Chapter 2. Medicaid, Managed Care, and People with Disabilities

Many Medicaid enrollees with disabilities are difficult and costly to serve, primarily because of the wide-ranging needs within the target population; hence the importance of coordinating and synchronizing services and supports across multiple service delivery systems. The fact that Medicaid recipients with disabilities frequently require both health care services and long-term supports adds to the complexity of the service delivery equation, since the latter services, historically, have been provided through networks that operate outside the health care delivery system.

Disability-Based Medicaid Eligibility

For eligibility and spending purposes, enrollees are classified as “disabled” when they are under 65 years of age and qualify for Medicaid benefits on the basis of a disability. Of the 58.8 million Medicaid enrollees in FY 2008, 9.1 million, or 15.5 percent, were classified as disabled, including approximately 1.4 million children under age 19. Approximately 3.5 million of these people were also eligible for Medicare benefits.[i]

Categorical Eligibility

Most enrollees with disabilities qualify for Medicaid benefits based on their SSI eligibility. SSI recipients are automatically eligible for such benefits in 39 states and the District of Columbia. The remaining 11 states use modified, pre-1972 definitions of disability.[ii] To qualify for SSI benefits, an adult must have a medically determinable physical or mental impairment (or multiple impairments) that prevent him/her from engaging in substantial gainful activity (Sec. 1614(a)(3)(A) of the Social Security Act). The impairment must be expected to last at least 12 months. A person earning more than a specified amount (minus impairment-related work expenses) is considered to be engaging in substantial gainful activity (SGA) and is therefore subject to the loss of SSI benefits unless certain benefit retention provisions apply (see discussion in appendix G).

Children under age 18 meet SSI’s definition of disability if they have a medically determinable physical or mental impairment which results in “marked and severe limitations” (Sec. 1614(a)(3)(C)(i) of the Social Security Act). As in the case of adult beneficiaries, a child’s impairment must be expected to last 12 months or longer. A child may be found eligible at birth or later. When a childhood recipient reaches age 18, his/her continued eligibility for SSI benefits is reevaluated using adult disability criteria.

Optional Eligibility

States may elect to extend Medicaid benefits to people with incomes above standard financial eligibility levels if they are medically needy. Under this option, people can become eligible for Medicaid once a certain level of medical expenses is incurred (referred to as a “spend-down”). In 2010, 33 states offered services to at least some medically needy recipients. The income cutoff level under state medically needy programs ranges widely, from 11 percent of the federal poverty level (FPL) in Louisiana to 110 percent the FPL in Vermont.[iii]

For people with disabilities residing in a Medicaid-certified long-term care institution[iv] or at risk of placement in such an institution, states may establish special income eligibility levels not exceeding 300 percent of the SSI payment standard. People qualifying for benefits under a special income standard must have resources that do not exceed the state’s Medicaid eligibility limits and must pay a portion of the cost of services in accordance with state-established rules. Originally established to allow nursing home residents with higher incomes to qualify for Medicaid benefits, the special income option was extended to community-based services when the HCB waiver authority was authorized in 1981.[v] In 2010, 43 states and the District of Columbia had established special income eligibility levels for recipients of institutional and home and community-based services (HCBS) under their Medicaid state plans. Income eligibility was set at the maximum level (300% of the SSI payment standard) in the vast majority of states (39 plus the District of Columbia out of 43).[vi]

States also may elect to disregard family income and resources in determining the eligibility of children under 19 years of age who have a severe, chronic disability. Under this so-called Katie Beckett option, a child must meet SSI disability standards, be in need of institutional care, and be capable of benefiting from alternative home-based care and services.

In recent years, Congress also has extended Medicaid eligibility to several categories of low-income workers with disabilities. Appendix G summarizes these employment-related Medicaid coverage options.

Despite the expansion of Medicaid eligibility to additional subpopulations of people with disabilities over the past 30 years, it is important to point out that millions of Americans with disabilities do not qualify for benefits furnished through the Medicaid program, because of either a nonqualifying disability or excess income and/or resources. Of the 36 million Americans with functional disabilities in 2010, approximately one-fourth were Medicaid eligible.[vii]

Covered Services

The Medicaid program serves beneficiaries with diverse health and social support needs, including children and adults with severe, chronic disabilities. Consequently, the program provides a comprehensive range of acute and long-term care benefits that reach considerably beyond typical commercial health insurance plans. These services include support services designed to complement medical care and help people with disabilities to achieve and maintain their independence.

