MMA Implementation: Issues Facing States

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Presentation transcript:

MMA Implementation: Issues Facing States Victoria Wachino Center on Budget and Policy Priorities Presentation to Medicare Congress November 1, 2005 wachino@cbpp.org

Medicaid Expenditures by Service, 2003 DSH Payments 5.4% Home Health and Personal Care 13.0% Inpatient Hospital 13.6% Ambulatory Care 10.4% Nursing Facilities/ ICF/MR/ Mental Health 22.9% 45% of Rx spending for duals 55% for other groups Drugs 10.0% Other Acute 6.3% Managed Care Payments 15.6% Medicare Premiums 2.3% Total = $266.1 billion SOURCE: Urban Institute estimates for the Kaiser Commission on Medicaid and the Uninsured.

Offsets to Cost of Medicare Part D, 2006-2010 $195 Billion SOURCE: Kaiser Commission on Medicaid and the Uninsured analysis of CBO Estimate of Conference Agreement on MMA

Projected State “Clawback” Payments, 2006-2010 In Billions: SOURCE: CMS, January 2005 Final Rule on MMA Implementation. Estiamtes are shown on a calendar year basis.

Issues With the Clawback Calculation Base year is 2004 (so subsequent cost containment activity is not factored in) Inflated by annual growth in Part D benefit (may be higher than what states would have experienced) One size fits all (no state-to-state variation) States have no control over payment

State Estimates of Fiscal Impact Associated with FY 2006 Medicare Part D Clawback Obligations Number of States as of July 2005: SOURCE: Kaiser Commission on Medicaid and the Uninsured survey of Medicaid officials in 50 states conducted by Health Management Associates, October 2005.

What Determines Whether and How Much a State Saves as a Result of MMA? How much it saves on drug coverage for duals through Medicaid How much it saves on drug coverage through state-only programs (heavily concentrated in three states) Clawback Payments Unexpected New Enrollment in QMB/SLMB Administrative Costs from Enrolling Duals Net state losses about $1B this year Grow to more than $2 billion in 2010

Impact on Medicaid of Medicare Drug Law (percentage of states reporting) SOURCE: Kaiser Commission survey conducted by the Health Policy Institute, Georgetown University (2005). NOTES: Based on survey responses from 37 states in 2005. n = number of states responding to the survey question.

Challenges in Transitioning to Part D Coverage Sharing information needed for transition (states identifying duals for feds) Helping beneficiaries process information about wide array of choices available to them How duals get assigned to plans (can be randomly assigned or select) Subsidy for lowest cost average plan Medicaid drug coverage ends December 31st—no transition period

Decisions States Are Making Now How to make transition less abrupt for duals? Will the state fill in the gaps in coverage for dual eligibles Provide “backup” coverage for drugs (on temporary or ongoing basis) Pay drug copayments so beneficiaries continue to receive drugs States fill in the gaps at their own expense – federal funding is banned Administering Eligibility Determinations for Low-Income Subsidy Very few states have appropriated funds for new administrative costs

Harmful Medicaid Provisions in House Reconciliation Bill Rolling back key standards that make coverage affordable for beneficiaries to permit states to: Restrict benefits and eliminate guarantee of comprehensive coverage for children through Early and Periodic Screening Diagnostic and Testing Significantly increase cost sharing for all services for many beneficiaries Substantially increase “tiered” co-payments for prescription drugs Allow providers to deny services to beneficiaries who are unable to pay

Falloff in Use of Prescription Drugs After Tiered Copayments Were Imposed in Minnesota In 2003, Minnesota imposed tiered copays of $1 to $3 on some Medicaid beneficiaries. Research documented: Half of beneficiaries who needed medications could not get them due to cost One-third of those people went to ER or were admitted to a hospital for reasons related to not having needed medication Three-quarters of those who went without their medications reported that their health was harmed