Affordable Care Act Proposed Regulations Give State Medicaid Programs More Flexibility on Setting Cost-Sharing Amounts

Affordable Care Act Proposed Regulations Give State Medicaid Programs More Flexibility on Setting Cost-Sharing Amounts

On January 14, Health and Human Services (HHS) Secretary Kathleen Sebelius released a proposed rule related to the Medicaid expansion brought on by the Affordable Care Act. The proposed rule gives states more flexibility when operating their Medicaid programs, particularly around cost-sharing. Below are excerpts from a brief summary on this rule prepared by the Administration on Community Living (ACL).

HHS encourages all people to review and submit comments on the proposed rule before the deadline at 5 pm EST on February 13, 2013. You can submit your comments electronically at www.regulations.gov. Please refer to file code: CMS-2334-P.

Summary of Proposed Medicaid Cost-Sharing:

This rule proposes to update and simplify policies around Medicaid premiums and cost-sharing requirements to promote the most effective use of services and to assist states in identifying cost-sharing flexibilities.  Specifically, the Center for Medicare and Medicaid Services (CMS) proposes to update the maximum allowable cost-sharing levels and to consolidate redundant provisions in order to create one streamlined set of rules for all Medicaid premiums and cost-sharing.  Additionally, the rule proposes to allow states to establish higher cost-sharing for non-preferred drugs, and to impose higher cost-sharing for non-emergency use of the emergency department.

Relevant Pages of the Rule:

  • Preamble: pages 223-231
  • Regulation text: 385-396

Outpatient Cost-Sharing (section 447.52) (not including pharmacy or emergency department services):

CMS proposes that States may charge up to $4.00 per outpatient visit for people with incomes under 100% of the Federal Poverty Level (FPL). CMS proposes that States may charge up to 10% of the cost of services or people with incomes above 100% to 150% of the federal poverty level. CMS specifically seeks comments on whether to define cost-sharing limits differently for people receiving Home and Community Based Services and Supports.

Considerations include the definition of long term supports and services and appropriate units of service for which cost-sharing would be charged, etc.

Inpatient Cost-Sharing (section 447.52):

CMS proposes that States may charge up to 50% of cost of the 1st day of an inpatient visit for people with incomes below 100% of the federal poverty level. CMS is considering alternatives for the maximum allowable cost-sharing related to an inpatient stay because this is a relatively high cost for very low income people and not a service that consumers have the ability to avoid or prevent.

Options under consideration include the $4 maximum applied to outpatient services, $50, or $100, which would encompass the majority of hospital cost-sharing currently in effect.

Non-Emergency Use of the Emergency Department (section 447.54):

CMS proposes allowing cost-sharing of up to $8 for non-emergency use of the emergency department for people with incomes from 100%  to 150% of FPL.

For individuals with family income above 150 percent of the FPL, per section 1916A(e) of the Act, there is no limit on the cost-sharing that may be imposed for non-emergency use of the ED. If an emergency condition does not exist the hospital must provide screening and referral to ensure that beneficiaries have appropriate access to other sources of care, before cost-sharing is imposed.

Cost-Sharing for Drugs (§447.53):

CMS proposes to allow states to implement cost-sharing of up to $8 for non-preferred drugs, and $4 for each preferred drug for individuals with income equal to or less than 150% of the federal poverty level. This in addition to any other cost-sharing requirements. However, if a doctor specifies that a non-preferred medication is in the best interests of the consumer, the consumer will be able to receive the medication at the preferred drug rate.

For individuals with family income above 150 percent of the FPL cost-sharing for non-preferred drugs may not exceed 20 percent of the cost the agency pays for the drug. Please note: CMS’ above stated request for input about the impact of the increased cost-sharing on persons with disabilities also applies to the prescription drug provisions.

Medicaid Premiums: Relevant pages of the rule:

  • Preamble: pages 231- 235
  • Regulation text: pages 390-396

Medically Needy Premiums (section §447.55(a)(5)):

CMS proposes to revise requirements related to premiums imposed on medically needy individuals whose income is under 150 percent of the FPL by providing states with the flexibility to determine their own sliding scale for establishing premiums for the medically needy up to maximum of $20 instead of the $19 in current regulation.

Premiums for People Receiving Home and Community Based Services (section §447.56(a)(1)(v)):

CMS proposes to allow a state option to include individuals receiving HCBS to be exempt from premiums.  Since these individuals are only allowed to keep a personal needs allowance, similar to those residing in an institution, we propose to allow states to exempt these individuals from cost-sharing in the same manner as those residing in an institution in accordance with the comparability requirements under section 1902(a)(19) of the Act.

Premiums for Indians (section 447.56(a)(1)(vii):

CMS proposes that those Indians who are currently receiving or have ever received an item or service furnished by the Indian Health Service, an Indian Tribe, Tribal Organization, or Urban Indian Organization (I/T/U) or through referral under contract health services are exempt from all cost-sharing.

See a recent press release on the proposed rule for more information.

Karen Fletcher
Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.

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