States are required to offer certain “mandatory services” to Medicaid-eligible people. Mandatory services include physician and hospital services, laboratory and diagnostic tests, and nursing facility (NF) services. In addition, states may elect to provide an extensive list of “optional services” under their Medicaid state plans, such as prescription medications, personal care services, and HCBS. The availability of optional services varies significantly from state to state, and the choices that state policymakers make are particularly important to Medicaid enrollees with disabilities. Access to proper prescription drugs, for example, is vitally important in people with acute and chronic physical and mental illnesses. And access to personal/attendant care services is critical for people who require assistance in performing activities of daily living.

Population Characteristics

During FY 2008, 9.1 million people under 65 years of age were enrolled in the Medicaid program on the basis of disability. The eligibility of approximately two-thirds of these people was linked to the receipt of SSI benefits, with the eligibility of the remaining enrollees based on a variety of non-SSI criteria (see table 2-A).

Table 2-A. Medicaid Enrollees on the Basis of Disability
by Eligibility and Age Group, FY 2008

 

No. Eligible
(in millions)

Medicaid Eligibility

Age Group

SSI
(%)

Non-SSI
(%)

Under 19
(%)

19–64
(%)

Total number of eligibles

9.1

65.8

34.2

15.7

84.3

Medicaid-only eligibles

5.6

79.9

20.1

25.4

74.6

Dual

3.5

43.2

56.8

0.1

99.9

Source: Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP (Washington, DC: Medicaid and CHIP Payment and Access Commission, March 2012), http://www.macpac.gov/reports.

Approximately 38 percent of nonelderly people who qualify for Medicaid on the basis of disability, or 3.5 million beneficiaries, are also eligible to receive Medicare benefits. These so-called dual eligibles[viii] are enrolled in both programs. Most dual eligibles under 65 years of age qualify for income maintenance payments through the Social Security Disability Insurance (SSDI) program. Medicaid eligibility is not linked to SSDI eligibility. Although SSDI beneficiaries have to meet the same disability test as SSI recipients, they also must meet SSI financial eligibility criteria or qualify for Medicaid benefits through an alternative pathway.[ix]

State Medicaid agencies are not required to collect and report diagnostic information on recipients who qualify for benefits on the basis of disability. Nonetheless, because disability-related Medicaid eligibility is based on SSI eligibility for about two-thirds of Medicaid-only recipients, it is possible to gain a sense of the diversity of the population from diagnostic data gathered and reported by the Social Security Administration.

As shown in chart 2-A, 59 percent of the 3.3 million nonelderly adults receiving SSI benefits in 2010 had as their qualifying disability either a mental disorder (35.9%) or an intellectual disability (20.1%). The remaining 41 percent qualified on the basis of a physical or other nonmental disorder, such as spinal cord injuries, birth defects, or diseases of the organs system.[x]

Chart 2-A. SSI Adults not Receiving SSDI

Chart 2-A, a pie chart entitled, SSI Adults not Receiving SSDI,  shows that 59 percent of the 3.3 million non-elderly adults receiving SSI benefits in 2010 had as their qualifying disability either a mental disorder (35.9%) or an intellectual disability (20.1%). Mental disorders include mood disorders (17%), schizophrenic and psychotic disorders (9%) and other mental disorders (4.2%). The remaining 41 percent of the 3.3 million adult SSI recipients qualified on the basis of a physical or other non-mental disorder, ranging from spinal cord injuries, birth defects or diseases of organs and system.

Source: Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP (Washington, DC: Medicaid and CHIP Payment and Access Commission, March 2012), http://www.macpac.gov/reports.

As shown in chart 2-B, compared to nonelderly adult beneficiaries with disabilities, a significantly larger proportion of SSI-eligible children qualify on the basis of a mental or intellectual disability. Among the 1.2 million children receiving SSI benefits because of a qualifying disability during 2010, two-thirds (67%) qualified on the basis of a mental or intellectual disability. Twenty percent of the qualifying children had developmental disorders, and eight percent had autistic disorders. Another 19 percent qualified on the basis of a childhood or adolescent disorder, including attention deficit hyperactivity disorder.

