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As reported in a April 13, 2004 Health Access Update, the State Department of Health Services has released "concept papers" on part of its plans for restructuring Medi-Cal and securing a Federal waiver to release Medi-Cal from many federal Medicaid regulations. As indicated elsewhere, DHS Director Kim Belshe has said the Medi-Cal redesign and federal waiver are key to eliminating billions of dollars in state deficits anticipated in years ahead.
One of DHS's stated goals in the redesign making recipients pay more costs, and the DHS's proposed mechanism is to introduce various tiers of eligibility and cost-sharing to Medi-Cal. Tiering Medi-Cal is expected to save $111 million as currently proposed, though savings would be considerably higher as premiums, co-payments, and co-insurance requirements are raised in the future.
To review briefly, DHS's plan is to divide the currently
eligible Medi-Cal population into two tiers with different eligibility
and cost-sharing, based largely on income. Medi-Cal recipients above the
poverty level would be charged premiums, higher co-pays and 20% co-insurance
for a wide variety of vital materials like glasses, hearing aids, prosthetics,
and for services like dialysis, hospice, and physical therapy.
The redesign would drive even more providers out of Medi-Cal, since their
re-imbursements, already among the lowest in the country with plans for
a further 15% cut, would have their patients' co-payments and co-insurance
pre-deducted. The provider would have to collect the charges or take the
loss personally. Providers can legally withhold services if co-pays or
co-insurance are not paid. More Details
The research below strongly suggests that even low levels of premiums,
co-pays, and co-insurance significantly hurt people's health, either driving
them out of programs, or cutting them off services within programs.
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Excerpts from "Question and Answer: Impact of Increased Cost-Sharing on Medicaid Beneficiaries"
For the entire document in Microsoft Word
Manjusha P. Kulkarni, Staff Attorney, National Health Law Program (NHeLP)
Advocates should be concerned about the impact of state budget crises on Medicaid cost-sharing. In Fiscal Year 2004, twenty-one states plan to increase Medicaid beneficiary cost-sharing. States which are considering increased copayments include Arizona, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Louisiana, Michigan, Nevada, New York, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Utah, Virginia, Washington, West Virginia and Wisconsin. More recently, California also has expressed interest in imposing premiums as well as increasing copayments on Medi-Cal beneficiaries.
As advocates of clients and constituents who have low income and limited resources, we know that imposing cost-sharing on Medicaid beneficiaries does discourage necessary care. Several studies and reports provide ample evidence of this. Specifically, they show that implementation of premiums on low-income individuals leads to a drop in enrollment and imposition of and increases in copayments result in reduced utilization of all services, not simply services providing "discretionary care."
PREMIUMS
Cost-sharing in the form of premiums can cause beneficiaries to lose health care coverage.
In February 2003, Oregon significantly altered its Oregon Health Plan (OHP) by creating two distinct programs called "OHP Plus" and "OHP Standard." OHP Plus covered 300,000 categorically eligible Medicaid beneficiaries (children, pregnant women, and disabled) and the OHP Standard offered health care coverage to 100,000 (low-income) individuals not covered under Medicaid or private insurance. In altering the OHP, the state also increased premiums and mandated copayments for most benefits for those enrolled in OHP Standard. The imposition of premiums alone resulted in a precipitous drop in enrollment in the program from 102,000 in December 2002 to 51,000 in October 2003. Furthermore, the 51,000 who lost coverage remained uninsured for at least six months due to a penalty imposed individuals who fail to pay their premiums.
In Connecticut, state leaders are considering the imposition of premiums for individuals enrolled in Medicaid and Husky A, the Medicaid program for families. Current proposals require that all families with incomes above 50% Federal Poverty Level be assessed premiums. In a series of policy briefs by the Connecticut Health Foundation, researchers reported that more than 94,000 people are likely to lose coverage due to the implementation of premiums. A majority of the beneficiaries who would lose coverage are children. Also, approximately 2000 would be low-income pregnant women, who would likely give birth without health care coverage.
Evaluating data from four states, researchers at the Urban Institute found a direct correlation between the amount of premium and the drop in the participation rate among eligible individuals. According to the 1999-2000 report, the higher the premium, the lower the participation in Medicaid or SCHIP. Premiums as low as one percent of a family's income led to a drop in enrollment of 16%. Premiums constituting three percent of a family's income resulted in 49% lower enrollment and premiums as high as five percent led to a drop in participation of 74%.
CO-PAYMENTS
Copayments can cause beneficiaries to avoid or delay essential medical care.
The RAND Health Insurance Experiment, one of the most comprehensive studies of the impact of cost-sharing on health care utilization, found that low-income adults made 41% fewer medical visits when they were required to make copayments than when they received free care. Low-income children also received 44% fewer health care services when their families had to pay copayments. These percentages applied to services which researchers determined were clinically effective in improving health outcomes, and not "discretionary" services, or those which were less likely to lead to better health outcomes.
