or below 400% of FPL. California allows people earning more than this to make a sliding scale co-payment based on their annual state income tax liability and family size, up to a ceiling of $50,000 per year. It has been observed, however, that even in states that have relatively more generous eligibility criteria, the majority of ADAP clients are earning less than 200% of FPL.

Medical Eligibility Criteria

The basic medical criteria for enrollment into any ADAP is a diagnosis of HIV infection. Alabama, Florida, Georgia, Idaho, Indiana, Mississippi, Nevada and South Carolina also require that an applicant have a CD4 cell count of less than 500, although this can be waived for pregnant women and neonates needing AZT (for the reduction of perinatal HIV transmission). South Carolina also notes that the CD4 requirement can be waived but does not specify under which circumstances.

Kentucky currently requires a CD4 count of under 550 or a history of confirmed pneumocystis carinii pneumonia for enrollment in the program, although again this can be waived for pregnant women and neonates. Iowa requests that applicants have a recent CD4 count result available, but there is no specific CD4 requirement for entry into the program.

A new prognostic laboratory test known as the HIV viral load test is now being used to determine medical eligibility for some ADAPs. The viral load test measures the amount of viral genetic material, known as HIV RNA, in a blood sample. Maine states that a CD4 count of under 400 or a viral load test result of over 20,000 copies/ml is required for admission into the program. Mississippi requires a CD4 count under 500 or a viral load test result of over 30,000 copies/ml. Puerto Rico specifies that the CD4 count be under 500 or the viral load be over 10,000/ml. Louisiana and Virginia require that new applicants have a recent viral load test result available but there is no specific viral load requirement for program entry.

ADAP Drug Formularies

States determine both the number and type of drugs that are available on their state ADAP formulary. Hence, there is a significant variation in the size and composition of ADAP formularies from state to state. ADAP formulary drugs fall into two main categories: antiretrovirals, which target HIV directly, and drugs to treat and/or prevent opportunistic infections.

New York’s ADAP offers the most comprehensive formulary, totaling 214 drugs, hepatitis vaccines and a variety of nutritional supplements and vitamins. This is commensurate with having the largest budget of any ADAP next to California. At the other end of the spectrum is the Louisiana ADAP which covers three drugs — all of which are protease inhibitors. An additional HIV drug formulary, however, is available to low-income state residents through several ambulatory care sites throughout the state, provided under the auspices of the Louisiana Health Care Authority (LHCA). There are plans to combine the state-funded LHCA program with the federally-funded ADAP in order to provide a more uniform HIV pharmaceutical assistance program for people living with HIV in Louisiana.

Although HIV incidence within a state, number of clients served and total budget might be expected to impact upon the comprehensiveness of an ADAP drug formulary, this is not always the case. North Dakota currently offers one of the largest formularies in the nation, although it has the smallest budget of any ADAP. North Dakota also served just fourteen clients during January 1997, making it the second smallest program next to Alaska in terms of clients served.

Antiretrovirals

At the time of our survey, three protease inhibitors were commercially available: saquinavir (Invirase), ritonavir (Norvir) and indinavir (Crixivan). Saquinavir was approved in December 1995, with ritonavir and indinavir approved by the Food & Drug Administration in March of 1996. On March 14, 1997, following the completion deadline for the ADAP survey, a fourth protease inhibitor, nelfinavir (Viracept), received FDA approval.

Four state ADAPs report that they do not cover any protease inhibitors: Arkansas, Nevada, Oregon, and South Dakota. Arkansas notes that formulary expansion is planned, but mentions no specific date. Nevada is considering adding new drugs if state funding can be secured. Oregon’s ADAP reports that formulary expansion may be possible if the ADAP can successfully move more ADAP clients on to more comprehensive health insurance coverage. South Dakota estimates that the program would require an additional $150,000 a year in funding to provide protease inhibitors to eligible clients. Two state ADAPs (Mississippi and Idaho) cover only one of the four approved protease inhibitors as of July 1997. Another thirty-two state ADAPs cover all four protease inhibitors; two of those states (New York and North Carolina) also cover all available antiretroviral drugs.

All ADAP programs, with the exception of Louisiana, offer all five approved nucleoside analog antiretroviral drugs: zidovudine (AZT, Retrovir), didanosine (ddI, Videx), zalcitabine (ddC, HIVID), stavudine (d4T, Zerit) and lamivudine (3TC, Epivir). Some programs, however, may restrict access to these drugs based on specific medical criteria.

Opportunistic Infection Medications

Drugs for the treatment and prevention of opportunistic infections (OIs) have significantly improved the length and quality of the lives of people with AIDS. The preventive treatments available for pneumocystis carinii pneumonia (PCP), for example, have extended survival after an AIDS diagnosis.

Most ADAPs offer some of the available OI drugs, but it is in this category of drug coverage that the widest variability is found across the states. In 1995, the Infectious Disease Society of America (IDSA) in conjunction with the U.S. Public Health Service (PHS) issued Guidelines for the Prevention of Opportunistic Infections in Persons Infected with Human Immunodeficiency Virus. The drugs referenced in these guidelines as “strongly recommended” for the prevention of OIs include: TMP/SMX, dapsone, pentamidine, pyrimethamine, leucovorin, sulfadiazine, clindamycin, fluconazole, itraconazole, isoniazid, foscarnet, ganciclovir and acyclovir. Currently, five ADAPs (10%) report that they have these drugs available on their formularies: Illinois, New York, North Dakota, Pennsylvania and Wyoming.

Currently, there are three drugs approved for the prevention of another common OI, Mycobacterium avium complex (MAC): rifabutin, clarithromycin and azithromycin. All of these treatments have demonstrated a clear ability to prevent MAC and two have also been associated with a distinct survival benefit. Thirty ADAPs cover all three of these drugs. Five ADAPs offer two of these drugs while six ADAPs cover only one.

A revised, updated ISDA/PHS document was released on June 27, 1997, containing fourteen drugs which are strongly recommended for the prevention of OIs. Two state ADAPs (New York and Illinois) currently cover all fourteen drugs on their formularies. Nine additional state ADAPs cover 80% or more of the highly recommended drugs. Five state ADAPs cover none of the highly recommended OI prophylactic drugs.

Drug Purchasing And Distribution Systems

The drug purchasing and distribution systems of state ADAPs have been under increasing scrutiny from Congress, the Administration and HIV/AIDS advocacy organizations over the past several months. The heightened interest is focused on state ADAPs’ ability to take advantage of available drug discounting mechanisms. In order to serve increasing numbers of potential clients while covering new and promising therapies (protease inhibitors in particular), states must carefully evaluate their drug purchasing and distribution systems in order to meet these challenges with finite resources.

The methods that state ADAPs use to purchase formulary drugs may be classified generally as either:

• direct purchasing with central drug purchasing (by the ADAP, or through a state pharmacy, purchasing agent or public agency/hospital); or
• indirect purchasing via contracts with a pharmacy network, mail order pharmacy, or pharmacy benefits management company (PBM) that purchase drugs and are subsequently reimbursed by the ADAP.

State ADAPs that purchase drugs directly usually have a centralized mechanism for dispensing drugs to clients. For example, drugs purchased through a central state pharmacy may be distributed through a network of local public health clinics/hospitals, sent directly to clients, or distributed through clients’ physicians. These “direct purchase” ADAPs participate in federal discount drug pricing programs such as Section 602 of the Veteran’s Health Care Act.¹ Another mechanism for state drug distribution is to allow ADAP eligible clients to receive drugs through their neighborhood drug store or local pharmacy networks. These “indirect purchase” ADAPs may in turn obtain rebates from pharmaceutical manufacturers to achieve cost containment and recovery. All states currently report using one or more cost containment measures — which include use of purchasing discounts, rebates or other cost savings mechanisms — or are making progress toward achieving the lowest possible costs for formulary medications.

Barriers to Serving Potential Clients

ADAPs, by statute, are intended to provide pharmaceutical assistance to low-income, uninsured and underinsured individuals. This may include lower-income individuals who: have no private insurance coverage, have inadequate prescription coverage through their private insurance or do not meet financial, disability or other criteria for Medicaid. There has been little effort in the past to identify the barriers that ADAP programs face in attempting to serve intended client populations.

States were asked to list the barriers, in order of severity, that impact on their ability to serve intended client populations. Twenty-four states indicated that inadequate funding is the primary barrier. Six states cited various administrative issues as another barrier to adequate service delivery and six indicated that lack of adequate service coordination with other providers — especially in rural areas — was a barrier to the adequate provision of service. Four states identified lack of coordination with the state Medicaid program as a barrier.

There are currently no national projections of the potential universe of ADAP clients who could be served in the absence of the identified barriers. According to the Centers for Disease Control and Prevention (CDC), twenty-eight states collect data on HIV infection rates in addition to AIDS cases, and two of these states only collect information on new HIV infections for infants. The lack of sufficient data on reported HIV infection in all states, in addition to a lack of a current and complete assessment of the numbers of HIV-infected individuals and individuals with AIDS who have adequate private insurance and/or Medicaid, makes a precise estimate of the potential ADAP client population problematic.

A gross estimate of potential demand for ADAPs nationally, however, can be extrapolated from existing published data sources. CDC estimates that there were 650,000-900,000 individuals with HIV in the U.S. in 1992. Based on a 1994 published study on AIDS cost and services utilization (ACSUS) from the federal Agency for Health Care Policy Research (AHCPR), approximately 21.4% of persons with symptomatic HIV disease receiving care in the U.S. have no health insurance coverage.² This population would represent those for whom triple therapy would be uniformly recommended and who would generally be eligible for an ADAP program (although no income information is available). This number is likely an underestimate of those who are uninsured who would be eligible for HIV therapy and does not include any estimates of the number of underinsured. This number is likely an overestimate of those who are aware of their HIV status and in care. Based on these estimates, between 140,000 to 280,000 individuals could potentially be eligible for the ADAP program. This number represents a two- to four-fold increase from the current estimate of 80,000 clients being served nationally on an annual basis.

Future Opportunities and Challenges

The information obtained from this survey paints a complex and often paradoxical picture of state ADAP programs. Although federal and some state contributions to these programs have increased dramatically over the past two years, evidence from many states indicates that resources remain insufficient to adequately serve people living with HIV/AIDS. As promising new treatments have become available, many ADAPs have sought to include these drugs on their formularies, yet many ADAPs are also faced with making difficult decisions regarding who may have access to these treatments due to severe budget constraints. Some state ADAP formularies offer a large menu of HIV and OI drugs, while others offer only a few.

For many individuals, ADAPs represent the primary — and sometimes the sole — source of access to medications which may significantly improve the quality and length of their lives. The high cost of combination antiretroviral therapy may be out of reach for individuals who continue to work and have no or inadequate insurance coverage, and who are not ill or poor enough to qualify for Medicaid. These individuals may also be excluded from eligibility for ADAPs based on financial or medical eligibility restrictions.

