Federal Medicaid Commission Releases Reform Recommendations
The federal Medicaid commission charged with recommending short- and long-term reforms to the program on Thursday released to Congress its proposals, which it said would reduce Medicaid spending growth by $11 billion over the next five years, CQ HealthBeat reports (CQ HealthBeat, 9/1). The commission, whose members were appointed by HHS Secretary Mike Leavitt, was required by Sept. 1 to submit a report with recommendations on how to reduce Medicaid spending growth by $10 billion over the next five years. The second report, due Dec. 31, 2006, will include recommendations for stabilizing Medicaid over the long term (California Healthline, 8/18).
The recommendations, which were approved by the commission on Aug. 19, include:
- Restricting beneficiaries' transfer of assets to qualify for long-term care under Medicaid, which is expected to save about $1.6 billion over five years;
- Permitting states to use the average manufacturer price instead of the average wholesale price to determine payments to drug companies -- a move expected to save $4.3 billion over five years;
- Allowing Medicaid managed care plans to be involved with the drug manufacturer rebate program, which is expected to save $2 billion over five years; and
- Expanding the number of beneficiaries who are permitted to be charged copayments and the amount of copayments for prescription drugs, physician visits and other services -- a move projected to save $2 billion over five years (CQ HealthBeat, 9/1).
On Aug. 30, the National Governors Association detailed its Medicaid proposals which were initially presented in June during congressional testimony. The fiscal year 2006 budget resolution calls on the Senate Finance Committee by Sept. 16 to provide a list of areas in which spending could be reduced by $10 billion over five years. The governors' recommendations for Medicaid include:
- Strengthening asset transfer rules, including increasing the "look-back" period for beneficiaries' asset transfers from three years to five years;
- Permitting the use of "reverse mortgages" to offset long-term Medicaid costs;
- Increasing cost-sharing for beneficiaries with annual incomes above the federal poverty level;
- Streamlining the waiver application process for states;
- Allowing states to offer different benefits packages depending upon the beneficiaries' health;
- Clarifying the process by which Medicaid pays for prescription drugs;
- Adopting closed prescription drug formularies; and
- Increasing the minimum rebates that states collect on brand-name drugs from 15.1% to 20% "to ensure lower total costs that would not solely impact pharmacists" (CQ HealthBeat, 8/30).
On Aug. 31, health care analysts and patient advocates at an Urban Institute forum expressed concern about the impact of the proposed Medicaid overhaul on Indian health care. According to CQ HealthBeat, the federal government fully funds Medicaid services provided through Indian Health Service facilities for approximately 600,000 American Indians and Alaska Natives. States are not required to make matching payments for such services. However, states are required to provide Medicaid funding for Medicaid services delivered in urban Indian clinics and for services given to American Indian or Alaska Native Medicaid beneficiaries referred by Indian health care facilities to private providers.
In addition, the Indian health system currently is "severely underfunded, receiving only 57% of the level of funding required to provide services equivalent to the federal employee health benefit plan," according to Mim Dixon, former director of health care for Cherokee Nation. Analysts expressed concern that changes to Medicaid could reduce services or payments for services, resulting in reduced access to care for American Indians and Alaska Natives.
They also raised concerns about premiums, copayments and deductibles that states might charge under the overhaul proposals. Many IHS beneficiaries will not be able to cover the new out-of-pocket expenses, Andy Schneider, an analyst at Medicaid Policy LLC, said. He noted that the NGA proposals could allow states to prohibit providers from treating Medicaid beneficiaries who cannot meet the necessary copayments. Schneider and other analysts said American Indians and Alaska Natives should be exempt from new cost-sharing requirements and benefit reductions and tribal consultation should be required for new authority that states could use to change Medicaid.
Dixon and Kris Locke in a paper released at the forum said, "Policymakers should understand that the Indian health system is unlike any other. It services the poorest, sickest and most remote populations in the United States" (CQ HealthBeat, 8/31).
According to a white paper released on Aug. 30 by the American Public Health Association, lawmakers should create Medicaid policies that encourage preventive care and treatment for children instead of focusing on "artificial, short-term financial savings" that would "disproportionately affect minority and rural beneficiaries and exacerbate health disparities," CQ HealthBeat reports (CQ HealthBeat, 8/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.