States on hook for ris­ing Medi­care premi­ums

Modern Healthcare - - NEWS - By Vir­gil Dick­son

State Med­i­caid agen­cies are brac­ing for hun­dreds of mil­lions of dol­lars in new obli­ga­tions, thanks to a sig­nif­i­cant in­crease in Medi­care premi­ums.

This sum­mer, the 2015 Medi­care Trustees Re­port pro­jected Part B premi­ums would in­crease by 52%—up to $159.30 a month from $104.90.

How­ever, most Medi­care ben­e­fi­cia­ries will be spared, as roughly 70% of them pay their premi­ums through de­duc­tions from their So­cial Se­cu­rity ben­e­fit checks. The “hold harm­less” pol­icy shields ben­e­fi­cia­ries from pre­mium hikes that out­pace cost-of-liv­ing in­creases. That means So­cial Se­cu­rity check amounts will not de­cline from one year to the next be­cause of in­creases in Medi­care Part B premi­ums.

Not pro­tected are those who do pay Part B premi­ums out of pocket, which in­cludes those newly en­rolled in Medi­care and in­di­vid­u­als du­ally el­i­gi­ble for Med­i­caid.

The ad­di­tional cost would fall on the states, said Juli­ette Cuban­ski, as­so­ciate di­rec­tor of the Pro­gram on Medi­care Pol­icy at the Kaiser Fam­ily Foun­da­tion. “If the ac­tual in­crease is any­where in line with the pro­jected in­crease, it could be a pretty big im­pact in terms of the ad­di­tional costs that states would bear,” she said.

HHS sets Part B premi­ums ev­ery fall, and they are ex­pected to be re­leased this month.

It’s only been in re­cent weeks that states have be­gun to re­al­ize what the pro­jected hike would mean to their bot­tom lines. And they are very con- cerned, said Matt Salo, ex­ec­u­tive di­rec­tor of the Na­tional As­so­ci­a­tion of Med­i­caid Di­rec­tors. “This is one of those sleeper is­sues that kind of snuck up on ev­ery­body,” he said.

Cal­i­for­nia, which faces $550 mil­lion in new costs, is call­ing the pre­mium hikes an “ur­gent fis­cal is­sue” and sent a let­ter to Congress ask­ing it to act.

Other states are re­act­ing sim­i­larly.

“This un­fore­seen in­crease lit­er­ally shocked us,” said Tom Shana­han, spokesman for the Idaho Depart­ment of Health and Wel­fare, which es­ti­mates it will in­cur nearly $20 mil­lion in ad­di­tional Part B pre­mium and de­ductible costs.

Medi­care Part B pre­mium in­creases are noth­ing new, but states say they have never seen any­thing like this.

“An an­nual in­crease in the Part B Pre­mium is in­cluded in Texas Med­i­caid cost pro­jec­tions, but not of the mag­ni­tude that the CMS has un­der con­sid­er­a­tion,” said Bryan Black, a spokesman for Texas’ Health and Hu­man Ser­vices Com­mis­sion. The state is pro­ject­ing as much as $80 mil­lion in new costs as a re­sult of the in­crease.

A spokesman from Vir­ginia’s Depart­ment of Med­i­cal As­sis­tance Ser­vices said his agency projects new costs of more than $66 mil­lion.

For dual-el­i­gi­bles with in­comes above 120% of the fed­eral poverty level, states pay for Medi­care Part B premi­ums via a block grant pro­gram called the Qual­i­fied In­di­vid­ual pro­gram. Last month, Ari­zona of­fi­cials in­formed the CMS that it would deny any new ap­pli­ca­tions from qual­i­fy­ing dual-el­i­gi­bles wish­ing to have their premi­ums paid for un­der the pro­gram.

With­out the QI pro­gram, peo­ple will need to pay the full Medi­care Part B pre­mium, which they will likely be un­able to do, given their in­come, Salo said. No other states have spo­ken about cap­ping QI en­roll­ment.

And even dual-el­i­gi­bles who don’t get their premi­ums paid for through the QI pro­gram could be af­fected.

“An in­crease of this mag­ni­tude to Part B pre­mium costs may lead to states ei­ther de­creas­ing Med­i­caid pay­ments to health plans for dual-el­i­gi­bles, or may act as a dis­in­cen­tive for states to en­roll peo­ple who stand to ben­e­fit from the pro­gram,” said Meg Mur­ray, CEO of the As­so­ci­a­tion for Com­mu­nity Af­fil­i­ated Plans.

The CMS says it would take an act of Congress to avoid the pre­mium in­creases.

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