The Centers for Medicare & Medicaid Services Advises States About Medicare Savings Program Enrollment

Introduction

Long-awaited guidance from the Centers for Medicare & Medicaid Services (CMS) concerning implementation of various provisions of the Medicare Improvements for Patients and Protections Act of 2008 (MIPPA), Pub. L. 110-275, was released on February 18, 2010. [1] The guidance, in the form of a State Medicaid Director Letter (SMDL # 10-003), signed by Center for Medicaid & State Operations Director, Cindy Mann, addresses six provisions of MIPPA and several related issues. Since most of the relevant MIPPA provisions were effective January 1, 2010, states and beneficiary advocates have been concerned about the lack of written direction from CMS.

This Alert will review the SMDL and identify questions or issues that remain open for discussion or further clarification.

Section By Section Review

Section 111 — Extension of the Qualifying Individual (QI) Program

The QI program pays the Part B premium for Medicare beneficiaries with incomes between 120% and 135% of the federal poverty levels (135% FPL for one person is $14,620.50/year or $1218.38/month for 2009 and early 2010). Unlike other Medicare Savings Programs, the QI program is operated through a block grant to the states that must be reauthorized and funds for which must be appropriated periodically. MIPPA extended the QI program through the first quarter of fiscal year (FY) 2010; subsequent legislation has extended it through the first quarter of FY 2011, with an appropriation for FY 2010 of $612.5 million, up from $480 million for FY 2009. [2] $165 million is available for the first quarter of FY 2011.

Advocates continue to press for a permanent extension of the QI program and, preferably, for the program to be folded into the Specified Low-Income Medicare Beneficiary Program (SLMB), thus eliminating the block grant form of funding. The periodic short-term reauthorizations under which the program has operated for the past eight (8) years are destabilizing to program beneficiaries and to states administering the benefit.

Section 112 – Application of LIS Resources Test to MSP

In an effort to move toward greater alignment of the Medicare Savings Programs (MSP) and Low Income Subsidy (LIS) programs, which serve the same population, MIPPA requires that, effective January 1, 2010, states use the LIS resource standards for the Qualified Medicare Beneficiary (QMB) program, the Specified Low-Income Medicare Beneficiary (SLMB) program, and the Qualified Individual (QI) program. [3] The MIPPA provision does not apply to the Qualified Disabled Working Individual (QDWI) program, which has no tie-in to the Part D subsidy.

The SMDL directs states to amend their State Plans to reflect the new resource limits and to change their eligibility systems and publications to reflect the change, as well. The SMDL also reminds states that they must use the new resource limits even if they have not yet amended their State Plans.

Advocates are cautioned that different government materials describing these standards may use different numbers. For example, the Social Security Administration (SSA) and CMS generally refer to the LIS resource standards as being (for 2010) $8,100/individual and $12,910/couple. This is because, when evaluating eligibility for the low-income subsidy, SSA assumes that an individual wants to set aside the $1,500 allowed by law for burial ($3,000/couple) and adds that amount into the standard resource amount of $6,600/individual and $9,910/couple. While states could take the same approach, they are not required to do so. They might, instead, ask applicants to show that they have set these amounts aside in a bank account separate from their general account.

Section 113 – Eliminating Barriers to Enrollment

This provision of MIPPA is one for which guidance was most eagerly sought. It requires that states receive certain data from SSA and act on those data as an application for MSP benefits. Specifically, the SMDL states, "Starting January 1, 2010, the State is directed to treat the data as an application for MSP benefits as if it had been submitted directly by the applicant."

The data in question reflect SSA's determination of eligibility (or non-eligibility) for LIS and would give the states all or most of the information they need to make a determination of MSP eligibility. Data are only transmitted to the states if the applicant gives SSA authority to do so. The data will be transmitted Monday through Friday, excluding federal holidays.

Effective dates. The SMDL clarifies that states are required to abide by two different dates with respect to their processing of the MSP application. The date the data are received from SSA is the date from which the states' 45-day processing requirement is measured.tates must have completed action on the application no later than 45 days from receipt of the information from SSA. For purposes of the effective date of the MSP benefit, a different date is used. That is the date the beneficiary first expressed interest in applying for the LIS benefit (what SSA calls the "protected filing date"), a date that will always be earlier than the date the data are received by the state from SSA.

This bifurcation achieves two goals: it protects the beneficiary's right to benefits as of the earliest date s/he expressed interest in them and it protects the states from being penalized for failure to process an application for benefits timely. The SMDL reminds States that, while Medicaid law precludes protected filing dates for QMB benefits (which are available only prospectively in the first month after the state determines eligibility), the States "must protect the LIS filing date for other (non-QMB) MSP applicants." (SMDL p. 7).

A further complication, vis a vis the effective date of benefits, is not addressed at all by the SMDL. That is, the entitlement of SLMBs and QIs to benefits up to three (3) months prior to their LIS application, if they were eligible for the SLMB or QI benefit during those three (3) months. [4]

Example: Beneficiary applies for LIS on January 4, 2010, and is found eligible on January 25. SSA sends data to state on January 25.