Only 33 percent of children receiving SSI benefits qualified on the basis of a physical or other nonmental disability.[xi]

Chart 2-B. SSI Children

Chart 2-B, a pie chart entitled 'SSI Children,  shows that, compared to non-elderly adult beneficiaries with disabilities, a significantly larger proportion of SSI-eligible children qualify on the basis of a mental or intellectual disability. Among the 1.2 million children receiving SSI benefits due to a qualifying disability during 2010, two-thirds (67%) qualified on the basis of a mental or intellectual disability. Approximately one-fifth (19.5%) of the qualifying children had developmental disorders, 11.4 percent had intellectual disabilities and eight percent had autistic disorders. Another 19.5 percent qualified for SSI benefits on the basis of a childhood or adolescent disorder, including attention deficit hyperactivity (ADHD), 3.4 percent qualified on the basis of mood disorders and 5.5 percent on the basis of other mental disorders. The remaining 33.3 percent of children receiving SSI benefits qualified on the basis of a physical or other non-mental disability.

Source: Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP (Washington, DC: Medicaid and CHIP Payment and Access Commission, March 2012), http://www.macpac.gov/reports.

Comorbidity

Many people eligible for Medicaid services on the basis of disability have multiple disabling conditions, including co-occurring behavioral disorders and physical health conditions. In examining the rate of comorbidity among Medicaid enrollees with disabilities, Kronick and colleagues[xii] discovered the following:

  • There was a high prevalence of mental illness (47%), cardiovascular disease (38%), and central nervous system diseases (28%) among Medicaid-only enrollees qualifying on the basis of disabilities.
  • Nearly half (45%) of such individuals were diagnosed with three or more chronic conditions; they accounted for 75 percent of the spending on Medicaid-only enrollees with disabilities.
  • Eighty-seven percent of the enrollees with the highest Medicaid costs had three or more chronic conditions, and 67 percent had five or more chronic conditions.

Behavioral health needs are particularly pervasive among Medicaid enrollees who qualify on the basis of disability. One study found that 47 percent of Medicaid-only enrollees with a qualifying disability also were diagnosed with bipolar disorder, psychosis, depression, or another form of mental illness. Furthermore, an analysis of Medicaid claims data revealed that 29 percent of such beneficiaries were treated for a mental illness and another 18 percent had used a prescription medication to address a behavioral disorder, suggesting unmet mental health treatment needs among the latter group.[xiii]

Mental illnesses also occur frequently among Medicaid beneficiaries who are most expensive to serve. In studying the most common clusters of health conditions among Medicaid-only enrollees with chronic disabilities, Kronick and colleagues found that mental illness was included in three of the top five pairings among the highest-cost beneficiaries (i.e., those in the upper five percent of the per capita cost range). Another researcher discovered that approximately two-thirds of Medicaid-only beneficiaries with disabilities and one or more of the five most common physical conditions also had a mental illness.[xiv] In addition, 20 percent of such individuals had both a mental illness and an alcohol or other drug use disorder. For those with the most common chronic physical health conditions, health care spending is 60 to 75 percent higher for those with a mental illness than for those without one. The addition of a substance use disorder doubles or triples health care spending, depending on the conditions involved.

Medicaid Expansion

The impact of the expansion of Medicaid eligibility called for under the ACA is unknown at present and probably will not be known for several years after states begin enrolling newly eligible people in 2014. Many analysts, however, expect some people with disabilities to be among the millions of newly eligible enrollees. CMS has made clear in final regulations governing expanded Medicaid and Children’s Health Insurance Program (CHIP) eligibility under the 2010 ACA legislation that people with disabilities, including those requiring LTSS, will be permitted to enroll in an existing Medicaid eligibility category to ensure that they receive the coverage that best meets their needs.[xv] The growth in enrollment is expected to be especially evident among adults with behavioral disabilities, either alone or in combination with chronic medical conditions, due to the ACA’s mental health parity provisions, the designation of mental health services as an essential benefit, and the prohibition against denying services on the basis of a pre-existing condition.

