Medicare Modernization Act of 2003: Implications for Low-Income People and State Medicaid Programs
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Transcript of Medicare Modernization Act of 2003: Implications for Low-Income People and State Medicaid Programs
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Medicaid and the Uninsured
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Medicare Modernization Act of 2003:
Implications for Low-Income People and State Medicaid Programs
Jocelyn GuyerKaiser Commission on Medicaid and the Uninsured
October 7, 2004
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Implications for People on Medicare and Medicaid (“Dual Eligibles”)
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11%
17%
2%
13%
24%
6%
14%
24%
22%
52%
3%
71%
Alzheimer'sDisease
Stroke
Diabetes
Reside in LTCFacility
Income Below$10,000
Fair/Poor HealthStatus*
Dual Enrollees (MedicareBeneficiaries with Medicaid)
Other Medicare Beneficiaries
Characteristics of Dual Enrollees Compared to Other Medicare Beneficiaries, 2000
*Community-residing individuals only.SOURCE: KCMU estimates based on analysis of MCBS Cost & Use 2000.
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Treatment of Dual Eligibles in the Medicare Law
• As of January 1, 2006, full benefit dual eligibles no longer are eligible for Medicaid-financed prescription drug coverage
– Loss of Medicaid coverage applies even if a dual eligible is not enrolled in a Part D plan
• Instead, full benefit dual eligibles are expected to enroll in subsidized Part D coverage
– Full benefit dual eligibles will be autoenrolled in a Part D plan if necessary; proposed MMA regulations leave unclear who will handle
– All dual eligibles are deemed automatically eligible for a Part D low-income subsidy
• Dual eligibles will receive extensive Part D subsidies, but gaps in their Rx coverage may remain
– Risk of no coverage during a transitional period– The drugs they need may not be covered by their Part D plan, particularly
because full subsidies are limited to average or low-cost plans– Some co-payment obligations
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States must begin accepting applications for the new low-income subsidy program
July1
Deadline for HHS to provide information on the Part D plans available to Medicare beneficiaries.
October15
First day on which dual eligibles and others can sign up for a Part D plan.
November15
Key Dates Related to Enrollment of Full Benefit Dual Eligibles in Part D Plans
2005 20062004
Federal Medicaid matching funds no longer available for prescription drugs for full benefit dual eligibles.
January1
MMA regulations call for dual eligibles to begin to be autoenrolled in Part D plans if they have not signed up on their own (date likely to change).
May15
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Challenges in Helping Dual Eligibles Make the Transition to Medicare Part D
• To avoid coverage gaps, 6.4 million dual eligibles will need to be signed up for Part D plans in 6 weeks
• Dual eligibles unlikely to voluntarily enroll in the absence of extensive counseling and additional time to make a choice
• Autoenrollment will require a number of steps– Identify dual eligibles who need to be signed up for Part D plans– Identify plans for which they are eligible– Assign dual eligibles to plans and tell plans which dual eligibles they are
supposed to cover
• Once autoenrolled in a plan, dual eligibles still will need help before they can use their Part D coverage
– Provide dual eligibles with enrollment cards– Educate them about their Part D plans’ rules for filling prescriptions – Switch their drugs to match those on their plans’ formularies (or try to
secure exceptions)– Advise them of option to switch Part D plans
• Dual eligibles in nursing homes will require special assistance
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Other0.3%
Private insurance
19.9%
Medicare risk HMO6.5%
Medicaid (dual
eligibles)59.9%
Medicare FFS13.4%
Distribution of Medicare Beneficiaries in Long-Term Care Facilities, by Insurance Status, 2000
Total = 2.3 million Medicare beneficiaries
SOURCE: Medicare Current Beneficiary Survey Access to Care File, 2000.
Non-dual eligibles
40%
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Implications for Other Low-Income Individuals
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The New Part D Low-Income Subsidy Program
• Establishes a Medicare Part D low-income subsidy program– Eligibility is extended to individuals with income below 150 percent of
poverty who meet an asset test
– Subsidies are particularly generous for those below 135% of poverty who meet an asset test
• To secure subsidized Part D coverage, beneficiaries must complete a two-part process:– Sign up for a Part D plan
– Enroll in the low-income subsidy program
• Special eligibility, enrollment, and cost-sharing rules apply to dual eligibles
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Eligibility for the Low-Income Drug Subsidy Among Part B Medicare Beneficiaries,
Calendar Year 2006
59%
36%
5%
Medicare Part B Beneficiaries = 39.9 Million
SOURCE: KCMU analysis of CBO’s cost estimate of the Medicare prescription drug benefit, July 2004. Due to rounding, percentages may not total 100% and data may not sum to 39.9 million.
