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Senate Joins House to Pass Deficit Bill Cutting Medicare, Medicaid

AARP and others join in criticism of cuts in senior programs

Dec. 21, 2005 – Vice President Dick Cheney stepped in today to break a 50-50 vote in the Senate for the passage of the deficit reduction act that was passed by the House on Monday. It is aimed at reducing the deficit by $39.7 billion – much of this coming from cuts in Medicare, Medicaid and the student loan program. The action drew immediate criticism from AARP and others.

"This is a sad day in history for the 109th Congress and all American families. Instead of standing up for those who are most vulnerable, today Congress voted to protect the interests of the pharmaceutical and managed care industries," said AARP CEO William D. Novelli.

"Throughout this entire debate AARP acknowledged the need to improve Medicaid. We tried hard to ensure a responsible policy that achieved the goals of preventing abuse, but still protected those who innocently helped grandchildren and or gave to charities. It is shameful that the final budget contains measures that penalize innocent people, threaten their ability to keep their homes, and shows a preference for protecting the powerful at the expense of millions of Americans," Novelli said.

"This budget represents bad policy and AARP will now work to explain the full impact of this vote to its more than 36 million members."

The legislation will extend Medicaid's "lookback" period for all asset transfers before qualifying for Medicaid coverage of nursing home care 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, according to a report at ElderLawAnswers.com.

The legislation provisions impacting senior citizens will also:

  ● Establish new rules for the treatment of annuities, including a requirement that the state be named as the remainder beneficiary.

  ● 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.

  ● Require all states to apply the so-called “income-first” rule to community spouses who appeal for an increased resource allowance based on their need for more funds invested to meet their minimum income requirements.

  ● Extend long-term care partnership programs to any state.

  ● Freeze home health care payments under Medicare at current levels for a year

More criticism came from Sue Swenson, executive director of The Arc of the United States and Stephen Bennett, president and CEO of United Cerebral Palsy, two of the nation's leading non-profit organizations advocating for people with disabilities., They issued the following statement.

"Nationwide, people with disabilities should be saddened to know that their United States Congress considers their health and well- being a less than worthy investment. The Arc and UCP can truthfully say this could be the darkest day for people with disabilities and the future looks even bleaker.

"Congress has given State Governors unprecedented abilities to balance their state budgets on the backs of the neediest. Most low- income people with disabilities rely on Medicaid for their health and long-term care. Governors can raise co-payments on Medicaid's prescription medicines and therapies for millions of beneficiaries with disabilities, forcing them to choose between life-saving services or rent, clothes and food. People with disabilities who have no money can be denied the critical prescription drugs and long- term care they need to survive if they cannot pay these co-payments required by the new law.

"Children born with mental retardation, cerebral palsy, and related developmental disabilities will suffer without Medicaid's Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program, which can prevent and minimize disability through early, regular health screenings and treatments. In addition, new onerous work requirements for TANF recipients will force many parents of children with disabilities further into poverty.

"This Budget Reconciliation is unlike any other in Congress' history and shows a true callousness for our nation's poorest and most vulnerable populations. Passage of this law represents a huge set back for services and supports for our constituents and their families. They deserve better."

Even industry groups were disappointed. The American Pharmacists Association, (APhA) issued a statement saying it is extremely disappointed with changes to the Medicaid program contained in the budget conference report passed by the House Monday and the Senate today.

"The cuts to pharmacy reimbursement will likely have a disastrous impact on the profession's ability to provide necessary care to Medicaid patients," the APha statement said.

"APhA has repeatedly warned Members of Congress that pharmacy, especially community pharmacies, would bear a disproportionate share of the burden, should the proposed Medicaid cuts be enacted. The conference report does little to alleviate this concern; in addition, it fails to address the consequences of Medicaid patients' restricted access to pharmacy services.

"APhA is aware of the widely-held myth that the Medicaid program overpays for prescription drugs. Pharmacists, however, have long worked with states to keep Medicaid drug costs down by dispensing generic alternatives where appropriate, by protecting against fraud, and most importantly, by helping Medicaid patients make the best use of their medications so that the medication investment yields health benefits.

"Despite these efforts to help states save money, pharmacy reimbursement has steadily decreased over time. Provisions in the conference report will so adversely affect reimbursement rates that pharmacies will be faced with a very stark decision-Turn away Medicaid patients or remain in business. APhA is also dismayed that the new payment formula, through an absence of incentives, could actually discourage the dispensing of generic drugs, a significant source of Medicaid savings.

"We sincerely regret the actions Congress has taken this year, and hope to work with lawmakers to alleviate the untenable shifting of this burden before it causes lasting harm and limits patient access to necessary medications and pharmacist services."

Five Republican Senators-- Susan M. Collins and Olympia J. Snowe of Maine, Gordon Smith of Oregon, Mike DeWine of Ohio and Lincoln D. Chafee of Rhode Island -- voted against the bill, as did James M. Jeffords, an independent from Vermont, and all Senate Democrats.

Due to changes in the Senate by Democrats, the House will have to vote on the bill again before it goes to the President, but the House has recessed for the holidays.

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.

For the report in ElderLawAnswers.com – click here.

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