LEGISLATIVE

ARE WE FIXING THE BUDGET?

Editorial by Sharon Edwards

Imagine finding a bill from the federal government in your mailbox for $27,500.00. Sounds pretty far out, right? But that is the share of the national debut each U.S. citizen would owe today to pay off our national debt of some $8 trillion. And it is increasing at the rate of $2.83 billion a day. According to the Concord Coalition, U.S. debt is greater than the combined economies of the seven biggest countries in the world. We used to own our debt, but for years now the U.S. has relied on other countries to loan us the money to finance it; China , who is becoming a major economic power, holds much of it.

We have seen a lot of posturing by politicians on both sides of the aisle on how the deficit would be brought into check. For instance, take the recently adopted Deficit Reduction Act of 2005 which was touted as a measure to get spending under control. According to economists and pessimists alike, once again Congress failed to take the necessary steps to address the growing deficit and U.S. debt. While spending cuts were achieved, the total in tax cuts was much higher. Republicans wanted to cut spending but also cut taxes. Democrats on the other end of the see-saw opposed tax cuts and the size of spending cuts. Meanwhile the national debt continues to grow …$2.83 billion a day is not small change!

.So what is Congress and the Administration to do? More than half the federal budget is spent for entitlement programs, and mandatory spending went up another 7% last year. This doesn't include the billions of dollars for Katrina and Iraq . Should Congress balance the budget on the back of the neediest? Raise taxes? The truth of the matter is the measures that need to be taken are political death and will require leaders who are willing to fall on their own sword for the sake of honestly attacking our mammoth debt.

For my small part I suggest we stop creating new, mandated programs and quit expanding eligibility for existing ones. Now that would be a step in the right direction! And by the way, don't mess with the services and programs most dear to me. Sound familiar? Needless to say this dilemna has no easy answer and requires a great deal of courage on the part of politicians, but we must get control of our debt and deficit spending. It appears to be a question of when Congress will be forced to deal with it. We can see what our unwillingness to act has cost…and it is mounting every second.

DEFICIT REDUCTION ACT OF 2005

The Deficit Reduction Act was passed on December 15 when Vice President Dick Cheney broke a tie vote in the Senate for its passage. The measure was passed by the House on the previous Monday. [Because of changes made by the Senate, the bill will have to voted on again by the House of Representatives jin January, 2006]. The spending bill was aimed at reducing the deficit by $39.7 billion with much of it coming from cuts in Medicare and Medicaid.

Passage of the bill drew immediate criticism from several groups including AARP who released a statement saying, "This budget represents bad policy.” In defense of the bill , U.S. Senator Chuck Grassley, R-Iowa, who is chairman of the Finance Committee, issued a statement saying, “Congress only did what the governors nationwide asked us to do with regard to the adopted Medicaid provisons. The debate and fall-out will continue for months to come as government, service providers, and consumers experience its implementation.

Because the Deficit Reduction Act has significant implications for all of long term care, COWL is providing .a synopsis of the provisions that impact long term care.

Medicare Provisions:

* Reduces allowance for collectible bad debt to skilled nursing facilities

* Retains full bad debt allowance for dual eligible beneficiaries at 100%, (which is estimated to be roughly 90% of SNF bad debt). 

* Reduces Medicare program payments for unpaid coinsurance (bad debt) by individuals who are not dually eligible for Medicaid to 70 percent.

* Change is effective with respect to cost reporting periods beginning on or after October 1, 2005.

* Codifies phase-in of the inpatient rehabilitation facility classification criteria

* Adds an additional year in the transition period for the 75 percent rule.

* Retains the 60 percent threshold for 2006. 

* Threshold increases to 65 percent on July 1, 2007 and to 75 percent on July 1, 2008. 

* Provides for Exceptions to Cap on therapy services

* Allows $1740 therapy cap to take effect on January 1, 2006, per current law.  Allows patients to apply for additional therapy services if their treatment is medically necessary and expected to exceed the cap.  CMS will determine that process by expedited rulemaking. 

* Requires the Centers for Medicare and Medicaid Services (CMS) to improve coding to reduce inappropriate payments for therapy services.

* Creates a three-year demonstration program to begin on or before January 1, 2008, to analyze costs and outcomes across different post-acute care settings following hospitalization.

* Freezes home health care payments under Medicare at current levels for a year

Medicaid Provisions :

Newly adopted provisions increase personal responsibility of beneficiaries and the ability of governors to make their state Medicaid programs more flexible.   Major reforms include pharmacy reimbursement changes, co-pays and changes to financial and programmatic eligibility for nursing home care for the aged. 

