Guidance released recently by the Centers for Medicare & Medicaid
Services (CMS) sheds new light on an issue that has created
hardships for beneficiaries and challenges for advocates trying to
help them. The guidance addresses two issues: balance billing of
Qualified Medicare Beneficiaries (QMBs) and payment of Medicare
cost-sharing for dually eligible beneficiaries enrolled in Medicare
Advantage plans. For details on the guidance see the CMS Memo
"Medicaid Cost Sharing for Medicaid Beneficiaries", as well as
the supporting information in
"Balance Billing of Qualified Medicare Beneficiaries (QMB) Q & A"
"Capitation for Medicare Cost Sharing in Medicare Advantage (MA)
Plans Q & A".
State Medicaid agencies
have legal obligations to pay Medicare cost-sharing for most "dual
eligibles" – Medicare beneficiaries who are also eligible for some
level of Medicaid assistance. Further, most dual eligibles are
excused, by law, from paying Medicare cost-sharing, and providers
are prohibited from charging them.
But the particulars are complex in traditional Medicare and become
even more complex when a dual eligible is enrolled in a Medicare
Advantage (MA) plan.
be helpful to think of dual eligibles in two categories: those who
are Qualified Medicare Beneficiaries (QMBs) (with or without full
Medicaid coverage) and those who receive full Medicaid coverage but
whose incomes are above 100% of the federal poverty level, the
ceiling for QMB eligibility.
QMBs, all cost-sharing (premiums, deductibles, co-insurance and
copayments) related to Parts A and B is excused, meaning that the
state picks up the obligation. The state has responsibility for
these payments for QMBs regardless of whether the particular service
is also a Medicaid-covered service. States can, but are not
required to, pay premiums for MA plans' basic and supplemental
"Balance Billing" Q & A referenced above answers the question, "May
a provider bill a QMB for either the balance of the Medicare rate or
the provider's customary charges for Part A or B services?" with a
straightforward, "No." The guidance continues:
Providers who bill QMBs
for amounts above the Medicare and Medicaid payments (even when
Medicaid pays nothing) are subject to sanctions. Providers may not
accept QMB patients as "private pay" in order to bill the patient
directly, and providers must accept Medicare assignment for all
Medicaid patients, including QMBs.
For non-QMB dual
the state's obligation, according to guidance issued by CMS in 2007,
is to pay up to the Medicaid rate for Medicaid services "rendered by
Medicaid providers" in excess of any third-party liability (such as
that of traditional Medicare or an MA plan).
In other words, states do not have to pay if the Medicare service is
not also a Medicaid service, or if the beneficiary saw a Medicare
provider who is not also a Medicaid provider. In addition to this
obligation, the Medicaid statute authorizes – but does not require –
states to pay providers Medicare cost-sharing for at least some non-QMB
It appears from the language of the statute that such payment could
include cost-sharing for services not covered in the state Medicaid
Level of Help is Available?
addition to Medicaid law allowed (but did not require) states to
limit their QMB cost-sharing obligations to their Medicaid payment
for the same service or, if Medicaid did not cover the service, to a
payment level they adopted in their state plan.
After this change in the law, many states that had been paying at
the full Medicare rate changed their payment policies to pay at
their lower Medicaid rate.
A congressionally-mandated study of the effects of this provision of
the law concluded that the reduced rates resulted in fewer doctor
visits and mental health services, but did not examine the effect on
health of such reductions and recommended further study of the
No such further study has been undertaken.
this weren’t all confusing enough, a different issue arises when, in
rare instances that often involve coverage for wheelchairs, the
state Medicaid payment is actually higher than the Medicare
payment. The Medicaid statute does not preclude states from paying
at their higher rate; in fact, it has been successfully argued in
federal court that they must do so.
While the CMS Q&A discussed above states that providers must take
assignment (i.e. not charge more than the Medicare approved rate)
for all dual eligibles, the Medicare statute in
fact only requires this of physicians.
Dual eligibles have had difficulties getting coverage for
wheelchairs due to this apparently erroneous interpretation of the
Does Cost-Sharing Work With Medicare Advantage Plans?
Medicaid agency obligations to pay Medicare cost-sharing for QMBs
and other dual eligible beneficiaries extend to services provided by
But exactly how this works is not well understood, likely varies
significantly from state to state, and may operate with little
uniform methodology. In the traditional Medicare program, a
provider files a claim with Medicare, then Medicare, after it has
paid its portion, sends the claim to Medicaid for payment of the
beneficiary’s cost-sharing. However, if a beneficiary is in an MA
plan, the provider does not bill Medicare; the provider bills the
plan or receives a capitated payment from the plan. There is no
automatic system for billing the state.
