HEALTH ACCESS UPDATE
Thursday, May 19, 2005

BUDGET SUBCOMMITTEES MEET ON MEDI-CAL REDESIGN, MEDICARE DRUGS

Earlier today, the Assembly Budget Subcommittee #1 on Health and Human Services, chaired by Assemblyman Hector De La Torre (D-South Gate), went through and made decisions on the budget proposals in the May Revise, and other outstanding issues.

Tommorrow, the Senate Budget Subcommittee #3 on Health and Human Services, chaired by Senator Denise Moreno Ducheny (D-San Diego) will start its deliberations on health issues, probably to last into the weekend.

DECISIONS ON REDESIGN: Both committees have already made several decisions with regard to Governor Arnold Schwarzenegger’s proposals around “Medi-Cal Redesign.” These changes are reflected–and often updated–in the Health Access Medi-Cal Redesign Scorecard, on our website at:
http://www.health-access.org/preserving/docs/MediCalRedesignScorecard2005.doc

In previous sessions, the subcommittees rejected proposals to impose premiums on a half-million Medi-Cal patients, and to outsource single-point-of-entry application processing. The legislators also rejected a Administration proposal to impose a $1000 cap on dental services for three million adults on Medi-Cal. Instead, they proposed a higher, $1800 cap, along with additional exclusions, and instituted a sunset so the cap would be lifted after three years. Also, no decisions have been made on the proposed hospital financing waiver, since no details have been made public at this date.

MEDI-CAL MANAGED CARE: In Assembly Subcommittee today, there was some discussion of the proposal to shift more Medi-Cal patients into managed care plans. In previous meetings, the subcommittee voted to allow the expansion of managed care for children and families, and to carve out California Children’s Services (CCS). In this meeting, the committee voted to allow County Organized Health Systems (COHS) to expand into new counties, but rejected mandatory enrollment of aged, blind, and disabled populations into managed care.

The Senate Budget Subcommittee on Health and Human Services is expected to consider this issue, as well as many others, tomomrrow. The agenda and staff analysis for the Senate Budget Subcommittee is available at their website, at:
http://www.senate.ca.gov/ftp/SEN/COMMITTEE/STANDING/BFR/_home/NEWAGENDA.HTML#three

MEDICARE PRESCRIPTION DRUG IMPLEMENTATION: Another important discussion item today was the upcoming implementation of the Medicare Part D prescription drug benefit, starting in January 2006. Several issues are pending with regard to this new federal program, signed into law by President George W. Bush as part of the Medicare Modernization Act of 2003.

When proposed, the Medicare drug benefit was offered as a way to provide states with needed fiscal relief, as the federal government takes responsibility for covering the drug costs of “dual eligibles,” those who qualify for both the state Medi-Cal program and the federal Medicare program. Recent analyses have indicated that due to a “clawback” formula, and the corresponding loss of the state’s bargaining power, the state may actually lose money. The Legislative Analyst’s Office has studied this issue in depth, in their paper, “Part D Stands for Deficit,” on their website at:
http://www.lao.ca.gov/2005/medicare/medicare_031605.pdf

There are also issues of concern with the implementation of the prescription drug program for all seniors, but especially low-income and vulnerable populations. The Governor did acknowledge some of these issues in his May Revise, putting some funding for outreach activities around the launch of this new benefit. The Governor also proposed to continue providing drugs now covered by Medi-Cal for dual eligible beneficiaries where federal matching funds are available, as those classes of drugs will not be covered by Medicare. Medicare Part D excludes certain drugs from coverage, most notably benzodiazepines, barbiturates and over the counter medications.

Yet even with this, nearly one million low-income elderly and disabled dual eligible beneficiaries in California will be forced into an entirely new and more restrictive type of drug benefit through Medicare Part D. These dual eligible beneficiaries will be randomly assigned to drug plans based upon cost, not individual drug needs. Continuity of care will not be guaranteed. Of most concern, a very short transition period will leave no margin for error, since Medicaid drug coverage for this population ends the same day that Part D coverage begins.

Some of these issues will be discussed tomorrow before the Senate Budget Subcommitte. Several senior, disability, low-income, patient, consumer, and legal advocates, including Western Center for Law and Poverty and Health Access California, are making the case that the Budget Committees should:

  • Augment the Governor’s Budget to include an emergency coverage plan for the Medicare covered drugs for first two years of the Part D program to ensure continuity of care for dual eligible beneficiaries. Medicare Part D is supposed to cover medically necessary drugs for beneficiaries but dual eligibles will be forced to purchase some drugs at “full-price” out-of-pocket if their particular drug is not covered by their plan. The state should provide emergency relief to disabled or aging beneficiaries who may have to pay full price for drugs pending an appeal.
  • Augment the Governor’s Budget to provide assistance for dual-eligible beneficiaries with new cost-sharing requirements, including co-pays and premiums. While dual eligibles will not have to pay premiums for average cost drug plans, higher cost plans may better meet their individual drug needs, which could require them to pay added expenses for premiums. Unlike current Medicaid rules, pharmacies will be able to deny drugs to those who cannot afford to pay the co-payments.

For more information to assist on this issue, contact Anthony Wright, Health Access at awright@health-access.org.

Health Access California promotes quality, affordable health care for all Californians.

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