INTRODUCTION

Medicare and Medicaid Dual Eligibility The Medicare program has two basic types of coverage -- Part A, which pays for hospitalization costs; and Part B, which pays for outpatient and physician services. Beneficiaries are automatically eligible for Part A coverage, but Part B coverage is optional. Part B coverage may be purchased, or beneficiaries may choose not to purchase it. In addition there are at least 8 million low-income Medicare beneficiaries who are estimated to be eligible for some level of Medicaid benefits and subsidies. Based on state income requirements, Medicare beneficiaries may be eligible for full Medicaid benefits. In addition, Federal Medicaid legislation requires Medicaid payment of Medicare deductibles, copayments, and Part B premiums for certain beneficiaries. Enclosure 1 describes the categories of dual eligibility.

The Families USA Foundation has recently estimated that about 3.5 million of the Medicare beneficiaries who are eligible for Medicaid coverage are not enrolled for those benefits or subsidies. A state-by-state breakdown of this analysis is presented as Enclosure 2.

This finding highlights an opportunity for Bureau-supported sites to expand their role in assisting with Medicaid
enrollment and providing care for this population. Since Medicaid most often subsidizes all or part of the optional
Part B premiums, unenrolled beneficiaries are likely to be uninsured for services provided by health centers and NHSC sites.

Improving enrollment among this population should therefore improve reimbursements for Bureau sites that serve this population and enhance their ability to provide comprehensive care. Nationally about 8 percent, or 800,000 of health centers_ patients are elderly, and about 5 percent of total health center revenue comes from the
Medicare program.

Medicare Managed Care The opportunities for Bureau supported sites to increase revenues and expand services
to the Medicare population will be impacted by the expected growth in Medicare managed care enrollment.
Through the Balanced Budget Act of 1997, Congress created the Medicare+Choice program to increase the range of
managed care entities that could enroll Medicare beneficiaries. In 1998, 14 percent of all Medicare beneficiaries are enrolled in managed care. That proportion is projected to rise under Medicare+Choice to 25 percent by 2002. A description of the Medicare+Choice program is included as Enclosure 3. While most of the dual eligibles will generally not be enrolled in managed care, health centers and NHSC sites in some markets may have opportunities to expand their services to other Medicare beneficiaries by contracting with Medicare managed care plans in their areas.

STRATEGY FOR EXPANDING ACCESS AND IMPROVING REIMBURSEMENT
The strategy for assisting Bureau-supported sites to expand their provision of services to the low-income elderly has two parts: (1) a state based strategy and (2) a technical assistance and training strategy.

(1) State Based Strategy
Through expansion of the Outstationed Eligibility Worker Demonstration Program, State Primary Care Associations
(PCAs) will be funded to work with their state Medicaid agencies and the Bureau-supported sites in their state to
improve implementation of the dual eligibility programs. A letter describing this funding opportunity was released
to PCAs and Primary Care Offices on October 20, 1998.

Through Memorandums of Agreement with state Medicaid agencies, PCAs would work with states to assess their
policies around dual eligible enrollment and to improve implementation of subsidies for all categories of eligible
low-income elderly. The PCAs would also work with health centers and NHSC sites in their state to expand the
function of outstationed Medicaid eligibility worker programs to include this population. The PCAs would also
be expected to work with the centers to develop programs for reaching out to the elderly and encouraging their use
of primary care services.

Building on the market assessments that have been conducted by the PCAs, they may also work with the Bureau supported sites in their state to evaluate their opportunities for expanding service capacity for the elderly. Where appropriate, the PCAs would work with the Bureau to coordinate technical assistance and training for
developing the capacity for expanded services to the elderly.

For additional information on this program, please contact Lynn Spector at 301-594-6014.

(2) Technical Assistance and Training Strategy

The Bureau will offer a workshop to PCAs, health centers, and NHSC sites on expanding coverage and access to
services for the low-income elderly. The workshop will cover the structure of Medicare and Medicaid dual
eligibility programs, outreach and enrollment strategies targeted to the elderly, and capacity expansion and
delivery system design. This workshop will be offered beginning in January of 1999.

In addition, in response to the expected growth in Medicare managed care enrollment under the Medicare+Choice program, the Bureau of Primary Health Care (BPHC) is also offering a workshop on Medicare managed care. The course covers Medicare benefits and contracting issues, reimbursement and financial issues, and utilization and risk management for the Medicare population. This workshop is currently available.

Both of these workshops can be scheduled by contacting Ron Farhood at BPHC (301-594-4060) or Deloris Campbell at the National Association of Community Health Centers (202-659-8008).

Finally, the Bureau is developing a resource manual for health centers and NHSC sites on reaching out to and
serving the elderly that will highlight successful strategies and programs that have already been developed
by centers. The manual will be completed and distributed to health centers in the Spring 1999.

