For other versions of this document, see http://wikileaks.org/wiki/CRS-RL33251 ------------------------------------------------------------------------------ Order Code RL33251 CRS Report for Congress Received through the CRS Web Side-by-Side Comparison of Medicare, Medicaid, and SCHIP Provisions in the Deficit Reduction Act of 2005 January 30, 2006 Karen Tritz, Sibyl Tilson, Julie Stone, Chris L. Peterson, Jennifer O'Sullivan, Paulette C. Morgan, Elicia J. Herz, Jean Hearne, Jim Hahn, April Grady, Hinda Chaikind, and Evelyne P. Baumrucker Analysts and Specialists in Health Insurance and Financing Domestic Social Policy Division Congressional Research Service ~ The Library of Congress Side-by-Side Comparison of Medicare, Medicaid, and SCHIP Provisions in the Deficit Reduction Act of 2005 Summary On December 19, 2005, the House agreed to a conference report on S. 1932. However, the Senate amended the report, removing a few provisions as the result of a point of order raised associated with the "Byrd Rule." The amended agreement passed the Senate on December 21, 2005, and was returned to the House for further action. It is expected that the agreement will be taken up in the early part of the session. This report provides a comparison of Medicare, Medicaid and State Child Health Insurance Program (SCHIP) provisions contained in the Deficit Reduction Act of 2005 (S. 1932) as amended and passed by the Senate. The report compares the bill's provisions with current law. This report will be updated. Contents Medicare's update factor to increase operating payments to acute-care hospitals as affected by submission of quality data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Value-based purchasing for acute care hospitals . . . . . . . . . . . . . . . . . . 2 DRG Adjustment for Certain Hospital Acquired Infections . . . . . . . . . 3 Clarification of Inclusion of Medicaid Patient Days in Medicare's Computation of its Disproportionate Share Hospital (DSH) Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 4 Improvements to the Medicare-Dependent Hospital (MDH) Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Reduction in Payments to Skilled Nursing Facilities (SNFs) for Bad Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Extend Phase-in of the Inpatient Rehabilitation Facility (IRF) Compliance Thresholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Development of a Strategic Plan Regarding Physician Investment in Specialty Hospitals . . . . . . . . . . . . . . . . . 6 Gainsharing Demonstration Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Post-acute Care Payment Reform Demonstration Program . . . . . . . . . . 8 Beneficiary ownership of certain DME and Oxygen equipment . . . . . . 9 Adjustments in Payments for Imaging Services . . . . . . . . . . . . . . . . . 10 Limitation on Medicare Payments for Procedures in Ambulatory Care Surgical Centers (ASCs) . . . . . . . . . . . . . . . 11 Update for Physicians' Services for 2006 . . . . . . . . . . . . . . . . . . . . . . 12 Three Year Hold Harmless Transition for Small Rural Hospitals Into the Outpatient Prospective Payment System (OPPS) . . . . . . 14 Update to the Composite Rate Component of the Basic Case-Mix Adjusted Prospective Payment System for Dialysis Services . . . 14 Revisions to Payments for Therapy Services . . . . . . . . . . . . . . . . . . . . 15 Accelerated Implementation of Income-Related Reduction in Part B Premium Subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Medicare Coverage of Ultrasound Screening for Abdominal Aortic Aneurysms . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Improving Patient Access to, and Utilization of, Colorectal Cancer Screening Under Medicare . . . . . . . . . . . . . . . 18 Delivery of Services at Federally Qualified Health Centers (FQHC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Waiver of Part B Late Enrollment Penalty for Certain International Volunteers . . . . . . . . . . . . . . . . . . . . . . . . . 18 Home health payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Revision of period for providing payment for claims that are submitted electronically . . . . . . . . . . . . . . . . . . . . . . . . . 20 Time frame for part A and B payments . . . . . . . . . . . . . . . . . . . . . . . . 20 Increase in Medicare Integrity Program (MIP) Funding . . . . . . . . . . . 21 Phase-out of risk adjustment budget neutrality in determining the amount of payments to Medicare Advantage organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Establishment of PACE Provider Grant Program . . . . . . . . . . . . . . . . 24 Title VI. Medicaid and SCHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Subtitle A. Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Chapter 1. Payment for Prescription Drugs . . . . . . . . . . . . . . . . . . . . . . . . 26 Modification of Federal Upper Payment Limit for Multiple Source Drugs; Definition of Multiple Source Drugs . . 26 Disclosure of Price Information to States and the Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Definition of Average Manufacturer Price . . . . . . . . . . . . . . . . . . . . . 27 Exclusion of Sales at a Nominal Price from Determination of Best Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Retail Survey Prices; State Payment and Utilization Rates; and Performance Rankings . . . . . . . . . . . . . . . 29 Miscellaneous Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Effective Date for Prescription Drug Provisions . . . . . . . . . . . . . . . . . 31 Collection and Submission of Utilization Data for Certain Physician Administered Drugs . . . . . . . . . . . . . . . . . . . . 31 Collection and Submission of Utilization Data for Certain Physician Administered Drugs . . . . . . . . . . . . . . . . . . . . 32 Children's Hospital Participation in Drug Discount Program . . . . . . . 33 Chapter 2. Asset Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Lengthening Look-Back Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Change in Beginning Date for Period of Ineligibility . . . . . . . . . . . . . 35 Effective Date Section 6011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Availability of Hardship Waivers; Additional Provisions on Hardship Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Disclosure and Treatment of Annuities . . . . . . . . . . . . . . . . . . . . . . . . 36 Application of "Income-First" Rule in Applying Community Spouse's Income Before Assets in Providing Support of Community Spouse . . . . . . . . . . . . . . . . . . 39 Disqualification for Long-Term Care Assistance for Individuals with Substantial Home Equity . . . . . . . . . . . . . . . 41 Enforceability of Continuing Care Retirement Communities (CCRC) and Life Care Community Admission Contracts . . . . . . 42 Requirement to Impose Partial Months of Ineligibility . . . . . . . . . . . . 44 Authority for States to Accumulate Multiple Transfers into One Penalty Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Inclusion of Transfer of Certain Notes and Loans Assets . . . . . . . . . . 46 Inclusion of Transfers to Purchase Life Estates . . . . . . . . . . . . . . . . . . 47 Effective Date for Section 6016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Expansion of State Long-Term Care Partnership Program . . . . . . . . . 49 Chapter 3. Eliminating Fraud, Waste, and Abuse in Medicaid . . . . . . . . . . 57 Encouraging the Enactment of State False Claims Acts . . . . . . . . . . . 57 Employee Education About False Claims Recovery . . . . . . . . . . . . . . 57 Prohibition on Restocking and Double Billing of Prescription Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Medicaid Integrity Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Enhancing Third Party Identification and Payment . . . . . . . . . . . . . . . 59 Improved Enforcement of Documentation Requirements . . . . . . . . . . 60 Chapter 4. Flexibility in Cost Sharing and Benefits . . . . . . . . . . . . . . . . . . 62 State Option for Alternative Premiums and Cost Sharing . . . . . . . . . . 62 General Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Specified Groups Exempt from Premiums . . . . . . . . . . . . . . . . . . . . . 63 Specified Groups and Services Exempt from Service-Related Cost Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Beneficiary Conditions For Continued Medicaid Enrollment and Receipt of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Indexing Nominal Cost Sharing and Conforming Amendment . . . . . . 65 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Special Rules for Cost Sharing for Prescription Drugs . . . . . . . . . . . . 65 Limitations on cost-sharing for non-preferred drugs . . . . . . . . . . . . . . 66 Special conditions and applicable cost-sharing . . . . . . . . . . . . . . . . . . 66 Flexibility regarding drugs excluded from cost sharing provisions . . . 66 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Emergency Room Co-Payments for Non-Emergency Care . . . . . . . . . 66 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Provider Obligations Regarding Emergency Services . . . . . . . . . . . . . 67 Provider Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Grants to Establish Alternative Non-Emergency Provider Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Use of Benchmark Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Full Benefit Eligible Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Exempted Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Standard Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Wrap-Around Benefits for Children Only . . . . . . . . . . . . . . . . . . . . . . 73 Treatment of Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) . . . . . . . . . . . . . . . 73 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Chapter 5. State Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Managed Care Organization Provider Tax . . . . . . . . . . . . . . . . . . . . . 74 Reforms of Case Management and Targeted Case Management (TCM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Additional FMAP Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 DSH Allotment for the District of Columbia . . . . . . . . . . . . . . . . . . . . 76 Increase In Medicaid Payments to the Insular Areas . . . . . . . . . . . . . . 76 Subchapter A -- Family Opportunity Act . . . . . . . . . . . . . . . . . . . . . . 78 Opportunity for Families of Disabled Children to Purchase Medicaid Coverage for Such Children . . . . . . . . . . . 78 Interaction with Employer-Sponsored Family Coverage . . . . . . . . . . . 79 State Option to Impose Income-Related Premiums . . . . . . . . . . . . . . . 79 Conforming Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Demonstration Projects Regarding Home- and Community-Based Alternatives to Psychiatric Residential Treatment Facilities for Children . . . . . . . . . . . . . . . 81 State Demonstration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Federal Evaluation and Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Appropriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Family-to-Family Health Information Centers . . . . . . . . . . . . . . . . . . 82 Restoration of Medicaid Eligibility for Certain SSI Beneficiaries . . . 83 Subchapter B -- Money Follows the Person Rebalancing Demonstration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Money Follows the Person Demonstration . . . . . . . . . . . . . . . . . . . . . 84 State Demonstrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Eligible Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 State Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Requirements for Self-Directed Services . . . . . . . . . . . . . . . . . . . . . . . 87 Secretary's Award of Competitive Grants and Waivers . . . . . . . . . . . 87 Conditional Approval of Out-Year Grants . . . . . . . . . . . . . . . . . . . . . 87 Payments to States/ Carryover of Unused Grant Amounts . . . . . . . . . 88 Quality Assurance and Improvement; Technical Assistance and Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Research and Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Subchapter C -- Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Medicaid Transformation Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Health Opportunity Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Eligibility Rules for Demonstration Participants . . . . . . . . . . . . . . . . . 91 Benefits for Demonstration Participants . . . . . . . . . . . . . . . . . . . . . . . 93 Cost Sharing for Demonstration Participants . . . . . . . . . . . . . . . . . . . 93 Provider Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Demonstration evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 State Option to Establish Non-Emergency Medical Transportation Program . . . . . . . . . . . . . . . . . . . . . . . . . 95 Extension of Transitional Medical Assistance (TMA) and Abstinence Education Program . . . . . . . . . . . . . . . . . . . . . . . 95 Emergency Services Furnished by Non-Contract Providers for Medicaid Managed Care Enrollees . . . . . . . . . . . . . . . . . . . . 96 Expansion of home and community-based services . . . . . . . . . . . . . . 97 Establishment of Needs-Based Criteria . . . . . . . . . . . . . . . . . . . . . . . . 98 Projected Number of Enrollees in the Benefit and Modification of Needs-Based Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Independent Evaluation of Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 99 Independent Assessment Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Individualized Care Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 State Option to Offer Self-Directed Services . . . . . . . . . . . . . . . . . . . 101 Quality Assurance and Conflict of Interest Standards . . . . . . . . . . . . 101 Redeterminations and Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Presumptive Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 No Effect on Other Waiver Authority . . . . . . . . . . . . . . . . . . . . . . . . 102 Continued Federal Medicaid Funding for Certain Individuals . . . . . 102 Quality of care measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Optional Choice of Self-Directed Personal Assistance Services (Cash and Counseling) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 State Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Reports and Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Limits to the Availability of Self-Directed Services . . . . . . . . . . . . . 105 Scope of Self-Directed Personal Assistance Services . . . . . . . . . . . . 106 Self-Directed Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Self-Directed Services Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Application of Quality Assurance and Risk Management . . . . . . . . . 107 Financial Management Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Effective date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Subtitle B -- State Children's Health Insurance Program . . . . . . . . . . . . . 109 Additional allotments to eliminate FY2006 funding shortfalls . . . . . 109 Use of Additional FY2006 Appropriation for Child Health Assistance for Targeted Low-Income Children . . . . . . . . . . . . . 110 Prohibition against covering nonpregnant adults with SCHIP funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Continued authority for qualifying states to use certain funds for Medicaid expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Subtitle C -- Katrina Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Additional Federal Payments Under Hurricane-Related Multi-State Section 1115 Demonstrations . . . . . . . . . . . . . . . . . 113 List of Tables Title V. Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Title VI. Medicaid and SCHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Subchapter A -- Reform of Asset Transfer Rules . . . . . . . . . . . . . . . . . . . . . . . . 34 Subchapter B -- Expanded Access to Certain Benefits . . . . . . . . . . . . . . . . . . . 49 Chapter 6. Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Subchapter A -- Family Opportunity Act. . . . . . . . . . . . . . . . . . . . . . . . . . 78 Subchapter B -- Money Follows the Person Rebalancing Demonstration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Subchapter C -- Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Side-by-Side Comparison of Medicare, Medicaid, and SCHIP Provisions in the Deficit Reduction Act of 2005 On December 19, 2005, the House agreed to a conference report on S. 1932. However, the Senate amended the report, removing a few provisions as the result of a point of order raised associated with the "Byrd Rule." 1 The amended agreement passed the Senate on December 21, 2005, and was returned to the House for further action. Among the many provisions in the act, Title V proposes changes in the Medicare program, and Title VI proposes changes in the Medicaid and State Child Health Insurance Program (SCHIP) and provides some fiscal relief for Katrina victims using Social Security Act section 1115 waiver authority. The House is slated to act on the bill when it returns in 2006. This report provides a side-by-side comparison of the provisions contained in the Senate-passed version of the bill with current law. Additional information on provisions in the House and Senate versions of the bill can be found in CRS Report RL33131, Budget Reconciliation FY2006: Medicaid, Medicare, and State Child Health Insurance Program (SCHIP) Provisions. This report will be updated. 1 See CRS Report RL33132, Budget Reconciliation Legislation in 2005, by Robert Keith. CRS-2 Title V. Medicare Provision Current Law Conference Agreement as passed by the Senate Medicare's update factor to increase Medicare's annual increase in its operating payments to Section 5001(a). Hospitals that do not submit the operating payments to acute-care hospitals as hospitals is determined in part by the projected annual required data in FY2007 and each subsequent year will affected by submission of quality data. change in the hospital market basket (MB), a measure that have the applicable MB percentage increase reduced by estimates price inflation affecting hospitals. Congress two percentage points. Each IPPS hospital is required to establishes this update for Medicare's inpatient prospective submit data on measures selected by the Secretary in the payment system (IPPS) often several years in advance. established form, manner, and specified time. Any Currently, through FY2007, the IPPS operating update has reduction applies only to the fiscal year in question and been established as the MB for hospitals that submit does not affect subsequent fiscal years. The conference specific quality information and as the MB minus 0.4 agreement establishes that the Secretary will expand the percentage points for hospitals that do not provide such number of quality indicators required from acute care information. The required data are those 10 quality hospitals. Beginning October 1, 2006 the Secretary will indicators established as of November 1, 2003. Starting in begin to adopt the baseline set of performance measures FY2008, the IPPS update will be the hospital MB. Any set forth in the November 2005 Institute of Medicine MB reduction does not apply when computing the report that was required by Section 238(b) of MMA. applicable percentage increase in subsequent years Beginning October 1, 2007, the Secretary will add other measures that reflect consensus among the affected parties. Quality measures of process, structure, outcome, patients' perspective on care, efficiency, and costs of care that relate to inpatient services are to be reported on the CMS website. Value-based purchasing for acute care No current law. Section 5001 (b). The Secretary is required to develop a hospitals. plan to implement a value-based purchasing program for IPPS payments to acute care hospitals beginning with FY2009. The plan is required to consider specified factors such as (1) the development, selection, and modification process for quality measures (2) data CRS-3 Provision Current Law Conference Agreement as passed by the Senate reporting, collection, and validation; (3) the structure of value-based payment adjustments and sources of its funding; and (4) the disclosure of information on hospital performance. The Secretary will consult with relevant affected parties and consider experience with applicable demonstration programs. DRG Adjustment for Certain Hospital Medicare discharges are classified into diagnosis related Section 5001(c). Starting for discharges on October 1, Acquired Infections. groups (DRGs) primarily on the basis of the diagnosis and 2007, hospitals are required to report any secondary procedure code information included on the beneficiary's diagnosis codes applicable to patients at their admission claim. The information includes the principal diagnosis in order to be paid. By October 1, 2007, the Secretary is (or main problem requiring inpatient care), up to eight required to identify at least two high cost or high volume secondary diagnoses codes as well as up to six procedures (or both high cost and high volume) diagnoses codes with performed during the stay. Medicare pays for inpatient a DRG assignment that has a higher payment weight when hospital services using per discharge rates that will vary by present as a secondary diagnosis. These codes represent the DRG (and its calculated weight) to which a patient's conditions, including certain hospital acquired infections, stay is assigned. Each DRG weight represents the average that could reasonably have been prevented through the use resources required to provide care for cases in that specific of evidence-based guidelines. Starting for discharges on DRG relative to the average resources used to treat cases October 1, 2008, the DRG assigned to a discharge with in all DRGs. Under the DRG classification system, certain the identified diagnosis codes will be the lower paid secondary diagnoses are considered to be complications or DRG. The assignment of the lower paid DRG applies to comorbidities (CC). When present as a secondary discharges, where, at the time of the patient's admission, condition (with a specific principal diagnosis), these the beneficiary had none of the identified diagnosis codes. diagnosis codes are considered to increase the length of Adjustments to the relative weight that occur because of stay by least one day in at least 75% of the patients. In this action are not budget neutral. The list of diagnoses FY2006, 524 DRGs are used for Medicare payment may be revised from time to time as long as there are at purposes; 121 paired DRGs are split into higher and lower least two diagnosis codes selected for discharges paid DRGs on the presence or the absence of a CC. CMS occurring during any fiscal year. The Secretary is has added and deleted codes from the standard list of CCs, required to consult with the Centers for Disease Control but has never conducted a comprehensive review of the and Prevention and other appropriate entities when CRS-4 Provision Current Law Conference Agreement as passed by the Senate list. It is planning systematic review of the CC list for selecting and revising the identified diagnosis codes. The FY2007 Medicare payments. list of diagnosis codes and DRGs are not subject to judicial review. Clarification of Inclusion of Medicaid Patient Hospitals that serve a certain number of low income Section 5002. The Secretary can include inpatient Days in Medicare's Computation of its Medicare and Medicaid beneficiaries will receive a DSH hospital days of patients eligible for medical assistance Disproportionate Share Hospital (DSH) adjustment that increases their Medicare IPPS payments. under a Section 1115 demonstration waiver in the Adjustment . Most hospitals receive the additional payments based on Medicare DSH calculation. These days will be counted as their DSH patient percentage which is calculated using if they were provided to patients who were eligible for proportion of the hospital's total days provided to medical assistance under an approved Medicaid state plan. Medicaid recipients added to the proportion of the The existing regulations and their effective date are hospital's Medicare inpatient days provided to poor ratified. No hospital cost reports that are closed on the Medicare beneficiaries (those who are eligible for Part A enactment date will be reopened to implement this and receive Supplemental Security Income.) After a provision minimum threshold of 15% is met, a hospital's DSH adjustment will vary by the hospital's bed size or urban or rural location. The policy of whether inpatient days provided to a patient covered under a demonstration projects established by Section 1115 waivers could be included in the Medicare DSH calculation has changed over time. Starting January 20, 2000, hospitals were allowed to include the inpatient hospital days attributable to patients made eligible for Medicaid pursuant to a state's Social Security Act Section 1115 waiver. Previously, hospitals could include days for populations under the Section 1115 waiver who were or could have been made eligible under a state Medicaid plan. Starting for discharges on October 1, 2003, hospital days attributed to patients who do not receive coverage for inpatient benefits under Section 1115 demonstration projects cannot be CRS-5 Provision Current Law Conference Agreement as passed by the Senate counted in the Medicare DSH calculation. These policies were established by regulation in January 2000 and August 2003. Improvements to the Medicare-Dependent Certain small rural hospitals (with 100 beds or less) that Section 5003. The MDH status for qualifying rural Hospital (MDH) Program. have at least 60% of its inpatient days or discharges during hospitals would be extended through discharges occurring FY1987 or during two of the three most recently audited before October 1, 2011. Starting for discharges on cost reporting periods (for which there is a settled cost October 1, 2006, a MDH would be able to elect payments report) attributed to Medicare patients qualify for special based on 50% of its FY2002 hospital-specific costs if that treatment as MDHs. MDH hospitals are paid at national would result in higher Medicare payments. MDH's standardized rate or, if higher, 50% of their adjusted payments would be based on 75% of their adjusted FY1982 or FY1987 hospital-specific costs. This special hospital-specific costs starting for discharges on October treatment will lapse for discharges starting on October 1, 1, 2006. MDH's that qualify for a disproportionate share 2006. Certain hospitals that serve a high proportion of hospital (DSH) adjustment would not have the adjustment Medicaid patients or poor Medicare beneficiaries qualify capped at 12%. for a DSH adjustment to their inpatient payments. Small urban and most rural hospitals (except for rural referral centers) have their DSH adjustment capped at 12%. Reduction in Payments to Skilled Nursing Medicare pays the costs of certain items on a reasonable Section 5004. Medicare payments to SNFS for allowable Facilities (SNFs) for Bad Debt. cost basis (outside of the applicable prospective payment bad debts would be reduced to 70% for beneficiaries who system) including the unpaid debt for beneficiaries' are not eligible for both Medicare and Medicare. coinsurance and deductible amounts. CMS has reimbursed Medicare's payments for allowable bad debts attributed to certain providers for 100% of the debt. Effective for cost dual eligible beneficiaries would remain at 100%. reports starting in FY2001, Medicare began reimbursing acute care hospitals for 70% of the reasonable costs associated with beneficiaries' allowable bad debt. SNFs are still reimbursed 100% for this bad debt. CRS-6 Provision Current Law Conference Agreement as passed by the Senate Extend Phase-in of the Inpatient IRFs are either freestanding hospitals or distinct part units Section 5005. The compliance threshold for IRFs is Rehabilitation Facility (IRF) Compliance of other hospitals that are exempt from Medicare's IPPS established at 60% during the 12-month period beginning Thresholds. used to pay acute care hospitals. The Medicare statute on July 1, 2006; at 65% during the 12-month period gives the Secretary discretion to establish the criteria that beginning on July 1, 2007; and at 75% beginning on July facilities must meet in order to be considered an IRF. 1, 2008 and subsequently. Recently issued regulations by CMS require that a facility must treat a certain proportion of patients with specified medical conditions in order to qualify as an IRF and receive higher Medicare payments. CMS adopted a transition period for the compliance threshold as follows: at 50% from July 1, 2004 and before July 1, 2005; at 60% from July 1, 2005 and before July 1, 2006; at 65 % from July 1, 2006 and before July 1, 2007; and at 75% from July 1, 2007 and thereafter. Development of a Strategic Plan Regarding Physicians are generally prohibited from referring Section 5006. The Secretary is required to develop a Physician Investment in Specialty Hospitals. Medicare and Medicaid patients to facilities in which they strategic and implementing plan regarding physician (or their immediate family member) have financial investment in specialty hospitals. The plan will address interests. This prohibition does not extend to patient the proportionality of investment return, bona fide referrals to hospitals where physicians have ownership or investments, annual disclosure of investment income, the investment interest in the whole hospital itself (and not provision of care to Medicaid patients and to charity care merely in a subdivision of the hospital). Section 507 of patients by specialty hospitals, and appropriate MMA established that the exception for physician enforcement. An interim report is due within three investment and self-referral would not extend to specialty months and the final report is due no later than six months hospitals for a period of 18-months from enactment (or after the date of enactment. The Secretary will continue until June 8, 2004). This moratorium has been extended to suspend the enrollment of new specialty hospitals until administratively by CMS which has not issued provider the earlier of the date of submission of the report or six numbers to new specialty hospitals while it examines the months after the date of enactment. If the Secretary does criteria used to award such numbers. Generally, a not submit the final report within the six month time specialty hospital is primarily or exclusively engaged in period, then the enrollment suspension will be extended CRS-7 Provision Current Law Conference Agreement as passed by the Senate the care and treatment of cardiac or orthopedic patients, an additional two months. The Secretary will also provide but does not include those that are in operation or under an appropriate certification of the failure to congressional development as of November 18, 2003 (with the same committees of jurisdiction. The Secretary may waive number of physician investors as of such date that meets certain requirements of the Administrative Procedures Act other specified requirements). For instance, an increase in when developing the strategic and implementing plan. the number of beds could only occur on the main campus Two million dollars from the Treasury is appropriated in of the hospital and could not exceed the greater of 50% of FY2006 for this strategic plan. the number of beds in the hospital as of November 18, 2003, or five beds. The Secretary was directed to consider certain factors in determining whether a hospital is under