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Medicare, Medicaid Take Hits from House as Budget
Bill Goes to Senate Today
Surprise cut in home health care spending by Medicare
Dec. 19, 2005 – The Senate is expected to vote
today on the Budget Reconciliation Act passed by the House in the early
morning hours that is estimated to reduce the Federal Budget by just
under $40 billion. Significant cuts will be made in Medicaid and
Medicare under the bill.
House Budget Bill Unfairly Punishes Elderly,
Leading elder law Website warns that House bill
cutting Medicaid would drastically change asset transfer rules,
punishing older Americans
Nov. 29, 2005 - House and Senate conferees will
soon sit down to reconcile two very different budget bills that cut
billions from the Medicaid
program. The House bill, H.R. 4241, contains provisions that will punish
unwitting elders who have given their families modest gifts, and will
force some middle-income elderly to sell their homes and spend down the
proceeds, warns ElderLawAnswers (www.elderlawanswers.com),
the nation's leading elder law Web site.
House Joins Senate in Passing Budget Cuts Including
Nov. 18, 2005 – After embarrassing failures by the
Republican leadership in the House of Representatives to pass a bill to
cut the federal budget, they finally passed the finish line early this
morning with a 217 to 215 vote victory. The House bill has major
differences from the bill passed by the Senate yesterday 64-33,
including cuts in Medicaid, which will impact millions of senior
citizens. President Bush has said he will veto the Senate bill, should
its provision for additional taxes on oil companies be part of the
compromise. Read more...
More Senior Politics
A major surprise is a one year freeze on payments
to home health care providers, which many see as a significant blow to
this industry that is popular with senior citizens. This had not been in
earlier budget reduction proposals. Observers believe the freeze was due
to a recent Medicare Payment Advisory Commission finding that home
health Medicare profit margins are currently in the 16 to 17% range.
It was also surprising because many states and
other lawmakers have been developing new ways to encourage home health
care, saying it is less costly to government than nursing homes.
The largest cut in Medicare will be a reduction of
funding for the private Health Maintenance Organizations that was
established in the 2003 Medicare bill. These plans are part of the
Medicare Advantage option and the 2003 legislation was designed to
encourage them to participate in Medicare, working on the assumption
that these plans save money for Medicare over traditional Medicare
Total Medicare cuts are anticipated to reduce the
budget about $8 billion.
The House increased spending on physicians,
however, by cancelling a planned 4.4 percent reduction in payments to
doctors in the Medicare plan. This is expected to increase costs of $7.3
billion. The budget calls for Medicare physician payments to be frozen
at FY 2005 levels.
Medicaid will be cut about $5 billion, with most of
that coming on tighter restrictions of the rules for seniors to transfer
assets out of their name – primarily to children – in order to qualify
for Medicaid assistance with nursing home costs. (See more on asset
transfers below this report.)
The bill passed the House by a 212-206 vote and the
Senate must act before the holiday recess.
"This conference report on the Deficit Reduction
Act makes government run better by making some commonsense reforms,"
said House Speaker Dennis Hastert (R-Ill.).
"It includes market based Medicaid reforms that
both Republican and Democratic governors - who pay 43 percent of the
program's cost - have been begging for. One of those reforms includes
starting a demonstration project to give states the flexibility to offer
Health Opportunity Accounts for Medicaid beneficiaries. We are also
giving Governors the flexibility they need to better serve their
conservatives, chagrined that their party has been at the helm
during a surge in government spending and massive federal
deficits, are leading the charge for the first budget cuts in
House Democratic Leader Nancy Pelosi said, " It is
shameful that this Congress will adjourn passing this immoral budget,
meeting the greed of the special interest friends of the Republicans
instead of the needs of the American people."
"With this budget, do we say, 'God bless you' when
we leave here without extending the time our seniors need to understand
the befuddling prescription drug plans that have been handed to them
with a time limit? Democrats have a better idea, extending the time for
seniors to enroll and lowering the cost of prescription drugs. But no,
the pharmaceutical industry goose is getting fat off this Congress at
the expense of America's seniors," Pelosi added.
Although the bill will reach the Senate vote today,
the vote may be later in the week. Some moderate Republican senators
have been "rankled" by proposals to increase Medicaid beneficiaries'
costs, CQ Today reports. For example, Sen. Gordon Smith
(R-Ore.) and six other moderate Republicans in a letter last week asked
Frist to avoid changes that would increase Medicaid beneficiaries'
costs. According to CQ Today, it is not clear whether those
senators will vote for the spending cut package (Schuler, CQ Today,
More on the Medicaid Asset Transfer Provisions
The bill places major new restrictions on the
ability of the elderly to transfer assets before qualifying for Medicaid
coverage of nursing home care. The bill, a compromise between House and
Senate budget bills hammered out by Republican leaders, now must be
approved by the Senate, an action that could come quickly as lawmakers
rush to leave town for the holidays.
The bill retains changes in the transfer rules that
were part of the earlier House bill. It would extend Medicaid's "lookback"
period for all asset transfers from three to five years and change the
start of the penalty period for transferred assets from the date of
transfer to "the date on which the individual is eligible for medical
assistance under the State plan and is receiving services . . . but for
the application of the penalty period, whichever is later. . . ". The
bill also would make any individual with home equity above $750,000
ineligible for Medicaid nursing home care.
The House bill would also:
● Establish new rules for the treatment of
annuities, including a requirement that the state be named as the
● Require Medicaid applicants to provide "full
information . . . concerning any transaction involving the transfer or
disposal of assets during the previous period of 60 months, if the
transaction exceeded $100,000, without regard to whether the transfer or
disposal was for fair market value."
● Allow Continuing Care Retirement Communities
(CCRCs) to require residents to spend down their declared resources
before applying for medical assistance.
● Set forth rules under which an individual's
CCRC entrance fee is considered an available resource.
● Extend long-term care partnership programs to
Kirsten Sloan, chief health lobbyist for AARP,
said, "AARP strongly opposes the current conference agreement. This is
irresponsible policy and will harm millions of low-income Medicaid
beneficiaries, millions of older persons who need long-term care and
unfairly increases Part B premiums for all Medicare beneficiaries."
For the full text of the Deficit Reduction Act of
2005, click on:
http://thomas.loc.gov/cgi-bin/query/z?c109:S.1932: Click on
the third version of the bill listed, then scroll down to Title III,
Chapter 2, for the asset transfer rule changes.
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