<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:23941.wais]
S. Hrg. 109-224
Mandatory or Optional? The Truth About Medicaid
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
June 28, 2005
__________
Serial No. 109-10
Printed for the use of the Special Committee on Aging
U.S. GOVERNMENT PRINTING OFFICE
23-941 WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800
Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001
SPECIAL COMMITTEE ON AGING
GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama HERB KOHL, Wisconsin
SUSAN COLLINS, Maine JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri RUSSELL D. FEINGOLD, Wisconsin
ELIZABETH DOLE, North Carolina RON WYDEN, Oregon
MEL MARTINEZ, Florida BLANCHE L. LINCOLN, Arkansas
LARRY E. CRAIG, Idaho EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania THOMAS R. CARPER, Delaware
CONRAD BURNS, Montana BILL NELSON, Florida
LAMAR ALEXANDER, Tennessee HILLARY RODHAM CLINTON, New York
JIM DEMINT, South Carolina
Catherine Finley, Staff Director
Julie Cohen, Ranking Member Staff Director
(ii)
C O N T E N T S
----------
Page
Opening Statement of Senator Gordon Smith........................ 1
Panel I
Diane Rowland, Sc.D., executive vice president, The Henry J.
Kaiser Family Foundation, Washington, DC....................... 2
Panel II
Pamels S. Hyde, J.D., secretary, New Mexico Human Services
Department, Santa Fe, NM....................................... 31
Howard Bedlin, vice president, Public Policy and Advocacy,
National Council on the Aging, Washington, DC.................. 43
Jeffrey S. Crowley, project director, Health Policy Institute,
Georgetown University, Washington, DC.......................... 62
Sister Karin Dufault, SP, RN, Ph.D., chairperson, Board of
Trustees, Catholic Health Association of the United States,
Seattle, WA.................................................... 85
APPENDIX
Prepared Statement of Senator Jeffords........................... 103
Questions from Senator Jeffords for Diane Rowland................ 103
Questions from Senator Jeffords for Pamela Hyde.................. 105
Questions from Senator Jeffords for Jeffrey Crowley.............. 106
Questions from Senator Jeffords for Sister Karin Dufault......... 109
Statement submitted by Association for Community Affiliated Plans 113
Testimony submitted on behalf of the American Congress of
Community Supports and Employment Services (ACCSES) and
Disability Service Providers of America (DSPA)................. 115
Statement submitted by National Citizens Coalition for Nursing
Home Reform (NCCNHR)........................................... 121
Statement submitted by National Mental Health Association........ 124
(iii)
MANDATORY OR OPTIONAL? THE TRUTH ABOUT MEDICAID
---------- --
TUESDAY, JUNE 28, 2005
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The committee met, pursuant to notice, at 3 p.m., in room
G50, Dirksen Senate Office Building, Hon. Gordon H. Smith
(chairman of the committee) presiding.
Present: Senators Smith and Carper.
OPENING STATEMENT OF CHAIRMAN GORDON H. SMITH
The Chairman. Ladies and gentlemen, welcome to this hearing
on the Aging Committee. Our topic is ``Mandatory or Optional?
The Truth About Medicaid.''
We are glad you are all here, and I am especially pleased
to welcome our distinguished panel of witnesses, who I am
certain will share with the committee a great deal of
information that will help us make decisions as Congress moves
forward with development and consideration of a reconciliation
package later this year.
Medicaid is a vital safety net program for 54 million
elderly, disabled, chronically ill and poor Americans who rely
upon it for their health care. The purpose of this hearing is
to learn about a fundamental aspect of the program, use of
mandatory and optional populations and benefits.
To some these categories simply mean that those who are
considered mandatory populations should receive care through
Medicaid, and that those who are optional probably have other
alternatives and do not really need Medicaid's help.
Well, by the end of this hearing I believe we will all
learn that it is not necessarily the case. In fact, if we allow
optional beneficiaries to lose Medicaid coverage, they will
simply join the ranks of millions of uninsured Americans and
end up costing taxpayers far more in the long run. We also may
learn today that there are whole groups of Americans without
health care coverage, and no matter how poor or sick they may
be, they cannot receive care through Medicaid.
Exploration of these issues is very important as we move
forward to try to determine, one, how to meet the $10 billion
reconciliation instruction given to the Finance Committee, and
two, how to improve and reform this vital program.
As we consider proposals intended to respond to the budget
reconciliation instruction and deliberate ways to improve the
overall Medicaid program, we must proceed with very real
caution and heightened sensitivity.
It is my experience, both as a State Senator in Oregon, and
as president in the Oregon Senate, and now as a member of the
U.S. Senate, that much good can be accomplished when we work
together and remain focused on the people this program helps.
Unfortunately, because of its complexity and the severity of
many beneficiaries' health status, much damage can also be done
if Medicaid is not approached in the right way.
That is why I continue to advocate for bringing all
stakeholders to the table, because only when all voices have
been heard can a solution be discovered that will be able to
garner majority support from the U.S. Senate.
Using the Aging Committee, I plan to hold a series of
hearings over the next year and a half to provide a forum to
share ideas, concerns and hopefully craft proposals that will
result in a higher quality, more efficient, more sustainable
Medicaid program. The focus of these hearings will be divided
between the short-term challenge of meeting the reconciliation
instruction and the long-term challenge of improving the
program.
So I look forward to working with my colleagues as we delve
into Medicaid and welcome input from all Medicaid stakeholders.
After all, every voice must be heard because all have an
important and unique perspective to bringing to the table the
right kind of solutions and reforms.
We hope to have more of my colleagues here. There are a
tremendous amount of things going on on the floor and other
meetings that were called and canceled, so hopefully more will
find their way to join us soon.
We have two panels today. The first will be Ms. Diane
Rowland, who is the executive vice president of the Henry J.
Kaiser Foundation in Washington, DC.
Diane, why do you not take the hot seat, and share with us
what you would have us know.
STATEMENT OF DIANE ROWLAND, Sc.D., EXECUTIVE VICE PRESIDENT,
THE HENRY J. KAISER FAMILY FOUNDATION
Ms. Rowland. Thank you, Mr. Chairman. I am delighted to be
here and very pleased that you are holding this hearing as well
as the series you have planned on Medicaid.
Medicaid is today our largest health care program, and as
you know, the only real source of long-term care assistance in
the Nation. It assists 54 million Americans, including 8
million with severe disabilities and 5 million who are low-
income elderly. The elderly and disabled are not the face of
Medicaid. It is often the children that the program covers. Yet
they account for 70 percent of all spending on the program. So
really, Medicaid has very much become a program for the elderly
and disabled, even though the majority of its beneficiaries are
children.
Much of the spending in the program is driven by long-term
care. Medicaid now covers half of all long-term spending in the
Nation, and 60 percent of nursing home residents depend on
Medicaid for assistance with the substantial cost of long-term
care. Financing these roles, however, as you've noted, has
become an increasing challenge for both the Federal and State
Governments.
The structure of Medicaid provides for joint financing
between the Federal Government and the States. There are
certain requirements put on the States in terms of who they
must cover and what services they must provide in order to
receive matching funds from the Federal Government for the
services they cover. The matching rate varies from 50 to 77
percent depending on the per capita income of the State so that
the Federal Government assists those States that are poorer at
a greater level.
On average today 57 percent of all spending on Medicaid to
covered by the Federal Government, so there is a large Federal
stake in what happens to the State programs under Medicaid.
In terms of what is required for Medicaid coverage, States
are required to cover all children under the poverty level,
pregnant women and children who are under age 6 in families
with incomes under 133 percent of the poverty level, and the
aged and disabled who are recipients of cash assistance through
the Supplemental Security Income Program. Those are the so-
called mandatory populations for Medicaid.
What is optional in Medicaid coverage is that states can
cover individuals with higher incomes who meet these
categories, and especially a group we call the medically needy.
The medically needy are individuals who meet the categories for
Medicaid assistance under the mandatory rules, but have
somewhat higher incomes, whose medical expenses allow them to
spend down below the Medicaid eligibility levels and obtain
Medicaid. Nursing home care is one of the most frequently
utilized services for people who spend down to Medicaid
eligibility.
Twenty-nine percent of all people covered by Medicaid today
are covered at the option of the State and not required by
federal law; expenditures for populations and services covered
at state option account for almost 60 percent of overall
program spending. About 48 percent of all elderly people
covered by the Medicaid program are covered as optional groups,
compared to only 22 percent of children. So it really is in the
services the program provides to people who are elderly and
those with disabilities where the term ``optional eligibility''
becomes most appropriate, mostly because nearly half spend
down.
On the benefit side federal law requires States to cover
physician services, basic hospital care, laboratory services
and some nursing home services, but leaves many of the other
benefits, including prescription drugs, home and community
based services, personal care services, and a lot of what is
needed for someone with long-term care needs as optional
benefits.
It is hard to imagine if you were putting together a
benefit package today that you would leave some of these
services optional and put others into the mandatory category.
This point was just so aptly demonstrated by Congress in making
prescription drugs a part of the Medicare benefit package.
Medicaid's evolution as a long-term care provider has
largely grown through the optional services. Benefits offered
today at State option account for about 30 percent of all
Medicaid spending.
So overall when we look at the picture of mandatory versus
optional populations and spending, we see that 61 percent of
all Medicaid spending is either for optional services for
people who are covered as mandatory populations or for optional
and mandatory services for the optional population.
But are they really optional? Is any of this really at
State option? As the laws are changed to move toward broadening
Medicaid coverage beyond its origin as the source of coverage
for the welfare population, often those additions were made
optional for the States so that new requirements would not be
imposed on States unable to afford their State matching share.
Increasingly, the Congress moved to make children more of a
mandatory population, but the elderly and the disabled were
left more at State option, in part, I believe because of the
substantial cost that those individuals can impose, given their
greater health care needs and use of long-term care.
About 85 percent of all Medicaid spending on long-term care
is optional. So when we think of long-term care services as the
dominant role that Medicaid plays for people who are elderly or
with disabilities, we are really talking there about a set of
services that is largely considered optional. However, if you
talk to any of the individuals needing these services, they are
anything but optional, they are in fact essential benefits.
One can clearly make the case that if you were revisiting
Medicaid and trying to design it anew today, you would probably
never make many of the optional benefits optional, nor limit
the populations covered to the income levels that Medicaid
covers as mandatory. You would clearly redesign it to provide a
broader range of protection for all low-income individuals and
a more stable benefit package for those in need.
The question has always been one of resources and the
options were put in place to try not to impose additional
resource requirements on States that were resource poor. The
question today of resources continues. States now want
increased flexibility but without additional resources that
increased flexibility is very likely to lead to penny-wise and
pound-foolish solutions.
Cost-sharing for poor families on Medicaid is one of the
flexibility options that States have asked for. We know that
you can collect some money from low-income individuals, but if
they are living on $750 a month it may be pretty difficult to
pay 5 or 10 dollars per prescription. We know that cost-sharing
leads to barriers to primary care, and I think it is pound
foolish because in the end we will see many of these
individuals end up sicker and needing hospital care, sicker in
the emergency room, and in the end will have to pay more for
the cost of their care because we delayed the early primary and
preventive care that can make a difference.
Similarly, some States have begun to look at imposing
enrollment premiums even for the lowest-income individuals,
people living at less than 8 or 9 thousand dollars a year. Your
own State of Oregon actually tried the premium route and
discovered that enrollment in the program declined by over
50,000 people largely as a result of their inability or
unwillingness to pay the premium. That was about half of the
enrollees covered who were subject to premiums. So we know that
premiums may sound good and seem like a way to save some
additional funds, but may in the end result in growing our
uninsured population instead of providing additional revenues
to the Medicaid program.
The Chairman. What was the amount of the premium Oregon
charged?
Ms. Rowland. It ranged from $6 to $20 a month, depending on
the income. It was on a sliding scale. Sounds modest, but what
we find is that our ability to understand what it takes to live
on $750 a month for a family of 3 may mean that what seems like
very nominal cost-sharing or premium amounts to us may in fact
not be within the budget of the families we are talking about.
The Chairman. How would that compare to copays or an up-
front portion for a particular service?
Ms. Rowland. The copays might range from 3 to 5 or 10
dollars. They have been limited under the Medicaid program to
date, but one of the areas of flexibility States have requested
is to raise the copays.
In the Utah experience there was an expansion of coverage
to additional low income people with an annual enrollment fee
of about $50 a year, hospital services and many mental health
services were not covered and substantial copayments well
imposed on covered services.
So we are seeing costs for beneficiaries imposed within the
program. It may be worthwhile looking at how costs have
affected some of the higher income children who cost-sharing is
allowed under the SCHIP program. In Medicaid we are primarily
talking about adults who in some states are covered at 28 or 29
percent of the poverty level and do not really able to have
much in the way of financial resources to pay for their care.
Instead of cutting benefits, I believe, the real solution
to making Medicaid sustainable is actually to make it less
necessary. If we had universal health coverage or if we had
some broader form of long-term care assistance, the future
sustainability of Medicaid would not be in question. But now in
the absence of these broader solutions, I think as you have
stated so well in your opening statement, we really do need to
take care to make sure that any changes to Medicaid do not
shred the only safety net out there for millions of our sickest
and frailest citizens. I believe we should be looking at ways
to better coordinate care under Medicaid and to better organize
services through Disease Management and other programs that
help the chronically ill to get the care they need and not fall
through the cracks and get sicker before we treat them.