There is a growing body of literature which suggests that the use of combination therapy including protease inhibitors is a potentially cost-effective means of providing care for people living with HIV/AIDS. In fact, when compared with the cost-effectiveness of other commonly-used medical interventions, combination antiretroviral therapy is shown to be an economically sound investment in terms of cost per year of life saved.³ Making appropriate treatment available to people living with HIV/AIDS is not only medically and ethically supported, it may also make sound economic sense as well.

Future Considerations

Given the growing demand upon ADAP programs and the resulting cost implications — coupled with the tightening federal and state budget scenarios over the next several years — it appears likely that ADAPs, as they currently exist, are not prepared to fill the ever-increasing coverage gap for people living with HIV. From its inception, ADAP was designed to fill in a service gap and that gap is widening. Several proposals have recently been forwarded to help improve access to treatments for people living with HIV/AIDS. One such proposal would allow states to extend limited Medicaid benefits, including coverage for antiretroviral therapy, to individuals with HIV who do not meet disability criteria for access to Medicaid.

Among the major opportunities and challenges facing ADAPs in the future:

• Significant additional federal and state resources will be needed to enable ADAPs to maintain pace with demand to deliver the standard of care for HIV therapy. Although 30 states supplement federal support for ADAPs, 22 states do not contribute to this program. Diversity of federal, state and other resources is a likely predictor of fiscal stability for ADAPs in the future.
• Federal guidelines for HIV antiretroviral therapy will likely result in increased pressure on ADAPs to expand drug coverage and keep pace with expected client growth. Although the policy and budget implications of implementing these new guidelines have not been established, they will have a critical impact on state ADAPs.
• There is clearly room for improvement for many ADAPs to squeeze additional cost containment out of existing purchasing mechanisms, such as: federal drug discount pricing, pharmaceutical manufacturer rebates and better drug distribution systems. The challenge will be to effectively implement additional initiatives to enhance the purchasing power of ADAPs, including pharmaceutical rebates and a prime vendor system (under development at the federal level).
• Enhancing the ADAP interface with state Medicaid programs represents an additional opportunity and challenge. There is increased pressure to assure that ADAP represents the payer of last resort and that Medicaid programs are not inappropriately limiting prescription drug coverage. Limitations on Medicaid drug coverage — where states place a monthly cap on per client prescriptions — applies increased pressure on financially strained ADAPs to pick up the burden of paying drugs for underinsured Medicaid-eligible populations.
• Many states are exploring other innovative strategies for broadening access to HIV/AIDS therapies such as health insurance continuity programs and purchasing insurance through state risk pools. Paying health insurance premiums that provide access to care and medications can, in many cases, be more cost effective for states than covering expenses directly under ADAP or Medicaid. For states such as Minnesota and Oregon, insurance purchasing and continuity programs represent the bulk of their efforts to provide access to medications for low-income people living with HIV/AIDS. These and other initiatives may narrow the gap that state ADAPs would need to fill to provide uninterrupted medication coverage for eligible individuals with HIV/AIDS.

Footnotes

¹ Section 602 of the Veteran’s Health Care Act stipulates that state ADAPs, along with certain other federally-funded programs, can purchase covered drugs at discounted prices. The discount rate available to ADAPs under the 602 program is equal to the rebate amount that manufacturers are mandated to pay to state Medicaid programs.

² Schur, C.L., and Berk, M.L.: Health Insurance Coverage of Persons With HIV-Related Illness: Data From the ACSUS Screener. AIDS Cost and Services Utilization Survey (ACSUS) Report, No. 2. AHCPR Pub. No. 94-0009. Rockville, MD: Agency for Health Care Policy and Research, 1994.

³ Moore, R.D. and Bartlett, J.G.: Combination Antiretroviral Therapy in HIV Infection: An Economic Perspective. PharmacoEconomics, 1996, Aug: 10(2): 109-113.

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State AIDS Drug Assistance Programs: A National Status Report on Access:Press Release Report Part One Part Two State Data

Despite Funding Increases In Recent Years, Many States Limiting AIDS Drug Assistance Programs (ADAPs) In Response To Growing Demand And Costs

Drugs Covered, Eligibility, and State Contribution Vary Widely Across State ADAPs

Embargoed for release until: 9:30 am, EST, Thursday, July 10, 1997

Washington, D.C. — As expensive new drug therapies prove more promising in treating peopleliving with HIV/AIDS, a survey of the nation’s 52 state AIDS Drug Assistance Programs, or ADAPs,finds that despite an 85 percent increase in total program spending between 1996 and 1997, morethan half imposed limits to cope with growing demand and costs. Thirty-five ADAPs enacted at leastone “emergency measure” in the last year:

• Seventeen transferred funds from other AIDS-specific services or other discretionary health department funds;
• Sixteen instituted waiting lists for access to the program or protease inhibitors;
• Fifteen capped or restricted access to protease inhibitors;
• Thirteen capped the number of people served;
• Eleven reduced the number of drugs covered; and
• Seven restricted eligibility by lowering the income levels covered.

As of this month, 23 ADAPs continue to have an emergency cost-containment measure in place.

The study, which was conducted for the Kaiser Family Foundation by the National Alliance of Stateand Territorial AIDS Directors and the AIDS Treatment Data Network, also found wide variationacross the nation’s ADAPs in terms of income and medical eligibility criteria, state contribution to theprogram, and drugs covered:

• Income eligibility ranges from coverage for people with incomes up to 100% of poverty ($7890 or less for one person) in Arkansas and Utah to a high of 400% above the federal poverty level in California, Hawaii, Idaho and Rhode Island.
• In 1997, 30 ADAPs supplemented federal funding of the program with state money and 22 provided no additional contribution.
• Most ADAPs cover at least some of the drugs that can be used in the combination drug therapies that are recommended for the treatment of HIV-positive individuals by the federal Public Health Service. Two states — New York and North Carolina –currently cover all available antiretrovirals. Only four ADAPs — Arkansas, Nevada, Oregon, and South Dakota — do not cover any of the approved protease inhibitors.

“At a time when new guidelines are calling for expanded access to AIDS drugs, state and federal policymakers face difficult decisions about how to meet the growing demand on state AIDS Drug AssistancePrograms,” said Sophia Chang, M.D., Director, HIV Programs, Kaiser Family Foundation.

In June of this year, the Public Health Service (PHS), part of the federal Department of Health andHuman Services, released draft guidelines for HIV antiretroviral therapy that recommend patients starton a combination drug treatment earlier in the course of the disease.The report concluded that theguidelines would put further pressure on state programs to finance needed drugs: “Although theimplications of implementing these new guidelines have not been established, they will likely increasepressure on state ADAPs to expand drug coverage and keep pace with expected client growth.””Unfortunately, many state ADAPs are unprepared to offer this standard of care to eligible patients whomay be candidates for triple combination therapy,” the researchers said.

Budget and Demand: What’s Been Happening Recently to ADAP?

Between 1996 and 1997, the overall ADAP budget including both federal and state contributionsincreased 85 percent from $208 million to $385 million. Over the last two years, ADAP budgetsnationally grew three-fold.

National ADAP Funding Source Changes Between 1996 and 1997Funding Source FY 1996(in millions) FY 1997(in millions) Percent Change Federal * $136.1 $ 249.6 + 83% State $ 53.7 $109.0 + 103% Other (includes Drug Rebates, Insurance Recovery) $ 17.7 $ 26.4 + 50% Total $207.5 $385.0 + 85% * Includes both Title I and II funds The report notes that while states may be reluctant to report ADAP budget shortfalls, at least in partbecause some state laws prohibit overspending of federal or state resources, in this survey elevenADAPs did indicate anticipating shortfalls in 1997: Alabama, Arizona, Arkansas, Colorado, Montana,New Mexico, Puerto Rico, Texas, Vermont, Washington State, and West Virginia. In addition, threeothers — Florida, Mississippi, and South Dakota — reported having had to severely limit services alreadythis year in response to increased demand and cost.

“While there has been a significant increase in both federal and state support to ADAP in the last year,states are spending their funds almost as soon as they receive them due to growing client demand andthe costly new standard of treatment. In many states, this translates into restricted access to AIDSdrugs,” said Joseph Kelly, Deputy Director, National Alliance of State and Territorial AIDS Directors.

Forty-two of the 52 ADAPs reported increases in the number of low-income HIV-positive people servedin the last six months of 1996, the most recent period for which information is available. Nationally, thenumber of clients served in December 1996 was 23 percent higher than in the previous July — anaverage increase of approximately 1,000 clients per month. Monthly program spending during the samesix month period increased overall by 37 percent, from $14.9 million to $20.4 million.

During the calendar year 1996, the national estimate of the total number of people served by ADAP was80,000. The report’s authors find that “in spite of very limited data, an estimate of those persons withHIV who would be eligible for the program range between 140,000 and 280,000 nationally,” a range thatwould imply a “two- to four-fold increase in potential ADAP clients.”

AIDS Drug Assistance Program, or ADAP, is a state-administered program that providesaccess to the drugs used to treat HIV and prevent the onset of related opportunistic infections forlow-income people living with HIV/AIDS who do not have adequate private or public healthinsurance. The program forms one link in the continuum of publicly-funded HIV care and servicesthat includes the Ryan White CARE Act, Medicaid, Medicare, and local indigent health careprograms. The 52 ADAPs — fifty states plus the District of Columbia and Puerto Rico — receivefederal funds through the Ryan White CARE Act. In 1997, thirty states contributed supplementaryfunding. In 1997 total federal and state ADAP spending was $385 million. States set the incomeand medical eligibility, determine which drugs will be covered and how they will be purchased anddistributed.

The Kaiser Family Foundation, based in Menlo Park, California, is a non-profit, independent nationalhealth care philanthropy and is not associated with Kaiser Permanente or Kaiser Industries. TheFoundation’s work is focused on four main areas: health policy, reproductive health, and HIV in theUnited States, and health and development in South Africa.

The National Alliance of State and Territorial AIDS Directors (NASTAD) represents the chiefHIV/AIDS program managers in every U.S. state and territorial health department responsible foradministering federally-funded HIV/AIDS prevention surveillance, health care, supportive service andhousing programs, including Title II of the Ryan White CARE Act. Established in 1992, NASTADprovides a forum for technical assistance and dissemination of information about effective HIVprevention and continuum of care programs among state AIDS directors.

The AIDS Treatment Data Network (ATDN) operates the Access Project, a nationwide database ofAIDS Drug Assistance Programs, Medicaid Programs and pharmaceutical industry-sponsored drugaccess programs, as well as provides information about drugs used to treat HIV/AIDS.

Copies of State AIDS Drug Assistance Programs: A National Status Report on Access can beordered by calling the Kaiser Family Foundation’s toll-free publications request line at 1-800/656-4533. (Ask for report #1275).

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State AIDS Drug Assistance Programs: A National Status Report on Access:Press Release Report State Data

State AIDS Drug Assistance Programs (ADAPs): A National Status Report on Access

A survey of AIDS Drug Assistance Programs or ADAPs, which provide drug financing for people living with HIV/AIDS who do not have private or public health insurance, in the fifty states and the District of Columbia and Puerto Rico. The study includes information on ADAP eligibilty requirements, budgets, state contribution to the program, drugs covered and “emergency measures” states have taken to contain costs.

