|
Summary
Some of the goals of the Governor's Medi-Cal redesign initiative
as addressed during the workgroup meetings include program improvements,
federal revenue maximization and other cost-savings. During the
workgroup process, some state officials have indicated that a comprehensive
section 1115 waiver from the federal government may be the vehicle
to institute certain eligibility and enrollment simplifications,
obtain additional federal funds and implement other cost savings
strategies. However, the state could more easily implement many
of these improvements, federal revenue increases and cost reductions
through routine state plan amendments, more limited scope federal
waivers, and federal legislative changes.
By following these alternative routes, the state
also would not have to seek a comprehensive section 1115 waiver
and subject the entire Medi-Cal program to the significant fiscal
risks posed by a federal Medicaid funding cap required under federal
budget neutrality requirements. (Under federal rules, any state
seeking a section 1115 waiver must demonstrate budget neutrality;
that is, federal spending must not be higher than it would have
otherwise been in the absence of the waiver. In enforcing this requirement
over the life of the waiver, the federal government requires the
state to give up open-ended federal Medicaid financing and instead
accept a federal funding cap meant to approximate what the level
of spending would have been without the waiver. Such capped amounts,
however, may end up being less--possibly far less--than the state
would have actually received under the existing federal Medicaid
financing structure.)
Eligibility and Enrollment Simplifications
During the workgroup process, the state, county welfare officials,
and other stakeholders raised substantial concerns about the complexity
of existing Medi-Cal eligibility rules and how such rules unduly
increase Medi-Cal administrative costs. Yet, as stakeholders consistently
emphasized throughout the workgroup process, federal law already
provides the state of California with significant flexibility in
how it can set Medi-Cal eligibility, enroll beneficiaries and renew
their coverage. As a result, improvements that would simplify California's
eligibility, enrollment and renewal procedures could be implemented
through routine amendments to its Medicaid state plan. There is
no need for a comprehensive waiver to implement such changes.
Examples include:
-
Simplification of Medi-Cal income and assets rules. States
have near-complete flexibility in how they count income and
assets for purposes of determining Medicaid eligibility. They
can disregard various types of income, eliminate the assets
test entirely or raise the level substantially, and can use
the same or similar set of income and asset counting rules across
eligibility groups to better align eligibility criteria in order
to simplify administration (though such alignment requires careful
design to ensure that it does not end up excluding any currently
eligible individuals). For example, California could eliminate
the assets test for parents under Medi-Cal using this authority,
just as it already has done for children.
-
Greater use of self-verification of income and assets upon
both application and renewal. There are generally no federal
requirements on how states must verify beneficiaries'
income and assets for purposes of assessing Medicaid eligibility.
As a result, for example, the state could rely on self-certification
by beneficiaries when they are applying for Medi-Cal or seeking
renewal of their coverage. The state could also use eligibility
information from other benefits programs such as Food Stamps,
CalWorks and School Lunch to help verify eligibility for Medi-Cal.
-
Easing or elimination of administratively burdensome reporting
requirements by beneficiaries. California recently reinstated
semi-annual reporting requirements. Yet, under federal regulations,
states have broad flexibility in establishing rules relating
to when beneficiaries must inform states about changes in their
circumstances such as increases in income that may affect eligibility.
For example, California could eliminate semi-annual reporting
and merely require beneficiaries to report income or asset changes
when such changes would make beneficiaries actually ineligible
for Medi-Cal (not just for any change in circumstances). States
can even use the flexibility they have in counting income and
resources to disregard changes in income and resources between
eligibility reviews to effectively eliminate reporting entirely.
-
Continuous eligibility for 12 months for beneficiaries other
than children in order to avoid onerous reporting and frequent
redeterminations. Federal law only requires that states conduct
redeterminations of eligibility at least once every 12 months.
States like California have used specific federal authority
to provide for 12 months continuous eligibility for children
to avoid the administrative hassles of redetermining eligibility
and processing periodic beneficiary reporting. Using existing
federal flexibility on redetermination periods and on beneficiary
reporting (as discussed above) would allow California to effectively
extend continuous eligibility beyond children to other aid groups.
In fact, California has already received federal approval (though
it was never implemented) to effectively extend continuous eligibility
to parents on Medi-Cal using this flexibility.
