Success of Federal Funds - Term Paper Example

 «Success of Federal Funds» The various health care systems that exist throughout the world are closely correlated with the development of medical science. Considering the fact that the greatest advance in medicine has been made during the last century, every major change in the existing health care systems have occurred during that period. Medicaid is just one example of the broad spectra of changes made to the United states health policy, which were mainly localized during the latter half of the twentieth century. Title XIX of the Social Security Act is a Federal/State entitlement program that pays for medical assistance for certain individuals and families with low incomes and resources. This program, known as Medicaid, became law in 1965 as a cooperative venture jointly funded by the Federal and State governments (including the District of Columbia and the Territories) to assist States in furnishing medical assistance to eligible needy persons. Medicaid is the largest source of funding for medical and health-related services for America’s poorest people. Within broad national guidelines established by Federal statutes, regulations, and policies, each State establishes its own eligibility standards; determines the type, amount, duration, and scope of services; sets the rate of payment for services; and administers its own program. Medicaid policies for eligibility, services, and payment are complex and vary considerably, even among States of similar size or geographic proximity. Thus, a person who is eligible for Medicaid in one State may not be eligible in another State, and the services provided by one State may differ considerably in amount, duration, or scope from services provided in a similar or neighboring State. In addition, State legislatures may change Medicaid eligibility, services, and/or reimbursement during the year. Medicaid does not provide medical assistance for all poor persons. Under the broadest provisions of the Federal statute, Medicaid does not provide healthcare services even for very poor persons unless they are in one of the groups designated below. Low income is only one test for Medicaid eligibility for those within these groups; their resources also are tested against threshold levels (as determined by each State within Federal guidelines). States generally have broad discretion in determining which groups their Medicaid programs will cover and the financial criteria for Medicaid eligibility. To be eligible for Federal funds, however, States are required to provide Medicaid coverage for certain individuals who receive federally assisted income-maintenance payments, as well as for related groups not receiving cash payments. In addition to their Medicaid programs, most States have additional “State-only” programs to provide medical assistance for specified poor persons who do not qualify for Medicaid. Federal funds are not provided for State-only programs. The mandatory Medicaid “categorically needy” eligibility groups for which Federal matching funds represent: Individuals are generally eligible for Medicaid if they meet the requirements for the Aid to Families with Dependent Children (AFDC) program that were in effect in their State on July 16, 1996. Children under age 6 whose family income is at or below 133 percent of the Federal poverty level (FPL). Pregnant women whose family income is below 133 percent of the FPL (services to these women are limited to those related to pregnancy, complications of pregnancy, delivery, and postpartum care). Supplemental Security Income (SSI) recipients in most States (some States use more restrictive Medicaid eligibility requirements that pre-date SSI). Recipients of adoption or foster care assistance under Title IV of the Social Security Act. Special protected groups (typically individuals who lose their cash assistance due to earnings from work or from increased Social Security benefits, but who may keep Medicaid for a period of time). All children born after September 30, 1983 who are under age 19, in families with incomes at or below the FPL. Certain Medicare beneficiaries. States also have the option of providing Medicaid coverage for other “categorically related” groups. These optional groups share characteristics of the mandatory groups (that is, they fall within defined categories), but the eligibility criteria are somewhat more liberally defined. The broadest optional groups for which States will receive Federal matching funds for coverage under the Medicaid program include the following: Infants up to age 1 and pregnant women not covered under the mandatory rules whose family income is no more than 185 percent of the FPL (the percentage amount is set by each State). Children under age 21 who meet criteria more liberal than the AFDC income and resources requirements that were in effect in their State on July 16, 1996. Institutionalized individuals eligible under a “special income level” (the amount is set by each State—up to 300 percent of the SSI Federal benefit rate). Individuals who would be eligible if institutionalized, but who are receiving care under home and community-based services (HCBS) waivers. Certain aged, blind, or disabled adults who have incomes above those requiring mandatory coverage, but below the FPL. Recipients of State supplementary income payments. Certain working-and-disabled persons with family income less than 250 percent of the FPL who would qualify for SSI if they did not work. TB-infected persons who would be financially eligible for Medicaid at the SSI income level if they were within a Medicaid-covered category (however, coverage is limited to TB-related ambulatory services and TB drugs). Certain uninsured or low-income women who are screened for breast or cervical cancer through a program administered by the Centers for Disease Control. The Breast and Cervical Cancer Prevention