Disability Perspectives and Recommendations
on Proposals to Reform the Medicaid and Medicare Programs
November 9, 1995
National Council on Disability
1331 F Street, NW
Suite 1050
Washington, DC 20004-1107
(202) 272-2004 Voice
(202) 272-2074 TT
(202) 272-2022 Fax
The views contained in the report do not necessarily
represent those of the Administration, as this document has not
been subjected to the A-19 Executive Branch review process.
Letter of Transmittal
November 9, 1995
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
On behalf of the National Council on Disability (NCD)
I am providing you with an important time-sensitive report from
the National Council on Disability (NCD) entitled, Disability
Perspectives and Recommendations on Proposals to Reform the Medicaid
and Medicare Programs. NCD believes that the proposed changes
to these programs will have a serious adverse impact on approximately
9 million people with disabilities who depend on them to meet their
critical health care needs.
While NCD recognizes the need for constructive reforms
in the Medicaid and Medicare programs, NCD believes that Medicaid
and Medicare changes must be enacted in the context of system-wide
reform in order to maintain the quality and effectiveness of our
nation's health care system. Further, if the national goals of independence,
economic self-sufficiency, and inclusion of people with disabilities--embodied
in the Americans with Disabilities Act of 1990--are to become a
reality, access to affordable quality health care is a necessity.
NCD is concerned about proposed changes to both programs,
but is particularly concerned about Medicaid. The human side of
the Medicaid porgram is compelling. Medicaid serves as the financing
of last resort for the health and long-term care needs of some of
the most marginalized individuals in society: a child with mental
retardation or cerebral palsy; an adolescent with a traumatic brain
injury or spinal cord injury; a young adult with Multiple Sclerosis
or serious mental illness; a middle-aged person with cancer; an
elderly person with a stroke or Parkinson's Disease. These and other
people with disabilities are dependent on the continuation of this
vital government program, often because no other options exist for
health care coverage.
America needs your leadership on this critical issue.
It is our hope that the information contained in this report will
help you and the Members of the 104th Congress in constructing a
Medicaid and Medicare system that is productive and just.
Sincerely,
Marca Bristo
Chairperson
(The same letter of transmittal was sent to the President
Pro Tempore of the U.S. Senate and the Speaker of the U.S. House
of Representatives.)
NCD MEMBERS AND STAFF
Members
Marca Bristo, Chairperson
John A. Gannon, Vice Chairperson
Yerker Andersson, Ph.D.
Ellis B. Bodron
Larry Brown, Jr.
John D. Kemp
Ela Yazzie-King
Audrey McCrimon
Bonnie O'Day
Lilliam R. Pollo
Debra Robinson
Shirley W. Ryan
Michael B. Unhjem
Rae E. Unzicker
Kate P. Wolters
Staff
Ethel D. Briggs, Executive Director
Speed Davis, Executive Assistant to the Chairperson
Billie Jean Hill, Program Specialist
Jamal Mazrui, Program Specialist
Mark S. Quigley, Public Affairs Specialist
Brenda Bratton, Executive Secretary
Stacey S. Brown, Staff Assistant
Janice Mack, Administrative Officer
ACKNOWLEDGMENT
The National Council on Disability wishes to express
its sincere apreciation to Peter W. Thomas, Esq. for his hard work
and valuable suggestions in preparing this report.
TABLE OF CONTENTS
Introduction
The Current Medicaid Program
The Current Medicare Program
The Importance of Private Insurance Reforms
Statement of Policy
The Proposed Medicaid Reforms
Recommendation No. 1
The Consequences of the Proposed Medicaid Changes
Block Grants and the Individual Federal Entitlement
Alternatives to Block Grants and the Loss of the Individual Federal
Entitlement
Recommendation No. 2
The Private Right of Action and Application of Federal Civil Rights
Law
Recommendation No. 3
Consumer Representation in Decision-Making
Recommendation No. 4
The Elimination of Federal Standards in Nursing Homes and Managed
Care Plans
Recommendation No. 5
The Proposed Medicare Reforms
The Proposed Level Medicare Reductions
Recommendation No. 6
Managed Care and People with Disabilities
Medical Underwriting Should be Prohibited in Medicare and Medicaid
Managed Care Plans
Recommendation No. 7
Medical Savings Accounts May Act as a Drain on the Medicare Trust
Fund
Recommendation No. 8
Quality Assurance in Medicare Managed Care Plans
Recommendation No. 9
Shifting to Managed Care Requires Federal Standards to Ensure
Access to Quality
Recommendation No. 10
Conclusion
Appendix A: Summary Recommendations
Appendix B: NCD: A Brief Description
INTRODUCTION
The 104th Congress is considering the Omnibus Budget
Reconciliation Act of 1995, (the "budget bill") which seeks to balance
the federal budget by the year 2002, significantly restructure the
Medicaid and Medicare programs, reform federal welfare programs,
and provide substantial tax relief to many taxpayers. Medicaid and
Medicare are among the fastest growing sectors of the federal budget.
Because Medicaid expenses are shared between the federal government
and the states, many governors have called for reforms in the program.
Medicare is a federal program that the trustees of the Medicare
Trust Fund have forecasted will be in bankruptcy by 2002 under current
law. While Medicare and Medicaid spending represent 17% of the annual
federal budget, 45% of the spending reductions necessary to balance
the federal budget by 2002 will come from these two programs under
the current version of the budget bill.