In summary, co-occurring conditions—especially mental illnesses—are a major contributing factor to the cost of serving Medicaid beneficiaries with disability-based eligibility. The presence of a mental illness also adds to the complexity of the treatment process because (a) coordinating the full spectrum of the individual’s care and support and controlling expenditures across multiple treatment and care settings pose a major challenge; and (b) adherence to treatment regimens is often difficult to achieve in this population. When such people also struggle with a substance use disorder, the complexities involved in delivering services and supports escalate even further.

Medicaid Spending on People with Disabilities

In addition to covering preventive, primary, and acute health care services, Medicaid offers other benefits of particular importance to eligible individuals with disabilities (see appendix F for an overview of disability-related Medicaid service coverages). For some recipients, the Medicaid program provides a much wider array of benefits than either the Medicare program or the vast majority of commercial health plans. In particular, Medicaid pays for institutional and HCB long-term supports to help beneficiaries with disabilities deal with chronic illnesses and disabilities while maintaining their independence.

During FY 2008, combined federal-state Medicaid expenditures totaled $339 billion. Although people under age 65 enrolled on the basis of disability made up 15 percent of all Medicaid beneficiaries that year, they accounted for 42 percent of program expenditures, or $142 billion. In contrast, children and adults under 65 years of age without disabilities accounted for approximately 75 percent of Medicaid enrollees but only about one-third of program outlays (see chart 2-C).

Chart 2-C. Medicaid Enrollment and Spending by Eligibility Group,
FY 2008

Chart 2-C, a bar chart entitled Medicaid Enrollment and Spending by Eligibility Group, FY 2008 shows that during FY 2008, combined federal-state Medicaid expenditures totaled $339 billion. While individuals under age 65 enrolled on the basis of disability made up 15 percent of all Medicaid beneficiaries that year, they accounted for 42 percent of program expenditures, or $142 billion. In contrast, non-disabled children (48%) and non-disabled adults under 65 years of age (26%) accounted for approximately three quarters (74%) of Medicaid enrollees but only about one-third (35%) of program outlays. The remaining 10 percent of enrollees were low-income seniors, who accounted for 23 percent of program expenditures.

Source: Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP (Washington, DC: Medicaid and CHIP Payment and Access Commission, March 2012), http://www.macpac.gov/reports.

The disproportionate share of Medicaid expenditures attributed to nonelderly people enrolled on the basis of disability can be attributed to the higher per capita costs of providing services to these recipients, which averaged $17,412 for a full-time equivalent enrollee during FY 2008. Average annual per enrollee expenditures were considerably lower for children without disabilities ($3,025) and adults under 65 years of age without disabilities ($4,651) (see table 2-B).

Table 2-B. Medicaid Enrollment and Spending by Eligibility Group,
FY 2008

Eligibility Group

No. of Enrollees
(in millions)

Total Medicaid Spending
(in billions)

Annualized Spending
Per Enrollee

Children

28.3

$68.1

$3,025

Adults

15.4

 49.5

 4,651

Aged

 6.0

 78.9

 14,945

Disabled

 9.1

 142.0

 17,412

Medicaid-only

 5.6

 98.2

 19,682

Dual Eligibles

 3.5

 43.8

 13,835

All Enrollees

58.8

$338.6

$ 7,267

Source: Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP (Washington, DC: Medicaid and CHIP Payment and Access Commission, March 2012), http://www.macpac.gov/reports.

As is the case for other Medicaid eligibility groups, expenditures on behalf of people who qualify on the basis of disability tend to be concentrated among a relatively small proportion of beneficiaries. Average per recipient expenditures for the top five percent of enrollees with disability-based eligibility topped $100,000 during FY 2008. These people accounted for almost half of total Medicaid spending on people enrolled in the program on the basis of disability.[xvi]