development, such as the completion of architectural plans, and the status of funding, zoning requirements, and necessary approvals from State agencies. Gainsharing Demonstration Project. Anti-kickback and patient referral laws are intended to Section 5007. The Secretary will establish a gainsharing discourage physicians and other health care providers from demonstration project to evaluate arrangements between improperly profiting from referrals of Medicare and IPPS hospitals and physicians and practitioners. Up to six Medicaid patients. Exceptions to those laws permit certain projects (with at least two in rural areas) will be approved physician-facility arrangements under specific by November 1, 2006 and operational no later than circumstances. In 2004, a federal district court stopped January 1, 2007. The Secretary will solicit applications CMS from implementing an eight hospital gainsharing 90 days after enactment. The projects will end on demonstration project because of civil monetary penalty December 31, 2009. The projects must meet certain concerns. In March 2005, MedPAC recommended that requirements for maintaining or improving quality while Congress grant the Secretary the authority to allow achieving cost savings. Certain existing restrictions regulated gainsharing arrangements between physicians concerning incentive payments will be waived. The and hospitals. Secretary will meet the following reporting requirements: (1) a report to Congress on the number of projects will be due no later than December 1, 2006; (2) a project update will be due no later than December 1, 2007; (3) a report on quality improvement and savings will be due no later CRS-8 Provision Current Law Conference Agreement as passed by the Senate than December 1, 2008; and (4) a final report will be due no later than May 1, 2010. Six million dollars will be appropriated from the Treasury in FY2006 to carry out the projects and will remain available for expenditure through FY2010. Post-acute Care Payment Reform No provision. Section 5008. The Secretary is required to establish a Demonstration Program. three-year demonstration program to assess the costs and outcomes across different post-acute care sites by January 1, 2008. Under this demonstration, an individual provided treatment for specific diagnoses will receive a comprehensive assessment at discharge to determine the appropriate post-acute care placement for the patient. A standardized patient assessment instrument will be used across all post-acute care sites to measure the patients' functional status and other factors. Participants are required to provide information on the fixed and variable cost for each patient and provide an additional comprehensive assessment at the end of the person's episode of care. The demonstration program is required to consist of sufficient numbers to determine statistically reliable results. The Secretary is required to submit a report to Congress no less than six months from the end of the project. Six million dollars will be transferred from Medicare's Hospital Insurance Trust Fund for the costs of carrying out the demonstration program. CRS-9 Provision Current Law Conference Agreement as passed by the Senate Beneficiary ownership of certain DME and Medicare Part B pays for certain items of durable medical Section 5101. The conference agreement would require Oxygen equipment. equipment such as hospital beds, nebulizers and power- the supplier to transfer the title of durable medical driven wheelchairs under the capped rental category. Most equipment in the capped rental category to the beneficiary items in this category are provided on a rental basis for a after a 13-month rental period. The option for a 15- period that can not exceed 15 months. After using the month rental period with the supplier retaining ownership equipment for 10 months, beneficiaries must be given the of the item would be eliminated. The option for option of purchasing it effective 13 months after the start beneficiaries to purchase power-driven wheelchairs when of the rental period. If they choose the purchase option, initially furnished would be retained. the title to the equipment is transferred to beneficiaries. If the purchase option is not chosen, the supplier retains Automatic payment to the suppliers every six months for ownership of the equipment. Beneficiaries can continue to maintenance and servicing would be eliminated. Such use it, but Medicare rental payments to the supplier are payments (for parts and labor not covered by the terminated. In the case of a power-driven wheelchair, the supplier's or manufacturer's warranty) would only be supplier must offer the beneficiary the option of made if the Secretary determined them to be reasonable purchasing the equipment when it is first furnished. and necessary. This amendment would apply to items for which the first rental month occurred on or after January Medicare payments to suppliers for maintenance and 1, 2006. servicing differ based on whether the beneficiary has purchased the equipment or whether the supplier continues The agreement further provides that rental payments for to own it. In the case of a purchase agreement, payment oxygen equipment (including portable oxygen equipment) for repairs and maintenance recommended by the are converted to ownership at 36 months. The supplier is manufacturer is covered. When the equipment remains in required to transfer the title of the equipment to the the ownership of the supplier and continues to be used by beneficiary after a 36-month rental period. After transfer the beneficiary after the 15-month rental period, Medicare of the title, monthly payments for oxygen contents (in the makes a payment to the supplier every six months for case of gaseous and liquid oxygen) will continue to be servicing and maintenance regardless of whether any made, as provided for under current law, for the period of maintenance and servicing is performed. medical need. Payments for maintenance and servicing (for parts and labor not covered by the supplier's or manufacturer's warranty) will be made if the Secretary CRS-10 Provision Current Law Conference Agreement as passed by the Senate determines them to be reasonable and necessary. The agreement specifies that the provision takes effect on January 1, 2006. In the case of an individual receiving oxygen equipment as of December 31, 2005, the 36 month period begins January 1, 2006. Adjustments in Payments for Imaging Medicare has a long-standing policy of reducing payment Section 5102. The conference agreement specifies that, Services. for multiple surgical procedures performed by the same effective for fee schedules established beginning with physician, on the same patient on the same day. Full 2007, the reduced expenditures attributable to the multiple payment is made for the highest priced procedure, with procedure payment reduction for imaging (under the final any subsequent procedure paid at 50%. In 1995, the policy rule published November 21, 2005) will not be taken into was extended to certain nuclear medicine diagnostic account for purposes of the budget neutrality calculation procedures. for fee schedules for 2006 and 2007. Under the physician fee schedule, diagnostic imaging The agreement further provides that for specified procedures are priced as follows: (1) the professional imaging services furnished on or after January 1, 2007, component (PC) represents the physician work, that is the the technical component (including the technical interpretation; (2) the technical component (TC) represents component of the global fee) for a service will be reduced practice expenses including clinical staff, supplies, and if it exceeds (without regard to the geographic wage equipment; and (3) the global service which represents adjustment factor) the outpatient department (OPD) fee both the PC and TC. Diagnostic imaging services, even schedule amount for the service established under the those performed on contiguous body parts, are generally prospective payment system for hospital outpatient paid at 100% for each procedure. departments. In such cases, the Secretary will provide for the use of that OPD amount, adjusted by the geographic On November 21, 2005, CMS issued its final adjustment factor under the physician fee schedule. The physician fee schedule regulation for 2006 (Federal services this policy applies to are: imaging and computer- Register, vol. 70, pp. 70116-70476). This regulation assisted imaging services, including X-ray, ultrasound provided for a reduction in the TC for the subsequent (including echocardiography), nuclear medicine imaging procedure performed on contiguous body parts. (including positron emission tomography), magnetic The multiple procedure reduction is not applied to PC resonance imaging, computed tomography, and CRS-11 Provision Current Law Conference Agreement as passed by the Senate services. When a global service code is billed, the TC fluoroscopy. Not included are diagnostic and screening portion, but not the PC portion, is reduced. CMS mammography. This change is not to be taken into identified 11 families of imaging procedures by imaging account for purposes of the budget neutrality calculation modality. The multiple procedure TC payment reduction beginning in 2007. is to be applied only to procedures involving contiguous body parts within a family of codes, not across families. The payment reduction is to be phased-in with a 25% reduction in 2006 and a 50% reduction in 2007. Further, the budget neutrality adjustment is to be applied only to practice expense relative value units rather than to both work and practice expense relative value units. Limitation on Medicare Payments for Medicare uses a fee schedule to pay for the facility Section 5103. Starting for surgical procedures on Procedures in Ambulatory Care Surgical Centers services related to a surgery provided in an ASC. The January 1, 2007, when the ASC facility payment (without (ASCs). associated physician services (surgery and anesthesia) are application of any geographic price differences) is greater reimbursed under the physician fee schedule. CMS than the Medicare OPD fee schedule amount established maintains a list of approved ASC procedures which is under OPPS (without application of any geographic required to be updated every two years. The approved adjustment) for the same service, the ASC will be paid the ASC procedures are categorized into one of nine payment OPD fee schedule amount. This adjustment applies to groups that comprise the ASC facility fee schedule. The ASC payments until the revised ASC payment system is nine payment rates reflect the national median cost of implemented. Total payments to ASCs under the revised procedures in that group adjusted to reflect geographic payment system can be no more than those under the price variation. Payments are also adjusted when multiple existing ASC payment system, including the reduced surgical procedures are performed at the same time. The expenditures that result from the application of this Secretary is required to implement a new ASC payment provision. system no later than January 2008. Medicare reimbursement for hospital outpatient department (OPD) services is based on a fee schedule established by a separate prospective payment system (OPPS). Under OPPS, the unit of payment is the individual service or CRS-12 Provision Current Law Conference Agreement as passed by the Senate procedure as assigned to a ambulatory payment classification (APC). The payment rate for each service is determined by multiplying the relative weight for the service's APC by the conversion factor. Update for Physicians' Services for 2006. Medicare payments for services of physicians and certain Section 5104. The conference agreement overrides nonphysician practitioners are made on the basis of a fee application of the formula for 2006 by setting the update schedule. The fee schedule assigns relative values to at zero. In effect, this means that the 2006 conversion services that reflect physician work (i.e., the time, skill, factor is the same as the 2005 conversion factor. and intensity it takes to provide the service), practice expenses, and malpractice costs. The relative values are The agreement also requires the Medicare Payment adjusted for geographic variations in costs. The adjusted Advisory Commission (MedPAC) to submit a report to relative values are then converted into a dollar payment Congress by March 1, 2007 on mechanisms that could be amount by a conversion factor. The conversion factor for used to replace the sustainable growth rate system. The 2005 is $37.8975. report is to: (1) identify and examine alternative methods for assessing volume growth; (2) review options to control The conversion factor is the same for all services. It the volume of physicians services under Medicare while is updated each year according to a formula specified in maintaining access for beneficiaries; (3) examine the law. The intent of the formula is to place a restraint on application of volume controls under the fee schedule; (4) overall spending for physicians' services. Several factors identify levels of application of volume controls such as enter into the calculation of the formula. These include (1) group practice, hospital medical staff, type of service, the sustainable growth rate (SGR) which is essentially a geographic area, and outliers; (5) examine the cumulative target for Medicare spending growth over time administrative feasibility of implementing options under (with 1996 serving as the base period); (2) the Medicare (2), including the availability of data and time lags; (6) economic index (MEI) which measures inflation in the examine the extent to which the alternative methods inputs needed to produce physicians services; and (3) the identified and examined under (1) should be specified; update adjustment factor which modifies the update, which and (7) identify the appropriate levels of discretion for the would otherwise be allowed by the MEI, to bring spending Secretary of HHS to change payment rates under the fee in line with the SGR target. In no case can the adjustment schedule or to otherwise take steps that affect physician factor be less than minus 7% or more than plus 3%. behavior. The report is to include recommendations on CRS-13 Provision Current Law Conference Agreement as passed by the Senate The law specifies a formula for calculating the SGR. alternative mechanisms to replace the SGR. The section It is based on changes in four factors: (1) estimated appropriates $550,000 from the Treasury, out of amounts changes in fees; (2) estimated change in the average not otherwise appropriated, to MedPAC to carry out the number of Part B enrollees (excluding Medicare study. Advantage beneficiaries); (3) estimated projected growth in real gross domestic product (GDP) growth per capita; and (4) estimated change in expenditures due to changes in law or regulations. In order to even out large fluctuations, MMA changed the GDP calculation from an annual change to an annual average change over the preceding 10 years (a "10-year rolling average"). The SGR target is not a limit on expenditures. Rather, the fee schedule update reflects the success or failure in meeting the target. If expenditures exceed the target, the update for a future year is reduced. This is what occurred for 2002. It was also slated to occur in 2003 and 2004; however, legislation prevented this from occurring through 2005. Under the formula, a negative 4.4 % update goes into effect in 2006. Three Year Hold Harmless Transition for The OPPS for services provided by hospital outpatient Section 5105. Certain small rural hospitals (with no more Small Rural Hospitals Into the Outpatient departments (OPD) was implemented in August 2000 for than 100 beds that are not SCHs) can receive additional Prospective Payment System (OPPS). most acute care hospitals. Under hold harmless provisions, Medicare payments if their outpatient payments under as modified by the MMA, rural hospitals with no more OPPS are less than under the old payment system. For than 100 beds and sole community hospitals (SCH) located calendar year (CY) 2006, these hospitals will receive 95% in rural areas are paid no less under OPPS than they would of any difference. The hospitals will receive 90% of the have received under the prior reimbursement system for difference in CY2007 and 85% of the difference in covered OPD services provided until January 1, 2006. CY2008. Under its administrative authority, starting for services on CRS-14 Provision Current Law Conference Agreement as passed by the Senate January 1, 2006, CMS has increased OPPS payments to rural SCHs by 7.1%. Update to the Composite Rate Component The Medicare Prescription Drug, Improvement, and Section 5106. The conference agreement increases the of the Basic Case-Mix Adjusted Prospective Modernization Act of 2003 (MMA) required the Secretary composite rate component of the basic case-mix adjusted Payment System for Dialysis Services. to establish a basic case-mix adjusted prospective payment system by 1.6% for services beginning January 1, 2006. system for dialysis services furnished either at a facility or in a patient's home, for services furnished beginning on January 1, 2005. The basic case-mix adjusted system has two components: (1) the composite rate, which covers services, including dialysis; and (2) a drug add-on adjustment for the difference between the payment amounts for separately billable drugs and biologicals and their acquisition costs, as determined by Inspector General Reports. The Secretary is required to update the basic case-mix adjusted payment amounts annually beginning with 2006, but only for that portion of the case-mix adjusted system that is represented by the add-on adjustment and not for the portion represented by the composite rate. Revisions to Payments for Therapy The Balanced Budget Act of 1997 (BBA 97) established Section 5107. The conference agreement does not extend Services. annual per beneficiary payment limits for all outpatient the moratorium. However, the Secretary is required to therapy services provided by non-hospital providers. The implement an exceptions process for expenses incurred in limits applied to services provided by independent 2006. Under the process, a Part B enrollee, or a person therapists as well as to those provided by comprehensive acting on behalf of the enrollee, may request an exception outpatient rehabilitation facilities (CORFs) and other from the physical therapy and occupational therapy caps. rehabilitation agencies. The limits did not apply to The individual may obtain such exception if the provision outpatient services provided by hospitals. of services is determined medically necessary. If the CRS-15 Provision Current Law Conference Agreement as passed by the Senate Beginning in 1999, there were two beneficiary Secretary does not make a decision on a request within 10 limits. The first was a $1,500 per beneficiary annual cap business days of receipt, the Secretary is deemed to have for all outpatient physical therapy services and speech found the services medically necessary. The Secretary is language pathology services. The second was a $1,500 per required to waive such provisions of law and regulations beneficiary annual cap for all outpatient occupational (including those related to the Paperwork Reduction Act) therapy services. Beginning in 2002, the amount would as are necessary to implement these amendments on a increase by the Medicare economic index (MEI) rounded timely basis. The amendments may be implemented by to the nearest multiple of $10. program instruction or otherwise. The agreement specifies that there can be no administrative or judicial review of The Balanced Budget Refinement Act of 1999 the exceptions process (including establishment of the (BBRA) suspended application of the limits for 2000 and process). 2001. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) extended The agreement also requires the Secretary, by July the suspension through 2002. Implementation of the 1, 2006, to implement clinically appropriate code edits for provision was delayed until September 2003. The caps physical therapy services, occupational therapy services, were implemented from September 1, 2003 through and speech language pathology services. The edits are to December 7, 2003. MMA reinstated the moratorium from identify and eliminate improper payments. The edits are December 8, 2003 through December 31, 2005. The caps to include edits of clinically illogical combinations of go into effect again beginning January 1, 2006. In the procedure codes and other edits to control inappropriate November 2005, final physician fee schedule regulation billings. for 2006 CMS announced that the cap would be $1,740 in 2006. Accelerated Implementation of Income- Since the inception of Medicare, all Part B enrollees have Section 5111. The agreement accelerates the phase-in Related Reduction in Part B Premium Subsidy. paid the same Part B premium, regardless of their income period from five years to three years, with the provision level. MMA increased the Part B premiums for higher fully effective in 2009. In 2007, higher income enrollees income enrollees beginning in 2007. In 2007, individuals will pay total premiums ranging from 28.3% to 43.15% of whose modified adjusted gross income (AGI) exceeds the total value of Part B. In 2010, enrollees will pay total $80,000 and couples whose modified AGI exceeds premiums ranging from 31.7% to 61.85% of the total $160,000 will be subject to higher premium amounts. The value of Part B. When fully phased-in in 2009, higher CRS-16 Provision Current Law Conference Agreement as passed by the Senate increase is to be phased-in over five years. During the first income individuals will pay total premiums ranging from year, higher income enrollees will pay premiums ranging 35% to 80% of the total value of Part B. from 27% to 36% of the value of Part B. When fully phased-in, higher income individuals will pay premiums ranging from 35% to 80% of the value of Part B. The term modified AGI means adjusted gross income as defined under the Internal Revenue Code (determined without regard to specified exclusions), increased by tax-exempt interest. In general, the taxable year to be used is that beginning in the second calendar year preceding the year involved. Under certain circumstances, an individual may request to have the determination made for a more recent year. The current law provision which specifies that a beneficiary's check can not go down from one year to the next as a result of the Part B premium increase will not apply to persons subject to an income-related increase in their Part B premiums. Medicare Coverage of Ultrasound Screening Medicare provides coverage for services which are Section 5112. The agreement authorizes Medicare for Abdominal Aortic Aneurysms. reasonable and necessary for the diagnosis or treatment of coverage of ultrasound screening for abdominal aortic illness or injury or to improve the functioning of a aneurysms for individuals who: (1) receive referrals for malformed body member. In addition, Medicare covers such screenings as a result of an initial preventive physical certain preventive services specified in law. exam performed for new Medicare enrollees; (2) who have not previously had such a test covered by Medicare; and (3) who have a family history of abdominal aortic aneurysm or who manifest risk factors included in a beneficiary category identified by the United States Preventive Services Task Force. An ultrasound screening for abdominal aortic CRS-17 Provision Current Law Conference Agreement as passed by the Senate aneurysm is defined as a procedure using sound waves provided for the early detection of abdominal aortic aneurysm. The Secretary could specify other procedures using alternative technologies which are of commensurate accuracy and cost. The term includes the physician's interpretation of the results of the procedure. Ultrasound screening for abdominal aortic aneurysm is to be included in the package of services provided in the initial preventive service exam offered to new Medicare enrollees. Payments are made under the physician fee schedule for screenings performed on or after January 1, 2007. The Part B deductible does not apply to these services. Improving Patient Access to, and Utilization Medicare covers certain colorectal cancer screening tests, Section 5113. The agreement provides that the Part B of, Colorectal Cancer Screening Under Medicare. subject to coverage limitations based on the type of test deductible does not apply to colorectal cancer screening and the individual's level of risk. Covered tests are fecal tests, effective January 1, 2007 occult blood test, flexible sigmoidoscopy, screening colonoscopy, and barium enema. Payments for services are made under the physician fee schedule, subject to the Part B deductible and coinsurance. Delivery of Services at Federally Qualified According to statute, an FQHC is required to provide Section 5114. Medicare covered diabetes self- Health Centers (FQHC). certain primary care services by physicians and appropriate management training and medical nutrition therapy mid-level practitioners as well as other preventive health services (provided by registered dietitian or nutrition services including those required under certain sections of professional) are added as FQHC services. Services the Public Health Service (PHS) Act (specifically Sections furnished by a health care professional who is under 329, 330, and 340 of the PHS). Prior to the enactment of contract with a FQHC would be made directly to the CRS-18 Provision Current Law Conference Agreement as passed by the Senate MMA, FQHC services were covered by a skilled nursing FQHC. facility's (SNF) consolidated billing requirement. FQHC services were bundled into the SNF's comprehensive per diem payment for the covered stay and not separately billable. MMA specified that a SNF Part A resident who receives FQHC services from a physician or appropriate practitioner would be excluded from SNF consolidated billing and be paid separately. Waiver of Part B Late Enrollment Penalty for Medicare Part B is a voluntary program. People generally Section 5115. The agreement permits certain individuals Certain International Volunteers . enroll in Part B when they turn 65. Persons who delay to delay enrollment in Part B without a delayed enrollment in the program after their initial enrollment enrollment penalty. Those individuals permitted to delay period are subject to a premium penalty. This penalty is a enrollment would be those who volunteered outside of the surcharge equal to 10% of the premium amount for each United States for at least 12 months through a program 12 months of delayed enrollment. There is no upper limit sponsored by a tax-exempt organization defined under on the amount of the surcharge that may apply. Further, Section 501(c)(3) of the Internal Revenue Code. The the penalty continues to apply for the entire time the individuals must demonstrate they had health insurance individual is enrolled in Part B. The law establishes coverage while serving in the international program. certain exceptions to the delayed enrollment penalty. One exception applies to the "working aged." Delayed Individuals permitted to delay enrollment will have enrollment is also permitted for certain disabled persons a special Part B enrollment period which will be the six- who have group health insurance coverage based on their month period beginning on the first day of the month the own or a family member's current employment with a individual is no longer in the program. Coverage will large group health plan. begin the month after the individual enrolls. This section applies to months and special enrollment periods Individuals who are permitted to delay enrollment beginning January 2007. have their own special enrollment periods. A special enrollment period begins when current employment ends or when coverage under the plan ends. The special enrollment period ends eight months later. Individuals CRS-19 Provision Current Law Conference Agreement as passed by the Senate who fail to enroll in this period are considered to have delayed enrollment and could become subject to the penalty. Home health payments. The Medicare home health prospective payment system, Section 5201. The conference agreement eliminates the which was implemented on October 1, 2000, provides a update for home health payments in 2006. It also extends standardized payment for a 60-day episode of care the 5% additional payment for rural home health episodes furnished to a Medicare beneficiary. Medicare's payment or visits beginning on or after January 1, 2006 and before is adjusted to reflect the type and intensity of care January 1, 2007. furnished and area wages as measured by the hospital wage index. Starting in 2007, the conference agreement directs home health agencies to submit to the Secretary health care Each year Medicare's payment to home health agencies is quality data in a form, manner, and time period specified updated by the projected annual change in the home health by the Secretary. In 2007 and subsequent years, a home market basket (HHMB), with specified reductions in some health agency that does not submit the required quality years. For the last three calendar quarters of 2004-2006, data will receive an update of the market basket minus the home health update is the HHMB minus 0.8 percentage two percentage points. This reduction would only apply points. In 2007 and subsequent years, the payment update to the fiscal year in question. The conference agreement for home health agencies is equal to the full HHMB. directs the Secretary to design procedures for making the data available to the public. The Medicare Prescription Drug Improvement and Modernization Act of 2003 provided for a one-year 5% The conference agreement directs the Medicare Payment additional payment for home health services furnished in Advisory Commission to submit a report to Congress no rural areas. The temporary payment began for episodes later than June 1, 2007 on a value-based purchasing and visits ending on or after April 1, 2004 and before April program for home health services. The report is to 1, 2005. It was made without regard to certain budget include recommendations on the structure of the program, neutrality provisions and was not included in the base for determining thresholds, the size of value-based payments, determination of payment updates. sources of funds, and the relationship of payments and improvements in health care quality. The conference agreement directs $550,000 to be appropriate to the CRS-20 Provision Current Law Conference Agreement as passed by the Senate Medicare Payment Advisory Commission to write this report. Revision of period for providing payment for Mandatory electronic claims submission went into effect Section 5202. The Conference agreement directs claims that are submitted electronically. on July 1, 2005 for all providers, with a few exceptions. Medicare contractors to delay the payment of claims that The exceptions include (1) small providers with fewer than are not submitted electronically. The contractors are 25 full-time equivalent (FTEs) employees and physicians, directed to pay 95% of all "clean" claims within 29-30 practitioners, or suppliers with fewer than 10 FTEs, (2) days of receipt for paper claims. dentists, and (3) other providers as specified by the Centers for Medicare and Medicaid Services (CMS). Medicare contractors must pay 95% of all "clean" paper claims within 27-30 days of