States would be able to reduce payments to providers for treating poor Medicare beneficiaries under a provision in the Senate's recently approved balanced-budget plan.
The measure would limit states' cost-sharing responsibility for enrollees in the Qualified Medicare Beneficiary program. The same provision would reduce state costs for paying the healthcare bills of other "dual-eligibles"-Medicare beneficiaries who also are eligible for Medicaid.
Under the QMB program, state Medicaid programs pick up Medicare coinsurance, deductibles and premiums for Medicare beneficiaries with incomes at or below the federal poverty level.
States currently can pay the full Medicare copayments and deductibles for QMB enrollees. But HCFA gives states the option of making the combined package of Medicare reimbursement and state cost sharing equal to the state's Medicaid rates.
In other words, in states using the latter option, the payments hospitals and physicians receive for treating QMB enrollees cannot exceed what they would get for treating Medicaid beneficiaries.
In March 1995, 29 states had applied the latter option. But federal appeals courts have invalidated that option, forcing eight states to change their policies.
In response, the Senate proposes to reinstate the Medicaid cost-sharing option. It would result in reduced state costs because the state Medicaid programs could pay cost-sharing charges much less than Medicare requires. The federal government would benefit as well because its contribution to QMB and dual eligibles' cost sharing would be reduced.
The Congressional Budget Office estimates state savings of $3.5 billion and federal savings of $2.1 billion over five years, according to Senate aides.
Because the proposal is only in the Senate legislation, the QMB cost-sharing plan probably will be a subject of the talks among House, Senate and White House negotiators that began last week.
Physicians and advocates for the elderly are opposing the measure, saying it will harm access to care.
The American Medical Association is urging negotiators to reject the measure because it "would really make it a two-tiered system," said spokesman James Stacey.
"Providers would be less likely to see some of these Medicare beneficiaries if they're only getting paid Medicaid rates," said Howard Bedlin, vice president for public policy and advocacy at the National Council on the Aging.
However, both the House and Senate measures would extend about $1.5 billion in financial protections to lower-income Medicare beneficiaries.
As negotiated under the balanced-budget framework to which congressional leaders and President Clinton agreed, the income limit for participants in the related Specified Low Income Medicare Beneficiary program would be raised to 135% from 120% of the federal poverty level. That program covers enrollees' Medicare Part B premiums.
In addition, it would protect moderate-income Medicare beneficiaries from the effects of shifting more than $30 billion in home health spending from the Medicare Hospital Insurance Trust Fund to the Part B pool. Under the Senate legislation, a shift of $30.7 billion over five years in home health spending would increase monthly Part B premiums by $7.50 per month in 2002.
The budget framework calls for protecting Medicare beneficiaries with incomes between 135% and 175% of the federal poverty level from premium increases related to that shift in home health spending.