Utah waiver gives caution for Medicaid changes wrung from coverage reductions
Utah waiver gives caution for Medicaid changes wrung from coverage reductions
Utah's experience with a Section 1115 waiver allowing expansion of primary care to adults not previously eligible for Medicaid using savings from coverage reductions for previously eligible parents provides a cautionary note on such strategies, according to a Kaiser Commission on Medicaid and the Uninsured survey.
"Officials need to be realistic about the potential for achieving Medicaid cost savings without harming enrollees, who are poorer and sicker than the privately insured population and often need broad benefits and cost protections," says Kaiser Commission senior policy analyst Samantha Artiga. "Recent analysis indicates that Medicaid is already an efficient program when compared with private coverage. Efforts to stretch the Medicaid dollar should guard against the unintended consequences of passing the buck to beneficiaries, who are among society's most vulnerable citizens."
Utah got its waiver approval in 2002 and the Kaiser survey was conducted in 2004. The recently enacted Deficit Reduction Act of 2005 gives states new authority to limit benefits and impose cost on beneficiaries, expanding the administration's efforts to give states increased discretion over program changes. Ms. Artiga tells State Health Watch that while there may have been some small program adjustments since the survey, there have been no major changes that would affect the validity of the survey report.
Reportedly a major impetus for the Utah redesign was the desire of then-governor Mike Leavitt (now Secretary of Health and Human Services in the Bush administration's second term) to expand coverage for low-income working adults, with the goal of providing preventive and primary care and eventually preventing and reducing illness and reducing uncompensated care in the state's health care system.
The federal government's active encouragement of waivers was seen as an opportunity to pursue the coverage initiative, Ms. Artiga says, and a second factor was that costs in the Utah Medical Assistance Program, which provided care for acute and life-threatening conditions to very poor adults not eligible for Medicaid, had exceeded expectations for several years, and there was increasing legislative pressure to reduce those costs.
Ms. Artiga notes that, because of a desire to move quickly, the waiver was designed primarily by the state with little input from other stakeholders. Some state officials told Kaiser they were faced with the trade-off of covering fewer people with full benefits vs. covering more people with limited benefits, and that they chose the route of providing less to more.
Advocates expressed concerns about increased demands on primary care providers and the waiver's absence of a formalized system for providing Primary Care Network (the new coverage entity) enrollees inpatient hospital and specialty care. Because the Primary Care Network coverage package did not include hospital and specialty care, the state made an informal agreement with the state's hospitals to provide a set amount of charity care to enrollees and made Department of Health case managers available to help enrollees obtain donated specialty care. However, enrollees were to be held responsible for care they obtained that was not covered through donations.
Advocates and providers told the commission that while the notion was well intentioned, it did not guarantee enrollees access to necessary and timely specialty care and did not provide good continuity of care, particularly for beneficiaries outside of Salt Lake City. It also was noted that some primary care providers stretched the scope of their services by providing care they would usually refer to a specialist so the care would be covered by the Primary Care Network.
Eligiblity rules
Survey respondents said enrollees appeared able to obtain hospital care, but expressed concern about the sustainability of the donated hospital care system since hospitals reported providing care in excess of the agreed-upon amount and an inequitable distribution of the donated care across all the state's hospitals.
To be eligible for the Primary Care Network, adults had to have income below 150% of poverty, be uninsured, and not have access to employer-sponsored insurance. Eligible individuals were required to pay an enrollment fee initially set at $50, and there were copayments ranging from $5 to $30 depending on the service, and up to 10% coinsurance for some services.
Utah offset costs for the Primary Care Network expansion by reducing benefits and increasing cost-sharing for previously eligible parents, including very poor parents with income below 54% of poverty, parents who recently left TANF because of employment, and parents with high medical expenses who spent-down to qualify for Medicaid. The state referred to this program as nontraditional Medicaid.
The Kaiser survey found that Primary Care Network adults were primarily poor (67%), and nearly 60% were parents with dependent children. Enrollees represented a broad mix of ages, with more than half being older than 40. More than a third reported being in fair to poor health, and almost two-thirds said they suffered from chronic or ongoing health conditions, and nearly one-third reported a disability or condition that regularly prevented them from engaging in normal activities.
More than half the enrollees reported they were employed at least part time, but the overwhelming majority said they were not offered health insurance through an employer.
Nearly 20% of the enrollees said the enrollment fee was somewhat or very unaffordable, and a quarter received help paying the fee. Almost half said that paying the fee disrupted their monthly budget.
Consistent with the high prevalence of health conditions reported on the survey, respondents from both the Primary Care Network and nontraditional Medicaid reported using a wide range of health care services. Nearly all Primary Care Network enrollees reported having had a physician visit in the past year, more than half reported a dental visit, nearly one-third reported an emergency department visit, and more than a quarter reported an eye exam — all services covered at least in part. Respondents also reported using uncovered services such as mental health care and inpatient hospital care.
More than 90% of nontraditional Medicaid patients said they had visited a doctor in the past year, and almost half reported an emergency department visit. Some 40% said they had visited a dentist, nearly one-third reported an eye exam, and 20% said they were admitted to the hospital.
"It appears that most of the surveyed enrollees in both groups — 76% of Primary Care Network enrollees and 67% of nontraditional Medicaid enrollees — used or needed services beyond the scope of their coverage," Ms. Artiga said.
Among Primary Care Network enrollees, 40% said medical expenses had had a major impact on their family, and a similar number reported medical expenses of more than $250 during the past 12 months. Nearly one-third had been contacted by a collection agency in the past year for unpaid medical bills. Many also reported problems paying for basic needs, especially those who had difficulty paying for medical expenses.
Fewer nontraditional Medicaid parents reported that medical bills had a major impact on their family or medical expenses exceeding $250 in the previous 12 months. Many of those enrollees reported difficulty paying for basic needs, however. And many also reported difficult financial experiences in the previous 12 months.
Ms. Artiga says Utah's experience shows strong demand and a high level of need for health insurance among low-income uninsured adults. Although many enrollees were working at least part time, the vast majority did not have access to employer coverage and the Primary Care Network filled an important void for them. However, the need for coverage exceeded what the program's funding could support. The limited financing available from the nontraditional Medicaid reductions for parents resulted in an enrollment cap that constrained the Primary Care Network's expansion reach. She notes that in the past, other states have funded broader Medicaid expansions by drawing on larger sources of funds such as managed care savings or unspent disproportionate share hospital funds, and tells SHW that such large financing sources appear necessary for larger expansions with broader coverage.
Possible renewal changes
State officials announced in the spring they were planning to request the Department of Health and Human Services extend the Primary Care Network past 2007 and planned to request some program changes based on discussions with doctors, hospitals, clinics, and advocates for low-income individuals.
Among the proposed changes are development of a preferred drug list, addition of urgent care coverage with a $20 copayment, possible elimination of emergency department coverage to free funding for other services such as specialty care, an increase in emergency department copayments if the coverage is retained, and an increase in the out-of-pocket maximum from $1,000 to $1,500.
Changes proposed for nontraditional Medicaid include increasing the pharmacy copayment from $2 to $3 and seeking a federal match for physician fees that now are paid only from state funds.
Ms. Artiga's survey report is in the March/April Health Affairs. Other reports on the Utah experience are available from the Kaiser Commission on Medicaid and the Uninsured on-line at www.kff.org. E-mail Ms. Artiga at [email protected] or telephone (202) 347-5270.
Utah's experience with a Section 1115 waiver allowing expansion of primary care to adults not previously eligible for Medicaid using savings from coverage reductions for previously eligible parents provides a cautionary note on such strategies.Subscribe Now for Access
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