Medicare Compliance & Reimbursement

Plan would save money, but at what cost?

A recent federal proposal that would allow Medicaid to raise co-payment rates for its beneficiaries is causing unrest in the house of the Medicaid Commission.

During an August 17 meeting, the commission discussed a plan that would allow states to charge adults $5 co-pays for each visit and children $3 per visit. Supporters say that the co-pay amount is negligible and will save Medicaid billions of dollars. Detractors were lined up to dispute both arguments, however.

By September 1, the commission must report to Congress with recommendations on how to reduce Medicaid spending increases by $10 billion over the next five years. A second report, due at the end of 2006, must feature long-term ideas to stabilize Medicaid spending.

During the meeting, members of the President Bush-appointed commission "made clear [they] would not rubberstamp proposals" from the White House or the National Governors Association, as members argued for and against the co-pay plan, according to a New York Times article.

The proponents of the higher co-pay plan contend that the increase in fees does not really amount to much more money. Current Medicaid law caps co-payments at $3 for most adults and does not allow states to charge children co-payments. Panel member Michael J. O'Grady, also an assistant secretary of health and human services, doubted the higher costs would place financial strain on benes.

"We are talking about the price of a pack of cigarettes," O'Grady told the Times. O'Grady also stated that the government has kept the co-payment level stable for more than two decades.

Co-pay increase supporters also pointed to the savings the plan would create. Medicaid benes will cover $4 billion more of costs over the next half-decade if the proposal passes, according to the Congressional Budget Office.
 Medicaid Commission members who are against the co-pay increases don't dispute the fact that the plan will save the federal government some money, but they question how much difference the savings would make in the context of the Medicaid program.

Medicaid official Dennis G. Smith said the $4 billion was not a large amount, since the federal government and the states expect to spend $2 trillion on Medicaid in the next five years.

Further, a chronically ill bene who cannot afford her medicine because of the higher co-payment could end up in the emergency room, which is more costly for her and the state, John C. Nelson, MD, a commission member and former president of the American Medical Association, told the Times. "If we raise the co-payment, some people will not get the care they need. These are real people," he argued.