For an updated report, please see National ADAP Monitoring Project: Interim Technical Report, #1379.

• News Release: HTML format
• News Release: Despite Funding Increases in Recent Years, Many States Limiting AIDS Drug Assistance Programs (ADAPs) in Response to Growing Demand and Costs
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• Toplines/Survey
• Report
• Report

Side-By-Side Comparison Of Proposed Federal Legislation For Consumer Protection In Managed Care Plans

Nicole Tapay, Karen Pollitz, Jalena Curtis

Institute for Health Care Research and Policy Georgetown University Medical Center

July 18, 1997

Issue Summary

Over the past decade, an increasing number of Americans have been receiving their health care coverage through HMOs, PPOs and other types of managed care entities. The growing influence of managed care, in turn, has led consumers and state and federal policy makers to raise questions about the appropriate roles and rights of consumers, providers, employers, purchasers, and insurers within this system. Areas of concern include: 1) whether plans provide sufficient access and choice for consumers; 2) what is the appropriate method to enable consumers to appeal plan decisions; and 3) what rights consumers have with respect to information about their health plans.

Most states have basic protections in place regulating HMOs and managed care plans that are subject to state law. In addition, there has been a surge of recent state legislative activity in this area which has augmented the sophistication and specificity of some of these laws. At the federal level, Medicare currently imposes certain requirements upon managed care plans contracting with the program. Federal standards for Medicaid managed care have been somewhat more general; as states move toward requiring managed care enrollment, federal legislation has been proposed to strengthen protections for Medicaid beneficiaries. Also at the federal level, ERISA, which governs self-funded employer plans, contains minimal requirements for such plans and virtually no protections specifically targeted at the managed care components of such plans.

In the 105th Congress, several bills of varying scope have been introduced to address an array of concerns relating to consumer and provider protections in health plans. In addition, Congressional Budget Reconciliation Bills suggest several changes in this area for Medicare and Medicaid. This document is a side-by-side comparison of many of the leading federal bills in these areas. It begins with the following brief description of the bills contained in the side-by-side comparison tables. The Medicare and Medicaid provisions of the House and Senate Budget Reconciliation Bills (House and Senate Budget Bills) are presented in Part I. The eight remaining bills discussed below, introduced in the House and/or Senate, are presented by topic in Part II.

Please note: This document includes certain acronyms; many of these are defined in the “Definitions” section at the end of the document.

H.R. 2015–House Budget Bill/Provisions Relating To Medicare Managed Care

The House Budget Bill would establish a new Medicare managed care program, MedicarePlus. Plan options include a variety of coordinated care plans. Importantly, this option does not preclude Medicare eligibles from choosing the traditional fee-for-service Medicare program. The House Budget Bill includes requirements relating to information disclosure, gag rules, grievance procedures, quality assurance, access to care, access to specialists, emergency services, continuity of care, privacy, provider protection, solvency standards for provider-sponsored organizations, and enforcement issues.

The House Budget Bill requires plans to disclose specified information to federal authorities and enrollees. It also includes a grievance/appeals system with internal and external mechanisms, including time limits and reviewer requirements for all grievances and appeals. Time frames are established for prior authorization determinations. Minimum requirements are established for internal quality assurance. The House Budget Bill requires plans to provide access to providers in service area within a reasonable time frame and to cover appropriate specialist treatment.

The House Budget Bill sets forth a process for provider-sponsored organizations (PSOs) to receive federal waivers from state laws that fall within specified categories. Solvency standards for PSOs will be set at the federal level. The House Budget Bill also sets forth open enrollment and information requirements to facilitate beneficiary choice and mobility among Medicare options.

Status: Passed by the House on June 25, 1997, and awaiting action by reconciliation conference committee. The House Budget Bill incorporates two separate proposals for Medicare, as passed by the committees of jurisdiction (Commerce and Ways and Means) with some slight variations.

S. 947–Senate Budget Bill/Provisions Relating To Medicare Managed Care

The Senate Budget Bill would establish a new Medicare managed care program, Medicare Choice. In general, the Senate Budget Bill is very similar to the House Budget Bill, with differences highlighted within the attached side-by-side chart. Plan options include a variety of coordinated care plans; Medicare eligibles can still choose the traditional fee-for-service program. The Senate Budget Bill includes requirements relating to information disclosure, gag rules, grievance procedures, quality assurance, access to care, access to specialists, emergency services, continuity of care, privacy, provider protection, solvency standards for provider-sponsored organizations, and enforcement issues.

The Senate Budget Bill requires plans to disclose specified information to federal authorities and enrollees. It also includes a grievance/appeals system with internal and external mechanisms, including time limits for all grievances and appeals and limited reviewer requirements. Time frames are established for prior authorization determinations. Minimum requirements are established for internal quality assurance. The Senate Budget Bill requires plans to provide access to providers in their service areas within a reasonable time frame and to cover appropriate specialist treatment.

The Senate Budget Bill sets forth a process for provider-sponsored organizations (PSOs) to receive waivers from state laws. Solvency standards for PSOs will be set at the federal level. The Senate Budget Bill also sets forth open enrollment and information requirements to facilitate beneficiary choice and mobility among Medicare options.

Status: Passed by the Senate on June 26, 1997, and awaiting action by reconciliation conference committee.

H.R. 2015–House Budget Bill/Provisions Relating To Medicaid Managed Care

The House Budget Bill incorporates selected consumer protection standards for Medicaid managed care enrollees. The House Budget Bill includes requirements relating to gag rules, grievance procedures, quality assurance, access to care, access to specialists, emergency services, and continuity of care. It requires plans to permit female enrollees access, without prior authorization, to obstetricians/gynecologists for routine care and to designate such physicians as their primary care providers. It requires plans to establish internal grievance procedures that meet federal standards, including timeliness of considerations. It requires plans to follow quality standards. The House Budget Bill also prohibits restrictions on medical communications between providers and patients.

Status: Passed by the House on June 25, 1997, and awaiting action by reconciliation conference committee.

S. 947–Senate Budget Bill/Provisions Relating To Medicaid Managed Care

The Senate Budget Bill sets forth protections for Medicaid beneficiaries enrolled in managed care plans. The Senate Budget Bill includes requirements relating to information disclosure, grievance procedures, quality assurance, utilization review, access to care, access to specialists, emergency services, protections relating to covered benefits, discrimination, continuity of care, and enforcement issues. It permits states to mandate enrollment in a managed care plan as a condition of receiving Medicaid coverage. Beneficiaries generally must be given a choice of at least two plans, though states may waive this rule in rural areas under certain circumstances. States may not mandate managed care enrollment for certain, more vulnerable Medicaid beneficiaries. The Senate Budget Bill establishes standards relating to information disclosure, access to care, access to specialists, and access to emergency services. It requires plans to establish grievance procedures, sets a general requirement of timeliness for prior authorization systems, and provides for quality assurance standards. It prohibits balance billing by plan contractors and subcontractors. It establishes standards for financial soundness of Medicaid managed care plans, and authorizes the Secretary to apply new sanctions against plans that do not comply with the Senate Budget Bill’s requirements.

Status: Passed by the Senate on June 26, 1997, and awaiting action by reconciliation conference committee.

S. 644–D’Amato/H.R. 1415–Norwood

This bill establishes consumer protection standards for managed care plans, both insured and self-insured. Standards address information disclosure, gag rules, grievance procedures, utilization review, quality assurance, access to care, access to specialists, emergency services, continuity of care, privacy, experimental therapies, provider protection, discrimination, minimum solvency, and enforcement issues. The bill requires plans to disclose specified information to enrollees, prospective enrollees, health professionals, and providers. Time limits and restrictions on reviewer qualifications are established for internal review of grievances and appeals; time limits are also specified for UR prior authorization determinations. The bill mandates internal quality improvement programs with specified components. Enrollees must have access to specialized treatment when necessary, and must receive continued coverage when provider changes could disrupt continuity of care. Plans must offer point-of-service options with fair and reasonable premiums. Emergency services must be covered and must be accessible at all times. States may impose more stringent requirements than those specified in the bill.

Status: Hearings were held in the Committee on Labor and Human Resources in May 1997. No committee or legislative actions have been taken; provisions similar to portions of this bill have been incorporated into the House and Senate Budget Bills. The House companion bill to S. 644 is H.R. 1415 (Norwood).

S. 373–Kennedy/ H.R. 820–Dingell

This bill sets forth consumer protection standards for managed care plans, both insured and self-insured. Standards address information disclosure, gag rules, grievance procedures, utilization review, quality assurance, access to care, access to specialists, emergency services, continuity of care, privacy, experimental therapies, provider protection, and enforcement issues. The bill requires plans to disclose specified information, updated monthly, to state authorities, enrollees, and the public. The bill also outlines a grievance/appeals system with internal and external mechanisms, including time limits and reviewer requirements for all grievances/appeals. Time frames are also established for UR prior authorization determinations. Minimum requirements for internal quality assurance are established, including a minimum uniform data set to be specified by the Secretary. The bill requires plans to cover treatment by specialists, and requires continuity of care for specified periods after providers are no longer participating. If emergency services are covered benefits, standards are set forth for coverage without prior authorization and without regard to whether the provider is participating. To assist consumers with coverage choice, filing complaints, and to investigate instances of poor treatment of enrollees, the bill requires the establishment of state health insurance Ombudsmen. States are permitted to impose more stringent requirements on plans than those outlined in the bill.

Status: Hearings on the subject of health care quality in commercial and public plans have been held by the Senate Labor and Human Resources Committee and the Senate Finance committee. No hearings have yet been held on this particular bill, nor has committee or legislative action been taken. A similar bill to S. 373 has been introduced in the House, H.R. 820 (Dingell). Unlike S. 373, H.R. 820 does not amend ERISA.

S. 346–Wellstone

This bill sets forth consumer protection standards for managed care plans, both insured and self-insured. Standards address information disclosure, gag rules, grievance procedures, utilization review, access to care, access to specialists, emergency services, privacy, provider protection, discrimination, minimum solvency, and enforcement issues. The bill requires plans to disclose specified information in standardized form to prospective covered individuals and UR information to state officials. The bill also establishes guidelines for internal, external/independent, and expedited reviews of grievances, which are to be further developed through federal regulation. Requirements for mandatory UR programs are described, and additional standards are to be developed for certification of UR programs. The bill sets forth standards for provider credentialing, and requires states to develop uniform credentialing requirements. “Meaningful” access to specialist treatment is required, and enrollees with chronic conditions must receive ongoing direct access to specialists as appropriate. Emergency services must be covered and must be accessible at all times. States are to establish Offices for Consumer Information, Counseling and Assistance with Health Care to educate and assist consumers with health insurance issues. States may pass laws with equal effect or stricter requirements than those in the bill.

Status: Hearings on the subject of health care quality in commercial and public plans have been held by the Senate Labor and Human Resources Committee and the Senate Finance committee. No hearings have yet been held on this particular bill, nor has committee or legislative action been taken.

