National Health Law Program The Basics of Medicaid Mara Youdelman National Health Law Program Congressional Briefing: Universal Health Care Task Force February 8, 2002

The National Health Law Program NHeLP is a national non-profit public interest law firm working working to increase and improve access to quality health care on behalf of America’s limited income individuals including the unemployed poor, people of color, women, children, the elderly and people with disabilities Our areas of expertise include: Medicaid; managed care; waivers of Medicaid requirements under §§ 1115 and 1915(b); Early and Periodic Screening, Diagnostic and Treatment services (EPSDT); civil rights; and racial and ethnic disparities in health care

What is Medicaid? Medicaid is a federal-state entitlement program for low-income individuals that covers basic health and long-term care services Medicaid serves four main groups of low-income Americans: the elderly, people with disabilities, parents and children – over 40 million individuals

Why should the Task Force be concerned about Medicaid? Medicaid and Medicare together represent a foundation for UHC – incremental reform can be built upon these two programs Single largest source of federal funds to the states – about 40% of the federal grant-in-aid dollars flowing to the states (1999) Medicaid under stress – state budget deficits and rising healthcare costs Losing ground in Medicaid can hinder efforts towards UHC Medicaid – moving up, SCHIP, covering more low-income individuals Medicare – moving age limit down, buy-ins for 55-65, PACE On average, states spent 10% of their own general fund dollars on Medicaid; Medicaid spending has risen avg. _____/year and projected for ___ for 2002 Rising unemployment b/c of recession likely to lead to increased Medicaid rolls

What does Medicaid pay for? Pays for over 1/3 of all births in U.S. Finances over 70% of all nursing home residents -- paying for about ½ of all nursing home care

What do states receive from the federal government? Federal Gov’t reimburses states for a substantial portion of their costs Services: FMAP avg. 57% (varies from 50% to 83% depending upon a state’s per capita income) Administrative costs: FMAP varies from 50% to 100%, depending on the administrative activity FMAP – Federal Medical Assistance Percentage; poorer states have higher FMAP, based on states per capita income Admin costs – 90% for family planning; 100% for implementing and operating an immigration status verification system

Who is Covered? Over 40 million individuals (1998) Children – 50% of all Medicaid beneficiaries; roughly 21 million or 1 in 4 U.S. children Parents -- 8.6 million low-income adults in families with children, the vast majority of whom are women Elderly -- more than 4 million adults 65 and over Individuals with Disabilities -- about 6.8 million Elderly -- 1.8 million of these were eligible because they were receiving cash assistance through the Supplemental Security Income (SSI) program. Others have too much income to qualify for SSI but “spend down” to Medicaid eligibility by incurring high medical or long-term care expenses.

Who is covered? Created to cover some low-income individuals Eligibility depends on categories States set own income & asset eligibility criteria Does not cover childless adults and most parents

Who is Covered? Covers more individuals than Medicare or any other health insurer But covers only 25% of non-elderly with incomes below 200% FPL* * 200% FPL is $35,000 for a family of four

Mandatory Eligibility Mandatory v. Optional Eligibility Groups – mandatory and optional Services – mandatory and optional Groups  Services  Mandatory Eligibility Optional Eligibility Mandatory Services YES Optional Services Depends on State It is often said that there isn’t one Medicaid program but rather 50 different Medicaid programs b/c of broad flexibility states have to shape eligibility categories and benefit packages.

Eligibility Categories

Eligibility Categories: Mandatory Pregnant women and children up to 6 years at < 133% FPL Children 6-19 years, < 100% FPL § 1931 – families deemed to be receiving AFDC because their current income, resources and circumstances would have met the State’s AFDC standards in effect on July 16, 1996 Transitional Medical Assistance – certain families whose income exceeds the State’s eligibility limit due to an increase in earned income Individuals receiving SSI and related programs Newborn children of Medicaid-eligible women Qualified Medicare beneficiaries & Specified Low Income Beneficiaries Women for 60 days post-partum And other categories listed in the Medicaid Act Working disabled – qualified severely impaired individuals and qualified disabled working individuals Non-parent, non-disabled adults can only be covered if state receives a waiver

