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Medicare Compliance & Reimbursement

Medicaid:

Commission Recommendations Rile NGA

Published on Sun Aug 21, 2005

Proposals affect drug reimbursement, eligibility and tax treatment of MCOs.

The controversial Commission on Medicaid Reform submitted its report to Health and Human Services Secretary Michael Leavitt on Sept. 1 with recommendations for achieving $11 billion in savings during the next five years.

Congressional leaders greeted the proposals without much enthusiasm. Senate Finance Committee Chairman Chuck Grassley (R-IA) said they would be "considered" in budget reconciliation talks to meet a Sept. 16 deadline.

"It's premature to discuss the likelihood that any one option will be included in the Finance Committee package," he said in a statement. Ranking member Senator Max Baucus (D-MT) commented afterward that some of the Commission's ideas had merit and may warrant consideration in the $10 billion budget reconciliation package, though he believes that "all those savings should not come from Medicaid."

The Commission noted that enrollment growth in the Medicaid program would play a large part in determining future spending. For the five-year period from 1998 to 2003, total enrollment in the program increased by 30 percent. Officials expect Medicaid enrollment to increase 21 percent from 54 million enrollees in 2003 to 65 million in 2015.

Medicaid expenditures increased at a faster rate than that of other insurance plans between 1998 and 2003. Overall Medicaid expenditures increased by 62 percent from $153 billion to $248 billion, and spending on adults increased 77 percent. This compares to increases of 51 percent for private insurance expenditures and 36 percent for Medicare over the same time period.

Total Medicaid spending will increase from $275 billion in 2003 to $685 billion in 2015, an overall increase of almost 145 percent over the 12-year period, or 7.9 percent each year. Federal spending will increase from $161 billion to $390 billion and state spending from $114 billion to $295 billion.

The Commission recommended cost-saving changes in several different areas, among them:

• prescription drug reimbursement formula reform.

• extending the Medicaid drug rebate program to Medicaid managed care.

Medicaid could see savings of $2 billion over five years by providing Medicaid managed care health plans.

• access to the existing pharmaceutical manufacturer rebate program currently available to other Medicaid health plans, the report claimed.

• changing the penalty period for persons transferring assets for Medicaid eligibility. By moving the penalty period start date from the date of the transfer to the date of application for Medicaid or the nursing home admission date, whichever is later, the Commission estimates savings of $1.4 billion. This rule change relates to how the states determine financial eligibility for Medicaid's nursing home care coverage.

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