S. 864–Chafee/Breaux

This bill sets forth protections for Medicaid beneficiaries enrolled in managed care plans. The bill permits states to mandate enrollment in a managed care plan as a condition of receiving Medicaid coverage. Beneficiaries generally must be given a choice of at least two plans, though states may waive this rule in rural areas under certain circumstances. States may not mandate managed care enrollment for certain, more vulnerable Medicaid beneficiaries. The bill establishes standards relating to information disclosure, access to care, access to specialists, and access to emergency services. It establishes specific standards for access to care provided by Ob-Gyns for women and care by specialists for patient with chronic conditions. The bill requires plans to establish grievance procedures, sets a general requirement of timeliness for prior authorization systems, and provides for external review of enrollee grievances and of quality assurance standards. It prohibits balance billing and restrictions on medical communications between providers and patients. It establishes standards for financial soundness of Medicaid managed care plans, and authorizes the Secretary to apply new sanctions against plans that do not comply with the bill’s requirements.

Status: Some portions of this bill appear in the Senate Budget Bill, and others appear in the House Budget Bill.

H.R. 586–Ganske

This bill establishes consumer protection standards in the area of medical communications for group and individual insurers, including group health plans. Standards address gag rules and enforcement issues. Although a similar bill, S. 449 (Kyl/Wyden), is not included as a separate bill in the side-by-side, the description of H.R. 586 highlights the main difference between H.R. 586 and S. 449. Both S. 449 and H.R. 586 prohibit plan restrictions on medical communications and establish monetary penalties for violation of this rule. In addition, H.R. 586 provides that while plans may not restrict such communications, entities operating plans may place limitations on services offered based on religious or moral convictions. S. 449 includes a somewhat different “conscience clause.”

Status: During the 104th Congress, hearings on this bill were held by the Health Subcommittee of the House Committee on Ways and Means. In addition, the Health and Environment Subcommittee of the House Commerce Committee also held a hearing which focused on the issue of gag rules in managed care plans and whether legislation was necessary to address the issue. In July 1996, the full Commerce Committee met in open markup session and ordered the bill reported to the House, as amended, by a voice vote. No further action was taken. During the 105th Congress, portions of this bill have been incorporated within the House Budget Reconciliation Bill. See above.

H.R. 815–Cardin

This bill establishes consumer protection standards in limited areas for group and individual insurers, group health plans, Medicare (HMOs and competitive medical plans), Medicaid, and Medicare Select plans. Standards address emergency services, information disclosure, and enforcement issues. The bill sets forth standards for coverage of emergency services without prior authorization and without regard to whether providers are participating. Time limits are established for authorization of post-stabilization care. States may establish standards relating to emergency services to the extent they do not prevent the application of requirements in the bill.

Status: No legislative or committee action. Similar provisions are incorporated within the House and Senate Budget Bills, as well as within S. 644, S. 373, and S. 346.

H.R.135–DeLauro

This bill establishes consumer protection standards in limited areas for group and individual insurers, including group health plans. Standards address protections relating to covered benefits, provider protection, and discrimination as they relate to treatment of breast cancer. The bill establishes minimum length of stay requirements for mastectomies and lymph node dissections for treatment of breast cancer if these services are covered benefits. In addition, the bill prohibits financial incentives to providers and enrollees for purposes of avoiding these requirements; however, doctors in conjunction with patients may decide upon shorter lengths of stay. States may pass laws requiring at least the same length of stay or requiring that length of stay decisions be left to doctors in consultation with patients.

Status: No legislative or committee action.

S. 795–Jeffords/Lieberman

This bill establishes consumer protection standards for federal health plan contractors, including the Federal Employees Health Benefits Program, Medicare, Medicaid, TRICARE, and Veterans Affairs. Standards developed pursuant to the bill address information disclosure, grievance procedures, quality assurance, and enforcement. The bill requires plans to disclose specified information in standardized form to prospective enrollees. The bill also establishes a Federal Health Plan Quality Council to evaluate plans, direct government participation in regional health care accountability initiatives, and advise the President and Congress on consumer protection and quality of participants’ health care. The Council must establish criteria for mandatory certification of plans by licensed certification entities, with minimum criteria requirements specified in the bill. The Council will pay plans to reward them for meeting or exceeding quality targets; to fund this program, all plans must allocate annual payments to the Council.

Status: Hearings on the subject of health care quality in commercial and public plans have been held by the Senate Labor and Human Resources Committee and the Senate Finance committee. No hearings have yet been held on this particular bill, nor has committee or legislative action been taken.

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Side-By-Side Comparison Of Proposed Federal Legislation For Consumer Protection In Managed Care Plans:

Side-By-Side Part One Part Two Part Three Part Four

Heavy Use Of Home Health Services By Sickest And Poorest Seniors Drives Sharply Rising Medicare Home Health Costs

For-profit Agencies Increased Medicare Home Health Expenditures by More Than $1 Billion in 1994

Embargoed for release until: 9 am, EST, Tuesday, July 1, 1997

Washington, D.C. — As Congress looks to the Medicare home health benefit as a possible source ofsavings for the program, a new study prepared for the Kaiser Family Foundation by the Project HOPECenter for Health Affairs finds that the sickest Medicare beneficiaries–those who receive more than200 home health visits per year–have driven the recent expenditure increases in home health spending. These “high utilizers,” most of whom live at or near the poverty level, have more than doubled as ashare of total Medicare home health spending, increasing from 20% in 1991 to 43% of spending in1994, although they accounted for just 10% of home health users (Figure 1).

At the same time, the report finds that for-profit home health agencies generate higher Medicarespending–$1 billion in 1994–because they provide more visits to similar patients than non-profitagencies do.

“Sharply rising costs make the Medicare home health benefit a natural target for budget cutting,” saysDrew Altman, President of Kaiser Family Foundation. “But this study shows that the home healthservices also meet real needs of very sick and low-income seniors. Curtailing services withoutendangering needed care will be a real challenge.”

High Utilizers

Compared to the average beneficiary who received home health services in 1994, those with 200 ormore visits per year were much more likely to have had serious medical problems, with one-quarterhaving two or more hospital admissions within a year. They also had greater long-term care needs,with nearly 80% reporting severe functional impairments, such as difficulty bathing.

The study’s authors also point out that the majority (80%) of people who receive extensive home healthcare live close to or below the poverty level. They observe that adding a copayment for home healthservices for Medicare beneficiaries–part of the Senate bill that was passed last week–woulddisproportionately impact the near-poor who do not qualify for Medicaid but are unable to afford aprivate supplemental policy.

“While home health care was originally conceived as a short-term benefit to help seniors recover after ahospital stay, now only one-third of all home health patients receive this type of ‘post-acute’ care,”points out lead author Joel Leon, of the Project HOPE Center for Health Affairs (Figure 3).

“Medicare’s home health benefit has evolved into a limited long-term care safety net, especially for’high utilizers,'” explains Tricia Neuman, director of the Kaiser Medicare Policy Project and a co-author of the report. “It has also become an important source of medical care for really sick seniorswho are in and out of hospitals several times a year.”

For-Profit Agencies

The report also finds a significant difference in the number of home health visits provided by for-profitagencies as compared to non-profit or government-run agencies. The average annual Medicare homehealth expenditure per beneficiary ($4,442 in 1994) was $1,064 higher for beneficiaries served by for-profit providers. The higher expenditures associated with care from for-profit agencies–which totaled$1 billion in 1994–could not be explained by the age, health, functional status, or other characteristicsof the patients they served.

“The differences in the level of care provided by home health agencies warrant a closer look,” saysLeon.

Medicare’s Home Health Benefit was originally designed to provide short-term care at home tohelp beneficiaries recover following an inpatient hospital stay. Legislative, administrative, and judicialreforms in the 1980s caused an increase in the number of people receiving home health services and theaverage number of visits per home health user. Home health services are funded primarily out ofMedicare’s Hospital Insurance (Part A) Trust Fund, which is financed mainly through payroll taxes. There are no copayments imposed on home health visits. Home health agencies are paid on a cost-reimbursement basis, which is subject to limits.

The home health benefit accounts for 9% of total Medicare spending, nearly $19 billion, in 1997. Between 1991 and 1996, home health spending per enrollee grew at an average annual rate of nearly29%, four times the rate of inpatient hospital and physician care.

SOURCE: Medicare Chart Book, The Kaiser Medicare Policy Project, June 1997.

Understanding the Growth in Medicare’s Home Health Expenditures was prepared by Joel Leon,Ph.D., and Stephen Parente, Ph.D., of Project HOPE Center for Health Affairs, and Tricia Neuman,Sc.D, of the Kaiser Family Foundation. The analysis was based upon data from the Medicare CurrentBeneficiary Survey and related Medicare home health claims. Copies of the report can be ordered bycalling the Foundation’s toll-free request line at 1-800/656-4KFF. Ask for report #1274.

The Kaiser Family Foundation, based in Menlo Park, California, is a non-profit, independent nationalhealth care philanthropy and is not associated with Kaiser Permanente or Kaiser Industries. TheFoundation’s work is focused on four main areas: health policy, reproductive health, AIDS/HIV, andhealth and development in South Africa. The Kasier Medicare Policy Project was established in 1995to provide a framework for the Foundation’s ongoing work related to health coverage for the elderlyand disabled.

Understanding the Growth in Medicare’s Home Health Expenditures

Overview Of Selected Medicare Provisions:

A Side-by-Side Comparison of Medicare Current Law with House and Senate Provisions to the Balanced Budget Act of 1997

Prepared by: Health Policy Alternatives, Inc.

Prepared for: The Henry J. Kaiser Family Foundation

July 1997

Preface

This report, prepared by Health Policy Alternatives, presents a side-by-side comparison of current Medicare law with selected Medicare provisions included in the Balanced Budget Act of 1997, as passed by the House of Representatives and the Senate.

The report includes a description of selected Medicare provisions in:

• H.R. 2015, the Balanced Budget Act of 1997, as passed by the House of Representatives on June 25, 1997; and
• S. 947/H.R. 2015, the Balanced Budget Act of 1997, as passed by the Senate on June 25, 1997.

In addition, the report includes Congressional Budget Office estimates of the described provisions.

