Deficit Reduction Act of 2005 Overview of Key

Deficit Reduction Act of 2005: Overview of Key Medicaid Provisions

Overview and Organization of Presentation Eligibility n Acute Care n Long-Term Care n Payment n Fraud, Waste and Abuse n Other n Summary of Mandates n 2

Eligibility

Eligibility Changes n Long-Term Care (“Medicaid estate planning) n All provisions became effective 1/1/06, except: • Transfers made prior to the date of enactment (2/8/06) are subject to the old asset-transfer rules • If a state needs enabling legislation, the effective date is the first day of the quarter following the close of the next legislative session (i. e. , for Maryland, 7/1/07). n Proof of Citizenship n Effective for all initial determinations and redeterminations on or after 7/1/06 4

Long-Term Care: Asset Transfers n n Look-back period is changed to five years Transfer penalty begins later of date of transfer or the date the person first would be eligible for Medicaid, but for the transfer The purchase of an annuity where the state isn’t the primary or secondary beneficiary is a transfer The purchase of an annuity where the term exceeds the person’s life expectancy, or with a large balloon payment, is a transfer 5

Long-Term Care: Asset Transfers A state “shall not” round down fractional penalties n A state “may” aggregate multiple transfers into one penalty period, beginning on the date of the first transfer n 6

Long-Term Care: Transfer Penalties and the Undue Hardship Process n The state must create a process to avoid imposing the transfer penalty where the state decides that an “undue hardship” would result: n n n The penalty would deprive the person of medical care putting him/her at risk of health or life, or The penalty would deprive the person of the means for securing food, clothing, shelter, or necessities The state must create a process to notify applicants of this process and their rights The state must have a timely process to make determinations, and notify the person of his/her to appeal An institution may pursue it on behalf of an applicant, with his/her consent HHS must issue rules that would allow a state, if it wants, to pay for up to 30 days in a NF pending the process 7

Long-Term Care: Annuities n n Applicants must disclose all annuities in application The state must be primary or secondary remainder beneficiary (after spouse or surviving minor/disabled child) The state must notify issuer of the state’s remainder interest The state may require the issue to notify the state of any changes in the income or principal withdrawal provisions 8

Long-Term Care: Home Equity n n n If a person owns a home with equity of $500, 000 or more, the person “shall not be eligible” for Medicaid (unless there is a spouse, or minor or dependent child) The state may raise this level, at its discretion, to an amount no higher than $750, 000 The floor will increase, beginning in 2011, by CPI, rounded to nearest $1, 000 Applicants are permitted to use reverse annuity mortgages to reduce their home equity The state must have an “undue hardship” process 9

Long-Term Care: Other n n n CCRCs may require, in their admission contracts, that a person spend all of their declared assets before applying to Medicaid CCRC “entrance fees” are countable as a Medicaid resource if (a) they are refundable and (b) they do not confer an ownership interest in the CCRC States must use an “income-first” approach to spousal impoverishment 10

Proof of Citizenship n n All applicants (and re-applicants) must prove their citizenship status Exceptions: People who already proved it on a federal application n n Prior Medicare (for dual eligibles) Prior SSI Others as specified in rule by HHS This appeared in fraud and abuse portion of DRA 11

Acute Care

Acute Care Changes n Benefit Flexibility n n Effective 4/1/06 Cost sharing n Effective 4/1/06, except ER provisions (hospitals charging for non-emergent services) become effective 1/1/07 13

Benefit Flexibility n n n States may offer benchmark plan (SCHIP-like), instead of traditional Medicaid benefits Applies to “full benefit” COEs as of February 8, 2006 For children under 19, it must be supplemented with full EPSDT n n Note: not up to age 21 Benchmark plans must permit access of covered benefits at FQHCs/RHCs, at their special payment rates 14

Benefit Flexibility: Exempt Populations n n Certain populations are exempt from “benefit flexibility”, meaning they must receive traditional Medicaid Exempt populations: n n n n n Individuals in TANF (children and adults) SSI and SSI-related children Mandatory pregnant woman Dual eligibles Individuals in an institution Individuals meeting institutional level of care Children in foster care Eligibility groups in specialty benefits (breast and cervical cancer, and hospice) Others with a “special needs status” as defined by HHS (see 3/31/06 State Medicaid Director letter) 15