receipt. Time frame for part A and B payments. Medicare contractors accept, process, and pay claims Section 5203. The Conference agreement delays submitted by providers for Medicare-covered services. Medicare Part A and B payments by nine days. Claims Medicare contractors must pay interest on claims that are that would otherwise be paid on September 22, 2006, not paid promptly. through September 30, 2006 would be paid on the first business day of October 2006. No interest or late penalty The contractors must pay 95% of all "clean" claims within would be paid to an entity or individual for any delay in 14-30 days of receipt for electronically submitted claims, a payment during the period. and within 27-30 days of receipt for paper claims. If the payment is not made within that time, interest begins accruing on the day after the required payment date and ends on the date on which the payment is made. The interest rate is set at the higher of the "private consumer rate", or the "current value of funds." Increase in Medicare Integrity Program (MIP) As part of the Health Insurance Portability and Section 5204. MIP funding is increased by $100 million Funding. Accountability Act of 1996 (HIPAA), Congress acted to for FY2006. increase and stabilize federal funding for anti-fraud CRS-21 Provision Current Law Conference Agreement as passed by the Senate activities. As required by Section 1817(k) of the Medicare law, an expenditure account was established within the Federal Hospital Insurance Trust Fund (the HCFAC account). Certain amounts were appropriated from the Trust Fund for specific activities, including the Medicare Integrity Program (MIP). These amounts have been established as not less than $710 million and not more than $720 million for FY2002 and subsequently. Phase-out of risk adjustment budget Medicare Advantage payment rates are risk adjusted to Section 5301. Beginning in 2007, this section (1) would neutrality in determining the amount of payments control for the variation in the cost of providing health care change the way MA area-specific non-drug monthly to Medicare Advantage organizations. among beneficiaries. Rates are adjusted by demographic benchmarks (or MA benchmarks) are calculated, and (2) and health status indicators. In the report language to the would specify an adjustment to the benchmarks to phase- Medicare, Medicaid, and SCHIP Balanced Budget out overall increases in MA rates that are the result of the Refinement Act of 1999, Congress urged the Secretary to budget neutral implementation of risk adjustment. implement a more clinically-based risk adjustment methodology without reducing overall payments to plans. Changes to the benchmark: In 2007, if the Secretary To keep payments from being reduced overall, the does not rebase rates to 100% of per capita fee-for-service Secretary applied a budget neutrality adjustment to the risk costs, the MA benchmarks would be equal to the 2006 adjusted rates. However, the Secretary has proposed to rates as announced by the Secretary on April 4, 2005, with phase-out the budget neutrality adjustment citing studies four adjustments -- (1) exclusion of any national that show a difference in the reported health status of adjustments for coding intensity, (2) exclusion of risk Medicare Advantage enrollees compared to the reported adjustment budget neutrality, (3) increase based on the health status of beneficiaries in traditional Medicare. national per capita MA growth percentage, and (4) omission of any adjustments to account for errors in previous years' projections of the national per capita MA growth percentage. If the Secretary does rebase the rates in 2007, the MA benchmark would be set at the greater of either the rate calculated above, or 100% of per capita fee- for-service spending in the area. After 2007, if the CRS-22 Provision Current Law Conference Agreement as passed by the Senate Secretary does not rebase rates, the MA benchmarks would be the previous year's benchmark (prior to the application of the phase-out percentage discussed below) increased by the national per capita MA growth percentage without adjusting for errors in the estimation of the growth percentage for a year before 2004. After 2007, if the Secretary rebases rates, the benchmark would be equal to the greater of either the rate calculated above, or 100% of per capita fee-for-service spending. Phasing out Budget Neutrality for Risk Adjustment: The new benchmarks described above would be free of the budget neutral risk adjustment. However, the new benchmarks would be adjusted so that budget neutrality would be phased-out over four years. The applicable phase-out factors would be equal to .55 in 2007, .40 in 2008, .25 in 2009 and .05 in 2010. This means that in 2007, 55% of the payment to plans would be based on the budget neutral risk adjustment, and 45% of the payment to plans would be based on a rate without the budget neutral adjustment. Additionally, the benchmark would be multiplied by a complex formula that equals the Secretary's estimate of the total amount of payments that would have been made to plans with budget neutrality, divided by the Secretary's estimate of the total amount of payments that would be made without budget neutrality. When making this calculation, the Secretary would (a) use a complete set of the most recent and representative MA risk scores available, (b) adjust the risk scores to reflect CRS-23 Provision Current Law Conference Agreement as passed by the Senate changes in treatment and coding practices in fee-for- service, and (c) adjust the risk scores for differences in coding patterns under Medicare Part A and B compared to MA plans to the extent the Secretary has identified differences and (d) as necessary, adjust for late data submissions, lagged cohorts, and changes in MA enrollment. The Secretary could take into account estimated health risk of enrollees in preferred provider organizations (including MA regional plans) for the year. The Secretary would be required to conduct a study of the difference between treatment and coding patterns between MA plans and providers under Parts A and B of Medicare using data starting in 2004. The findings would be incorporated into calculations of MA benchmarks in 2008, 2009, and 2010. No adjustments would be made if payments increased relative to current law. The Secretary could not make any adjustments to MA benchmarks, other than those specified above. The Secretary's authority to risk adjust MA benchmarks based on 100% of per capita fee-for-service spending would not be limited by these changes. Establishment of PACE Provider Grant PACE is a program providing comprehensive Medicare Section 5302. This provision creates site development Program. and Medicaid services under a managed care arrangement grants, provides technical assistance to established rural to individuals over age 55 who are eligible for a nursing PACE providers, and establishes an outlier fund for rural home level of care. PACE organizations, which are public PACE providers. A rural area would be a county that is or private non-profit entities, receive a fixed monthly not part of a Metropolitan Statistical Areas (as defined by Medicare and Medicaid payment to cover a comprehensive the Office of Management and Budget) as established for set of services for PACE participants. The PACE service Medicare IPPS payments to acute care hospitals. The CRS-24 Provision Current Law Conference Agreement as passed by the Senate package must include all Medicare and Medicaid covered Secretary will establish a procedures to award site services, and other services determined necessary by the development grants to up to 15 qualified PACE providers multidisciplinary team for the care of the PACE that serve a rural area. These providers are rural PACE participant. pilot sites. The PACE grants would not exceed $750,000. The Secretary is appropriated $7.5 million in FY2006 out of the Treasury for these development grants and remain available for expenditure until FY2008. The Secretary will establish a technical assistance program to provide (1) outreach and education to specified entities interested in starting rural PACE programs, and (2) technical assistance necessary to support rural PACE pilot sites. An outlier fund for inpatient and related physician and ancillary costs incurred for an eligible participant within a given 12-month period is required. Outlier costs are those inpatient and other costs in excess of $50,000 incurred within a given 12-month period for an eligible participant who resides in a rural area. For the first three years of its operation, a rural PACE site will receive 80% of the outlier costs in excess of $50,000 for that period. Total outlier payments for an eligible participant could not exceed $100,000 for the 12 month period used to calculate the payment. No site may receive more than $500,000 in total outlier expense payments in a period. A rural PACE pilot site is required to access and exhaust risk reserves held or arranged for the provider and any working capital amounts prior to receiving any payment from the outlier fund. The Secretary is appropriated $10 million for FY2006 for the outlier fund which are available for expenditure through FY2010. The Secretary CRS-25 Provision Current Law Conference Agreement as passed by the Senate is required to submit a report to Congress on the evaluation of the rural PACE pilot sites no later than 60 months from the date of enactment. Any amount paid under this authority would be in addition to Medicare PACE funds paid under Section 1894 of the Social Security Act or Medicaid PACE funds paid for under Section 1934 of the same act. Title VI. Medicaid and SCHIP Subtitle A. MedicaidChapter 1. Payment for Prescription Drugs Provision Current Law Conference Agreement as passed by the Senate Modification of Federal Upper Payment States set the amounts to pay pharmacies for outpatient Section 6001.(a). The conference agreement applies Limit for Multiple Source Drugs; Definition of prescription drugs provided to Medicaid enrollees. States FULs to multiple source drugs for which the FDA has Multiple Source Drugs. pay those amounts to pharmacies and then seek rated two or more products to be therapeutically and reimbursement of the federal share of those payments. pharmaceutically equivalent. For those drugs, the FUL Federal reimbursements to states for state spending for would be equal to 250% of the average manufacturer price certain outpatient prescription drugs are subject to ceilings computed without regard to prompt pay discounts. called federal upper limits (FULs). The FUL applies, in the Effective January 1, 2007. CRS-26 Provision Current Law Conference Agreement as passed by the Senate aggregate, to payments for multiple source drugs -- those The agreement modifies the definition of multiple source that have at least three therapeutically equivalent drug drug so that a drug qualifies as a multiple source drug if versions. The Centers for Medicare and Medicaid Services there is at least one other drug sold and marketed during (CMS) calculates the FUL to be equal to 150% of the the period that is rated as therapeutically equivalent and published price for the least costly therapeutic equivalent. bioequivalent to it. The published prices that CMS uses as a basis for calculating the FULs are the lowest of the average wholesale prices (AWP) for each group of drug equivalents. Brand name drugs are subject to an upper limit equal to the amount that pharmacists must pay to acquire the drug (the acquisition cost) as estimated by the states. Pharmaceutical manufacturers whose drugs are available to Medicaid beneficiaries must provide state Medicaid programs with rebates. Rebates are calculated based on the average manufacturer's price (AMP) of each product, and for certain other products, the best price at which the manufacturers sell the drug. The AMP is defined as the average price paid to a manufacturer by wholesalers for drugs distributed to retail pharmacies. Certain federal drug purchases as well as several other specific kinds of sales are exempt from the AMP and from the best price calculation. Sales at prices that are "nominal" in amount are excluded from the computation of best price. CMS defines nominal prices to be those that are below 10% of the AMP. Disclosure of Price Information to States AMP and best price data are required to be reported by Section 6001(b). The conference agreement would and the Public. manufacturers to CMS no later than 30 days after the date of increase the required reporting of AMP and best prices. entering into a rebate agreement and then no later than 30 AMP would be reported and calculated on a monthly CRS-27 Provision Current Law Conference Agreement as passed by the Senate days after the last day of each rebate period. Those prices are basis. In addition, the agreement allows states to have required to be kept confidential except for the purpose of access to reported AMP data for multiple source drugs for carrying out the requirements of Medicaid rebates, or to the purpose of carrying out the Medicaid programs and permit the Comptroller General and the Director of the would require the Secretary to disclose such information Congressional Budget Office to review the information. through a website accessible to the public. In addition, the provision requires the Secretary to provide AMPs to states on a monthly basis and to update information posted to the website on at least a quarterly basis. Definition of Average Manufacturer Price. The AMP is defined as the average price paid to a Section 6001(c). The conference agreement amends the manufacturer by wholesalers for drugs distributed to retail definition of AMP to exclude customary prompt pay pharmacies. CMS instructs manufacturers to exclude certain discounts extended to wholesalers from those amounts. In federal drug purchases as well as free goods from the addition, the agreement modifies the price reporting computation of AMP. Sales at nominal prices are excluded requirements so that manufacturers would be required to from the best price computation. Manufacturers are required submit, not later than 30 days after the last day of each to report, for each rebate period, the AMP for all Medicaid rebate period, the customary prompt pay discounts covered outpatient drug products and the best price for single extended to wholesalers in addition to the AMP and best source and innovator multiple source drugs to CMS. price reporting required under current law. The conference agreement requires the Inspector General of the Department of Health and Human Services (HHS) to, no later than June 1, 2006, review the requirements for, and the manner in which AMP is determined and to submit to the Secretary and Congress any recommendations for changes as determined to be appropriate. The agreement also requires the Secretary of HHS to promulgate a regulation clarifying the requirements for CRS-28 Provision Current Law Conference Agreement as passed by the Senate and the manner in which AMPs are to be determined, taking into consideration the recommendations of the Inspector General. Exclusion of Sales at a Nominal Price In addition to the AMP, pharmaceutical manufacturers are Section 6001 (d). The conference agreement modifies the from Determination of Best Price. required to report to the Secretary of HHS the "best price" at manufacturer price reporting requirements so that for which the manufacturer sells each of its drug products to calendar quarters beginning on or after January 1, 2007, certain purchasers for the purpose of calculating the rebate manufacturers would be required to report information on amounts. Prices that are nominal in amount are excluded sales of Medicaid covered drugs that are made at a from best price reporting. Nominal prices are defined by nominal price. CMS to be those that are below 10% of the average manufacturer's price. In addition, the agreement defines the sales that are to be considered nominal for the purpose of reporting nominal price sales and for computing and reporting the best price. (The agreement does not amend the AMP vis-a-vis nominal prices.) Nominal sales are those made by a manufacturer of covered drugs at nominal prices to (a) entities eligible for discounted prescription drug prices under Section 340(B) of the Public Health Service Act; (b) intermediate care facilities for the mentally retarded, (c) state-owned or operated nursing facilities, d) any other facility or entity that the Secretary determines is a safety net provider to which sales of such drugs at nominal prices would be appropriate based on the type of facility, the services it provides, the patients served and the number of other such facilities eligible for nominal pricing in the area. The nominal price limitations do not apply to nominal drug purchases pursuant to a master agreement for procurement of drugs on the Federal Supply Schedule. CRS-29 Provision Current Law Conference Agreement as passed by the Senate Retail Survey Prices; State Payment and No provision. Section 6001(e). The agreement allows the Secretary to Utilization Rates; and Performance Rankings. contract for services for the determination of retail survey prices for covered outpatient drugs that represent a nationwide average of consumer purchase prices for such drugs, net of all discounts and rebates. Such a contract would be awarded for a term of two years. The Secretary would be required to competitively bid for an outside vendor with a demonstrated history in surveying and determining on a representative nationwide basis, retail prices for ingredient costs of prescription drugs; working with retail pharmacies, commercial payers, and states in obtaining and disseminating price information; and collecting and reporting price information on at least a monthly basis. The contract would include the terms and conditions specified by the Secretary and would include a requirement that the vendor monitor the marketplace and report to the Secretary each time there is a new covered outpatient drug available nationwide; and update the Secretary no less often than monthly on the retail survey prices for multiple source drugs and on the computed upper payment limit for those drugs. Information on the retail survey prices obtained through this process, including information on single source drugs would be required to be provided to states on an ongoing and timely basis. The Secretary would be required to devise and implement a means for providing access to each state Medicaid agency of collected price information and to provide information on retail survey CRS-30 Provision Current Law Conference Agreement as passed by the Senate prices, including information on single source drugs, to states at least monthly. The agreement allows such a contract to include notification of the Secretary when a drug product that is therapeutically and pharmaceutically equivalent and bioequivalent becomes generally available. If the Secretary were to be notified that such a product has become generally available, the Secretary would be required to make a determination within seven days as to whether the drug meets the definition of a multiple source drug subject to the application of the FUL. The agreement allows the Secretary to waive those provisions the Secretary determines are appropriate to waive, of the Federal Acquisition Regulation, for the efficient implementation of the contract. The agreement requires an annual report from each state agency. States are required to provide to the Secretary, the payment rates for all covered drugs, dispensing fees and utilization of multiple source drugs under the state Medicaid plan. The Secretary is required to compare, on an annual basis, for the 50 most widely prescribed drugs, the national retail sales price data for each state. In addition, the Secretary is required to submit full information regarding the annual rankings to Congress. The provision becomes effective on January 1, 2007. Miscellaneous Amendments. States are required to have in place a program of prospective Section 6001(f). The conference agreement clarifies that CRS-31 Provision Current Law Conference Agreement as passed by the Senate drug review wherein before each prescription is filled, the the requirement to provide prospective drug reviews is not use of the prescription is screened for potential drug therapy intended to require verifications that consultations were problems. The requirement includes language clarifying that offered or refused. Effective on the date of enactment. nothing in the provision is intended to require a pharmacist to provide this consultation when a beneficiary refuses such a consultation. Effective Date for Prescription Drug No provision. Section 6001(g). Unless otherwise specified, the Provisions. provisions in Section 6001 take effect on January 1, 2007, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date. Collection and Submission of Utilization Manufacturers are required to provide rebates to states for all Section 6002. For administered drugs administered on or Data for Certain Physician Administered Drugs. outpatient prescription drugs with some exceptions. after January 1, 2006, states are required to provide for the Outpatient prescription drugs provided through managed care collection and submission of utilization and coding organizations are explicitly exempted from the rebate information for each Medicaid single source drug that is requirement. In addition, outpatient drugs dispensed by a physician administered. For drugs administered on or hospital and billed at no more than the hospital's purchasing after January 1, 2008, states are required to provide for the costs are exempt from the rebate requirement. Certain drugs collection and submission of utilization and coding administered by physicians in their offices or in another information for each Medicaid multiple source drug that outpatient setting, such as chemotherapy, have often been is physician administered. Submissions from states will be excluded from the drug rebate program although there is no based on National Drug Codes unless the Secretary specific statutory exclusion. This is because providers use specified an alternative coding system. All other Healthcare Common Procedure Coding System (HCPCS) provisions are identical to the House bill. J-codes to bill the Medicaid program for injectible prescription drugs, including cancer drugs. The HCPCS J-codes do not, however, provide States with the specific manufacturer information necessary to enable them to seek rebates. The NDC number is necessary for the state to bill CRS-32 Provision Current Law Conference Agreement as passed by the Senate manufacturers for rebates. CMS has requested that states identify Medicaid drugs, specifically those using HCPCS J-codes, by their NDC codes so that rebates can be collected for these drugs (Letter to State Medicaid Director, SMDL #03-002, dated March 14, 2003). CMS has concluded that because of this coding, many state Medicaid programs have not collected rebates on these drugs, resulting in millions of dollars in uncollected rebates. Collection and Submission of Utilization Manufacturers are required to provide rebates to states for all Section 6002. For administered drugs administered on or Data for Certain Physician Administered Drugs. outpatient prescription drugs with some exceptions. after January 1, 2006, states are required to provide for the Outpatient prescription drugs provided through managed care collection and submission of utilization and coding organizations are explicitly exempted from the rebate information for each Medicaid single source drug that is requirement. In addition, outpatient drugs dispensed by a physician administered. For drugs administered on or hospital and billed at no more than the hospital's purchasing after January 1, 2008, states are required to provide for the costs are exempt from the rebate requirement. Certain drugs collection and submission of utilization and coding administered by physicians in their offices or in another information for each Medicaid multiple source drug that outpatient setting, such as chemotherapy, have often been is physician administered. Submissions from states will excluded from the drug rebate program although there is no be based on National Drug Codes unless the Secretary specific statutory exclusion. This is because providers use specified an alternative coding system. All other Healthcare Common Procedure Coding System (HCPCS) provisions are identical to the House bill. J-codes to bill the Medicaid program for injectible prescription drugs, including cancer drugs. The HCPCS J-codes do not, however, provide states with the specific manufacturer information necessary to enable them to seek rebates. The NDC number is necessary for the state to bill manufacturers for rebates. CMS has requested that states identify Medicaid drugs, specifically those using HCPCS J-codes, by their NDC codes so that rebates can be collected CRS-33 Provision Current Law Conference Agreement as passed by the Senate for these drugs (Letter to State Medicaid Director, SMDL #03-002, dated March 14, 2003). CMS has concluded that because of this coding, many state Medicaid programs have not collected rebates on these drugs, resulting in millions of dollars in uncollected rebates. Children's Hospital Participation in Drug Section 340(B) of the Public Health Service Act allows Section 6004. The conference agreement includes a Discount Program. certain health care providers, including community health provision adding Children's Hospitals to the list of centers and disproportionate share hospitals, access to providers that may have access to 340(B) discounted prescription drug prices that are similar to the prices paid by prices. The provision would become effective for drugs Medicaid agencies after being reduced by manufacturer purchased on or after the date of enactment. rebates. CRS-34 Chapter 2. Asset Transfers Subchapter A -- Reform of Asset Transfer Rules Provision Current Law Conference Agreement, as Passed by the Senate Lengthening Look-Back Period. Current law requires states to impose penalties on individuals Section 6011(a). The Conference agreement would who transfer assets (all income and resources of the amend section 1917(c)(1)(B)(i) of the Social Security individual and of the individual's spouse) for less than fair Act to lengthen the look-back date to five years, or 60 market value (an estimate of the value of an asset if sold at months, for all income and assets disposed of by the the prevailing price at the time it was actually transferred). individual after enactment. For income and assets Specifically, the rules require states to delay Medicaid disposed of prior to the enactment date, the look back eligibility for certain Medicaid long-term care services for periods of 36 months for income and assets and 60 individuals applying for care in a nursing home, and, at state months for certain trusts would apply. option, for certain people receiving care in community-based settings, who have transferred assets for less than fair market value on or after a "look-back date." The "look-back date" is 36 months prior to application for Medicaid for income and most assets disposed of by the individual, and 60 months in the case of certain trusts. Ineligibility for Medicaid coverage is limited to only certain long-term care services, not all services covered under the program. The services for which the penalty applies include nursing facility care; services provided in any institution in which the level of care is equivalent to those provided by a nursing facility; Section 1915(c) home and community-based waiver services; home health services; and personal care furnished in a home or other locations. States may choose to apply this ineligibility period to other state plan long-term care services. (They also currently apply to home and community care for functionally disabled elderly individuals CRS-35 Provision Current Law Conference Agreement, as Passed by the Senate under Section 1929 of the act. This is an optional coverage group which operates only in Texas.) In general, states do not extend the penalty to Medicaid's acute care services. Change in Beginning Date for Period of The period of ineligibility, or penalty period, begins on the Section 6011(b). The Conference agreement amends Ineligibility. first day of the first month during or after which assets have Section 1917(c)(1)(D) of the Social Security Act by been improperly transferred and which does not occur in any changing the start date of the ineligibility period for all other period of ineligibility. There is no limit to the length of transfers made on or after the date of enactment, to begin the penalty period. on the first day of a month during or after which assets have been transferred for less than fair market value, or the date on which the individual is eligible for Medicaid and would otherwise be receiving institutional level care based on an approved application for such care but for the application of the penalty period, whichever is later, and which does not occur during any period of ineligibility as a result of an asset transfer policy. For transfers made prior to this act's enactment, current law applies. Effective Date Section 6011. Currently effective. Section 6011(c). The Conference agreement makes the provisions in this section effective on or after the date of enactment. Availability of Hardship Waivers; Additional To protect beneficiaries from unintended consequences as a Sections 6011(d) and (e). The Conference agreement Provisions on Hardship Waivers. result of asset transfer penalties, current law requires states to amends Section 1917(c)(2(D)) of the Social Security Act establish procedures for not imposing penalties on persons by adding requirements that states approve undue who, according to criteria established by the Secretary, can hardship requests when the asset transfer penalty would show that a penalty would impose an undue hardship. CMS deprive the individual of (A) medical care such that the guidance specifies that undue hardship can occur when individual's health or life would be endangered; or (b) application of the penalty would deprive the individual of food, clothing, shelter, or other necessities of life. States CRS-36 Provision Current Law Conference Agreement, as Passed by the Senate medical care so that his or her health or life would be are required to provide for: (1) notice to recipients that endangered, or when it would deprive the individual of food, an undue hardship exception exists; a (2) a timely clothing, shelter, or other necessities of life. The guidance process for determining whether an undue hardship explains that undue hardship does not exist when application waiver will be granted for the individual; and (3) a of the penalty would merely cause the individual process under which an adverse determination can be inconvenience or when it might restrict his or her lifestyle but appealed. would not put him or her at risk of serious deprivation. The Conference agreement also amends Section CMS guidance requires that state procedures, at a minimum, 1917(c)(2) of the Social Security Act to permit facilities provide for and discuss: (1) a notice to recipients that an in which institutionalized individuals reside to file undue undue hardship exception exists; (2) a timely process for hardship waiver applications on behalf of the individual, determining whether an undue hardship waiver will be with the institutionalized individual's consent or that of granted; and (3) a process under which an adverse the personal representative. If