• State must process MSP application within 45 days of January 25, or by March 11, 2010.

• If beneficiary is found eligible for SLMB or QI, and was also eligible in the three (3) months prior to her LIS application, then the eligibility for SLMB or QI would be retroactive to October 1, 2009, i.e., three (3) months before the beneficiary filed the LIS application on January 4.

• If beneficiary is found eligible for QMB, then QMB eligibility would begin on April1, 2010, the month after the date the beneficiary was determined eligible for QMB by the State Medicaid agency.

Adjudication. The SMDL directs that all data transmitted "will need to be adjudicated." (SMDL p. 8 ) It then describes three situations and explains how the state should proceed:

• If the State does not have adequate information from the SSA data to make an eligibility determination, "the State is responsible for contacting the applicant" to give the applicant the opportunity to provide further information.

• If the LIS application was denied by SSA, the State is still responsible for adjudicating the application.

• If the LIS applicant self-attested that s/he was over the resource level for LIS, the State still must adjudicate the application.

Verification. Although States must process all data as an application, the SMDL makes clear that "States are not required to separately verify income and resources that are reported by SSA on the MSP application file." (SMDL p. 8 ) This is an important piece of guidance, as it allows states to minimize the burden on themselves and on applicants by focusing only on information that is missing from the application, not what has already been provided.

It would have been helpful for the SMDL to also include explicit assurances that States would not be penalized for errors that might occur due to reliance on the SSA data, but such assurances do not appear in the SMDL. Presumably, States may infer that from the "States are not required. . ." language, cited above.

Different rules. The SMDL reminds States that their own eligibility rules may differ from those used by SSA – for example, SSA will not count the value of life insurance policies in determining eligibility. If the state does count life insurance (or any other item not considered by SSA), such information would be subject to the State's verification requirements. As discussed more fully below, states can reduce the complexity of responding to SSA data by liberalizing their own rules to conform with SSA's rules for LIS. In fact, a number of states currently have no asset test at all for their MSPs, allowing them to respond to the data in a more streamlined fashion. [5]

SSA's responsibilities. The guidance is clear that "SSA is not responsible for MSP eligibility issues." (SMDL p. 9) SSA is responsible for 1) transmitting the MSP application file to the State, 2) providing MSP model applications (see below) to individuals requesting assistance, and 3) coordinating outreach activities with the States in connection with LIS. The SMDL has no detail on the third responsibility of SSA.

Other Eligibility Issues. The SMDL addresses two specific issues raised during consultations with State staff and advocates: 1) whether a "wet" signature (i.e., physically signed) is required on the application and 2) whether citizenship must be verified.

Wet Signature. On the first point, the SMDL states that because the data from SSA are treated as if submitted directly by the applicant, it is not necessary to have a "wet" signature. "The State's receipt of SSA data from the LIS application will suffice for this purpose." (SMDL p. 9)

Citizenship Documentation. On the second matter, the SMDL points to regulations[6] that exempt anyone entitled to or enrolled in any part of Medicare from citizenship documentation that is otherwise required in Medicaid. Thus, the guidance states that "unless SSA denied the LIS application because the applicant was not eligible for Medicare," the State would not be required to document citizenship. (SMDL p. 9)

This segment of the guidance is confusing. The confusion, we believe, arises from the terms "eligible for" and "entitled to/enrolled in." An LIS application could be denied because an individual was not "entitled to or enrolled in" Medicare (meaning the individual was not actually getting Medicare Parts A or B) and there could still be eligibility for an MSP, as the State could pay the individual's premiums for Parts A and/or B. In such a circumstance, the exemption referred to would not apply and that State would, indeed, be required to document citizenship or resident alien status. But if the individual's LIS application was denied because s/he was not "eligible" for Medicare (meaning even if s/he could pay for it, the rules would not allow her/him to get it), s/he would also not be eligible for MSP and citizenship documentation would be a pointless and burdensome exercise.

Outreach and Training. The SMDL notes that MIPPA includes money for grants to State and local agencies to increase awareness of and provide assistance in applying for benefits. It does not elaborate on the work expected from such grantees or on how such work would be coordinated with SSA and the State Medicaid Agencies.

Section 115 – Eliminating Application of Estate Recovery to Medicare Cost-Sharing Benefits

MIPPA requires that, effective January 1, 2010, Medicare cost-sharing payments be exempted from recovery from an individual's estate under Medicaid law. The estate recovery preclusion applies to all MSPs, including the QDWI program.

