Medicaid in an Era of Health & Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015
Premiums and Cost-sharing
Medicaid beneficiaries tend to be poorer and sicker than those enrolled in private insurance. Given these characteristics, federal law limits the extent to which states can charge premiums and cost-sharing, particularly for pregnant women, children and adults with disabilities but allows flexibility for individuals with higher incomes. Over the years, Medicaid premiums and cost-sharing have been used to limit state program costs, to encourage more personal responsibility over health care choices, and to better align public coverage with private coverage where states have expanded coverage. The use of premiums has been targeted to certain populations while copayments have been used more broadly across states. In July 2013, CMS released final rules that streamlined and simplified existing regulations around premiums and cost-sharing while also making some changes to regulations for cost-sharing. The table below summarizes cost-sharing limits for 2014.
| Federal Maximum Allowable Cost-Sharing for 2014 | |||||
| Notable Cost-Sharing Changes | Individuals with family income: | ||||
| < 100% FPL | 101 – 150% FPL | > 150% FPL | |||
|
Outpatient Services (physician visit, physical therapy, etc.)
–
Inpatient Stay
|
$4
(CPI-U Annual Update) –
$75
(CPI-U Annual Update) |
10% of cost for entire stay | 20% of cost for entire stay | ||
| Preferred Drugs | $4 | $4 | $4 | ||
| Non-Preferred Drugs | $8 | $8 | 20% of cost | ||
| Non-emergency Use of the ER | $8 | $8 | No Limit | ||
| 78 Fed. Reg. 42307-42310. (July 15, 2013). | |||||
Total Medicaid premiums and cost-sharing incurred by all individuals in a Medicaid household may not exceed an aggregate limit of 5 percent of the family’s income applied on either a quarterly or monthly basis. States are further required to have an effective process for tracking the 5 percent cap that does not rely on beneficiary documentation. In this year’s survey, some states commented on the difficulty of implementing a tracking process that would assure compliance with this requirement and the various applicable exemptions.
Premiums
While states are generally limited to charging premiums to Medicaid beneficiaries with incomes over 150 percent FPL, there are certain other populations for which premiums may be charged (sometimes labeled as “buy-in” programs) including: working people with disabilities eligible under the Ticket to Work and Work Incentives Improvement Act (TWWIIA) and children with disabilities eligible under the Family Opportunity Act (FOA). States are also allowed under certain circumstances to impose premiums on parents with increased income receiving Transitional Medical Assistance (TMA.) Prior to the ACA, a number of states also received Section 1115 waiver authority to expand coverage to higher income groups with premium requirements.
In this year’s survey, many of the premium-related policy actions reported were related to ACA coverage expansions including the elimination of waiver programs that included premium requirements and the imposition of new premium requirements on expansion adults. Of the four states reporting new or increased premium requirements (one in 2014, three in FY 2015), two were new premium requirements on ACA Medicaid expansion adults in FY 2015 (in Iowa and Michigan.) Wisconsin implemented a new premium for parents and caretakers in the TMA program in April 2014; these parents and caretakers will not pay for the first six months. Georgia reported premiums in the buy-in program will increase in FY 2015. In addition, Arizona reported plans to implement a mandatory premium for ACA Medicaid expansion adults in FY 2015 that still required waiver approval at the time of this survey.
Of the seven states reporting premium decreases or eliminations in FY 2014, three (Arkansas, Rhode Island and Wisconsin) eliminated coverage programs with premium requirements (due to the availability of subsidized coverage in Health Insurance Marketplaces), one state (Minnesota) decreased MinnesotaCare premium levels and changed them to a fixed monthly amount per person to align with the Basic Health Plan (BHP) requirements (in advance of the conversion of MinnesotaCare enrollees to BHP coverage in 2015) and one state (Utah) eliminated a $50 enrollment fee as a condition of renewal of its Section 1115 Primary Care Network (PCN) waiver. In addition, Vermont reported eliminating premiums for pregnant women; pregnant women with incomes over 185 percent FPL had previously been subject to a premium requirement under the state’s Dr. Dynasaur program. Washington eliminated TMA premiums for adults for the second 6 months.
