M edicaid and the Deficit Reduction Act (DRA) of 2005

1. Medicaid and the Deficit Reduction Act (DRA) of 2005 Dan Walter Sr. Health Policy Analyst AAP Division of State Government Affairs AAP National Conference and Exhibition Resident Section Annual Assembly October 7, 2006

2. Medicaid and Children • Medicaid, a federal-state partnership, is the largest children’s health insurance program in the country • Medicaid insures 1 in 3 children in the US today – 29.7 million children • Children make up over 50% of all Medicaid enrollees, but account for less than 25% of total Medicaid spending • The Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program specifically protects children in Medicaid

3. The Deficit Reduction Act (DRA) of 2005 • Signed into law February 8, 2006 (P.L. 109-362) • Different versions agreed to by House and Senate

4. AAP Analysis • Sent to AAP chapters in March 2006 • Disseminated to State Medical Societies via AMA ARC in April 2006

5. Medicaid Provisions of DRAAffecting Children 1. New options for state benefit packages 2. New options for raising cost sharing and premiums 3. New requirements for citizenship documentation 4. Reductions in coverage of case management services 5. New options for “Health Opportunity Account” demonstrations

6. New Options for State Benefit Changes • States allowed to substitute “benchmark” benefit packages for current benefits • In benchmark coverage, mental health, prescription drug, vision and hearing services may be limited • EPSDT considered “wrap around” to benchmark coverage for children

7. Implications for EPSDT • EPSDT is still intact for children to age 19 • CMS has clarified it will not approve State Plan Amendments that do not provide EPSDT through age 19 • Chairs of Senate Finance and House Energy and Commerce have clarified Congressional intent to maintain EPSDT • Legal experts concur that EPSDT must be covered • Questionable from approved State Plan Amendments

8. New Options for Raising Cost Sharingand Premiums • New options for states to raise medical care, prescription drug, and non-emergency ED service cost sharing • Premiums allowed for children over 150% FPL • Cost sharing for some prescription drugs and medical services may be as high as 20% of the cost

9. New Requirements for Citizenship Documentation • EVERY Medicaid applicant and re-enrollee required to provide evidence of identity and citizenship, starting July 1, 2006 • CMS guidance and regulations – call for tiers of documentation and originals • Regulations now require signed declaration under penalty of perjury • Up to 3 million children may lose coverage

10. 4.Reductions in Coverage of Case Management Services • Case management services especially important to children and children with special health care needs • DRA indicates federal government will no longer pay for Medicaid funding of case management services if another public program may pay for them • Other programs have policies against paying for Medicaid enrollees’ case management services, leaving coverage gaps

11. 5. New Options for “Health Opportunity Account” (HOA) Demonstrations • HOAs are essentially Health Savings Accounts (HSAs) in Medicaid • 10 states allowed over first 5 years • Under HOAs, states will offer a contribution to HOA + Medicaid coverage after deductible is met • Deductible may be 110% of HOA fund amount resulting in possible gaps in coverage

12. CMS Approves Three State Plan Amendments (SPAs) • WV and KY received approval on May 3, 2006 • ID received approval on May 19, 2006 • All three (3) states had prior plans to seek Section 1115 waivers • All different proposals – questions surround EPSDT • SPAs approved very quickly

13. West Virginia SPA • “Member agreement” requirements • If met, “enhanced” benefits provided • If not met, “basic” benefits provided • Physicians must monitor activities and report • Liability concerns • Those who don’t sign will receive “basic” package • “Basic” benefits for children don’t include skilled nursing, orthotics/prosthetics, nutrition education, diabetes care, chemical dependency or mental health services, tobacco cessation • EPSDT statements questionable

14. West Virginia SPA“Member Agreement” • I will do my best to stay healthy. I will go to health improvement programs as directed by my medical home. • I will go to my medical home when I am sick. • I will take my children to their medical home for check-ups. • I will take the medicines my health care provider prescribes for me. • I will show up on time when I have my appointments. • I will bring my children to their appointments on time. • I will use the hospital emergency room only for emergencies.

15. Different benefit packages for children $225 cap on cost sharing for medical services and additional $225 cap on pharmacy Benefits limits are considered “soft limits” Kentucky SPA

16. Idaho SPA • Different benefit packages for children • Moves some children from Medicaid to SCHIP • Increases SCHIP cost sharing

17. CMS Guidance • CMS has issued 10 guidance letters, 2 “roadmap” documents, 1 fact sheet, 1 plan document, and 4 State Plan Amendment forms since DRA passage • Regulations on citizenship documentation released July 11, 2006 • More to come…

18. AAP State Activity • Encouraging chapters to monitor state SPA activity • Working with AAP chapters to ensure SPA proposals protect children • Disseminating new information on DRA • Working with partners in Washington to ensure appropriate interpretation of DRA • Advocating that CMS not approve any SPA that would cut children’s services

19. AAP State Strategy • Need for stakeholder involvement in SPA development – including legislature • States must ensure that changes don’t harm children • Legislative oversight as strategy • Connecticut model • Involvement of Medicaid Assistance Advisory Committees (MAACs)

20. AAP Chapter Advocacy Pediatricians Leadership Residents Lobbyist AAP Chapter Legislature/ Legislative Cmte. Strategy State ED Advocacy Groups

21. For More Information Dan Walter AAP Division of State Government Affairs 800-433-9016 x. 7799 dwalter@aap.org