health care policies week 5

Chapter 10:

Government Health Insurance

Programs: Medicaid, CHIP,

and Medicare

Chapter Overview

• Chapter 10 provides a basic overview of the

major public health insurance programs in the

United States, including changes to the

programs under the Affordable Care Act.

• Chapter 10 focuses on:

– Medicaid

– Children’s Health Insurance Program

– Medicare

Entitlements v. Block Grants

• Entitlement: Everyone who is eligible for and

enrolled in the program is legally entitled to receive

benefits from the program. Beneficiaries may not be

refused service for lack of funds or other reasons.

• Block Grants: A defined sum of money (often from

the federal government to the states) that is allocated

for a particular program over a certain amount of

time. Beneficiaries may be refused service for lack of

funds or other reasons.There is no legal entitlement to

the benefits.

Medicaid

• Overview: A federal-state public health insurance program for the indigent.

• Program administration

– Federal: Center for Medicare and Medicaid Services (CMS) outlines mandatory and optional populations and benefits covered under Medicaid

– State: state Medicaid agencies run programs, select which optional populations and benefits to cover in the state program

• All states participate in Medicaid

Medicaid – Eligibility • Medicaid generally covers low-income

• Pregnant women

• Children

• Adults in families with dependent children

• Individuals with disabilities

• Elderly

• Must meet 5 eligibility requirements: Categorical, Income level, Resources, Residency and Immigration status

Medicaid — Benefits

• Medicaid covers extensive acute care and Long-Term

Care benefits

– Some benefits are mandatory, others are optional

– Early and Periodic Screening Diagnostic and

Testing services are a comprehensive set of

mandatory services for children

• Deficit Reduction Act of 2006 (DRA) created a new

benefit option that allows states to use one of 5

benchmark or benchmark equivalent options to set

their benefit package

Medicaid — Financing

• Medicaid is jointly financed by the federal and state governments

• Matching system

– Federal Medical Assistance Percentage determines the

matching rate; rate is tied to each state’s per capita income with poorer states receive a higher federal match, and must be at least 50/50

• Beneficiary cost-sharing

– Prior to DRA, very limited cost-sharing allowed

– DRA provides expanded cost-sharing options

Medicaid –

Provider Reimbursement

• Reimbursement levels vary by state and type of

provider

– States have a lot of discretion in setting rates

• Fee-for-service provides paid on a state-determined

fee schedule

• Managed care providers paid according to contracts

between the state and the managed care organization

• Medicaid reimbursement is typically much lower than

private insurance or Medicare reimbursement

Medicaid — Waivers

• States may apply to the federal government for

waivers of Medicaid requirements

• Section 1115 waivers

– Secretary of Health and Human Services may

grant a section 1115 waiver to allow for a research

and demonstration project that “assists in

promoting the objectives” of Medicaid

– Use states as “policy laboratories” to test health

reform ideas

– Health Insurance Flexibility and Accountability

Act

Affordable Care Act Changes to Medicaid:

Significant eligibility expansion

• All non-Medicare eligible adults under 65 with

incomes up to 133% of poverty will be eligible in

every state

– Do not have to fit a category

– Standardized resource test

• Also, must cover all children 6–19 at 133% of

poverty

• Immigrants still have 5 year bar but states have option

to cover legal immigrant pregnant women and

children who have been in the country > than 5 years

Affordable Care Act Changes to Medicaid

• Benefits

– Newly eligible individuals entitled to essential health benefit package, not traditional Medicaid services

• Financing

– Federal government pays 100% of newly eligible expansion for two years then phases down to covering 90% by 2020

• States have a maintenance of effort requirement for adults and children

CHIP

• Overview: A 10-year, $40 billion block grant

program designed to provide health insurance

to low-income children whose family income

is above the Medicaid eligibility level in their

state

– Reauthorized in 2009 and extended in the ACA;

Authorization through 2019, funding through 2015

• All states participate in CHIP

CHIP – Structure

• Three options for CHIP structures

– Incorporate CHIP into Medicaid program as an

expansion population

– Create separate CHIP program

– Hybrid program: Some CHIP children are in

Medicaid and some are in a separate CHIP

program

• All three types of options are used by the states

CHIP — Financing

• Federal-state matching program

– “Enhanced” match — CHIP match will always be

higher than the state’s Medicaid match

• States receive payments in 2-year allotments

– If Beneficiary cost-sharing requirements are

allowed

CHIP — Eligibility

• States may cover children up to 300% Federal

Poverty Level (FPL)

– Children who are eligible for Medicaid must be

enrolled in Medicaid, not CHIP

• States may impose waiting periods, enrollment

caps, and other measures to limit expenses

CHIP — Benefits

• CHIP programs must provide “basic” benefits

– Inpatient and outpatient hospital care

– Physician services

– Laboratory

– X-ray

– Well-baby & well-child

• CHIP programs may provide additional benefits such as Prescription drugs, Mental health, vision, and hearing

CHIP — Benefits

• Benefit packages are based on one of five

benchmark health plans

– Similar to DRA option in Medicaid

• Overall, Medicaid programs generally offer

much more comprehensive benefits than CHIP

programs

CHIP — Waivers

• States may apply to the federal government for

waivers of CHIP requirements

• States may cover pregnant women without a

waiver but no new waivers will be granted for

other adults

• States also use waiver for premium assistance

Medicare

• Overview: A federally-funded health insurance

program for the elderly and some persons with

disabilities.

• Medicare is administered by CMS

– No state administration

– National rules, apply uniformly in all states

Medicare — Eligibility

• Medicare covers two main groups of people – elderly and disabled

• Elderly requirements

– At least 65 years old

– Eligible for Social Security by having worked and contributed to Social Security for at least 10 years

• Disabled requirements

– Individual is totally and permanently disabled and has received Social Security Disability Insurance for at least 24 months OR

– Has End Stage Renal disease

Medicare — Benefits

• Medicare split into 4 parts, each with its own set of

benefits

• Part A: Hospital Insurance: Inpatient hospital, skilled

nursing facility, hospice

• Part B: Supplemental Medical Insurance: Physician

services, outpatient services, limited preventive

services

Medicare — Benefits

• Part C: Managed Care: Same services (sometimes

receive additional services) delivered through a

managed care arrangement; Part C includes other

types of plans as well

• Part D: Prescription Drug Coverage: May receive

through private drug plans or managed care

arrangement

Medicare — Financing • Part A

– trust fund funded through a mandatory payroll tax

– deductibles and cost-sharing paid by beneficiaries

• Part B

– general federal tax revenues

– monthly premiums, deductibles, and cost-sharing

paid by beneficiaries

Medicare — Financing • Part C

– Receives funding for Part A and B services

through funding sources described above; Plans

may also require monthly premiums, deductibles,

and cost sharing to be paid by beneficiaries

• Part D

– General federal tax revenues

– Monthly premiums, deductibles, and cost-sharing

paid by beneficiaries

– State payments for dual enrollees

Medicare –

Provider Reimbursement

• Physicians

– Paid on a fee-for-service basis according to a Medicare fee

schedule

• Hospitals

– Paid on a prospective payment system based on diagnosis

• Diagnostic Related Groups for inpatient care

• Ambulatory Payment Classification for outpatient care

• Managed Care

– Plans paid a negotiated capitated rate by the federal

government

Affordable Care Act Changes to Medicare

• New coverage for preventive services without cost

sharing

• Eventually closes Part D doughnut hole

– Short-term relief as well

• Reimbursement changes

• Cost changes to beneficiaries

• Creation of Independent Payment Advisory Board

• CMS innovation center