Benefit Flexibility: Major Groups Who May Be Subject to the Provisions n Children in poverty-level groups (who are not on TANF or disabled) n Most adults, including adults with disabilities (SSI adults must have an opt-out) 16

Cost sharing: Family Incomes Between 101 -150% FPL* n n n No premiums permitted Coinsurance allowed, up to 10% of cost of service Family cap of 5% of family income Post eligibility income determinations need not be based on same rules as eligibility determinations, so states may count income differently post determination; e. g. , application of disregards (*Drafting error in DRA: Rules for households below 100% FPL not specified. ) 17

Cost sharing: Family Incomes at or above 151% FPL Premiums permitted (amount not specified) n Coinsurance allowed, up to 20% of cost of service n Family cap of 5% of family income n Post eligibility income determinations may apply, so state may count income differently post determination (disregards, etc. ) n 18

Cost sharing: Population Exemptions from Premiums n These groups are exempt from premiums: n n n Mandatory children age 18 or younger Pregnant women Institutionalized individuals Terminally ill individuals receiving hospice Women in breast or cervical cancer eligibility group 19

Cost sharing: Service exemptions from Coinsurance n No cost sharing for: n n n n Services used by mandatory children to age 18 Preventive services Family planning Pregnancy-related services to pregnant women Services to terminally ill or institutionalized persons Emergent use of ER Women in breast or cervical cancer eligibility group 20

Cost sharing: Enforcement n Premiums: If required and payment not made for 60 days, state may terminate eligibility State may waive for hardship n State may treat different populations differently n n Providers may deny service for nonpayment of coinsurance 21

Cost sharing: Special Rules for Rx n State may impose higher cost sharing on non-preferred drugs than preferred drugs n State must waive this rule where physician determines that patient needs non-preferred drug 22

Cost sharing: Special Rules for ER n After conducting an EMTALA screening assessment, a hospital may charge coinsurance for the provision of non-emergent services if: n n It notifies the patient of the name and location of an alternate non-emergency services provider It notifies the patient that such alternative would not result in the same level of cost sharing The hospital offers to coordinate the referral to the alternative provider Other general cost sharing rules largely apply 23

Long-Term Care

Long-Term Care Changes n HCBS State Plan Option n n Money Follows the Person Demos n n Effective 1/1/07 Public/Private Insurance Partnerships n n Effective 1/1/07 Effective 2/8/06 Cash and Counseling Without a Waiver n Effective 1/1/07 25

HCBS State Plan Option n n States may provide HCBS services under a state plan amendment Eligibility must be based on needs-based criteria that is less stringent than NF level of care The state may cap the number of participants If a state raises its NF level of care, it must grandfather into NF and 1915(c) services people meeting the old level of care, for a period of 12 months 26

HCBS State Plan Option n n Under the HCBS state plan option, states must conduct an independent face-to-face assessment by an independent entity to help develop the plan of care Customary approach to the development of a plan of care (treatment team, etc. ) Self-direction permitted Presumptive eligibility (with FFP) okay for up to 60 days 27

HCBS State Plan Option n Drafting issues in the law: n The law says that the option only may cover people at or 150% FPL • This is a Catch 22 for the group of people above this level but below 300% SSI, who only would remain eligible for 1915(c) waiver service on basis of financial eligibility n n The law says that the state plan option must require 2 ADLs (in one place) and may require 2 ADLs in another It is unclear whether the necessary waiver of comparability exists under DRA 28

Money Follows the Person Demos n n States must apply If approved, the demo design must include these requirements: n Eligible person: • At least 6 months (or, at state discretion, for an alternative period not to exceed 2 years), in an institution • On Medicaid at the time of community-placement • Is expected to continue meeting, and needing, institutional level of care 29

Money Follows the Person: continued n Requirements, continued n Eligible placement: • The person’s home • The home of a family member • A congregate setting of no more than 4 residents Customary approach to the development of a plan of care (treatment team, assessment, etc. ) n The demo must last at least two years n 30

Money Follows the Person: continued n Requirements, continued n n n The state must maintain its effort: total $$ in HCBS must remain at level of year before MFP demo The demo need not be “statewide” or “comparable” Enhanced FFP will be provided for HCBS services during the first year per recipient: CMS will pay half the state’s usual share (i. e. , in Maryland, if the regular FMAP is 50%, the enhanced FMAP is 75%) 31