THE CURRENT MEDICAID PROGRAM
The Medicaid program is the primary federal program
providing health and long-term care to low-income families, the
elderly, and people with disabilities. Of the 36 million people
covered by Medicaid, 4.9 million are children or adults who are
blind or have other significant disabilities. In fact, 15% of Medicaid
beneficiaries (blind and disabled) accounted for 39% of expenditures
in 1993. Medicaid is a means-tested entitlement program that is
funded by states and the federal government and is administered
by the states. People who meet federal eligibility criteria are
entitled to be covered by the program (i.e., people receiving Supplemental
Security Income "SSI" or pregnant women and children with incomes
under a certain level of poverty), but states determine additional
financial eligibility criteria and have the option of covering additional
groups of individuals. States that meet the federal eligibility
and benefit guidelines receive federal matching payments ranging
from 50% to 80%, depending upon the state's per capita income and
other factors.
States must provide mandatory Medicaid services--such
as hospitalization, physician services and EPSDT (early and periodic
screening, diagnosis and treatment) for children--and states may
choose to provide a wide array of "optional" services including
rehabilitation therapies and devices, mental health services, personal
care services, case management, and prescription drugs. The primary
source of long-term care for poor elderly individuals and younger
individuals with significant disabilities is the Medicaid Long-Term
Care Program. Approximately 85 percent of Medicaid expenditures
in this area are for institutional care, including nursing home
care. Only 15 percent of expenditures are for home and community-based
services.
The current Medicaid program maintains a bias toward
institutional care rather than home and community-based services
and supports. Currently, home and community-based care is only covered
under a state Medicaid waiver and is usually only provided if the
beneficiary would qualify for institutional care. Recent studies
have demonstrated the cost-effectiveness of home and community-based
care for a large percentage of persons at risk of being institutionalized.
The human side of the Medicaid program is compelling.
Medicaid serves as the financing of last resort--assuming both financial
and disability eligibility criteria are met--for the health and
long-term care needs of some of the most marginalized individuals
in society: a child with mental retardation or cerebral palsy; an
adolescent with a traumatic brain injury or spinal cord injury;
a young adult with Multiple Sclerosis or serious mental illness;
a middle-aged person with cancer; an elderly person with a stroke
or Parkinson's Disease. These and other people with disabilities
are dependent on the continuation of this vital government program,
often because no other options exist for health care coverage.
THE CURRENT MEDICARE PROGRAM
Although Medicare serves the health care needs of
approximately 36 million senior citizens, the program also covers
4.2 million people with disabilities below 65 years of age. These
people with disabilities qualify for Medicare coverage through the
Social Security Disability Insurance (SSDI) program after a two-year
waiting period, through the End Stage Renal Disease (ESRD) program
after their private insurance is exhausted, or as a disabled dependent
of a retired, deceased, or disabled worker. Eligibility is based
on work history and other eligibility criteria.
Medicare has two parts: Part A covers hospitalization
through the Medicare Hospital Insurance Trust Fund which is funded
through FICA taxes representing 2.9 percent of earned income of
all employed persons; Part B covers physician services and non-physician
provider services such as therapists, rehabilitation devices, and
home health care. Medicare Part B services are paid for out of the
Supplementary Medical Insurance Trust Fund which includes general
government revenues and premiums paid by beneficiaries. Beneficiaries
also pay deductibles and co-payments for some Part B services. Notable
exclusions in Medicare benefits include outpatient prescription
drugs and many forms of assistive technology for people with disabilities.
According to the Congressional Budget Office (C.B.O.),
over 90 percent of Medicare beneficiaries receive health services
under the fee-for-service program which allows unlimited choice
of health care provider regardless of the beneficiary's level of
income. Approximately 7 percent of beneficiaries have chosen to
enroll in Medicare managed care plans under the Medicare Risk Contract
Program, which limit choice of provider but often cover additional
benefits.
THE IMPORTANCE OF PRIVATE INSURANCE
REFORMS
The National Council on Disability (NCD) has a strong
interest in reform of our nation's health care system based on the
disability community's principles of nondiscrimination, comprehensive-ness,
appropriateness, equity and efficiency. Only through reforms based
on these principles can we ensure that our nation's health system
serves the needs of all Americans, including Americans with disabilities.
See, "Making Health Care Reform Work for Americans with
Disabilities: Summary Information on Five "Town Meetings" on Health
Care Reform" A Report to the President and the Congress of the United
States, NCD, July 26, 1994.
The dramatic growth in the Medicaid and Medicare programs
can be attributed, in part, to the private insurance sector's reluctance
to adequately provide for the health care needs of the populations
covered by these programs. In this respect, the Medicare and Medicaid
programs represent large high risk pools. The number and need for
services of Medicaid beneficiaries continues to rise as employer-sponsored
health care is declining and those who are privately covered tend
to be less frequent users of health services. In fact, over one
million people under age 65 become uninsured each year which currently
represents over 41 million people.
STATEMENT OF POLICY
NCD recognizes the need to reduce the rate at which
the costs of the Medicaid and Medicare programs are rising and supports
constructive change in these programs to promote the goals of enhanced
coverage and quality, increased efficiency, elimination of fraud,
waste, and abuse, and delivery of benefits that meet the health
and long-term care needs of people with disabilities and chronic
illnesses. NCD believes that Medicaid and Medicare changes must
be enacted in the context of system-wide reform in order to maintain
the quality and effectiveness of our nation's health care system.