the application for undue determination can be appealed. hardship of nursing facility residents meets criteria specified by the Secretary, the state would have the option of providing payments for nursing facility services to hold the bed for these individuals at a facility while an application is pending. Such payments could not be made for longer than 30 days. Disclosure and Treatment of Annuities. Current law provides that the term "trust," for purposes of Section 6012. The Conference agreement amends asset transfers and the look-back period, includes annuities Section 1917 of the Social Security Act and requires only to the extent that the Secretary of DHHS defines them as individuals applying for Medicaid-covered LTC services, such. CMS guidance (Transmittal Letter 64) asks states to upon Medicaid application and recertification of determine the ultimate purpose of an annuity in order to eligibility, to disclose to the state, a description of any distinguish those that are validly purchased as part of a interest the individual or community spouse has in an retirement plan from those that abusively shelter assets. To annuity (or similar financial instrument, as specified by be deemed valid in this respect, the life of the annuity must the Secretary), regardless of whether the annuity is coincide with the average number of years of life expectancy irrevocable or is treated as an asset. Such application or for the individual (according to tables in the transmittal). If recertification form includes a statement naming the state CRS-37 Provision Current Law Conference Agreement, as Passed by the Senate the individual is not reasonably expected to live longer than as the remainder beneficiary. In the case of disclosure the guarantee period of the annuity, the individual will not concerning an annuity, the state notifies the annuity's receive fair market value for the annuity based on the issuer of the state's right as a preferred remainder projected return; in this case, the annuity is not "actuarially beneficiary for Medicaid assistance furnished to the sound" and a transfer of assets for less than fair market value individual. Issuers may notify persons with any other has taken place. The state Medicaid Manual provides life remainder interest of the state's remainder interest. expectancy tables to be used by states for determining whether an annuity is actuarially sound. States may require an issuer to notify the state when there is a change in the amount of income or principal withdrawn from the amount withdrawn at the point of Medicaid application or recertification. States take this information into account when determining the amount of the state's financial share of costs or in the individual's eligibility for Medicaid. The Secretary may provide guidance to states on categories of transactions that may be treated as a transfer of asset for less than fair market value. States may deny eligibility for medical assistance for an individual based on the income or resources derived from an annuity. The Conference agreement also amends Section 1917(c)(1) of the Social Security Act by adding that the purchase of an annuity be treated as a disposal of an asset for less than fair market value unless the state is named as the remainder beneficiary in the first position for at least the total amount of Medicaid expenditures paid on behalf of the annuitant or is named in the second CRS-38 Provision Current Law Conference Agreement, as Passed by the Senate position after the community spouse or minor or disabled child and such spouse or a representative of the such child does not dispose of any such remainder for less than fair market value. Includes annuities purchased by or on behalf of an annuitant who has applied for Medicaid-covered nursing facility or other long-term care services in the definition of annuities that are subject to asset transfer rules. The Conference agreement excludes from the definition of an asset, those that are described in subsection (b) and (q) of Section 408 of the Internal Revenue Code (IRC) of 1986, or purchased with proceeds from: (1) an account or trust described in subsections (a), (c), and (p) of Section 408 of the IRC; (2) a simplified employee pension as defined in Section 408(k) of the IRC; or (3) a Roth IRA defined in Section 408A of the IRC. Annuities would also be excluded from penalties if they are irrevocable and non-assignable, actuarially sound (as determined by actuarial publications of the Office of the Chief Actuary of the Social Security Administration), and provide for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments. The Conference agreement amends Section 1917(b)(4) of the Social Security Act to include an annuity in the definition of estate that is subject to estate recovery unless the annuity is issued by a financial institution or CRS-39 Provision Current Law Conference Agreement, as Passed by the Senate other business that sells annuities in the state as part of its regular business. The amendments apply to transactions, including the purchase of annuity, occurring on or after the date of this act's enactment. Application of "Income-First" Rule in Regarding income, current law exempts all income (e.g., Section 6013. The Conference agreement amends Applying Community Spouse's Income Before pension or Social Security) of the community spouse (the Section 1924(d), and therein sections (c) and (e), of the Assets in Providing Support of Community spouse of a Medicaid beneficiary receiving institutional, or at Social Security Act to require states to consider that all Spouse. state option, home and community-based long-term care income of the institutionalized spouse that could be made services) from being considered available to the other spouse available to the community spouse, in accordance with for purposes of Medicaid eligibility. For community spouses the calculation of the post-eligibility allocation of with more limited income, Section 1924(d) of the Social income or additional income allowance allocated at a fair Security Act provides for the establishment of a minimum hearing, has been made before states allocate to the monthly maintenance needs allowance for each community community spouse resources from the institutionalized spouse to try to ensure that the community spouse has spouse to provide the difference between the minimum sufficient income to meet his or her basic monthly needs. monthly maintenance needs allowance and all income (The community spouse's minimum monthly maintenance available to the community spouse. These amendments needs allowance is set at a level that is higher than the official apply to transfers and allocations made on or after the federal poverty level.) Once income is attributed to each of date of this act's enactment by individuals who become the spouses according to their ownership interest, the institutionalized spouses on or after such date. community spouse's monthly income is compared against the minimum monthly maintenance needs allowance. Regarding assets, federal law allows states to select the amount of assets a community spouse may be allowed to retain. This amount is referred to as the community spouse resource allowance (CSRA). Federal requirements specify that this amount may be no greater than $95,100 and no less CRS-40 Provision Current Law Conference Agreement, as Passed by the Senate than $19,020 in total countable assets in 2005. When determining eligibility, all assets of the couple are combined, counted, and split in half, regardless of ownership. If the community spouse's share of the assets is less than the state- specified maximum, then the Medicaid beneficiary must transfer his or her share of the assets to the community spouse until the community-spouse's share reaches the maximum. All other non-exempt assets must be depleted before the applicant can qualify for Medicaid. If the community spouse's monthly income amount is less than the minimum monthly maintenance needs allowance, the institutionalized spouse may choose to transfer an amount of his or her income or assets to make up for the shortfall (i.e., the difference between the community spouse's monthly income and the state-specified minimum monthly maintenance needs allowance). This transfer allows more income to be available to the community spouse, while Medicaid pays a larger share of the institutionalized spouse's care costs. Within federal limits, states set the maximum monthly income level that community spouses may retain. Federal requirements specify that this amount may be no greater than $2,377.50 per month, and no less than $1,561.25 per month in 2005. The Medicaid beneficiary or community spouse is entitled to a fair hearing if either is dissatisfied with: (1) a determination of the community spouse monthly income allowance; (2) the amount of monthly income otherwise available; (3) the computation or attribution of the spousal share of resources; CRS-41 Provision Current Law Conference Agreement, as Passed by the Senate or (4) the determination of the community spouse resource allowance. If either spouse establishes that the community spouse needs income above the amounts provided by the minimum monthly needs allowance, due to exceptional circumstances resulting in significant financial duress, there shall be substituted for the minimum monthly maintenance needs allowance amounts adequate to provide additional necessary income. Federal law allows either income or resources from the spouse receiving Medicaid to be transferred to the community spouse to meet this need. Disqualification for Long-Term Care Within federal law, states set asset standards that applicants Section 6014. The Conference agreement amends Assistance for Individuals with Substantial must meet to qualify for Medicaid coverage. Among other Section 1917 of the Social Security Act to exclude from Home Equity. things, these standards specify a limit on the amount of Medicaid eligibility for nursing facility or other long- countable assets a person may have to qualify, as well as term care services, certain individuals with an equity define which types of assets are counted and not counted. In interest in their home of greater than $500,000. A state general, countable assets cannot exceed $2,000 for an may elect, without regard to Medicaid's requirements individual applicant. States generally follow SSI rules for concerning statewideness and comparability, to computing both countable and non-countable assets. substitute an amount that exceed $500,000 but does not exceed $750,000. These dollar amounts are increased, Current Medicaid and SSI asset counting practices generally beginning in 2011, from year to year based on the exclude the entire value of an applicant's home. A home is percentage increase in the consumer price index for all defined as any property in which an individual (and spouse, urban consumers (all items, United States city average), if any) has an ownership interest and which serves as the rounded to the nearest $1,000. The Secretary establishes individual's principal place of residence. This property a process for waiving this provision in the case of a includes the shelter in which an individual resides, the land demonstrated hardship. on which the shelter is located and related outbuildings. If an individual (and spouse, if any) moves out of his or her home Individuals whose spouse, child under age 21, or child without the intent to return, the home becomes a countable who is blind or disabled (as defined by the Section 1614 resource because it is no longer the individual's principal of the Social Security Act) lawfully resides in the CRS-42 Provision Current Law Conference Agreement, as Passed by the Senate place of residence. However, if an individual leaves his or individual's home would not be excluded from her home to live in an institution, the home is still considered eligibility. This provision would not prevent an to be the individual's principal place of residence, individual from using a reverse mortgage or home equity irrespective of the individual's intent to return, as long as a loan to reduce the individual's total equity interest in the spouse or dependent relative of the eligible individual home. continues to live there. The individual's equity in the former home becomes a countable resource effective with the first The Conference agreement would apply to individuals day of the month following the month it is no longer his or who are determined eligible for Medicaid nursing her principal place of residence. facility or other long-term care services based on an application filed on or after January 1, 2006. Enforceability of Continuing Care Continuing Care Retirement Communities (CCRCs) offer a Section 6015. The Conference agreement amends Retirement Communities (CCRC) and Life Care range of housing and health care services to serve older Section 1919(c)(5) of the Social Security Act to provide Community Admission Contracts. persons as they age and as their health care needs change over an exception for state-licensed, registered, certified, or time. CCRCs generally offer independent living units, equivalent continuing care retirement communities assisted living, and nursing facility care for persons who can (CCRCs) or a life care community (including nursing afford to pay entrance fees and who often reside in such facility services provided as part of that community) to CCRCs throughout their older years. The services generally allow them to require in their admissions contracts that offered include meals, transportation, emergency response residents spend their resources (subject to Medicaid's systems, and on-site nursing and physician services. Many rules concerning the resources allowance for community also offer home care, maid services and laundry. CCRCs spouses, described above), declared for the purposes of were developed, in large part, in response to an interest admission, on their care before they apply for Medicaid. among many elderly persons to age-in-place. CCRCs can be For applicants with community spouses, only that part of either for-profit or not-for-profits. They are paid primarily the entrance fee that is not protected for by the with private funds, but a number also accept Medicaid community spouse's resource allowance would be payment for nursing facility services. Although the majority considered in the computation of the spousal share of CCRC residents do not meet the financial criteria for available to Medicaid. Medicaid, some do. The Conference agreement amends Section 1917 of the Social Security Act to consider certain entrance fees for CRS-43 Provision Current Law Conference Agreement, as Passed by the Senate CCRCs or life care communities to be countable resources, and thus available to the applicant, for purposes of the Medicaid eligibility determination to the extent that: (A) the individual has the ability to use the entrance fee, or the contract provides that the entrance fee may be used, to pay for care should other resources or income of the individual be insufficient to pay for care; (B) the individual is eligible for a refund of any remaining entrance fee when the individual dies or terminates the CCRC or life care community contracts and leaves the community; and (C) the entrance fee does not confer an ownership interest in the continuing care retirement community or life care community. CRS-44 Provision Current Law Conference Agreement, as Passed by the Senate Requirement to Impose Partial Months of Current law requires states to impose penalties on individuals Section 6016(a). The Conference agreement amends Ineligibility. applying for Medicaid who transfer assets (all income and Section 1917(c)(1)(E) of the Social Security Act by resources of the individual and of the individual's spouse) for adding that a state shall not round down, or otherwise less than fair market value (an estimate of the value of an disregard any fractional period of ineligibility when asset if sold at the prevailing price at the time it was actually determining the ineligibility period with respect to the transferred). Specifically, the rules require states to delay disposal of assets. Medicaid eligibility for individuals receiving care in a nursing home, and, at state option, certain people receiving care in community-based settings, who have transferred assets for less than fair market value on or after a "look-back date." The "look-back date" is 36 months prior to application for Medicaid for income and most assets disposed of by the individual, and 60 months in the case of certain trusts. The length of the delay is determined by dividing the total cumulative uncompensated value of all assets transferred by the individual (or individual's spouse) on or after the look- back date by the average monthly cost to a private patient of a nursing facility in the state (or, at the option of the state, in the community in which the individual is institutionalized) at the time of application. For example, a transferred asset worth $60,000, divided by a $5,000 average monthly private pay rate in a nursing home, results in a 12-month period of ineligibility for Medicaid long-term care services. The period of ineligibility begins the first day of the first month during or after which assets have been improperly transferred and which does not occur in any other period of ineligibility. There is no limit to the length of the penalty period. CRS-45 Provision Current Law Conference Agreement, as Passed by the Senate When calculating the length of the penalty period when assets are transferred for less than fair market value, current law allows states to "round down," or not include in the ineligibility period the quotient amounts (resulting from the division of the value of the transferred asset by the average monthly private pay rate in a nursing home) that are less than one month. For example, in a state with an average private stay in a nursing home of $4,100, an ineligibility period for an improper transfer of $53,000 could be 12.92 months (i.e., $53,000/$4,100=12.92). Although some states would impose an ineligibility period of 12 months and 28 days (of a 31 day month), other states may round down the quotient to an ineligibility period of 12 months only. Authority for States to Accumulate Multiple Current law and additional CMS guidance provides that when Section 6016(b) The Conference agreement amends Transfers into One Penalty Period. a number of assets are transferred for less than fair market Section 1917(c)(1) of the Social Security Act by adding value on or after the look-back date during the same month, that for an individual or an individual's spouse who the penalty period is calculated using the total cumulative disposes of multiple fractional assets in more than one uncompensated value of all assets transferred during that month for less than fair market value on or after the month by the individual (or individual's spouse) divided by applicable look-back date, states may determine the the average monthly cost to a private patient of a nursing penalty period by treating the total, cumulative facility in the state (or, at the option of the state, in the uncompensated value of all assets transferred by the community in which the individual is institutionalized) at the individual (or individual's spouse) during all months as time of application. When a number of assets are transferred one transfer. States would be allowed to begin such during different months, then the rules vary based upon penalty periods on the earliest date which would apply to whether the penalty periods overlap. If a penalty period for such transfers. each transfer overlaps with the beginning of a new penalty period, then states may either add together the value of the transferred assets and calculate a single penalty period or impose each penalty period sequentially. If the penalty CRS-46 Provision Current Law Conference Agreement, as Passed by the Senate period for each transfer does not overlap, then states must treat each transfer as a separate event and impose each penalty period starting on the first day of the month in which each transfer was made. Inclusion of Transfer of Certain Notes and Under current law, states set standards, within federal Section 6016(c). The Conference agreement amends Loans Assets. parameters, for the amount and type of assets that applicants Section 1917(c)(1) of the Social Security Act to make may have to qualify for Medicaid. In general, countable additional assets subject to the look-back period, and assets cannot exceed $2,000 for an individual. However, not thus a penalty, if established or transferred for less than all assets are counted for eligibility purposes. The standards fair market value. Such assets would include funds used states set also include criteria for defining non-countable, or to purchase a promissory note, loan or mortgage, unless exempt, assets. States generally follow rules for the the repayment terms are actuarially sound, provide for Supplemental Security Income (SSI) program for computing payments to be made in equal amounts during the term both countable and non-countable assets. of the loan and with no deferral nor balloon payments, and prohibit the cancellation of the balance upon the Under state Medicaid and SSI rules, countable assets may death of the lender. include, but are not limited to, funds in a savings or money market account, stocks or other types of equities, accelerated In the case of a promissory note, loan, or mortgage that cash benefits from certain types of insurance policies, and does not satisfy these requirements, their value shall be funds from certain types of trusts that can be obtained by the the outstanding balance due as of the date of the individual, the individual's spouse, or anyone acting for the individual's application for certain Medicaid long-term individual or the individual's spouse, to pay for the care services. individual's medical or nursing facility care, even if the funds or payments are not distributed. Under Medicaid and SSI rules, non-countable assets include an individual's primary place of residence, one automobile, household goods and personal effects, property essential to income-producing activity, up to $1,500 in burial funds, life insurance policies whose total face value is not greater than $1,500, and miscellaneous other items. CRS-47 Provision Current Law Conference Agreement, as Passed by the Senate Other rules defining countable and non-countable assets apply only in particular states. Their rules are generally intended to restrict the use of certain financial instruments (e.g. annuities, promissory notes, or trusts) to protect assets so that applicants can qualify for Medicaid earlier than they might otherwise. Inclusion of Transfers to Purchase Life Current law does not specify whether life estates should be Section 6016(d). The Conference agreement amends Estates. treated as countable or noncountable assets for purposes of Section 1917(c)(1) of the Social Security Act by adding applying the Medicaid asset transfer rules. In CMS guidance, a provision that would redefine the term `assets,' with however, the Secretary specifies that the establishment of a respect to the Medicaid asset transfer rules, to include the life estate constitutes a transfer of assets. The guidance also purchase of a life estate interest in another individual's explains that a transfer for less than fair market value occurs home unless the purchaser resides in the home for at whenever the value of the transferred asset is greater than the least one year after the date of purchase. value of the rights conferred by the life estate. According to CMS, a life estate is involved when an individual who owns property transfers ownership to another individual while retaining, for the rest of his or her life (or the life of another person), certain rights to that property. Generally, a life estate entitles the grantor to possess, use, and obtain profits from the property as long as he or she lives, even though actual ownership of the property has passed to another individual. Effective Date for Section 6016. No provision. Section 6016(f). This provision applies to payment made under the Medicaid program for calendar quarters beginning on or after the date of this act's enactment, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date. Amendments made by this provision do not CRS-48 Provision Current Law Conference Agreement, as Passed by the Senate apply to Medicaid assistance provided for services before the date of enactment, assets disposed of on or before the date of enactment, or trusts established on or before the date of enactment. In the case of a state that the Secretary of Health and Human Services determines requires state legislation to meet the additional requirements of this provision, the state Medicaid plan would not be regarded as failing to comply with the requirements solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the state legislature that begins after the date of enactment of this act. In the case of a state that has a two-year legislative session, each year of the session would be considered to be a separate regular session of the state legislature. This amendment applies to provision under Section 6016 of the Conference agreement. CRS-49 Subchapter B -- Expanded Access to Certain Benefits Provision Current Law Conference Agreement, as Passed by the Senate Expansion of State Long-Term Care Under Medicaid's long-term care (LTC) insurance Section 6021. The conference agreement amends Section Partnership Program. partnership program, certain persons who have 1917(b)(1)(C)(ii) of the Social Security Act to: (1) require exhausted (or used at least some of) the benefits of a that existing partnership programs not allow consumer private long-term care insurance policy may access protection standards to be less stringent (determined by the Medicaid without meeting the same means-testing Secretary) than those applying under the state plan requirements as other groups of Medicaid eligibles. For amendment as of December 31, 2005; and (2) allows certain these individuals, means-testing requirements are relaxed individuals in states with state plan amendments approved at (1) the time of application to Medicaid; and (2) the after May 14, 1993 to be exempt from estate recovery time of the beneficiary's death when Medicaid estate requirements if the amendment provides for the disregard of recovery is generally applied. any assets or resources in the amount equal to the amount of insurance benefits made to or on behalf of an individual who In general, states allow individuals to retain no more than is a beneficiary under a LTC policy (including a certificate $2,000 in countable assets and exempt certain non- issued under a group insurance contract), if the following countable assets such as an individual's primary place of requirements are met: residence, one automobile, household goods and personal effects. Under Section 1902 of the Social (I) The policy covers an insured who was a resident of such Security Act, a state may request the Secretary's state when coverage first became effective under the policy. permission to amend its Medicaid state plans to allow In the case of a LTC insurance policy exchanged for another certain applicants to retain greater amounts of countable such policy, this requirement applies based on the coverage assets than other applicants and still qualify for of the first such policy that was exchanged; Medicaid. Specifically, states that obtain the Secretary's approval may disregard some or all of the assets of (II) The policy is a qualified LTC insurance policy (meeting persons applying for Medicaid who have purchased specifications defined in Section 7702B(b) of the Internal long-term care insurance policies. Revenue Code of 1986) issued not earlier than the effective date of the Medicaid state plan amendment; Section 1917 of the Social Security Act (amended by the Omnibus Budget Reconciliation Act of 1993, P.L. 103- (III) The policy meets the following requirements specified CRS-50 Provision Current Law Conference Agreement, as Passed by the Senate 66) allows only those states with an approved state plan in the National Association of Insurance Commissioner's amendment as of May 14, 1993 to exempt individuals (NAIC) Long-Term Care Insurance Model Regulations and from Medicaid estate recovery who apply to Medicaid Long-Term Care Insurance Model Act (as adopted as of after exhausting their private long-term care insurance October 2000). benefits. By that date, five states (California, Connecticut, Indiana, Iowa, and New York) had received CMS approval. All of these states, except Iowa, have implemented partnership programs. The four partnership states with active programs have Model Regulations relating to: different models for determining the amount of assets - Guaranteed renewal or noncancellability (including some that an eligible participant may protect. Connecticut and sections of the Model Act); California use a dollar-for-dollar model, in which the - Prohibitions on limitations and exclusions; amount of the assets protected is equivalent to the value - Extension of benefits; of the benefit package paid by the policy purchased (e.g., - Continuation or conversion of coverage; $100,000 of nursing home or assisted living benefits paid - Discontinuance and replacement of policies; enables that individual to retain up to $100,000 in assets - Unintentional lapse; and still qualify for Medicaid coverage in that state). - Disclosure; New York uses a total asset protection model in which - Required disclosure of rating practices to consumer; persons who purchase certain state-approved policies - Prohibitions against post-claims underwriting; may qualify for Medicaid without having to meet any of - Minimum standards; Medicaid's asset criteria. Indiana uses a hybrid model, - Application forms and replacement coverage; offering both dollar-for-dollar and total asset protection - Reporting requirements; (Indiana switched from the dollar-for-dollar model to the - Filing requirements for marketing; hybrid model in 1998). - Standards for marketing, including inaccurate completion of medical histories; Federal oversight of LTC insurance is largely limited to - Suitability; provisions established by the Health Insurance - Prohibition against preexisting conditions and probationary Portability and Accountability Act of 1996 (HIPAA, P.L. periods in replacement policies or certificates; 104-191). HIPAA established new rules regarding the - Contingent nonforfeiture benefits if the policyholder CRS-51 Provision Current Law Conference Agreement, as Passed by the Senate tax treatment of LTC insurance and expenses, and declines the offer of a nonforfeiture provision; defined the requirements for a tax-qualified LTC - Standard format outline of coverage; and insurance policy. LTC insurance products are largely - Delivery of shopper's guide. regulated by states. Every state and the District of Columbia has some laws governing LTC insurance. Many of these laws reflect guidance provided by the National Association of Insurance Commissioners (NAIC), an organization of state insurance regulators. This guidance, provided in the form of a Model Act and Model Regulations for LTC insurance, addresses a number of areas, including the following. Model regulations: Model Act relating to: - Application forms and replacement coverage; - Preexisting conditions; - Reporting requirements; - Prior hospitalization; - Filing requirements for marketing; - Contingent nonforfeiture benefits; - Standards for marketing; - Right of return; - Appropriateness of