There are also ways I think we can really move to improve
the delivery of long-term care services, with more home and
community based services. We need to be building on these
experiences.
You also mentioned the uninsured and the fact that some
individuals, no matter how poor, never qualify for Medicaid,
and that is the case for adults without dependent children who
do not meet the disability definition. We should really be
looking at ways to secure coverage for our lowest income
population and not through Medicaid shred the safety net
Medicaid provides. I am glad you are holding this hearing to
begin to explore these issues.
Thank you, and I would welcome any questions.
The Chairman. Can you talk a little bit more about the
creation of mandatory and optional, and would you just discard
those definitions or would mandatory become more of the
preventive kind of medicine and optional, I guess, cosmetic
surgery?
Ms. Rowland. Clearly, Medicaid, when it was enacted in
1965, was a follow-up program to what was then known as the
Kerr-Mills Act, which was assistance to States to provide care
for the aged. When it was enacted it was seen as a program that
could help people who were on welfare. So at the time the Aid
to Families with Dependent Children Program, and by 1972 with
the Federalization of Cash Assistance with the Supplemental
Security Income Program for the Aged, Blind and Disabled,
Medicaid really became the provider of medical services for the
cash assistance population.
One historical thing of interest is that in 1972 when the
Aged, Blind and Disabled became a Federal cash assistance
program under Supplemental Security Income, there was concern
that not all States would be willing to provide full Medicaid
coverage to all of the SSI Federal entitlement people. States
were thus given the option of not providing coverage and using
their old rules for the aged and disabled that were in place in
1972. A few States still follow those rules.
So I think that the implementation of disability coverage
under Medicaid really provided the first ``if we are going to
expand coverage to a population, not all States may be able to
step up to the plate and cover that full population, so we will
give them options.''
Therefore, if you really look at the history of the
program, optional populations were always those that had a
worthiness to be covered by Medicaid. No one doubted that they
were too well off, but coverage was optional because Congress
did not want to impose requirements on States that may not have
had adequate resources to provide coverage. Over time, some
groups especially children, became a popular part of the
program. Today many children are mandated for coverage because
of the progression of a year at a time covering all children
under poverty. That has not been the case for adults, so adults
have remained largely covered at the option of the State.
The Chairman. Obviously, I was being facetious when I
mentioned cosmetic surgery as an optional procedure, but can
you name something that is an optional procedure now that
really ought to be a mandatory procedure?
Ms. Rowland. Well, I certainly think that prescription drug
coverage, which is an optional benefit, but available now in
all the States, would be part of any benefit package today.
Clearly a lot of the other services, such as prosthetic
devices, and durable medical equipment, are optional services
that you would think would be required for a program that
covers people with severe disabilities. I think most of the
other services that tend to be in the optional category like
dental services and vision care may be optional if you were
talking about a benefit package for working Americans, but when
you are talking about the benefits needed by some of the lowest
income and poorest Americans, you may want to include those as
mandatory rather than optional services.
Where the real options are that I would consider part of a
mandatory program are around the long-term care benefits, where
intermediate care facilities for the mentally retarded, home
and community based care and other services are not part of the
mandated benefits, only nursing homes.
The Chairman. How about mental health? Can you speak to
that as an optional service?
Ms. Rowland. Mental health I think is one of the area
obviously that has emerged as a place where prescription drug
coverage is essential. While mental health services in terms of
physician visits are covered under the mandatory section of the
program, prescription drugs are optional so clearly one of the
main treatment options is an ``optional'' benefit.
In fact, I just heard that the State of Florida is planning
to impose some prior authorization requirements on use of
psychotropic drugs. I think one of the areas where mental
health really needs to be addressed is that if the services
needed for treatment are optional, then providing people with
access to the provider, but no access to the agents that they
need to maintain their status is really counter productive.
It is also an area where we found that many States, as they
look to slim down or restructure their benefit packages have
left mental health services out. Specifically when Utah was
doing its primary care benefit package, it did not include
mental health services.
The Chairman. At all?
Ms. Rowland. Not at all. You know, it included the basic
physician services with copays and four prescription drugs per
month with copays, but mental health specialist services and
hospital care were excluded from the benefit package.
I think one of the dangers we have today is that when we
talk about the Medicaid benefit package being too
comprehensive, many of the services that are optional today are
being considered for elimination. The slimmer the benefit
package, the less able this program will be to meet the diverse
health needs of the population it serves.
The Chairman. When you cut out the mental health component,
have you ever quantified in the research that you do what it
means to other costs that are borne by the State in terms of
county jails, in terms of State hospitals, emergency rooms?
Ms. Rowland. We have not done any studies that would relate
to the other societal costs for cutting out mental health
services from Medicaid specifically. We do know from some of
the work on the uninsured population, the societal costs for
people without health insurance coverage who do not get the
health care they need contributes to problems among children in
school, to people not engaging productively in the labor force,
and to more preventable hospitalizations, because if people
were under treatment they would not need to be hospitalized for
care.
There are definite costs to not providing coverage that we
see from our analysis of the uninsured. I think we know from
States that have been looking at cutting back on some of the
prescription drug coverage for people with mental illness, that
there is obviously going to be a rise in costs in other areas,
probably hospitalization, but also I think as you are pointing
out, to the prison system, and to society in general.
The Chairman. In your testimony you spoke of the Oregon
experience, my State, and some of the cost-sharing or cost-
shifting that has gone on under the Oregon health plan. Can you
speak to the Oregon experience as you see it and what the
Congress might learn from mistakes that may have been made
there?
Ms. Rowland. Well, I think we see from Oregon a State that
tried to do as much as possible to provide adequate and broad
coverage to its low-income population. It was willing to take
some risks and challenges in how it tried to set up its tiering
of benefits. It had broad use of managed care and also has been
a State that led the way in terms of community based care as an
alternative to nursing home care.
Yet I think that when budgets get tight and revenues from
the Federal Government are not there to help support States
through some of the economic downturns they face, you see that
as you trim on benefits you have people who go without the care
they need. We see a higher rate of hospitalization for
conditions that are avoidable if they are subject to early
preventive care. Especially around use of cost sharing we see
people deferring care that should be available at the
beginning, and we see providers saying that they are seeing it
imposing greater administrative burdens on them for trying to
collect the cost sharing. This really results in providers
actually getting less payment for the services they provide
since under Medicaid law they cannot require the beneficiary to
pay the cost sharing before rendering services. As a result I
think in some States we have seen some providers unwilling to
continue to participate in the program, thereby further
compromising access for the low income population.
The Chairman. If premiums are not the answer or maybe
counterproductive to the right answer, what could be reasonably
required in terms of to induce responsibility, avoid abuse,
without hurting peoples' access to using Medicaid but not
abusing Medicaid?
Ms. Rowland. I think that cost sharing is probably more
difficult than premiums, so let me just differentiate between
the two.
The Chairman. They are very different, but what works and
what does not?
Ms. Rowland. I think that premiums have their negative
effect on overall participation, but they do not influence how
someone uses the health care system, whereas cost sharing
influences how somebody accesses the health system, when they
access it and how much they use.
I think that one of the more effective ways to control
utilization and work with patients is to have them enrolled in
managed care plans that actually try to manage their care and
give them incentives. I think it is counterproductive to have
cost sharing for preventive services where you want people to
have no barriers to use services. I think if you try to
distinguish within the benefit package on the benefits that may
be less necessary, perhaps that is one place where you could
impose some of the cost sharing. But premiums I think work the
best if you are trying to get participation in the program
financially from individuals, but they do discourage
enrollment.
If one is going to use premiums, one of the most important
things is how you keep people established in the program. So if
I used premiums I would combine them with longer term
eligibility so that you do not have people dropping on and off.
The Chairman. As you see the Finance Committee wrestle with
a $10 billion reconciliation, are there some obvious things
that you would suggest to us to do so that we do not hurt the
people we are trying to serve and improve the program? What
would you have the Finance Committee do with that $10 billion?
Ms. Rowland. They always say that you should go where the
money is if you are trying to save money, and I think one of
the places that we see tremendous opportunity to improve care
as well as potentially reduce costs is in better coordination
between Medicare and Medicaid of the care of the dual eligible
population.
About 18 percent of all Medicare beneficiaries are
currently also getting assistance from Medicaid. They account
for 42 percent of all Medicaid spending so. We need to look at
better management, especially around some of their prescription
drug needs, around their coordination of care between the
Medicare benefits and Medicaid, around long-term care to
achieve possible savings. This is the group for whom disease
management and better care management may well result not only
in some savings to both Medicaid and Medicare but also in
improved quality of care.
I think around the children's services----
The Chairman. Can you quantify that? How much would that
save? I mean, 5, 10?
Ms. Rowland. I think you could probably get to 5 or 10 over
a couple of years.
The Chairman. We have 5 years to do it, so.
Ms. Rowland. Really 4, right?
The Chairman. Exactly, 4. We are burning up the first year
here.
Ms. Rowland. I think that is one area. The other area is
obviously where States have already been very aggressive in
trying to get better prices for prescription drugs, to try to
better control utilization of the prescription drugs. Possibly
introducing some tiering so that some of the brand name drugs
are not as available and have limited differential cost sharing
could be used. Most of the current employee benefit plans have
tiered cost sharing in the Medicaid program working with
preferred drug lists and working with better pricing is a
priority getting better prices is both important to make sure
that the drugs that are needed are available but also as a way
to save some money.
The Chairman. A lot of the information sharing on that is
being done by a number of States. I believe even Oregon is
doing that. Do you think we can glean from that the kind of
information that will allow for tiering and for more effective
use of----
Ms. Rowland. I think you can glean some from that. I think
the other issue that you really are going to have to visit is
what the implications on January 1, 2006, of pulling the dual
eligibles drug coverage out of Medicaid and over to Medicare is
going to mean for the State's ability to continue to get the
kind of discounts and rebates that they have gotten in the
past. They will obviously have a lower market share now.
Second, obviously, revisiting some of the issues in the
clawback and the lack of a wraparound for some of the dual
eligible beneficiaries where States are not eligible for
federal matching funds--if they try to supplement the Medicare
package. This is the area of concern to people with mental
illness who really need some of the drugs that may not be well
covered under the Medicare formulary. I think that is an area
where helping the States to be able to still obtain Federal
matching funds if they wrap around is an important item to
consider. It would not save money, but it might really save
lives.
The Chairman. Do you think policies on copays should wait
to consider options for all program aspects, or can we look at
drugs and not cause damage in other areas?
Ms. Rowland. Well, we have always looked at drugs a little
differently, because as I said, they have been an optional
benefit. Adults covered by Medicaid can be changed minimal
copays imposed on prescription drugs.
One of the experiences though is that many States used to
have a dollar or two dollar copay for prescription drugs. They
decided in many ways that that was too expensive to administer,
and so a lot of States dropped copays on drugs.
One of the most negative experiences with copays for
prescription drugs was actually in the State of New Hampshire,
where they imposed copays on individuals who often needed
mental health drugs. They did not take their drugs and they
ended up in nursing homes and hospitals, costing the State
substantially more.
I think that the one thing to always remember with this
population is what may seem like a prudent policy for
individuals who are relatively healthy does not always apply to
the Medicaid population where individuals not only have fewer
resources than others in society, but also often have more co-
morbidities and health care problems that require very delicate
balancing to make sure they do not get out of kilter.
The Chairman. I think you have answered my questions. You
have been very, very helpful, Ms. Rowland. You have added
measurably I think to the Senate record, and I think your
advice to us is be careful of the designations of mandatory and
optional populations. I think I am understanding you to say
that flexibility may ultimately save money short term, but cost
money long term and will not ultimately save us money, and may
throw people off coverage that really should be covered.
Ms. Rowland. That is right. One of my colleagues likes to
say there is no such thing as an optional person, and I think
that is something to remember as we move forward in this
debate.
The Chairman. Anybody optional here? [Laughter.]
No. I think everyone here is mandatory. Thank you very,
very much for your time and for sharing the experience of the
Kaiser Family Foundation.
Ms. Rowland. If there is anything else we can provide we
would be glad to work with you and look forward to working with
you. Thank you.
The Chairman. We look forward to that as well. Thank you so
very much.
