SB12-018, Alt. Med Assitance for Elderly

SB12-018

DEVELOPMENT OF AN ALTERNATIVE MEDICAL ASSISTANCE PROGRAM FOR THE ELDERLY 

Senators Lundberg, Harvey, Neville

Staff Name:  Lou Irwin

What the Bill Does:  The bill creates a voluntary alternative medical assistance program  for the medicaid-eligible elderly. An eligible participant agrees to receive only 70% of the medical assistance benefits that he or she would have received if the participant were enrolled in the state’s traditional medicaid program.  In exchange, the participant can avoid two conditions of traditional medicaid assistance: the ability to (1) choose any provider; and (2) avoid all estate recovery by the state to offset the state’s medicaid costs to the participant.  The program will be administered by the Department of Health Care Policy and Financing (DHCPF), which must seek and obtain a federal waiver for the bill’s provisions to take effect.

 Colorado Context: Like all states, Colorado administers the Medicaid program for low-income participants in partnership with the federal government. Colorado spent $1,417,208,003 in Medicaid-related expenditures in FY 2009 (the last year for complete data).  Total health care expenditures consume 20% of the Colorado state budget[1], of which about one-third is attributable to the cost of the Medicaid program.  Medicaid enrollment has increased by 72% in Colorado over the past 5 years, exerting severe pressure on the state budget[2].  Any significant changes to the Medicaid program that would increase or decrease Medicaid expenditures would have a far reaching effect on the state budget.

National Context:  Medicaid was created by the Social Security Amendments of 1965 as a federal-state partnership.  Each state administers its own Medicaid program while the federal Centers for Medicare and Medicaid Services (CMS) monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards. CMS imposes many restrictions on how the program can operate, including limitations on the selection of providers, and obligations by the states to recover partial costs of the program from the assets of beneficiaries.  States can set up alternative forms of medical assistance within the Medicaid program, but only through waiver of federal rules, which generally requires a lengthy process.

Bill Provisions:   

• Establishes an alternative assistance program to Medicaid-eligible persons in which
  • The state makes available  assistance in the amount of 70% of what participants  would receive under the traditional program
  • The participant can choose the provider(s) of their choice
  • The state of Colorado waives its right to pursue all estate recovery methods from the participant while they are alive, or from the participant’s family after the participant dies.
• Directs the department of health care policy and financing to
  • Determine the expected costs upon which the 70% reimbursement would be based, by having the participant’s physician assesses the level of care the participant needs
  • Develop criteria for eligibility
  • Re-evaluate the participant’s eligibility every year, or sooner if the participant’s condition substantially changes
  • Implement a debit card system for direct payment to the participant
• Requires that the program be voluntary
• Directs the DHCPF to apply for a waiver from the federal medicaid regulations

Fiscal Impact: Net cost to the state will be substantial, ranging from an estimated $15,846 in the first year of the program, to $1,245,830 in FY2016-17.  Since Medicaid depends on an equivalent federal match, the same net cost to the federal budget must be assumed.  The costs derive from the need for more personnel  (3 FTEs by FY2016-17) to process, implement, and oversee the program, the need to apply for the federal waiver, contract for the debit card payment system, make changes to the medical management information system and the Colorado Benefits Management System, notify eligible participants, and administer the program.  In addition, revenues to the state will be curtailed due to the state’s inability to recover part of the costs (which amounted to 47% of the the state’s Medicaid expenditures in FY2007-08) from the estates of those who choose to participate. If the bill is enacted, the DHCPF will require an appropriation of $31,692, including $15,846 from the General Fund and $15,846 from federal funds in FY 2012-13.

[2] http://www.colorado.gov/cs/Satellite/GovHickenlooper/CBON/1251608981339