Because this document is intended to highlight proposed changes that are likely to have a direct impact on beneficiaries, it does not include provisions pertaining to payments and other policies affecting health plans that contract with Medicare or providers under the traditional Medicare program. Table Of Contents

Preface ii A. Medicare Plus/Medicare Choice Plans 1 1. Private plan options 1 2. General enrollment provisions 2 3. Special enrollment period 2 4. MSA enrollment 2 5. Disenrollment 3 6. Minimum enrollment 3 7. 50/50 rule 3 8. Premiums for basic benefits 4 9. Required additional benefits, etc. 4 10. Cost-sharing 5 11. Supplemental benefits (extra benefits not covered under the traditional Medicare program) 5 12. Balance billing by providers 6 13. Quality assurance 6 14. Access to emergency services 7 15. Minimum payments to out-of-plan providers 8 16. Provider-patient communications 8 17. Physician incentive plans 9 18. Marketing materials 9 19. Beneficiary counseling 9 20. Consumer information 10 21. Grievance and appeals 10 B. Establishment Of New Medicare Commission 11 1. Advisory commission on the future of Medicare 11 C. Medigap 12 1. Guarantee issue 12 2. Use of pre-existing condition exclusions 12 3. New Medigap policy 12 D. New Benefits 13 1. Preventive benefits 13 E. Co-Insurance And Other Out-Of-Pocket Costs 14 1. Home health copayments 14 2. Allowing beneficiaries to waive Medicare limits on provider charges 14 3. Hospital outpatient co-insurance 15 F. Part B Premium 16 1. Part B premium 16 2. Income-related Part B premium 16 G. Low-Income Protection 17 1. Low-income premium assistance 17 2. Low-income cost-sharing assistance 17 H. Eligibility 18 1. Delay Age of Entitlement 18

Balanced Budget Act Of 1997

Comparison Of Current Law With Selected House And Senate Medicare Provisions

A. MedicarePlus/Medicare Choice Plans Provision Current law House / h.r. 2015 Senate / s. 947 1. Private plan options Beneficiaries can choose coverage under a risk or cost contract HMO or remain in the traditional Medicare program. Beneficiaries can choose from an array of private plans including HMOs, PPOs, PSOs, plans offered by religious fraternal benefit societies, and MSAs (in combination with high-deductible plans) under a risk contract with Medicare. All options are required to meet revised quality and consumer protection standards.

CBO estimate^{1 98-02 98-07 Payment reforms:2 -$18.6 b -$75.1 b Selection effects: +$3.4 b n/a Similar provision except that beneficiaries may also choose coverage in an unrestricted fee-for- service (FFS) plan, or any other approved private plan with a Medicare contract. FFS plans would be exempt from most quality and consumer protection standards, including balanced billing limits.}

CBO estimate 98-02 98-07 Payment reforms: -$26.5 b -$150.7 b Selection effects: +$0.9 b n/a 2. General enrollment provisions Beneficiaries may enroll in a risk or cost contract HMO at any time during the year that the plan is open for enrollment. Risk or cost contract HMOs must be open for enrollment at least for 30 days during each year. From 1998-2000, all plans are required to have continuous open enrollment. Coordinated enrollment periods would be held during which changes among plans may be made for the following year beginning in October, 2000 (and in every succeeding year). Prior to coordinated open enrollment periods, comparative consumer data would be provided at “health fairs” sponsored by the HHS. Similar provision except individuals could enroll any time plans were open for enrollment including the coordinated enrollment period (beginning in November, 1998 and each year thereafter). 3. Special enrollment period No provision. In 2001 (and after), special enrollment periods would be held if a plan terminates operations in an area, an individual moves from plan service area, or a beneficiary disenrolls from a plan for cause. Similar provision except that special enrollment periods would begin in 1998 (and thereafter). 4. MSA Enrollment No provision. MSA enrollment permitted only at time of entitlement or annual open enrollment periods beginning for MSAs only in 1998. Enrollment in MSAs would be limited to 500,000 beneficiaries. Similar provision except that enrollment in MSAs would be limited to 100,000 beneficiaries. 5. Disenrollment Beneficiaries may disenroll at any time from an HMO. Disenrollments are effective within 30 days of notice. Beneficiaries permitted to disenroll at any time before 2001 as under current law (except disenrollment from MSA plans permitted onlyduring annual open enrollment periods.) In 2001, disenrollment is permitted only during the first 6 months of the year and during the annual open enrollment period. In 2002 and thereafter disenrollment permitted only during the first 3 months of year and during open enrollment period. Beneficiaries permitted to disenroll at any time as under current law, except for MSA plans, for which disenrollment is limited to annual open-enrollment periods. 6. Minimum enrollment Risk or cost contract HMOs must have at least 5000 enrollees (or 1500 in rural areas). Plans required to have at least 5000 (or 1500 for PSOs) enrollees or fewer under exceptions approved by HHS for rural areas (but not less than 500 for PSOs.) Requirements may be waived in first 3 years of Medicare contract. Plans required to have at least 1500 enrollees (500 in rural areas). PSOs permitted to count individuals served under risk arrangements with other plans to meet minimum enrollment standard. Requirement may be waived for first 2 years of Medicare contract. 7. 50/50 Rule Risk or cost contract HMOs are prohibited from having more than 50% of their enrollees eligible for Medicare or Medicaid. The 50/50 Rule would not apply to MedicarePlus plans. HHS provided authority to waive 50/50 rule after 1996 for current risk contract HMOs. The 50/50 rule sunsets after 1/1/99 and HHS provided authority to waive the rule prior to sunset. 8. Premiums for basic benefits Risk contract HMOs must provide at least the benefit package covered by traditional Medicare (“basic benefits”). They may not charge beneficiaries a premium for these benefits, except to cover cost-sharing equivalent to that in the traditional program. Similar to current law except that prohibition on additional premium for basic benefits would not apply to MSA plans. (For rules on minimum payments to out-of-plan providers, see below.) Similar provision except that prohibition on additional premium for basic benefits would not apply to either “unrestricted fee-for-service” plans^{3 or MSA plans. (For rules on minimum payments to out-of-plan providers, see below.) 9. Required additional benefits, etc. If the average of capitated payments a HMO receives from Medicare exceeds its adjusted community rate (ACR) for “basic benefits”, additional benefits equal to the excess paid by the program must be offered, the excess deposited in a benefit stabilization fund, or returned to Medicare.4 Cash rebates are not permitted. Current law is retained except that MSAs would not be required to compute an ACR or to provide additional benefits. Cash rebates would not be permitted as under current law. Identical provision. 10. Cost-sharing Average cost-sharing for “basic benefits” in an HMO cannot exceed the actuarial value of deductibles and coinsurance in the traditional, fee-for service program. Current law is retained except that MSA plans would not be subject to any limit on cost-sharing. Similar provision with an exception for “unrestricted fee-for-service” plans. MSA plans required to limit annual cost-sharing for Medicare covered services to $3000 for individuals, $5500 for couples. 11. Supplemental benefits (extra benefits not covered under the traditional Medicare program) HMOs may offer benefits in addition to those covered under the traditional Medicare program. HHS must review these benefits (for cost as barrier to enrollment) before plan can require beneficiary to pay for them as condition of enrollment. Supplemental benefits that are optional for beneficiaries are not subject to such review. Premium for supplemental benefits may not exceed ACR for services involved. Current law retained except that ACR limit on premiums would not apply to MSA plans. Similar provision with an exception to ACR limit on premiums for “unrestricted fee-for-service” plans as well as MSA plans. 12. Balance billing by providers HMOs must require participating providers not to balance bill Medicare enrollees. Out-of-plan hospitals, nursing homes may not charge more for Medicare covered inpatient services than the amount traditional Medicare would pay. Out-of-plan physicians may not charge beneficiary more than they could in the traditional program. Similar to current law, except that the Ways & Means bill would not apply balance billing limits to services furnished by physicians and other entities to enrollees in MSA plans. Similar to Ways & Means bill except that balance billing limits would not apply to services furnished by physicians and other entities to enrollees in either an “unrestricted fee-for-service” plan or an MSA plan. 13. Quality Assurance Plans are required to have ongoing internal quality assurance programs that stress health outcomes. External review by a peer review organization (PRO) of care is required. HHS has authority to designate an alternative entity to perform quality reviews. Ongoing internal quality assurance programs are required to measure outcomes, provide for utilization review, disclose data to facilitate choice, and conduct consumer satisfaction surveys. Plans must have contract with independent review agency that can be satisfied through approved private accrediting entities. Similar provision except that provisions do not apply to unrestricted FFS plans. Requires all plans to disclose loss ratios. 14. Access to emergency services HMOs are required to provide access to emergency services 24 hours a day, 7 days a week and to pay for out-of-plan emergency services without regard to prior authorization.}

Defines emergency services as services that are needed immediately because of an injury or sudden illness and cannot be delayed for the time needed to reach plan providers without risk of permanent damage to health. Plans would be required to coverout-of-plan emergency services without regard to prior authorization or the provider’s contractual relationship with the plan.

Emergency services are services needed to evaluate or stabilize an emergency medical condition. An emergency medical condition is a medical condition manifesting itself by acute symptoms of sufficient severity such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in specified serious adverse health effects. Similar provision except the definition of emergency medical condition would be expanded to include severe pain. 15. Minimum payments to out-of-plan providers No provision. To satisfy requirement that MedicarePlus plans provide at least the “basic benefits” under Medicare, out-of-plan providers must be paid at least amounts equal to traditional Medicare(plus allowable balance billing). MSAs must also make minimum payments (excluding balance billing) and count toward the deductible at least the amount traditional Medicare would pay. “Unrestricted fee-for-service” plans would not be required to meet standards for minimum payments to providers. 16. Provider-patient communications No provision. MedicarePlus plans could not prohibit or otherwise restrict communications between a health professional and a patient about the patient’s health status or treatment options if the health professional is acting within their scope of practice. No provision. 17. Physician incentive plans HMOs may not operate a physician incentive plan that links incentive payments (compensation) to specific patients. A physician incentive plan that places physicians at substantial financial risk must include stop-loss protection and periodic surveys on access. Similar to current law except Commerce bill would expand prohibition to cover incentive plans involving other health professionals. Would retain current law. 18. Marketing materials Risk contract HMOs must submit marketing materials to HHS for review and approval prior to use. MedicarePlus plans required to submit marketing materials to HHS 45 days prior to use. Unless disapproved, materials may be used. No MedicarePlus plan or agent is permitted to complete any election form for a beneficiary. Similar provision except MedicarePlus plans or agents are not prohibited from completing a beneficiary election form. 19. Beneficiary counseling HHS is authorized to make grants to states to support beneficiary insurance information and counseling services. HHS is authorized to require MedicarePlus plans to pay their pro rata share of the costs of information dissemination and to support the grant program established under current law for counseling services. Similar provision except that MedicarePlus plans are not required to share in the costs of the grant program for state counseling services authorized under current law. 20. Consumer information HHS is authorized to prescribe the requirements for risk contracting HMOs regarding information about qualified plans for beneficiaries. Brochures, enrollment forms and other promotional information must be approved by HHS prior to use. MedicarePlus plans are required to disclose at time of enrollment and annually the following information in a standardized format: plan service area; benefits and exclusions; provider network members; out-of-area coverage policy; premiums; prior authorization rules; grievance and appeal rights; and quality assurance programs. Similar provisions except that on request from a beneficiary, Medicare Choice plans must furnish data on their plan compared to the traditional Medicare program. 21. Grievance and appeals Risk or cost contract HMOs must have meaningful grievance and appeals procedures. In cases of denied services or disputes over charges, beneficiaries have the right to a hearing by HHS if the amount is over $100 (or judicial review if the amount is over $1000. Beneficiaries must be informed of their rights at the time of enrollment and annually thereafter. Similar to current law, MedicarePlus plans would be required to allow external review by HHS of service denials if amount of service exceeds $100, and to judicial review if amount exceeds $1,000.