[The prepared statement of Ms. Rowland follows:]
[GRAPHIC] [TIFF OMITTED] T3941.001
[GRAPHIC] [TIFF OMITTED] T3941.002
[GRAPHIC] [TIFF OMITTED] T3941.003
[GRAPHIC] [TIFF OMITTED] T3941.004
[GRAPHIC] [TIFF OMITTED] T3941.005
[GRAPHIC] [TIFF OMITTED] T3941.006
[GRAPHIC] [TIFF OMITTED] T3941.007
[GRAPHIC] [TIFF OMITTED] T3941.008
[GRAPHIC] [TIFF OMITTED] T3941.009
[GRAPHIC] [TIFF OMITTED] T3941.010
[GRAPHIC] [TIFF OMITTED] T3941.011
[GRAPHIC] [TIFF OMITTED] T3941.012
[GRAPHIC] [TIFF OMITTED] T3941.013
[GRAPHIC] [TIFF OMITTED] T3941.014
[GRAPHIC] [TIFF OMITTED] T3941.015
[GRAPHIC] [TIFF OMITTED] T3941.016
[GRAPHIC] [TIFF OMITTED] T3941.017
[GRAPHIC] [TIFF OMITTED] T3941.018
[GRAPHIC] [TIFF OMITTED] T3941.019
[GRAPHIC] [TIFF OMITTED] T3941.020
The Chairman. We will now call up our second panel. That
panel will consist of Pamela S. Hyde, who is the secretary, New
Mexico Department of Human Services at Santa Fe, NM--welcome,
Pamela; Howard Bedlin, vice president for Public Policy and
Advocacy, the National Council on the Aging here in Washington,
DC; Jeffrey Crowley, project director, Health Policy Institute
at Georgetown University here in the District; and Sister Karin
Dufault, who is the chair of Board of Trustees, Catholic Health
Association in Seattle, WA.
Why do we not go in the order announced? So, Pamela, you
are first at bat.
PAMELA S. HYDE, J.D., SECRETARY, NEW MEXICO HUMAN SERVICES
DEPARTMENT, SANTA FE, NM
Ms. Hyde. Thank you, Chairman Smith, distinguished members
of the committee when they get here.
The Chairman. Yes. [Laughter.]
Ms. Hyde. My name is Pamela Hyde. I am secretary of the New
Mexico Human Services Department. That is a department that is
responsible in New Mexico for the Medicaid program. We also
administer several other Federal and State programs.
I am grateful to the chairman and to the committee for
holding these hearings, and I am especially grateful to you,
Senator Smith, and to our Senator Bingaman, for your leadership
in trying to find some compromise in this process and for
trying to resist the massive cuts that were originally proposed
to the program. So thank you.
The Chairman. You are welcome.
Ms. Hyde. I would like to make three points about the role
of the Medicaid program in serving people with mental illness,
and then make three recommendations.
First, Medicaid is a critical source of funding for the
services upon which persons with mental illness rely. Reducing
that funding will not make those service's needs go away.
Individuals served through Medicaid are often severely disabled
by mental illness or substance abuse, and without services
designed to assure their ability to live and work in the
community, they end up in other systems where services will
significantly be more costly, such as inpatient settings,
emergency rooms, or they will be inappropriately addressed,
such as jails, prisons, juvenile justice settings and homeless
shelters.
Medicaid now exceeds for the first time half of the public
mental health expenditures nationwide. In New Mexico Medicaid
accounts for over 60 percent of those public mental health
expenditures. States need Federal assistance to increase their
expenditures for mental health and substance abuse, not
decrease them, by absorbing reductions in Federal funding or
forcing States to reduce the single most important source of
funding for behavioral health treatment in support of services.
Medicaid recipients of mental health services generally
need ongoing services due to the severity and chronic nature of
their disorders. However, some of the adults most in need of
mental health and addictions services are not quite disabled
enough to receive a disability designation. The irony is that
in many States a member of a ``mandatory population'' with a
less critical clinical need may be entitled to a mandatory
mental health service, while an optional or even ineligible,
high-need, high-risk adult or child cannot get an optional or a
mandatory service such as assertive community treatment, multi-
systemic therapy, or even medications.
Second point. Many of the populations and most of the
services considered to be optional in the Medicaid program are
simply not optional for people with mental illness. Mandatory
services, as you know, include outpatient, inpatient, physician
services. However, they do not include medication monitoring or
prescription medications, which are critical, especially for
people with severe mental illness.
They do not include clinical services of psychologists or
social workers or personal assistance programs. Mandatory
services do not include those community based services that are
particularly helpful for the management of symptoms and life
with mental illness.
They also do not include those most widely accepted
evidence-based practice such as medication algorithms,
assertive community treatment, family cycle education,
therapeutic day care, respite care, multi-systemic therapy or
even targeted case management. Even psychologists and social
workers, as I indicated, are not mandatory in the Medicaid
program.
These are all services that are not optional by any means
for adults with serious mental illness or children with severe
emotional disturbance. States are forced to reduce the cost of
their Medicaid programs. They have no choice but to reduce
those services that are considered optional by the Federal
Government. Since some populations in need of behavioral health
services in almost all the services needed by seriously
mentally ill adults and severely emotionally disturbed children
are optional, these artificial distinctions have a
disproportionate impact on such individuals.
Third. Medicaid rules and regulations stifle creativity in
the treatment of persons with mental illness and addictions,
and prevent the utilization of evidence based practices for
such individuals.
I have mentioned that some already, but some of the most
appropriate supportive services for these individuals, such as
a supported housing, supported employment, integrated treatment
approaches for co-occurring disorders, respite care for adults,
after-school therapy, they are difficult if not impossible to
get in the Medicaid program even through waivers. States find
themselves in the awkward situation of being required to fund
medically oriented services for populations that would best be
served by a rehabilitative or supportive therapies approach.
The mandatory and optional categories just do not work well
for people with behavioral health needs, and some CMS waivers,
Oregon being an example, even allows mental health and
substance abuse benefits to be excluded from some of the
limited benefit package approaches being tried through waivers.
Because of the historical unwillingness of the Federal
program to pay for institutional care for adults between 18 and
64, we have something called the IMD exclusion which makes it
very difficult for States to make the case about financing of
home and community based services in order to obtain these
waivers for adults with mental illness.
I want to highlight just three recommendations in this
short time, and would be glad to answer questions.
First, Medicaid reform cannot be disconnected from
Medicare. Many adults with serious mental illness are duly
eligible for both programs as are many children. Once Medicare
Part D begins, many of these individuals are going to find
themselves dealing with multiple formularies and having to
receive some of their medications through Medicare, some
through Medicaid, and some not through either. Medicare does
not cover all the needs of persons with mental illness and in
many ways is discriminatory about that benefit, especially not
the Medicaid optional rehab services. So coordination of
benefits is necessary and it is always difficult to do that
coordination for the individual, for their families and their
providers.
Additionally, dual-eligible individuals have to wait 2
years, as do all dual-eligibles, to become Medicare eligible.
They may receive Medicaid services during that 2 years, then
they must switch to those services that Medicare will cover and
begin the coordination of benefits. The 2-year waiting period
should be eliminated so that those dually eligible individuals
can be covered by Medicare upon receipt of their disability
determination. Better yet, Medicare should pick up all the
medication costs for this population from the day they are
determined to be disabled, and should assure that the
formularies cover all the drugs they need, including the newest
anti-psychotic medications that have less side effects and
therefore higher compliance rates.
Congress should seriously consider having the Federal
Government take over the whole care of persons who are dually
eligible. I know that is controversial, but in fact, I believe
that it would save a lot of administrative costs both at the
provider level, at the State level and at the Federal level,
trying to do this coordination of benefits.
Second. Make it simple to allow States to put evidence-
based practices into their State plans or waiver programs.
States have to wait long periods of time for approvals of State
plan amendments and waiver requests even if they are changes
other States have been doing for years. Mexico right now is
waiting for approval for the addition of ACT teams. Almost
every other State already has these in their State plan, it
should not be a big thing to do.
Anything another State has been allowed to do, especially
if it helps to implement an evidence-based or promising
practice for adults or children with behavioral health needs,
should be allowed on a fast-track approach. CMS needs to work
with States to come up with creative ways to deal with the IMD
exclusion so that housing supports and supported employment can
be available for persons with mental illness. These services
are available through waivers for other disability categories.
Third. As Congress considers reforms, do not make those
reforms different for optional and mandatory populations
without considering what may not be optional in the lives of
those with serious behavioral health needs, and frankly, avoid
simply making current optional services mandatory or simply
protecting current mandatory populations and services. The
assumption is that States are going to behave inappropriately
in order to gain more Federal money. In fact, we share common
goals including increasing services as well as containing
costs.
States do not want to be in a situation where they have to
reduce services or eligibility that will hurt the most
vulnerable individuals because the Federal Government wants to
preserve services for so-called mandatory populations and
reduce its own spending for so-called optional ones. We should
work together to contain costs while providing critical
services for those most in need.
Thank you. I would be glad to answer any questions.
[The prepared statement of Ms. Hyde follows:]
[GRAPHIC] [TIFF OMITTED] T3941.021
[GRAPHIC] [TIFF OMITTED] T3941.022
[GRAPHIC] [TIFF OMITTED] T3941.023
[GRAPHIC] [TIFF OMITTED] T3941.024
[GRAPHIC] [TIFF OMITTED] T3941.025
[GRAPHIC] [TIFF OMITTED] T3941.026
The Chairman. Thank you very much, Pamela. You mentioned in
your testimony that some States have obtained waivers in order
to exclude mental health from the optional category. How many
States have done that?
Ms. Hyde. Mr. Chairman, I am sorry, I do not have the
number of the States that have done that, but Oregon is
certainly an example. When they did a limited plan, one of the
things that were excluded were mental health and substance
abuse services. New Mexico has a limited benefit plan that we
are about to implement, but we did include mental health and
substance abuse services, but that was an option. Had we chosen
not to do so to save more money, we could have done that. But
the point here is those are considered optional, they are not
considered critical to the health of our Nation.
The Chairman. Has New Mexico quantified the other costs
that are borne by the State when this option is pursued? I mean
what has New Mexico done? Have you cut back on the mental
health?
Ms. Hyde. Mr. Chairman, at the moment, no, and I think I
need to say I have a fairly strong behavioral health
background, so as the person in charge of this program I would
probably lay my body down before we did that.
But having said that, we are actually--the only way we can
increase services, because we have lost Federal money--we have
lost FMAP because our economy got slightly better. We have lost
the extra FMAP that the Federal Government provided, and we
have lost huge proportions of it, more than other States, more
than every other State except Texas even though we are an
extremely poor State.
Having said that, the only way we are able at this point to
increase services--and frankly, mental health is one of the
sets we are trying to increase--is through better matching of
existing State dollars. So we have something called the
Interagency Behavioral Health Purchasing Collaborative. It is a
unique approach. We are trying to look at every dollar and
every State agency that is legitimately considered matchable,
and use that to increase, for example, ACT teams we are trying
to put into our State plan. We are trying to add intensive
outpatient therapy and maybe next we will be looking at multi-
systemic therapy which is now only done as an enhanced service
at MCOs' options. In other words, our managed care
organizations can do it just because they think it is a good
thing to do, but it is nothing that we require in our State
plan at this point.
The Chairman. As someone with your professional background,
I assume you can attest to the fact that physical health and
mental health are not exclusive, that both are legitimate
fields?
Ms. Hyde. Mr. Chairman, absolutely, and in fact, what we
know, that a lot of times people with severe mental illnesses
or children with severe emotional disturbances also have higher
physical health implications. So the cost to any health care
program for untreated mental health services could be high,
higher accidents, higher health and heart disease, higher high
blood pressure, other high physical health needs go together
with these issues.
The Chairman. Thank you very much, Pamela.
We have been joined by my colleague, Senator Tom Carper,
former Governor of Delaware.
Senator Carper. A graduate of Ohio State University.
[Laughter.]
The Chairman. Yes.
Senator Carper. I see that Pamela Hyde spent some time in,
was it Columbus?
Ms. Hyde. Senator, yes, I did.
Senator Carper. What did you do there?
Ms. Hyde. Actually, I worked for Governor Richard Celeste
as his mental health director in his cabinet there, among other
things.
Senator Carper. When did you leave Ohio?
Ms. Hyde. I left Ohio, Senator, about 1990.
Senator Carper. I think that was the year that George
Voinovich was elected Governor.
Ms. Hyde. Mr. Chairman, that is correct.
Senator Carper. All right, good enough. [Laughter.]
The Chairman. You have an opening statement, right?
Senator Carper. I have no statement, but I am anxious--not
anxious. I am looking forward to being able to ask a couple of
questions when the time comes, but thanks very much. To our
witnesses, whether you are from Ohio or not, you are welcome.
The Chairman. Or Delaware.
Senator Carper. When I was at Ohio State I used to think
Delaware was a little town just 30 miles north of Columbus.
Later on after I graduated from Ohio State, I found out it was
a whole State, and they were looking for a Governor, so I
showed up and applied. [Laughter.]
Ms. Hyde. Mr. Chairman, Senator, I lived in Delaware for
not too long. Delaware, Ohio, of course. [Laughter.]
Senator Carper. Someday I will tell you a great story about
going back for my high school reunion and running into a guy,
and I had a State trooper with me. I was trying to get to a
high school reunion, and just north of Columbus looking for
this place, and I ran into this guy in a convenience store, and
I had to get to this high school reunion just before 7 o'clock
in the evening before they took the picture, the class reunion
picture.
We went into this convenience store just about halfway
between Columbus and Delaware, Ohio. This guy was coming out
and I said I am trying to find my class reunion and told him
where it was. He said, ``Well, just go down this road, take a
turn, go there and there.'' He said, ``By the way, where are
you from?'' I said, ``Well, I am from Delaware.'' he said,
``Well, what do you do there?'' I said, ``Well, I am their
Governor.'' he said, ``I work in Delaware every day.'' He was
thinking Delaware, Ohio, I am thinking the State. So here was a
guy did not know we had a State either. [Laughter.]
