LTC Bullet: Medicaid Budget Reconciliation Sneak Peek
September 20, 2005
Comment: The House Energy and
Commerce Committee is writing legislation to save Medicaid $10 billion over five
years AND improve the program in the process.
Wanna know what they're planning? After
WHEN WILL WE SEE GAO'S TOA REPORT? On
September 2, 2005, the Government Accountability Office released its report on
transfer of assets in the Medicaid program to the study's Congressional
requestors, including Congressmen Waxman and Dingell.
Those Democratic legislators have the prerogative to hold the report up
to 30 days before making it public. So
far, to our knowledge, they're sitting on it.
One wonders why they would withhold this important study and its findings
given that House and Senate committees are desperately seeking ways to contain
Medicaid's skyrocketing costs by curtailing Medicaid planning abuses (including
asset transfers). Could it be that
GAO exposed serious TOA abuses instead of delivering the ho-hum, no-big-deal
findings the requestors anticipated? We'll let you know as soon as the report is released and
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BULLET: MEDICAID BUDGET
RECONCILIATION SNEAK PEEK
Comment: Everyone who cares about
Medicaid and long-term care financing has been on pins and needles waiting to
see what Congress will do this year.
we have a glimpse. Yesterday, House
Energy and Commerce Committee staff tipped their hand to State Policy Network
members (and invited guests) on a conference call.
(State Policy Network is the professional service organization for
America's free market, state-based think tanks: www.spn.org.)
delays caused by Hurricane Katrina complications, E&C hopes to have its
budget reconciliation package out of committee by mid-October.
the meantime, Committee staff are looking for "feedback and tweaks"
from "conservative and free market allies" to enhance "market and
anticipate vociferous opposition from all groups that favor expanding government
over private sector solutions. So
they seek to design, and mobilize support for, the best possible package of free
market-oriented proposals. Their
objective is not just to save money but to improve Medicaid.
how the conference call briefing was introduced:
On April 28, 2005, Congress passed a Conference Agreement on the Fiscal
Year (FY) 2006 Budget which calls for a $14.734 billion reduction in outlays
under the jurisdiction of the Energy and Commerce Committee for FY06-FY10.
It is anticipated $10 billion of these savings will come from Medicaid,
although no Medicaid savings are assumed in FY06. Energy and Commerce staff have been working closely with the
National Governors Association and several reform-minded governors individually
to craft policy proposals to strengthen and improve the program while achieving
savings at both the federal and state level.
staff identified four major areas for Medicaid reform.
Cost sensitivity through cost sharing.
Make Medicaid more like a health insurance benefit.
Give states flexibility.
Asset transfers and eligibility for long-term care.
fourth category (asset transfers and LTC eligibility) especially interests us
and that's where Committee staff provided the most detail.
what they have in mind:
the look back period for asset transfers from three to five years so it mirrors
the current look back for transfers to trusts.
the date when the penalty period for uncompensated asset transfers begins.
Currently, the penalty period begins when the transfer is made.
That allows penalty periods often to expire before application for
Medicaid is made. Both the
Administration and the National Governors Association proposed starting the
penalty period instead when a person applies or would otherwise have become
eligible for Medicaid. That's what
the Committee is likely to propose. Nursing
home groups are concerned that this change could force them to provide more
uncompensated care. Committee staff
are giving this concern very serious consideration.
Committee is looking carefully at financial instruments that Medicaid planners
use to impoverish their clients artificially, such as annuities.
Annuities have been abused for a long time as instruments to qualify for
Medicaid LTC benefits without spending down for care.
People transfer large chunks of money into annuities thus changing the
assets from countable into non-countable resources.
The main idea is to put state Medicaid programs in the position of the
primary beneficiary in such annuities, so that the money doesn't disappear and
Medicaid is reimbursed for care provided.
controlling the abuse of annuities, the Committee contemplates giving the
Secretary of Health and Human Services broad authority to look at and control
all sorts of instruments used by Medicaid planners to qualify people for
Medicaid by dodging income and asset limits.
possibility under consideration is to put a limit on the amount of home equity
that can be exempted while qualifying for Medicaid long-term care benefits.
Currently, there is no limit whatsoever on home equity.
Several members of the Committee are sympathetic to placing some limit.
They say "enough is enough."
The level of the limit is still under discussion.
addition to discouraging Medicaid planning abuses, the Committee is considering
positive measures to encourage the public to plan for long-term care expenses.
The most likely proposal in that regard is to expand LTC partnership
programs by lifting restrictions in effect since 1993 so all states can
participate. Committee staff would also like to encourage reciprocity
between LTC partnership states, but that is very complicated to do.
Committee staff turned briefly to the other main categories of proposals they
have under consideration. For
example, cost sharing. Medicaid has
no real cost sharing. The statute
currently allows nominal cost sharing up to $3, but that has no effect because
recipients are not required to pay it. One
possibility under consideration is to allow governors to impose cost sharing on
some categories of recipients. The
main objective is to make people aware there are often less costly and better
alternatives for care, such as seeing a regular doctor instead of relying on
emergency room visits.
flexibility would not apply to the more vulnerable populations.
Rather, would allow states to vary benefit packages according to some
benchmark. Make it easier for
states to put people into managed care or employer plans.
how Medicaid pays for prescription drugs.
The main idea is to get away from AWP (average wholesale price) and go to
something more realistic. Create
incentives for manufacturers to move to a more competitive plan like Arizona's.
considering health savings accounts for some recipients and incentives for more
fraud and abuse controls in response to horror stories from New York.
information technology advancements.
foregoing, in a nutshell, are some of the ideas for Medicaid reform that House
Energy and Commerce Committee staff are considering.
brief Question and ANSWER period followed this presentation.
asked if the Committee had considered reforming the Medicaid federal funds
matching system that encourages states to "game" the program by
leveraging up their federal match with creative financing techniques.
Why not implement a block grant?
ANSWER WAS THAT THEY COULD NOT GET CONSENSUS FOR A BLOCK GRANT.
INSTEAD, THEY ARE TRYING TO GET AT THE PROBLEM BY IMPROVING INCENTIVES
FOR STATES TO CONTAIN COSTS.
Moses asked whether the Committee had any specific dollar amount in mind for a
home equity exemption limit.
ANSWER WAS THAT THE COMMITTEE WOULD CONSIDER THE LIMIT PROPOSED BY THE NATIONAL
GOVERNORS ASSOCIATION, SPECFICALLY $50,000 OR 10% OF THE HOME'S VALUE, WHICHEVER
IS LESS. "BUT WE DON'T KNOW IF
THE COMMITTEE CAN GO THAT LOW."
That concluded the SPN conference call on Medicaid reform. The Center for Long-Term Care Reform wishes to thank the State Policy Network for the opportunity to participate in this briefing.