Further, if the national goals of independence, economic self-sufficiency,
and inclusion of people with disabilities--embodied in the Americans
with Disabilities Act of 1990--are to become a reality, access to
affordable and quality health care is a necessity.
While NCD recognizes the need for constructive reforms
in the Medicaid and Medicare programs, NCD has concerns that key
elements of both the House and Senate approved budget bills could
significantly and negatively impact the health, independence, and
dignity of all Americans with disabilities. Nationally, ten percent
of the population accounts for 72 percent of total health care expenditures.
Generally, NCD's reservations with the current Medicaid and Medicare
proposals reflect the concern that quality will be jeopardized as
unrealistic cuts in these programs are pursued.
The proposals also fail to promote the cross-subsidization
which is necessary to meet the higher health care costs of people
with disabilities and chronic conditions. The proposals miss the
opportunity to use the leverage that government has in the health
care marketplace to require managed care plans to cover high users
of care, e.g. people with disabilities. Finally, the proposals fail
to promote home and community-based care rather than institutional
placement. NCD's specific concerns are outlined below and recommendations
have been provided where appropriate.
THE PROPOSED MEDICAID REFORMS
The Medicaid provisions included in the House and
Senate versions of the budget bill represent dramatic change in
the nation's health care program for low income families, children,
and people with disabilities. Congress proposes to reduce spending
in the Medicaid program by $170 billion over the seven-year period
ending in 2002 by completely eliminating the individual entitlement
to Medicaid coverage in the House budget bill and reducing the rate
at which program spending increases in future years. In the Senate,
the budget bill calls for the same level of savings but proposes
to continue some form of individual federal Medicaid entitlement
for certain pregnant mothers, children through the age of 12, and
people with disabilities.
The House and Senate bills would place a cap on federal
Medicaid payments to states based on a complex funding formula designed
to bring the rate of annual Medicaid growth down to approximately
4.5 percent. Federal Medicaid funds would be sent to the states
in the form of block grants with few federal requirements for use
of federal dollars. Medicaid is the largest single source of federal
funds to the states and many of the nation's governors support the
block grant approach. They have assured Congress that by allowing
the states flexibility in the design and implementation of their
Medicaid programs, the states will adequately provide for the health
and long-term care needs of their residents.
Recommendation No. 1:
The National Council on Disability recommends that Congress significantly
reduce the level of proposed Medicaid cuts over the next seven years
in order to ensure the continued vital assistance that Medicaid provides
to people with disabilities.
The Consequences of the Proposed Medicaid Changes
If the final budget bill eliminates the individual
entitlement to Medicaid and block grants the program to the states,
as in the House bill, people with disabilities will lose access
to critical health and long term services. For people with disabilities
and chronic health conditions, the lack of access to health and
health-related services and supports could lead to an exacerbation
of existing health problems and/or disabilities, as well as the
emergence of additional health problems and secondary disabilities.
In some cases, inappropriate institutionalization of adults and
children with disabilities may be the result.
According to the Urban Institute's Medicaid Expenditure
Growth Model, the loss of the individual federal entitlement to
Medicaid will result in the loss of Medicaid coverage for as many
as 1.2 million people with disabilities nationwide by the year 2002,
many of whom are children. Because Medicaid often provides items
such as wheelchairs, communication devices, therapy at home, respite
care, and home modifications, the loss of Medicaid coverage for
children with disabilities could mean that parents have no choice
but to seek institutional placement.
For people with long term care needs, the lack of
Medicaid coverage may lead to the loss of services and supports
that help these individuals live more independent lives in their
homes and communities, in some cases resulting in homelessness or
unnecessary institutionalization. The lack of Medicaid coverage
will place unreasonable pressures on family members, many of whom
will have their own economic security undermined as they attempt
to pay for health and long-term care costs, and in some cases, forego
employment to care for relatives.
The loss of the individual entitlement under Medicaid
will greatly affect people who are dually eligible for both programs,
such as low-income elderly persons. Medicaid currently provides
subsidies to low-income elderly persons who cannot afford Medicare
Part B premiums, deductibles, and co-payments. An open question
remains whether low-income Medicare beneficiaries will be able to
receive the services they need when they cannot afford these premiums,
deductibles and co-payments without Medicaid subsidies to help cover
these costs.
Finally, the current Medicaid proposals fail to address
major transitional issues that, upon signature of the bill into
law, will immediately place persons with disabilities and chronic
conditions at risk of losing critical access to care. In some cases,
preserving or eliminating access to care will have life and death
consequences. The monumental change to which state governments must
adapt in Medicaid and other programs formerly run at the federal
level is simply not taken into account in the current House and
Senate budget proposals.
Block Grants and the Individual Federal
Entitlement to Medicaid
Proposals to eliminate the individual federal entitlement
to Medicaid and block grant the program to the states with virtually
no federal standards constitute a major threat to the health and
independence of people with disabilities. The current House and
Senate Medicaid proposals establish no mandatory benefits that states
must provide to beneficiaries except childhood immunizations and,
in the Senate bill, pre-pregnancy family planning services. The
proposals, however, include state level "set-aside" categories for
certain vulnerable populations, i.e., families with pregnant women
and children, elderly individuals, and low-income persons with disabilities
under age 65. States would be permitted within these broad categories
to determine which health and long-term services to cover.