Asset Transfers

* Lengthens the “look back” when determining Medicaid eligibility to 5 years from 3 years.

* Moves the start date of the period of ineligibility (penalty phase) when an improper asset transfer has occurred. Date is now the later of the first day of the month during or after which assets were transferred or the date when the individual is eligible and would otherwise be receiving institutional level care but for the application of the penalty period. Effective for transfers made on or after the date of enactment of this Act.

* Codifies in federal statute that a state shall provide a hardship waiver process if application of the above policy would deprive the individual of medial care and endanger their life or deprive them of food, clothing, shelter, etc.

* The facility can file an undue hardship waiver application on behalf of the individual with the consent of the individual or the personal representative.

* A state may make payments to the facility for up to 30 days to hold the bed for an individual who has a hardship waiver pending.

* Certain annuities are now under the asset transfer law. Establishes new rules for the treatment of annuities, including a requirement that the state be named as the remainder beneficiary.

* Individuals applying for Medicaid funded nursing facility or other long-term care services are not eligible if the individual's equity interest in the individual's home exceeds $500,000. States may increase this to $750,000.

* Admission fees and entrance contracts for Continuing Care Retirement Communities (CCRC's) are now considered a resource for purposes of determining Medicaid eligibility.

* States can accumulate multiples transfers into one penalty period and other changes to asset transfer laws.

State Long Term Care Partnership Program

* Repeals moratorium that stopped expansion of the Long Term Care Partnership Program. Currently California , Connecticut , Indiana and New York have programs. Under the Program, states can submit a State Plan Amendment that provides for the disregard of any asset or resources in an amount equal to the benefit of qualifying long term care insurance policy. If individuals exhaust their qualifying long term care insurance policy, they can utilize Medicaid to fund their long term care needs.

* Establishes a National Clearinghouse for Long-Term Care Information to educate consumers on long term care insurance.

Fraud, Waste and Abuse; False Claims Act

* Encourages states to enact a State False Claim Act. States can keep more of the state share of recoveries if they have this Act in state statute.

* Entities that receive at least $5 million in Medicaid payments shall have a False Claims Act education program for employees.

* Restocking and double billing of prescription drugs is prohibited.

* Establishes an extensive Medicaid Integrity Program to review individuals and entities to determine whether fraud, waste or abuse has occurred. Includes an expansion of the Medicaid-Medicare Data Match Pilot Program to identify program vulnerabilities.

* Enhances states' ability to identify third party liability and increase collections under this effort.

* Persons who are citizens and who are applying for Medicaid must show satisfactory documentary evidence of citizenship.

Flexibility in Cost Sharing and Benefits

* Expands access to home and community based services by allowing states to provide home and community based services as an optional benefit as they would do in a waiver, but without undergoing the waiver approval process. Eligibles still must be at risk of needing institutional care.

* States can offer Medicaid funded self directed personal assistance services for individuals who are receiving personal care services or HCBS.

* States can opt to impose premiums and cost sharing for any group of eligibles and for any type of services and may vary the premiums and cost sharing with some limitations

* Money Follows the Person Rebalancing

* Allows the Secretary to award grants to states for demonstration projects under the Money Follows the Person Rebalancing Program. The goals are to increase the use of home and community-based services in place of institutional LTC services, eliminate barriers that prevent/restrict receiving services in LTC setting of choice, ensure continuity of service, i.e., increase ability to receive services at home/community when beneficiary transitions from institution.

[Note: COWL thanks the American Health Care Assn. for information on the bill included above .]

MEDICARE THERAPY CAP IN EFFECT JANUARY 1

Medicare therapy services are once again subject to two caps -- one combined $1,740 cap for physical therapy and speech language pathology and a separate cap for occupational therapy, The caps will be in effect on January 1, 2006.

Before adjourning for the holidays, Congress was working towards a conference agreement on the Deficit Reduction Act (S. 1932), which would authorize the Centers for Medicare and Medicaid Services (CMS) to allow coverage for services beyond the cap if they are shown to be medically necessary.

The budget reconciliation bill was approved by the Senate but still must be voted on by the House. The conference agreement is not expected to be completed until January, thereby allowing the therapy cap to take effect on January 1 as described in current law.

As we go to press, COWL has no new information.

For more info please contact us at phone: 615-444-1836 or email us at info@cowl.org