Slightly more than one-third of federal-state Medicaid expenditures in FY 2009 (35%; $125 billion) paid for LTSS on behalf of children and adults with chronic disabilities. The LTSS share of overall Medicaid spending has remained relatively constant over the past 15 years (ranging from a high of 39% to a low of 33%). However, the proportion of expenditures on HCBS has increased steadily compared with institutional LTSS. In FY 2009, 44 percent of Medicaid LTSS outlays ($55.9 billion) paid for HCBS, up from 18 percent in FY 1995.[xvii]

Medicaid is by far the primary source of financing for LTSS, accounting for 61.5 percent of the $203 billion expended by all sources in FY 2009. The program paid all or part of the costs of nearly 1.5 million nursing home residents and purchased HCBS for some 2.3 million low-income Americans with disabilities.[xviii] Access to Medicaid-financed LTSS, however, varies widely from state to state. One study found that only about 20 percent of low-income adults with long-term service needs received Medicaid-funded supports in the five states with the tightest eligibility and coverage standards, compared with 36 percent in the median state and 63 percent in the five states with the most generous Medicaid eligibility and coverage standards.[xix] Even greater interstate variations are evident when average per capita spending levels are compared. Overall per capita spending on LTSS, including both seniors and nonelderly recipients, averaged $527 per recipient in the five lowest states, compared with $1,118 in the median state and $3,152 in the five highest states. The pattern was similar when Medicaid HCBS were compared. Average per capita expenditures in the five highest states was $1,613, compared with $501 in the median state and $191 in the five lowest states.[xx]

The majority of Medicaid enrollees under age 65 whose enrollment is based on disability (62% in FY 2008) are Medicaid-only enrollees. Likewise, the Medicaid-only group accounts for more than two-thirds of expenditures on behalf of people enrolled in the program on the basis of disability (69% in FY 2008). As indicated in table 2-B, average annual per capita expenditures are higher on behalf of Medicaid-only enrollees ($19,682 in FY 2008) than on behalf of dual eligibles ($13,835). The difference reflects the fact that Medicare is the primary payer for most of the acute health care services (e.g., physician and hospital services, prescription medications) that dual eligibles receive, with Medicaid assuming the cost of long-term supports and other services not covered by Medicare.

The average annual expenditures for LTSS in FY 2008 was lower among Medicaid-only enrollees ($5,040) than among dual eligibles ($8,784). The difference reflects, in part, a higher overall utilization of LTSS among dual eligibles vs. Medicaid-only beneficiaries, and in part, the proportionally greater use of high-cost institutional services by dual eligibles (44% of total LTSS expenditures in FY 2008) compared with Medicaid-only enrollees (34% of total LTSS expenditures in FY 2008).[xxi]

LTSS expenditures account for a smaller share of total Medicaid outlays on behalf of Medicaid-only, nonelderly beneficiaries with disabilities (26%) than they do for dual-eligible, nonelderly beneficiaries (63%). This difference is driven largely by the fact that the Medicare program assumes primary responsibility for covering the acute care costs of dual eligibles. Sixteen percent of Medicaid-only enrollees under 65 with qualifying disabilities were LTSS users during FY 2008, compared with 22 percent of dual eligibles.

The picture changes, however, when the focus is limited to recipients of LTSS. Users of Medicaid LTSS were 6 percent of all Medicaid enrollees in FY 2007, but were the source of nearly half of total Medicaid spending that year (as shown in chart 2-D). Most users of LTSS relied on community-based services but, due to the higher average per capita cost of institutional services, the percentage of total expenditures devoted to institutional care (26%) was slightly higher than the percentage devoted to HCBS (22%).[xxii]

Chart 2-D. Medicaid LTSS Users by Type and Expenditures, FY 2007

Chart 2-D, a bar chart entitled "Medicaid LTSS Users by Type and Expenditures, FY 2007," shows that the picture changes, however, when the focus is limited to recipients of long-term services and supports. Users of Medicaid LTSS accounted for six percent of all Medicaid enrollees in FY 2007, but were the source of nearly half (48%) of total Medicaid spending that year. The remaining 94 percent of Medicaid enrollees, consisting of non-disabled children and non-elderly adults without disabilities, accounted for the rest of the $300 billion expended on Medicaid services that year. Most users of LTSS relied on community-based services but, due to the higher, average per capita cost of institutional services, the percent of total expenditures devoted to institutional care (26%) in FY 2007 was slightly higher than the percentage devoted to HCBS (22%).

