MEDICAID OPTIONAL ELIGIBILITY AND SERVICES: OPTIONS THAT AREN T REALLY OPTIONS

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Easter McCoy
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1 MEDICAID OPTIONAL ELIGIBILITY AND SERVICES: OPTIONS THAT AREN T REALLY OPTIONS Introduction Created in 1965, Medicaid is a federal and state-funded program that most people think of as simply a health insurance program for low-income Americans. Today, Medicaid is the largest public or private health insurance program in the United States; this year, 53 million people are expected to be enrolled. Medicaid covers two-thirds of nursing home residents, 1 one in five persons under age 65 with chronic disabilities (including about 70% of poor children), 2 one-third of all births, and half of spending for states mental health services. 3 There are many myths about the program and the people it helps, including the misconception that most Medicaid beneficiaries are on welfare, and about whom and what it covers. This document aims to shed light on Medicaid today's safety net for those who are unable to pay for their health and long-term care. It is one of a set of documents on Medicaid published by the AARP Public Policy Institute (see below). Medicaid Options Federal Medicaid law creates a distinction between those who must be covered under programs in all states and and those who may be covered depending on decisions by each state. Categories for those people who must be covered are known as mandatory eligibility categories, and categories for those who may be covered are known as optional eligibility categories. Figure 1 shows the percentage of Medicaid beneficiaries in each major enrollment group who received coverage in 2001 as a result of optional eligibility. While optional eligibility accounts for at least 22% of each enrollment group, the share is particularly high for parents and pregnant women (41%) and the elderly (48%). 4 Figure 1: Percent of Medicaid Beneficiaries with Optional Eligibility, % 78.5% 22.1% 77.9% 47.7% 52.3 % 41.4% 58.6% Children Disabled Elderly Parents/Pregnant Women M andatory Eligibility Source: KCMU, June Optional Eligibility In addition, the law identifies a set of mandatory benefits that must be provided to all enrollees and a set of optional benefits that states may offer if they choose to do so. 5 Figure 2 shows the percentage of optional spending for major eligibility groups that was accounted for by specific services in The vast majority of optional Medicaid spending for children and parents was accounted for by acute care services, while the largest share of optional spending for the elderly and disabled was attributable to long-term care. Mandatory and Optional Medicaid Eligibility Categories Optional eligibility categories allow states to provide health insurance to children and their parents, low-income working parents who cannot obtain health insurance in the DD 115R

2 Figure 2: Percent of Optional Medicaid Spending on Enrollment Group Accounted for by Specific Services, % 5% 9% 25% 19 % 56% 10 % 12 % 78% 83% 13 % 5% Children Disabled Elderly Parents/Pregnant Women Long-Term Care Prescription Drugs Other Acute Care Source: KCMU, June workforce, and low-income people who have high out-of-pocket medical expenses. 7 Many individuals who do not need long-term care services qualify as optional beneficiaries because they have low incomes or have high medical costs. These people rely on Medicaid to stay healthy and/or to avoid incurring medical debt that could affect their ability to pay basic living expenses (e.g., rent and food). Examples of Current Mandatory Eligibility Categories 8 Infants < age 1 and family income 133% Federal Poverty Level (FPL), equivalent to $21,400 per year for a family of 3 in Children ages 1 thru 5 and income 133% FPL ($21,400 per year for a Children ages 6 thru 19 and income 100% FPL ($16,090 per year for a Children < age 6 and income 133% FPL ($21,400 per year for a family of 3 in 2005). Parents below AFDC cutoffs from July 1996 (mean = 42% FPL or $8,127 per year for a family of 4 in 2005). 9 Pregnant women with income < 133% FPL ($17,064 a year for family of 2 in 2005). Persons receiving Supplemental Security Income (SSI). (2005 income limits are $579 for an individual; $869 for a couple). Examples of Current Optional Eligibility Categories 10 Infants < age 1 with income between 133% and 185% FPL (between $21,400 and $29,766 per year for a family of 3 in Children ages 1 thru 5 with income > 133% FPL ($21,400 per year for a Children ages 6 thru 19 with income > 100% FPL ($16,090 per year for a Low-income parents with income above the 1996 AFDC level (mean = 42% FPL or $8,127 per year for a family of 4 in 2005). Pregnant women with income between 133% and 185% FPL ($17,064 and $23,735 for family of 2 in 2005). Persons who incur medical costs that reduce their income to a level that qualifies them for the medically needy program (states establish income eligibility levels). Aged and disabled persons with income 100% FPL ($9,570 per individual in 2005). People in these optional eligibility groups depend upon Medicaid just as much as those in the mandatory groups to provide them access to basic preventive health services as well as acute 2