A similar study of California's Medi-Cal beneficiaries found that even small copayments resulted in fewer doctor visits and less preventive care. In terms of preventive services, beneficiaries who were subject to $1 copays obtained 45% fewer immunizations, 21.5% fewer Pap smears and 58% fewer obstetrical care services. Similarly, researchers found that there were 33% fewer outpatient doctor visits among Medi-Cal beneficiaries when a copayment was required.
Researchers have determined that copayments also lead to less access to prescription drugs for Medicaid beneficiaries. A 1977 study of South Carolina Medicaid beneficiaries, 67% of whom were elderly and disabled, showed that a $.50 copayment resulted in an 11% drop in the average number of monthly prescriptions. In a University of Maryland study, Medicaid copayments were found to reduce drug utilization among those who reported their health status as good, fair or poor. The study determined that while individuals in fair condition living in states with no copayments filled an average of 30.2 prescriptions per year, those in fair condition who lived in states with copayments filled, on average, only 21.8 prescriptions. Likewise, Medicaid beneficiaries in poor condition in states without copayments filled an average of 36 prescriptions per year and beneficiaries in poor condition in states with copayments filled 28.4 prescriptions annually, a difference of 8 prescriptions per year.
Medicaid beneficiaries are already sharing the cost of their health care.
Over half of Medicaid beneficiaries have incomes below the federal poverty level ($14,630 for a family of three). Yet, despite their very low-incomes, Medicaid beneficiaries are already required to pay substantial out-of-pocket costs for health care services. Results from the Medical Expenditure Panel Survey for 1999 show that adult Medicaid beneficiaries who were not disabled or elderly spent on average 2.3% of their income on out-of-pocket health care costs. By way of comparison, privately-insured individuals with middle incomes spent only .58% of their income on out-of-pocket health care expenditures. On prescription drugs, in particular, Medicaid beneficiaries paid 1.5% of their incomes while higher-income individuals who had private health care coverage paid only .2%. Thus, as a percentage of their income, Medicaid beneficiaries spent approximately seven times more than their privately-insured, more affluent counterparts.
Conclusion:
Numerous studies and reports indicate that increased cost-sharing in the form of premiums and copayments for Medicaid beneficiaries results in lower enrollment and reduced utilization of services. While cost-sharing in the private insurance model is intended to encourage consumers "to use services prudently," in the Medicaid arena, it simply forces low-income individuals to go without medically necessary care. Instead, they may opt for the less expensive, but also less clinically effective choice and thus engage in irrational rationing. Moreover, in many states, these beneficiaries are already required to pay copayments for physician visits and prescription drugs which are a much greater percentage of their income than privately-insured individuals. For non-Medicaid-covered services, they have to pay the entire cost. Asking Medicaid beneficiaries to pay more will simply create a barrier which they cannot overcome and will destroy the already tattered safety net Medicaid currently provides.
DETAILS OF DHS'S PROPOSED TIERING OF MEDI-CAL
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Tier 1:
Consists of individuals or parents with income is below FPL or SSI (aged, blind, disabled), medically needy or indigent children, and poor pregnant women.
Benefits are the current services minus acupuncture and chiropractics.
Except for children and pregnant women, recipients pay current federally-mandated co-pays for non-emergency, non-institutional non-family-planning care ($5 for care in ER, $1 for outpatient, dental, and each prescription and refill. Total cost-sharing to be capped at undetermined level.
The co-pays would be deducted from reimbursement to the provider, who would have to collect them from the patient. Providers would have the legal right to refuse services to patients who faild to provide co-pays.
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Tier 2:
Consists of parents with income above FPL, and aged, blind, or disabled recipients with income over SSI.
Same benefits as Tier 1.
Except for pregnant women, recipients pay following co-pays for non-emergency, non-institutional non-family-planning care ($20 hospital admission, $10 for care in ER, $3 for outpatient, $2 for dental, and $1 for each prescription and refill. Total cost-sharing to be capped at undetermined level.
Except for children under 20, recipients pay the following monthly premiums. 100-150% FPL: up to $10/month. 150-200% FPL: up to $20/mo.
Recipients pay 20% co-insurance for services above "core" services, such as Nursing facility services, ICF/MR services (ICF/DD), Personal care services, Home health services, Medical supplies, Nursing facility services over 60 days/year, Vision services, Podiatry, Physical, occupational, speech therapies, Audiology & hearing aid services, Over-the-counter drugs, Orthotic and prosthetic appliances, Institutions for Mental Diseases, Hospice, Non-emergency transportation, Adult day health care services, Dialysis services, Drug and alcohol services
Co-pays and co-insurance are deducted from reimbursements to providers, who must collect them from patients and may legally withhold services if payments are not made. Insurer can disenroll recipient for failure to pay monthly premium.
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Tier 3:
Consists of recipients under current Medi-Cal Home and Community-Based Services waivers, institutionalized or at risk of institutionalization.
Benefits are Tier 1 benefits plus any benefits from waivers, plus services needed to avoid institutionalization.
Co-pays, Premiums, and Co-insurance would be either
Tier 1 or Tier 2, depending on which the recipient would otherwise fall
into.