Dear Members of General Assembly:
I am writing to provide you with an update on the
department's efforts to implement co-payments for families making over 200
percent of the federal poverty level (FPL) in the category of Medical
Assistance (MA) often referred to as the "loophole" category, which
covers eligible children with mental and physical disabilities. First and foremost, it is important to note
that we take our role in protecting Pennsylvania's children very seriously.
While many opponents have sensationalized this initiative, here are the key
facts:
- There will be no changes to services or health care benefits
as a result of this initiative. Services provided to children with disabilities
will not change. The department will
continue to cover health care needs for these children now and well into the
future.
- Care for children receiving services through this category
is costly. Today, nearly 48,000
children receive Medicaid services under this category, costing taxpayers
approximately $700 million a year.
- Many of the families who receive these services have the
ability to pay their fair share. About
80 percent of these families have incomes above 200 percent of the federal
poverty level and 1 in 4 have incomes above $100,000 a year.
- All in-school services provided by schools are exempt from
the co-payment requirement.
- No other state has eligibility criteria as generous as
Pennsylvania's. Pennsylvania is the only state that allows a child whose
disability does not require institutional care to be eligible for Medicaid
without considering the parent's income, child support or Social Security
benefits received by the child.
- We must act now to protect the safety net. Targeting co-payments based on ability to
pay will allow us to continue to effectively serve the most vulnerable Pennsylvanians
who need it most.
Background
Under federal law, states have the option in their Medicaid
program to cover children with physical and mental disabilities, without regard
to their family's income, if the child needs an institutional level of care but
can receive that care at home. This option was authorized by the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. No. 97-248). Twenty states
have elected the TEFRA option, commonly referred to as a Katie Beckett Waiver.
Currently, Pennsylvania is the only state that allows a
child whose disability does not require institutional care to be eligible for
Medicaid without considering the parent's income, child support or Social
Security benefits received by the child. This is why it's been referred to as
the "loophole" category.
Pennsylvania started covering these children in November 1988, and the
number has grown significantly through the years. Today, nearly 48,000 children receive Medicaid services through
this category resulting in hundreds of millions of dollars at the expense of
the taxpayer each year. Unlike other families served by the department, these
families have the means to afford the co-payments for the services they
receive. About 80 percent of these
families have incomes above 200 percent of the FPL, and one in four has an
income above $100,000 a year.
Co-payments
Through this initiative, we are asking those families with
incomes above the normal Medicaid eligibility levels to contribute to the cost
of services for their children. The
department currently applies co-payments to other individuals with income
levels substantially below 200 percent FPL.
Targeting co-payments based on ability to pay will ultimately protect
the safety net and allow us to continue to effectively serve Pennsylvanians now
and well into the future.
There has been some discussion regarding the department's
decision to implement co-payments instead of a premium, both of which have been
approved by the General Assembly and are currently authorized in the Public
Welfare Code. Unfortunately, as with
many issues facing our department, our actions are limited by Maintenance of
Effort (MOE) provisions in the president's health care law: the Affordable Care
Act. The department received early
guidance from the Centers for Medicaid and Medicare Services (CMS) that a
premium would likely violate the MOE requirements. We will continue to explore
a premium as an option. However, we need to move forward with implementing
co-payments to establish cost sharing.
In addition to the authority in Act 22 of 2011 to establish
co-payments for families with incomes above 200 percent FPL, the federal
Deficit Reduction Act of 2005 (DRA) gave states the option to apply cost
sharing to non-exempt populations based on family income, including disabled
children who are traditionally exempt from cost sharing. While the DRA allows for flexibility in how
income is counted, it caps the maximum aggregate cost sharing at five percent
of total family income.
The following points are intended to provide an update and
further information regarding the department's co-payment policy.
- A public notice was published in the Pennsylvania Bulletin
on Aug. 11, 2012 to announce the department's intent to amend our state plan to
apply co-payments to children with disabilities, and the department will issue
a Medical Assistance bulletin to providers before Oct. 1.
- The department will implement the co-payments in the
fee-for-service delivery system on Oct. 1 for newly eligible recipients, and
Nov. 1 for those currently eligible. The difference in dates is due to
recipient notification requirements.
These notices have recently been mailed to impacted families.
- As indicated in the public notice, most co-payments will be
on a sliding scale with a specified co-payment amount for each range, or tier,
based on the MA fee for the service, not to exceed 20 percent of the lowest fee
on each tier (i.e., the higher the cost of the service, the higher the
co-payment). Co-payments for inpatient
hospital stays, prescription drugs, diagnostic services, and psychotherapy will
be set at fixed amounts, not on a sliding scale.
- Upgrades to the department's eligibility and claims processing
systems, in order to support the new co-payments, are complete and ready to be
put into operation.
- DPW has established a tracking system to ensure each
family's total co-payments will be capped to not exceed five percent of the
family's aggregate annual income, prorated and applied on a monthly basis, as
determined by the county assistance offices. Not all families will hit the cap,
however, as it is dependent on the family's utilization of services. The
family's co-payment liability will be portioned across the fee-for-service,
physical health managed care and behavioral health managed care delivery
systems based on the utilization analysis completed by the department.
- Services exempt from the co-payment requirement include all
the services currently excluded for adult MA recipients, as identified in MA
program regulations. Further,
preventive services, MA services provided through the School Based ACCESS
Program, Early Intervention and Home and Community-Based Program waivers will
also not require a co-payment.
- Managed Care Organizations (MCOs) may implement the
co-payments, but are not mandated to do so. MCOs that choose to implement the
co-payments will need to determine and develop the process for how co-payments
will be assessed and collected. The
department will inform them of their respective portions of the maximum monthly
co-payment liability amount. They will
then be required to notify members and network providers of their intent to
apply co-payments and of their liability amount, track co-payments applied
within their respective systems, and shut off the co-payments if a family
reaches the MCO's portion of the maximum co-payment liability amount. MCOs may
also apply the co-payments in a less restrictive manner (i.e., a lesser co-payment
amount for the same service(s) applied by the department).
In addition to the information provided in this letter, we
have included a document of frequently asked questions to assist you and your
constituents in understanding this change.
Sincerely,
Gary D. Alexander, Secretary
Department of Public Welfare