3 medical care. Medicaid coverage for these people may be optional for the state, but in most cases the individuals covered in these categories have no other options but Medicaid to finance their health care needs. Here are some of their stories. 11 George and Lucille: George and Lucille both work hard in their local poultry factory. Although the factory doesn t offer health insurance, George, Lucille, and their two children haven t had any serious illness in the family, but they have all had to make do without routine primary and preventive health services. When their 5-year-old daughter, Christy, developed a rare form of childhood cancer and had to be hospitalized, George and Lucille paid her medical bills out of their own pocket until their spending reached a level at which their income qualified Christy for Medicaid under the state s optional coverage category for medically needy children. With this help, George and Lucille are able to continue to provide for their family s basic needs. Marcy: Marcy, who is seven months pregnant, works in a job that doesn t offer health insurance coverage. Even though she s working, Marcy qualifies for Medicaid because her state offers optional eligibility for pregnant women with little income. Marcy s pregnancy has been complicated, and without access to the continuous prenatal care that Medicaid provides, doctors are almost certain that her baby would have been born premature, requiring several months of expensive care in a neonatal intensive care unit. Shelton: Roberta s eight-year old son Shelton has cystic fibrosis, a chronic lung disease that requires ongoing outpatient treatment and expensive prescription drugs. Roberta works as a clerk at the local bakery and although her employer offers health insurance, Roberta can t afford her share of the monthly premium. Although Roberta is uninsured, Shelton has Medicaid coverage under the states optional coverage category for children, which pays for his drugs and treatments. Without his prescriptions and his outpatient respiratory treatments, Shelton would need frequent hospitalizations to stabilize his condition. Gary: Gary, age 28, was an auto mechanic before he was injured by a hit and run driver one year ago, leaving him a paraplegic. Gary receives Social Security disability insurance (SSDI) benefits and qualifies for Medicaid because his state has an optional poverty level category that allows him to qualify as long as he is disabled and his income does not exceed 100 percent of the federal poverty level. Gary s Medicaid coverage pays for the personal care attendants and a number of assistive devices that he needs in order to continue to live at home instead of going into a nursing home. Mandatory and Optional Medicaid Benefits Although optional benefits are a creation of federal statute, it is important to remember that many of the people who require these so-called optional covered services often depend on them to maintain life and/or quality of life. Options don t really seem like options to people who have nowhere else to turn. Examples of Current Mandatory Acute Care Benefits 12 Physician services Laboratory and x-ray 3

4 Inpatient hospital services Outpatient hospital services Early and periodic screening, diagnosis, and treatment (EPSDT) services for persons < age 21 Family planning and supplies Federally qualified health center (FQHC) services Rural health clinic services Nurse mid-wife services Certified nurse practitioner services Examples of Current Optional Acute Care Benefits 13 Prescription drugs Medical care or remedial care furnished by licensed practitioners Diagnostic, screening, preventive, and rehabilitation services Clinic services Dental services and dentures Physical therapy Prosthetic devices and eyeglasses TB-related services Primary care case management Other specialist medical or remedial care Many pregnant women, children, parents, and families who receive optional services under existing law, in fact, depend upon these Medicaid services to continue to live independently in the community, to have hope for a normal future, or to work. Here are some of their stories. 14 Marion: Marion is 75 years old and in excellent health, except that her eyesight is rapidly deteriorating and she requires frequent changes in her eyeglass prescription. Although Marion receives Medicare, she also qualifies for Medicaid because her income is so low. Medicare does not pay for eyeglasses, but Marion is able to get her eyeglasses paid for by her state s Medicaid program. Marion knows that without frequent changes in her eyeglasses prescription, her impaired vision could cause her to have accidents which could result in hospitalization or even require her to seek out Medicaidfinanced long-term care services. Josephine: Josephine, or Jo as her friends call her, is 52 years old and permanently disabled because of complications associated with juvenile diabetes. Jo also has high blood pressure and mild congestive heart failure. Jo is on multiple prescription drugs but, fortunately, qualifies for Medicaid because she is disabled and relies on SSI as her only source of income. Jo has done a great job of managing her condition with her prescription drugs drugs Jo couldn t afford to purchase on her own. Amanda: Amanda s mother, Sue, waits tables at a local diner. Sue s employer doesn t provide health insurance, and Sue is uninsured. Amanda is five years old and has cerebral palsy, a condition that requires intensive physical therapy. Fortunately, Amanda qualifies for Medicaid under the state s optional coverage category for children. Without this coverage, Sue would never be able to afford the therapy that Amanda needs, and Amanda would probably never learn to walk. Conclusion Medicaid has evolved into a health insurance program that provides access to care for millions of low-income Americans (many of whom are working) and their children. 15 While current 4