Federal Funding Maximization and Other
Cost-Saving Strategies
Similarly, the state of California could pursue several measures
that would increase federal funding for the Medi-Cal program or
glean cost-savings without pursuing a comprehensive section 1115
waiver. Such measures could be instituted through existing federal
law, other more limited waiver authority, or through federal legislation.
Examples include:
-
Improved enforcement of the Medi-Cal drug rebate program and
other litigation against drug manufacturers. Under existing
law, drug manufacturers are required to pay rebates to both
the federal government and states for the drugs that state
Medicaid programs furnish to beneficiaries. There is increasing
evidence that manufacturers are repeatedly violating the drug
rebate rules and that states could do a better job in both
enforcing and collecting these rebates. For example, manufacturers
have not been accurately reporting the “best price” at
which they sell their drugs as required under the rebate. Moreover,
manufacturers have been artificially inflating the drug prices
used to calculate the rates at which Medicaid reimburses pharmacies.
The federal Medicaid rebate law, federal Medicare and Medicaid
fraud and abuse laws, the federal False Claims Act and the
California False Claims Act already provide the state of California
with adequate legal authority to pursue litigation against
the drug manufacturers for these types of violations and obtain
sizable financial settlements that could be reinvested in the
Medicaid program.
-
Greater school-based claiming for Medi-Cal administrative and
medical services. The federal government has authorized states
to permit schools to provide both Medicaid administrative services
(such as enrolling eligible children) as well as health care
services covered by Medicaid provided to Medicaid children in
school clinics. The federal government has recently clarified
how schools may appropriately bill Medicaid for administrative
services. Greater school-based administrative and health service
claiming by California schools would only require a state plan
amendment.
-
Use of disease management services. A number of states (as
well as stakeholders during the workgroup meetings) have expressed
interest in providing more cost-effective care to Medicaid beneficiaries
with special health care needs through increased use of disease
management programs. The federal government recently clarified
that states may claim federal Medicaid matching funds for health
care services and administrative services provided through disease
management programs. Disease management could be implemented
by California through a state plan amendment.
-
Increased federal financing of the IHSS program. The In-Home
Supportive Services (IHSS) program is principally funded through
Medi-Cal under the Medicaid personal care benefit and is thus
eligible for federal matching funds. However, some IHSS Residual
Program services are solely state funded. Some of those services
could be folded into a section 1915(c) waiver which allows states
to provide home and community-based care to people with disabilities
who would otherwise require care in a nursing home. Unlike a
comprehensive section 1115 waiver that the state is proposing
under its Medi-Cal redesign, this waiver would be of only limited
scope and the budget neutrality requirement would apply only
to the affected population of Residual IHSS beneficiaries who
are otherwise eligible for Medi-Cal, not the entire Medi-Cal
program.
-
Extension of the temporary increase in the FMAP. Last year,
Congress enacted a temporary increase in the federal Medicaid
matching rate (known as the FMAP) of 2.95 percentage points
to provide about $10 billion in fiscal relief to the states.
That fiscal relief expires on June 30, 2004. If the current
provisions are extended through the end of fiscal year 2005
(September 30, 2005), this fiscal relief would provide California
approximately $1.16 billion in additional federal Medicaid matching
funds. This would require federal legislation.
-
State option to provide Medicaid coverage to legal immigrants
within the five year bar. In 1996, Congress barred states from
providing Medicaid coverage to legal immigrants within five
years of the date of their entry into the United States. Allowing
states to receive federal Medicaid funds to provide coverage
to legal immigrants would require federal legislation. However,
the Senate-passed version of the Medicare drug legislation included
the Immigrant Children's Health Improvement Act (ICHIA)
which would allow states like California that already provide
coverage to legal immigrants (financed solely with state funds)
to receive federal Medicaid matching funds for coverage of pregnant
women and children. While these immigrant provisions were dropped
during conference negotiations, there is renewed interest in
the Senate to include ICHIA in welfare reauthorization legislation
that may be considered soon on the Senate floor.
Conclusion
The Medi-Cal policy changes discussed above would not require a
comprehensive section 1115 waiver to implement. Rather, such improvements,
revenue maximization strategies, and cost-savings could be accomplished
with routine state plan amendments, limited-scope waivers, and federal
legislation. As a result, the state would be able to institute these
changes without having to accept an overall federal funding cap
in order to meet the federal budget neutrality requirements inherent
in a section 1115 waiver.
|