and Treatment Act of 2000 (Public Law 106-354) provides these women with medical assistance and follow-up diagnostic services through Medicaid. “Optional targeted low-income children” included within the State Children’s Health Insurance Program (SCHIP) established by the Balanced Budget Act (BBA) of 1997. “Medically needy” persons. The medically needy (MN) option allows States to extend Medicaid eligibility to additional persons. These persons would be eligible for Medicaid under one of the mandatory or optional groups, except that their income and/or resources are above the eligibility level set by their State. Persons may qualify immediately or may “spend down” by incurring medical expenses that reduce their income to or below their State’s MN income level. Medicaid eligibility and benefit provisions for the medically needy do not have to be as extensive as for the categorically needy, and may be quite restrictive. Federal matching funds are available for MN programs. However, if a State elects to have a MN program, there are Federal requirements that certain groups and certain services must be included; that is, children under age 19 and pregnant women who are medically needy must be covered, and prenatal and delivery care for pregnant women, as well as ambulatory care for children, must be provided. A State may elect to provide MN eligibility to certain additional groups and may elect to provide certain additional services within its MN program. As of August 2002, thirty-five States plus the District of Columbia have elected to have a MN program and are providing at least some MN services to at least some MN beneficiaries. All remaining States utilize the “special income level” option to extend Medicaid to the “near poor” in medical institutional settings. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, known as the “welfare reform” bill, made restrictive changes regarding eligibility for SSI coverage that impacted the Medicaid program. For example, legal resident aliens and other qualified aliens who entered the United States on or after August 22, 1996 are ineligible for Medicaid for 5 years. Medicaid coverage for most aliens entering before that date and coverage for those eligible after the 5-year ban are State options; emergency services, however, are mandatory for both of these alien coverage groups. For aliens who lose SSI benefits because of the new restrictions regarding SSI coverage, Medicaid can continue only if these persons can be covered for Medicaid under some other eligibility status (again with the exception of emergency services, which are mandatory). Some part of the law also affected a number of disabled children, who lost SSI as a result of the restrictive changes; however, their eligibility for Medicaid was reinstituted by another law. In addition, welfare reform repealed the open-ended Federal entitlement program known as Aid to Families with Dependent Children (AFDC) and replaced it with Temporary Assistance for Needy Families (TANF), which provides States with grants to be spent on time-limited cash assistance. TANF generally limits a family’s lifetime cash welfare benefits to a maximum of 5 years and permits States to impose a wide range of other requirements as well—in particular, those related to employment. However, the impact on Medicaid eligibility is not expected to be significant. Under welfare reform, persons who would have been eligible for AFDC under the AFDC requirements in effect on July 16, 1996 generally will still be eligible for Medicaid. Although most persons covered by TANF will receive Medicaid, it is not required by law. Title XXI of the Social Security Act, known as the State Children’s Health Insurance Program (SCHIP), is a new program initiated by the BBA. In addition to allowing States to craft or expand an existing State insurance program, SCHIP provides more Federal funds for States to expand Medicaid eligibility to include a greater number of children who are currently uninsured. With certain exceptions, these are low-income children who would not qualify for Medicaid based on the plan that was in effect on April 15, 1997. Funds from SCHIP also may be used to provide medical assistance to children during a presumptive eligibility period for Medicaid. This is one of several options from which States may select to provide healthcare coverage for more children, as prescribed within the BBA’s Title XXI program. Medicaid coverage may begin as early as the third month prior to application, if the person would have been eligible for Medicaid had he or she applied during that time. Medicaid coverage generally stops at the end of the month in which a person no longer meets the criteria of any Medicaid eligibility group. The BBA allows States to provide 12 months of continuous Medicaid coverage (without reevaluation) for eligible children under the age of 19. The Ticket to Work and Work Incentives Improvement Act of 1999 provides or continues Medicaid coverage to certain disabled beneficiaries who work despite their disability. Those with higher incomes may pay a sliding scale premium based on income. Within broad Federal guidelines and certain limitations, States determine the amount and duration of services offered under their Medicaid programs. States may limit, for example, the number of days of hospital care or the number of physician visits covered. Two restrictions apply: limits must result in a sufficient level of services to reasonably achieve the purpose of the benefits; and limits on benefits may not discriminate among beneficiaries based on medical diagnosis or condition. In general, States are required to provide comparable amounts, duration, and scope of services to all categorically needy and categorically related eligible persons. There are two important exceptions: Medically necessary healthcare services that are identified under the EPSDT program for eligible