Dual Eligibles Might Lose Coverage Under Medicare Prescription Drug Benefit, Study Finds
As a result of a provision in the 2003 Medicare law requiring states to contribute to the cost of the new prescription drug benefit, some states are planning to eliminate coverage for "tens of thousands" of people who are considered dually eligible for Medicare and Medicaid, according to a study released Wednesday by Families USA, CQ HealthBeat reports. Under the 2003 law, drug coverage for dual eligibles will be transferred from state Medicaid programs to the new Medicare benefit. States will be required to pay the federal government 90% of the estimated amount they would have paid in drug expenses in 2006, and therefore could experience savings of 10% from their current prescription drug spending levels for dual eligibles.
However, the National Governors Association maintains that "various flaws" in the formula for calculating the payments means that many states actually will lose money under the provision, according to CQ HealthBeat. To reduce their payments to the federal government, several states plan to eliminate or have eliminated Medicaid coverage for some dual eligibles (CQ HealthBeat, 7/6). The study says the expected cuts are occurring in states that expanded Medicaid coverage beyond what is federally mandated for dual eligibles -- people who are elderly or have disabilities and have incomes up to 73% of the poverty level (Families USA, "Special Report: New Medicare Drug Law Puts Low-Income People at Risk," July 2005).
According to the Families USA study, Florida is expected to eliminate Medicaid coverage for 77,000 beneficiaries, Mississippi will end coverage for 65,000 people and Missouri will drop 8,660 people from Medicaid. In addition, North Carolina lawmakers are considering a proposal to eliminate Medicaid benefits for 65,000 dual eligibles in 2006, according to the study.
Dual eligibles expected to lose Medicaid coverage will no longer receive coverage for some services, including personal care, vision, dental, podiatry and hearing, the study says. The study adds that dual eligibles who lose Medicaid coverage also will no longer receive benefits for nonemergency transportation to medical appointments and services in which a case manager helps coordinate care. The study predicted that more states will enact such cuts in the future.
"The clawback formula creates a perverse incentive to cut the poorest of the poor" from Medicaid, Ron Pollack, executive director of Families USA, said (CQ HealthBeat, 7/6). He added, "One of the ironies of this is the proponents of the Medicare Modernization Act said this was going to be very helpful for the poor. But as this report shows, a significant portion of the poorest of the poor are going to be considerably worse off then they are today" (Gerencher, MarketWatch/Investor's Business Daily, 7/6).
CMS spokesperson Gary Karr said the report's findings are inaccurate, noting that no state lawmakers are quoted as saying that language related to the provision prompted them to enact Medicaid cuts. "It certainly makes no sense that a law that saves states money would in any way threaten the Medicaid program, as the Families USA study alleges," he added. Karr said, "States have been reducing the Medicaid program because of rising costs, and one of the ways to stem these reductions is to help states with these costs."
Leighton Ku, a researcher with the Center on Budget and Policy Priorities, said the provision has become a focal point for state lawmakers because "[f]or the first time they're writing a check to the federal government, so it feels quite different to them." He added that the number of states that reduce Medicaid coverage for dual eligibles likely will increase next year because of the size of payments to the federal government (CQ HealthBeat, 7/6). The study is available online. Note: You must have Adobe Acrobat Reader to view the study.
NPR's "Morning Edition" on Thursday reported on how states and the federal government are managing increased costs for the Medicaid program, including clawback payments. The segment includes comments from Tennessee Gov. Phil Bredesen (D); Ku; Sen. Blanche Lincoln (D-Ark.); and Tim Westmoreland, former director of Medicaid under the Clinton administration (Rovner, "Morning Edition," NPR, 7/7). The complete segment is available online in RealPlayer.
Additional information on the Medicare drug benefit is available online.