Source: Kaiser Commission on Medicaid and the Uninsured, Medicaid Long-Term Care Users: Spending Patterns Across Institutional and Community-based Settings (7Washington, DC: Kaiser Family Foundation, October 2011).

Moreover, nearly three-quarters of expenditures for the 3.6 million Medicaid recipients who received LTSS during FY 2007 were directed to long-term supports, as opposed to acute health services (see chart 2-E). Medicaid beneficiaries who used LTSS that year cost the Medicaid program an average of $43,296, compared with the average of $3,694 for nonrecipients of LTSS. A majority of Medicaid long-term care users were seniors (52%), with the balance (40%) being made up primarily of people with disabilities. Average annual per recipient costs were considerably higher for users of institutional services ($62,750), compared with recipients who predominately used HCBS ($31,341). Annual per capita spending on behalf of nonelderly people qualifying on the basis of disability was higher than per capita spending on behalf of older recipients of LTSS, primarily due to the much greater reliance of the latter group on Medicaid to pay for their acute care services.[xxiii]

Chart 2-E. Medicaid Spending by Users of LTSS

Chart 2-E, a pie chart entitled “Medicaid Spending by Users of LTSS,” shows that among the 3.6 million Medicaid recipients who received LTSS during FY 2007, nearly three-quarters (74%) of the $144.7 billion expended on their behalf was directed to long-term services and supports. The balance was expended on acute health services (23%) and a mix of acute health and LTSS (4%) (see Chart 2-E above). Medicaid beneficiaries who used long-term services and supports that year cost the Medicaid program an average of $43,296, compared to the average of $3,694 expended on behalf of non-recipients of LTSS. A majority of Medicaid long-term care users were elderly (52%), with the balance (40%) being made up primarily of individuals with disabilities. Average annual per-recipient costs were considerably higher for users of institutional services ($62,750), compared to recipients who predominately used home and community-based supports ($31,341). Annual per capita spending on behalf of non-elderly individuals qualifying on the basis of disability was higher than per capita spending on behalf of elderly recipients of LTSS, primarily due to the much greater reliance of the latter group on Medicaid to pay for their acute care services.

Source: Kaiser Commission on Medicaid and the Uninsured, Medicaid Long-Term Care Users: Spending Patterns Across Institutional and Community-based Settings (Washington, DC: Kaiser Family Foundation, October 2011).

Coordination of acute care and LTSS is often cited as a major barrier to improving the quality and cost-effectiveness of services and supports for dual eligibles. But states face similar hurdles in attempting to improve the quality and cost-effectiveness of services to Medicaid-only recipients of LTSS. As Gifford and colleagues pointed out in a recent survey report of trends in state Medicaid programs, only a few states operate managed care programs that integrate acute care and long-term supports for beneficiaries with disabilities under a unified system of capitated payments.[xxiv]

The Future of Managed Care for People with Disabilities

Three factors are driving states to expand managed care enrollments: (1) the severe budget constraints under which most states presently operate and predictions that budget shortfalls will continue to plague states for at least the next few years; (2) the impending expansion of Medicaid roles in 2014 under the ACA; and (3) a growing consensus among health experts and government officials that high-cost Medicaid recipients—including frail seniors and people with disabilities and chronic diseases—can be served more effectively and at lower costs through managed care plans.

The states’ fiscal outlook has improved somewhat over the past year, at least compared with the precarious situation many states faced during 2009 and 2010.[xxv] However, multiple challenges lie ahead as states enter FY 2013. The phase-out of federal stimulus funding under the American Recovery and Reinvestment Act of 2009 (ARRA) forced states to replace federal funds with state dollars in order to balance their FY 2012 budgets. State Medicaid programs were especially hard hit by the loss of ARRA funding. During FY 2012, state general revenue outlays for Medicaid services were expected to increase by an average of 29 percent over the previous fiscal year, primarily because of the loss of enhanced federal Medicaid matching funds.[xxvi] Moreover, because of persistently high levels of unemployment and the normal lag between economic recovery and higher tax revenues, total state revenues remain below FY 2008 levels despite recent revenue gains in 38 states.[xxvii] Meanwhile, estimates of the total unfunded indebtedness of state and local governments range between $885 billion and $4.6 trillion, depending on estimates of future returns on pension funds and other investments.[xxviii] For state officials, replenishing depleted public employee pension funds and paying off other outstanding debts is a key to stabilizing state finances over the long term. The long-term obligations of state and local governments remain a challenge that extends far beyond the exigencies of balancing current operating budgets.