Copayment Requirements
Most state Medicaid programs impose copayment requirements, but to varying degrees. This year’s survey saw a modest increase in the number of states reporting actual or planned cost-sharing increases in FY 2014 and FY 2014 (8 states each year) compared to FY 2013 (4 states) and FY 2012 (6 states).1 The new requirements and increases are highlighted below.
ACA Expansion-related Increases. Three states in FY 2014 (Arkansas, Michigan, and West Virginia) and one state in FY 2015 (Arizona) adopted broader copayment policies (in terms of the dollar amount or the number of services subjected to copayment requirements) for their expansion populations compared to the copayment policies applicable to previously eligible, lower income groups.
Increases to Federal Maximum Amounts. Four states in FY 2015 (Arizona, Illinois, North Carolina and Tennessee) reported plans to increase copayment amounts to the maximum federal level. Oklahoma and Wyoming reported plans to increase most copays from $3 to $4 in FY 2015.
Emergency Room. Three states in FY 2014 (Kentucky, New Mexico and West Virginia) and one state in FY 2015 (Iowa) reported plans to implement or increase copayments for non-emergency use of the emergency room. Two additional states (Arizona and California) reported plans to implement copayments for non-emergency use of the emergency room above amounts allowable under current law, which would require waiver approval from CMS.
Pharmacy. Several states reported new or increased pharmacy copayments including five states in FY 2014 (Kentucky, New Mexico, Oklahoma, Tennessee and West Virginia) and one state in FY 2015 (New Hampshire).
Nine states in FY 2014 and three states in FY 2015 reported plans to decrease or eliminate a copayment requirement. Of the nine states in FY 2014, the changes in five were related in some way to the ACA coverage expansions and waiver renewals, such as states transitioning waiver coverage to the ACA Medicaid expansion (Arizona and Maryland), states preparing to implement the Basic Health Plan (Minnesota) or changes made as part of waiver renewals (Utah and Wisconsin.) A few other states reported cost sharing reductions or eliminations for select services such as preventive services (Colorado and Wisconsin.)
Additional information on FY 2014 or FY 2015 changes to premiums and copayments is reported in Table 11.
| ACA Medicaid Expansion Premium and Cost Sharing Waivers |
|
Three states (Arizona, Iowa and Michigan), used or plan to use Section 1115 demonstration waiver authority to implement premium and/or cost sharing requirements for their expansion populations beginning in FY 2014 or FY 2015.
–
Under Iowa’s Health and Wellness Plan, Medicaid expansion enrollees receive coverage through existing Medicaid delivery systems (for those with incomes up to 100 percent FPL) and through purchasing coverage through QHPs in the state’s Health Insurance Marketplace (for those with incomes over 100 percent FPL). In both cases, there are no copayment requirements except for non-emergency use of the emergency department, which is waived during the first year of enrollment. Iowa’s demonstration includes monthly premiums for enrollees with incomes over 50 percent FPL, beginning in the second year of coverage, which could be waived if the member completes specified wellness activities. However, premiums are not a condition of eligibility for beneficiaries with incomes from 50 to 100 percent FPL, and this group cannot lose Medicaid coverage for non-payment. Premium amounts are indexed to be approximately three percent of income for a two-person household where both participants are enrolled in the Iowa Health and Wellness Plan.
–
The Healthy Michigan Plan requires contributions equal to two percent of annual income for persons between 100 and 138 percent of the FPL after they have been in the health plan for six months. Total cost-sharing, including copayments, cannot exceed five percent of annual household income and is paid through the use of a dedicated health account called the “Michigan Health Account.” Enrollees can reduce their annual cost sharing by participating in healthy behavior activities which include completing an annual health risk assessment and changing unhealthy activities.
–
Arizona is seeking waiver authority to impose a $200 copayment for non-emergency use of the emergency room for the expansion population; the states also reported plans to implement additional copays for this population up to the federal maximum allowable amounts.