The set-aside proposals under the House and Senate
bills differ but generally require each state to annually spend
in future years a minimum of 85 percent of the state's average Medicaid
spending in prior years for people in each set-aside category. The
85 percent spending levels are based on services that are currently
"mandatory" and do not take into account spending on so-called "optional"
services, i.e., those services that states now choose to cover.
Optional Medicaid services are a misnomer because they are medically
necessary and are of critical importance to children and adults
with disabilities. Optional services currently provided in many
states include rehabilitation therapies and devices, prescription
drugs, home and community-based services, personal assistance services,
and case management.
The disability set-aside would significantly understate
the level of Medicaid services provided to people with disabilities
and could result in a substantial reduction in Medicaid spending
for this population. With no entitlement, no requirement for the
provision of specific services, and underfunded set-asides, states
would be unable to provide the range of medically necessary services
and supports that they now provide for children and adults with
disabilities. In short, the disability set-aside is a weak substitute
to the current Medicaid guarantee to specific health and long term
services.
Alternatives to Block Grants and the
Loss of the Individual Federal Entitlement
Reductions in the rate of growth of Medicaid spending
could be achieved in a number of ways that preserve the individual
federal entitlement to Medicaid. For instance, a per capita cap
would limit the growth of Medicaid spending to a reasonable rate
for each person in the program without placing an artificial program-wide
cap on Medicaid spending. The guarantee of Medicaid coverage would
be maintained while states with growing populations would be able
to cover their Medicaid costs. Significant Medicaid savings could
also be achieved--without losing the individual federal entitlement
to the program--by establishing incentives for the use of home and
community-based care and disincentives for the use of institutional
care in appropriate circumstances. Home and community-based care
is often cost-effective and promotes independent living among people
with disabilities. Home and community-based care has also been required
to be provided by state Medicaid programs based on legal challenges
involving federal civil rights laws. See, Helen L., et
al, v. Albert L. DiDario for Norristown State Hospital, No.
94-1243 (3d Cir., Jan. 31, 1995).
The Senate version of the budget bill retains a guarantee
of Medicaid coverage to certain low-income pregnant mothers, children
through the age of 12, and people with disabilities. The definition
of "people with disabilities" in the Senate bill relies on the SSI
definition of disability (as amended by the welfare bill) which
currently applies to 3.9 out of 4.9 million people with disabilities
receiving Medicaid services. This individual federal Medicaid entitlement
for people with disabilities has been strongly opposed by many of
the nation's governors who would prefer that the definition of disability
be determined on a state by state basis, or that no federal entitlement
remain for people with disabilities.
Recommendation No. 2:
The National Council on Disability recommends that Congress retain
the current individual federal entitlement to Medicaid and not block
grant this vital program to the states. To control the rate of growth
in Medicaid spending, options such as a per capita cap on federal
Medicaid dollars and incentives for home and community-based care--instead
of institutional care--should be considered. The Senate language,
which only retains the individual federal entitlement for people with
disabilities and other at-risk populations, is a major setback from
current law and is only supportable in comparison to the complete
elimination of the individual federal Medicaid entitlement as in the
House bill. Any significant changes in the Medicaid program should
be phased-in to ensure a smooth transition for Medicaid beneficiaries.
The Private Right of Action and Application
of Federal Civil Rights Law
The House Medicaid proposal expressly denies a private
citizen--including a beneficiary, a provider, or a health plan--the
right to bring a federal cause of action against a state to enforce
compliance with provisions of the Medicaid program. This proposal
removes the existing right of a Medicaid beneficiary to sue to require
enforcement of the Medicaid statute and regulations. The Americans
with Disabilities Act of 1990 and the Rehabilitation Act of 1973
would no longer be available to Medicaid beneficiaries with disabilities
in challenging the Medicaid decisions of states. Provisions eliminating
the federal cause of action were struck from the Senate bill before
passage.
Recommendation No. 3:
The National Council on Disability recommends that Congress maintain
the existing federal private right of action against states to enforce
compliance with the Medicaid statute and regulations and to ensure
that state Medicaid programs fully comply with the Americans with
Disabilities Act of 1990 and the Rehabilitation Act of 1973.
Consumer Representation in Decision-Making
With the emphasis on state flexibility, the nexus
of decision-making will devolve to the states under the proposed
reforms. Many people with disabilities and their families remember
when states had complete control over the health and long-term care
decisions of persons with disabilities and other marginalized populations.
These memories bring to mind the future ethical dangers at stake
when many people consider a life with a disability as a life not
worth living.
To promote greater public accountability, it is critical
that representatives of consumer groups, particularly people with
disabilities, are accounted for and actively participate in every
level of decision-making concerning the provision of health and
long-term services and supports to each states' Medicaid population.
Consumers should be represented on all state, regional, and local
advisory boards, policy panels, and Medicaid committees. This includes
the creation of ombudspersons to represent the interests of consumers
within each state's Medicaid program and in all managed care plans
serving Medicaid beneficiaries. The current versions of Medicaid
reforms are wholly inadequate with regard to consumer participation.
Recommendation No. 4:
The National Council on Disability recommends that Congress include
specific provisions in its Medicaid reforms to ensure the active participation
of persons with disabilities at every level of decision-making in
the Medicaid program.
The Elimination of Federal Standards in Nursing
Homes and Managed Care Plans
The House proposal dramatically reduces, and in some
cases, eliminates consumer and quality assurance protections and
federal oversight in Medicaid services and in Medicaid-funded facilities.
