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Medicaid Officials Release Rule Affecting Cost-Sharing and Coordination with Exchanges

By Rebecca Adams, CQ HealthBeat Associate Editor

January 14, 2013 -- Under a 474-page proposed rule released last week, state officials would be able to charge Medicaid patients higher cost-sharing for some services than current regulations allow.

The proposed rule also affects a wide range of other Medicaid provisions, including appeals of eligibility determinations; coordination between Medicaid and the new health care law's insurance exchanges; the role of counselors to assist people with their coverage applications; procedures to verify employer-sponsored coverage; and the use of updated Medicaid eligibility categories.

Centers for Medicare and Medicaid Services Deputy Administrator Cindy Mann recently said on a call with reporters that the new proposal would increase the amount that states could charge patients for non-preferred drugs, non-emergency care in emergency departments and some other services.

Mann said the new proposal is necessary because different federal laws govern Medicaid eligibility and there has been a lot of "overlap and underlap and confusion" about what states could ask of beneficiaries through cost-sharing.

Mann said CMS officials "put those authorities together and tried to make the most sense out of them" by spelling out what states can charge beneficiaries with income under 100 percent of the federal poverty level and what they can charge for people with income higher than that. Under the health care law (PL 111-148, PL 111-152), states can elect to expand Medicaid eligibility to people with incomes up to 138 percent of the federal poverty level.

States will be able to charge $8 copays for non-preferred drugs and $8 copays for non-emergency use of the emergency department for people with income equal to or less than 150 percent of the poverty level or who have been exempt from cost-sharing. Those copays are now typically lower than that.

"That allows states to really drive folks to preferred drugs, which is a big potential cost-saver for them," said Joan Alker, co-executive director at the Center for Children and Families and a senior researcher at the Georgetown University Health Policy Institute. Preferred drugs often are lower-cost medicines, such as generics.

For people with family income above 150 percent of the poverty line, cost-sharing for non-preferred drugs would not be able to exceed 20 percent of the cost that the agency pays for the medicine. CMS officials would keep current rules that don't have a limit on the cost-sharing that may be imposed for non-emergency use of the emergency department for those above that income limit.

In the past, CMS has allowed states to charge "nominal" copays, but Mann said the requirements have been complicated and "hard for people to understand."

For instance, cost-sharing for outpatient services is tied to what the agency pays for the service. In fiscal 2013, CMS officials allowed states to charge up to $1.30 for outpatient services if the agency pays more than $10 to $25. If the costs are higher, states could charge more. The maximum copay could be $3.90 for services that cost the agency more than $50.

If the rule is finalized as it has been proposed, CMS officials would allow flat copays of $4 for outpatient care.

But the agency is also considering adding a cap for inpatient care for beneficiaries with incomes below the poverty line. Current rules for institutional care allow states to charge patients up to half of the cost for the first day of care for individuals with incomes below 100 percent of the poverty line.

"This is a relatively high cost for very low-income people and not a service that consumers have the ability to avoid or prevent," said the rule, which added that CMS officials are seeking "comment on the best approach to cost-sharing for an inpatient stay for very low-income individuals."

The proposed rule also would allow states to offer benefit packages to the group of people who would gain eligibility in 2014 under the health care law that would differ from what is currently allowed for Medicaid patients under the traditional program.

"A lot of times you hear about states wanting to do more of a commercial package," said Alker. "This might be an important option for states that might be on the fence about whether to expand their programs."

Alker also expressed disappointment that the rules would allow state officials to continue using waiting periods for kids who are eligible for the Children's Health Insurance Program. The proposal would scale back the waiting periods so they could last no longer than 90 days, but Alker's group had hoped that CMS officials would eliminate them.

Other parts of the rule would aim to streamline appeals decisions so that people who are denied coverage don't have to file separate appeals with exchange officials and Medicaid officials. States that run their own exchanges could choose to have the exchange take the lead in deciding Medicaid appeals.

The public has until Feb. 13 to comment on the proposal.

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