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Patient Advocates Concerned About Cost-Sharing Changes in Medicaid Rule

By Rebecca Adams, CQ HealthBeat Associate Editor

May 23, 2013 -- Children's consumer advocacy groups and health industry professionals are watching to see what a final Medicaid rule that will soon be released will say about changes to patient costs.

The final rule is one of a half dozen Centers for Medicare and Medicaid Services (CMS) regulations that are at the Office of Management and Budget (OMB) for a final review before being released.

The proposed regulation, which was released in January, is a grab bag of many Medicaid-related changes. It affects appeals; the coordination between Medicaid and the new health care law marketplaces; eligibility verification, including immigration status of applicants; and how hospitals can start signing up uninsured patients for Medicaid. The rule also includes changes to the Children's Health Insurance Program.

One difference in the proposed rule from current law would allow states to levy higher out-of-pocket charges on Medicaid patients.

The changes, if finalized, would affect people who are already on or eligible for Medicaid as well as those who can enroll next year if their state expands eligibility. The health care law (PL 111-148, PL 111-152) allows states to expand Medicaid for those earning up to 138 percent of the federal poverty level.

The proposed rule suggests higher cost sharing for some services, including prescription drugs and non-urgent use of the emergency department.

Stakeholders Want Changes

CMS officials are getting pressure from hospitals and advocates to ease the proposed increases.

The American Hospital Association (AHA) agreed that inappropriate use of emergency departments is a problem, noting that visits to the emergency department by Medicaid and uninsured patients grew by 42 percent from 2004 to 2009, compared with a 23 percent increase among all patients. But the group wrote that imposing higher cost sharing "poses challenges for hospitals."

"For hospitals, the collection of Medicaid cost-sharing amounts for non-emergency care in ED [emergency department] settings can prove difficult, leading to lack of payment and increases in bad debt," said the association's letter, signed by AHA Executive Vice President Rick Pollack.

Patient advocates also are prodding the agency to keep cost sharing low.

"Maternal and child health advocates are alarmed at the proposed cost-sharing changes to the Medicaid program," said a letter from advocacy groups including the American Academy of Pediatrics, the American Congress of Obstetricians and Gynecologists, and the March of Dimes. The groups said higher cost sharing could result in untreated problems that become more severe and "lead to downstream costs to the health system."

Under current law, emergency department costs are supposed to be "nominal" for people with incomes at the poverty level (which this year is $11,490) or less. That means no more than $3.90 per visit in fiscal 2013. Under the proposed rule, the new maximum amount would more than double, to $8.

The amount for emergency care that could be charged to people with incomes more than 150 percent of the poverty level would stay the same, with a limit of 5 percent of the family's income.

However, the rule also puts new restrictions on when hospitals could impose cost sharing for non-urgent emergency department visits. Those new requirements say, for instance, that the hospital has to give the patient the name and location of another provider and ensure that the other provider can serve the patient in a timely manner with lower cost sharing.

Those types of rules leave hospital officials scratching their heads about how they will know whether providers can see them.

For drugs, the caps on patients' costs would increase to $4 for preferred drugs such as generics and $8 for non-preferred medicines for people with incomes at or less than 150 percent of the poverty line. Low-income people who earn more than that could be charged up to 20 percent of the drug cost for non-preferred drugs.

For outpatient care, the cost sharing under current law is tied to what the agency pays for the service. For fiscal 2013, states can charge from $1.30 and up to $3.90.

CMS officials proposed changing that to a flat $4 maximum charge for outpatient care for people with incomes below the federal poverty level or less. "We believe a flat $4 cost-sharing maximum is reasonable," said the proposed rule. For people with incomes at or above the poverty level for outpatient care, states would be able to continue charging higher cost sharing.

For inpatient care, Medicaid officials also said they are trying to decide how to cap patient costs. Options include limiting copays to $4, $50 or $100 per visit. Currently, the cost sharing that states require of Medicaid patients varies significantly, with many states charging nothing or minimal amounts, according to statistics by the Kaiser Commission on Medicaid and the Uninsured. Some states, however, require copays of up to $200.

The New York City Department of Health and Mental Hygiene is another critic of increased cost sharing.

"The department is concerned that some beneficiaries would go without needed care due to inability to pay (or a fear or incurring) cost shares, potentially resulting in subsequent negative (and expensive) health" conditions, the agency wrote.

"There has been an extensive body of research indicating that when low-income families face higher cost sharing and premium charges, enrollment and the use of necessary services decreases," the Georgetown University Center for Children and Families chimed in, noting that the rule mentions this research. "It is disappointing that these proposed rules offer states the option to impose higher cost sharing on low-income families. More effective and targeted strategies, such as turning to disease management programs or ensuring that all Medicaid beneficiaries have a primary care provider who helps them manage and coordinate their health care, would serve the goals of the program better than cost sharing."

Also at OMB

Other health-care-law-related rules getting a final review at OMB include:

  • A final regulation that for the first time sets standards for health and safety at community mental health centers that serve Medicare beneficiaries. The proposed rule was issued on June 16, 2011. Under the proposed rule, the centers would be required to establish qualifications for employees and contractors; notify clients of their rights and investigate and report rights violations; convene treatment teams that would develop treatment plans and coordinate services; create quality programs; and more.
  • A final rule that would set up a transition plan for the so-called SHOP exchanges. In an effort to make the shift to the new program smoother, the CMS proposal would delay an "employee choice" model as a requirement for SHOPs in federally run exchanges. That means small employers would have to offer only one qualified health plan to workers in the exchanges.
  • Two other rules address eligibility requirements for exemptions in the exchanges, as well as additional program implementation guidelines.

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