Medicare Compliance & Reimbursement

'Clawback' payments could give states incentives to drop dual eligibles.

Many low-income individuals who are eligible for both Medicaid and Medicare could find themselves without prescription drug coverage on Jan. 1, 2006.
 
Because the Medicare Modernization Act demands that states pay the federal government for taking on their Medicaid beneficiaries' prescription drug coverage under the new Medicare drug benefit, many Medicaid benes could fall into a dangerous coverage gap.

The best-case scenario for these Medicaid benes is that they will face higher copayments under Medicare and coverage for fewer prescription drugs, according to a Families USA report entitled "Trouble Brewing? New Medicare Drug Law Puts Low-Income People at Risk," released on July 6.

'Clawbacks' Could Force State Cutbacks

What's worse, the MMA requires states to make special "clawback" payments to the federal government to contribute to the new drug benefit's financing, the report noted. This payment is based on a complex formula, in which states can control only one factor in determining how much they must pay to the federal government to compensate for Medicare's drug coverage for their dual eligibles. The only way states can decrease their clawback payments is to drop dual eligibles from Medicaid, the report said. These cutbacks will inevitably affect the most vulnerable of Medicare and Medicaid beneficiaries.

"Dual eligibles tend to be sicker than the average Medicare enrollee - over half are in fair or poor health," Families USA senior health policy analyst and report author Marc Steinberg wrote.

Elderly dual eligibles are more than twice as likely to experience health problems than other Medicare enrollees and "many have multiple conditions requiring complicated, comprehensive treatment," the report found.

Clawback Payments Hurt Home Care, Disabled

If states decide to drop dual-eligible beneficiaries from Medicaid, forcing them to enroll into Medicare, they will lose essential health services that are not covered through Medicare, the report said. Benes will lose their vision, dental, podiatry and hearing coverage, as well as coverage for non-emergency transportation to medical appointments and case-management services.

Losing coverage for personal care services that help disabled Medicaid benes perform daily activities, such as eating and bathing, could force many out of their homes and into institutions to get care, the report noted.

Many disabled Medicaid beneficiaries could be left without health care coverage for up to two years, if their state drops them from the Medicaid program. Medicare requires disabled people who are under 65 years of age to wait 24 months before they can receive Medicare coverage, according to the report.