Eligibility Categories: Optional Pregnant women and infants with income > 133% and < 185% FPL Children 1-6 > 133% FPL; 6-19 > 100% FPL Optional targeted low-income children (SCHIP expansion of Medicaid) “Medically needy” - those with incomes above the eligibility limit until their qualifying medical expenses are taken into account Continuous and presumptive eligibility Individuals receiving home and community based services - mostly elderly and disabled Women with breast or cervical cancer Non-institutionalized children with disabilities And other categories listed in the Medicaid Act

Mandatory and Optional Medicaid Recipients, 1998 By group Of all 1998 enrollees, this is percentage mandatory and optional Source: Urban Institute estimate, based on data from FY 1998 HCFA-2082 and HCFA-64 reports, 2001, reprinted with permission from the Kaiser Family Foundation

Expenditures by Enrollment Group Elderly and blind/disabled comprise 1/3 of enrollees but over 2/3 spending Children and parents comprise 2/3 of enrollees but less than 1/3 spending *Total expenditures exclude administrative expenses; ** Disproportionate Share hospital payments SOURCE: Urban Institute estimate, based on data from FY 1998, HCFA-2082 and HCFA-64, reports; reprinted with permission from Kaiser Family Foundation

Services

What services does Medicaid cover? Relatively few services are mandatory States have extensive flexibility to provide additional services Approx. 2/3 of total Medicaid spending is “optional” spending – on either optional beneficiaries or optional services for mandatory beneficiaries So while 70% of eligibility categories are mandatory, 70% of spending is optional.

Services: Mandatory Physician services Laboratory/x-ray services In-patient hospital services Outpatient hospital services EPSDT Family planning services & supplies Pregnancy related services FQHC & rural health clinic services Nurse midwife services Certified nurse practitioner services Nursing facility services for ind. > 21 Home health care services (for ind. entitled to Nursing Facility care) Mandatory services apply to mandatory eligibility categories For optional eligibility categories, states can determine scope of services EPSDT services include periodic screenings to identify physical and mental conditions as well as vision, hearing, and dental problems. EPSDT services also include follow-up diagnostic and treatment services to correct conditions identified during a screening, without regard to whether the state Medicaid plan otherwise covers those services with respect to adult beneficiaries. FQHC services are primary care and other ambulatory care services provided by community health centers and migrant health centers funded under section 330 of the Public Health Service Act, as well as by “look alike” health clinics that meet the requirements for federal funding but do not actually receive federal grants. FQHCs must provide services without regard to ability to pay.

Services: Optional Prescription drugs Home health services for ind. not eligible for nursing facility Private duty nursing services Dental services Vision care Physical therapy Institutional care for individuals with mental disabilities In-patient psychiatric hospital services for ind. < 21 Hospice care Case management services Personal care services Other services outlined in Medicaid Act

Services: Mandatory v. Optional 65% of spending is for optional services or groups Total: $154 billion Note that: while 70% of eligibility categories are mandatory (see slide 13) , 70% of spending is optional. NOTE: Expenditures do not include DSH payments, admin costs, or accounting adjustments. SOURCE: Urban Institute estimates based on data from FY 1998 HCFA-2092 and HCFA-64 reports; reprinted with permission from the Kaiser Family Foundation

Medicaid Spending by Eligibility Category & Service, 1998 $ Billions $24.5 $16.0 $67.7 $46.1 NOTE: Expenditures do not include DSH, administrative costs, or accounting adjustments. SOURCE: Urban Institute Estimates, based on data from FY 1998 HCFA-2082 and HCFA-64 reports, reprinted with permission from Kaiser Family Foundation.

Distribution of Spending by Eligibility Group and Service, 1998 Illustrates broad flexibility states have to determine eligibility and services SOURCE: Urban Institute estimates, based on data from FY 1998 HCFA-2082 and HCFA-64 reports; reprinted with permission from the Kaiser Family Foundation

Additional Information NHeLP serves as a resource for information about the Medicaid Program Washington, DC Office: 202-289-7661 Website: www.healthlaw.org NHeLP recently published its updated Advocates Guide to the Medicaid Program – sign up on back table for a copy or contact us youdelman@healthlaw.org or 202-289-7661