Income <150% poverty, but ineligible
due to assets(1.8 million)
Eligible for Part D subsidy
(14.2 million)
Ineligible due to income > 150%
poverty(23.8 million)
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Characteristics of Subsidy-Eligible Individuals, Calendar Year 2006
45%
13%
42%
Subsidy Eligible Individuals = 14.2 Million
SOURCE: KCMU analysis of CBO’s cost estimate of the Medicare prescription drug benefit, July 2004. Due to rounding, percentages may not total 100% and data may not sum to 39.9 million.
Non-duals Eligible for
Full Subsidy(6.0 million)
Non-duals Eligible for Partial Subsidy
(1.9 million)
Eligible for Part D subsidy as a
dual eligible(6.4 million)
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The New Part D Low-Income Subsidy Program:Application and Enrollment Procedures
• People can apply for Part D subsidies at Social Security Administration offices or State Medicaid agencies
– Treatment may vary depending on site of application (e.g., verification requirements, appeals rights, redetermination procedures, “backdoor” access to subsidies via Medicaid eligibility could depend on application site)
• States must screen applicants for Medicaid eligibility under Medicare Savings Programs and, if eligible, offer them enrollment
• Some details of enrollment process beginning to emerge in HHS’s proposed MMA regulations
– States required to begin accepting applications on July 1, 2005– All QMBs, SLMBs, and QI-1s will be eligible for the full low-income subsidy – Asset test will consider only “liquid assets” and non-primary residences– For people who apply at SSA, automated data matches will be used to verify
income and assets as much as possible
• SSA expected to issue proposed regulations shortly– States likely to be encouraged to forward low-income subsidy applications to
SSA for processing, creating a system under which SSA “owns” the applications
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Implications for State Medicaid Programs
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Key Elements of the Medicare Law with Implications for State Medicaid Budgets
• Elimination of Medicaid drug coverage for “dual eligibles” – Will states end up supplementing Part D coverage for dual eligibles?
– How will “losing” Rx spending on dual eligibles affect Rx cost containment efforts for other Medicaid populations?
• The “clawback” -- mandatory payments to the federal government to help finance the Medicare drug benefit for dual eligibles
• Responsibilities for administering Medicare’s low-income subsidy program
• The “screen and offer” requirement – requirement to screen people who apply for a Part D subsidy for Medicaid and, if eligible, offer them coverage
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Spending on Dual Eligibles as a Share of Medicaid Spending on Benefits, FY2002
Total Spending on Benefits = $232.8 Billion
Note: Due to rounding, percentages do not total 100%. SOURCE: Urban Institute estimates prepared for KCMU based on an analysis of 2000 MSIS data applied to CMS-64 FY2002 data.
6%
42%
Rx Spending for Dual Eligibles ($13.4 Billion)
Non-Rx Spending for Dual Eligibles ($82.7 Billion)
Spending on Other Groups
($136.7 Billion)
36%
59%
6%
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Total Medicaid Spending on Prescription Drugs, 2002
Drug Spending on Dual Eligibles
Drug Spending on Other Groups
Total Spending = $23.4 Billion
SOURCE: Urban Institute estimates prepared for KCMU based on MSIS data for FFY2000 and Form 64 FFY2002 data. Data reflect expenditures on outpatient prescription drugs only and are net of Medicaid rebates.
48% ($11.3 Billion)
52% ($12.1 Billion)
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Estimated Impact of the Medicare Law (H.R. 1) on State Medicaid Spending, FY2004-2013
Medicaid Savings Retained by States
($17.2 billion)
Mandatory State Payments to the
Federal Government (“Clawback”)
($88.5 billion)
Additional Spending for New Enrollment of Medicaid Beneficiaries
Due to H.R. 1 ($5.8 billion)
Reduction in State Spending Due to Eliminating the Medicaid Drug Benefit for Dual Eligibles = $114.6 billion
Note: Estimates do not include the effects of Medicaid provisions in Title X of H.R. 1. SOURCE: KCMU analysis of Congressional Budget Office estimates, 2003.
