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Sens. Baucus, Grassley Ask HHS to Revisit Medicaid Co-Payment Proposal

By CQ Staff

March 18, 2008 -- A proposal governing states' ability to impose cost-sharing and premiums on Medicaid beneficiaries may make those payments higher than Congress intended, according to Senate Finance Committee leaders.

In a letter sent Tuesday to Department of Health and Human Services (HHS) Secretary Michael O. Leavitt, the senators say a proposed rule the agency issued last month may violate language in a budget-savings law (PL 109-171) that gave states flexibility to set co-payments for Medicaid beneficiaries, and then directed the HHS secretary to increase those payments each year by the annual percentage increase in the medical care component of the consumer price index then round up in an "appropriate manner."

Baucus and Grassley say the proposed HHS rule would index co-payments for inflation after the amount is rounded up, not before, as in most federal programs, which over time would increase beneficiaries' payments much more quickly.

While the differences in rounding may result in small amounts—a 10-cent difference is an example the senators cite in their letter—"the effect of applying the annual increase to the previous limit after rounding would grow steadily over time," they wrote. "That, in turn, would make Medicaid co-payments increasingly burdensome for beneficiaries ... We are concerned that the approach that the rule takes may harm the health of some of the nation's poorest individuals."

HHS Spokeswoman Christina Pearson said the senators' concern about co-payments "is a technical issue that we became aware of through the comment period, rather than a difference in policy. We recognize this part of the rule may not be as clear as it should be and therefore could be interpreted differently."

The senators' letter also asked that HHS clarify that all co-payments for Medicaid beneficiaries in managed care be the same, regardless of whether they receive their care in a managed care or fee-for-service setting.

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