This includes the elimination of current federal nursing home and
ICF-MR regulations, as well as standards related to community-based
care. The Senate bill does maintain current federal standards for
nursing homes but allows states to receive waivers from the federal
government if their standards are equal to or stricter than federal
standards. Because there is no private right of action, however,
minimum federal standards for nursing homes appear to be in jeopardy.
In addition, the basic requirement that Medicaid funds must be spent
on "active treatment" for individuals in institutional settings,
rather than merely custodial care, would be eliminated under the
Medicaid proposals.
The House and Senate proposals permit states to shift
Medicaid beneficiaries into managed care plans with inadequate consumer
protections related to access and quality of care. For instance,
the proposals eliminate the federal requirement that managed care
plans which serve Medicaid beneficiaries must maintain at least
25% of their enrollees as private purchasers of health coverage.
In addition, the health status of people with disabilities who are
often underserved in capitated health plans may be placed at risk
under provisions that allow states to use mandatory managed care
for Medicaid beneficiaries. In fact, HCFA recently denied a waiver
request from New York City based on federal civil rights law to
use mandatory managed care for its Medicaid population until it
could demonstrate appropriate quality assurance protections for
people with disabilities.
Recommendation No. 5:
The National Council on Disability recommends that federal standards
of consumer protection and quality assurance be maintained in Medicaid-funded
facilities--such as nursing homes, ICFs-MR, and community-based programs--and
in all Medicaid-funded managed care. Managed care should be an "option"
and not the only choice for Medicaid beneficiaries with disabilities
and should include strong protections for timely and appropriate access
to all necessary services, supports, and providers.
THE PROPOSED MEDICARE REFORMS
Currently, Medicare beneficiaries may choose any provider
and/or specialist they wish under the fee-for-service Medicare program
or can choose to enter into the Medicare Risk Contract Program to
receive health care through a managed care plan. The Congressional
leadership's Medicare proposals represent a substantial restructuring
of the nation's health program for senior citizens and people with
disabilities under 65 years of age. Congress proposes to reduce
spending in the Medicare program by $270 billion over the seven-year
period ending in 2002 by sharply reducing the rate of growth in
fees to hospitals and other providers, creating incentives to shift
large numbers of beneficiaries from the Medicare fee-for-service
program into private managed care plans, and by increasing the share
that beneficiaries will pay under the program. The House and Senate
bills are designed to bring annual Medicare growth in spending down
from just over 10 percent to approximately 7 percent.
The Proposed Level of Medicare Reductions
Removing $270 billion from the Medicare program over
the next seven-year period is a level of spending reductions never
before considered by Congress. These spending reductions have been
characterized as "cuts" by opponents and "reductions in the rate
of growth" by proponents. From a disability perspective, removing
this magnitude of resources from Medicare, before reforms have occurred
throughout the entire health system, will decrease the quality of
care, reduce health benefits, and decrease access to necessary medical
services.
Under the Medicare proposals, some beneficiaries will
spend significantly more for health care than under current law
through increases in Part B premiums and increases in out-of-pocket
expenses through balance billing. In the Medicare fee-for-service
program, providers' fees will grow at a much slower pace than currently
projected and new budget mechanisms will allow the government to
further reduce fee-for-service provider fees if cost containment
goals are not met. Providers serving beneficiaries in Medicare managed
care plans will have to offer discounted rates in order to compete
against other providers, thereby further limiting provider payments.
While this approach may be effective in reducing
the growth of Medicare spending, these significant fee reductions
for Medicare providers will likely cause access and quality concerns
for Medicare beneficiaries. Access concerns are raised when Medicare
provider fees become so low in comparison to other payors that providers
simply refuse to treat Medicare patients. Quality concerns are raised
as providers cut corners in the provision of care (i.e., shortened
office visits; less comprehensive examinations) in order to limit
the impact of lower reimbursement levels.
Recommendation No. 6:
The National Council on Disability recommends a significant reduction
in the proposed level of spending cuts to be taken out of the Medicare
program in order to maintain access and quality of health care services
for people with disabilities.
Managed Care and People with Disabilities
Enticing a greater percentage of Medicare beneficiaries
into managed care arrangements and out of the Medicare fee-for-services
system is a major objective of the bills currently under consideration
in Congress. As managed care continues to sweep the health care
marketplace, however, dissatisfaction with many of these plans among
people with disabilities and chronic illnesses continues to grow.
Anecdotal and empirical data suggest that managed
care plans may not adequately meet the needs of high users of health
care services. Many beneficiaries with significant health conditions,
therefore, may opt to remain in the fee-for-service Medicare program.
The fee-for-service system ensures access to appropriate specialty
care and avoids the potential danger of underservice which often
occurs when people with disabilities are served by managed care
plans, particularly capitated systems.
This form of "adverse selection" could result in program
cost increases to the fee-for-service Medicare sector as relatively
young and healthy beneficiaries move to Medicare managed care plans,
leaving beneficiaries with the greatest health care needs in the
fee-for-service system. The average Medicare outlay per beneficiary
was $4,020 in 1993. The healthiest 90 percent of Medicare beneficiaries,
however, received an average of $1,340 of Medicare outlays in that
same year. By contrast, 10 percent of Medicare beneficiaries with
the greatest health care needs averaged $28,120 in Medicare expenditures
in 1993.
As a result, Medicare managed care plans stand to
benefit from windfall profits by attracting the healthiest Medicare
beneficiaries and receiving inflated payments which reflect the
health care expenditures for the most expensive Medicare beneficiaries.
