Medicare Compliance & Reimbursement

Two major initiatives give states a huge cash injection from the federal government.

Policymakers have a vision for the Medicaid of the future--and the money they spend on remodeling Medicaid now could pay off big down the road.

Two separate initiatives from the Centers for Medicare & Medicaid Services (CMS) offer a total of approximately $1.9 billion to state Medicaid agencies, according to recent CMS statements.

On July 25, CMS announced it would give states $150 million during 2007 and 2008 to "fund research and design of ways to transform their Medicaid systems." The Deficit Reduction Act of 2005 authorized the "transformation grants."

"With these grants, states can streamline and modernize their systems, stabilize the growth of the program and protect it into the future," says CMS administrator Mark McClellan.

Medicaid spending projections for 2006 through 2015 are already down $224 billion from earlier estimates, CMS points out. "The slowdown has resulted from many steps including innovative waivers, greater collaboration between states and the federal government and shifting drug costs for the dually-eligible to the new Medicare drug benefit," the agency notes.

The grants are for a wide range of changes to Medicaid, including: reducing patient error rates; improving collection efforts from estates; reducing waste, fraud and abuse; increasing generic-drug use; improving care coordination; implementing performance-based payment programs; improving health care access for the uninsured; and implementing medication risk-management programs.

All states are eligible to receive a grant, and CMS isn't requiring states to match funds for these grants. State applications are due by Aug. 15. For more information, visit www.cms.hhs.gov/MedicaidTransGrants.

States Get $1.75 Billion To Expand Choices For Elderly, Disabled

In addition to the transition grants, states will also get money from the federal government to move elderly and disabled Medicaid beneficiaries from an institutional setting to their homes or community-based settings, Health and Human Services Secretary Mike Leavitt announced on July 26.

Through competitive grants, CMS "will give states a total of $1.75 billion over five years to help shift Medicaid from its historical emphasis on institutional long-term care to a system that offers more choices for seniors and persons with disabilities from all age groups," the agency says. The rebalancing initiative, called "Money Follows the Person," also stemmed from the DRA.

"We've worked with advocates and states for years to end the institutional bias in Medicaid, and now we've got the best opportunity ever to do it," McClellan enthuses.

For this initiative, however, states will have to match some amount of the federal money. The federal government is offering an enhanced match rate "equal to an increase of 50 percent of the usual state Medicaid percentage contribution in addition to the usual match rate," CMS says.

That means the federal government will pay for 75 to 90 percent of the transition costs relating to Medicaid benes who want to move from nursing homes to community settings.

The DRA also made changes to "allow states to add home and community-based services to their permanent array of benefits without having to go through the waiver process," CMS points out.

Although the funding is available for five years, states must participate for at least two consecutive years. Demonstration applications are due by Nov. 1, and CMS will award demonstration grants to states from Jan. 1, 2007, through Sept. 30, 2011.

More information about the demonstration is available at www.grants.gov.