"Capitation" Q&A referenced above asks and answers the question,
"When a State chooses to pay Medicare cost-sharing for dual
eligibles enrolled in MA plans through capitated payments to the
plan, may the State unilaterally determine the capitation rates, and
are the MA plans obligated to accept that rate?"
says the state can determine the rate but it must reflect, at least,
the state’s Medicaid payment for the same service. It also says the
MA plan does not have to accept the capitated rate offered by the
state, but that plan providers must be able to submit valid claims
to the State Medicaid program in order to obtain payment for the
cost-sharing. It notes that this may be problematic as a provider
may not be able to identify the plan payment for a particular
service, presumably because the provider, itself, may have been paid
a capitated rate. The Capitation Q&A reiterates the message from
the Balance Billing Q&A that providers are prohibited from balance
billing Medicaid beneficiaries. Finally, it states that all MA
plans serving dual eligibles "must specify in their contracts that
dual eligible enrollees will not be held liable for Medicare Part A
and B cost-sharing."
is known about the extent to which this guidance is followed. In a
1999 survey of state practices with respect to dual eligibles, only
19 states reported paying some copayments for their dual eligibles
in Medicare managed care.
To the knowledge of the Center for Medicare Advocacy, no follow-up
survey has been done.
Can Be Done?
Advocates report that dual eligibles are frequently charged improper
cost-sharing. To the extent that providers are merely confused
about their responsibilities, it will be helpful to provide them
with the recent CMS guidance. To the extent they are unwilling to
serve dually eligible beneficiaries if there is small or no
cost-sharing payment from their state, dually eligible beneficiaries
will have greater difficulty getting access to needed health care.
Advocates can work with their states to increase the state’s
cost-sharing payment to the full Medicare rate. Perhaps it is time
for Congress to revisit the question of whether limited cost-sharing
payments adversely impact beneficiaries.
more information, contact attorney Patricia Nemore in the Center for
Medicare Advocacy's Washington, DC office at (202) 293-5760 or
pnemore @ medicareadvocacy.org (remove spaces).
 42 U.S.C.
§1396a(n); Memorandum of February 27, 2008 from Gale P.
Arden, Director, Disabled and Elderly Health Programs Group
to All Associate Regional Administrators, Division of
Medicaid and Children's Health, Subject: Medicare
Cost-Sharing for Medicaid Beneficiaries, Attachment:
Balance Billing of Qualified Medicare Beneficiaries (QMB)
Q&A (February 27, 2008 memo)
 See, generally,
42 U.S.C. §1396a(n) and §1396d(p), for discussions relating
to Qualified Medicare Beneficiaries (QMB) and §1396d(a),
penultimate sentence for discussion of cost-sharing for non-QMB
 While most of
these beneficiaries are likely to be "medically needy," that
is, to have incomes above those normally used to qualify for
Medicaid but also to have high medical bills that reduce
their incomes to a separate standard set for the "medically
needy," some of them might also be individuals who receive a
state supplement to their income that puts them above 100%
FPL, but nonetheless allows them to receive Medicaid. For
an excellent exposition of Medicaid eligibility categories,
see National Health Law Program, "An Advocate's Guide to the
Medicaid Program," (2001), which was
available for purchase at
http://www.healthlaw.org as of April 18, 2008.
 42 U.S.C.
§1396d(a), penultimate sentence
 BBA-97, §4714,
codified at 42 U.S.C. § 1396a(n). An example of the
cost-sharing payment system allowed by the BBA is as
follows: If Medicare allows $100 for a physician visit (and
thus pays $80, or 80%), under full payment of cost sharing,
the state would pay the full $20 remaining. But if the
state’s rate for the same service is $80, the state will pay
nothing, since Medicare has already paid the full amount of
the state payment. If the state's payment were $90, the
state would pay the difference between Medicare's payment
and the state’s payment, or $10.
 See, e.g.
Patricia B. Nemore, "Variations in State Medicaid Buy-In
Practices for Low-Income Medicare Beneficiaries – a 1999
Update," prepared for the Henry J. Kaiser Family Foundation,
(December 1999). From 1997 to 1999, at least 15 states
reduced their payments to their Medicaid rates. (Variations
in State Medicaid)
 Janet B.
Mitchell, Ph.D. and Susan G. Haber, Sc.D., "State Payment
Limitations on Medicare Cost-Sharing: Impacts on Dually
Eligible Beneficiaries and their Providers." July 31, 2003,
http://www.rti.org/abstract.cfm?pid=1203 (site visited
April 18, 2008).
 The authors
recently received a copy of a letter from a Tennessee
oncologist declaring that he was withdrawing cancer drug
treatments for several of his patients because Tennessee's
Medicaid program, TennCare, refused to pay the 20% Medicare
cost-sharing for the treatment.
 See, e.g,.
Charpentier v. Belshe, Civ. No. 90-758 EJG/PAN, Medicare &
Medicaid Guide (CCH) 43,123 (N.D.Cal 1994), but see Ralabate
v. Wing, 1996 WL 377204, (Medicare & Medicaid Guide (CCH)
44, 550 (W.D.N.Y. 1996)
 42 U.S.C. §
 Variations in