recommended purchase; - Outline of coverage; - Standard format outline of coverage; and - Requirements for certificates under group plans; - Requirements to deliver shopper's guide. - Policy summary; - Monthly reports on accelerated death benefits; and Model Act: Incontestability period. - Outline of coverage; - Requirements for certificates under group plans; policy These provisions of the Long-Term Care Insurance Model summary; Regulation and Long-Term Care Insurance Model Act are - Accelerated death benefits; and treated as including any other provision the Regulation or Act - Incontestability period. necessary to implement the provision. Long-term care insurance policies issued in a state shall be deemed as HIPPA also includes requirements that tax-qualified meeting the requirements of the model regulation or the policies comply with consumer protections regarding the Model Act if the state plan amendment provides that the state CRS-52 Provision Current Law Conference Agreement, as Passed by the Senate delivery of policies, information on denials of claims, insurance commissioner for the state certifies (in a manner and disclosure. While many state laws and regulations satisfactory to the Secretary) that the policy meets such are based largely on the NAIC standards, others have requirements. adopted only some of these standards. As a result, there (IV) If at the date of purchase the purchaser is younger than is significant variation in regulatory practices across age 61, the policy must provide for compound inflation; if the states. purchaser is at least age 61 but not older than age 76, the policy must provide some level of inflation protection; and if the purchaser is age 76 or older, the policy may, but is not required to, provide some level of inflation protection. National Clearinghouse for Long-Term Care. No (V) The state Medicaid agency provides information and provision in current law requires the establishment of a technical assistance to the state insurance department on the LTC consumer clearinghouse. insurance department's role of assuring that any individual who sells a LTC insurance policy under the partnership In related activities, DHHS has funded some states to receives training or demonstrates evidence of an establish state-based consumer-friendly access to understanding of such policies and how they relate to other information about LTC services. In FY2003 and public and private coverage of LTC; FY2004, the Centers for Medicare and Medicaid (CMS) and AoA awarded approximately $19 million in grants (VI) The issuer of the policy provides regular reports to the to states for the purpose of assisting their efforts to Secretary that include, in accordance with the Secretary's create a single, coordinated system of information and regulations (after consultation with the National Association access for all persons seeking long term care to minimize of Insurance Commissioners, issuers of LTC insurance confusion, enhance individual choice, and support policies, states with experience with LTC insurance informed decision-making. In FY2005, $15 million was partnership plans, other states, and representatives of awarded. A total of 43 states have received grants for consumers of LTC insurance policies) notification regarding this purpose. Some of the common activities under this when all benefits and their amounts under the policy have grants program include information and referral, been paid, when the policy otherwise terminates, and other outreach, counseling about public benefits and LTC information that the Secretary determines is appropriate to the options, and case management. States' methods for administration of the partnership programs. These implementing the grant may vary; some states have regulations shall specify the type and format of the data and CRS-53 Provision Current Law Conference Agreement, as Passed by the Senate established an actual physical location, and other states information to be reported, and the frequency with which have established a statewide clearinghouse through a such reports are to be made. The Secretary, as appropriate, toll-free number or a web-based information site. provides copies of the reports to the state involved; In addition, CMS has made available to the public, via its website, a comparison of Medicare and Medicaid- certified nursing homes and home health agencies. The information provides detailed facility and agency information and characteristics, and contains several measures of quality (e.g., improvement in mobility). This website does not cover assisted living facilities, group homes and other residential facilities that are not nursing facilities; nor does it cover non-medical, non- certified, home and community-based LTC services. (VII) The state does not impose any requirement affecting the terms or benefits of such a policy unless the state imposes such requirement on LTC insurance policies without regard to whether the policy is covered under the partnership or is offered in connection with such a partnership. In consultation with other appropriate federal agencies, issuers of LTC insurance, and the National Association of Insurance Commissioners, state insurance commissioners, states with experience with LTC insurance partnership plans, other states, and representatives of consumers of LTC insurance policies, the Secretary develops recommendations for Congress to authorize and fund a uniform minimum data set to be reported electronically by all issuers of LTC insurance policies under qualified state LTC insurance CRS-54 Provision Current Law Conference Agreement, as Passed by the Senate partnerships to a secure, centralized electronic query and report generating mechanism that state, the Secretary, and other federal agencies can access. Not later than 12 months after the National Association of Insurance Commissioners issues a revision, update or other modification of a model regulation or model act provision listed above or substantially related those listed above, the Secretary reviews these changes, determines whether incorporating such changes into the corresponding provision would improve qualified state LTC insurance partnerships, and, if so, incorporate the changes into the provision. States may require issuers of LTC insurance policies sold in that state (regardless of whether the policy is issued under a qualified state LTC insurance partnership) to report additional information or data to the state. Out of any fund in the Treasury not otherwise appropriated, there is appropriated to the Secretary $1 million for the period of FYs2006-2010. To permit portability in LTC insurance policies purchased under state LTC insurance partnerships, the Secretary develops no later than January 1, 2007, in consultation with the National Association of Insurance Commissioners, states with experience with LTC insurance partnership plans, other state, and representatives of consumers of LTC insurance policies, standards for uniform reciprocal recognition of such policies among states with qualified state LTC insurance CRS-55 Provision Current Law Conference Agreement, as Passed by the Senate partnerships which have benefits paid under such policies will be treated the same by all such states, and states with such partnerships shall be subject to such standards unless the state notifies the Secretary of the State's election to be exempt from such standards. The Secretary annually reports to Congress on the LTC insurance partnerships. Such reports would include analyses of the extent to which partnership programs expand or limit access of individuals to LTC and the impact of such partnerships on federal and state expenditures under Medicare and Medicaid. Nothing in this provision shall require the Secretary to conduct an independent review of each LTC insurance policy offered under or in connection with a state partnership program. A state plan amendment that provides for a qualified state LTC insurance partnership may provide that the amendment be effective for LTC insurance policies issued on or after a date that is not earlier than the first day of the first calendar quarter in which the plan amendment was submitted to the Secretary. National Clearinghouse for LTC. The Secretary establishes a National Clearinghouse for LTC Information (this may be done through a contract or interagency agreement). The National Clearinghouse for LTC: (1) educates consumers with respect to the availability and limitations of Medicaid LTC coverage (and provides contact information for obtaining specific state information on LTC coverage), CRS-56 Provision Current Law Conference Agreement, as Passed by the Senate including state Medicaid eligibility and estate recovery requirements; (2) provides objective information to assist consumers with the decision-making process for determining whether to purchase LTC insurance or to pursue other private market alternatives for purchasing LTC and provide contact information for additional objective resources on planning for LTC needs; and (3) maintain a list of states with state LTC insurance partnerships. In providing information to consumers on LTC, the National Clearinghouse for LTC Information shall not advocate in favor of a specific LTC insurance provider or a specific LTC insurance policy. Out of any funds in the Treasury not otherwise appropriated, there is appropriated to carry out for the National Clearinghouse for LTC $3 million for each of FY2006-2010. CRS-57 Chapter 3. Eliminating Fraud, Waste, and Abuse in Medicaid Provision Current Law Conference Agreement, as Passed by the Senate Encouraging the Enactment of State False Under the federal False Claims Act, anyone who knowingly Section 6031. Under the conference agreement, if a Claims Acts. submits a false claim to the federal government is liable for state has in effect a law relating to false or fraudulent damages up to three times the amount of the government's claims that meets requirements specified in the bill, the damages plus mandatory penalties of $5,500 to $11,000 for FMAP, with respect to any amounts recovered under a each false claim submitted. Under qui tam (whistleblower) state action brought under such a law, is decreased by 10 provisions of the act, private citizens with knowledge of percentage points. potential violations ("relators") may file suit on behalf of the government and are entitled to receive a share of the proceeds The provision is effective January 1, 2007, except in the of the action or settlement of the claim (ranging from 15% to case of a state which the Secretary of HHS determines 30%, depending on whether or not the government elects to that state legislation is required for compliance. participate in the case). States may have a variety of laws in place to facilitate prosecution of Medicaid fraud, and some have established their own versions of a false claims act. With limited exceptions, a state must repay the federal share (generally determined by the federal medical assistance percentage, or FMAP) of any provider overpayment within 60 days of discovering the overpayment, regardless of whether or not the state has recovered the overpayment to the provider. Employee Education About False Claims No provision. Section 6032. Under the conference agreement, a state Recovery. is required to provide that any entity that receives annual Medicaid payments of at least $5 million, as a condition of receiving such payments, must: (1) establish written policies for all employees (and any contractor or agent) of the entity that provide detailed information on state CRS-58 Provision Current Law Conference Agreement, as Passed by the Senate and federal false claims laws and whistle-blower protections under such laws, (2) include in such written polices detailed provisions regarding the entity's policies and procedures for detecting and preventing fraud, waste, and abuse, and (3) include in any employee handbook for the entity a specific discussion of such laws, the rights of employees to be protected as whistleblowers, and the entity's policies and procedures for detecting and preventing fraud, waste, and abuse. The provision is effective January 1, 2007, except in the case of a state which the Secretary of HHS determines that state legislation is required for compliance. Prohibition on Restocking and Double No provision. Section 6033. The conference agreement would prohibit Billing of Prescription Drugs. federal matching payments for the ingredient cost of a covered outpatient drug for which the pharmacy has already received payment (other than a reasonable re-stocking fee). It would become effective on the first day of the first fiscal quarter beginning after enactment. Medicaid Integrity Program. States and the federal government share in the responsibility Section 6034. The conference agreement establishes a for safeguarding Medicaid program integrity. States must Medicaid Integrity Program, under which the Secretary comply with federal requirements designed to ensure that of HHS shall enter into contracts with eligible entities to Medicaid funds are properly spent (or recovered, when carry out its activities, including review of the actions of necessary). The Centers for Medicare and Medicaid Services individuals or entities, audit of claims for payment, (CMS) is the primary federal agency responsible for identification of overpayments, and education with providing oversight of states' activities and facilitating their respect to payment integrity and quality of care. program integrity efforts. The HHS Office of Inspector Appropriations for the program total $5 million in General (OIG) also plays a role in Medicaid fraud and abuse FY2006, $50 million in each of FY2007 and FY2008, CRS-59 Provision Current Law Conference Agreement, as Passed by the Senate detection and prevention efforts through its investigations, and $75 million in each fiscal year thereafter (with a audits, evaluations, issuances of program recommendations, mandated increase of 100 employees whose duties and other activities. consist solely of protecting the integrity of the Medicaid program). States are required to comply with any As part of its program integrity activities, CMS operates a requirements determined by the Secretary to be Medicare-Medicaid (Medi-Medi) data match project that necessary for carrying out the Medicaid Integrity analyzes claims data from both programs together to detect Program. aberrant patterns that may not be evident when billings are viewed in isolation (e.g., providers submitting claims to both In each of FY2006-2010, $25 million is appropriated for programs for procedures that add up to an excessive number Medicaid activities of the HHS Office of Inspector of hours of patient care in a single day). The Medi-Medi General (in addition to any other amounts appropriated project began with one state in 2001, and was subsequently or made available for its Medicaid activities, to remain expanded to include eight others. It is primarily supported by available until expended). "wedge" funds from the Health Care Fraud and Abuse Control (HCFAC) account within the federal Hospital The conference agreement also establishes a national Insurance (Medicare Part A) trust fund. HCFAC wedge expansion of the Medicare-Medicaid data match project funds are divided between the Department of Justice, the (referred to as the Medi-Medi Program) as a required HHS Office of Inspector General, CMS, and other HHS activity of the Medicare Integrity Program. In addition agencies. The HCFAC account also funds the Medicare to HCFAC appropriations for the Medicare Integrity Integrity Program and activities of the Federal Bureau of Program, the Medi-Medi Program is appropriated $12 Investigation related to health care fraud. Annual minimum million in FY2006, $24 million in FY2007, $36 million and maximum HCFAC appropriations are specified in statute. in FY2008, $48 million in FY2009, and $60 million in FY2010 and each fiscal year thereafter. Enhancing Third Party Identification and Third-party liability (TPL) refers to the legal obligation of Section 6035. The conference agreement substitutes the Payment. third parties -- individuals, entities, or programs -- to pay all term "managed care organization" for "health or part of the expenditures for medical assistance furnished maintenance organization" and amends the list of third under a Medicaid state plan. In general, federal law requires parties named in Section 1902(a)(25) of the Social Medicaid to be the payor of last resort, meaning that all other Security Act for which states must take all reasonable available third parties must meet their legal obligation to pay measures to ascertain the legal liability to include CRS-60 Provision Current Law Conference Agreement, as Passed by the Senate claims before the Medicaid program pays for the care of an self-insured plans, pharmacy benefit managers, and other individual. parties that are legally responsible (by statute, contract, or agreement) for payment of a claim for a health care States are required to take all reasonable measures to item or service. It also amends that section to include ascertain the legal liability of third parties to pay for care and these entities in the list of health insurers that states must services available under the state Medicaid plan. If the state prohibit from taking an individual's Medicaid status into has determined that probable third party liability exists at the account when enrolling the individual or making time a claim for reimbursement is filed, it generally must payments for benefits to or on behalf of the individual. reject the claim and return it to the provider for a determination of the amount of third party liability (referred In addition, it requires a state to provide assurances to as "cost avoidance"). If probable liability has not been satisfactory to the Secretary of HHS that it has laws in established or the third party is not available to pay the effect requiring third parties to provide, upon request of individual's medical expenses, the state must pay the claim the state, information to determine health insurance and then attempt to recover the amount paid (referred to as coverage (in a manner prescribed by the Secretary) and "pay and chase"). States are generally required to cost avoid to cooperate with payment and recovery efforts by claims unless they have an approved waiver that allows them Medicaid. to use the pay and chase method. The provision is effective January 1, 2006, except in the As a condition of eligibility for Medicaid, individuals are case of a state which the Secretary of HHS determines required to assign to the state Medicaid agency their rights to that state legislation is required for compliance. medical support and payment for medical care from any third party. This assignment of rights facilitates TPL recovery by allowing the state to collect, on behalf of Medicaid enrollees, amounts owed by third parties for claims paid by Medicaid. Improved Enforcement of Documentation To be eligible for the full range of benefits offered under Section 6036. Under the conference agreement, states Requirements. Medicaid, an individual must be a citizen or national of the are prohibited from receiving federal Medicaid United States or a qualified alien (e.g., a legal permanent reimbursement for an individual who has not provided resident, refugee, alien granted asylum or related relief) who satisfactory documentary evidence of citizenship or meets all other Medicaid program eligibility criteria. nationality. Such evidence includes one of the following CRS-61 Provision Current Law Conference Agreement, as Passed by the Senate Non-qualified aliens (e.g., those who are unauthorized or documents: (1) a U.S. passport; (2) Certificate of illegally present, non-immigrants admitted for a temporary Naturalization; (3) Certificate of U.S. Citizenship; (4) a purpose) who would otherwise be eligible for Medicaid valid state-issued driver's license or other identity except for their immigration status may only receive document described in Section 274A(b)(1)(D) of the Medicaid care and services that are necessary for the Immigration and Nationality Act, but only if the state treatment of an emergency medical condition and are not issuing the license or document requires proof of U.S. related to an organ transplant procedure. citizenship or a verified Social Security number before issuance; (5) such other document specified in regulation As a condition of an individual's eligibility for Medicaid by the Secretary that provides reliable documentation of benefits, Section 1137(d) of the Social Security Act requires identity and proof of U.S. citizenship or nationality. a state to obtain a written declaration, under penalty of perjury, stating whether the individual is a citizen or national Satisfactory evidence also includes a document from of the United States. If an individual declares that he or she each of the following lists: (1) a certificate of birth in the is a citizen or national, the state is not required to obtain U.S; (2) Certificate of Birth Abroad; (3) U.S. Citizen additional documentary evidence but may choose to do so. Identification Card; (4) Report of Birth Abroad of a If an individual declares that he or she is not a citizen or Citizen of the U.S.; or (5) such other document specified national, the individual must declare that he or she is a by the Secretary that provides proof of U.S. citizenship qualified alien and present Department of Homeland Security or nationality; AND (1) any identity document described United States Citizenship and Immigration Services Bureau in Section 274A(b)(1)(D) of the Immigration and (DHS/USCIS, formerly the Immigration and Naturalization Nationality Act; or (2) any other document specified in Service) or other documentation determined by the state to regulation by the Secretary that provides reliable constitute reasonable evidence of satisfactory immigration documentation of identity. status. If an individual presents DHS/USCIS documentation, the state must verify immigration status with DHS/USCIS The requirements do not apply to aliens who are entitled through the automated Systematic Alien Verification for to or enrolled for Medicare benefits, receiving Entitlements (SAVE) system, or through an alternative Supplemental Security Income (SSI) benefits, or eligible system approved by the Secretary of HHS. for Medicaid on such other basis as the Secretary may specify that satisfactory evidence had been previously presented. The provision would apply to initial CRS-62 Provision Current Law Conference Agreement, as Passed by the Senate determinations and to redeterminations of eligibility for Medicaid made on or after July 1, 2006. Chapter 4. Flexibility in Cost Sharing and Benefits Provision Current Law Conference Agreement, as Amended by the Senate State Option for Alternative Premiums and With some exceptions, premiums and enrollment fees are Section 6041(a). The conference agreement allows Cost Sharing. generally prohibited under Medicaid. When applicable, states to impose premiums and cost-sharing for any nominal amounts for such charges are between $1 and $19 group of individuals for any type of service (except per month depending on family income. States are allowed prescribed drugs which are treated separately; see to establish nominal service-related cost-sharing requirements below), through Medicaid state plan amendments (rather that are generally between $0.50 and $3, depending on the than waivers), subject to specific restrictions. Premiums cost of the service provided. Specific services and groups are and cost-sharing imposed under this option are allowed exempted from such cost-sharing. Waiver authority is to vary among classes or groups of individuals, or types required to change these rules. of service. Premiums and cost-sharing provisions in current law for workers with disabilities are not affected. General Limitations. See above. In general, for individuals in families with income between 100 and 150% FPL: (1) no premiums may be imposed, (2) cost sharing for any item or service cannot exceed 10% of the cost of the item or service, and (3) the total aggregate amount of all cost-sharing (including cost sharing for prescribed drugs and emergency room copayments for non-emergency care; see below) cannot exceed 5% of family income as applied on a quarterly or monthly basis as specified by the state. For individuals CRS-63 Provision Current Law Conference Agreement, as Amended by the Senate in families with income above 150% FPL: (1) the total aggregate amount of all cost sharing (including cost sharing for prescribed drugs and emergency room copayments for non-emergency care) cannot exceed 5% of family income as applied on a quarterly or monthly basis as specified by the state, and (2) cost-sharing for any item or service cannot exceed 20% of the cost of the item or service. Specified Groups Exempt from Premiums. Under certain circumstances, families qualifying for Premiums are not permitted for: (1) mandatory groups transitional Medicaid, pregnant women and infants with of children under 18, including individuals in foster care income over 150% FPL, medically needy groups, and receiving aid or assistance under Part B of Title IV and workers with disabilities may be charged premiums for persons receiving adoption or foster care assistance Medicaid coverage. Otherwise, in the absence of a waiver, under Title IV-E, regardless of age; (2) pregnant women; premiums may not be charged for other individuals and (3) terminally ill persons receiving Medicaid hospice groups. care; (4) individuals in medical institutions who are required to pay for costs of care all but a minimal amount of their income for personal needs, and (5) women who qualify for Medicaid under the breast and cervical cancer eligibility group. States may exempt additional groups from premiums. Specified Groups and Services Exempt All service-related cost-sharing is prohibited for: (1) children Service related cost-sharing is not permitted for: (1) from Service-Related Cost Sharing. under 18 years of age; (2) pregnant women for any services services provided to mandatory groups of children under that relate to the pregnancy or to any other medical condition 18, including individuals in foster care receiving aid or which may complicate pregnancy; (3) services furnished to assistance under Part B of Title IV and persons receiving individuals who are inpatients in a hospital, or are residing in adoption or foster care assistance under Title IV-E, a long term care facility or in another medical institution if regardless of age; (2) preventive services provided to the individual is required to spend most of their income for children under 18 regardless of family income; (3) medical care; (4) services furnished to individuals receiving services provided to pregnant women that relate to CRS-64 Provision Current Law Conference Agreement, as Amended by the Senate hospice care; (5) emergency services; and (6) family planning pregnancy or to other medical conditions that may services and supplies. For most other beneficiaries and complicate pregnancy; (4) services provided to services, states may impose nominal service-related terminally ill individuals receiving Medicaid hospice cost-sharing (described above). For workers with disabilities, services; (5) services provided to individuals in medical service-related cost-sharing may be required that exceeds institutions who are required to spend for costs of care all nominal amounts as long as they are set on a sliding scale but a minimal amount of their income for personal based on income. needs; (6) emergency services; (7) family planning services and supplies, and (8) services to women who qualify for Medicaid under the breast and cervical cancer eligibility group. States may exempt additional individuals or services from service-related cost-sharing. Construction. No provision. The agreement further specifies that these provisions would not prevent states from further limiting premiums and cost sharing, affect the authority of the Secretary to waive limits on premiums or cost-sharing, nor affect related waivers in effect before the date of enactment. Beneficiary Conditions For Continued Under the state Medicaid plan, providers must not deny care The agreement allows states to condition the provision of Medicaid Enrollment and Receipt of Services. or services to Medicaid beneficiaries due to the individual's medical assistance on the payment of premiums, and to inability to pay a cost-sharing charge. However, this terminate Medicaid eligibility on the basis of failure to requirement does not eliminate the beneficiary's liability for pay a premium if that failure continues for at least 60 payment of such charges. For certain groups of pregnant days. States may apply this provision to some or all women and infants for which monthly premiums may be groups of beneficiaries, and may waive premium charged, states must not require prepayment and must not payments in cases where such payments would be an terminate Medicaid eligibility for failure to pay such undue hardship. In addition, the provision would allow premiums until such failure continues for at least 60 days. states to permit providers participating in Medicaid to States may waive those premiums when such payments require a Medicaid beneficiary to pay authorized would cause undue hardship. cost-sharing as a condition of receiving care or services. Providers would also be allowed to reduce or waive CRS-65 Provision Current Law Conference Agreement, as Amended by the Senate cost-sharing amounts on a case-by-case basis. Indexing Nominal Cost Sharing and The regulations that specify nominal premium and Section 6041(b). Beginning with 2006, the Secretary is Conforming Amendment. service-related cost-sharing amounts were published and required to increase nominal amounts for service-related amended in the late 1970s and the early 1980s. These cost-sharing by the annual percentage increase in the amounts are not adjusted by any factor. medical care component of the consumer price index (CPI) for all urban consumers (U.S. city average), as rounded up in an appropriate manner. These changes apply to premium and cost-sharing provisions involving nominal amounts in existing statute (Section 1916) as well as to the new cost-sharing provisions specific to prescription drugs and non-emergency care provided in an emergency room (described below). Effective Date. No provision. Section 6041(c) These provisions apply to cost-sharing for items and services furnished on or after March 31, 2006. Special Rules for Cost Sharing for States are allowed to establish nominal service-related Section 6042. Under the conference agreement, states Prescription Drugs. cost-sharing requirements (defined in regulation) that are may impose higher cost-sharing amounts for state- generally between $0.50 and $3, depending on the cost of the identified non-preferred drugs within a class; waive or service provided. Specific services and groups are exempted reduce the cost-sharing otherwise applicable for from such cost-sharing. Waiver authority is required to preferred drugs within such class; and must not apply change these rules. As with other Medicaid benefits, nominal such cost-sharing for preferred drugs to persons exempt cost-sharing may be imposed on prescribed drugs, and states from cost-sharing (identified above). Within these may vary nominal cost-sharing amounts for preferred and parameters, states identify the group(s) of beneficiaries non-preferred drugs. States may also implement prior for which these special cost-sharing rules will apply. authorization