Money Follows the Person: continued n Application n n n Must be developed with public process Give preference to states with models including consumer-directed benefit design Must assure CMS that recipients will continue to receive HCBS services following completion of the year of enhanced FMAP Must assure CMS that recipient participation in the demo is voluntary Give preference to states targeting multiple populations (NF; ICF/MR; etc. ) Give preference to states offering transition assistance 32

Public/Private Partnerships States may initiate dollar-for-dollar public/private LTC insurance partnerships n Requirements: n n Eligible person: • Must purchase policy after effective date of SPA • Must be a resident of the state when he/she first draws LTC insurance benefits 33

Public/Private Partnerships HHS to develop reciprocity rules (across states) by 1/1/07, for portability n Issuers must provide reports to HHS in accordance with TBD regs from HHS n Issuers may be required to provide certain information and data to states, according to state-defined requirements n 34

Public/Private Partnerships n Requirements: n Eligible policy: • Must meet numerous requirements found in the Model LTC Insurance Act (renewable, prohibition on exclusions and post-claims underwriting, etc. ) • Must be certified by state Insurance Commissioner • Must have inflation protection n The Medicaid agency must provide technical assistance and information to insurance agency 35

Cash & Counseling n Cash & Counseling models now authorized under 1915(c) may be approved without a waiver n n n State must provide counseling Consumer would have the right to self-direct the selection, hiring, firing & scheduling of caregivers Consumer would have the right to substitute services (e. g. microwave or ramp) 36

Payment

Payment Changes n Pharmacy -- Upper Payment Limit n n Pharmacy – Physician-administered drugs n n Effective 1/1/06 Managed Care Premium Tax as “Broad Based” n n Effective 1/1/07 Effective 2/8/06 Targeted Case Management n Effective 1/1/06 38

Pharmacy – Upper Payment Limit The UPL is 250% of the average manufacturer price (AMP) n The AMP is to be used where there is a multiple source drug, defined as a drug with at least one other similar drug product n HHS shall provide states, on monthly basis, with the AMP by manufacturer and drug (effective 7/1/06) n 39

Pharmacy: Other Related Issues n n Manufacturers cannot use “prompt pay” rules to game AMP Manufacturers cannot use “nominal” prices to game AMP. “Nominal prices” now defined to only exist where sold/given to: n n n 340 B provider ICF/MR State owned or operated nursing facility Any other provided defined as “safety-net” by HHS must conduct detailed rate study on retail prices 40

Pharmacy: Physician. Administered Drugs n For single-source drugs, states must provide to HHS the J codes and NDC codes in a format as specified by HHS to enable recovery of rebates n n Effective 1/1/06 For multiple-source drugs, by 1/1/07 HHS must publish a list of the 20 highest dollar value drugs, and by 1/1/08, states must report the J codes and NDC codes for these drugs to HHS 41

Pharmacy: Other n Children’s Hospitals are entitled to 340 B pricing 42

Managed Care Premium Tax n Law changed to require inclusion of non. Medicaid managed care premiums in order for the premium tax to be considered “broad based” 43

Targeted Case Management n n “Case management” services are comprehensively defined in DRA The definition specifically excludes certain activities from being considered CM. E. g. : n n n n Assessing adoption placements Recruiting foster parents Home investigations Making placement arrangements Administering foster care subsidies Providing transportation Serving legal papers 44

Targeted Case Management (continued) n “Targeted case management” is defined as: n n Case management services Delivered to a targeted population FFP only is available for TCM “if there are no other third parties liable for such services, including as reimbursement under a medical, social, educational, or other program. ” States therefore must extract from TCM rates any funds for services that overlap with IV. E. (foster care), IDEA (education), etc. n State Medicaid Directors letter expected 3/31/06 45

Fraud, Waste & Abuse

Fraud, Waste and Abuse Changes n Encourage states to enact False Claims Act n n Vendor/provider employee education about false claims recovery: policies and procedures n n Effective 4/1/06 Expansion of Medi-Medi data match n n Effective 1/1/07 Prohibition against Rx restocking and double-billing n n Effective 1/1/07 Effective with FY 06 budget TPL Laws n Effective 1/1/06 47