Many of the Medicare beneficiaries with conditions that are expensive
to treat will likely stay in the fee-for-service program. Because
of this, the shift to Medicare managed care may result in higher
Medicare program outlays for health services, not savings as are
currently anticipated. In fact, the C.B.O. estimates that savings
from managed care will result from lower capitated payments provided
to managed care plans, not more effective care.
Medical Underwriting Should Be Prohibited
In Medicare Managed Care Plans
Increased numbers of Medicare beneficiaries with significant
health care needs will be more likely to join Medicare managed care
plans if adequate federal safeguards are established to ensure access
and quality to high users of care and to protect against underservice.
Two provisions in the House and Senate proposals address the problem
of adverse selection in Medicare managed care plans. The current
Medicare proposals contain provisions that guarantee issue and renewability
of managed care policies to Medicare beneficiaries so that young
and healthy enrollees will be less apt to be "cherry picked" by
managed care plans. The proposals also provide for risk adjustments
to the Medicare managed care premium paid to managed care plans
based on the beneficiary's age and other factors, potentially accounting
for health status and disability in the amount of the premium paid
by Medicare.
Unfortunately, the current version of the Senate bill
does not prohibit managed care plans which will service Medicare
beneficiaries from charging the beneficiary the difference between
the amount the Medicare program will pay for a beneficiary's premium
and the cost of a medically underwritten managed care policy for
that individual. The House-approved version of the Medicare bill
would significantly resolve this problem by requiring Medicare managed
care plans to accept the government contribution as the full premium
for the individual. If the Senate version prevails in the final
budget bill, many people with disabilities will be effectively priced
out of the managed care market and have no choice but to remain
in the fee-for-service system.
The Medicare proposals maintain the long-standing
prohibition against balance billing in the fee-for-service program
and in Medicare managed care plans, but the federal prohibition
against balance billing will be eliminated for all out-of-network
services accessed by Medicare managed care beneficiaries. Balance
billing occurs when a physician or other Medicare provider is allowed
to charge the patient directly for the difference between the amount
that Medicare pays and the provider's customary fee. This provision
will likely lead to increased out-of-pocket expenses for Medicare
managed care beneficiaries who access out-of-network services or
providers, particularly where there is a lack of competition in
the managed care marketplace.
Recommendation No. 7:
The National Council on Disability recommends that the premium collected
by Medicare managed care plans be limited to the government contribution
for the individual beneficiary, adjusted for the age and health status
of the enrollee. NCD further recommends that Congress maintain the
provisions related to guaranteed issue and renewability of Medicare
managed care plans and continue the prohibition against balance billing
throughout the Medicare program.
Medical Savings Accounts May Act as
a Drain on the Medicare Trust Fund
The House Medicare proposal allows a Medicare beneficiary
to establish a Medical Savings Account (MSA) in conjunction with
a high deductible catastrophic insurance plan which is intended
to increase the Medicare beneficiary's awareness of the price of
health services. Medicare would pay the premiums for the catastrophic
insurance plan and deposit in the beneficiary's MSA the difference
between the average Medicare outlay (per person per year) and the
premium for the catastrophic plan.
Medicare beneficiaries would be expected to pay for
the cost of health services out of their MSA and their own funds
until their annual out-of-pocket expenditures reached a high deductible
threshold--probably between $3,000 to $10,000--when their catastrophic
plan would begin paying for their care. The Medicare MSA option
will likely appeal to relatively young and healthy beneficiaries
who are currently at low risk of using significant health services.
Under the House Medicare proposal, beneficiaries who have funds
remaining in their MSAs at the end of the year could use these funds
for non-health related purposes, as long as taxes on this income
are paid.
From a disability perspective, this proposal could
result in a drain of health dollars out of the Medicare Part A Trust
Fund at a time when the long term solvency of this Fund is at genuine
risk. Establishing MSAs in the Medicare program sets a bad precedent
for the private insurance market, where adverse selection becomes
a problem for people with disabilities. In the Senate, the Medicare
MSA proposal was dropped from the budget bill under the "Byrd" rule
because it would have increased the federal deficit by $3.5 billion
over seven years.
Recommendation No. 8:
The National Council on Disability recommends that Congress reject
Medicare Medical Savings Accounts. If Medicare MSAs are authorized,
however, Congress should risk adjust the capitated government contribution
toward MSAs and strictly limit the use of MSA funds to health, long-term
care, and independent living expenses only.
Quality Assurance in Medicare Managed
Care Plans
The Medicare Risk Contract Program currently allows
any Medicare beneficiary enrolled in a managed care plan to disenroll
from the plan with 30 days notice. This is a key consumer protection
for Medicare beneficiaries with disabilities and chronic illnesses.
The Medicare proposals eliminate this important protection two years
after enactment and only allow disenrollment during an annual open
enrollment period.
Another important quality assurance mechanism is the
requirement that Medicare managed care plans, particularly closed-panel
health maintenance organizations (HMOs), ensure beneficiaries access
to out-of-network services through an affordable point-of-service
option. A point-of-service option is designed to allow beneficiaries
access to out-of-network specialists and other providers when desired
by the patient, when the service is a covered benefit under the
plan, and when medically appropriate. A problem with the point-of-service
option is that it may not be affordable to many of the people who
are most likely to need it.