Second, as a result of the passage of the ACA, eligibility for Medicaid services is scheduled to be extended to all people under 65 years of age with income below 133 percent of the FPL effective January 1, 2014 (P. L. 111-148). These impending enrollment increases, which will come on top of the 7.6 million recession-induced increase in total enrollments between December 2007 and June 2010,[xxix] pose a major challenge for state Medicaid officials as they simultaneously struggle with continuing inflationary growth in program costs. The U.S. Supreme Court recently added another element of uncertainty to these calculations by prohibiting the total withdrawal of federal funds from states that do not expand Medicaid coverage, thereby making the planned expansion, in effect, a state option.[xxx] After the Supreme Court’s decision, the Congressional Budget Office projected that some states will not expand Medicaid at all, or will not expand Medicaid roles to the full extent authorized by the ACA.[xxxi]

Third, in addition to near-term reductions in Medicaid spending, state officials intend to restructure the delivery of health and long-term services in order to place program expenditures on a more sustainable course. State budget-cutting strategies over the past three years have focused primarily on reducing provider payment rates, cutting and restricting access to program benefits, and instituting new and higher beneficiary copayments. Meanwhile, service delivery restructuring initiatives have revolved around three major themes: (a) expanding the geographic scope of managed care services, as well as the types of recipients enrolled in such plans; (b) continuing to shift the locus of long-term service delivery from institutional to HCB settings; and (c) coordinating the delivery of health and LTSS to dual eligibles.[xxxii]

Viewed from a disability perspective, federal and state Medicaid officials see Medicaid as a key device for accomplishing all of the aforementioned service delivery reforms. As will be discussed in greater detail in chapter 3, state officials hope to significantly improve the cost-effectiveness of health services provided to high-cost beneficiaries by enrolling more people with chronic illnesses and disabilities in Medicaid managed care programs. Moreover, a growing number of states see managed care as a more effective and less costly approach to (a) delivering behavioral health services to people with serious mental illnesses and substance use disorders; (b) providing LTSS to people with physical, sensory, and developmental disabilities; and (c) providing a coordinated array of health services and long-term supports to dual eligibles.

All of the signs indicate that Medicaid services to beneficiaries with disabilities are on the cusp of a major transformation, driven primarily by the introduction of managed care principles to the financing and delivery of such services. The changes inherent in a managed care approach pose both opportunities and challenges. For this reason, chapter 3 articulates and elaborates upon a series of principles that should guide the design and implementation of managed care services for people with disabilities, whether they are eligible for Medicaid services only or for both Medicare and Medicaid services.

Footnotes

[i]. Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP (Washington, DC: Medicaid and CHIP Payment and Access Commission, March 2012), http://www.macpac.gov/reports.

[ii]. These 11 states, known as Section 209(b) states, use eligibility criteria that deviate from the federal SSI criteria. They also may use more restrictive financial and nonfinancial eligibility criteria as long as their Medicaid rules are no more restrictive than the rules the state had in place in 1972, the year the SSI program was established.

[iii]. Medicaid and CHIP Payment and Access Commission, “MACStats, Table 9.”

[iv]. May be a nursing facility, an intermediate care facility for people with developmental disabilities, a psychiatric treatment facility for children under 21, or a mental hospital serving people age 65 or older.

[v]. G. Smith, B. Burwell, R. Mollica, and L. Williams, Understanding Medicaid Home and Community Services: A Primer (Washington, DC: U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, October 2000).

[vi]. Medicaid and CHIP Payment and Access Commission, “MACStats, Table 9.”

[vii]. Rehabilitation Research and Training Center on Disability Statistics and Demographics, Tables 1.3 and 10.3, in 2011 Annual Disability Statistics Compendium (San Francisco: University of California at San Francisco, 2011), http://disabilitycompendium.org/.

