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Medicare Looms As Budget, Logistical Issue for
States
By Erin Madigan, Staff Writer ,
Stateline.org
Dec. 27, 2004 – A Medicare prescription drug
benefit for senior citizens through private plans is still more than a
year away. But for state lawmakers and health officials preparing to
help administer the complex new law, crunch time is now.
Although
Medicare is a federal benefit, states will play a central role in
administering and financing a large chunk of the coverage for
prescription medicine.
Over the next 12 months, states will have to
examine everything from the wording of existing state laws relating to
prescription drug coverage, to creating systems to process thousands of
applications, to ensuring they have enough staff to answer phones and
field questions from flustered residents trying to understand the new
drug benefit.
State budget writers are waiting to learn how much
they'll still be required to pay of the billions of dollars of drug
bills for 6.4 million poor seniors who account for more than half of
almost every state's spending on prescription medicines but who soon
will qualify for Medicare drug benefits.
These were just a few of a litany of Medicare
concerns that were raised at the National Conference of State
Legislatures’ health policy conference Dec. 8 – 10, where several
hundred state lawmakers and policy experts convened to discuss health
care priorities for 2005.
“One of the biggest challenges is just trying to
siphon through what all the regulations are going to be. … Our challenge
as legislators is to be prepared,” said Illinois state Sen. Donne
Trotter (D), who heads
NCSL’s health committee.
High among states’ concerns is how to shift poor seniors who will be
eligible both for the state-federal Medicaid program, because of their
income level, and for Medicare, because of their age, from one
prescription drug plan to another in less than two months. Senior
citizens can start enrolling in the Medicare plans Nov. 15, 2005; the
sign-up deadline is Jan. 1, 2006, when their Medicaid prescription drug
coverage expires.
To ease the transition, the federal government
promises to automatically enroll these so-called “dually eligible”
seniors in a Medicare plan if they don’t sign up themselves. However,
the federal agency that oversees Medicare (the Centers for Medicare and
Medicaid Services) hasn’t yet laid out its plans for the switch.
States worry that this population of seniors – the
majority of whom earn less than $10,000 a year and often reside in
nursing homes or suffer serious health problems – will suffer gaps in
their drug coverage or be confused at the pharmacy counter.
“(The federal government) is going to have to do
something. You can’t in six weeks get that many people moved who are
chronically ill, heavy users of medication, mentally ill or folks in
nursing homes who are really sick. … You’ve got to give it some time,”
said
Ohio Deputy Medicaid Director Barbara Coulter Edwards, who wants the
federal government to grant a phase-in period for the dual eligibles
during which old Medicaid benefits could be honored for 90 or 180 days.
Medicare also will play into state budget debates.
In approving the Medicare overhaul in 2003,
Congress failed to deliver on a provision lobbied heavily for by states:
having the federal government pick up the prescription drug tab for the
“dual eligibles.” This population makes up about 21 percent of all
Medicaid patients, but accounts for more than half of almost every
state’s spending on prescription medicines, according to the
Kaiser Commission on Medicaid and the Uninsured.
While the dual eligibles in 2006 will qualify for
federal Medicare drug benefits, states won't get to keep all of the
savings from dropping the indigent seniors from state-financed Medicaid
drug plans. Instead, states will get hit with what’s been coined the
“clawback” provision, which will require states to finance a large share
of the federal drug benefit by making payments – on an ongoing basis –
to the U.S. government based on a formula.
States are waiting to learn exactly how much their
“clawback” payments will be, but the Kaiser Commission estimates that
between 2006 and 2014, states will make $88 billion in payments to the
federal government for Medicare and will see little, if any, fiscal
relief.
Meanwhile, states will have to make their best
guess when debating their Medicaid and overall state budgets. Some
states fear that under the clawback formula, they'll wind up paying even
more to cover dual eligible's drug bills than before. For example,
Edwards estimates that Ohio’s “clawback” payment to the federal
government in 2007 will be $84 million more than what the state would
have paid if the dually eligible population had remained on Medicaid
drug coverage.
States also will have to decide whether or how to
fill in any coverage gaps left by the federal law, which may not provide
as rich or comprehensive a benefit as state plans. But if states choose
to supplement the federal prescription drug benefit, they must pay for
it with state-only funds.
Donna Boswell, a health-care lawyer with
Hogan & Hartson L.L.P. in Washington, D.C., said state lawmakers
need to focus this year on the Medicare changes so that they don't grant
extra drug benefits in 2006 that they can't pay for out of state
dollars.
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