ODDC- Mississippi’s Flawed Medicaid Waiver Proposal

ODDC Banner

TITLE:Mississippi’s Flawed Medicaid Waiver Proposal- Waiver provides no benefit to the people the state is planning to cut off Medicaid and it could lead to additional Medicaid cuts later, August 11, 2004; and the press release from the Governor’s Office, Medicaid Waivers Granted Governor Haley Barbour Says Action Should ‘Wipe Away Fears,’ Give Reason To Continue Reform, September 9, 2004
Author: Leighton Ku, Center on Budget and Policy Priorities (Katherine Cargill-Willis 9/22/04)

Kathy’s Note: This report summarizes two articles that have opposing views; the Center on Budget and Policy Priorities and the Governor’s Office. This subject appears to be explosive and both sides are very passionate.

Background: On September 15, 2004 Mississippi was planning to stop providing Medicaid health coverage to 65,000 Poverty-Level Aged and Disabled (PLAD). The policy, proposed by Governor Haley Barbour (R) and approved by the legislature, requires the state to seek a waiver to provide limited Medicaid coverage to some of the people who will lose coverage. The bill, HB 1434, is the biggest cut in Medicaid eligibility for senior citizens or people with disabilities ever made by any state. Many of those affected live on fixed incomes of $500-$700 per month and need medications that may cost $300-$1,200 per month, as well as other medical care. Since Mississippi has the highest federal Medicaid matching rate in the nation, earning more than $3 in federal matching funds for every dollar the state spends on Medicaid, the law would eliminate Medicaid coverage for thousands of Mississippians and will cost the state tens of millions of dollars in matching federal funds. Most people affected by the law are “dual eligibles,” both Medicaid and Medicare covers them. If they lose Medicaid, they will remain covered by Medicare, but Medicare does not cover several things that Medicare does; such as reduced coverage for prescription drugs and no coverage for transportation; case management; or long-term care. Although the state applied for a Medicaid waiver, data from the application indicates that the beneficiaries who will lose Medicaid and not be covered by the waiver are expected to have average medication costs exceeding $3,000 between July 1, 2004 and December 31, 2005; their Medicare drug subsidies will cover less than half of those costs. The state submitted its waiver request on June 23rd 2004 and covers two groups:

For people who are losing the Medicaid and do not have Medicare coverage, the waiver would provide limited benefits after their current Medicaid coverage expires on September 15, 2004. The state estimates there are about 5,000 people in this category, and its waiver would limit enrollment to 5,000. The state proposes that the waiver last for five years.
For people who do not have Medicare coverage but have certain specific diseases, including cancer, organ-transplant patients and patients with certain mental illnesses who receive anti-psychotic medications, the waiver would provide limited benefits. The waiver would expire January 1, 2006 and limit enrollment for such individuals to 12,000.

Waiver Risks: Although the governor has stated that the state’s waiver would enable the state to continue providing coverage to the most vulnerable people the author of the article states that the waiver would be an inadequate substitute for the coverage that beneficiaries now receive and creates serious risks for PLAD who will remain on Medicaid.

Almost three-quarters (72%) of PLAD beneficiaries, 47,000 seniors and people with disabilities would be excluded from the waiver, even though all of them have low incomes and many have serious medical problems that will become more severe and debilitating without continued medication and appropriate medical care; such as home health services to keep seniors and people with disabilities from entering nursing homes.
The PLAD beneficiaries who would be included in the waiver will receive fewer benefits than are now available under Medicaid. Services that the waiver specifically does not cover include: long-term services and supports; therapies; eyeglasses; dental care; podiatric services; and chiropractic care. These services (aside from long-term care) are relatively inexpensive and may help prevent more costly care from being needed later.