If you have any questions about these activities or the information provided in the enclosures, please contact Julia Tillman at 301-594-4060.

Sincerely yours,

Marilyn H. Gaston, M.D.
Assistant Surgeon General
Associate Administrator
Director

ENCLOSURE 1

MEDICARE AND MEDICAID DUAL ELIGIBILITY PROGRAMS
The dual eligible programs, which have been in effect since 1988, were designed to protect low-income seniors from the growing costs of receiving Medicare coverage. The programs provide varying levels of Medicaid coverage to Medicare beneficiaries who are up to 120 percent of the Federal Poverty Level. The Balanced Budget Act of 1997 created two new categories of Medicare and Medicaid dual eligibility that extends the threshold for some level of coverage up to 175 percent of the Federal Poverty Level.

The following describes each of the categories of individuals who are known as dual eligibles. Medicare has two basic coverages: Part A, which pays for hospitalization costs; and Part B, which pays for physician services, lab and x-ray services, durable medical equipment, and outpatient and other services. Dual eligibles are individuals who are entitled to Medicare Part A and Part B and are eligible for some form of Medicaid benefit.

Category	Eligibility Criteria	Benefit
Qualified Medicare Beneficiaries (QMBs) without other Medicaid (QMB Only)	come of 100% of the federal verty level (FPL) or less esources that do not exceed ce the limit for SSI eligibility re not otherwise eligible for Medicaid	Medicaid payment of Medicare Part A premiums, if any Medicare Part B premiums Medicare deductibles and coinsurance for Medicare services provided by Medicare providers
with full Medicaid (QMB	come of 100% FPL or less esources that do not exceed ce the limit for SSI eligibility re eligible for State dicaid benefits	Medicaid payment of Medicare Part A premiums, if any Medicare Part B premiums Medicare deductibles and coinsurance ull Medicaid benefits
Specified Low-Income Medicare Beneficiaries (SLMBs) without other	_. Income of 100 _120 % of FPL _. Resources that do not _. Medicaid payment of Medicare Part B premiums Medicaid (SLMB Only) exceed twice the limit for SSI eligibility _. Are not otherwise eligible for Medicaid
SLMBs with full Medicaid (SLMB Plus)	_. Income of 100 _ 120% FPL _. Resources that do not in exceed twice the limit for SSI eligibility _. Are eligible for State Medicaid benefits	_. Medicaid payment of Medicare Part B premiums _. Full Medicaid benefits
Qualifying Individuals (1) (QI-Is) _. This group is effective 1/1/98 - 12/31/02 _. There is an annual cap on the amount of money available, which may limit the number of individuals in the group	Income of 120 _ 135% FPL _. Resources that do not exceed twice the limit for SSI eligibility _. Are not otherwise eligible for Medicaid	_. Medicaid payment of Medicare Part B premiums
Qualifying Individuals (2) (QI-2s) _. This group is effective 1/1/98 - 12/31/02 _. There is an annual cap on the amount of money available, which may limit the number of individuals in the group	_. Income of 135 - 175% FPL _. Resources that do not exceed twice the limit for SSI eligibility _. Are not otherwise eligible for Medicaid	_. Medicaid payment of a portion of Medicare Part B premiums
Medicaid Only Dual Eligibles (Non QMB, SLMB, QI-1, or QI-2)	re eligible for full Medicaid nefits re not eligible for Medicaid a QMB, SLMB, QI-l, or QI-2	ull Medicaid benefits ayment for Medicaid rvices provided by Medicaid oviders
	ypically, these beneficiaries into a Medicaid eligibility verty group that exceeds the its for those categories)	Medicaid payment of edicare cost-sharing Medicaid payment of edicare Part B premiums is State option

ENCLOSURE 2

STATE ESTIMATES FOR NON-COVERED DUAL ELIGIBLES
[The following are estimates from a report by the Families USA Foundation]