children, and that are within the scope of mandatory or optional services under Federal law, must be covered even if those services are not included as part of the covered services in that State’s Plan; and States may request “waivers” to pay for otherwise uncovered home and community-based services (HCBS) for Medicaid-eligible persons who might otherwise be institutionalized. As long as the services are cost effective, States have few limitations on the services that may be covered under these waivers (except that, other than as a part of respite care, States may not provide room and board for the beneficiaries). With certain exceptions, a State’s Medicaid program must allow beneficiaries to have some informed choices among participating providers of healthcare and to receive quality care that is appropriate and timely. Medicaid operates as a vendor payment program. States may pay healthcare providers directly on a fee-for-service basis, or States may pay for Medicaid services through various prepayment arrangements, such as health maintenance organizations (HMOs). Within federally imposed upper limits and specific restrictions, each State for the most part has broad discretion in determining the payment methodology and payment rate for services. Generally, payment rates must be sufficient to enlist enough providers so that covered services are available at least to the extent that comparable care and services are available to the general population within that geographic area. Providers participating in Medicaid must accept Medicaid payment rates as payment in full. States must make additional payments to qualified hospitals that provide inpatient services to a disproportionate number of Medicaid beneficiaries and/or to other low-income or uninsured persons under what is known as the “disproportionate share hospital” (DSH) adjustment. During 1988–1991, excessive and inappropriate use of the DSH adjustment resulted in rapidly increasing Federal expenditures for Medicaid. Under legislation passed in 1991, 1993, and again within the BBA of 1997, the Federal share of payments to DSH hospitals was somewhat limited. However, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 increased DSH allotments for 2001 and 2002 and made other changes to DSH provisions that resulted in increased costs to the Medicaid program (Rosenbaum). States may impose nominal deductibles, coinsurance, or copayments on some Medicaid beneficiaries for certain services. The following Medicaid beneficiaries, however, must be excluded from cost sharing: pregnant women, children under age 18, and hospital or nursing home patients who are expected to contribute most of their income to institutional care. In addition, all Medicaid beneficiaries must be exempt from copayments for emergency services and family planning services. The Federal Government pays a share of the medical assistance expenditures under each State’s Medicaid program. That share, known as the Federal Medical Assistance Percentage (FMAP), is determined annually by a formula that compares the State’s average per capita income level with the national income average. States with a higher per capita income level are reimbursed a smaller share of their costs. Medicaid was initially formulated as a medical care extension of federally funded programs providing cash income assistance for the poor, with an emphasis on dependent children and their mothers, the disabled, and the elderly. Over the years, however, Medicaid eligibility has been incrementally expanded beyond its original ties with eligibility for cash programs. Legislation in the late 1980s assured Medicaid coverage to an expanded number of low income pregnant women, poor children, and to some Medicare beneficiaries who are not eligible for any cash assistance program. Legislative changes also focused on increased access, better quality of care, specific benefits, enhanced outreach programs, and fewer limits on services. In most years since its inception, Medicaid has had very rapid growth in expenditures. This rapid growth has been due primarily to the following factors: • The increase in size of the Medicaid-covered populations as a result of Federal mandates, population growth, and economic recessions. • The expanded coverage and utilization of services. • The DSH payment program, coupled with its inappropriate use to increase Federal payments to States. • The increase in the number of very old and disabled persons requiring extensive acute and/or long-term healthcare and various related services. • The results of technological advances to keep a greater number of very low-birth-weight babies and other critically ill or severely injured persons alive and in need of continued extensive and very costly care. • The increase in drug costs and the availability of new expensive drugs. • The increase in payment rates to providers of healthcare services, when compared to general inflation. As with all health insurance programs, most Medicaid beneficiaries incur relatively small average expenditures per person each year, and a relatively small proportion incurs very large costs. Moreover, the average cost varies substantially by type of beneficiary. National data for 2001, for example, indicate that Medicaid payments for services for 23.3 million children, who constitute 50 percent of all Medicaid beneficiaries, average about $1,305 per child (a relatively small average expenditure per person). Similarly, for 11.6 million adults, who comprise 25 percent of beneficiaries, payments average about $1,725 per person. However, certain other specific groups have much larger per-person expenditures. Medicaid payments for services for 4.4 million aged, constituting 9 percent of all Medicaid beneficiaries, average about $10,965 per person; for 7.7 million disabled, who comprise 16 percent of beneficiaries, payments average about $10,455 per person. When