New Administrative Costs for Medicare’s Low-Income Subsidy Program ($3.1
billion)
77%
15%
5%
3%
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Estimated Impact of the MMA on State Medicaid Spending, Year-by-Year
$11.2
$13.8$15.3
$16.9
$18.8
$20.9
$0.2
$6.2
$12.4
$5.2
$0.0$0.0
$10.9
$16.4$15.0
$13.9$12.9
$9.9
$11.8
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Note: Estimates do not include the effects of Medicaid provisions in Title X of MMA.SOURCE: KCMU analysis of Congressional Budget Office estimates, 2003.
In Billions
Medicaid Prescription Drug Savings
New State Medicaid Costs Due to MMA
$0.1
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Conclusion
• Key Implications for dual eligibles– Risk dual eligibles may end up without any Rx coverage during transition– Once enrolled, some may have problems getting drugs or meeting co-payments– Complexities of the MMA are likely to be particularly difficult for dual eligibles to
understand and navigate
• Key implications for other low-income individuals– Millions of people have a new opportunity to secure assistance with Rx costs– Realizing the potential of the MMA will require aggressive outreach and
enrollment efforts and overcoming key challenges• Two-step enrollment process• Need for SSA and states to closely coordinate enrollment efforts
• Key Implications for states– Less fiscal relief in Medicaid than expected; some states could possibly fare
worse as a result of MMA– Some states may have to fill in the gaps in coverage created by transition of Rx
coverage for dual eligibles to Medicare Part D– States have major responsibilities for administering Medicare’s low-income
subsidy program and, perhaps, autoenrolling dual eligibles
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Additional Background Materials
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Overview of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
• In 2004 and 2005, beneficiaries have access to:– Medicare-approved drug discount cards– $600 annual drug subsidy if low-income (<$12,569/single) and no Medicaid
drug coverage
• Beginning January 1, 2006, beneficiaries have choice of:– Traditional, fee-for-service Medicare, with access to private drug-only plans
(PDPs) – Medicare Advantage (MA), integrated plans that cover Medicare benefits
and drugs• Regional plans (PPOs)• Local area plans (HMOs)
– Low-income beneficiaries may be eligible for subsidies to help pay premiums and cost-sharing under Medicare drug plans
– Medicaid no longer provides drug coverage, affecting 6 million dual eligibles
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Medicare Beneficiaries’ Out-of-Pocket Drug Spending Under New Medicare Rx Benefit, 2006
+ ~$420 in annual premiumsNew Medicare Legislation
Deductible $250
No Coverage
CatastrophicCoverage
PartialCoverage
up to Limit
$2,250
$5,100 (equivalent to $3,600 inout-of-pocket spending)
25%
5%
$2850 Gap
Beneficiary Out-of-Pocket Spending
Note: Benefit levels are indexed to growth in per capita expenditures for covered Part D drugs. As a result, the Part D deductible is projected to increase from $250 in 2006 to $445 in 2013; the catastrophic threshold is projected to increase from $5,100 in 2006 to $9,066 in 2013.
Medicare Pays 75%
Medicare Pays 95%
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Per Capita Expenditures
(PCE)1/12
Formula for Determining Monthly State Clawback Payments
Monthly State
PaymentX
Dual Eligibles
(DE)X
Phase-Down Percentage
(PD%)
Per capita Medicaid
expenditures on prescription drugs covered
under Part D for dual eligibles during 2003,
trended forward
Number of dual eligibles enrolled in a
Medicare Part D plan in the
month for which
payment is made
Phase-down percentage for
the year specified in the
statute (e.g., 90% in 2006)
=State
Match (S%)
X
State share of Medicaid
expenditures
X
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Income as a Percentage of the Federal Poverty Line for an Individual and
Couple, 2004
Family Size Percentage of the Federal Poverty Line
100% FPL 135% FPL 150% FPL
Individual $9,310 $12,569 $13,965
Couple $12,490 $16,862 $18,735
SOURCE: Federal Register.