The Senate proposal includes a provision that requires
all closed-panel plans serving Medicare beneficiaries to offer a
point-of-service option at the time of enrollment. Under the Senate
bill, however, the beneficiary could be liable for as much as 100%
of the cost of care received outside the managed care network, a
major disincentive for accessing out-of-network providers. A point-of-service
option must not be allowed to take pressure off the managed care
plan to provide appropriate care or pay for the out-of-network referral
if the managed care plan cannot provide it. The House bill does
not address the point-of-service issue.
Recommendation No. 9:
The National Council on Disability recommends that the 30-day disenrollment
provision be maintained in order to ensure that Medicare managed care
plans provide access, quality, and accountability to all Medicare
beneficiaries. In addition, Medicare managed care plans should ensure
access to out-of-network providers through an affordable point-of-service
option.
Shifting to Managed Care Requires Federal
Standards to Ensure Access and Quality
In order to ensure that the shift of large numbers
of Medicare and Medicaid beneficiaries into managed care plans does
not compromise health care access and quality, minimum federal standards
for managed care plans have been considered by Congress, but thus
far few of these standards have been included in the Medicare and
Medicaid proposals. Examples of these important safeguards can be
found in several bills including H.R. 2400, introduced by Congressman
Norwood (R-GA) and Congressman Brewster (D-OK); H.R. 2350, introduced
by Congressman Coburn (R-OK), and H.R. 2329, introduced by Congressman
Brown (D-OH).
The Medicare and Medicaid managed care standards at
issue include the disenrollment provision etailed above. Other important
safeguards for consumers with disabilities--and the providers who
serve them--include requirements that managed care plans establish
and maintain consumer and provider due process standards, adequate
grievance and appeals mechanisms for denials of benefits and access
to specialists, and utilization management protocols to ensure informed
determinations of medical necessity.
Ensuring access to specialty care is a primary concern
of people with disabilities in managed care plans. The point-of-service
option described above is an effective method of improving access
to specialists but additional consumer safeguards are necessary.
These safeguards include provisions allowing beneficiaries with
disabilities and chronic illnesses to choose a specialist as a primary
care "gatekeeper," allowing direct and ongoing access to specialists
when medically indicated, ensuring access to centers of specialized
treatment expertise, and the prohibition of physician incentive
plans that reward physicians for not making referrals to specialists.
Recommendation No. 10:
The National Council on Disability recommends the inclusion in the
Medicare and Medicaid proposals of federal standards for managed care
plans. These standards should address the critical issues of access
and quality of care for Medicare and Medicaid beneficiaries with disabilities
and chronic illnesses who enroll in managed care plans. Without adequate
quality assurance standards, managed care is likely to be discriminatory
against people with disabilities in the near term and against all
people in managed care over time.
CONCLUSION
NCD encourages Congress and the President to assess
in detail the far-reaching impact of the current Medicare and Medicaid
proposals on people with disabilities and chronic illnesses. NCD
welcomes the opportunity to advise policymakers as to the disability
perspective on Medicare and Medicaid issues and provides these recommendations
for your consideration.
APPENDIX A: SUMMARY RECOMMENDATIONS
Recommendation No. 1: The National Council
on Disability recommends that Congress significantly reduce the
level of proposed Medicaid cuts over the next seven years in order
to ensure the continued vital assistance that Medicaid provides
to people with disabilities.
Recommendation No. 2: The National Council
on Disability recommends that Congress retain the current individual
federal entitlement to Medicaid and not block grant this vital program
to the states. To control the rate of growth in Medicaid spending,
options such as a per capita cap on federal Medicaid dollars and
incentives for home and community-based care--instead of institutional
care--should be considered. The Senate language, which only retains
the individual federal entitlement for people with disabilities
and other at-risk populations, is a major setback from current law
and is only supportable in comparison to the complete elimination
of the individual federal Medicaid entitlement as in the House bill.
Any significant changes in the Medicaid program should be phased-in
to ensure a smooth transition for Medicaid beneficiaries.
Recommendation No. 3: The National Council
on Disability recommends that Congress maintain the existing federal
private right of action against states to enforce compliance with
the Medicaid statute and regulations and to ensure that state Medicaid
programs fully comply with the Americans with Disabilities Act of
1990 and the Rehabilitation Act of 1973.
Recommendation No. 4: The National Council
on Disability recommends that Congress include specific provisions
in its Medicaid reforms to ensure the active participation of persons
with disabilities at every level of decision-making in the Medicaid
program.
Recommendation No. 5: The National Council
on Disability recommends that federal standards of consumer protection
and quality assurance be maintained in Medicaid-funded facilities--such
as nursing homes, ICFs-MR, and community-based programs--and in
all Medicaid-funded managed care. Managed care should be an "option"
and not the only choice for Medicaid beneficiaries with disabilities
and should include strong protections for timely and appropriate
access to all necessary services, supports, and providers.
Recommendation No. 6: The National Council
on Disability recommends a significant reduction in the proposed
level of spending cuts to be taken out of the Medicare program in
order to maintain access and quality of health care services for
people with disabilities.
Recommendation No. 7: The National Council
on Disability recommends that the premium collected by Medicare
managed care plans be limited to the government contribution for
the individual beneficiary, adjusted for the age and health status
of the enrollee. NCD further recommends that Congress maintain the
provisions related to guaranteed issue and renewability of Medicare
managed care plans and continue the prohibition against balance
billing throughout the Medicare program.
