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Tip: Collecting copayment and deductibles from those eligible for Medicare and Medicaid

Compliance Monitor, January 21, 2004

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Current law bars the recovery of the deductible or coinsurance from poor beneficiaries who are eligible for both Medicare and Medicaid. States must pay the cost of Medicare deductibles and coinsurance of certain low-income Medicare beneficiaries.

However, the Balanced Budget Act of 1997 (BBA), allows states to avoid paying the coinsurance by setting their Medicaid payment rate below the Medicare payment amount. The payment that Medicare makes is the net of any coinsurance requirement.

For example, if the Medicare fee for a physician visit is $100, Medicare pays $80 and the beneficiary pays $20. A state that reimburses a physician $70 for this visit would not be required to pay the coinsurance. The Congressional Budget Office estimates that as a result of this provision, many states will no longer pay deductibles and coinsurance on behalf of poor Medicare beneficiaries.

According to the Center on Budget and Policy Priorities, a non-profit organization in Washington, DC, since the legislation prevents seeking recovery of the deductible or coinsurance amounts from poor Medicare beneficiaries, there is a financial incentive for providers to shun treating poor Medicare beneficiaries.

The BBA does allow states to impose deductibles and copayments on Medicaid beneficiaries enrolled in Managed Care Organizations (MCOs), with certain restrictions. However, the legislation prohibits subcontracting providers from "balance billing" beneficiaries for the difference between the rate the provider agreed to accept from the MCO for serving the Medicaid enrollee and the provider's usual fee.

Compliance officers may want to investigate what their state is doing regarding these BBA provisions and establish compliance monitors where necessary.

This column was written by Hank Vanderbeek, MPA, CIA, CFE. IRP, Inc. - an Innovative Health Solutions company

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