for prescribed drugs. CRS-66 Provision Current Law Conference Agreement, as Amended by the Senate Limitations on cost-sharing for non- See above. Cost-sharing for non-preferred drugs may not exceed: preferred drugs. (1) nominal amounts for individuals in families with income below or equal to 150% FPL, and (2) 20% of the cost of the drug for individuals in families with income above 150% FPL. For persons generally exempt from cost-sharing (identified above), cost-sharing for non-preferred drugs may be applied. Such cost-sharing may not exceed nominal amounts, and aggregate caps on cost-sharing (identified above) would still apply. Special conditions and applicable cost- No provision. In cases in which a prescribing physician determines that sharing. the preferred drug would not be effective or would have adverse health effects or both, the state may impose the cost-sharing amount for preferred drugs on the prescribed non-preferred product. Flexibility regarding drugs excluded from No provision. The agreement does not prevent states from excluding cost sharing provisions. specified drugs or classes of drugs from these special cost-sharing rules. Effective Date. No provision. These provisions are effective for cost-sharing imposed for items and services furnished on or after March 31, 2006. Emergency Room Co-Payments for Non- Waivers may be used to allow states to impose up to twice the Section 6043. The conference agreement would allow Emergency Care. otherwise applicable nominal cost-sharing amounts for states, through a state plan amendment, to impose non-emergency services provided in a hospital emergency increased cost-sharing on state-specified groups for room (ER). States may impose these higher amounts if they non-emergency services provided in an ER, when certain have established that Medicaid beneficiaries have available conditions are met. First, alternative non-emergency and accessible alternative sources of non-emergency, providers must be available and accessible to the person CRS-67 Provision Current Law Conference Agreement, as Amended by the Senate outpatient services. seeking care. Second, after a medical screening for emergency medical conditions (as defined in Medicare law) and a determination that such an emergency does not exist, but before the non-emergency care is provided at the ER, the beneficiary must be told: (1) the hospital can require a copayment, (2) the name and location of an alternative non-emergency provider who is actually available and accessible and that such a provider may not impose the same cost-sharing, and (3) the hospital can provide a referral. When these conditions are met, states can apply or waive cost-sharing for services delivered by the alternative non-emergency provider. Limitations. See above. For persons with income between 100-150% FPL, cost-sharing for non-emergency services in an ER can not exceed twice the nominal amounts. Individuals exempt from premiums or service-related cost-sharing under other provisions of this agreement may be subject to nominal copayments for non-emergency services in an ER, only when no cost-sharing is imposed for care in hospital outpatient departments or by other alternative providers in the area served by the hospital ER. Aggregate caps on cost-sharing (described above) still apply. Provider Obligations Regarding Emergency Contracts with managed care plans must provide for coverage These provisions have no impact on a hospital's Services. of emergency services without regard to whether the obligations with respect to screening and stabilizing an emergency care provider has a contractual relationship with emergency medical condition, nor do they modify the the plan or prior authorization. An emergency medical application of the prudent-layperson standard with condition is one manifesting itself by acute symptoms of respect to payment or coverage of emergency services by CRS-68 Provision Current Law Conference Agreement, as Amended by the Senate sufficient severity (including severe pain) such that a prudent any managed care organization. layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual in serious jeopardy (and in the case of a pregnant woman, her health or that of her unborn child), serious impairment to bodily functions, or serious dysfunction of any bodily organ or part. Provider Liability. No provision. (In general, state laws govern provider In addition, no hospital or physician that imposes liability.) cost-sharing for non-emergency care in an ER is liable in any civil action or proceeding, absent a finding by clear and convincing evidence of gross negligence. Liabilities related to the provision of emergency care or other applicable state laws regarding delivery of care are not affected by these provisions. On December 21, 2005, the Senate passed an amended conference agreement that, through a point of order, struck this provision. Definitions. No provision. "Non-emergency services" means any care or services furnished in an ER that the physician determines does not constitute an appropriate medical screening examination or stabilizing examination and treatment screening required for hospitals under Medicare law (regarding examination and treatment for emergency medical conditions and women in labor). "Alternative non-emergency services provider" means a Medicaid-participating health care provider, such as a physician's office, health care clinic, community health center, hospital outpatient department, or similar health CRS-69 Provision Current Law Conference Agreement, as Amended by the Senate care provider that provides clinically appropriate services for the diagnosis or treatment of the condition contemporaneously with the provision of non-emergency services that would otherwise be provided in the ER. Grants to Establish Alternative Non- No provision. The Secretary is required to provide for payments to Emergency Provider Networks. states for the establishment of alternate non-emergency providers, or networks of such providers. The conference agreement also authorizes and appropriates $50 million for paying such providers for the four-year period beginning with 2006. The Secretary is required to give a preference to states that establish or provide for alternate non-emergency services providers (or networks) that serve rural or underserved areas where beneficiaries may have limited access to primary care providers, or in partnership with local community hospitals. To access these funds, states are required to file an application meeting requirements set by the Secretary. Effective Date. No provision. These amendments apply to non-emergency services furnished on or after January 1, 2007. Use of Benchmark Packages. Categorically needy (CN) eligibility groups include families Section 6044. The agreement gives states the option to with children, the elderly, certain persons with disabilities, provide Medicaid to state-specified groups through and certain other pregnant women and children who meet enrollment in benchmark and benchmark-equivalent applicable financial standards. Medically needy (MN) groups coverage (described below). States can only exercise include the same types of individuals, but different, typically this option for eligibility groups that were established higher financial standards apply. Some benefits are under the state plan on or before the date of enactment of mandatory for the CN (e.g., inpatient and outpatient hospital this option. States may choose to provide other CRS-70 Provision Current Law Conference Agreement, as Amended by the Senate care, lab and x-ray services, physician services, nursing wrap-around and additional benefits (see below). facility care for persons age 21 and over). Other benefits are optional for the CN (e.g., other practitioner services, routine dental care, physical therapy). Benefits offered to CN groups must be the same statewide, and in amount, duration and scope. States may offer a more restrictive benefit package to the MN, but must offer prenatal and delivery services, ambulatory services for persons under 21 and those entitled to institutional services, and home health services for those entitled to nursing facility care. Benefits offered to MN groups must be the same statewide, and in amount, duration and scope. Changes in comparability or statewideness for benefits for CN and MN groups require a waiver. Full Benefit Eligible Individuals. See above. Enrollment in benchmark and benchmark-equivalent coverage can be required for "full benefit eligible individuals," including persons eligible for all services covered for the CN, or any other category of eligibility for all covered services under the state Medicaid plan as determined by the Secretary. Certain individuals would be excluded from the definition of a full-benefit eligible, including (1) the MN; (2) CN individuals in certain states who are required to pay for medical expenses from their income until their remaining net income meets SSI financial standards in effect in 1972; and (3) other individuals who qualify for Medicaid when costs incurred for medical expenses or other remedial care are subtracted from income to meet financial eligibility requirements (also known as spend-down populations). CRS-71 Provision Current Law Conference Agreement, as Amended by the Senate Exempted Groups. No provision. Specific groups are exempted from mandatory enrollment in the benefit package option, including (1) mandatory pregnant women; (2) individuals who qualify for Medicaid under the state plan on the basis of being blind or disabled regardless of their eligibility for SSI on such basis, including children that meet SSI disability standards who require institutional care, but for whom care is delivered outside the institution, and the cost of that care does not exceed institutional care (also known as Katie Beckett or TEFRA children); (3) dual eligibles; (4) terminally ill hospice patients; (5) individuals in medical institutions who are required to pay for costs of medical services except for a minimal amount retained from their income for personal needs; (6) individuals who are medically frail or who have special medical needs, as identified in accordance with regulations of the Secretary; (7) individuals who qualify for Medicaid long-term care services (i.e., nursing facility or equivalent level of care, home and community-based waiver services, home health, home and community care for functionally disabled elderly, personal care, and other optional long-term care offered by the state); (8) children in foster care receiving child welfare services (under Title IV-B) and children receiving foster care or adoption assistance under Title IV-E regardless of age; (9) individuals who qualify for Medicaid on the basis of receiving assistance under TANF (as in effect on or after the welfare reform effective date applicable to the state); (10) women in the breast and cervical cancer eligibility CRS-72 Provision Current Law Conference Agreement, as Amended by the Senate group; and (11) other "limited services beneficiaries," including certain tuberculosis-infected individuals, and legal and undocumented non-citizens who meet the financial and categorical requirements for Medicaid eligibility without regard to time in the U.S. and are eligible only for emergency medical services. Standard Benefits. As described above, some benefits are mandatory for the CN Benchmark and benchmark-equivalent packages would (e.g., inpatient and outpatient hospital care, lab and x-ray be nearly identical to those offered under SCHIP, with services, physician services, FQHC services, nursing facility some additions. Benchmark coverage would include (1) care for persons age 21 and over). Other benefits are optional the standard Blue Cross/Blue Shield preferred provider for the CN (e.g., other practitioner services, routine dental plan under FEHBP; (2) health coverage for state care, physical therapy). Benefits offered to CN groups must employees; (3) health coverage offered by the largest be the same statewide, and in amount, duration and scope. commercial HMO; and (4) secretary approved coverage States may offer a more restrictive benefit package to the which may include any other health benefits coverage MN, but must offer prenatal and delivery services, that the Secretary determines will provide appropriate ambulatory services for persons under 21 and those entitled coverage for the population targeted to receive such to institutional services, and home health services for those coverage. Benchmark-equivalent coverage would have entitled to nursing facility care. Benefits offered to MN the same actuarial value as one of the benchmark plans. groups must be the same statewide, and in amount, duration Such coverage includes (1) inpatient and outpatient and scope. Changes in comparability or statewideness for hospital services, (2) physician services, (3) lab and benefits for CN and MN groups require a waiver. x-ray services, (4) well child care, including immunizations, and (5) other appropriate preventive care (designated by the Secretary). Such coverage must also include at least 75% of the actuarial value of coverage under the benchmark plan for: (1) prescribed drugs, (2) mental health services, (3) vision care, and (4) hearing services. Determination of actuarial value would follow generally accepted actuarial principles and methodologies and would be conducted by a member of CRS-73 Provision Current Law Conference Agreement, as Amended by the Senate the American Academy of Actuaries. Wrap-Around Benefits for Children Only. Under the Early and Periodic, Screening, Diagnostic and For any child under age 19 in one of the major Treatment (EPSDT) benefit, Medicaid children under age 21 mandatory and optional eligibility groups (defined in in CN groups receive comprehensive screening services and Section 1902(a)(10)(A)) under the state Medicaid plan, preventive care, and are guaranteed access to all federally wrap-around benefits to the benchmark or benchmark- coverable services necessary to treat a problem or condition. equivalent coverage includes ESPDT as defined in EPSDT may be offered to MN children. current Medicaid law. Treatment of Rural Health Clinics (RHCs) Both the services provided by RHCs and FQHCs are States can only enroll eligible beneficiaries in benchmark and Federally Qualified Health Centers (FQHCs). required benefits for CN groups under Medicaid. Among and benchmark-equivalent coverage if such persons have other mandatory benefits for MN groups, states must offer access to services provided by RHCs and FQHCs, and ambulatory services for persons under 21 and those entitled the Medicaid prospective payment system for both types to institutional services. Such ambulatory services may of providers remains in effect. include RHC and FQHC services at state option. In general, RHCs and FQHCs are paid on a per visit basis, using a prospective payment system that takes into account costs incurred and changes in the scope of services provided. Per visit payment rates are also adjusted annually by the Medicare Economic Index applicable to primary care services. Effective Date. No provision. These provisions are effective on March 31, 2006. CRS-74 Chapter 5. State Financing Provision Current Law Conference Agreement, as Passed by the Senate Managed Care Organization Provider Tax. States' ability to use provider-specific taxes to fund Section 6051. The conference agreement would expand Medicaid expenditures is limited. If a state establishes the Medicaid MCO provider class to include all MCOs. provider-specific taxes to fund the state's share of program To qualify for federal reimbursement, a state's provider costs, reimbursement of the federal share will not be available tax would need to apply to both Medicaid and unless the tax program meets the following three rules: the non-Medicaid MCOs. This would make the MCO taxes collected cannot exceed 25% of the state (or provider class more consistent with the other provider non-federal) share of Medicaid expenditures; the state cannot classes for purposes of determining if a provider tax is provide a guarantee to the providers that the taxes will be broad-based. returned to them; and the tax must be "broad-based." A broad-based tax is a tax that is uniformly applied to all The provision becomes effective upon enactment except providers or services within the provider class. The federal in states with taxes based on the current law Medicaid statute identifies each of the classes of providers or services MCO provider class in place as of December 8, 2005. In for the purpose of determining whether a tax is broad-based. those states, the provision becomes effective on October 1, 2009. Medicaid managed care organizations (MCOs) are identified as a separate class of providers for the purposes of determining if a tax is broad-based. This class is unlike all of the other classes of providers or services because it is limited to only Medicaid providers. Other classes of providers or services identified in statute, such as inpatient hospital services, outpatient hospital services, physicians -- are not restricted to Medicaid providers or Medicaid services. Reforms of Case Management and Case management is an optional Medicaid benefit designed Section 6052. The conference agreement clarifies the Targeted Case Management (TCM). to help Medicaid beneficiaries access needed medical, social, activities that can be considered case management or educational, and other services. States that cover case targeted case management, and those activities (primarily management do not have to offer the benefit statewide and foster care-related activities) that may not be reimbursed CRS-75 Provision Current Law Conference Agreement, as Passed by the Senate can limit the service to specific groups of Medicaid as case management services or TCM. beneficiaries which is referred to as "targeted case management" (TCM). Several states extend case management services to individuals who may also be receiving certain case management services as part of another state and/or federal program (e.g., foster care, juvenile justice). Additional FMAP Adjustments. The federal medical assistance percentage (FMAP) is the rate Section 6053. Under the conference agreement, if at which states are reimbursed for most Medicaid service Alaska's FY2006 or FY2007 FMAP for Medicaid or expenditures. It is based on a formula that provides higher SCHIP is less than its FY2005 FMAP, the FY2005 reimbursement to states with lower per capita incomes FMAP shall apply. relative to the national average (and vice versa); it has a statutory minimum of 50% and maximum of 83%. An In addition, in computing Medicaid and SCHIP FMAPs enhanced FMAP is available for both services and for any year after 2006 for a state that the Secretary of administration under the State Children's Health Insurance HHS determines has a significant number of individuals Program (SCHIP), subject to the availability of funds from a who were evacuated to and live in the state as a result of state's SCHIP allotment. Hurricane Katrina as of October 1, 2005, the Secretary shall disregard such evacuees and their incomes. When state FMAPs are calculated by HHS for an upcoming fiscal year, the state and U.S. amounts used in the formula are equal to the average of the three most recent calendar years of data on per capita personal income available from the Department of Commerce's Bureau of Economic Analysis (BEA). BEA revises its most recent estimates of state per capita personal income on an annual basis to incorporate revised Census Bureau population figures and newly available source data. It also undertakes a comprehensive data revision -- reflecting methodological and other changes -- every few years. CRS-76 Provision Current Law Conference Agreement, as Passed by the Senate P.L. 106-554 (Consolidated Appropriations Act, 2001), provided that for FY2001-2005, Medicaid and SCHIP FMAPs for Alaska would be calculated using the state's per capita income divided by 1.05. Dividing by 1.05 lowered the state's per capita income, thereby increasing its FMAP. DSH Allotment for the District of Columbia. States and the District of Columbia are required to recognize, Section 6054. The conference agreement would raise in establishing hospital payment rates, the situation of the allotments for the District of Columbia for FY2000, hospitals that serve a disproportionate number of Medicaid 2001, and 2002 from $ 32 million to $ 49 million. The beneficiaries and other low-income patients with special higher allotments would be used to calculate DSH needs. Under broad federal guidelines, each state determines allotments beginning with FY2005 amounts. The which hospitals receive DSH payments and the payment provision would take effect as if enacted on October 1, amounts to be made to each qualifying hospital. The federal 2005 and would apply to expenditures made on or after government shares in the cost of state DSH payments at the that date same federal matching percentage as for most other Medicaid services. Total federal reimbursement for each state's DSH payments, however, are capped at a statewide ceiling, referred to as the state's DSH allotment. Increase In Medicaid Payments to the In the 50 states and the District of Columbia, Medicaid is an Section 6055. For each of FY2006-2007, the Insular Areas. individual entitlement. There are no limits on the federal Conference Agreement increases the federal Medicaid payments for Medicaid as long as the state is able to funding caps in the insular areas. For Puerto Rico, the contribute its share of the matching funds. In contrast, federal Medicaid cap is increased by $12 million in each Medicaid programs in the territories are subject to spending of FY2006 and FY2007. For the Virgin Islands and caps. For FY1999 and subsequent fiscal years, these caps are Guam, the federal Medicaid caps is increased by $2.5 increased by the percentage change in the medical care million in FY2006, and by $5.0 million in FY2007. For component of the Consumer Price Index (CPI-U) for all the Northern Marianas, the federal Medicaid cap is Urban Consumers (as published by the Bureau of Labor increased by $1.0 million in FY2006, and by $2.0 Statistics). The federal Medicaid matching rate, which million in FY2007. For American Samoa, the federal determines the share if Medicaid expenditures paid for by the Medicaid cap is increased by $2.0 million in FY2006, CRS-77 Provision Current Law Conference Agreement, as Passed by the Senate federal government, is statutorily set at 50% of the territories. and by $4.0 million in FY2007. For FY2008 and Therefore, the federal government pays 50% of the cost of subsequent fiscal years, the total annual cap on federal Medicaid items and services in the territories up to the funding for the Medicaid programs in the insular areas is spending caps. calculated by increasing the FY2007 ceiling for inflation. The Conference Agreement is effective upon enactment of this act CRS-78 Chapter 6. Other Provisions Subchapter A -- Family Opportunity Act. Provision Current Law Conference Agreement, as Passed by the Senate Opportunity for Families of Disabled For children with disabilities, there are a number of Section 6062(a)(1). The agreement creates a new optional Children to Purchase Medicaid Coverage for potentially applicable Medicaid eligibility groups, some Medicaid eligibility group for children with disabilities under Such Children. mandatory but most optional. For some of these groups, age 19 who meet the severity of disability required under SSI disability status or medical need is directly related to without regard to any income or asset eligibility requirements Medicaid eligibility (e.g., children receiving applicable under SSI for children, and whose family income Supplemental Security Income or SSI with family does not exceed 300% FPL. (States can exceed 300% FPL, income below 75% FPL). There are other pathways without federal matching funds for such coverage.) Medicaid through which such children may also qualify for coverage will be phased in by age group, beginning with Medicaid coverage for which disability status and/or children through age six in the second through fourth quarters medical need are irrelevant (e.g., children under age 6 of FY2007, then covering children through age 12 beginning with family income below 133% FPL). All of the in FY2008, and finally, covering children through age 18 Medicaid eligibility pathways for children require during FY2009 and thereafter. income levels that are generally below 300% of the federal poverty level (FPL) with some state-specific exceptions. Interaction with Employer-Sponsored States may require Medicaid beneficiaries to apply for Section 6062(a)(2). Under the agreement, states must Family Coverage. coverage in certain employer-sponsored group health require certain parents of children eligible for Medicaid under plans (in which such persons are eligible) when it is the new optional coverage group to enroll in, and pay cost-effective to do so (defined below). This premiums for, family coverage through employer-sponsored requirement may be imposed as a condition of insurance if certain conditions are met. When the employer continuing Medicaid eligibility, except that failure of a offers family coverage, the parent is eligible for such parent to enroll a child must not affect the child's coverage, and the employer contributes at least 50% of the continuing eligibility for Medicaid. If all members of the total cost of annual premiums for such coverage, states must family are not eligible for Medicaid, and the group require participation in such coverage as a condition of health plan requires enrollment of the entire family, continuing Medicaid eligibility for the child. States can pay CRS-79 Provision Current Law Conference Agreement, as Passed by the Senate Medicaid will pay associated premiums for full family any portion of required premiums on behalf of eligible coverage if doing so is cost-effective. Medicaid will not children under such employer plans. Medicaid would be the pay deductibles, coinsurance or other cost-sharing for secondary payer to these employer plans. Benefits offered by family members ineligible for Medicaid. Third party Medicaid but not offered by the employer plans would be liability rules apply to coverage in a group health plan; covered under Medicaid. Also, if such employer coverage is that is, such plans, not Medicaid, must pay for all obtained, states must reduce income-related premiums for covered services under the plan. Cost-effectiveness Medicaid coverage (permitted under Section 6062(b); see means that the reduction in Medicaid expenditures for below) by an amount that reasonably reflects the premium Medicaid beneficiaries enrolled in a group health plan is contribution made by the parent for private coverage on likely to be greater than the additional costs for behalf of a child with a disability. premiums and cost-sharing required under the group health plan. State Option to Impose Income-Related For certain eligibility categories, states may not impose Section 6062(b). States are permitted, within certain limits, Premiums. enrollment fees, premiums or similar charges. States are to require families with children that qualify for Medicaid specifically prohibited from requiring payment of under the new optional eligibility category to pay monthly deductions, cost-sharing or similar charges for services premiums on a sliding scale based on income, but only if furnished to children under 18 (up to age 21, or specific caps on aggregate payments for cost-sharing, reasonable subcategories, at state option). Also, in including premiums for employer-sponsored family coverage certain circumstances, states may impose monthly if applicable, and other charges are met. These caps specify premiums for Medicaid. For example, states may require that cost-sharing cannot exceed 5% of income for families certain workers with disabilities to pay premiums and with income up to 200% FPL, and cannot exceed 7.5% of cost-sharing set on a sliding scale based on income. For income for families with income between 200% and 300% one of these groups, states may require those with FPL. States cannot require prepayment of premiums, nor can income between 250% and 450% FPL to pay the full states terminate eligibility of an enrolled child for failure to premium. But the sum of such payments may not exceed pay premiums unless lack of payment continues for a 7.5% of income. For other groups, states may not minimum of 60 days beyond the due date. States can waive require prepayment of premiums and may not terminate payment of premiums when such payment would cause eligibility due to failure to pay premiums, unless such undue hardship. failure continues for at least 60 days. States may also CRS-80 Provision Current Law Conference Agreement, as Passed by the Senate waive premiums when such payments would cause undue hardship. Conforming Amendments. Unless otherwise specified for a given coverage group, Section 6062(c). The agreement permits the upper income Medicaid eligibility for children is limited to those in level for the new optional coverage group (set at 300% FPL) families with income up to 133 and 1/3% of the to exceed the otherwise applicable AFDC-related income applicable AFDC payment standard in place as of July standard for children under Medicaid. This section also 16, 1996. In addition, targeted low-income children stipulates that children with disabilities made eligible for under SCHIP statute are defined as those who would not Medicaid through the new optional coverage group would not qualify for Medicaid under the state plan in effect on be considered to be targeted low-income children as defined March 31, 1997. Payments for services provided to under SCHIP. Thus, the regular Medicaid FMAP, rather than children who receive Medicaid benefits through an the higher SCHIP E-FMAP, applies for determining the expansion of eligibility under SCHIP authority are federal share of Medicaid expenditures for the new optional reimbursed by the federal government at the enhanced coverage group. In addition, federal payments will be drawn federal medical assistance percentage (E-FMAP) rate, from the open-ended Medicaid account and not the capped and funds based on this rate are drawn from annual SCHIP account. SCHIP allotments. The SCHIP E-FMAP builds on the Medicaid FMAP. The FMAP formula is designed to provide a higher federal matching rate for states with lower average per capita personal income, compared to the national average. Effective Date. No provision. Section 6062(d). These provisions are effective for items and services furnished on or after January 1, 2007. Demonstration Projects Regarding Home- Medicaid home and community-based service (HCBS) Section 6063. The conference agreement establishes a five- and Community-Based Alternatives to waivers authorized by Section 1915(c) of the Social year demonstration project in which up to 10 states could Psychiatric Residential Treatment Facilities for Security Act allows states to provide a broad range of provide a broad range of home- and community-based Children. home and community-based services to Medicaid services to children who would otherwise require services in beneficiaries who would otherwise need the level of care a psychiatric residential treatment facility. The demonstration CRS-81 Provision Current Law Conference Agreement, as Passed by the Senate provided in a hospital, nursing facility, or intermediate would test the effectiveness of improving or maintaining the care facility for individuals with mental retardation (ICF- child's