The Chairman. All right. Our next witness, Howard Bedlin.
You know where Delaware is?
Mr. Bedlin. I go to the beach there all the time.
Senator Carper. God bless you.
Good for the economy. [Laughter.]
STATEMENT OF HOWARD BEDLIN, VICE PRESIDENT, PUBLIC POLICY AND
ADVOCACY, NATIONAL COUNCIL ON THE AGING, WASHINGTON, DC
Mr. Bedlin. Thank you, Mr. Chairman, Senator Carper. I am
Howard Bedlin, vice president for Public Policy and Advocacy
with the National Council on the Aging.
Over 5 million seniors receive some form of assistance from
Medicaid. A typical senior on Medicaid is a very poor,
chronically ill widow in her 80's. In our view, the
distinctions between mandatory and optional populations and
services are not helpful in evaluating how to reform the
program. Optional beneficiaries are among our Nation's most
needy and vulnerable. They are not less worthy. Many optional
services are essential, they are not less valuable.
Over the past 6 years both the Administration and the
National Governors Association have recommended treating these
populations and services quite differently, essentially by
eliminating minimum Federal consumer protections. But would
Federal nursing home quality standards for optional groups be
eliminated? Could a State charge 50 percent coinsurance for
home care to a senior at the poverty line, or could a State
mandate children to supplement their mothers' nursing home
payments? I hope not.
With the Federal Government paying 57 percent of Medicaid
costs, imposing minimum standards is not unreasonable. Seniors
may have the most to lose if Medicaid reform results in the
elimination of Federal protections for optional populations and
services since over 84 percent of Medicaid spending on the
elderly is optional.
It is very difficult too for a senior to qualify for
mandatory Medicaid services. In general they must need nursing
home care. They have to have a monthly income below only $590--
that is a little over $7,000 a year--and have non-housing
assets below $2,000, which is not adjusted for inflation and
has not been updated for over 20 years.
The primary senior Medicaid question we need to address is
who will pay for long-term care? The States do not want to pay
for it. The Federal Government does not want to pay for it, and
seniors and their families simply cannot afford it.
Our long-term care crisis is growing worse. Overburdened
caregivers are sacrificing their own health. Seniors have few
choices to stay in their own homes, and after working hard
throughout their lives, millions of seniors are forced to
bankrupt themselves before getting help from Medicaid, which
pays about 43 percent of our Nation's long-term care costs,
more than any other source.
While Medicaid nursing home coverage is mandatory, only 16
percent of Medicaid's long-term care dollars for seniors are
spent on home and community services, primarily through the
Home and Community Based Waiver Program and the Personal Care
Program, both of which are optional, but should be mandatory.
Both fall far short of meeting consumers' and families' needs
and suffer from enormous State variations. Even Medicaid
protection against spousal impoverishment is institutionally
biased since it is mandatory for nursing home care, optional
for home and community based waivers, and non-existent for
personal care.
Congress needs to take action this year to improve access
to home and community services. NCOA recently released a report
estimating that over 13 million households of those over age 62
are candidates for using a reverse mortgage to pay for home
care, and the private sector funding could increase for such
households that have an impaired member by $953 billion.
Congress should permit States to use Medicaid dollars to reduce
up-front reverse mortgage costs, and allow seniors who take
them out to protect some assets from a State recovery.
Additional Medicaid reforms to promote independence and
choice and reduce per capita costs are included in our written
statement. For example, States should be able to provide home
and community care through a State plan amendment rather than a
burdensome waiver. Another important Medicaid category of
service for seniors and people with disabilities is the
Medicare savings programs which pay for Medicare premiums and
cost sharing. These include the so-called QMB and SLMB
programs. In addition, the QI-1 program also pays Medicare
premiums for low-income beneficiaries, but it is a 100 percent
Federal capped allocation and it is scheduled to expire this
October 1.
While these programs are mandatory, there is no requirement
that the Federal and State Governments find and enroll those
who are eligible. Very few actually receive the benefits they
are entitled to. QMB take-up rates are only 33 percent, while
SLMB take-up rates are an abysmal 13 percent. That is about 1
out of 8 of those who are entitled to it actually get it.
Important lessons can be learned from a study issued just
last week by the NCOA-chaired Access to Benefits Coalition
which analyzed the best practices on outreach and enrollment.
Congress needs to strengthen the Medicare savings programs
by simplifying and consolidating them, improving outreach and
enrollment, indexing the asset test to inflation, and extending
the QI-1 program for 5 years at a minimum.
In conclusion, our Nation's moral compass should be guided
by how we treat our poorest and most vulnerable citizens, and
frankly, Mr. Chairman, in terms of how we are caring for
America's most frail mothers, grandmothers and great-
grandmothers, we are doing a lousy job. With the aging of the
baby-boom generation, there is a great need and opportunity for
a national dialog and debate about how to best address our
Nation's long-term care crisis. America needs a comprehensive
national strategy that includes a strong public sector safety
net and foundation of support, supplemented by a variety of
high-quality private sector funding mechanisms.
NCOA looks forward to working with you, Mr. Chairman, and
members of this committee and Members of Congress to address
these challenges in a way that protects the most vulnerable,
provides quality services, spends dollars as efficiently as
possible, and promotes choice, independence and dignity. Thank
you.
[The prepared statement of Mr. Bedlin follows:]
[GRAPHIC] [TIFF OMITTED] T3941.027
[GRAPHIC] [TIFF OMITTED] T3941.028
[GRAPHIC] [TIFF OMITTED] T3941.029
[GRAPHIC] [TIFF OMITTED] T3941.030
[GRAPHIC] [TIFF OMITTED] T3941.031
[GRAPHIC] [TIFF OMITTED] T3941.032
[GRAPHIC] [TIFF OMITTED] T3941.033
[GRAPHIC] [TIFF OMITTED] T3941.034
[GRAPHIC] [TIFF OMITTED] T3941.035
[GRAPHIC] [TIFF OMITTED] T3941.036
[GRAPHIC] [TIFF OMITTED] T3941.037
[GRAPHIC] [TIFF OMITTED] T3941.038
[GRAPHIC] [TIFF OMITTED] T3941.039
[GRAPHIC] [TIFF OMITTED] T3941.040
The Chairman. Howard, as we look for ways to save $10
billion over 5 years without reducing coverage to the people
that should be on Medicaid, are there any things in your view
that we ought to be considering? I mean how would you counsel
us on that?
Mr. Bedlin. Well, other than questioning whether we really
should be saving $10 billion--we will leave that aside for the
moment----
The Chairman. But I mean are there some programmatic things
that we ought to be doing differently that would save the money
so we can serve more people?
Mr. Bedlin. Well, the two that I mentioned in my statement,
for example, are looking at reverse mortgages, No. 1. We asked
the Lewin Group to analyze how much savings could potentially
be realized if we made those more available and a greater
number of seniors who have an impairment, that have an ADL
dependency, many of whom are very good candidates for a reverse
mortgage actually took one out, and I think the study found
that there could be savings of 3 to 5 billion. It is not I
think over the next 5 years, but it is something that we think
should be very seriously looked at this year. We could
certainly share those estimates with you to give you a sense of
what would need to be done to achieve those level of savings.
The Chairman. For the benefit of the committee, describe
these reverse mortgages and how they would work in answering
the question of long-term care.
Mr. Bedlin. A reverse mortgage is essentially a loan that
would allow a homeowner to convert home equity into cash while
living at home for as long as they want. The borrower could
continue to live in their home. They can receive payments as a
lump sum or a line of credit or a monthly payment, and then the
loan comes due when the last borrower moves out, dies or sells
the home. They would never owe more than the value of the
house, and we believe that many people could use their home to
stay at home, and that they could delay the need to spend down
onto Medicaid, and we think that it makes a lot of sense for a
whole host of reasons, and could save some money as well.
The Chairman. Where is it being done now?
Mr. Bedlin. The FHA makes so-called HECM loans available,
and there are not a great many that have been sold. I think
consumers need to learn more about them. There is a great deal
that could be done in terms of public education. The up-front
costs in some instances are prohibitive, and we think that
there are ways that those could be reduced to make them more
available.
We did a pretty comprehensive report this past January that
we are happy to share with the committee. We had the author,
who is an expert, Barbara Stucki, testify a couple months ago
before the House Energy and Commerce Committee, and detail some
specifics about the potential as well as what Congress could do
to promote these. So that is one thing we think could save
money.
Second, we do believe that making home and community
services more available could reduce per capita costs. We would
love to see the Congressional Budget Office take a broader view
of the potential cost savings, not only in Medicaid but in
Medicare and other programs as well. We do think that making
home and community services more available could delay
institutionalization. It could reduce cost, could improve
quality of life, and through some pretty straightforward
changes to Federal law, the institutional bias could be reduced
somewhat, and we think that those could reduce Medicaid
spending as well.
The Chairman. Because it would be far less expensive to
leave them in their homes than putting them in these other
institutions, that is your point.
Mr. Bedlin. That is certainly our view, and if you look at
Oregon, for example, which has, I would argue, one of the
Nation's best home and community base care programs, and
Wisconsin, Senator Kohl's State, those two States have done a
wonderful job. I think there are important lessons that could
be learned from those States, and I think that they spend their
long-term care dollars much more efficiently and wisely than
many other States.
The Chairman. That is a very good suggestion and certainly
one that I am hoping that we will produce to answer the
question of long-term care and who pays for it, and obviously I
think while my State and others have done some things wrong, we
certainly have done some things right, and that is one of them,
and I appreciate you pointing it out. But I did not hear you
promoting new premiums or higher copays. Would you speak to
that as how effective or ineffective you think that would be?
Mr. Bedlin. Well, I certainly have very serious concerns
about higher cost sharing on populations that have such low
income and assets. I think there are a number of studies, one
recently by the Center on Budget Policy and Priorities, that
found that higher cost sharing would keep the people in need
from using the services that they really require to be well. So
I think in the long run, while it could reduce utilization, you
probably would find more people in emergency rooms because they
would delay or neglect their health care needs.
So I think we really need to be extremely cautious about
shifting even more costs onto the poorest Americans because I
think at the end of the day it will not serve them well.
The Chairman. Thank you, Howard.
Senator Carper, do you have a question for this witness?
Senator Carper. Yes, I do.
Mr. Bedlin, I want to come back and talk just a little bit
about home and community-based services if we could. I think
you mentioned that these are primarily optional services, and I
would ask a couple of questions. What else can we do to
increase the availability of these home and community services?
A corollary to that is, maybe just talk a little about the cost
of those services, and are they cheaper in your view than the
cost of institutionalization?
Mr. Bedlin. Thank you. Our written statement includes a
number of specific recommendations. For example, there is a
piece of the legislation that the administration has
recommended that was introduced I believe by Senator Harkin, I
believe, Senator Smith, you are a cosponsor, S. 528, Money
Follows the Person proposal, which we think makes a great deal
of sense for people transitioning out of institutions. The
Federal Government would cover 100 percent of the first year of
Medicaid home and community-based waiver costs. We very much
support that and would like to see that enacted into law this
year.
I mentioned earlier a State plan amendment rather than
having to go through a waiver, would give States more
flexibility. We also think that under current Medicaid law, in
order to receive a waiver service, an individual needs to meet
a nursing home level of care requirement. In other words, if a
State has a three activities of daily living impairment
requirement to get nursing home care, an individual getting
home and community-based waivers also needs to have a three ADL
impairment level. We think States should have more flexibility
to distinguish between those two. So it might be three ADLs for
nursing home care, but two ADLs for home and community
services.
I mentioned spousal impoverishment protections, mandatory
for nursing home care, optional for home and community-based
waivers, non-existent for personal care. That could be
addressed.
There is also a great deal that is going on in States on
consumer directed care. Cash and counseling demonstrations in
Arkansas, New Jersey and Florida have had very positive
results. There are some things that could be done at the
Federal level to make those more available, and I think a lot
of people would be very interested in those kinds of
alternatives.
In terms of savings, the concern has always been that
people are going to come out of the woodwork because they want
home and community services, and generally are not rushing to
get into nursing homes. So the question is whether or not the
savings that I think are probable on a per capita basis,
whether or not those might be offset by more and more people
utilizing the service. So that is really I think the issue that
we need to look very closely at.
I know that in Wisconsin they have run I think some very
good numbers showing that overall that there would be net
savings. I do think that if you look at it on a case-by-case
basis certainly you would find that home and community services
are much less expensive. You know, for nursing home care,
Medicaid on average is paying over $50,000 a year. It is much
less than that for home and community services, and I do think
that if you target the home and community-based care
effectively, you can definitely realize cost savings in the
long run and I think have a much more family friendly policy
for folks that are caring for not only seniors but younger
people with disabilities as well.
Senator Carper. Thanks very much for responding to that.
Mr. Chairman, I am going to have to slip out and go meet
with a former Governor of Ohio in just a moment. Can I ask
another quick question of Ms. Hyde?
The Chairman. Sure.
Senator Carper. Who is your Governor now?