5 Medicaid law continues to maintain optional eligibility categories and optional covered services, many Americans rely on optional Medicaid eligibility and optional benefits that are urgently needed and not available through any other source. Note: This document is one in a set of documents published by the AARP Public Policy Institute that aims to shed light on the Medicaid program. Other documents in the set include: Six Things That You Might Not Know About the Medicaid Program by Lynda Flowers and Mary Jo Gibson Slicing the Long-Term Care Safety Net: Medicaid s Most Vulnerable at Risk by Mary Jo Gibson, Wendy Fox-Grage and Ari Houser The Faces of Medicaid Long-Term Care Beneficiaries by Wendy Fox- Grage and Mary Jo Gibson Myths About the Medicaid Program and the People it Helps by Mary Jo Gibson, Lynda Flowers,Wendy Fox-Grage and Ari Houser. 1 Cowles Research Group, computed from CMS Online Survey, Certification, and Reporting (OSCAR) database (2004). 2 Kaiser Commission on Medicaid and the Uninsured, Medicaid s Role for People with Disabilities. (Kaiser Commission on Medicaid and the Uninsured, Washington, DC, 2003). 3 Alan Weil, There s Something About Medicaid, Health Affairs, Vol 22, No. 1 (2003), pp Anna Sommers, Arunabh Ghosh, and David Rousseau, Medicaid Enrollment and Spending by Mandatory and Optional Eligibility and Benefit Categories (Kaiser Commission on Medicaid and the Uninsured, Washington DC, June 2005). 5 State can invoke federal waiver authority to alter statutory coverage categories and/or benefits, but these are exceptions, not the rule. 6 Supra note 4. 7 This last optional coverage category is known as the medically needy coverage category. As of March 2002, 35 states had medically needy programs. Brian Bruen, Joshua Wiener, and Seema Thomas. Medicaid Eligibility for Aged, Blind, and Disabled Beneficiaries (AARP, Washington, DC, November 2003). 8 Kaiser Commission on Medicaid and the Uninsured. The Medicaid Resource Book (Kaiser Commission on Medicaid and the Uninsured, Washington, DC, July 2002). 9 Aid to Families with Dependent Children (AFDC) was a program that provided transitional financial assistance to needy families with dependent children. In 1996, the AFDC program was abolished and replaced with the Transitional Assistance for Needy Families (TANF) program. Unlike the AFDC program which was an openended entitlement, TANF is a block grant program that aims to help move recipients into work and turn welfare into a program of temporary assistance. Cash assistance under the TANF program is limited to 4 years per lifetime and has a work requirement. 10 Kaiser Commission on Medicaid and the Uninsured. The Medicaid Resource Book (Kaiser Commission on Medicaid and the Uninsured, Washington, DC, July 2002). 11 The examples presented below are hypothetical but represent potential factual situations based on HHS federal poverty guidelines and Medicaid eligibility criteria as described in Title XIX of the Social Security Act. 12 Centers for Medicare and Medicaid Services. Medicaid Services (USDHHS, CMS) on the web at 13 Ibid. 14 The examples presented below are hypothetical but represent potential factual situations based on HHS federal poverty guidelines and Medicaid eligibility criteria as described in Title XIX of the Social Security Act. 15 Who either work in low wage jobs or who work for employers who do not offer affordable health insurance coverage. Written by Lynda Flowers, AARP Public Policy Institute, September , AARP Reprinting with permission only. AARP. 601 E Street, N.W., Washington, DC

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