functional level, and the cost-effectiveness of MR). The HCBS waiver does not allow states to provide providing these types of services as an alternative to these types of programs as an alternative to a psychiatric psychiatric residential treatment services. residential treatment facility for children with psychiatric disabilities. State Demonstration. No provision The state demonstration projects may provide a variety of home and community-based services as an alternative to psychiatric residential treatment facilities. The projects must follow the existing requirements of the HCBS waiver, and be budget neutral. The state must also provide for an interim and final evaluations that must be conducted by an independent third party. Following the demonstration, a state may continue to provide home and community-based services to those children who are enrolled in the demonstration project as of the project's termination date. Federal Evaluation and Report. No provision. The Secretary is required to complete evaluations of the project and report the findings to the President and Congress within 12 months of completing the evaluations. Of the amount appropriated for the demonstration, the Secretary may use $1 million each year in the FY2007-FY2011 period for this purpose. Appropriation. No provision. The conference agreement appropriates $218 million for FY2007-FY2011 to carry out the demonstration. The funds available for this demonstration total: $21 million in FY2007; CRS-82 Provision Current Law Conference Agreement, as Passed by the Senate $37 million in FY2008; $49 million in FY2009, $53 million in FY2010; and $57 million in FY2011. Family-to-Family Health Information Family-to-family health centers provide information and Section 6064. The conference agreement increases funding Centers. assistance to help families of children with special health under the SPRANS program of Title V of the Social Security care needs navigate the system of care and make Act for the development and support of new family-to-family decisions about the needs and available supports for their health information centers. It appropriates an additional $3 child. No provision in current law specifically million for FY2007, $4 million for FY2008, and $5 million authorizes a dedicated amount of funds for these family- for FY2009 for this new purpose. For each of FYs 2010 and to-family health information centers. However, since 2011, the conference agreement authorizes $5 million for this 2002, the Department of Health and Human Services purpose. Funds would remain available until expended. (HHS) has awarded approximately $6.9 million to The purpose of the family-to-family health information develop these information centers in 36 states under centers is to: (1) assist families of children with disabilities various program authorities including (1) Special or special health care needs to make informed choices about Projects of Regional and National Significance Program health care so as to promote good treatment decisions, cost- (SPRANS) of the Maternal and Child Services Block effectiveness, and improved health outcomes for such Grant (Title V of the Social Security Act) operated by children; (2) provide information regarding the health care the Health Resources Services Administration (HRSA); needs of, and resources available for children with disabilities (2) the Real Choice Systems Change grant program or special health care needs; (3) identify successful health operated by the Centers for Medicare and Medicaid delivery models; (4) develop a model for collaboration Services (CMS); and (3) a one-year direct congressional between families of such children and health professionals; appropriation to an organization in Iowa. Federal (5) provide training and guidance with regard to the care of funding for these projects is time-limited. Except for the such children; and (6) conduct outreach activities to the one-year direct appropriation, state projects have families of such children, health professionals, schools, and generally been funded for a three- or four-year period. other appropriate entities and individuals. The family-to- HRSA intends to fund additional family-to-family health family health information center would be staffed by families information centers awarding up to $2.4 million to six who have expertise in public and private health care systems projects for a four-year period starting in FY2006. and by health professionals. CRS-83 Provision Current Law Conference Agreement, as Passed by the Senate The Secretary is required to develop family-to-family health information centers in at least 25 states in FY2007, 40 states in FY2008, and all states in FY2009. Restoration of Medicaid Eligibility for SSI and Medicaid eligibility is effective on the later of Section 6065. The agreement extends Medicaid eligibility to Certain SSI Beneficiaries. (1) the first day of the month following the date the persons who are under age 21 and who are eligible for SSI, application is filed, or (2) the first day of the month effective on the later of: (1) the date the application is filed, following the date that the individual is determined or (2) the date SSI eligibility is granted. This provision is eligible. effective one year after the date of enactment. Subchapter B -- Money Follows the Person Rebalancing Demonstration. Provision Current Law Conference Agreement, as Passed by the Senate Money Follows the Person Demonstration. States can provide a variety of home and community- Section 6071(a). The conference agreement authorizes the based services to Medicaid beneficiaries who need long- Secretary to conduct a demonstration project in states to (1) term care. Some of these services may be offered increase the use of home and community-based care instead CRS-84 Provision Current Law Conference Agreement, as Passed by the Senate statewide as part of the Medicaid state plan (e.g., home of institutions by relocating individuals from institutions into health services and personal care services). Other the community, (2) expand the state's capacity to provide services may be offered through a home and community- home and community-based long-term care services for based services (HCBS) waiver under Section 1915(c) of individuals who choose to transition into the community; and the Social Security Act. The HCBS waivers allow states (3) to ensure that procedures are in place to provide quality to provide a broad range of home and community-based assurance and continuous quality improvement, that is at least services (e.g., respite, adult day care) to individuals who comparable to other Medicaid home and community-based would otherwise require the level of care provided in services. certain types of institutions (i.e., a hospital, nursing facility or intermediate care facility for individuals with mental retardation (ICF-MR)). As part of the HCBS waiver, states have the ability to define the covered services and specify a target population (e.g., elderly individuals). States may also limit the number of waiver participants. Medicaid beneficiaries who are residents of an institution (such as a nursing home) and who would like to leave that institution would be entitled to receive those Medicaid services covered by the Medicaid state plan. However, individuals may not be able to access the broader range of services under an HCBS waiver because many states have waiting lists. State Demonstrations. No provision States awarded a demonstration would receive additional federal funding for the costs of home and community-based, long-term care services (under a HCBS waiver and/or the state plan) for 12 months following a demonstration participant's transition from an institution into the community. In a given fiscal year, funding would be capped CRS-85 Provision Current Law Conference Agreement, as Passed by the Senate at the amount of a state's grant award. After the 12 months of grant funding, the state would be required to continue providing services through a Medicaid home and community- based long-term care program. Eligible Individuals. No provision. Individuals may participate in the demonstration if they meet the following criteria: (1) they are residents of a hospital, nursing facility, ICF-MR, or an institution for mental disease (IMD) (but only to the extent that the IMD benefit is offered as part of the existing state Medicaid plan); (2) they have resided in the facility for no less than six months or for a longer time period specified by the state (up to a maximum of two years); (3) they are receiving Medicaid benefits for the services in this facility; (4) they will continue to require the level of care of the facility but for the provision of HCBS services. After relocating into the community, the individual must reside in one of the following: a home owned or leased by the individual or his/her family; an apartment with an individual lease in which the individual (or family) has domain and control over the space; or a community-based residential setting where no more than four unrelated individuals reside. State Application. No provision. Section 6071(c). The state's application for a demonstration project is required to include, at a minimum, the following information: (1) assurance that the project was developed and will be operated through a public input process; (2) assurance that the project will operate in conjunction with an CRS-86 Provision Current Law Conference Agreement, as Passed by the Senate existing Medicaid home and community-based program; (3) the duration of the project, which must be for at least two consecutive fiscal years in a five-year period starting in FY2007; (4) the service area, which may be statewide or less- than-statewide; (5) the target groups and the projected number to be enrolled and the estimated total expenditures for each fiscal year; (6) assurance that the project defers to individual choice and that the state will continue services for participants after the demonstration ends, as long as the state offers such services and the individual remains eligible; (7) information on recent Medicaid expenditures for long-term care and home and community-based services the year preceding the demonstration, and proposed methods to increase the state's investment in home and community-based services; (8) methods the state will use to eliminate barriers to paying for long-term care services for participants in the setting(s) of their choice; (9) assurance that the state will meet a maintenance of effort for Medicaid HCBS expenditures and will continue to operate a HCBS waiver that meets the statutory requirements for cost-neutrality. A state is also required to identify any requested waivers of Medicaid law; describe a plan for quality assurance and improvement of HCBS services under Medicaid; if applicable, the process for participants to self-direct his or her own services (meeting standards described below); and compliance with reports and evaluation, as required by the Secretary. Requirements for Self-Directed Services. No provision. If a state allows demonstration participants to self-direct their CRS-87 Provision Current Law Conference Agreement, as Passed by the Senate home and community-based long-term care services, the state must include the following: (1) an assessment of the individual's needs, capabilities and preferences; (2) a service plan that is developed jointly with the individual (or an authorized representative). If a state allows for an individualized budget which is the value of the self-directed services, the state must describe the method used to set the budget, define a process to adjust the budget to reflect changes in individuals assessment and service plans, and evaluate expenditures under the budget. Secretary's Award of Competitive Grants No provision. Section 6071(d). In addition to evaluating the merits of a and Waivers. state's application, in selecting demonstration projects, the Secretary is required to consider a national balance of target groups and geographic distribution and to give a preference to states that cover multiple groups or offer project participants the opportunity to self-direct their services. The Secretary is also authorized to waive certain sections of Medicaid law to achieve the demonstration's purpose. Conditional Approval of Out-Year Grants. No provision To qualify for grant awards after year one, states will be required to meet numerical benchmarks measuring the increased investment in services under this proposal and the number of individuals transitioned into the community. States will also be required to demonstrate that they are assuring the health and welfare of project participants. For states that do not meet these requirements, the Secretary will be required to rescind the grant award for future grant periods CRS-88 Provision Current Law Conference Agreement, as Passed by the Senate and will be allowed to re-award unused funding. Payments to States/ Carryover of Unused Medicaid expenditures for services (including the Section 6071 (e). Those states awarded a demonstration Grant Amounts. Medicaid state plan and HCBS waiver) are generally would receive an enhanced FMAP rate (referred to as the shared between the federal and state governments. The `MFP-enhanced FMAP') equal to the current FMAP rate for specific federal share of a state is based on the state's the state increased by a number of percentage points equal to federal medical assistance percentage (FMAP) rate 50% of the difference between 100% and the normal FMAP which can range from 50% to 83%. rate. However, in no case can the FMAP rate exceed 90% for a state. The state will receive the MFP-enhanced FMAP for the costs of home and community-based, long-term care services for 12 months following a demonstration participant's transition from an institution into the community. Payments for home and community-based long-term care services under the demonstration project would be in lieu of payment for expenditures that could otherwise be paid for by Medicaid. However, if a state exhausts its grant funding in a particular year, the state is not prevented from using Medicaid to pay for home and community-based long-term care services. Finally, a state that does not use all of its funding in a given fiscal year will continue to have access to that funding for four subsequent fiscal years. Quality Assurance and Improvement; No provision. Section 6071 (f). The Secretary is required to provide for Technical Assistance and Oversight. technical assistance and oversight of states to improve the quality assurance and quality improvement systems under Medicaid home and community-based waivers. The Secretary may use up to $2.4 million of the amounts appropriated in the portion of FY2007 that begins on January CRS-89 Provision Current Law Conference Agreement, as Passed by the Senate 1, 2007, and ends on September 30, 2007, and for FY2008, to carry out these activities during the period beginning on January 1, 2007, and ending on September 30, 2011. Research and Evaluation. No provision. Section 6071 (g). The conference agreement requires the Secretary to provide for research on, and conduct a national evaluation of, the demonstration project. The Secretary must make a final report to the President and Congress no later than September 30, 2011, and may use up to $1.1 million each year from FY2008-FY2011, to carry out these activities. Appropriations. No provision. Section 6071(h). The conference agreement appropriates $250 million for the portion of FY2007 which begins on January 1, 2007, and ends on September 30, 2007; $300 million in FY2008; $350 million in FY2OO9; $400 million in FY2010; and $450 million in FY2011 to carry out the demonstration project. Funds not awarded to states in a given fiscal year would continue to be available in subsequent fiscal years, through September 30, 2011. CRS-90 Subchapter C -- Miscellaneous. Provision Current Law Conference Agreement, as Passed by the Senate Medicaid Transformation Grants. Section 1903(a) of the Social Security Act describes the level of Section 6081. Under the House bill, in addition to the federal reimbursement available to states for various Medicaid normal federal Medicaid reimbursement received by program functions. The federal medical assistance percentage states under Section 1903(a), the Secretary of HHS shall (FMAP) is the rate at which states are reimbursed for most provide for payments to states for the adoption of Medicaid service expenditures. It is based on a formula that innovative methods to improve the effectiveness and provides higher reimbursement to states with lower per capita efficiency in Medicaid. incomes relative to the national average (and vice versa); it has a statutory minimum of 50% and maximum of 83%. The federal Examples of innovative methods for which funds may be reimbursement rate for Medicaid administrative expenditures does used include (1) methods for reducing patient error rates not vary by state and is generally 50%, but certain administrative through the implementation and use of electronic functions receive enhanced (usually 75%) reimbursement. systems, (2) methods for improving rates of Medicaid collection from estates, (3) methods for reducing waste, fraud, and abuse, (4) implementation of a medication risk management program, (5) methods for reducing outpatient drug expenditures by increasing the utilization of generics, and (6) methods for improving access to primary and specialty physician care for the uninsured using integrated university-based hospital and clinic systems. Total payments will equal and not exceed $75 million in each of FY2007 and FY2008. The Secretary shall specify a method for allocating funds among states, providing preference for states targeting health providers that treat significant numbers of Medicaid beneficiaries and allocating at least 25% of the funds among states CRS-91 Provision Current Law Conference Agreement, as Passed by the Senate whose populations as of July 1, 2004 were more than 105% of their populations as of April 1, 2000. Health Opportunity Accounts. Medicaid is a joint federal-state entitlement program that finances Section 6082. The conference agreement requires the health care coverage for certain low-income families, children, Secretary of HHS to establish no more then 10 pregnant women, and individuals who are aged or disabled. Each demonstration programs within Medicaid for health state designs and administers its own program under broad federal opportunity accounts (HOA), effective January 1, 2007. guidelines. Variation exists among states in eligibility, covered If successful (based on cost-effectiveness, quality of care services, and the delivery of, and reimbursement for services. and other Secretary-specified criteria) during the initial States that wish to experiment with new approaches for providing five-year test period, such demonstrations may be health care coverage that promote the objectives of the Medicaid extended or made permanent, and other demonstrations program may seek approval for Section 1115 demonstration may be approved. waivers. While the demonstration programs described in the conference agreement have some of the elements of a Section HOAs will be used to pay (via electronic funds transfers) 1115 demonstration waiver, "Health Opportunity Accounts", as health care expenses specified by the state; payments defined by the provision are not explicitly authorized under could be restricted to licensed or otherwise authorized current law. providers as well as to items and services that are medically appropriate or necessary. Among other things, state demonstration programs are required to make patients aware of the high cost of medical care, provide incentives for them to seek preventive care, and reduce inappropriate uses of health care. Eligibility Rules for Demonstration To qualify for Medicaid, an individual must meet both categorical Section 6082 (b). Eligibility for HOAs is determined by Participants. and financial eligibility requirements. The specific income and the state, though individuals age 65 or older, or who are resource limitations that apply to each eligibility group are set blind or disabled regardless of whether the individual is through a combination of federal parameters and state definitions. eligible for SSI on such basis, who are pregnant, who have been eligible for medical assistance for a continuos period of less than three months, or who are receiving terminal care or long-term care, are among those who are CRS-92 Provision Current Law Conference Agreement, as Passed by the Senate precluded from participating. Other excluded groups include (1) dual eligibles, (2) terminally ill hospice patients, (3) children with disabilities that meet SSI disability standards who require institutional care, but for whom care is delivered outside the institution, and the cost of that care does not exceed the otherwise applicable institutional care (also known as Katie Beckett or TEFRA children); (4) medically frail and special medical needs individuals (as determined in accordance with regulations of the Secretary); (5)children in foster care receiving child welfare services (under Part B of Title IV) and who are children receiving foster care or adoption assistance under Part E of Title IV without regard to age; (6) individuals who qualify for Medicaid under the family coverage provision (Section 1931) or on the basis of receiving assistance under TANF (as in effect on or after the welfare reform effective date); (7) women in the breast and cervical cancer eligibility group; and (8) other "limited services beneficiaries," including certain tuberculosis-infected individuals, and legal and undocumented non-citizens who meet the financial and categorical requirements for Medicaid eligibility without regard to time in the U.S. and are eligible only for emergency medical services. The conference agreement adds a one-year moratorium for reenrollment, whereby eligible individuals disenrolled from the state demonstration programs are not permitted to reenroll for a full year from such individual's disenrollment date. CRS-93 Provision Current Law Conference Agreement, as Passed by the Senate Benefits for Demonstration Medicaid's basic benefits rules require all states to provide certain The conference agreement requires demonstration Participants. "mandatory" services as listed in Medicaid statute. Federal participants have both an HOA and coverage for medical matching payments are also available for optional services if states items and services that, after an annual deductible is met, choose to include them in their Medicaid plans. States define the are available under the existing Medicaid state plan specific features of each service to be provided under that plan and/or Section 1115 waiver authorities. HOA within broad federal guidelines including (1) Amount, duration, contributions could be made by the state or by other and scope. Each covered service must be sufficient in amount, persons or entities, including charitable organizations as duration, and scope to reasonably achieve its purpose, (2) permitted under current law. Including federal shares, Comparability. With certain exceptions, services available to any state contributions generally may not exceed $2,500 for categorically needy beneficiary in a state must be equal in amount, each adult and $1,000 for each child. duration, and scope to those available to any other categorically needy beneficiary in the state. Similarly, services available to any Once account holders are no longer eligible for Medicaid medically needy beneficiary in a state must be equal in amount, they may continue to make HOA withdrawals under duration, and scope to those available to any other medically state-specified conditions for a period of three years, needy beneficiary in the state, (3) Statewideness. State plan though no additional account contributions will be made services must be covered throughout an entire state, and (4) and the account balances will be reduced by 25%. For Freedom of choice. With certain exceptions, a state's Medicaid ineligible individuals who participated in the plan must allow recipients freedom of choice among health care demonstration program for at least one year, accounts providers or managed care entities participating in Medicaid. could then also be used to pay for health insurance or, at state option, for additional expenditures such as job training or education. Cost Sharing for Demonstration States may generally impose nominal cost-sharing on The conference agreement requires demonstration Participants. beneficiaries, with certain exceptions. They are precluded from participants to meet an annual deductible before they are imposing cost sharing on services for children under 18, services permitted to access coverage for medical items and related to pregnancy, family planning or emergency services, services available under the existing Medicaid state plan services provided to nursing facility residents who are required to and/or Section 1115 waiver authorities. The deductible spend all of their income for medical care except for a personal must be at least 100%, but no more than 110%, of the needs allowance, and services furnished to individuals receiving annual state contributions to the HOA without regard to hospice care. States may require nominal copayments, state-specified limits on the HOA balance. Both the CRS-94 Provision Current Law Conference Agreement, as Passed by the Senate coinsurance, or deductibles within federal limits from other deductible and the maximum for out-of-pocket cost- beneficiaries or for other services. Beneficiaries may be charged sharing could vary among families. The deductible need only one type of cost sharing per service. Providers may collect not apply to preventive care. cost sharing amounts from beneficiaries and generally are not to be reimbursed by the state if they are unsuccessful in collecting cost sharing from beneficiaries. Providers generally may not deny services if beneficiaries are unable to pay cost sharing amounts. For the most part, states establish their own rates to pay Medicaid The conference agreement requires demonstration Provider Payments. providers for services. By regulation these rates must be sufficient participants to be able to obtain services from Medicaid to enlist enough providers so that covered services will be providers, or Medicaid managed care organizations at available to Medicaid beneficiaries at least to the extent they are the same payment rates that are applicable if the available to the general population in a geographic area. All coverage deductible did not apply, or from any other providers are required to accept payments under the program as provider or managed care organization at payment rates payment in full for covered services except where states require not exceeding 125% of such Medicaid provider payment nominal cost-sharing by beneficiaries. rates. The conference agreement requires that the payment rates for Medicaid providers or managed care organizations be computed without regard to any cost sharing that are otherwise applicable under current law (as modified by the conference agreement). Demonstration evaluation. No provision. Not later than three months prior to the end of the initial five-year test period, the conference agreement requires the Comptroller General of the Unites States to submit to Congress an evaluation of the demonstration programs and, out of funds in the Treasury not otherwise appropriated, the conference agreement appropriates $550,000 for the period FY2007-FY2010 to the Controller General of the United States to carry out such an evaluation. CRS-95 Provision Current Law Conference Agreement, as Passed by the Senate Effective Date. No provision. The agreement is effective upon enactment of this act. State Option to Establish Non- Federal regulations require states to ensure necessary Section 6083. The agreement allows states to establish Emergency Medical Transportation transportation for beneficiaries to and from providers. When a non-emergency medical transportation brokerage Program. states offer transportation as an optional benefit, federal program for beneficiaries who need access to medical reimbursement uses FMAP which varies by state and ranges from care but have no other means of transportation. States 50% to 83%. FMAP reimbursement is only available if are not required to provide such services on a statewide transportation is furnished by a provider to whom a direct basis, comparable services for all Medicaid enrollees, nor payment can be made. Beneficiaries must have freedom of choice freedom of choice among providers. The program among transportation providers and such services must be equal includes wheelchair van, taxi, stretcher car, bus passes in amount, duration and scope for all beneficiaries classified as and tickets, and other transportation methods deemed CN. This comparability requirement also applies among MN appropriate by the Secretary, and can be conducted under groups. Services must also be available statewide. Other contract with a broker who: (1) is selected through a arrangements, such as payments to a broker who manages and competitive bidding process that assesses the broker's pays transportation vendors, must be claimed as an administrative experience, references, qualifications, resources and expense rather than as a benefit. Such costs are reimbursed by the costs; (2) has oversight procedures to monitor federal government at 50% for all states, and fewer federal beneficiary access and complaints and to ensure that requirements must be met. transport personnel are licensed, qualified, competent and courteous; (3) is subject to regular auditing by the state to ensure quality of services and adequacy of beneficiary access to medical care; and (4) complies with requirements related to prohibitions on referrals and conflict of interest established by the Secretary. This provision takes effect on the date of enactment of this act. Extension of Transitional Medical States are required to continue Medicaid benefits for certain Section 6084. The conference agreement extends TMA Assistance (TMA) and Abstinence Education low-income families who would otherwise lose coverage because under Section 1925 of the Social Security Act through Program. of changes in their income. This continuation of benefits is December 31, 2006. known as transitional medical assistance (TMA). States are CRS-96 Provision Current Law Conference Agreement, as Passed by the Senate currently required to provide TMA to families losing eligibility for Medicaid under two scenarios. First, under Section 1931(c) of the Social Security Act, states must provide four months of TMA coverage to families losing Medicaid eligibility due to increased child or spousal support. This is a permanent provision of law with no sunset date. Second, states are required to provide TMA to families losing Medicaid eligibility for work-related reasons. While Section 1902(e)(1) of the Social Security Act permanently requires states to provide four months of TMA to families losing Medicaid eligibility due to an increase in hours of work or income from employment, the Family Support Act (FSA) of 1988 expanded state TMA requirements under Section 1925 of the Social Security Act. As a result, states are currently required to provide at least six, and up to 12, months of TMA coverage to families losing Medicaid eligibility due to increased hours of work or income from employment, as well as to families who lose eligibility due to the loss of a time-limited earned income disregard (such disregards have the