–
Pennsylvania’s Healthy PA waiver applies existing cost-sharing amounts included in the state plan to new enrollees under the Healthy PA waiver (which begins coverage in January 2015.) Premiums (not to exceed two percent of income) will also apply to individuals with incomes above 100 percent FPL starting the second year of coverage (January 1, 2016); beneficiaries can reduce premium and cost-sharing amounts by engaging in healthy behaviors (which for the first year is the completion of an annual wellness exam. 2)
–
Indiana has submitted a proposal to amend and renew its existing waiver to implement the Medicaid expansion using the state’s Healthy Indiana Plan (HIP) as a base. HIP 2.0, if approved, would require most non-disabled adults (including those previously eligible) with incomes up to 138 percent FPL to contribute to a Personal Wellness and Responsibility (POWER) Account, which is modeled after a Health Savings Account (HSA.) Required POWER account contributions range from $3 per month for individuals with incomes up to 22 percent FPL to $25 per month for individuals with incomes between 100 and 138 percent FPL. (For current HIP enrollees, contribution amounts would decrease.)
–
Individuals who make these contributions will be eligible for the HIP Plus Plan that includes no cost-sharing (except for non-emergency use of the hospital emergency department) and expanded benefits. Coverage in HIP Plus would begin the first of the month after a beneficiary’s first contribution. (The state is seeking a waiver of retroactive eligibility). Individuals who fail to make contributions with incomes between 100-138 percent FPL will be dis-enrolled from coverage and barred from re-enrolling for six months. Individuals with incomes at or below 100 percent FPL who fail to make POWER account contributions will be moved to the HIP Basic Plan that has fewer benefits and requires cost-sharing for most health care services including $4 for outpatient services and preferred drugs, $8 for non-preferred drugs, $25 for non-emergency ED visits and $75 for inpatient services.3 Total cost-sharing requirements for both copayments and POWER account contributions would be limited to five percent of family income.
|
Table 12: Premium and Copayment Actions Taken in the 50 States and the District of Columbia, FY 2014 and FY 20154 |
||
| State | Fiscal Year | Premium and Copayment Changes |
| Alabama | 2014 | |
| 2015 | ||
| Alaska | 2014 | |
| 2015 | ||
| Arizona | 2014 | Copayments (Eliminated): Copays for waiver expansion group eliminated due to expiration of waiver. (Jan 2014) |
| 2015 |
Premiums (Proposed): Will impose a mandatory premium of not more than 2% of household income on ACA expansion adults. (Upon CMS approval)
Copayments (New): Plan to implement mandatory copays to the maximum extent allowed under federal law for ACA expansion adults.
Copayments (Proposed): Plan to pursue a waiver to impose a $200 copay for non-emergent use of the ER on ACA expansion adults. (Upon CMS approval)
|
|
| Arkansas | 2014 |
Premiums (Eliminated): Coverage through the ARHealthNet premium program ended December 31, 2013.
Copayments (New): Higher cost-sharing levels imposed for the ACA “Private option” expansion population and enforceable for expansion adults above 100% FPL. (Jan 2014)
|
| 2015 | ||
| California | 2014 | |
| 2015 | Copayments (Proposed): Plan to pursue a waiver to implement a $15 copayment on non-emergent use of the emergency room for adults at or above 100% FPL and enrolled in managed care. (Upon CMS approval) | |
| Colorado | 2014 | Copayments (Eliminated): Eliminated copays for preventive services. (Jan 2014) |
| 2015 | ||
| Connecticut | 2014 | |
| 2015 | ||
| Delaware | 2014 | |
| 2015 | ||
| District of Columbia | 2014 | |
| 2015 | ||
| Florida | 2014 | |
| 2015 | ||
| Georgia | 2014 | |
| 2015 | Premium (Increase): Plan to increase the Medicaid Buy-in premium for dual eligible beneficiaries. | |
| Hawaii | 2014 | |
| 2015 | ||
| Idaho | 2014 | |
| 2015 | ||
| Illinois | 2014 | Copayments (New): Imposed a new copayment on behavioral health services for all copay eligible populations. (Feb 2014) |
| 2015 | Copayments (Increased): Planning an across-the-board increase to all nominal copayment levels (with limited exceptions). | |
| Indiana | 2014 | |
| 2015 |
Premiums (Proposed): Under proposed HIP 2.0 waiver (pending CMS approval), most non-disabled adults with incomes up to 138 percent FPL required to contribute to an HSA-like Personal Wellness and Responsibility (POWER) Account. Required POWER account contributions range from $3 per month for individuals with incomes up to 22% FPL to $25 per month for individuals with incomes between 100% and 138% FPL. For current HIP enrollees, contribution amounts would decrease.
