Dual eligibility for Medicare and Medicaid is expected to improve access to care for low-income individuals who qualify for both programs, relative to eligibility for either program alone. Medicaid coverage of Medicare deductibles and co-payments can reduce the financial burdens that these cost sharing requirements may pose for low-income Medicare beneficiaries. These dual eligible beneficiaries also benefit from the generosity of Medicare reimbursement rates relative to Medicaid, which is expected to increase the willingness of providers to treat them.
A recent article published ahead-of-print in Medical Care found increased use of outpatient care for individuals with severe mental illness when they transitioned from Medicaid-only to Medicare-Medicaid dual coverage, which the authors attributed to Medicare’s more generous payment rates and service coverage. However, dual eligible beneficiaries may not always realize the benefit of having Medicaid pay their Medicare cost sharing and Medicare’s more generous payment rates.
A recent New York Times article reports that providers are improperly billing Medicare-Medicaid dually eligible beneficiaries – often charging deductibles and co-payments that dual eligible beneficiaries are, by law, exempt from paying. Although providers are expected to bill Medicaid for dual eligible beneficiaries’ Medicare cost sharing, Medicaid does not always pay the full amount and some providers try to collect the unpaid amount from their patients. This balance billing is illegal and can create undue financial burden for dually eligible beneficiaries who pay when billed—sometimes under pressure from providers.
Our research, conducted for the Medicaid and CHIP Payment and Access Commission (MACPAC) on the effect of the gap between Medicare cost sharing amounts and Medicaid payments on use of primary care services, confirms the barriers to accessing care reported by the Times. The gap in payment can lead to poorer access to care if dually eligible beneficiaries avoid seeking treatment because of the financial burden or because some providers do not accept dually eligible beneficiaries as patients because they consider them less profitable than other Medicare beneficiaries.
States historically have had flexibility in how Medicaid reimburses Medicare cost sharing, but the Balanced Budget Act of 1997 (BBA) clarified that Medicaid programs are not required to pay the full Medicare cost sharing if the total provider payment would exceed the state’s Medicaid payment rate. Thus, if a state’s Medicaid rate is lower than what Medicare has already paid to the doctor, the state does not have to pay any of the Medicare cost sharing. Since passage of the BBA, Medicaid programs have shifted away from paying the full Medicare cost sharing and increasingly limit their payment to the difference between the Medicare reimbursement and Medicaid payment rate (a lesser-of payment policy). For physician services, for example, only 11 states reported paying the full amount of Medicare cost sharing in 2012, down from 31 states in 1997; in contrast, 39 states used a lesser-of policy in 2012, up from 12 states in 1997. Regardless of how much Medicaid pays for the Medicare cost sharing, doctors are not allowed to bill dually eligible beneficiaries for it.
Our study showed substantial variation across states in Medicaid payment for Medicare cost sharing. In 2009, Connecticut paid about 11% (lowest) and Montana paid 93% (highest). Most states with a lesser-of policy reimbursed 50% or less of the Medicare cost-sharing amount. We further found that dually eligible beneficiaries in states with lower Medicaid payment of Medicare cost sharing have poorer access to primary care and are more likely to have to use safety net providers for primary care. RTI’s analyses suggest that Medicaid reimbursing the full Medicare cost-sharing amount, relative to paying 20%, would increase the likelihood of a dually eligible beneficiary having a primary care visit by 6% and decrease the likelihood of using safety net providers for primary care by 20-40%, depending on the type of safety net providers.
The goal of increasing access for dually eligible beneficiaries could be achieved either by requiring states to pay the full Medicare cost sharing or by transferring responsibility for the cost-sharing payments from Medicaid to Medicare. Either approach would also reduce or even eliminate the risk of doctors improperly billing dually eligible beneficiaries.