HHS Secretary Provides Guidance To Help States Decrease Medicaid Costs
On Thursday, HHS Secretary Kathleen Sebelius on Thursday sent a letter to U.S. governors explaining how they can reduce Medicaid costs by cutting certain benefits, limiting overuse of costly prescription drugs and eliminating fraud, the New York Times reports (Pear, New York Times, 2/3).
State governments are looking for ways to make significant cuts to the program as they face ongoing budget deficits and federal restrictions against limiting the program's eligibility requirements.
Medicaid Expansion, Costs
The federal health reform law requires states beginning in 2014 to expand Medicaid eligibility. The Medicaid program is expected to add 16 million beneficiaries by 2019. The federal government will cover the cost of the expansion through 2016, but states will be responsible for 10% of expansion costs by 2020.
Meanwhile, additional federal aid for Medicaid granted by the 2009 economic stimulus package will end in July, causing an increase of one-fourth to one-third in each state's share of program costs. At the same time, states are facing an estimated $125 billion in combined deficits (California Healthline, 1/31).
That confluence of events prompted 33 governors and governors-elect last month to ask for exemptions from the reform law provision requiring states to maintain their eligibility requirements until the expansion (Millman, "Healthwatch," The Hill, 2/3). For example, Arizona Gov. Jan Brewer (R) recently requested a waiver from the provision so that the state can drop 280,000 adults from its Medicaid program (California Healthline, 1/31).
HHS Guidance Details
In the letter, Sebelius did not give permission for states to restrict eligibility standards.
However, she explained that states have adequate discretion to reduce benefits and establish or increase copayments. She said states could cut optional services, such as:
- Dental services and dentures;
- Optometry services and eyeglasses;
- Prescription drugs;
- Physical therapy; and
- Respiratory care.
She also suggested that states manage care of the sickest Medicaid patients more aggressively, noting that the cost of treating 1% of program beneficiaries makes up 25% of total expenditures.
Sebelius added that states could save additional funds by:
- Cutting hospital admissions;
- Improving care for children with asthma; and
- Reducing premature births and medically unnecessary caesarean sections (New York Times, 2/3).
She noted that HHS also is doing its part to help states with Medicaid costs by helping to purchase drugs more efficiently, improving program integrity and creating a new office to handle beneficiaries who qualify for both Medicare and Medicaid, often referred to as dual eligibles ("Healthwatch," The Hill, 2/3).
Governors, Advocates React to Letter
Certain governors said they thought that Sebelius did not provide enough insight into cutting Medicaid costs, the Times reports. They reiterated their need for waivers from the reform law provision that maintains current eligibility levels.
Mike Schrimpf, a spokesperson for the Republican Governors Association, said, "Secretary Sebelius' cleverly buried response to governors is that she is still studying the issue."
Mississippi Gov. Haley Barbour (R) said that governors of both parties want HHS to remove the "burdensome constraints" of maintaining current eligibility standards. He added that Sebelius' letter "fails to provide solutions that immediately address the exploding state budget problems posed by the Medicaid program."
Meanwhile, advocates for low-income U.S. residents and people with disabilities expressed concern with Sebelius' letter. Peter Thomas, a lawyer for the Consortium for Citizens with Disabilities, said, "'Optional services' is a misnomer," adding, "These items and services, which include artificial limbs, wheelchairs and kidney dialysis, are life-saving and life-sustaining. They improve functional abilities and the quality of life for millions of people" (New York Times, 2/3).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.