[viii]. Dually eligible beneficiaries are divided into two categories—those eligible for a full array of Medicaid benefits (“full duals”) and those eligible for assistance in paying Medicare premiums and, in certain cases, cost-sharing requirements as well (“partial duals”). For full duals, Medicaid pays for wraparound health care and long-term services and supports, which are not included as Medicare benefits. Partial duals are divided into two groups. Qualified Medicare Beneficiaries (QMBs) are people with income above the state’s medical assistance level but at or below the federal poverty level (FPL) (and assets of up to $6,600 for an individual or $9,910 for a couple). QMBs qualify for assistance in paying Medicare premiums and cost sharing. Specified Low-Income Medicare Beneficiaries (SLMBs) have slightly higher incomes (100–120% of FPL) and receive help in paying their Medicare premiums only.

[ix]. Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP.

[x]. Ibid.

[xi]. Ibid.

[xii]. R. G. Kronick, M. Bella, and T. P. Gilmore, The Faces of Medicaid III: Refining the Portrait of People with Multiple Chronic Conditions (Trenton, NJ: Center for Health Care Strategies, Inc., October 2009).

[xiii]. Ibid.

[xiv]. C. Boyd et al., Multimorbidity Pattern Analyses and Clinical Opportunities Summaries (Trenton, NJ: Center for Health Care Studies, Inc., December 2010), http://www.chcs.org/publications3960/publications_show.htm?doc_id=1261203.

[xv]. Federal Register, “Medicaid Program; Eligibility Changes under the Affordable Care Act of 2010,” March 23, 2012, pp. 17143–17217.

[xvi]. Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP.

[xvii]. S. Eiken, K. Sredl, B. Burwell, and L. Gold, Medicaid Expenditures for Long-Term Services and Supports: 2011 Update: A Research Paper (Cambridge, MA: Thomson Reuters, October 31, 2011).

[xviii]. J. Feder and H. L. Komisar, The Importance of Federal Financing to the Nation’s Long-Term Care Safety Net (Washington, DC: Georgetown University, February 2012).

[xix]. S. Reinhard et al., Raising Expectations: A State Scorecard on Long-Term Care Services and Supports for Older Adults, Adults with Physical Disabilities, and Family Caregivers (Washington, DC: AARP Public Policy Institute, 2011).

[xx]. Feder and Komisar, The Importance of Federal Financing to the Nation’s Long-Term Care Safety Net.

[xxi]. Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP.

[xxii]. Kaiser Commission on Medicaid and the Uninsured, Dual Eligibles: Medicaid’s Role for Low-Income Medicare Beneficiaries, Medicaid Facts, KCMU (Kaiser Family Foundation, May 2011).

[xxiii]. Ibid.

[xxiv]. Gifford et al., A Profile of Medicaid Managed Care Programs in 2010.

[xxv]. National Association of State Budget Officers, Summary: Fall 2011 Fiscal Survey of the States (November 28, 2011), http://www.nasbo.org/sites/default/files/Fall%202011
%20Fiscal%20Survey%20-%20Summary.pdf
.

[xxvi]. Kaiser Commission on Medicaid and the Uninsured, Dual Eligibles.

[xxvii]. National Association of State Budget Officers, Summary.

[xxviii]. A. G. Biggs, Public Sector Pensions: How Well Funded Are They, Really? (State Budget Solutions, July 2012), http://www.statebudgetsolutions.org/doclib/
20120716_PensionFinancingUpdate.pdf
.

[xxix]. Kaiser Commission on Medicaid and the Uninsured, Medicaid and Managed Care.

[xxx]. National Federation of Independent Business, et al., v. Sebelius, Secretary of Health and Human Services, et al., U.S. Supreme Court, Slip Opinion, October Term, 2011, decided June 28, 2012.

[xxxi]. Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision (July 24, 2012), http://www.cbo.gov/publication/43472.

[xxxii]. Kaiser Commission on Medicaid and the Uninsured, “Enrollment-Driven Expenditure Growth: Medicaid Spending during the Economic Turndown, FFY 2007–2010,” (Washington, D.C.: Kaiser Family Foundation, October 2011).

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