effect of increasing the income level at which a family may qualify for Medicaid). FSA originally authorized Section 1925 to replace the four-month TMA requirement in Section 1902(e)(1) through FY1998. However, the sunset date for Section 1925 has been extended a number of times, most recently through December 31, 2005. Emergency Services Furnished by Medicaid law provides certain protections for beneficiaries Section 6085(a). A Medicaid provider that does not Non-Contract Providers for Medicaid enrolled in managed care, including assuring coverage of have a contract with a Medicaid managed care entity Managed Care Enrollees. emergency services under each managed care contract awarded by (MCE) that furnishes emergency care to a beneficiary the state. enrolled with that MCO must accept as payment in full CRS-97 Provision Current Law Conference Agreement, as Passed by the Senate no more than the amount otherwise applicable outside of managed care (e.g., in the fee-for-service setting) minus any payments for indirect costs of medical education and direct costs of graduate medical education. Also, in a state where rates paid to hospitals under the state Medicaid plan are negotiated by contract and not publicly released, the payment amount applicable under this provision must be the average contract rate that would apply under the state plan for general acute care hospitals or the average contract rate that would apply under the plan for tertiary hospitals. This provision is effective on January 1, 2007. Expansion of home and community- Medicaid home and community-based service (HCBS) waivers Section 6086. The conference agreement establishes based services. authorized by Section 1915(c) of the Social Security Act allow home and community-based services as an optional states to provide home and community-based services to Medicaid Medicaid benefit that would not require a waiver and beneficiaries who would otherwise need the level of care provided that meets certain other requirements for individuals in a nursing facility, intermediate care facility for persons with whose income does not exceed 150% of the federal mental retardation (ICF-MR) or hospital. HCBS waiver services poverty level. The scope of services may include any can include case management, homemaker/home health aide services permitted under Section 1915(c)(4)(B) of the services, personal care, psychosocial rehabilitation, home health, Social Security Act which the Secretary has the authority private duty nursing, adult day care, habilitation, respite care, day to approve, and would not include an individual's room treatment, and any other service requested by the state and and board. The state may provide this option to approved by the Secretary. As part of the waiver, states may individuals without determining that but for the define the services that will be offered, target a specific population provision of such services, the person would require the (e.g., individuals with developmental disabilities) or a specific level of care provided in a hospital, nursing home, or geographic region, and limit the number of waiver participants ICF-MR. (resulting in a waiting list for services in many states). Approval for a HCBS waiver is contingent on a state documenting CRS-98 Provision Current Law Conference Agreement, as Passed by the Senate the cost-neutrality of the waiver. Cost-neutrality is met if, on average, the per person cost under the HCBS waiver is no higher than the cost if the person were residing in one of the three types of institutions identified in Medicaid law, (hospital, nursing facility or ICF-MR). The state determines which type of institution(s) it will use to make the cost-neutrality calculation. A HCBS waiver is generally approved for a three- or five-year time period and is subject to additional oversight from the Centers for Medicare and Medicaid Services (CMS). Establishment of Needs-Based Criteria. No provision States that offer this new benefit must establish needs- based criteria to determine an individual's eligibility for HCBS services, and the specific HCBS the individual will receive. The state must also establish needs-based criteria for determining whether an individual requires the level of care provided in a hospital, nursing home, ICF-MR, or under a waiver of the state plan, that is more stringent than the needs-based criteria for the HCBS option established by this provision. The needs-based criteria must be based on an assessment of an individual's support needs and capabilities, and may take into account the inability of the individual to perform two or more activities of daily living (ADLs) as defined in the Internal Revenue Service (IRS) code (i.e., bathing, dressing, transferring, toileting, eating, and continence), or the need for significant assistance to perform these activities, and other risk factors determined to be appropriate by the state CRS-99 Provision Current Law Conference Agreement, as Passed by the Senate Projected Number of Enrollees in the No provision. A state may limit the number of individuals who can Benefit and Modification of Needs-Based participate in this benefit and establish waiting lists. The Criteria. state must submit to the Secretary the projected number of individuals who will receive HCBS services under this option. If the enrollment in the HCBS option exceeds the projected enrollment, a state may modify the needs- based criteria. The state is not required to seek prior approval of the Secretary if the state wishes to modify the needs-based criteria, but must give the Secretary and the public at least 60 days notice of the proposed modification. If a state modifies the needs-based criteria, existing recipients of the HCBS optional state plan services will continue to be eligible to receive those services for at least 12 months beginning on the date the individual first received medical assistance for HCBS services. After such a modification, the state, at a minimum, must apply the level of care determination for hospitals, nursing facilities, and ICF-MRs that were in effect prior to the application of more stringent criteria. Independent Evaluation of Eligibility. No provision. A state is required to use an independent evaluation for determining an individual's eligibility for the HCBS option. The independent evaluation must include an assessment of the needs of the individual to: (1) determine a necessary level of services and supports consistent with the individual's physical and mental CRS-100 Provision Current Law Conference Agreement, as Passed by the Senate capacity; (2) prevent unnecessary or inappropriate care, and (3) establish an individualized care plan for the individual. Independent Assessment Process. No provision. A state is required under the HCBS option to conduct an independent assessment of the individual. This independent assessment must include (1) an objective evaluation of an individual's inability or need for significant assistance to perform two or more activities of daily living as defined in the Internal Revenue Service code; (2) a face-to-face evaluation of the individual by an individual trained in the assessment and evaluation of individuals whose physical or mental conditions trigger a potential need for HCBS; (3) where appropriate, consultation with the individual's family, spouse, guardian, or other responsible individual; (4) consultation with all treating and consulting health and support professionals caring for the individual; (5) an examination of the individual's relevant history and medical records, and care and support needs guided by best practices and research on effective strategies that result in improved health and quality of life outcomes. The assessment must also evaluate the ability of the individual or individual's representative to self-direct the purchase and control of HCBS if he/she elects this option, and if such an option is covered by the state. Individualized Care Plan. No provision. The state must establish a written individualized care plan for all individual participating in the HCBS option. The care plan must be developed in consultation with the CRS-101 Provision Current Law Conference Agreement, as Passed by the Senate individual, the individual's physician and other health care and support professionals, and where appropriate the individual's family or representative. The service plan must take into account existing family or other supports, identify necessary home and community-based services to be provided, and be reviewed at least annually. State Option to Offer Self-Directed No provision. For this new benefit, a state may allow an individual or Services. the individual's representative to receive self-directed home and community-based services. If the state permits self-direction, there must be an assessment of the needs, capabilities and preferences of the individual. There must also be a service plan developed jointly with the individual that is approved by the state. The service plan must specify the services to be self-directed, identify the method of self-direction, specify the roles of various parties, and, if offered by the state, an individualized budget for the value of the services and supports to be self-directed. Quality Assurance and Conflict of No provision. The state must ensure that the provision of home and Interest Standards. community-based services meets state and federal guidelines for quality assurance. The state must also establish standards for the conduct of the independent evaluation and assessment to safeguard against conflict of interest. Redeterminations and Appeals. No provision. At least annually, the state must redetermine eligibility for this benefit according to the frequency and method CRS-102 Provision Current Law Conference Agreement, as Passed by the Senate used for redeterminations and appeals under the Medicaid state plan. The state may provide presumptive eligibility, for up to Presumptive Eligibility. 60 days, for individuals who the state believes may be eligible for home and community-based services. An individual may only receive home and community-based services while the evaluation and assessment for determining eligibility for the HCBS benefit is carried out. No Effect on Other Waiver Authority. This provision does not affect a state's option to offer home and community-based services under waivers of Sections 1915(c) or (d), or Section 1115 of the Social Security Act Continued Federal Medicaid Funding Federal Medicaid funding continues to be available for for Certain Individuals. Medicaid beneficiaries who are residing in an institution, or receiving home and community-based services under a waiver of Section 1915(c), (d) or Section 1115 of this act as of the effective date of a state plan amendment that adds this HCBS benefit, without regard to whether the individual satisfies the more stringent eligibility criteria established by this option. The federal Medicaid funding will be available until the individual is discharged from the institution or waiver program, or no longer requires such level of care Quality of care measures. The provision requires the Secretary acting through the Director of the Agency for Healthcare Research and CRS-103 Provision Current Law Conference Agreement, as Passed by the Senate Quality, to consult with consumers and health and social service providers and other professionals knowledgeable about long-term care services and supports to develop program performance indicators, client function indicators, and measures of client satisfaction regarding HCBS offered under Medicaid. The Secretary is required to use the indicators and measures to assess HCBS and outcomes, particularly with respect to a recipient's health and welfare, and the overall system for RCBS under Medicaid. The Secretary is also required to make best practices and comparative analyses of system features available to the public. The conference agreement appropriates $1 million for the period of FY2006-FY2010 for the Secretary to carry out these activities. This section would be effective for home and community-based services furnished on or after January 1, 2007. Optional Choice of Self-Directed Traditionally, Medicaid personal care services have been provided Section 6087. This proposal would allow a state to Personal Assistance Services (Cash and to individuals through local public or private agencies. However, cover, under the Medicaid program, payment for part or Counseling). in the last decade, Medicaid beneficiaries with disabilities or all of the cost of self-directed personal assistance chronic conditions and federal and state policymakers have been services (other than room and board) based on a written increasing the discretion that beneficiaries have over key elements plan of care to individuals for whom there has been a of the service (e.g., what time a personal care worker comes to the determination that, but for the provision of such services, home to help the beneficiary, who provides the service, etc.) the individuals would require and receive personal care These types of programs are broadly known as `self-directed' or services under Medicaid state plan or home and `consumer-directed' programs. The specific elements that a community-based services under a HCBS waiver. Self- CRS-104 Provision Current Law Conference Agreement, as Passed by the Senate Medicaid beneficiary can control vary widely depending upon the directed personal assistance services may not be state and the type of service covered. Currently, Medicaid law provided to individuals who reside in a home or property allows certain types of self directed programs to be implemented that is owned, operated, or controlled by a provider of through the normal Medicaid state plan and HCBS waiver services, not related by blood or marriage. process. Other types of self-directed programs require a research and demonstration waiver under Section 1115 of the Social Security Act. Generally, CMS policy has been that payments for personal care (or similar) services delivered by legally responsible individuals (e.g., the parent of a minor child or a spouse) are not eligible for federal Medicaid matching funds. However, CMS has recently amended its policy so that under a HCBS waiver (though not the Medicaid personal care benefit), states have the option of paying legally responsible relatives in extraordinary circumstances when the provision of personal care services is determined to be necessary to ensure the health and welfare of the waiver participant and so long as the parent or spouse meets the Medicaid provider requirements established by the state. State Requirements. The state must ensure that the necessary safeguards have been taken to protect the health and welfare of individuals receiving these services and to assure financial accountability for funds expended for these services. The state must also evaluate the need for personal care under the Medicaid state plan or personal services under a HCBS waiver for individuals who (1) are entitled to Medicaid personal care under the state plan or receive CRS-105 Provision Current Law Conference Agreement, as Passed by the Senate HCBS waiver services; (2) may require self-directed personal assistance services; and (3) may be eligible for self-directed personal assistance services. If covered by the state and at the choice of the individual, those who are likely to require personal care or HCBS waiver services must be informed of the feasible alternatives in the provision of Medicaid personal care services or personal assistance services under a HCBS waiver. The state must provide a support system that ensures participants in the program are appropriately assessed and counseled prior to enrollment and are able to manage their budgets. Additional counseling and management support may be provided at the request of the participant. Reports and Evaluation. States that elect this option must submit an annual report to the Secretary which includes the number of individuals served and total expenditures on their behalf, in the aggregate. The state must also provide an evaluation of overall impact on the health and welfare of participants compared to non-participants every three years. Limits to the Availability of Self- A state may provide self-directed personal assistance Directed Services. services under the state plan without regard to the Medicaid requirements for statewideness (under Section 1902(a)(1) of the Social Security Act), and may limit the population eligible to receive these services and the number of persons served without regard to Medicaid requirements regarding comparability (Section CRS-106 Provision Current Law Conference Agreement, as Passed by the Senate 1902(a)(10)(B) of the Social Security Act). Scope of Self-Directed Personal The term `self-directed personal assistance services' Assistance Services. means personal care and related services, or HCBS waiver services that are provided to an eligible participant. Individuals participating in such services would be permitted, within an approved self-directed services plan and budget, to purchase personal assistance and related services, and hire, fire, supervise, and manage the individuals providing such services. At the election of the state, a participant is be allowed to (1) choose as a paid service provider, any individual capable of providing the assigned tasks including legally liable relatives, and (2) use the individualized budget to acquire items that increase independence or substitute (such as a microwave oven or an accessibility ramp) for human assistance, to the extent that expenditures would otherwise be made for the human assistance. Self-Directed Services Plan. The approved self-directed services plan developed under option must meet the following requirements: (1) The participant (or his/her guardian or authorized representative if appropriate) exercises choice and control over the budget, planning, and purchase of self- directed personal assistance services, including the amount, duration, scope, provider and location of service provision; (2) There is an assessment of the needs, strengths, and preferences of the participants for such service; (3) An individual's plan for self-directed CRS-107 Provision Current Law Conference Agreement, as Passed by the Senate services and supports, which has been developed and approved by the state, is based on a person-centered assessment process that builds upon the participant's capacity to engage in activities that promote community life; respects the participant's preferences, choices and abilities; and involves families, and professionals in the planning or delivery of services or supports as desired or required by the participant. Self-Directed Services Budget. The budget for self-directed services and supports must be developed and approved by the state based on the assessment and plan, and on a methodology that uses valid, reliable cost data, is open to public inspection, and includes a calculation of the expected cost of such services if those services were not self-directed. The budget may not restrict access to other medically necessary care and services furnished under the plan and approved by the state but not included in the budget. Application of Quality Assurance In establishing and implementing the self-directed and Risk Management. services plan and budget, appropriate quality assurance and risk management techniques must be used which recognize the roles and sharing of responsibilities in obtaining services in a self-directed manner and which assure the appropriateness of the plan and the budget, based on the individual's resources and capabilities. CRS-108 Provision Current Law Conference Agreement, as Passed by the Senate Financial Management Entity. A state may employ a financial management entity to make payments to providers, track costs, and make reports under this program. Payment for the activities of the financial management entity is reimbursed at the same rate as other Medicaid administrative activities (generally federal Medicaid administrative reimbursement is 50 %, though certain activities may be eligible for 75 % reimbursement). Effective date. This provision becomes effective on January 1, 2007. CRS-109 Subtitle B -- State Children's Health Insurance Program Provision Current Law Conference Agreement, as Passed by the Senate Additional allotments to eliminate FY2006 Section 6101. Out of money not otherwise available in funding shortfalls. the Treasury, the Conference Agreement authorizes and appropriates $283,000,000 for the purpose of providing additional SCHIP allotments to shortfall states and territories in FY2006. The Conference Agreement defines shortfall states as those with an approved SCHIP plan for which (based on the most recent SCHIP data as of December 31, 2005) the Secretary estimates that such state's FY2006 projected expenditures exceed the sum of all funds available for expenditure by that state in FY2006 including (1) the amount, if any, that is redistributed to such state from unspent FY2003 original allotments during FY2006; (2) the amount of such state's FY2004 and FY2005 original allotments that will not be expended in FY2005 and that remain available for expenditure in FY2006; and (3) the amount of such state's newly available FY2006 original allotment. From the additional FY2006 SCHIP appropriation, after a 1.05% set aside for distribution among the territories, each FY2006 shortfall state would receive an allotment to cover its projected shortfall. Such additional SCHIP allotments are available for one year only. On October 1, 2006, any remaining unspent additional allotments will not be subject to redistribution, but will instead revert to the Treasury. The Conference Agreement is silent on how the CRS-110 Provision Current Law Conference Agreement, as Passed by the Senate Secretary will distribute the additional appropriated funds if such funds are inadequate to cover the FY2006 projected shortfalls. Use of Additional FY2006 Appropriation Like Medicaid, SCHIP is a federal -state matching The Conference Agreement limits the types of payments for Child Health Assistance for Targeted Low- program. For each dollar of state spending, the federal that may be matched at the SCHIP enhanced matching rate Income Children. government makes a matching payment drawn from for SCHIP expenditures drawn against the additional SCHIP accounts. The federal government contributes FY2006 appropriation available to shortfall states to more toward the coverage of individuals in SCHIP than it include child health assistance payments made on behalf does for those covered under Medicaid. All SCHIP of targeted low-income children. assistance for targeted low-income children, including claims submitted and approved by CMS for expenditures The amendments made by this section of the Conference under the Section 1115 waiver authority, are matched at Agreement apply to items and services furnished on or the enhanced federal medical assistance percentage after October 1, 2005, without regard to wether or not (enhanced- FMAP). regulations implementing such amendments have been issued. Title XXI of the Social Security Act specifies that federal SCHIP funds can be used for child health assistance, that meets certain requirements. Apart from these benefit payments, SCHIP payments at the enhanced FMAP rate for four other specific health care activities can be made, including (1) other child health assistance for targeted low-income children; (2) health services initiatives to improve the health of targeted low-income children and other low-income children; (3) outreach activities; and (4) other reasonable administrative costs. Prohibition against covering nonpregnant Section 1115 of the Social Security Act gives the Section 6102. The Conference Agreement limits the adults with SCHIP funds. Secretary of HHS broad authority to modify virtually all Secretary of Health and Human Services' Section 1115 aspects of the Medicaid and SCHIP programs. Under waiver authority by prohibiting the approval of new CRS-111 Provision Current Law Conference Agreement, as Passed by the Senate Section 1115, the Secretary may waive requirements in waiver, experimental, pilot, or demonstration projects Section 1902 (usually, freedom of choice of provider, (approved on or after October 1, 2005) that allow federal comparability, and statewideness). For SCHIP, no specific SCHIP funds to be used to provide child health assistance sections or requirements are cited as "waive-able." SCHIP or other health benefits coverage to nonpregnant childless statute simply states that Section 1115, pertaining to adults. The Conference Agreement allows the Secretary research and demonstration projects, applies to SCHIP. to continue to approve projects that expand the SCHIP program to caretaker relatives of Medicaid or SCHIP- With respect to SCHIP, the Clinton Administration issued eligible children (as defined under Section 1931of a July 31, 2000, letter regarding treatment of adults. Medicaid statue), and to pregnant adults. Finally, the While this Administration was supportive of using the Conference Agreement allows the continuation of existing 1115 authority to expand SCHIP to parents of Medicaid or Medicaid or SCHIP waiver projects (and/or extensions, SCHIP-eligible children, as well as to certain pregnant amendments, or renewals to such projects) affecting women, it opposed coverage of childless adults. Under the federal SCHIP funds that were approved under the Section Bush Administration, the Health Insurance Flexibility and 1115 waiver authority before the date of enactment of this Accountability (HIFA) Initiative was implemented using act. the 1115 waiver authority. The initiative was created to encourage states to increase the number of individuals The Conference Agreement is effective as if enacted on with health insurance coverage (including childless adults) October 1, 2005, and shall apply to any waiver, within current program resources experimental, pilot, or demonstration project that is approved on or after that date. Continued authority for qualifying states Current law permits qualifying states (i.e., states that on Section 6103. The Conference Agreement continues the to use certain funds for Medicaid expenditures. or after April 15, 1997, had an income eligibility standard authority for qualifying states to apply federal SCHIP for children, other than infants, of at least 184% of the matching funds toward the coverage of certain children FPL. -- Other qualifications also apply to states with enrolled in regular Medicaid (not an SCHIP Medicaid statewide waivers under Section 1115 of the Social expansion). Specifically, the Conference Agreement Security Act) to receive the SCHIP enhanced federal allows qualifying states to use any available FY2001, matching rate for the coverage of certain children enrolled FY2004 and FY2005 SCHIP funds (i.e., FY2001, in regular Medicaid. Specifically, for services delivered FY2004, and FY2005 original allotments, and/or FY2001, to Medicaid beneficiaries under the age of 19 who are not FY2004 and FY2005 retained allotments or redistributed CRS-112 Provision Current Law Conference Agreement, as Passed by the Senate otherwise eligible for SCHIP and have family income that funds, as the case may be) for such Medicaid services exceeds 150% of the FPL, federal SCHIP funds can be made on or after October 1, 2005 under the 20% used to pay the difference between the SCHIP enhanced allowance. federal matching rate and the regular Medicaid federal matching rate. The maximum amount that qualifying The Conference Agreement is effective on or after states may claim under this allowance is the lesser of the October 1, 2005. following two amounts: (1) 20% of the state's available FY1998 through FY2001 original SCHIP allotments; and (2) the state's balance (calculated quarterly) of any available FY1998 to FY2001 federal SCHIP funds (original allotments or reallocated funds). If there is no balance, states may not claim 20% spending. No 20% spending will be permitted in FY2006 or any fiscal year thereafter. CRS-113 Subtitle C -- Katrina Relief Provision Current Law Conference Agreement, as Passed by the Senate Additional Federal Payments Under The federal medical assistance percentage (FMAP) is the rate at Section 6201. The conference agreement appropriates $2 Hurricane-Related Multi-State Section 1115 which states are reimbursed for most Medicaid service billion (in addition to any funds made available for the Demonstrations. expenditures. It is based on a formula that provides higher National Disaster Medical System under the Department reimbursement to states with lower per capita incomes relative of Homeland Security for health care costs related to to the national average (and vice versa); it has a statutory Hurricane Katrina) for use by the Secretary of HHS to pay minimum of 50% and maximum of 83%. An enhanced FMAP eligible states (those who have provided care to affected is available for both services and administration under SCHIP, individuals or evacuees under a Section 1115 project) for: subject to the availability of funds from a state's SCHIP (1) the non-federal (i.e., state) share of expenditures for allotment. health care provided to affected individuals (those who resided in a county or parish designated for individual assistance pursuant to the Stafford Act as a result of Hurricane Katrina and continue to reside in the same state) and evacuees (affected individuals displaced to another state) under approved multi-state Section 1115 demonstration projects; (2) reasonable administrative costs related to such projects; (3) only with respect to affected counties and parishes, the non-federal share of expenditures for medical assistance provided to individuals under existing Medicaid and SCHIP state plans; and (4) other purposes, if approved by the Secretary, to restore access to health care in impacted communities. Using an application template developed by the Centers for The non-federal share paid to eligible states shall not be Medicare and Medicaid Services (CMS) within HHS, a number regarded as federal funds for purposes of Medicaid of states (17 as of December 15, 2005) have been granted matching requirements. No payment obligations may be waivers under Section 1115 of the Social Security Act to provide incurred under approved multi-state Section 1115 projects CRS-114 Provision Current Law Conference Agreement, as Passed by the Senate Medicaid and SCHIP services to certain individuals affected by for: (1) costs of health care provided as Medicaid or Hurricane Katrina (these waivers are referred to as being part of SCHIP medical assistance incurred after June 30, 2006, a multi-state demonstration project). (2) uncompensated care costs incurred after January 31, 2006, (3) uncompensated care costs for an item or service All of the waivers granted thus far create a temporary eligibility received by an evacuee or an affected individual from an period, not to exceed five months, during which certain individual or organization as part of a public or private Hurricane Katrina evacuees will be granted access to Medicaid hurricane relief effort. and SCHIP services in the host state (i.e., the state that has been granted a Section 1115 waiver) based on simplified eligibility criteria. In addition, waivers for some states also create an uncompensated care pool that may be used through January 31, 2006, to augment Medicaid and SCHIP services for evacuees and to reimburse providers that incur uncompensated care costs for uninsured evacuees who do not qualify for Medicaid or SCHIP. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL33251