Encourage States to Enact False Claims Act n n A False Claims Act, or whistle-blower statute, would allow private citizens to bring lawsuits on behalf of the government (with permission) The incentive to states: under funds recovered under such a law would receive enhanced match (the state would be able to retain 10% more of recovered funds than its normal match rate) 48

Vendor/Provider employee education about false claims recovery n Any entity that receives or makes annual payments of $5 million or more from a Medicaid agency must, as a condition of receiving such payments: n n n Establish written policies to notify employees about the provisions of the federal false claims laws Establish written policies and procedures on what the entity is doing to prevent and detect fraud, waste and abuse Include all of this information in any employee handbook 49

Prohibition on Restocking and Double Billing for Rx n States cannot seek FFP for expenditures made to a pharmacy where the pharmacy already has received payment for the same ingredient 50

Medi-Medi Match n HHS is instructed to enter into contracts with eligible entities to develop new algorithms to look for payment anomalies in data matches between Medicare and Medicaid claims for dual eligibles 51

TPL Assurances n Each state must provide an assurance to HHS that its state laws permit Medicaid TPL recoveries against any possible third-party, including self-insured plans, managed care organizations, etc. 52

Other

Other Changes n Family Opportunity Act n n Health Opportunity Accounts n n Effective 1/1/07 Other Miscellaneous n Effective dates vary 54

Family Opportunity Act n Creates new optional eligibility category for children who: n n n Are under 19 Would meet SSI disability test Are in households at or below 300% FPL State must require parents to buy into available ESI if employer contributes at least 50% of the premium State may require sliding scale premiums and coinsurance (and must give credit to ESI-related premiums paid) n n Total payments not to exceed 5% for families up to 200% FPL Total payments not to exceed 7. 5% for families between 200 -300% FPL 55

Health Opportunity Accounts Demo may begin on 1/1/07; up to 10 states may participate in demo initiative n Demos should be based on benefit flexibility models, and n Need not be statewide n Need not be comparable n Must be voluntary for enrollees n 56

Health Opportunity Accounts (continued) n Demos must include these elements: n n n n Create patient awareness of high cost of medical care Provide incentives for preventive care Reduce inappropriate use of health care Enable patients to take responsibility for health outcomes Provide enrollment counselors and ongoing education Provide transactions that use accounts and not cash Provide access to negotiated provider rates 57

Health Opportunity Accounts (continued) n Excluded populations from demos include: Age 65 or older n People with disabilities (regardless of eligibility category) n Pregnancy-related groups n People on Medicaid for less than 3 months n 58

Other n Development and support of family-to-family health information centers n n Grant process, similar to Systems Change New demo for up to 10 states to test HCBS services for children in psychiatric residential treatment facilities n RTCs are “institutional equivalent” for HCBS 59

Other, continued n Medicaid Transformation Grants n Competitive grants to “adopt innovative methods. ” Examples: • • n n Reduce medical errors Improve estate recovery Reduce payment error rates New models for medication management Katrina relief funding Extension of Transitional Medicaid (TMA) 60

Other, continued n n States may select and use a transportation broker without a 1915(b) waiver Emergency services provided out-of-network to managed care enrollees “shall be capped” at what the state’s FFS payment to the provider would have been n Net of IME and GME, too, if the state’s FFS bundles them (Effective 1/1/07) States may not use SCHIP funds for childless adults (all such programs in effect on 2/8/06 are grandfathered in for their duration, including renewals) 61

Summary of Mandates

Summary of Mandates on State Medicaid Programs n Eligibility changes n n n Pharmacy: Physician-administered Rx n n LTC effective immediately (unless enabling statute needed) Proof of citizenship effective 7/1/06 J Codes and NDC codes for single source immediately Amend MCO contracts if the out-of-network hospital provisions are not in compliance with the new payment provisions of DRA n Effective January 1, 2007 63

Summary of Mandates (continued) n Managed Care Premium Tax n n Case Management n n Effective immediately TPL Assurances n n Re-do time studies to exclude prohibited activities effective; effective immediately Targeted Case Management n n Program must be broad-based by 1/1/07 Effective immediately Vendor/Provider employee education n Effective 1/1/07 64