cost sharing

CMS DRA Guidance To States: Premiums and Cost-Sharing Provisions

Sections 6041, 6042, and 6043 of the Deficit Reductions Act of 2005 (DRA) provide state Medicaid programs with options to impose premiums and cost sharing requirements on certain Medicaid recipients. These sections of the DRA created a new section 1916A in the Social Security Act (SSA) which establishes options for alternative premiums and cost sharing which are not subject to the limitations under section 1916 of the SSA, including cost sharing for non-preferred prescription drugs, and cost sharing for non-emergency use of a hospital emergency room. For individuals in families with an income between 100 percent and 150 percent of the Federal Poverty Level (FPL) cost-sharing is limited to five percent of the total family income and no premium charges are permitted. Imposing premiums on individuals in families with an income exceeding 150 percent of the FPL is allowed but limited to five percent of the total family income. Cost-sharing for those in this category may not exceed 20 percent of the cost of the item or service provided.

Limitations

No premium can be imposed on:

children under age 18 and children, regardless of age receiving adoption assistance or foster care assistance,
pregnant women,
individuals receiving hospice care,
any individual who is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, if the individual is required, as a condition of receiving assistance, to spend for costs of medical care all but a minimal amount of their income required for personal needs.

No cost-sharing can be imposed:

on children under age 18 and children, regardless of age receiving adoption assistance or foster care assistance,
for preventive services provided to children under age 18, regardless of family income,
services furnished to pregnant women, if the services are pregnancy-related or related to other medical conditions that may complicate the pregnancy,
services provided to individuals receiving hospice care,
services provided to any individual who is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, if the individual is required, as a condition of receiving assistance, to spend for costs of medical care all but a minimal amount of their income required for personal needs,
emergency services, and
family planning services and supplies.

Exempts women who qualify for Medicaid under the breast or cervical cancer eligibility group, and children in foster care who receive child welfare services.

Special rules exist for cost-sharing for prescription drugs as described in Section 6042. Section 6043 addresses state options to impose increased cost-sharing on state-specified groups for non-emergency services provided in an emergency room (ER), when certain conditions are met. Non-emergency services has been defined as any care or services furnished in an ER that the physician determines does not constitute an appropriate medical screening examination or stabilizing examination and treatment screening required for hospitals under Medicare law (regarding examination and treatment for emergency medical conditions and women in labor).

The Congressional Budget Office (CBO) has estimated that these provisions could reduce Medicaid outlays by $3.2 billion over the 2006-2010 period and by $16.0 billion over the 2006-2015 period. On June 16th the Centers for Medicare and Medicaid Services (CMS) provided guidance to state Medicaid programs on the implementation of these new options.

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For further information, please call NCSL staff Joy Johnson Wilson, Health Policy Director at 202-624-8689 or Rachel Morgan RN, BSN, Senior Health Policy Specialist at 202-624-3569.