Ms. Hyde. Mr. Chairman, Senator Carper, in New Mexico,
where I am from, it is Governor Richardson.
Senator Carper. Bill Richardson?
Ms. Hyde. You bet.
Senator Carper. You know he was a member of the class of
1982 elected to the U.S. House of Representatives with Mike
DeWine, Tom Ridge, John McCain, John Spratt, Marcy Kaptur also
from Ohio. There are a whole lot of people, and yours truly.
When you see him, tell him that an old classmate says hello.
Give him my best.
Ms. Hyde. I will do that, thank you.
Senator Carper. I am going to try to come back before the
panel finishes. Thank you.
The Chairman. Thank you, Senator.
Jeff Crowley.
STATEMENT OF JEFFREY S. CROWLEY, PROJECT DIRECTOR, HEALTH
POLICY INSTITUTE, GEORGETOWN UNIVERSITY, WASHINGTON, DC
Mr. Crowley. Mr. Chairman, Senator Carper, good afternoon.
I am Jeffrey Crowley, a project director at the Georgetown
University Health Policy Institute. Thank you for inviting me
to provide a disability perspective to the current Medicaid
policy discussion.
An estimate 9.2 million non-elderly people with
disabilities depend on Medicaid, and an unknown percentage of
the 5.4 million seniors on Medicaid also have disabilities. For
these individuals, Medicaid is generally the only place they
can turn to have the full range of their needs met for health
and long-term services.
Medicaid is the largest source of funding for developmental
disability services, largest source of health coverage for
people with HIV/AIDS, largest source of funding for State and
local spending on mental health services, and it provides
critical support for people across the spectrum of disability,
including persons who are blind, individuals with traumatic
brain injuries, spinal cord injuries, epilepsy and multiple
sclerosis.
Much recent discussion has taken place over the difference
between mandatory and optional beneficiaries. For people with
disabilities the mandatory/optional distinction has no
connection whatsoever to the level of disability or the need
for health and long-term services. Some parties have
characterized optional beneficiaries as higher-income
individuals with less serious need for Medicaid assistance.
Virtually all Medicaid beneficiaries with disabilities have
extremely low incomes and all have met the same standard for
serious long-term disability.
Seventy-eight percent of Medicaid beneficiaries with
disabilities are mandatorily eligible. States, however, have
several options to extend coverage beyond Federal minimums.
These include the Poverty Level Option, which is particularly
important for States that wish to extend coverage to many SSDI
recipients; the Medically Needy Option, which permits States to
cover individuals who spend down to coverage by subtracting
medical expenses from their incomes.
There is no relation however, between the income standard
for mandatory Medicaid and the Medically Needy income limit.
Therefore, individuals may start out with income above Medicaid
standards, but their effective income after their medical
expenses are counted, leaves them often extremely poor. In one
State individuals must spend down to $100 per month.
The Chairman. Where is that?
Mr. Crowley. That is in Louisiana, and also Arkansas has a
Medically Needy income limit of $108 per month.
Although these and other options respond to differing needs
of certain groups within the disability community, they share
important commonalities. All the populations covered by the
optional categories meet the same standard of need as mandatory
populations, and the vast majority of individuals receiving
Medicaid coverage through these options have very low incomes.
Although all mandatory services are critical, the EPSDT
benefit is a mandatory service that is unique to Medicaid and
is especially important to people with disabilities. The EPSDT
benefit ensures that children on Medicaid are screened on a
regular basis, and if a disability or health condition is
diagnosed, the State covers the treatment. The rationale for
this essential protection is that by intervening early, the
harmful effects of disability can be minimized, and in some
cases lifelong disability can be prevented.
Medicaid optional services sometimes have been
characterized as discretionary services. The list of optional
services, however, I think are more appropriately characterized
as indispensable disability services because they are not
frequently needed by people who are otherwise healthy.
Moreover, many people end up on Medicaid because they have
tried and failed to obtain these services elsewhere in the
private market or in Medicare.
Critical optional services include prescription drugs,
physical therapy and related services. The personal care option
is also particularly important for extending access to
community living services.
Optional services are mandatory for meeting the needs of
people with disabilities, therefore, a State should not be
permitted to not cover them or eliminate them every time there
is an economic downturn.
The savings required by the budget resolution should not be
achieved at the expense of Medicaid beneficiaries. I encourage
you to focus on prescription drug reforms to achieve savings.
Additionally, 42 percent of Medicaid spending is for services
for low-income Medicare beneficiaries, the dual-eligibles. Even
minor program adjustments to reduce the Medicare cost shift
could relieve significant pressure off Medicaid.
Congress could, for example, end or phaseout the Medicare
waiting period. Net savings could be achieved, however, through
reductions in or elimination of the $10 billion in funding
provided under the Medicare Modernization Act for the regional
PPO stabilization fund.
Many other policy proposals to achieve Medicaid savings I
believe are misguided and are a direct threat to people with
disabilities. It would be very dangerous for the Congress to
grant any new benefits package flexibility. New flexibility for
States could only lead to new discrimination for people with
disabilities. People with disabilities already have experience
with States' ability to tailor benefits to specific populations
through the Home and Community-based Services Waiver Program.
What we have seen there is that which populations can access
services and which cannot is not rationale.
Several policymakers have proposed relying more heavily on
the private market. Unfortunately, people with disabilities
often end up on Medicaid because the private market has failed
them. Individuals with disabilities are already subject to cost
sharing in Medicaid. In fact, when Medicaid does impose cost
sharing, people with disabilities and chronic conditions, the
people that use the most services, tend to bear the highest
burden.
The best and perhaps only way to make long-term progress is
not to look to Medicaid alone for policy solutions. The
challenges facing Medicaid are a result of broad failures with
our health system and long-term care system. Until broader
reforms are implemented, however, we must continue to shore up
Medicaid so that it can continue its successes at serving
people with disabilities and others.
Thank you for the opportunity to appear before you today.
[The prepared statement of Mr. Crowley follows:]
[GRAPHIC] [TIFF OMITTED] T3941.041
[GRAPHIC] [TIFF OMITTED] T3941.042
[GRAPHIC] [TIFF OMITTED] T3941.043
[GRAPHIC] [TIFF OMITTED] T3941.044
[GRAPHIC] [TIFF OMITTED] T3941.045
[GRAPHIC] [TIFF OMITTED] T3941.046
[GRAPHIC] [TIFF OMITTED] T3941.047
[GRAPHIC] [TIFF OMITTED] T3941.048
[GRAPHIC] [TIFF OMITTED] T3941.049
[GRAPHIC] [TIFF OMITTED] T3941.050
[GRAPHIC] [TIFF OMITTED] T3941.051
[GRAPHIC] [TIFF OMITTED] T3941.052
[GRAPHIC] [TIFF OMITTED] T3941.053
[GRAPHIC] [TIFF OMITTED] T3941.054
[GRAPHIC] [TIFF OMITTED] T3941.055
[GRAPHIC] [TIFF OMITTED] T3941.056
[GRAPHIC] [TIFF OMITTED] T3941.057
[GRAPHIC] [TIFF OMITTED] T3941.058
The Chairman. Jeff, I wonder if you could comment for me on
a recently issued proposal by the Governors suggesting that
Medicaid should provide flexibility like SCHIP provides. What
does that do?
Mr. Crowley. What that would do is provide a benefits
package that is inadequate for people with disabilities. The
SCHIP package has been modeled on the private sector standards
which are based on serving health populations, and we have
Medicaid as a safety net, and so people often move from the
private market onto Medicaid so that they are very different
populations.
The Chairman. You have made very clear in your testimony
that services currently classified as optional really are not
optional for the disabled population, so they ought to be in
the mandatory category.
Mr. Crowley. That is correct. I often hear people talk
about the cost of services and wanting to tailor services, but
I think that people do not use services unless they need them.
So if there is a problem with Medicaid beneficiaries getting
services when they are not medically necessary, I think that
calls for a policy response, but we have not seen any evidence
of that. So when these services are made available, people only
get them when they do truly need them.
The Chairman. We have heard a lot in Congress on the whole
issue of asset transfers to be paper poor so you can get
Medicaid. What is the experience of the disabled population in
terms of asset transfers? Is this a real problem or is this
more imaginary with the disabled?
Mr. Crowley. I think for people with disabilities, that
does not really affect them because many of them have not
accumulated assets. I would say--and this is not an area I have
a lot of expertise in--is that there are special protections in
the Medicaid law right now that allow parents and other family
members to set up special trusts for their children with
disabilities, adult children, so that after their deaths their
children can continue to have additional support to supplement
Medicaid, and I would just want to make sure that if changes
are made in the asset transfer policy we continue to protect
those special exemptions.
The Chairman. In the savings area you mentioned the drug
benefit and States' ability to negotiate, and making sure that
those kinds of medicines that the disabled tend to use most
frequently are on their formulary.
Mr. Crowley. I mentioned----
The Chairman. Describe again the savings you would
envision.
Mr. Crowley. With respect to prescription drugs.
The Chairman. Right.
Mr. Crowley. I think we could look to a number of areas.
One issue that has been proposed is just to address the Federal
rebate. Some States do get supplemental rebates, but not all
States are able to obtain them. I think there is some concern
that States' ability to obtain those supplemental rebates would
be diminished with the implementation of the Medicare drug law,
but I also think there is room to just increase the Federal
rebate.
I also think there are ways to use evidence-based medicine,
and I heard you earlier state that your State has been a leader
in that, to achieve real savings. Some of the discussion about
cost sharing has been what level of sort of cost sharing
measures are appropriate given the low incomes of many Medicaid
beneficiaries?
One thing I have noticed is that Missouri, they believe
that they save a lot of money on mental health drugs, and their
approach is not to really push the consumer, but they do a
retrospective review. If they see that physicians are
prescribing mental health drugs that they think are
inappropriate for clinical standards, they send them a letter.
It starts out with a letter just from the Department of Mental
Health, but they escalate it, and they eventually get up to
where it is one of two or three top psychiatrists in the State
that intervenes personally. So they are not punishing
individuals. They are not saying doctors cannot prescribe
drugs. But they are really applying peer pressure.
The Chairman. They are looking for outcomes.
Mr. Crowley. Right. It has not hurt access, it has improved
access to care, but it is also saving the State money. So I
think we could look at other ways to use evidence.
The Chairman. So just monitor the process better than we
are.
Mr. Crowley. That is correct.
The Chairman. Missouri is a State that has done that
effectively?
Mr. Crowley. Missouri has done that with respect to mental
health drugs. A number of States have very effective evidence-
based medicine programs.
The Chairman. How about New Mexico, Pamela, on mental
health?
Ms. Hyde. Chairman Smith, we are just implementing what we
call a preferred drug list in New Mexico, and we are just
beginning that with all of our medications. We have essentially
exempted out the door the psychiatric medications from, ``try
other drugs first'' or the ``you must do a generic first,''
because of all the issues about psychiatric drugs. However, the
organization that is managing that for us happens to be headed
by a physician whose son is mentally ill, so we have a very
sympathetic doctor running that program, who does work with
psychiatrists around their prescribing practices.
I think that Mr. Crowley is correct, that dealing with it
on a peer basis is much better than some sort of arbitrary,
kind of, ``you cannot prescribe this medication unless you have
tried 3 others first.'' That generally is really bad for people
with mental illness.
The Chairman. In terms of all the controversy around some
of these psychiatric drugs right now, does the State of New
Mexico feel any exposure if it gets more involved in the
prescribing? Maybe you have a thought about that, Jeff. Are
States being enjoined in some of the lawsuits that are being
filed on these issues?
Ms. Hyde. Mr. Smith, New Mexico is not yet, and we are not
too worried about it at the moment, because in fact, as I said,
the way we are implementing this is we are actually treating
psychiatric drugs differently. We are letting psychiatrists
prescribe without any kind of up front authorization. It is
more of a, as Mr. Crowley said, a retrospective review using
peer involvement about it. It is not quite as formal as being
described in Missouri, but we certainly recognize that you
cannot treat anti-psychotics the same way you treat drugs for
gastrointestinal disorders or other kinds of things of that
nature.
Mr. Crowley. Could I also add, I do not think it is fear of
lawsuits that is holding States back, and in some States, quite
frankly, it is the pressure from the pharmaceutical
manufacturers, and I think that might be a roll for Congress to
step in and establish some standards.
I can also say, however, in States like Kansas, Washington
States, they have managed to overcome this, and now I think
they have a process that even the pharmaceutical manufacturers
believe works effectively, but that was a big stumbling block
initially.
The Chairman. Very good. Thank you.
Sister Dufault.
STATEMENT OF SISTER KARIN DUFAULT, SP, RN, Ph.D., CHAIRPERSON,
BOARD OF TRUSTEES, CATHOLIC HEALTH ASSOCIATION OF THE UNITED
STATES, SEATTLE, WA
Sister Dufault. Good afternoon, Mr. Chairman. I am Sister
Karin Dufault, a member of the Sisters of Providence religious
community and vice president Mission Leadership for the
Providence Health System.
I am pleased to be here with you today as the chairperson
of the Catholic Health Association to address your committee.
The Catholic health ministry provides care and services to
Medicaid patients throughout the continuum of care. Our concern
for Medicaid patients is rooted not only in our experience as
service providers but as faith-based organizations and people
committed to the common good and called to offer special
protection for the poor and vulnerable.