Copayments (Proposed): Individuals with incomes at or below 100% FPL who fail to make required POWER account contributions subject to new copayments on most outpatient services ($4) and inpatient hospital services ($75) and increased copayments on preferred drugs ($4) and non-preferred drugs ($8) and non-emergency ED visits (up to $25).
|
|
| Iowa | 2014 | |
| 2015 |
Premiums (New): Under the Iowa Health and Wellness Plan (IHWP), enrollees with incomes over 50 percent FPL are required to make a monthly premium contribution, beginning in the second year of coverage, which could be waived if they complete specified wellness activities. Premium amounts would be about 3 percent of income for a two-person household where both participants are enrolled in IHWP. (Jan 2015)
Copayments (New): All IHWP enrollees will be subject to $8 copay for non-emergent use of the ED. Cost-sharing will be waived during the first year of enrollment. (Jan 2015)
|
|
| Kansas | 2014 | |
| 2015 | ||
| Kentucky | 2014 | Copayments (Increased): Increased copay amounts for pharmacy, physician office visits and non-emergent use of the ER. (Jan 2014) |
| 2015 | ||
| Louisiana | 2014 | |
| 2015 | ||
| Maine | 2014 | |
| 2015 | ||
| Maryland | 2014 | Copayments (Decrease): Copayment enforceability ended for waiver expansion population that transitioned to ACA Medicaid expansion in 2014. Also, generic drug copayments for this population are lower following the transition. (Jan 2014). |
| 2015 | ||
| Massachusetts | 2014 | |
| 2015 | ||
| Michigan | 2014 |
Copayments (New): Healthy Michigan Plan copayments required for physician visits, outpatient hospital clinic visits, non-emergent use of the ER, inpatient hospital stays, pharmacy, hearing aids, chiropractic, dental, podiatry and vision visits.
Total cost sharing, including copays, cannot exceed 5% of annual household income and will be paid through a dedicated health account (MI Health Account.) Enrollees can reduce their annual cost-sharing by participating in healthy behavior activities, which include completing an annual health risk assessment and changing unhealthy activities.
Copayments (Decrease): Applied co-payment exemptions for drugs used to treat State defined chronic conditions.
|
| 2015 | Premiums (New): Healthy Michigan Plan requires contributions equal to 2% of annual income for persons between 100% and 133% FPL after they have been in the health plan for 6 months. (MI Health Account also applies to premiums/monthly contributions.) | |
| Minnesota | 2014 |
Premiums (Decreased): Decreased premium levels and changed to a fixed monthly amount/person based on income for MinnesotaCare adults to align with Basic Health Plan.