Effective date. The SMDL directs that only benefits for which the request for payment is received by the Medicaid agency on or after January 1, 2010 (or for premiums, the date the agency paid the premium is on or after January 1, 2010) are exempted from estate recovery. (SMDL p. 10) It also directs that the exemption only applies to recovery for deaths on or after January 1, 2010. Moreover, MSP cost-sharing benefits received before January 1, 2010 that have been included in a Medicaid lien in effect at the time of the recipient's death are not exempted. Finally, non-MSP benefits received by the same individual remain subject to estate recovery. This provision would apply for individuals with MSP and full Medicaid, especially those receiving long-term care services.

The MIPPA language may not require the narrow interpretation given in the SMDL. The statute itself says the amendment made by the section "shall take effect as of January 1, 2010." [7] A reasonable interpretation is that after December 31, 2009, there shall be no recovery of MSP cost-sharing benefits, regardless of when the benefits were received. In fact, because MSP benefits were never required to be recovered from estates, States could, even now, adopt such a broad interpretation by amending their State Medicaid plan.

Section 116 – Exemptions from Income and Resources for Determining Eligibility for LIS

MIPPA liberalizes the LIS eligibility standards by eliminating the requirements for SSA to consider in-kind support and maintenance (ISM) as income to the applicant and life insurance over a certain value as an asset to the applicant. The SMDL notes that these changes do not apply to the MSP programs, but that States can choose to apply these changes to their MSP eligibility rules. Obviously such changes would allow States to adjudicate the LIS data sent them from SSA in a more streamlined way.

Section 118 — Model Application.

MIPPA required CMS to translate a model MSP application it had developed under authority of an earlier law into at least the ten languages, other than English, that are most often used by those applying for Medicare. CMS has translated the application into Arabic, Chinese, Creole, Farsi, French, Korean, Russian, Spanish, Tagalong and Vietnamese; all are available at Http://www.cms.gov/DualEligible/03_ModelApplicationforMedicareSavingsPrograms.asp#TopOfPage

The SMDL notes that, as before MIPPA, use of the model application remains an option for the States. The guidance notes elsewhere that one of SSA's responsibilities is to provide the model application to "individuals requesting assistance." (SMDL p. 9)

The guidance could benefit from greater clarity about the States' obligations with respect to the model application. In one place, the SMDL says "If a State receives a model MSP application in any language, it must be treated as an application for MSP, even if it does not ordinarily use the model MSP application." (SMDL p. 2). Elsewhere, the guidance says that even though States are not required to use the model application, they must consider the application as "initiating the MSP process. . . . " (SMDL p.8). They must either accept the application as an application or provide the individual submitting it an opportunity to apply on their regular application form.

Several questions arise from the guidance. First, if States are permitted to require applicants to use the State's regular application, is the date on the model application a protected filing date both for the effective date of benefits and for the state's 45 days for timely processing? And, since SSA is required to provide the model application to "individuals requesting assistance," won't all those who apply for LIS at SSA be given the model application, thus duplicating the application that is initiated from the SSA-state data share? Beneficiaries, advocates, and States could all benefit from greater clarity about the connection between the model application and the SSA-state data share.

Opportunities for Alignment with Other Programs

CMS uses the SMDL to remind States that many low-income Medicare beneficiaries eligible for MSP benefits will also qualify for other programs such as full Medicaid, Supplemental Nutrition Assistance (formerly known as Food Stamps), and Low- Income Home Energy Assistance. The SMDL urges states to consider strategies for streamlining enrollment opportunities in coordination with the Medicaid eligibility process.

Defining Family Size

MIPPA does not address the issue of family size, although it is addressed in the SMDL. CMS states that States have the option of defining the statutory language "applicable to a family of the size involved" to mean a one or two person household, following the Supplemental Security Income (SSI) rules. [8] For LIS purposes, family size is based on the actual family size, including relatives of the applicant or spouse who are living in the household and who rely on the individual or spouse for at least one-half of their support. The SMDL notes that states could change their definitions to conform to the LIS definition and encourages "states to seriously consider making this change for their MSP groups." (SMDL p. 3).

Opportunities for States

Through a provision in federal law that permits states to change their methods of determining eligibility for Medicaid program to make them more (but not less) liberal than the methods used by the SSI program (which provides cash assistance for low-income older people and people with disabilities), States could fully align their MSP eligibility rules with those of LIS and thus be able to treat the receipt of LIS data from SSA as a fully adjudicated MSP application. Such alignments might include changes in how income and resources are counted, including providing the $1,500 burial allowance for an individual ($3,000 for a couple) as an automatic disregard, eliminating consideration of the value of in-kind support and maintenance and life insurance, and conforming the definition of family size. In addition, states could adopt options available to them such as eliminating recovery of all MSP benefits (regardless of when received) from estates of deceased Medicaid beneficiaries and adopting the model application.

Conclusion

The State Medicaid Director Letter has been long awaited. Its issuance provides states with initial guidance for implementing changes required by MIPPA. Now that it is available, CMS can attend to monitoring states' implementation of the changes and to clarifying those areas still subject to confusion. The Center for Medicare Advocacy will continue to write about MIPPA implementation as developments arise.