As policymakers strive to make improvements in the Medicaid
program, we believe that it is important to keep in mind the
primary oath of medicine, first do no harm. There is too much
at stake if we get this wrong.
CHA does believe that it is time for a serious and careful
discussion about the Medicaid program and how best to modernize
it. Mr. Chairman, we appreciate your efforts to do just that,
to establish a bipartisan Medicaid commission to examine
modernization of the program absent Medicaid budget cuts.
We also believe that the process should not be driven by
cost saving target and that modernization be developed and
implemented with primary consideration of the impact on
patients and a goal of ensuring coverage, access and quality.
CHA supports providing States with flexibility to operate
their Medicaid programs more efficiently, but we remain
concerned about how that is done. Specifically, two components
of increase flexibility, cost sharing and benefit package
design have not achieved the desired goals of more appropriate
utilization, reduced program costs and significantly increased
the numbers of persons covered.
Our hospitals in Oregon have witnessed and experienced
firsthand the results of increased Medicaid patient cost
sharing. In 2003, under the Medicaid waiver, Oregon established
a new Medicaid premium policy under which poor adults pay a $6
to $20 dollar monthly premium based on income. Oregon also
implemented a new lockout period for non-payment of premiums
and removed the ability of low-income and homeless
beneficiaries to obtain waivers. What we saw is that patients
who were unable to afford required cost sharing delayed needed
medical services until the condition reached an urgent level.
Following the changes, the 7 Providence hospitals in Oregon
experienced a 25 percent increase in uninsured patient activity
in the emergency rooms, while hospital uncompensated care costs
doubled over a 2-year period.
We cannot stress enough the importance of coverage provided
through State optional categories. While categories of
beneficiaries and services may be deemed optional, these
categories do not seem like an option for the beneficiaries we
serve.
I would like to provide you with one example out of many
that we could provide that illustrates this point. Sally
George, we will call her, age 70, a double amputee who suffers
from Crohn's disease, was living in low-income housing when her
health deteriorated. With the help of Medicaid she was able to
move into Providence ElderPlace in Portland, OR. This
innovative PACE program serves frail elderly in a community-
based setting that is less expensive than traditional nursing
facilities.
Sally, a caretaker herself, who looked after her own mother
until her death at age 97, is grateful for the services she
receives and the independence that she enjoys at ElderPlace.
She feels fortunate that the doctor is in house, as well as the
nurses, physical therapists and other caregivers. Sally hopes
that the Medicaid funding for this optional program will
continue to be there for her, even though she works hard to be
as self-sufficient as possible.
Medicaid is a primary source of revenue for America's
safety net institutions including many Catholic hospitals which
serve a disproportionate share of low-income, uninsured and
under-insured in their communities every day. In order to
ensure continued access to services, attention must be paid to
Medicaid payment rates for all providers. When Medicaid payment
rates fail to keep pace with the cost of providing care, access
to care for Medicaid patients is affected and the quality of
care could be jeopardized.
We currently have some 45 million uninsured persons in our
Nation. They rely on America's hospitals for their health care
needs, and creating barriers to Medicaid will simply worsen an
already terrible situation. Making the continuum of health care
services and facilities more effective for patients and for the
system itself requires that we focus most of our attention on
helping people maintain health and independence while treating
their chronic illness in the most appropriate setting.
Home and community-based services are proving to be cost
effective means for keeping frail and disabled persons as
independent as possible and avoiding or delaying the need for
costly institutional care. However, it is important to realize
that to be effective, a broad range of supportive services must
be available. We strongly support policies that coordinate
Federal and State supported health and housing services and
move our Nation toward a more rationale and comprehensive long-
term health care policy.
Medicaid represents a measure of how we as a society and
the wealthiest Nation in the world treat the poorest and most
vulnerable among us. The cumulative effect of Medicaid program
reductions and cuts in other essential services for low-income
individuals and families could be devastating.
Mr. Chairman, as Congress considers Medicaid reform, we
urge you to make decisions that will preserve and strengthen
this vital program while protecting those with the greatest
need and the fewest resources.
Thank you for the opportunity to speak before you.
[The prepared statement of Sister Dufault follows:]
[GRAPHIC] [TIFF OMITTED] T3941.059
[GRAPHIC] [TIFF OMITTED] T3941.060
[GRAPHIC] [TIFF OMITTED] T3941.061
[GRAPHIC] [TIFF OMITTED] T3941.062
[GRAPHIC] [TIFF OMITTED] T3941.063
[GRAPHIC] [TIFF OMITTED] T3941.064
[GRAPHIC] [TIFF OMITTED] T3941.065
[GRAPHIC] [TIFF OMITTED] T3941.066
The Chairman. Thank you, Sister. I wonder if you can share
with the committee and the audience, when you saw your
emergency room utilization go up 25 percent and the ranks of
the uninsured go up, how did you deal with that as a system, as
Providence Health System? Did you have to eat it on your bottom
line, or were you in a position where you would ultimately have
to pass that on to other paying patients?
Sister Dufault. Well, it certainly did affect our bottom
line. We did eat the cost. Our commitment to serving the
uninsured and the under insured continues to be there. However,
in order to sustain our ministry, and again, looking at that in
the long run, how long----
The Chairman. You cannot eat it forever.
Sister Dufault [continuing.] Can we continue to do that and
still continue to invest in our facilities and services? This
is an issue in terms of recapitalizing our institutions and
adding additional services. That is very important for us to
consider.
So we certainly recognize our responsibility, but we do see
it as a shared responsibility with our State and with our
Nation.
The Chairman. So you would probably agree with me then that
ultimately your ministry does not call on you to go bankrupt,
and eventually you have to find a way to invest in the future
and keep your books in balance as part of your ministry. So
ultimately paying patients will have to bear these increased
costs.
Sister Dufault. That is correct. There is a cost shifting
that does occur. We know that when we have talked about the
Medicare program as well, that there does have to be some
bearing of the burden. However, I would say that this is
becoming more and more difficult to do, especially as we
negotiate with our managed care insurance companies.
Again, how long this shifting? The shifting is becoming
more and more difficult to do.
The Chairman. So your comment then on copays and premiums,
your experience is that those are counterproductive.
Sister Dufault. I think that we have been able to
demonstrate in Oregon that it is counterproductive, that people
are going off of Medicaid because of it or during this period,
if they miss a payment and they are off of Medicaid for
supposedly a 6-month period, they are unable to get back on
because of the limits, in terms of the number of Medicaid
eligibles that are allowed in the State. So again, what we saw
was the uninsured continued to go up, and that is a serious
problem. It is aggravating, on the other side, the increase of
the uninsured population for our Nation.
The Chairman. The reason I am asking these questions, I
would like the audience, and obviously, the larger public that
may be viewing this, to understand that we are paying these
costs already, and perhaps not very efficiently. But rightly or
wrongly, the public generally, and I think many Members of
Congress believe that there needs to be some sort of incentive
not to abuse the system while you use the system. Are there
things that you have found in Providence in Oregon or elsewhere
that are good checks against abuse, but permit use?
Sister Dufault. Well, I think that one of the areas that
has been mentioned by others is that we do have a health plan
in Oregon, the Providence Health Plan, and we do have Medicaid
recipients who are a part of that plan. We have been able to
demonstrate that we have been able to manage the costs of the
beneficiaries' care in a much more efficient manner than
previously when they were not in a managed care program. I
think that one of the other factors is that for those who go
off and then use the emergency room, they are either using the
emergency room for care that should have been provided in a
primary care setting, or their situation is grave at the time
that they are receiving care.
So again, the costs--and if that goes in the uncompensated
care category, the charity care category, that cost goes up. So
either that is passed on to others, the whole goal of providing
the right care at the right time is not being done, increasing
the overall cost to the system as a whole.
So what we advise is that the recipients receive the right
care in the right place and be incentivized to be able to do
that. The copays just add another incentive for not going there
until things get a little worse.
So I hope that that addresses the question that you asked.
The Chairman. It very much does. On balance do you think
Oregon has learned some good things that have been helpful to
Providence?
Sister Dufault. Oregon has learned many good things, and I
guess this is one of the other pieces that the committee may
want to consider, is that the waivers, the demonstration
projects that have been going on throughout this country need
to be mined for what has worked and what has not worked. That
will offer some opportunities for those things that have really
worked to be a part of the program rather than a part of a
waiver.
The Chairman. There are some savings in there as well that
allow the right kind of coverage at the right time that it is
needed.
Sister Dufault. Correct.
The Chairman. But I mean we ultimately, just like anywhere
else, we have to do a better job of balancing our books here,
and the more information experientially that you can give us to
how to provide the outcome, serve the people that need it,
qualify for it, with the best outcomes, that is really what we
are looking for.
Sister Dufault. One of the areas that I mentioned was in
terms of the PACE project, which is now being spread in many of
the States. I think that we have been able to show how we have
avoided hospitalizations by virtue of that program, reducing
the costs, or being able to help people maintain a quality of
life and reduce their need for acute care by virtue of the
close supervision that they are being provided through such
settings as the PACE program.
The Chairman. You have talked about some of the things
Oregon has done well. What are the mistakes Oregon has made?
Sister Dufault. I think that one of the mistakes has been
what we have spoken about in terms of the premium and also the
copay. Incentivizing people to go off of Medicaid and be on the
uninsured list is one of the areas. I think that has been a
really big-mistake creating barriers. Then reducing what some
of the ``optional'' category of services in order to have more
people covered has also been counterproductive in many ways
because it has just increased the need for some of the acute
services.
The Chairman. What other States are you in? I know you are
in Washington State.
Sister Dufault. Alaska, Washington, Oregon and California.
The Chairman. Are there things those States have done that
you think could be good national models?
Sister Dufault. We have been able to replicate the PACE
program in Washington based on our experience in Oregon, and
again were able to get the waivers by virtue of what we
demonstrated in Oregon. We have not replicated it in our other
States, though it is being seriously considered. That is one of
the principal areas where Providence Health System, I think,
has assisted our Medicaid population.
The Chairman. Those States would need to apply for the same
waivers that Oregon has under the current system?
Sister Dufault. Actually, it is one of the optional
services now. It was not at the time that we initiated it. We
did ask for waiver when we initiated it in Washington, and have
multiple sites related to the PACE program.
The Chairman. You have answered my questions, been very
helpful.
Any of you, hearing the others, have any closing comments
you would like to make? You do not have to, but you are welcome
to. Pamela.
Ms. Hyde. Senator Smith, you asked a couple questions of
other folks that you did not ask of me, and I would like to
tell you what we are doing in New Mexico. One was about the
copay issue, or I should say cost sharing because there is two
different kinds. Oregon has of course done a premium approach.
We are in the process of requesting authorization to do an
enrollment fee approach. If I personally had my own druthers, I
would not do it, but the legislature said we should, and there
is sort of pressure to do cost sharing. The theory of
individuals should participate in their own care, I think
philosophically is understandable. It is frankly going to cost
us more to implement this than it is to save anything out of
it.
We do have cost sharing already in our SCHIP program, so
that is for the higher income children. For our working
disabled program, we have increased those cost sharing, and by
that I mean the copays. Other than that we do not have any kind
of a premium or enrollment fee at this point.
The Chairman. What would the enrollment fee be?
Ms. Hyde. The enrollment fee we are proposing to be, I
think it is $25 per month per family, and the point being here
you could have 4 people in your family and if you did it per
person that really would be prohibitive. I thoroughly
anticipate--and I know it is in some of the other materials--
that frankly, what will happen is probably what happened in
Oregon, which is nonprofits and others will probably try to
come up with money to help people enroll. I think that is just
shifting costs to the charity population or the charity
providers.
The other thing that is a little odd about this situation
with cost sharing is we are not at this point allowed to
require it except through waiver. Oregon is one of those that
have done that. Utah has been able to do it through sort of a
State plan definition. But what that does is it essentially
means that if a person does not have the 2 bucks or the 5 bucks
or whatever, then the provider eats it because they really
cannot turn away that individual. So we do have to balance this
issue for providers and others.
In our State the cost-sharing proposal is not going to
impose any cost sharing at lower income levels for middle
income, if you will, slightly over 100 percent of FPL. We are
going to have this enrollment fee plus a modest amount for
prescription drugs and physician services, but a higher amount
for emergency room, $25 for an emergency room visit, the theory
being to try to get people to go to physicians rather than
waiting until they are sicker.
I do not know if this is going to work. I just want to echo
this whole issue of cost sharing as a difficult one. I
certainly philosophically understand the idea of personal
responsibility. As a person responsible for the Medicaid
program, I do not have any choice on some of these matters, but
it is not a simple one as it seems on its face.
The Chairman. I think that is right. I think we would all
acknowledge a need for personal responsibility. I mean all the
paying patients that Providence has obviously exercise that,
and there is not an unreasonable request that everybody pay
something. But I guess what I am searching for is what is the
level at which it is counterproductive, that on the one hand
satisfies the demand of the tax-paying public, but the tax-
paying public does not want these things so unproductive that
they get these shifts in other billings that they get in the
mail from their insurance companies.
