The Deficit Reduction Act of 2005: Implications for Advocacy

Executive Summary

This fact sheet discusses the Deficit Reduction Act of 2005 and major Medicaid implications and opportunities for advocacy.

Introduction 
On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (DRA). The legislation addresses a wide range of issues, from housing and education to Medicare, Medicaid, and State Children?s Health Insurance Programs (SCHIP). This fact sheet will discuss selected major Medicaid provisions and their implications for advocacy.
The National Health Law Program and National Senior Citizens Law Center are publishing an indepth assessment of all of the DRA?s provisions on Medicaid, SCHIP, and health-related Katrina relief. The assessment will be available on our website, https://healthlaw.org, and in our quarterly newsletter, Health Advocate.
Background 
The Deficit Reduction Act of 2005 moved through Congress as S. 1932. Once signed by the President, the legislation became Pub. L. No. 109-171. Legislative history for the DRA can be obtained from the Library of Congress and includes the text of the DRA; the Conference Committee Report, H. Rpt. No. 109-362; and Congressional Budget Office cost estimates. To access these resources, go to http://thomas.loc, and type in the bill number, S. 1932.
The Congressional Budget Office estimates that the DRA will reduce federal Medicaid spending by $7 billion over the 2006-2010 period and $28 billion over the 2006-2015 period. Congressional Budget Office, Additional Information on CBO?s Estimate for the Medicaid Provisions in the Conference Agreement for S. 1932, The Deficit Reduction Act of 2005 at 1 (Jan. 27, 2006). While previous federal laws have curbed Medicaid spending, what is significant about the DRA of 2005 is that a large portion of the reductions in spending are attributable to provisions that make people ineligible for Medicaid or limit the benefits that are available to them through the program. The CBO estimates that 75 percent of the savings are due to provisions that make it more difficult for individuals
to qualify for long term care, allow states to impose heightened cost sharing, permit states to restrict benefit packages, and require recipients to prove their citizenship using specified documentation. Id.
In addition, there is some question whether the DRA of 2005 is valid legislation. At least three lawsuits challenge the DRA as unconstitutional: Zeigler v. Gonzales, No. 1:06-CV-00080 (S.D. Ala. filed Feb. 13, 2006) (focusing on Medicaid transfer of asset provisions); Public Citizen v. Clerk, No. 1:06-cv-00523-JDB (D.D.C. filed March 21, 2006) (focusing on increased filing fees for federal district court); and the ongoing Cookeville Regional Med. Ctr. v. Thompson, No. Civ. A. 04-1053 JR (D.D.C.), same case 2005 WL 3276219 (D.D.C. Oct. 28, 2005) (focusing on Medicare disproportionate hospital provisions).
The plaintiffs in these cases point out that the version of the DRA passed by the House on February 1, 2006 differs from the version passed by the Senate on December 21, 2005 and signed by the President. Compare 151 Cong. Rec. S14346-47 (Dec. 21, 2005) and S. 1932 (stating that Medicare will pay for 13 months rental for certain types of durable medical equipment) with 151 Cong. Rec. H77 (Feb. 1, 2006) (stating that Medicare will pay for 36 months of medical equipment rental). They argue that, under Article I, section 7 of the U.S. Constitution, legislation becomes law only after it is passed in the same version by both the House and the Senate (the Bicameral requirement) and only after the same version passed by both chambers is signed by the President (the Presentment requirement).
The Medicaid Provisions and Implications for Advocacy 
 
The DRA addresses numerous Medicaid topics, amending and adding provisions regarding, among other things, transfers of assets, provider-based taxes, outpatient prescription drug coverage, scope of benefits, cost sharing, home and community-based care waivers, documentation of U.S. citizenship, transportation, and case management. This fact sheet discusses the following:
  1. Cost-sharing options (page 3)
  2. Benefit packages (page 9)
  3. Case management (page 14)
  4. Citizenship documentation (page 16)
  5. The Family Opportunity Act (page 20) and
  6. Selected home and community-based care provisions (page 22).
As will become clear, many of the DRA provisions create options for states. For the most part, the options are elected through state plan amendments, as opposed to waiver programs. Thus, advocates in states considering these options will need to monitor developments closely and become familiar with how to participate in the state plan amendment process (which has no formal mechanism for consumer input). The National Health Law Program?s April Q&A will address the state plan amendment process.

 

Premiums and Cost Sharing
Pre-DRA law 
The Medicaid Act already allows states to impose cost sharing on Medicaid beneficiaries. However, because cost sharing has been shown to cause beneficiaries to go without needed care, the Act has been fairly prescriptive.
Thus, with limited exceptions, the Act has prohibited enrollment fees, premiums, or similar charges on categorically needy recipients, such as poverty-level children, recipients of SSI, and Qualified Medicare Beneficiaries. See 42 U.S.C. § 1396o(a). Congress has given states more flexibility to impose monthly premiums on individuals whose incomes exceed 150 percent of the federal poverty level (FPL) including qualified disabled and working individuals, employed individuals with a medically improved disability, and individuals between the ages of 16 and 65 who would be receiving SSI except for excess earnings.2See Id. at §§ 1396o(c), (d), (g). Premiums and similar charges can also be imposed on non-categorical groups, such as the medically needy. Id. at § 1396o(b).
Prior to the DRA of 2005, states could also impose ?nominal? copayments, defined by regulation and currently set between $.50-$3.00 depending on the cost of the underlying Medicaid service. Some groups and services have been excluded from copayments: services furnished to children under age 19 (at state option, under age 21 or 20), pregnancy-related services furnished to pregnant women (at state option, any services furnished to pregnant women), services furnished to institutionalized individuals with only a personal care allowance, emergency services, family planning services and supplies, and hospice services. See Id. §§ 1396o(a), 1396o(b); 42 C.F.R. § 447.54.
Medicaid participating providers have been prohibited from denying care because of the individual?s inability to pay a copayment; however, the unpaid copayment amount could remain the legal liability of the individual to pay. See Id. § 1396o(e). This latter provision has recently been enforced by a number of courts. See, e.g., Beeker v. Olszewski, 2006 WL 334565 (E.D. Mich. Feb. 13, 2006); Grier v. Goetz, 402 F. Supp. 2d 876, 920 (M.D. Tenn 2005); Newton-Nations v. Rodgers,316 F. Supp. 2d 883 (D. Ariz. 2005); Spry v. Thompson,2004 WL 1146543 (D. Or. May 20, 2004); Dahl v. Goodno, No. C9-04-7537 (Ramsey Co. Minn. Dist. Ct. Aug. 15, 2005).3

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