Waiver Could Lead to Cutbacks for Other Seniors and People with Disabilities: The federal government will not grant the type of waiver Mississippi has requested unless it has determined that the waiver will not cost the federal government more than it would spend without the waiver. This “budget-neutrality” requirement means that any additional federal funds used to pay for services covered by the waiver must be offset by reductions in other Medicaid expenditures. Mississippi’s waiver request must begin by assuming that Medicaid coverage has already disappeared for the state’s 65,000 PLAD beneficiaries. As a result, while in reality the waiver would mark only a partial restoration of a much larger cut in benefits, the waiver application must treat the waiver as an expansion of coverage for the 17,000 people to whom it applies, since otherwise they would not receive any Medicaid benefits. To ensure that the Mississippi waiver is budget neutral, the federal government will likely impose a cap on federal Medicaid expenditures for all elderly and disabled Medicaid beneficiaries in the state, as they did with several other states when they applied for waivers. If such a cap is imposed on Mississippi, the state will have to offset any additional federal costs associated with the waiver by reducing other Medicaid expenditures for senior citizens and people with disabilities, by lowering payment rates to physicians, hospitals, or other health care providers and imposing new limits on Medicaid hospital, physician, or mental health services. The application states that the waiver will require at least $340 million in additional federal funds over five years, to demonstrate budget neutrality and the state must show it will save at least this much from other Medicaid expenditures. The state argues that the partial Medicaid coverage proposed in the waiver would save money by keeping many of the people out of nursing homes and avoiding the costs for nursing home care for these people. Previously, the federal government chose to enforce the budget neutrality requirement by imposing a cap on federal funding for all elderly Medicaid beneficiaries in other states. If the federal government imposes a cap on total federal funding to Medicaid services to elderly and disabled beneficiaries in Mississippi, and if the state’s budget assumptions regarding the magnitude of savings the waiver will produce prove to be unrealistic, the state will be forced to institute substantial cutbacks in Medicaid for senior citizens and people with disabilities.

Other Concerns: If the waiver is approved, there could be some delays in implementing it, since modifying Medicaid benefits for the 17,000 people covered, notifying beneficiaries, and establishing other administrative procedures will take time. Such delays could cause people to go without coverage for a period of time. Finally, there has been no public discussion or review of the terms of the waiver.

Press Release from Mississippi’s Governor’s Office - September 9, 2004: CMS granted the waiver allowing more than 17,000 Mississippi Medicaid recipients to remain on the program. The Division of Medicaid will immediately send letters to these 17,000 recipients to notify them of their continued health care coverage.

According to the Governor, “More than 17,000 beneficiaries will not have any significant changes to their health care coverage. This news should wipe away their fears, and give us another reason to move forward with the implementation of the Medicaid Reform Act.”

According to Dr. Warren Jones, Executive Director of the Division of Medicaid, “Although the initial projection for the number impacted by these waivers was 17,000, we are to able to increase that number to above 17,000, if necessary, under the rules of this action.” The Medicaid population covered by the waiver includes:

Approximately 5,000 who are not eligible for Medicare because they are either not yet 65 years of age, they have no work history, or they are in the midst of a two-year waiting period required by federal law when applying for Medicare; and
Approximately 12,000 who are either end-stage renal disease patients on dialysis; cancer patients on chemotherapy, or organ transplant recipients on anti-rejection drugs. Also included in this waiver are mentally ill patients on anti-psychotic medications.

The remaining 48,000 PLADs recipients, who are shifting to the federal Medicare program, are eligible to get their drugs from Patient Assistant Programs. These programs provide over 1350 drugs at no cost or no more than $15 per month. In addition, they can sign up for a Medicare-Approved Drug Discount Card that will provide discounts on prescription drugs they cannot get for free. Beneficiaries also get $1200 to help pay for any prescription drugs they cannot get for free. Governor Haley Barbour strongly encouraged all eligible Mississippians to sign up for the Medicare-Approved Drug Discount Card, not just PLADs recipients. To date, the Division of Medicaid has contacted 40,000 of the 48,000 PLADs beneficiaries to help them enroll in alternative health care coverage.

Return to the top of the page.