Medicare Compliance & Reimbursement

The White House hasn’t necessarily developed all the details of its plan, but its overall vision for Medicaid is clear. As the Deseret News of Salt Lake City reported Feb. 25: “The Bush administration told the nation’s governors Monday that it hopes to reform Medicaid so that it looks, well, a lot like reforms it already allowed in Utah as an experiment.”

In search of a low-cost way to insure more working families during economic slowdowns, the administration inaugurated its Health Insurance Flexibility and Accountability demonstration project in 2001, and approved UTAH’s HIFA proposal in February 2002.

The Utah program is revolutionary — and controversial — because, as Utah Department of Health Executive Director Rod Betit wrote last year, “this will be the first time the federal government has permitted a state to offer a limited benefit plan that does not include hospitalization and specialty care under Medicaid. It is also the first time that the federal government has allowed a state to

reduce some benefits to current Medicaid eligibles in order to reallocate these funds to offer some coverage to working individuals who have no health-care coverage in the workplace.” In the demo, a new group of around 25,000 working-age adults who lacked health coverage for at least six months and have incomes under 150 percent of the federal poverty level receive a coverage package including primary, preventive, and some emergency care. Enrollees — who may earn up to $13,290 for a one-person household, and $17,910 for a two-person household — pay an annual enrollment fee of $50 plus copayments similar to those required by Utah’s State Children’s Health Insurance Program, for example, $5 for a physician visit.

Coverage includes basics like primary-care office visits, flu shots, emergency-room and urgentcare visits, laboratory x-rays, basic dental care, vision screening, and prescription drugs. Services not covered include outpatient and inpatient hospital care, specialty-physician care, advanced dental work like root canals, mental-health treatment, substance- abuse treatment, and eyeglasses.

Demonstration projects under HIFA are required to be budget-neutral for the federal government — i.e., covering more people while spending the same amount of federal dollars — although states are allowed to use somewhat looser rules than usual to demonstrate budget neutrality. To pay for extending primary-care coverage to the new group of low-income working adults, Utah has reduced the rich standard Medicaid benefit package for other people already covered by Medicaid, mostly parents of Medicaid-insured children, trimming their benefits to more closely resemble the basiccoverage package offered to state employees.

In discussions of the Utah waiver by White- House-plan backers this week, it’s this state employee- coverage package, not the much slimmer primary and preventive package, that has been most often mentioned, to show that benefits can be cut for some Medicaid populations without offering them substandard coverage.

Utah Gov. Mike Leavitt (R) “said that instead of being forced to offer more extensive Medicaid coverage that other states chose, Utah was allowed to pattern its program after less costly private insurance coverage it gives to state employees, including the governor himself,” the Deseret News reported.

Besides glossing over the fact that the new group of insured Utahans are getting only about the same amount of coverage they’d get from visiting a local community health center, this description overlooks another key fact. The optional population that Utah newly covers is assumed to be a generally healthy group, for whom primary-careonly coverage may be a reasonable alternative. Most of Medicaid’s optional coverage populations are not healthy.

The president’s plan would allow states to tailor benefit packages for many different populations. And while such tailored plans may save more money than current one-size-fits-all benefit packages, they are very unlikely to be nearly as economical as Utah’s primary-care package, which is held up as a prototype. Even a tailored plan will be relatively expensive if it targets the medical needs of most Medicaid optional populations, such as the elderly or patients with a serious disability, such as severe mental illness, head or spinal trauma, or HIV/AIDS.

In addition, even cheap-to-insure optional populations covered with front-loaded federal dollars might turn out to be too expensive in the final three years of the decade, when federal spending slows, Sen. John Breaux (D-LA) suggested at an NGA forum Feb. 24. “After seven years, I’m not sure you’re going to be very happy taking away the prescription drugs” he said. “What if your economic situation is worse?”