Warning: this Alert may cause headaches. Those readers who have ever roamed the Serbonian Bog that is Medicaid will feel right at home.
THE MEDICAID BOG
The so-called Medically Needy – Medicare beneficiaries whose Medicaid eligibility depends on meeting a spend-down (or share of cost) each month or quarter – are faced with difficult challenges just using their Medicaid, since, in most states, they must prove to the state that they have incurred a certain amount in medical bills before their Medicaid becomes effective. These same individuals face even greater complications resulting from their participation in Medicare Part D’s low income subsidy (LIS). One contributing factor to these complications is that the government’s share of payment for prescription medications, which are obtained at little or no cost to the individual under LIS, does not count toward meeting the medically needy spend-down, the condition that qualifies a beneficiary for full Medicaid coverage. In other words, having LIS often results in an individual losing their Medicaid coverage.
EXAMPLE: ONE CLIENT’S WANDERING IN THE BOG
Medicaid in 2005. Our client, Ms. H. had high drug costs prior to the implementation of Medicare Part D. Although her income was above her state’s limit for “regular” Medicaid, when her drug costs were taken into account, her income dropped to the state’s medically needy income level and Medicaid picked up her health care costs beyond those expenses needed to qualify. In addition to coverage for any drugs beyond those needed to qualify, she got coverage for some or all of Medicare’s cost-sharing as well as for services offered by her state Medicaid program that are only minimally or not at all provided by Medicare, such as dental, vision and transportation services.
Because she was on the Medicaid rolls in 2005, she was deemed eligible for the full Part D low-income subsidy for the full year of 2006.
Medicaid and Medicare Part D. In 2006, because the subsidy paid virtually all her drug costs, Ms. H. no longer had the high drug expenses that qualified her for medically needy Medicaid. Thus, while she had her drugs mostly covered by the LIS, she lost her full Medicaid coverage that included help paying for items and services that aren’t covered by Medicare.
When the Centers for Medicare & Medicaid Services (CMS) examined states’ Medicaid rolls in July of 2006 to determine who would be re-deemed eligible for the subsidy for 2007, Ms. H.’s name did not appear. CMS sent her a letter telling her she was no longer deemed eligible for the subsidy, but that she could apply through the Social Security Administration and be considered for the subsidy via that route. Ms. H. was confused by the letter and did not complete that application.
Medicaid and Part D in 2007. In January 2007, Ms. H. received a bill from her plan for her premium. She was confused about the bill, put it aside and forgot about it. She then went to the pharmacy and, for the first time, realized that she no longer had the help she had last year paying for her drugs. She now had a substantial deductible to meet as well as the premium she had not yet paid, both incurred costs that would result in her becoming eligible for Medicaid as a medically needy person once again, if she took her bills to the state. If she did so, she would, at least for January, appear on the state’s list of dual eligible and be, once again, deemed eligible for the low income subsidy for the remainder of 2007. Her eligibility would be effective January 1, but getting reimbursed for any amounts she paid out-of-pocket prior to her LIS being processed would likely require substantial advocacy. Moreover, once she is back in LIS, she will again not meet her spend-down, so will not have Medicaid for the rest of the year.
The most efficacious way out of this Bog is for Congress to enact a universal, unified health insurance program that would eliminate the complex interconnections that arise from dual coverage, especially from the intersection of Medicare and Medicaid.
A more immediate legislative solution to these particular issues faced by medically needy individuals is a statutory change to Medicare Part D directing that Part D, including LIS, should have no adverse impact on other public benefits. Such language was included in the portion of the Medicare Act of 2003 that established the Medicare Drug Discount card that was in effect in 2004 and 2005, but the language was not included for Part D that became effective in 2006. Such a change is, unfortunately, not likely to be made to Part D in the near future.
STRATEGIES FOR INDIVIDUAL CLIENTS
Other strategies exist that may help to stabilize LIS eligibility, but may not help achieve Medicaid eligibility for those pre-Part D medically needy Medicaid recipients, such as Ms. H.
First, advocates might advise clients to fill as many prescriptions as possible late in December, with 90 day supplies, if possible, so that they have drugs to tide them over processing times for LIS or Medicare Savings Programs applications.
Second, advocates can alert clients and others to the CMS letters sent in the fall of each year announcing that they have not been re-deemed for LIS and advise them to complete the application included with the letters. Clients should be advised to do this as soon as they receive the letter to allow time for the Social Security Administration to process the application for benefits to be available January 1.
For clients with incomes within the range of a Medicare Savings Program (MSP) ($1190/month* is the limit in most states in the lower continental US for 2008) and little need for Medicaid wrap-around services, advocates should seek MSP eligibility. Individuals with incomes below 100% of the federal poverty level ($887/month*) will have no Medicare cost-sharing obligations; those between $887 and $1190 will have their Part B premium paid. In addition, their MSP eligibility will give them deemed status for LIS that may be more stable than their deemed status through medically needy spend-down. (However, do not assume the state has determined clients to be eligible for an MSP just because their income falls within the range. States are supposed to evaluate each applicant for all Medicaid programs for which she or he is eligible, but some states are not fully compliant with this requirement.)
For clients with incomes above the MSP limit, but below the LIS limit ($1,320/month* nationally in 2008), there may be value in applying directly for LIS, though this benefit would be substantially more limited than that available through either the MSP or the medically needy route. The benefit is the partial low-income subsidy, with a premium based on sliding scale (from $0 to ~$25 for 2008), a $56 deductible in 2008 and coinsurance of 15% through the donut hole, after which the individual is responsible for co-pays of $2.25-$5.60. The partial subsidy is also available to those with income below the MSP limit whose assets are greater than allowed under most states’ MSP programs, but are less than the LIS partial subsidy asset limit.)
ONE MORE COMPLICATION
An additional complicating factor in all this is the September letter from CMS, including the LIS application, informing the individual that she is no longer deemed eligible for LIS. Clients need good information as to (1) the existence of the letter and its significance, and (2) whether to complete the LIS application or to proceed to the strategy of trying to meet spend-down before the end of the year, so as to reappear on the state’s Medicaid rolls. Moreover, clients need to know that if they re-qualify for Medicaid before the end of the year they will receive another letter from CMS alerting them to their LIS eligibility for the following year.
While each of these strategies may help smooth an otherwise very rocky process of yo-yo-ing on and off the low income subsidy, none of them addresses the underlying issue of loss of more regular medically needy eligibility. To the extent they are able, advocates may want to alert their Members of Congress to this situation, helping them understand it with client stories, and urging them to amend the law in ways that will ameliorate the harmful impact of Part D on the medically needy, e.g., to allow all Part D drug costs, including the LIS, to count toward medically needy spend-down.