In case of urgently needed care, reviews must be completed within 72 hours, or 24 hours for reconsiderations. HHS must contract with private entity for appeals of urgent or emergency care. Similar provision. B. Establishment of New Medicare Commission Provision Current law House / h.r. 2015 Senate / s. 947 1. Advisory commission on future of Medicare No provision. A 15-member bipartisan commission is established composed of members of Congress and Executive Branch officials who are directed to report, by 5/1/99, on the impact of baby boom retirees on Medicare, and to provide recommendations for comprehensive reforms, and on the feasibility of an ongoing independent commission to make annual recommendations on Medicare expenditure targets. Commission sunsets 30 days after submission of its report. Similar provision with specific direction to report on restoring financial solvency to Medicare through 2030, on an appropriate balance of benefits and individual contributions, on financing medical education, on the feasibility of a buy-in to Medicare at age 62, and on the impact of chronic disease and disability trends on the future of Medicare. C. Medigap Provision Current law House / h.r. 2015 Senate / s. 947 1. Guarantee Issue At age 65, beneficiaries have a one time 6-month open enrollment period for all 10 Medigap plans. Provision does not apply to beneficiaries under age 65 who are entitled to Medicare on the basis of disability. Beneficiaries would have an initial 6-month open enrollment period, and additional open enrollment for Medigap plans A,B,C, or F if: there is no break in prior coverage greater than >63 days; employer coverage is lost; there is a change in residence, or within 6 months of a one-time voluntary disenrollment from a MedicarePlus plan.

CBO estimate 98-02 98-07 +$0.2 b +$0.6 b Similar provision except the one-time voluntary disenrollment option permits open enrollment for 1 year to any Medigap policy with comparable or lesser benefits.

Also, extends initial 6 month open enrollment period to disabled beneficiaries.

CBO estimate 98-02 98-07 +$0.5 b +$1.5 b 2. Use of pre-existing condition exclusions Medigap issuers may impose pre-existing condition exclusion limits up to 12 months during the initial open enrollment period. For beneficiaries with at least 6 months of prior continuous coverage at age 65, during the initial open enrollment period, no preexisting condition exclusion may be imposed. Identical provision. 3. Standardization of Medigap policies Current law permits no more than 10 standardized packages of Medigap coverage to be sold. No provision. Expands list of standardized packages to include a combination of one of the existing 10 policies with an annual deductible of $1500. D. New Benefits Provision Current law House / h.r. 2015 Senate / s. 947 1. Preventive Benefits Medicare program provides limited coverage for preventive and screening services. Coverage is generally limited to diagnosis & treatment of an illness or injury. Coverage extended to annual mammograms for women >40, screening pelvic exams, annual prostate exams for men >50, colorectal screening including sigmoidoscopies, diabetes self-management training and certain supplies, & bone mass measurement.

Current outreach efforts on flu and pneumococcal vaccines extended through 2002.

Waives deductible for screening mammography and pap smears.

CBO estimate 98-02 98-07 +$4.6 b +$9.2 b Similar provisions except that screening pelvic exams, prostate exams, and the extension of outreach efforts are not included.

Waives coinsurance for screening mammograms provided in hospital outpatient departments.

CBO estimate 98-02 98-07 +$3.7 b +$7.3 b E. Co-insurance and Other Out-of-Pocket Costs Provision Current law House / h.r. 2015 Senate / s. 947 1. Home health copayments Home health benefits are not subject to deductibles or co-insurance under Part A or Part B. No provision. A $5 per visit copayment would be imposed on each visit covered under Part B (visits in excess of 100 for post- hospital patients and all visits not preceded by a 3-day hospital stay). Total annual amount of co-pays capped at Part A deductible.

CBO estimate 98-02 98-07 +$4.7 b +$10.5 b 2. Private contracting for Medicare-covered services. Providers and practitioners who furnish Medicare- covered services are required to file claims for their Medicare patients and to abide by limits on how much they can charge these patients above the amount Medicare pays. A provider is not required to file a claim for a covered service only if the beneficiary refuses to supply necessary information for privacy reasons. There are no exceptions to the limits on the amount a provider may charge beneficiaries. No provision. Physicians and other practitioners would be permitted to enter into private contracts for the provision of Medicare covered services with a beneficiary if no claim is submitted and if the practitioner otherwise submits no claims to Medicare for any other beneficiary. Such contracts would not be subject to Medicare balance billing limits. 3. Hospital outpatient co-insurance Co-insurance amounts for outpatient services are equal to 20% of the hospital charge without regard to Medicare payment amount.Co-insurance amounts would be limitedd to 20% of national median o charges for the service in 1996 updated yearly & hospitals allowed to reduce co-insurance to 20% of total payment amount.^{5 Similar provision except base year for setting co-insurance rates is 1997. F. Part B Premium Provision Current law House / h.r. 2015 Senate / s. 947 1. Part B premium Authority to set Part B premium equal to 25% of part B program costs expires after 1998. Sets Part B premium at 25% of part B program costs permanently.}

CBO estimate 98-02 98-07 +$12.9 b +$94.1 b Similar provision.

CBO estimate 98-02 98-07 +$12.4 b +$78.1 b 2. Income-related Part B premium All beneficiaries pay the same Part B premium, which covers 25% of part B program costs (remaining 75% of costs are funded by general revenues). An exception applies to low income Medicare beneficiaries (QMBs and SLMBs) who are entitled to receive Medicaid assistance in paying part B premiums. No provision. Individual beneficiaries with annual incomes over $50,000 & couples over $75,000 would pay higher Part B premiums, which phase up to 100% of Part B costs for individuals with over $100,000 annual income ($125,000 for couples). Administered by HHS based on income from most recently available tax records. Future premiums adjusted to reflect over or under payments in prior years, based on data provided by IRS. Revenues from higher part B premiums credited to Part A.

CBO estimate 98-02 98-07 +$3.9 b +$19.6 b G. Low Income Protection Provision Current law House / h.r. 2015 Senate / s. 947 1. Low-income premium assistance Individuals with income below 100% of poverty (QMBs) & those eligible for Medicaid are entitled to have Medicare premiums, deductibles and co-insurance amounts paid by Medicaid. Those with incomes between 100% & 120% of poverty (SLMBs) are eligible to have Medicaid pay their premiums only. Individuals with incomes between 120% & 135% of poverty would be entitled to Medicaid payment of premiums. Those with incomes between 135% & 175% of poverty would be entitled to Medicaid payment of only the portion of the premium related to the transfer of home health benefits to Part B. Premiums for individuals with incomes above 120% of poverty would be fully financed with Federal funds (i.e., no State match).

CBO estimate 98-02 98-07 +$1.1 b +$8.5 b States entitled to a block grant to support premium assistance to those with incomes between 120% & 150% of poverty. States have flexibility to design assistance within income limits and are not required to apply for grants. Grants sunset after 2002. Grant funds transferred from Part B trust fund total $1.5 billion over 5 years.

CBO estimate 98-02 98-07 +$1.5 b +$1.5 b 2. Low-income cost-sharing assistance Individuals eligible for Medicaid or with annual incomes below 100% of poverty are entitled to have Medicaid pay their Medicare premiums, deductibles, and co-insurance. States are required to pay the full amounts for which individuals would otherwise be liable. No provision. Medicaid would not be required to pay co-insurance amounts for dual eligibles or QMBs to the extent that the Medicare payment exceeds what Medicaid would pay for the same service. Providers would not be permitted to bill for amounts not recovered from Medicaid and beneficiaries would not be financially liable for any payment.

CBO estimate 98-02 98-07 Medicare +$2.9 b +$7.3 b Medicaid -$5.0 b -$12.6 b H. Eligibility Provision Current law House / h.r. 2015 Senate / s. 947 1. Delay Age of Entitlement Individuals generally become entitled to Medicare at age 65. Individuals under age 65 who qualify for Social Security disability benefits become entitled to Medicare after a 24-month waiting period. No provision. Age of entitlement to Medicare would be increased gradually two months/year) to age 67 by 2027.

CBO estimate 98-02 98-07 $0.0 b -$10.2 b

1. CBO estimates of the federal budgetary effects of H.R. 2015 as passed by the House of Representatives on June 25, 1997 and S.947 as passed by the Senate on June 26, 1997. House estimates are based on provisions as reported by the Ways and Means Committee.

2. Savings estimates include impact of payment reforms which are not described in this document.

3. The bill defines an “unrestricted fee-for-service plan” as one that “provides for coverage without restrictions relating to utilization and without regard to whether the provider has a contract or other arrangement” with the plan.

4. The ACR is essentially a proxy for what a plan would charge beneficiaries for the Medicare benefit package if they were enrolled in a community-rated commercial product.

5. Scoring of coinsurance protections are incorporated in the CBO savings estimate of implementing a prospective payment system for hospital outpatient department services.

Part I: Congressional Budget Reconciliation Proposals

A. Entities Regulated Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) Establishes new Medicare managed care program, “MedicarePlus;” MedicarePlus plan options include coordinated care plans (HMOs, PPOs), MSA plans (exceptions for MSA plans from some requirements). (Medicare eligibles can still choose the traditional fee-for-service program.) Medicare; established new “Medicare Choice” program. Medicare Choice plan options include fee-for-service, PPOs, point-of-service plans, PSOs, HMOs, MSAs, any other private plan for the delivery of health care items and services. (Medicare eligibles can still choose traditional fee-for-service program.) Medicaid managed care plans. State Medicaid programs and Medicaid managed care entities. B. Plan Choice/Enrollment Protections Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Point-Of-Service Requirement Point of service plans as well as closed-panel plans can be offered under Medicare Plus (Commerce Committee–see section 1852(m)). Traditional fee-for-service option would continue as well as a non-MedicarePlus option. Similar provision to House Budget Bill (Medicare). No provisions. No provisions. 2. Other Enrollment Provisions After transition period, enrollment changes without cause permitted during 90 day period after beneficiary first enrolls, and once annually thereafter. Annual coordinated enrollment period. Disenrollment for cause permitted at any time. No limit on number of enrollment changes. Annual coordinated enrollment period. Disenrollment for cause permitted at any time. No provisions. States may mandate enrollment in managed care. Choice of at least 2 plans must be available (other than in rural areas, where out-of-plan care must be permitted under certain circumstances). Managed care may not be required for special needs children, Medicare beneficiaries, or Indians.