State	Number of QMB and SLMB Eligibles	Percentage Not Enrolled
Alabama	209,000	44% - 48%
Arizona	118,000	60% - 63%
Arkansas	139,000	47% - 53%
California	826,000	9% - 12%
Colorado	52,000	9% - 21%
Connecticut	63,000	29% - 43%
Delaware	21,000	62% - 67%
District of Columbia	32,000	57% - 60%
Florida	547,000	46% - 50%
Georgia	249,000	35% - 41%
Hawaii	32,000	44% - 49%
Idaho	22,000	38% - 45%
Illinois	325,000	61% - 70%
Indiana	156,000	56% - 65%
Iowa	43,000	15%
Kansas	69,000	50% - 60%
Kentucky	149,000	33% - 39%
Louisiana	176,000	40% - 48%
Maine	48,000	37% - 44%
Maryland	127,000	57% - 64%
Massachusetts	218,000	43% - 52%
Michigan	226,000	45% - 52%
Minnesota	86,000	42% - 54%
Mississippi	111,000	9% - 15%
Missouri	144,000	50% - 59%
Montana	24,000	55% - 63%
Nebraska	39,000	60% - 68%
Nevada	43,000	63% - 66%
New Hampshire	17,000	69% - 75%
New Jersey	195,000	36% - 44%
New Mexico	70,000	54% - 57%
New York	476,000	31% - 40%
North Carolina	270,000	26% - 32%
North Dakota	20,000	75% - 80%
Ohio	393,000	59% - 67%
Oklahoma	125,000	54% - 61%
Oregon	88,000	45% - 49%
Pennsylvania	356,000	57% - 65%
Rhode Island	43,000	65% - 72%
South Carolina	152,000	34% - 36%
South Dakota	22,000	49% - 59%
Tennessee	176,000	11% - 19%
Texas	684,000	54% - 59%
Utah	22,000	39% - 47%
Vermont	19,000	34% - 40%
Virginia	224,000	54% - 58%
Washington	181,000	55% - 59%
West Virginia	99,000	60% - 63%
Wisconsin	109,000	40% - 52%
Wyoming	9,000	44% - 53%
TOTAL	8,044,000	42% - 48%

ENCLOSURE 3

MEDICARE+CHOICE PROGRAM OVERVIEW
The Balanced Budget Act of 1997 (BBA) introduced a new Part C of the Medicare
program, Medicare+Choice (M+C). Medicare+Choice expands the choices
available to beneficiaries by allowing them to select among several health delivery
systems, including traditional Medicare fee-for-service, coordinated care plans,
private fee-for-service plans, or medical savings accounts.

While entirely new options are introduced for the Medicare population, the law also
makes certain changes in payment policy, contracting requirements, and other
aspects of Medicare law that are intended both to facilitate the introduction of new
options and to expand the availability of current Medicare managed care options.
Regulations published in June 1998 implement the statutory provisions of the M+C
program. This regulation establishes the requirement for organizations that contract
with Health Care Financial Administration (HCFA) to provide health care services to
Medicare beneficiaries. Requirements include, but are not limited to eligibility,
election, and enrollment; benefits and beneficiary protections; quality assurance;
provider relationships; payments, premiums, and cost sharing; and grievance and
appeals procedures.

New Coverage Options
Prior to the BBA, Medicare beneficiaries could choose to receive their care through
original fee-for-service Medicare or through health maintenance organizations
(HMOs). The M+C introduces several new health plan options for Medicare
beneficiaries.

Coordinated care plan options that are available to beneficiaries are no longer limited
to traditional HMOs. Under the BBA, the Medicare program can contract with HMOs,
preferred provider organizations, and provider sponsored organizations. The HMOs
participating in the Medicare program may also now offer point-of-service options.
In addition, the BBA allows HCFA to enter contracts with private fee-for-service plans.
These plans would reimburse participating providers on a fee-for-service basis, and
enrollees would not be limited to network providers.

Beneficiary choice among health plans may be further increased by the elimination of
the enrollment composition requirement for health plans. Prior to the BBA, Medicare
contracting health plans were required to have enrollment of at least 50 percent non-
Medicare members. This requirement has been eliminated.

Payment Changes and Risk Adjustment
The BBA introduced several changes in how Medicare risk contractors will be paid
beginning in 1998. Payments across geographic areas will not be subject to as wide
a level of variation as under the prior methodology. The prior methodology based
Medicare capitation payments on historical fee-for-service costs in the geographic
area. This resulted in wide variation across counties. The new payment methodology
made a number of changes that will even out these differences and may serve to
increase the availability of managed care options in rural areas.
The BBA also made payment policy changes to address the issue of selection bias
among Medicare risk plans. Beginning in 2000, payments to M+C plans will be
adjusted for the health status of individual enrollees. To make these adjustments,
HCFA is requiring M+C plans to submit patient data on their enrollees beginning in
1998.

Quality and Consumer Protection
The implementing regulations for the M+C program require contracting health plans to
measure and report on plan performance, meet minimum performance standards,
and undertake performance improvement activities that lead to improvements in both
clinical and non-clinical areas.

The HCFA is required by the BBA to provide beneficiaries with information on health
plan quality and performance, disenrollment rates, satisfaction levels, and health
outcomes.

The regulation also establishes requirements for enrollee access to care under M+C
and requires that M+C networks maintain a network with sufficient numbers and
appropriate types of providers. Plans are also required to provide services in a
culturally competent manner.