Medicare Cost-Sharing for Dual Eligibles: Who Pays What for Whom?

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" and "Capitation for Medicare Cost Sharing in Medicare Advantage (MA) Plans Q & A".

Background

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. [1] 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. [2]

It may 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.

For 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 benefits.

The "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 eligibles, [3] 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).[4] 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 dual eligibles. [5] It appears from the language of the statute that such payment could include cost-sharing for services not covered in the state Medicaid program.

What Level of Help is Available?

A 1997 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. [6]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. [7] 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 issue. [8]No such further study has been undertaken.[9]

As if 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. [10] 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. [11] Dual eligibles have had difficulties getting coverage for wheelchairs due to this apparently erroneous interpretation of the law.

How Does Cost-Sharing Work With Medicare Advantage Plans?

State Medicaid agency obligations to pay Medicare cost-sharing for QMBs and other dual eligible beneficiaries extend to services provided by MA plans. [12] 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.

The "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?"

CMS 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."

Little 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. [13] To the knowledge of the Center for Medicare Advocacy, no follow-up survey has been done.

What 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.

For 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).