Enrollment changes without cause permitted during 90 day period after beneficiary first enrolls, and once annually thereafter. Disenrollment for cause permitted at any time. C. Information Disclosure Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Covered And Excluded Benefits Required; must describe service area and out-of-area coverage. Similar provision to House Budget Bill (Medicare). Information standards to be developed under QA program. Required, including plan service area; plan also must disclose benefit carveouts. 2. Enrollee Financial Obligations Required, including liability for balance billing; MSA plans must provide comparison of cost sharing with other MedicarePlus plans. Ways and Means Committee also requires MSA plans requirements to compare balance billing with other MedicarePlus plans. Similar provision to House Budget Bill (Ways and Means Committee) (Medicare). No provisions. Required. 3. List Of Health Plan Providers Number, mix, and distribution of providers. Commerce Committee also requires listing of any point-of-service options. Similar provision to House Budget Bill (Medicare). No provisions. Required upon request. 4. Description Of Prior Authorization/UR Process And Requirements Required for prior authorization. Similar to House Budget Bill (Medicare). No provisions. Required upon request. 5. Description Of Grievance/Appeals And UR Process/Requirements Required. Similar provision to House (Medicare) on grievances; UR processes upon request. No provisions. Required. 6. Outcomes Of Grievance, Appeals, and UR Processes Required; performed by Secretary (Commerce Committee only). No provisions. No provisions. No provisions. 7. Quality Indicators Required to the extent available, including comparison with fee-for-service indicators. Similar provision to House Budget Bill (Medicare). No provisions. Required to the extent available. 8. Enrollee Satisfaction Data Required to the extent available. Similar provision to House Budget Bill (Medicare). No provisions. Required to the extent available. 9. Enrollee Utilization Data No provisions. No provisions. No provisions. Must be disclosed to state for beneficiaries under age 21. 10. Provider Financial Incentives/Payment Methods Extent to which organization provides benefits through DSH/teaching hospitals, and extent to which differences between payment rates reflect disproportionate share percentage of low-income patients and presence of medical residency training programs (to Secretary). No provisions. No provisions. Required. 11. Disclosure of UR Criteria/Algorithms No provisions. No provisions. No provisions. No provisions. 12. Data Standardization Requires specified information to be broadly disseminated to beneficiaries and prospective beneficiaries. Similar provision to House Budget Bill (Medicare). Must provide information to state using Medicare Risk (Sec. 1876) information set or alternative set.

Marketing materials must be approved by state and may not contain false or misleading information. Enrollment and informational materials must be easily understood by Medicaid beneficiaries and enable comparison of plans.

Similar provision to House Budget Bill (Medicaid). 13. Plan Loss Ratios No provisions. No provisions. No provisions. Required. 14. Other Information No provisions. No provisions. No provisions. Upon request, information on plan financial soundness.

Extent to which beneficiary may select provider of choice. D. Discrimination Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Anti-Discrimination Provisions Prohibits denial, limitation, or conditions upon coverage based on any health status-related factors outlined in HIPAA (medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, or disability). Not required to enroll individuals with end-stage renal disease, but must continue to cover individuals who develop end-stage renal disease while enrolled in MedicarePlus plan. See also “Provider Protection.”

Must accept eligible individuals without restrictions (limited exceptions based on capacity). Same provision as House Budget Bill (Medicare). Plan must distribute marketing materials to entire service area. Prohibits discrimination in enrollment or disenrollment based on health status or anticipated need for health services.

Plan must distribute marketing materials to entire service area. E. Consumer Ombudsman Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Consumer Ombudsman, Functions HHS required to establish coordinated enrollment process, provide comparative plan information, and notice of coverage and enrollment rights to beneficiaries. Secretary must maintain toll-free number and Internet site to assist beneficiaries. Secretary may contract with outside entities to perform functions.

Beneficiary complaints may be taken to Social Security offices or directly to HCFA. Similar provision to House Budget Bill (Medicare). No provisions. Not required; states may use independent enrollment brokers to market plan enrollment to eligible beneficiaries. 2. Consumer Ombudsman, Financing No provisions. No provisions. No provisions. States may receive federal matching payments for eligible Medicaid managed care enrollment brokers. F. Access, Generally Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Access To Sufficient Number, Mix, Distribution Of Providers Must ensure access within service area with reasonable promptness (does not use number, mix, distribution requirement). Similar provision to House Budget Bill (Medicare). QA standards include access provisions. See QA requirements. Required to sufficiently assure same access as would be provided to non-Medicaid enrollees.

Adequate access to transportation and translation services.

Extended hours for primary care services.

Travel time standard for primary care services.

Services to be available and accessible with reasonable promptness in manner which assures continuity, and when medically necessary, 24 hours, 7 days/week.

HHS may impose additional access requirements. 2. Special Rules For Access In Rural/Underserved Areas No provisions. No provisions. No provisions. Rural Medicaid beneficiaries must be allowed to obtain care from providers outside plan in appropriate circumstances as established by HHS. 3. Enrollee Choice Of Primary Care Provider No provisions. No provisions. No provisions. If state requires enrollment with primary care case manager, beneficiary must have choice of 2 primary care case managers. 4. Emergency Care Access 24 hours, 7 days/week. Similar provision to House Budget Bill (Medicare). No provisions. 24 hours, 7 days/week. 5. Other Requirements Must cover service provided by nonparticipating provider if: (a) service was medically necessary and required immediately because of unforeseen illness, injury, or condition, and (b) it was unreasonable under the circumstances to obtain services through plan; must cover renal dialysis provided if enrollee temporarily out of service area. Similar provision to House Budget Bill (Medicare). No provisions. Plans can be sanctioned for substantially failing to provide medically necessary covered services.

States may not restrict choice of family planning providers. G. Access, Specialists Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Standard For Specialist Access Must provide access to appropriate credentialed specialists for:

Commerce Committee: treatment and services determined to be medically necessary by provider in consultation with individual;

Ways and Means Committee: for medically necessary services. Similar to House Budget Bill (Ways and Means Committee) (Medicare). No provisions. Must refer beneficiaries with sufficiently serious or complex conditions to available and accessible specialists.

Must refer children with special health needs to appropriate pediatric health care providers.

Must allow beneficiary access to religiously affiliated long-term care facilities if plan does not provide access to appropriate faith-based facilities. 2. Standard For Access To Specialists For Chronic Illness No provisions. No provisions. No provisions. No provisions. 3. Care by Ob-Gyn No provisions. No provisions. Requires plan to permit female enrollee to designate Ob-Gyn as PCP or, if enrollee has not designated such a provider as PCP, plan may not require prior authorization for coverage of Ob-Gyn services by participating professional. No provisions. H. Continuity Of Care Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Enrollee Protections When Provider Contract Changes No provisions. No provisions. QA requirements include standard for continuity of care. See QA requirements. No provisions. I. Experimental Treatment Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Coverage Of Experimental Treatment No provisions. No provisions. No provisions. No provisions. J. Emergency Services Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Coverage Of Evaluation And Treatment Without Prior Authorization, Regardless Of Whether Provider Non-Participating Required. Required. Required. Required. 2. Coverage Of Maintenance And Post-Stabilization Care Requires compliance with guidelines that may be established by Secretary to promote timely and efficient coordination of appropriate care. Similar provision to House Budget Bill (Medicare) except specifies components Secretary’s guidelines must include. Requires compliance with guidelines established for MedicarePlus program. Must follow HHS guidelines relating to efficient and timely coordination of appropriate maintenance and post-stabilization care.

If covered service, good faith effort to obtain prior approval required. 3. “Prudent Layperson” Standard For Determining Emergency Service² Yes. Yes. Yes. Yes. 4. “Reasonable Payment” Standard For Participating And Non-Participating Providers No provisions. No provisions. No provisions. No provisions. 5. Prior Authorization Standard For Other ER Services No provisions. No provisions. No provisions. No provisions. 6. Other Requirements No provisions. No provisions. No provisions. No provisions. K. Grievances, Internal Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Internal Grievances Process Required for coverage denials. Required for coverage denials. Requires process for resolving grievances. Required for denial of coverage or payment for services. 2. Timeliness Standard Reconsideration of coverage denials within 30 days of receipt of medical information but no later than 60 days from date of determination.

Expedited process required upon request of physicians or enrollees when use of normal time frames could jeopardize life or health of enrollee or enrollee’s ability to regain maximum function; must notify of reconsideration as expeditiously as health condition requires but not later than 24 hours (longer if Secretary permits). Similar provision to House Budget Bill (Medicare).

Similar provision to House Budget Bill (Medicare). Requires resolution of oral or written complaints before board of appeals within 30 days.

Also requires expedited procedure for certain grievances. No provisions. 3. Professional Qualifications Of Grievance Reviewers Reconsideration of denials based on lack of medical necessity made only by physicians with appropriate expertise in field necessitating treatment (Commerce Committee only) and physician must not have been involved in initial determination. Similar provision to House Budget Bill (Ways and Means Committee) (Medicare). Board of appeals to include organization physician and nonphysician representatives, non-enrollee consumers; and providers with expertise in area necessitating treatments. No provisions. 4. Written Documentation Of Adverse Determinations Requires notice of coverage denials, including statement of reasons (Commerce Committee only). No provisions. Requires notice of coverage denials or termination or reduction of services, including statements of reasons, explanation of complaint process and other appeal rights and description of how to obtain supporting evidence. No provisions. 5. Maintain Internal Records Of Grievance Process/Actions Taken No provisions. No provisions. No provisions. No provisions. L. Grievances, External/Independent Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. External Grievance Procedures If amount in controversy of appeal is $100 or more, enrollee entitled to administrative hearing before Secretary. If $1000 or more, entitled to judicial review of Secretary’s final decision.

Secretary must contract with independent, outside entity to review and resolve reconsiderations affirming denial of coverage. Commerce Committee specifies that resolution be timely. Similar provision to House Budget Bill (Medicare).

Similar provision to House Budget Bill (Ways and Means Committee) (Medicare). No provisions. No provisions. 2. Certification Of Reviewer Hearing before the Secretary. Similar provision to House Budget Bill (Medicare). No provisions. No provisions. 3. Binding Process Yes; administrative hearing (some subject to judicial review). Similar provision to House Budget Bill (Medicare). No provisions. No provisions. M. Utilization Review Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. UR Program No provisions requiring UR program. No provisions requiring UR program. No provisions. No provisions. 2. Applicable Standards Mandatory UR standards set forth in bill. Similar to House Bill (Medicare). See “Quality Assurance Program” and “Grievances, Internal.” No provisions. 3. Enrollee Or Provider Input Physician input required on medical policies, quality, and medical management procedures.

Required for length of stay decisions (Commerce Committee). Similar provision to House Budget Bill (Medicare). No provisions. No provisions. 4. Reviewer Professional Standards No provisions. No provisions. No provisions. No provisions. 5. Timeliness Standard “Timely” standard (not defined), determined by urgency of situation, applies to prior authorization of nonemergency services. (Prior authorization not required for emergency services.)

Expedited process required upon request of physicians or enrollees when use of normal time frames could jeopardize life or health of enrollee or enrollee’s ability to regain maximum function; must notify of determination as expeditiously as health condition requires but not later than 72 hours from receipt of request or information³ (longer if Secretary permits). Similar provision to House Budget Bill (Medicare).