I do not know that we have that answer, but obviously,
whether it is called an enrollment fee or a premium or whatever
we want to call it, I am really searching for what is the right
level, what is the effective thing and the fair thing for the
patient, the needy and the taxpayer?
Ms. Hyde. Senator Smith, one of the things that I think--
again, it is not simple--but for those, let us take medications
for example. One could say $2 is not enough to ask. If you are
somebody who makes enough money to pay taxes, $2 probably seems
like not much to ask. If you are a person on multiple
medications, especially if those medications are not much fun
to take, and you just soon not be taking them anyway, as is the
case with some conditions, then this is just one more reason
not to go get your medications.
So it may be an area where giving States a little more
flexibility in the context of some guidance might be useful,
rather than going all the way to where Oregon went, which I
think was to try to impose a private sector model of cost
sharing that I think really is not appropriate in these
populations.
The Chairman. Another part of the question--and as a State
administrator you would really be in a position to tell us
this--I mean what does collecting the fee cost us in
Government? I mean the Administration costs could be fairly
astronomical to pick up a couple bucks.
Ms. Hyde. Senator Smith, when we look at the amount that it
is going to cost us to implement these really relatively modest
cost-sharing proposals--because our premium is not going to be
a monthly premium, it is going to be a one-time enrollment fee,
so an annual enrollment fee to try to make it less onerous on
us and the families. Even at that, the overall savings is
pretty much offset by the cost that it is going to cost us to
do. Which means essentially we are doing it for the benefit of
the tax-paying public who feels that it is important that
people participate.
We have not analyzed--I do not know how we can until we do
it--what the implications will be for people who either do not
sign up or for people who fall off and cannot pay the money to
get back on or for people who do not take their medications
because of it. We have not implemented yet, so we do not know
what that is.
Now again, we already have cost sharing at the higher
income levels, and for the working disabled they are more than
happy to pay $2 or $3 a prescription. That is different for
somebody who is making 33 percent of the Federal poverty level,
or maybe on SSI and has a major schizophrenia or manic-
depressive illness or whatever.
The Chairman. I would be really interested to stay in touch
with you, Pamela, to find out what your experience is. I hope
you have a way to track it and can monitor it, because I think
the whole country is looking to the laboratory, the 50 States,
to help us find the right level, the right formula. HHS gives
out 2,000 waivers a year.
Well, there have got to be some nuggets in there somewhere
that we can learn from and include in not this $10 billion we
are talking about, but ultimately whatever long-term reforms
that we pursue in Medicaid, we really do need the States to
share with us the kind of information you are likely to
develop.
Sister, as you have ideas too, please do not be hesitate to
share them with us.
Sister Dufault. Senator, I do not know if Oregon has done
an analysis with regard to the recipients who went off of
Medicaid with the premium, but I think that that would be
something to really ask, because again, we do have--I mean we
know that people went off. We do not know how much each of them
were charged and what their income level was, because, you
know, it is by income level. So that would be something that
maybe the State could provide that data.
The Chairman. We will ask.
Howard or Jeff, do you have any closing comments?
Mr. Bedlin. I just want to reiterate a point that did not
come up in the Q&A but I think is very important, and that is
that there are so many low-income families, children, people
with disabilities, seniors, who are eligible for help under
Medicaid and other programs that just are not getting it. I
mentioned the QMB and SLMB programs, but if you look at the
elderly who are eligible for Medicaid, only 60 percent of them
actually get it. There are 40 percent of the seniors out there
who could get Medicaid and are not getting it.
So I think at the same time that we are worrying about
hitting a $10 billion savings figure and trying to figure out
ways to shift more costs onto these populations, I think we
also need to look at the bigger picture and try to get the
neediest Americans the help that they are entitled to.
The Chairman. Why do the 40 percent not do it in your
opinion?
Mr. Bedlin. Lots of reason, and there is some analysis out
there. It is burdensome in terms of forms that are very
complicated to fill out. There is a stigma attached to many of
these programs. Many are not available in languages other than
English. There are real burdens in terms of finding these
individuals. It is true for food stamps. Only 30 percent of the
seniors after 40 years that are eligible for food stamps are
getting it.
There is a lot that needs to be done, and I am concerned
that while we are talking about trying to impose more costs
onto these populations we are not getting them the help that
they are eligible for, and that is one of the reasons why this
is so unaffordable, that they are not even getting the
assistance from a whole host of Federal programs because we are
not committing the resources that are ultimately needed to find
these people and enroll them in these low-income means tested
programs, and I think that is a big problem that people are not
focusing sufficient attention on.
The Chairman. Jeff, do you have a closing comment?
Mr. Crowley. Yes. Senator, you have spoken a lot about cost
sharing, and I guess I just want to share my fears, as the
Congress considers that, in that you may seek to eliminate this
current protection that says services must be provided even
when individuals cannot pay the cost sharing. I only have
anecdotal data, but I have talked to many Medicaid
beneficiaries that tell me they are embarrassed when they
cannot pay $2 in cost sharing. It is not that they are
willfully just gaming the system.
I am just really concerned that that will produce bad
health outcomes, increase hospitalizations and other things if
people just cannot get the services they need.
The last point I would make is that I know you are trying
to get to what is a fair level of cost sharing, and while cost
sharing is not charged in every State, what is fair may not be
additional cost sharing. A study that was recently published by
the Center on Budget and Policy Priorities found that the
average cost sharing for SSI beneficiaries in Medicaid was $441
a year. So I think many Members of Congress will be surprised
that individuals are already paying that level of cost sharing.
The Chairman. Ladies and gentlemen, we thank you. This
panel has been very helpful in illuminating a very complex
problem, and certainly has not made the Congress' challenge any
easier, but you certainly have made us more informed. So you
have added measurably to the Senate record, and you shared your
time and your talent, and for that we thank you.
We are adjourned.
[Whereupon, at 4:45 p.m., the committee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Senator James Jeffords
Thank you Mr. chairman. I want to commend you and Senator
Kohl for holding this important hearing today. While it is
important that we understand the structure of the Medicaid
program--it is even more important that we know who the people
are who depend on Medicaid for their healthcare.
This is all the more true as the Congress begins to debate
what, if any, changes need to be made to the Medicaid program.
Mr. Chairman, I also want to note for the record your
contributions to this effort and to say that I was pleased to
join you and Senator Bingaman in calling for a bipartisan
Commission to review the Medicaid program.
I envisioned an effort similar to the commission on the
Medicare program. That is, a commission whose members would
include a range of stakeholders and who would have the
opportunity to vote on its recommendations. Unfortunately, that
did not happen and it remains to be seen whether the
Administration's effort will contribute much to the Medicaid
debate.
I also want to join you in welcoming our witnesses at
today's hearing. Their testimony promises to shed light on who
is served by the Medicaid program.
As we listen to them though, I would urge that we be
careful not to stereotype or categorize those served by the
Medicaid program.
All too often, we fall into the ``jargon-trap'' in
Washington and suddenly people stop being viewed as people.
Instead they become program ``mandatories'' or ``optionals'' or
``dual eligibles''. The worst is when Medicaid beneficiaries
are called ``bennies''.
So I would just urge, that as we all listen to today's
testimony, we remember that we are talking about ``people''.
Their healthcare is not an option.
Let me also say that I am very concerned that we not let an
artificially-set budget number--in this case $10 billion
dollars--drive the policy making process.
Instead, our focus should be on determining if there is a
better way to manage the Medicaid program and how we can help
the States better provide services to people who depend on
Medicaid.
In closing, I again want to commend Senator Smith and
Senator Kohl because I believe this hearing is moving us in
that direction.
------
Questions from Senator Jeffords for Diane Rowland
Question. Ms. Rowland, I want to thank you for your
statement and also commend you and the Kaiser Family Foundation
for your ongoing work on Medicaid and providing health coverage
for the uninsured.
Your statement closed by noting that there are no ``easy
answers'' to covering the 50 million Americans who depend on
Medicaid. You also note that policymakers, absent broader
solutions like universal health care, need to maintain the
``safety net.''
The Kaiser Commission on Medicaid and the Uninsured has
delved deeply into this issue and there are other efforts
underway by several think tanks.
Can you share with us the current thinking among health
policy experts on approaches that can assist us in maintaining
the safety net?
Answer. Medicaid's performance as a safety-net in the
recent economic downturn offers important insights into how
Medicaid's eligibility and financing structures work to assure
the program's safety-net role. By guaranteeing coverage to all
who meet its eligibility standards and guaranteeing federal
matching funds to states for their Medicaid spending as needed,
Medicaid was able to offset the decline in job-based coverage
among children from 2000-2003, and it kept the increase of 5
million uninsured adults from being even greater. Medicaid can
respond to economic downturns and other health problems as a
safety-net because it directs coverage and resources in
accordance with need.
The pressure the recession generated on state Medicaid
spending highlighted the importance of a greater federal role
in financing Medicaid during economic downturns. An increased
federal role is appropriate in light of the much more limited
fiscal capacity of the states, the large share of Medicaid
spending attributable to Medicare beneficiaries, and the
national scale of the demographic and economic trends that
drive Medicaid spending. Notably, the temporary federal fiscal
relief granted to states in September 2003 enabled many to
stave off or hold the line on an array of Medicaid cuts while
addressing their budget shortfalls due to declining revenues.
Finally, as broad a safety-net as Medicaid provides, 45
million Americans--15 million of them living below poverty--
remain uninsured. Under federal law, adults without children,
no matter how poor, are excluded from Medicaid because they not
meet the ``categorical requirements'' for federal matching
funds under Medicaid. Federal financing to support Medicaid
coverage for all Americans living in poverty would patch this
weak place in our nation's safety-net health insurance program.
In sum, maintaining the existing financing structure--in
which dollars follow services provided to individuals and
federal matching funds follow state spending--is critical to
Medicaid's role as our nation's health safety-net, able to
respond when and where health needs increase. Increased federal
support during economic downturns and recessions, when the
demands on the program tend to rise sharply, would strengthen
Medicaid's safety-net role.
Question. In listening to your statement I began to realize
that we are not talking about a single Medicaid program. What
we really are facing is at least 50 different Medicaid
programs, each with its unique coverage policy and funding
mechanism.
I know for example, that Vermont operates one of the most
effective Medicaid programs and significantly, Vermont ranks
very high health-related outcome measures. But Vermont, like
other states, is also facing budget constraints that are
forcing a reevaluation of its program.
Should there be some reassessment of what benefits should
constitute a minimum national benefit package?
What in your opinion constitute the key elements that a
state Medicaid program should have?
Answer. In the context of efforts to control Medicaid
spending, some have questioned whether Medicaid's comprehensive
benefits are necessary and proposed, instead, a limited basic
benefit package with additional benefits for people with
special needs.
In reassessing Medicaid's benefit package, it is important
to bear in mind the people Medicaid serves and what their needs
are. Medicaid's beneficiaries include infants and children,
pregnant women, adults and children with disabilities, those
with chronic physical and mental illnesses, seniors, people
with HIV/AIDS, and many others, whose very low income and
limited resources permit them to qualify for Medicaid. To
address the diverse and extensive needs of these individuals,
Medicaid covers a broad set of both acute and long-term care
services, with no or nominal cost-sharing.
Despite the breadth of Medicaid's benefits and limits on
cost-sharing, researchers have found that, when health status
differences are taken into account, Medicaid beneficiaries do
not use services at a higher rate than the low-income privately
insured. Other research shows that Medicaid spending is highly
concentrated in a small proportion of beneficiaries with
intense health needs and utilization. These findings indicate
that Medicaid's broad benefit package has not led to wide use
of all covered services, but, rather, has facilitated access
based on health needs. A comprehensive benefit package is
necessary to ensure that Medicaid beneficiaries can obtain the
care they need. To ensure that they obtain only the care they
need is the role of states and managed care organizations,
applying an array of utilization and disease management
strategies.
Question. Congressional consideration of Medicare reform
included several years of debate--and the debate itself was
preceded by a national commission charged with making
recommendations to strengthen Medicare.
The recent Medicare Modernization Act included many of
these recommendations--not all of which were agreed to by
everyone.
But one of the outcomes was the inclusion of new health
promotion and disease prevention benefits. Some experts believe
that these benefits will save money in the long run by
preventing people from getting more serious diseases.
Short of EPSDT, are there any comparable efforts underway
to bring modern health promotion into the Medicaid program?
Answer. As distinct from Medicare, Medicaid has always
covered preventive care. Furthermore, to promote access to
care, children and pregnant women are exempt from cost-sharing
under Medicaid, and cost-sharing for others must be nominal.
EPSDT, the Medicaid benefit package for children,
integrates early intervention, health promotion and disease
prevention with more traditional coverage of treatment for
disease and disability. Federal Medicaid law authorizes states
to cover screening and preventive services, as well as case
management, for adults too. Many states provide some coverage
for immunizations, preventive services, health education,
screening mammography, and other such benefits.
The wide and pioneering adoption of managed care in
Medicaid as a care delivery model represents a broader kind of
health promotion/disease prevention effort in the program. In
its most successful form, managed care can improve access to
appropriate care and effectively manage it for Medicaid
beneficiaries, whom the fee-for-service system often does not
serve adequately. Disease and care management strategies, which
also have promise for improving the quality of care, are also
being adopted by some states in their Medicaid programs.