Recommendation No. 8: The National Council
on Disability recommends that Congress reject Medicare Medical Savings
Accounts. If Medicare MSAs are authorized, however, Congress should
risk adjust the capitated government contribution toward MSAs and
strictly limit the use of MSA funds to health, long-term care, and
independent living expenses only.
Recommendation No. 9: The National Council
on Disability recommends that the 30-day disenrollment provision
be maintained in order to ensure that Medicare managed care plans
provide access, quality, and accountability to all Medicare beneficiaries.
In addition, Medicare managed care plans should ensure access to
out-of-network providers through an affordable point-of-service
option.
Recommendation No. 10: The National Council
on Disability recommends the inclusion in the Medicare and Medicaid
proposals of federal standards for managed care plans. These standards
should address the critical issues of access and quality of care
for Medicare and Medicaid beneficiaries with disabilities and chronic
illnesses who enroll in managed care plans. Without adequate quality
assurance standards, managed care is likely to be discriminatory
against people with disabilities in the near term and against all
people in managed care over time.
APPENDIX B: NCD: A BRIEF DESCRIPTION
Overview and Purpose
NCD is an independent federal agency led by 15 members
appointed by the President of the United States and confirmed by
the U.S. Senate.
The overall purpose of NCD is to promote policies,
programs, practices, and procedures that guarantee equal opportunity
for all individuals with disabilities, regardless of the nature
or severity of the disability; and to empower individuals with disabilities
to achieve economic self-sufficiency, independent living, and inclusion
and integration into all aspects of society.
Specific Duties
The current statutory mandate of NCD includes the
following:
- Reviewing and evaluating, on a continuing basis,
policies, programs, practices, and procedures concerning individuals
with disabilities conducted or assisted by federal departments
and agencies, including programs established or assisted under
the Rehabilitation Act of 1973, as amended, or under the Developmental
Disabilities Assistance and Bill of Rights Act; and all statutes
and regulations pertaining to federal programs that assist such
individuals with disabilities in order to assess the effectiveness
of such policies, programs, practices, procedures, statutes, and
regulations in meeting the needs of individuals with disabilities;
- Reviewing and evaluating, on a continuing basis,
new and emerging disability policy issues affecting individuals
with disabilities at the federal, state, and local levels, and
in the private sector, including the need for and coordination
of adult services, access to personal assistance services, school
reform efforts and the impact of such efforts on individuals with
disabilities, access for health care, and policies that operate
as disincentives for individuals to seek and retain employment.
- Making recommendations to the President, the Congress,
the Secretary of Education, the Director of the National Institute
on Disability and Rehabilitation Research, and other officials
of federal agencies, respecting ways to better promote equal opportunity,
economic self-sufficiency, independent living, and inclusion and
integration into all aspects of society for Americans with disabilities.
- Providing the Congress, on a continuing basis,
advice, recommendations, legislative proposals, and any additional
information that NCD or the Congress deems appropriate;
- Gathering information about the implementation,
effectiveness, and impact of the Americans with Disabilities Act
of 1990 (42 U.S.C. 12101 et seq.);
- Advising the President, the Congress, the Commissioner
of the Rehabilitation Services Administration, the Assistant Secretary
for Special Education and Rehabilitative Services within the Department
of Education, and the Director of the National Institute on Disability
and Rehabilitation Research on the development of the programs
to be carried out under the Rehabilitation Act of 1973, as amended;
- Providing advice to the Commissioner with respect
to the policies of and conduct of the Rehabilitation Services
Administration;
- Making recommendations to the Director of the National
Institute on Disability and Rehabilitation Research on ways to
improve research, service, administration, and the collection,
dissemination, and implementation of research findings affecting
persons with disabilities;
- Providing advice regarding priorities for the activities
of the Interagency Disability Coordinating Council and reviewing
the recommendations of this Council for legislative and administrative
changes to ensure that such recommendations are consistent with
the purposes of NCD to promote the full integration, independence,
and productivity of individuals with disabilities;
- Preparing and submitting to the President and the
Congress an annual report titled National Disability Policy:
A Progress Report; and
- Preparing and submitting to the Congress and the
President a report containing a summary of the activities and
accomplishments of NCD on an annual basis.
Consumers Served and Current Activities
While many government agencies deal with issues and
programs affecting people with disabilities, NCD is the only federal
agency charged with addressing, analyzing, and making recommendations
on issues of public policy that affect people with disabilities
regardless of age, disability type, perceived employment potential,
economic need, specific functional ability, status as a veteran,
or other individual circumstance. NCD recognizes its unique opportunity
to facilitate independent living, community integration, and employment
opportunities for people with disabilities by ensuring an informed
and coordinated approach to addressing the concerns of persons with
disabilities and eliminating barriers to their active participation
in community and family life.
NCD plays a major role in developing disability policy
in America. In fact, it was NCD that originally proposed what eventually
became ADA. Our present list of key issues includes personal assistance
services, health care reform, the inclusion of students with disabilities
in high-quality programs in typical neighborhood schools, equal
employment opportunity, community housing, monitoring the implementation
of the Americans with Disabilities Act, improving assistive technology,
and ensuring that persons with disabilities who are members of minority
groups fully participate in society.
Statutory History
NCD was initially established in 1978 as an advisory
board within the Department of Education (Public Law 95-602). The
Rehabilitation Act Amendments of 1984 (Public Law 98-221) transformed
NCD into an independent agency.
|