Similar provision to House Budget Bill (Medicare). No provisions. Plan may require prior authorization for services only if process provides for decisions to be made in a timely manner, depending on urgency of situation. 6. Consistency Standard No provisions. No provisions. No provisions. No provisions. 7. Notice Or Documentation Of UR Decisions Notice of any coverage denial required, including statement of reasons and description of grievance/appeals procedure (Commerce Committee). No provisions. No provisions. No provisions. 8. Other Patient Or Provider Protections No provisions. No provisions. No provisions. Child referred for treatment or permitted to seek treatment out of plan for special health care need shall be deemed to have obtained any prior authorization required. N. Quality Assurance Program Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Quality Assurance Requirements Mandatory program, subject to regulation. Must include data measuring health outcomes and other quality indices, UR protocols, review by physicians/other health professionals of process followed in provisions of health care, monitoring and evaluation of high volume and high risk services and care of acute/chronic conditions, evaluation of continuity and coordination of care, mechanisms to identify over/underutilization, action to improve quality with assessment of effectiveness, measures of consumer satisfaction. Must publish information on quality/outcomes to facilitate beneficiary comparison and choice (Secretary to establish form and guidelines). Similar provision to House Budget Bill (Medicare). States must develop and implement QA and QI standards, consistent with standards to be developed by the Secretary. Must require QA data to be provided to state and must use data and information set specified for Medicare risk contractors (Sec. 1876) or alternative set.

Regularly review scope and content of QI strategy.

Must include other aspects of care including grievance procedures, marketing and information standards, and adequately provide for financial reporting.

Must include access standards to assure availability within reasonable time frames and ensure continuity of care, adequate primary and specialist care, procedures for monitoring quality of care that reflect spectrum of populations.

Other aspects of care including grievance procedures and marketing and information standards. Required internal QA program; state contract with managed care entity must provide for state to develop and implement QA strategy with respect to access to care in reasonable time, adequate physician networks, and quality/ appropriateness of care.2. Independent Review Requires independent review through independent quality review and improvement organization approved by Secretary.

Accreditation: plans deemed to have met quality standards if accredited by private organization through process approved by Secretary. Standards must be no less stringent than standards in section 1856. Similar provision to House Budget Bill (Medicare). No requirement for independent review.

States may choose to have plans privately accredited; Secretary shall specify requirements for standards and process by which organizations shall be deemed in compliance.

Plan also deemed to have met QA standards if plan is current Medicare risk contractor (Sec. 1876) or MedicarePlus organization. Annual external independent review of quality outcomes, timeliness of and access to covered services, includes audit of sample medical records.

Managed care plans with Medicare contracts or accredited by private organization approved by HHS deemed in compliance and not subject to external quality review.

HHS will monitor state external quality review systems and will have “look-behind” authority to validate managed care plan compliance with quality standards. O. Privacy And Confidentiality Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Safeguards For Individually Identifiable Medical Information Must have procedures to safeguard privacy of such information, to maintain accurate and timely medical records and other health information for enrollees, and to assure timely access for enrollees to medical information. Similar provision to House Budget Bill (Medicare). No provisions. No provisions. P. Protections Relating To Covered Benefits Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Mandated Benefit Coverage Mandatory coverage for evaluation and treatment of emergency services. See also “Emergency Services.”

MedicarePlus plans must cover Medicare benefits for beneficiaries.

Length of inpatient hospital stay as determined by attending physician, in consultation with patient, to be medically appropriate (Commerce Committee only). Similar provision to House Budget Bill (Medicare), except for Commerce Committee provision on length of stay. No provisions. Medically necessary Medicaid covered services must be provided; plan can be sanctioned for “substantial failure” to provide medically necessary covered services.

Medically necessary shall not be construed as requiring coverage for abortion other than in cases of rape, incest, or if necessary to save life of mother. 2. Requirements If Covered Service See above. See above. No provisions. See above. 3. Balance Billing Limits On Out-Of-Network Services Prohibits balance billing for out-of-network services.

Commerce Committee exempts unrestricted fee-for-service MSA plans from these provisions. Similar provision to House (Medicare), except exempts MSA and unrestricted fee-for-service plans from this provision. No provisions. Prohibits balance billing by plan providers and subcontractors. Q. Anti-Gag Rule Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Medical Communications Between Providers And Patients No restrictions allowed on health care professionals’ communications about individual’s health status or medical care for individual’s condition, regardless of whether such care is covered under plan. No provisions. Similar provision to House Budget Bill (Medicare). No provisions. 2. Exceptions Based On Religious Or Moral Convictions Not required to provide, reimburse for, or cover counseling or referral service if organization objects to provision of such service on moral or religious grounds. Must make information available on policies regarding such service to prospective enrollees before or during enrollment and to enrollees within 90 days after organization adopts change in such policy. No provisions. Similar provision to House Budget Bill (Medicare). No provisions. R. Provider Protection Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Provider Incentive Plans⁴ Prohibited unless: not made as inducement to restrict medically necessary services; if plan puts provider at substantial financial risk, plan must provide stop-loss protection and conduct periodic customer satisfaction/access surveys; and plan must provide Secretary with sufficient information to determine if plan acceptable. Similar provision to House Budget Bill (Medicare). No provisions. Required to meet standard for Medicare plans. 2. Anti-Discrimination Prohibits discrimination in selecting health professionals for network based on race, origin, gender, age, disability (Commerce Committee).

May not deny participation, ability to participate in, or ability to be reimbursed for providing covered services based solely on license or certification (Commerce Committee). Similar provision to House Budget Bill (Commerce Committee) (Medicare), with clarification that plan not precluded from including providers only to extent necessary to meet enrollee’s needs nor does it preclude plan from implementing quality measures. No provisions. Similar provision to House Budget Bill (Medicare), and adds prohibition on discrimination in indemnification against health professional. 3. Provider Contracting Prohibits direct or indirect arrangements for providers to indemnify plans against any liability resulting from civil action brought for damage caused by plan denial of medically necessary care.

Once provider’s contractual obligations have ended, plan may not enforce contractual provisions preventing provider from joining or forming competing MedicarePlus organization that is a PSO in same area (Commerce Committee only). Similar provision to House Budget Bill (Ways and Means Committee) (Medicare).No provisions. No provisions. 4. Provider Application And Participation Requirements Must have procedures on physician participation including notice of rules, written notice of participation decisions adverse to physicians, and process for appealing adverse decisions with physician input. Commerce Committee excepts unrestricted fee-for-service MSA plans from this provision. Similar provision to House Budget Bill (Ways and Means Committee) (Medicare). No provisions. Managed care plan’s written participation requirements for any provider shall include terms and conditions that are no more restrictive than those included in agreements with other participating providers. 5. Payment Timeliness Standard No provisions. No provisions. No provisions. Required to meet general Medicaid requirements for timely payment unless alternative schedule is mutually agreed upon. 6. Other Payment Protections No provisions. No provisions. No provisions. Payments to RHCs and FQHCs: center or clinic that contracts with Medicaid managed care plan shall be able to elect payment under 1905(a)(2)(C) or 1902(a)(13)(E).

Payment adequacy for managed care organizations: states shall certify for Secretary that Medicaid payments to managed care entities are actuarially sufficient relative to cost of covered services. S. Provider Credentialing Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Provider Credentialing Requirements No provisions, but does require access to credentialed specialists. No provisions, but does require access to credentialed specialists. No provisions. No provisions. T. Minimum Solvency Requirements Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Minimum Solvency Provisions State solvency standards apply for Medicare Choice plans other than PSOs and to PSOs that do not have a waiver from the Secretary. (See “Enforcement;” federal solvency standards apply to PSOs that have obtained waivers.)⁵

Solvency standards for PSOs with waivers are to be developed through a negotiated rulemaking process. Secretary required to take into account, in developing the standards, delivery system assets and organization’s ability to provide services directly and alternative means of protecting against insolvency (examples provided). Same provision as House Budget Bill (Medicare) except also requires Secretary to take into account any NAIC standards for risk-based health delivery organizations in developing standards.⁶ Organization deemed to have met federal standards if meets state standards for private HMOs or other licensed risk-bearing entities unless the organization is not responsible for inpatient hospital service and physician services, or is a public entity, or solvency of organization is guaranteed by state or organization is controlled by one or more federally-qualified health centers and meets solvency standards established by state for such organization.

Effective 10/1/98 except that provides 3-year transition period for organizations that already have Medicaid contract. HHS will establish standard, including model contracting guidelines with contractors and subcontractors, to protect against risk of insolvency for Managed care plans.

Managed care plans shall report financial information to states annually.

States are required to annually audit at least 1 percent of in-state managed care plans operating.

Beneficiaries are protected from debts of providers and managed care plans due to insolvency. U. Enforcement Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Enforcement Provisions State enforcement of state requirements except with respect to PSOs with a waiver and state standards preempted by federal standards (See also “Preemption”).

No provision for agreement with state to enforce state non-solvency standards.

Secretarial certification process to ensure that PSOs meet federal solvency standards.

Secretarial approval process for waiver applications (includes explicit requirement that organizations have applied for state licensure); waiver supersedes state licensing standards that would prohibit organization from contracting with MedicarePlus. Commerce committee also states that waiver shall not supersede state quality and non-solvency consumer protection laws if imposed uniformly and generally applicable to entities engaged in substantially similar business.⁷ Similar provision to House Budget Bill (Medicare).

Secretary to enter into agreement with states with respect to PSOs with a waiver to ensure enforcement of state law non-solvency requirements for PSOs with waiver.

Similar provision to House (Medicare) on certification of PSO solvency standards.

Secretarial approval process of waiver applications; waiver supersedes any state law that would prohibit organization from contracting with Medicare Choice except that non-solvency state licensing provisions shall apply.⁸ Joint federal-state, as under current law. States must establish intermediate sanctions to enforce requirements on managed care plans. Secretary also may provide for application of sanctions against non-complying Medicaid managed care plan. V. Preemption Of State Law Issue H.R. 2015–House Budget Bill(Medicare) S. 947–Senate Budget Bill(Medicare) H.R. 2015–House Budget Bill(Medicaid) S. 947–Senate Budget Bill(Medicaid) 1. Preemption Provisions States may establish or enforce more stringent requirements on plans⁹ (section 1852(n) of Commerce Committee mark only).

Federal solvency standards preempt state solvency standards for PSOs with a waiver (waiver criteria include state solvency standards that differ from federal standards, other evidence of state’s differential treatment of entities engaged in substantially similar business).

Does not preempt state non-solvency requirements for all MedicarePlus plans (including PSOs) if :

Commerce Committee: state standards are applied on a uniform basis and are generally applicable to other entities engaged in substantially similar business and that provides consumer protections in addition to, or more stringent than, those developed by the Secretary.

Ways and Means Committee: state standards are not inconsistent with MedicarePlus standards. Preempts state solvency standards for PSOs with a waiver.

Preempts state non-solvency standards to extent they are inconsistent with the federal non-solvency standards developed by Secretary. No provisions. No provisions. Return to top

Side-By-Side Comparison Of Proposed Federal Legislation For Consumer Protection In Managed Care Plans:

Side-By-Side Part One Part Two Part Three Part Four

This side-by-side provides a comparison of the Medicaid provisions in the House and Senate versions of the Balanced Budget Act of 1997 with current law.

• Report
• Report