Copayments (Eliminated): Eliminated inpatient hospital coinsurance requirement and cap for MinnesotaCare childless adults to align with BHP requirements. (Jan 2014)
|
| 2015 | ||
| Mississippi | 2014 | |
| 2015 | ||
| Missouri | 2014 | |
| 2015 | ||
| Montana | 2014 | |
| 2015 | ||
| Nebraska | 2014 | |
| 2015 | ||
| Nevada | 2014 | |
| 2015 | ||
| New Hampshire | 2014 | |
| 2015 | Copayments (Eliminated): Eliminating pharmacy copays ($1-$2) for adults under poverty.Copayments (New): Imposing $1& $4 pharmacy copays on adults at or above 100% FPL (ACA expansion population). | |
| New Jersey | 2014 | |
| 2015 | ||
| New Mexico | 2014 | Copayments (New): For newly eligible adults, copays added for non-emergent use of the ED and for brand-name prescriptions when there is a less expensive generic equivalent medicine available. (Jan 2014) |
| 2015 | Copayments (Decreased): Pharmacy copayment decreased from $5.00 to $4.00 for Working disabled Individuals. (Effective date TBD) | |
| New York | 2014 | |
| 2015 | ||
| North Carolina | 2014 | |
| 2015 | Copayments (Increased): Increasing copay amounts up to the federal maximum for all non-exempt enrollees. (Nov 2014) | |
| North Dakota | 2014 | |
| 2015 | ||
| Ohio | 2014 | |
| 2015 | ||
| Oklahoma | 2014 | Copayments (Increased): Copays for prescriptions, physician, and outpatient visits increased for Insure Oklahoma waiver adults. (Jan 2014) |
| 2015 | Copayments (Increased): Most SoonerCare copayments will increase ($3 to $4.) (July 2014) | |
| Oregon | 2014 | |
| 2015 | ||
| Pennsylvania | 2014 | |
| 2015 | Copayments (New): New enrollees under the state’s Healthy PA waiver will be subject to cost-sharing under state plan. (Jan 2015) | |
| Rhode Island | 2014 | Premiums (Eliminated): Premiums eliminated for Medicaid and CHIP eligible children and families over 150% FPL participating in RIte Care. (Jan 2014) |
| 2015 | ||
| South Carolina | 2014 | |
| 2015 | Copayments (Eliminated): Exempting certain high value drugs (including maintenance and certain psychiatric drugs) from copay requirements. (Oct 2014) | |
| South Dakota | 2014 | Copayments (Eliminated): Eliminated cost-share in Breast & Cervical Cancer Program. (Jan 2014) |
| 2015 | ||
| Tennessee | 2014 | Copayments (New): Instituted a new copayment for generic drugs for adults not receiving LTC and Standard Kids. (July 2013) |
| 2015 | Copayments (Increased): Raising all copay to maximum allowable amount. (July 2014) | |
| Texas | 2014 | |
| 2015 | ||
| Utah | 2014 |
Premiums (Eliminated): $50 enrollment fee eliminated on PCN Waiver adults. (Jan 2014)
Copayments (Decreased): As a condition of PCN Waiver renewal, copayments reduced for PCN TANF-related waiver participants (1925 & 1931 adults). (January 1, 2014)
|
| 2015 | ||
| Vermont | 2014 |
Premiums (Eliminated): Premiums for pregnant women eliminated. (Jan 2014)
Copayments (Eliminated): Eliminated copayment requirements for DME. (July 2013)
|
| 2015 | ||
| Virginia | 2014 | |
| 2015 | ||
| Washington | 2014 | Premiums (Eliminated): Eliminated TMA second 6 month premium for adults. (Oct 2013) |
| 2015 | ||
| West Virginia | 2014 |
Copayments (New): Imposed new copayment requirements, tiered by income, on all non-exempt MAGI based eligibility groups (Jan 2014) including:
0-50%FPL: $0.50 – $3 for prescription drugs (tiered by drug price); and $8 for non-emergency use of the ER
50-100% FPL: $0.50 – $3 for prescription drugs (tiered by drug price); $8 for non-emergency use of the ER, $2 on outpatient services and $35 for inpatient hospital
Over 100% FPL: $0.50 – $3 for prescription drugs (tiered by drug price); $8 for non-emergency use of the ER, $4 on outpatient services and $75 for inpatient hospital
|
| 2015 | ||
| Wisconsin | 2014 |
Premiums (Eliminated): Premium-based coverage for infants in families with incomes above 200% FPL ended February 1, 2014.
Premiums (New): Premiums imposed on parents/caretakers on Transitional Medical Assistance with incomes between 100% and 133% FPL after first 6 months of coverage. (April 2014)
Copayments (Eliminated): Eliminated copayments on preventive services for enrollees in the BadgerCare Plus Standard Plan. (Jan 2014)
Copayments (Decreased): Copayments for services under the state’s benchmark plan were reduced to the amounts under the standard Medicaid benefit plan when the benchmark plan was ended March 31, 2014.
|
| 2015 | ||
| Wyoming | 2014 | |
| 2015 | Copayments (Increased): Increasing copays amounts from $3 to $4. (Effective date TBD) | |
