Will deferred care follow rise in Medicaid co-pays?

CMS wants to give states more latitude to impose higher cost sharing for certain Medicaid services.

By — Posted Jan. 28, 2013

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A federal proposal that would allow states to increase certain co-pays for Medicaid patients seeks to encourage the more prudent use of costly services such as emergency department care, but some health care professionals believe the measure could lead to more access problems for beneficiaries.

On Jan. 14, the Centers for Medicare & Medicaid Services issued a proposed rule that included a provision to simplify and update Medicaid premium and cost-sharing policies. Maximum co-payment amounts can vary based on what states pay for services and on income levels. In the interest of streamlining the system for the states, CMS is proposing an overall flat maximum rate of $4 for outpatient services for those under 100% of poverty, as well as higher cost sharing for certain services: an $8 maximum for using nonpreferred drugs and for nonemergency use of the emergency department for individuals at or below 150% of poverty.

Cost sharing isn't a new idea for Medicaid — nominal fees for nonemergent ED use were authorized in the Deficit Reduction Act of 2005, said Matt Salo, executive director of the National Assn. of Medicaid Directors. With this latest proposal, CMS “is trying to be responsive to very legitimate state claims that there is no meaningful beneficiary cost sharing in the program, and that is leading to unnecessary expense,” he said.

Jennifer Kowalski, vice president in the health reform practice of consultant Avalere Health LLC, said the higher cost-sharing amounts for nonpreferred drugs and nonemergent ED use provide states with another tool to encourage more appropriate utilization of services, “which, as you have more people coming into the program, will result in more cost savings if a state decides to expand Medicaid.” According to CMS, Medicaid beneficiaries have access to lower-cost alternatives for these two types of services.

Once finalized, the cost-sharing provisions will take effect on Jan. 1, 2014, the same implementation date as the Affordable Care Act's major coverage expansions.

Barbara Tomar, federal affairs director with the American College of Emergency Physicians, sees some benefits to simplifying the procedures on Medicaid co-payments. Coming up with more precise numbers, such as charging $8 for nonemergent ED care to individuals at or below 150% of poverty, is much more straightforward than what's been implemented in previous regulations, she said. “More importantly, though, is CMS' recognition that a co-payment can't be imposed simply because the patient's final diagnosis turned out to be nonemergent, particularly in the case of chest pain, which can be symptomatic of a variety of diagnoses.”

Poorest patients might avoid care

All of the rule's recommended cost-sharing provisions are up to the discretion of the state. But if implemented, what this means for beneficiaries is they're going to have to pay more for certain services, said Xiaoyi Huang, assistant vice president for policy with the National Assn. of Public Hospitals and Health Systems.

To a person with private insurance, these proposed increases may seem insignificant, but to a Medicaid patient, this would take up a larger portion of their income. The concern is patients may end up deferring care until their health situations worsen to the point that they incur larger costs when they finally seek treatment, Huang said.

However nominal these increases may seem, they also could lead to more bad debt, “and more so at our hospitals than at others, just because we treat a greater proportion of Medicaid patients,” she said. This is bound to have a trickle-down effect given the Medicaid and Medicare cuts to disproportionate share hospital payments that are scheduled under the Affordable Care Act, she said.

American Medical Association policy supports modest co-payments in Medicaid for nonemergent, nonpreventive services, as long as such cost sharing does not discourage Medicaid patients from seeking necessary care or make it difficult for them to comply with physician-prescribed therapies.

Kowalski said the increase in nominal fees probably will be more of an issue for hospital-based physicians than office-based ones, and perhaps for the pharmacies in states that decide to implement the $8 fee for nonpreferred medications.

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What co-pays will Medicaid beneficiaries pay?

The Centers for Medicare & Medicaid Services is proposing that Medicaid beneficiaries pay slightly higher co-payments for certain services to simplify state procedures and encourage more efficient use of medications and emergency departments. Here's how cost sharing would be applied in a state that decides to implement the plan:

Outpatient services

  • $4 for individuals with family income at or below 100% of the federal poverty level
  • 10% of the cost for those at 101% to 150% of poverty
  • 20% of the cost for those above 150% of poverty

Nonpreferred drugs

  • $8 for those at or below 150% of poverty
  • 20% of the cost for those above 150% of poverty

Nonemergency use of the emergency department

  • $8 for those with family income at or below 150% of poverty
  • No limit for those above 150% of poverty

Source: “Medicaid, Children's Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing,” Centers for Medicare & Medicaid Services, Federal Register, Jan. 22 (link)

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