------
Questions from Senator Jeffords for Pamela Hyde
Question. Thank you for your statement Ms. Hyde. I agree
with your assessment about the special challenges people with
mental illness face in accessing health care services through
the Medicaid program. I'm coming to the conclusion that the
Medicaid program's exclusion of funding for Institutions for
Mental Disease discriminates against people fighting mental
disease. For example, in Vermont the Brattleboro Retreat has
operated for many years under a waiver program that is now
being withdrawn by CMS. Are there not instances where the best
and most cost-effective treatment can be provided in these
hospitals.
Answer. It is true that at times, the best care for an
individual person for a short period of time is in a hospital
setting, and some of the state-operated hospitals in the
country are now among the best. The exclusion of IMDs is a
historical artifact of the federal government not wanting to be
responsible financially for services that were traditionally
paid for by state governments. However, in the case of persons
with developmental disabilities, the federal government does
allow home and community based services, even when the
institutional services from which individuals in such programs
are diverted are state-funded and operated. It is also true
that most states have now moved significant numbers of
individuals from state facilities or large private facilities
into more community based settings. Today, the IMD exclusion
operates in some cases to prevent states from moving
institutional funding for services for adults 18-64 into
community settings that have a residential component, and
operates to prevent states from providing some of the services
that adults with mental illness need, such as supported
employment and supportive housing settings. These same services
are available for persons of all ages with individuals with
developmental disabilities, using federal funds. In this sense,
the IMD exclusion is in fact discriminatory.
The solution, however, may not be a full scale removal of
the IMD exclusion, since we do not want to encourage the re-
institutionalization of adults with serious mental illness
(SMI). Rather, the solution, I believe, rests in CMS allowing
states to include in their state plans the same services for
adults with SMI that they allow for DD individuals, including
residential supports and supported employment, as well as some
of the flexible services and items that are being allowed by
CMS for DD individuals under self-directed waiver approaches
where a set amount of funds are provided for each individual to
spend for the services and things they need to live
successfully in the community. Another aspect of the solution
may be to allow states to receive federal funds (FMAP) for
community-based programs (including residential treatment and
supports in small home-like facilities, just as DD individuals
enjoy) for SMI adults that would otherwise be in larger
institutional settings, so long as the state continues to
provide the same level of state support that was provided for
such individuals in the past or so long as the state reduces
the number of individuals in large institutional settings.
There must be creative ways to support adults with SMI to be
successful in the community just as there has been with DD
adults.
It's time we understood that the keys to success for
Medicaid-eligible adults with SMI include housing and
employment, things that are currently not fundable using
federal funds.
Some people advocate for allowing federal funding for the
acute care (less than 21 or less than 30 days) provided by
state facilities, just as they would for acute care in private
hospital settings. This might be a compromise, but with limited
dollars, I personally would rather see federal funds more
easily used to support smalled home-like environments and
rehabilitation and supported employment and/or supported
education approaches that are more geared to assisting adults
with SMI to find their own recovery path.
The committee should note that the recent Bush
Administration Medicaid reform proposals for which legislative
language was just released include narrowing of the definitions
of case management and rehabilitative services that will have a
devastating affect on many states an on adults and children
with serious mental and emotional illnesses. This is NOT the
way to save money in the Medicaid program. It is in fact, a
step backwards. It may in fact result in more adults and
children institutionalized and is absolutely in opposition to
the recommendations of the President Bush's President's New
Freedom Commission on Mental Illness report.
I urge Congress to resist these attempts to limit federal
funding for persons with mental illness throughout our country.
------
Questions from Senator Jeffords for Jeffrey Crowley
Question. Mr. Crowley, Medicaid plays an important role for
schools in covering the cost of ``related services'' that are
required by a child's Individual Education Plan (IEP) under
IDEA.
Over the past few years, CMS has conducted a series of
audits of school-based Medicaid claims. Vermont has been the
subject of one of these audits. CMS and the state disagree on
the findings of the audit, and CMS has been slow to respond to
the issues raised by Vermont.
I have some real concerns about the timing and conduct of
these audits. I am concerned that we might be discouraging
schools from providing services to which our children are
constitutionally and legally entitled.
Can you discuss the need for school-based Medicaid and the
effect of these audits?
Answer. The civil rights law, the Individuals with
Disabilities Education Act (IDEA), entitles children with
disabilities to a free, appropriate public education in
conformity with an individualized education program (IEP). An
IEP is developed for eligible individuals with disabilities
that describe the range of services and supports needed to
assist individuals in benefiting from and maximizing their
educational opportunities. The types of services provided under
an IEP include services such as speech pathology and audiology
services, and psychological and occupational therapies. While
IDEA confers rights to individuals and obligations on the part
of school systems, it is not directly tied to a specific
program or an automatic funding source. For years, the Federal
government has failed to provide anywhere near the level of
funding promised in the IDEA statute. States' ability to
appropriately rely on Medicaid funds for Medicaid services
provided to Medicaid-eligible children pursuant to an IEP helps
defray some of the state and local costs of implementing IDEA.
This, in turn, helps assure that children receive all of the
services they have been found to need in order to meet their
full potential.
The sources of funding available to fund services under
IEPs have been a contentious issue in the past. Some time ago,
the Health Care Financing Administration (HCFA, the predecessor
to the Centers for Medicare and Medicaid Services, CMS)
attempted to limit the availability of Medicaid funding for
services under IEPs. In 1988, the Congress addressed the issue
in enacting the Medicare Catastrophic Coverage Act of 1988
(Public Law 100-360) in which it clarified that Medicaid
coverage is available for Medicaid services provided to
Medicaid-eligible children under an IEP. Under current law, the
Social Security Act at section 1903(c) reads,
``Nothing in this title shall be construed as prohibiting or
restricting, or authorizing the Secretary to prohibit or
restrict, payment under subsection (a) for medical assistance
for covered services furnished to a child with a disability
because such services are included in the child's
individualized education program established pursuant to part B
of the Individuals with Disabilities Education Act or furnished
to an infant or toddler with a disability because such services
are included in the child's individualized family service plan
adopted pursuant to part H of such Act.''
Nonetheless, federal officials have, from time to time,
suggested that costs for school-based services are being
inappropriately shifted to Medicaid. In response to these
concerns, the HHS Office of the Inspector General (OIG) has
carried out a number of reviews over the years, including a
recent audit of Vermont's Medicaid school-based health
services. The results of this audit were made public in January
2005. While I am not in a position to comment on the validity
of the specific audit findings, I believe it is important to
ensure that the rules governing these issues are clear,
consistent, and implemented in an even-handed manner across all
HHS regions. I also believe that, working within both the
Medicaid and IDEA statues, the Federal government should take
every opportunity to provide services to low-income children
with disabilities. This has not always been the case.
While CMS and federal officials have important
responsibilities to ensure that all federal Medicaid payments
are appropriate and reimburse states for only allowable
Medicaid services, without transparent rules and fair
administration, supervisory unions in Vermont may be unable to
provide optimal school-based services to children with
disabilities. Moreover, there are significant concerns by
representatives of children with disabilities in Vermont that
federal officials are attempting to restrict Medicaid
reimbursement in a manner that is expressly prohibited by the
Social Security Act, and that audits are being used as a tool
to create uncertainty that reimbursement will be allowable,
thus leading states and school systems to preemptively restrict
the school-based services it provides to children with
disabilities. Indeed, my understanding is that Vermont has been
a leader among states in using schools to meet the needs of
children, and when appropriate, to receive Medicaid
reimbursement for the cost of providing some of these services
to Medicaid beneficiaries. There is a strong concern that this
audit has had a chilling effect and has led supervisory unions
to limit the services they provide under IEPs because they are
unsure they will be able to receive Medicaid reimbursement for
these services. The Congress could not have been clearer in its
intent that it wants Medicaid to support the goals of IDEA;
these narrow interpretations of the law are inconsistent with
that intent.
Question. Vermont has been trying for two years now to gain
approval from CMS of its Early and Periodic, Screening,
Diagnostic, and Treatment (EPSDT) program.
The uncertainty that surrounds the administration of this
program has led 25% of the Supervisory Unions in Vermont to
withdraw from the program. They did not want to get caught in
an audit if Vermont's plan was disallowed two years after its
submission.
I fear the lack of response from CMS has hurt Vermont
schools any may have denied children access to care.
What can be done to provide some certainty to the states so
that they can focus on providing care to our neediest children?
Answer. The Early and Periodic Screening, Diagnostic and
Treatment Services (EPSDT) benefit is a mandatory Medicaid
benefit that provides critical protection to children who
receive Medicaid. EPSDT ensures that all children are screened
on a regular basis, and when a disability or health condition
is diagnosed, it ensures that Medicaid covers the treatment,
even if a state does not provide the same service to its adult
beneficiaries. EPSDT services can do much to help children
maintain the ability to function as independently as possible,
as well as improve their abilities, prevent secondary
conditions, and reduce the incidence of increased disability.
Access to these critical services can help families avoid
institutionalization and keep their children at home. A
critical outcome of EPSDT is that it allows children with
disabilities to attend public schools in their neighborhoods or
communities. According to the National Mental Health
Association, a recent national survey found that mental illness
begins very early in life, with 50% of lifetime cases starting
by age 14. The problems caused by early onset of these and
other illnesses is compounded by the fact that treatment is
often delayed for ten or more years increasing the risk of
school failure, teenage childbearing, unstable employment,
early marriage, marital instability and violence. The early
screening and diagnosis provided by the EPSDT benefit in
Medicaid is critical to detecting and treating mental illnesses
and a variety of disabilities and other conditions that can
strike so early in life.
In Vermont, it is a common practice to use school nurses to
conduct outreach and refer for treatment children covered by
Medicaid who are eligible for services under EPSDT. Since not
all of a school nurse's time should be billed to Medicaid,
school systems have been instructed by CMS to rely on time
studies to determine the percentage of time that school nurses
are involved in such activities. Under this approach, a time
study is conducted to determine the amount of time that school
nurses (or other personnel) expend on outreach, find Medicaid
providers, and facilitate enrollment in services. Schools then
seek reimbursement from Medicaid based on the percentage of
time that can be attributed to providing a Medicaid based on
the percentage of time that can be attributed to providing a
Medicaid beneficiary with EPSDT services, as determined by the
time study.
Over the past ten years, the manner in which states can
seek Medicaid reimbursement for school based services has been
subject to controversy. During much of this time, there was no
national policy on this issue and CMS regions had differing
rules regarding permissible services and permissible
reimbursement standards. In May 2003, CMS issued the Medicaid
School-Based Administrative Claiming Guide, establishing a
national standard for Medicaid payment for school-based
services. The guide cites OMB Circular A-87 to state that
``substitute systems'' for allocating salaries and wages to
federal awards are permitted in Medicaid. These sampling
systems (including time studies), however, are subject to
approval by the funding agency.
While I do not have the knowledge or expertise to respond
to the specific issues affecting Vermont, it appears that the
delay relates to federal approval for a time study as a
substitute system for allocating salaries and wages to
Medicaid. I have learned many Vermont stakeholders share the
concern raised by Senator Jeffords that the lack of approval by
CMS has led to considerable uncertainty and the end result is
that children with disabilities may not be receiving all of the
services they need; and for which Medicaid reimbursement should
be available. Given the urgency of ensuring that children on
Medicaid have access to the full range of school-based services
that they need, consistent with EPSDT, federal policy makers
should be required to provide a timely review of state
submission of substitute sampling systems, and if the state
proposal is deficient in some way, to provide technical support
to the state so that it may construct a suitable system. Given
the long history with this issue, it may be necessary for the
Congress to press CMS to clarify permissible practices for
states in seeking Medicaid reimbursement for providing Medicaid
services in school settings to Medicaid-eligible children. As a
first step, I encourage the Aging Committee to request from CMS
all outstanding requests for substitute sampling systems used
to bill for school-based services, including all approved and
rejected sampling systems along with the date of action by CMS.
[GRAPHIC] [TIFF OMITTED] T3941.067
[GRAPHIC] [TIFF OMITTED] T3941.068
[GRAPHIC] [TIFF OMITTED] T3941.069
[GRAPHIC] [TIFF OMITTED] T3941.070
[GRAPHIC] [TIFF OMITTED] T3941.071
[GRAPHIC] [TIFF OMITTED] T3941.072
[GRAPHIC] [TIFF OMITTED] T3941.073
[GRAPHIC] [TIFF OMITTED] T3941.074
[GRAPHIC] [TIFF OMITTED] T3941.075
[GRAPHIC] [TIFF OMITTED] T3941.076
[GRAPHIC] [TIFF OMITTED] T3941.077
[GRAPHIC] [TIFF OMITTED] T3941.078
[GRAPHIC] [TIFF OMITTED] T3941.079
[GRAPHIC] [TIFF OMITTED] T3941.080
[GRAPHIC] [TIFF OMITTED] T3941.081
[GRAPHIC] [TIFF OMITTED] T3941.082
[GRAPHIC] [TIFF OMITTED] T3941.083
[GRAPHIC] [TIFF OMITTED] T3941.084
<all>