expenditures for these high- and lower-cost beneficiaries are combined, the 2001 payments to healthcare vendors for 47.0 million Medicaid beneficiaries average $3,965 per person (Longest). Long-term care is an important provision of Medicaid that will be increasingly utilized as our nation’s population ages. The Medicaid program paid for over 41 percent of the total cost of care for persons using nursing facility or home health services in 2001. National data for 2001 show that Medicaid payments for nursing facility services (excluding ICFs/MR) totaled $37.2 billion for more than 1.7 million beneficiaries of these services—an average expenditure of $21,890 per nursing home beneficiary. The national data also show that Medicaid payments for home health services totaled $3.5 billion for more than 1.0 million beneficiaries—an average expenditure of $3,475 per home healthcare beneficiary. With the percentage of our population who are elderly or disabled increasing faster than that of the younger groups, the need for long-term care is expected to increase (Rosenbaum). Another significant development in Medicaid is the growth in managed care as an alternative service delivery concept different from the traditional fee-for-service system. Under managed care systems, HMOs, prepaid health plans (PHPs), or comparable entities agree to provide a specific set of services to Medicaid enrollees, usually in return for a predetermined periodic payment per enrollee. Managed care programs seek to enhance access to quality care in a cost-effective manner. Waivers may provide the States with greater flexibility in the design and implementation of their Medicaid managed care programs. More than 46.0 million persons received healthcare services through the Medicaid program in fiscal year (FY) 2001 (the last year for which beneficiary data are available). In FY 2003, total outlays for the Medicaid program (Federal and State) were $278.3 billion, including direct payment to providers of $197.3 billion, payments for various premiums (for HMOs, Medicare, etc.) of $52.1 billion, payments to disproportionate share hospitals of $12.9 billion, and administrative costs of $16.0 billion. Outlays under the SCHIP program in FY 2003 were $6.1 billion. With no changes to either program, expenditures under Medicaid and SCHIP are projected to reach $445 billion and $7.5 billion, respectively, by FY 2009 (Longest). Medicaid has made great strides in improving access to care for two-thirds of people with incomes below the federal poverty level, but Medicaid has its limitations. For those people with Medicaid coverage, access to care is by no means guaranteed. Medicaid pays physicians far less than does Medicare or private insurance, with the result that between 25% and 50% of private practice physicians do not accept Medicaid, varying by state and specialty. Many pregnant women have trouble finding an obstetrician who will accept Medicaid. Pregnant women with Medicaid coverage tend to initiate prenatal care later than those without insurance or with private insurance. Once prenatal care has been initiated, Medicaid recipients make more prenatal visits than those lacking insurance, but fewer visits than the privately insured. As a rule, people with Medicaid have a level of access to medical care that is intermediate between those without insurance and those with private insurance. Compared with uninsured people, those with Medicaid are more likely to have a regular source of medical care, receive more preventive services, and are less likely to report delays in receiving care. Compared with uninsured children, children receiving Medicaid have much higher use of preventive services, and among those with chronic illness and disability, greater use of treatment services. But compared with privately insured people, Medicaid recipients are twice as likely to experience difficulty in obtaining needed medical care, prescription drugs, dental care, and eyeglasses. (Conrad) Health outcomes for Medicaid recipients lag behind those for privately insured people. In some studies, Medicaid recipients have health outcomes that are better than those of uninsured people, but this is not always the case. Uninsured women and women with Medicaid had on average significantly more advanced breast cancer at initial diagnosis than privately insured women, and survival rates were markedly lower among uninsured and Medicaid patients. Differences between those without insurance and those with Medicaid were not significant ( and persons with Medicaid are sometimes relegated, with the uninsured, to the lowest tier of the health care system.) In 2000, 57% of people under age 65 with health insurance worried that they would not be able to afford care they needed (Bodenheimer). Medicare beneficiaries with hypertension or coronary heart disease without prescription drug coverage are significantly less likely to purchase needed antihypertensive and cholesterol-lowering medications than those with coverage. Among uncontrolled hypertensives, 36.5% of them reported difficulty paying for their medications, compared with 15.5% of those whose blood pressure was controlled, demonstrating that cost of prescriptions contributed to inadequate control of hypertension. In summary, lack of comprehensive insurance reduces access to health care services and may contribute to poorer health outcomes. References: 1. Bodenheimer, Thomas and Kevin Grumbach. Understanding Health Policy. Philadelphia: McGraw-Hill Medical, 2008. 2. Conrad, Peter. The Sociology of Health and Illness. New York: Worth Publishers, 2008. 3. Longest, Beaufort B. Jr. Health policy making in the United States. Washington, D.C., AUPHA Press, 2006 4. Reisman, David. Health Care and Public. Northampton, Massachusetts: Edward Elgar Publishing, 2007. 5. Rosenbaum, Sara. “Medicaid”. New England Journal of Medicine February 21, 2002 vol. 346: 635-640. Read More