Medicaid Rx Coverage Expands In Three States With CHIP Waivers

New Jersey will use prescription drug co-pays in its expanded health insurance coverage to parents of children eligible under either the State Children's Health Insurance Program or Medicaid.

N.J. FamilyCare will enroll families with incomes up to 200% of the federal poverty level. Families with incomes between 150% and 200% of poverty will pay $5 per prescription or $10 if the script is for more than a 34-day supply.

The Medicaid benefit package will be offered to families with incomes up to 133% of poverty. Families between 133% and 200% of poverty will receive a benefit package based on the state's most widely sold commercial HMO package.

The New Jersey program expects to provide coverage to 81,000 children and parents by FY 2002.

New Jersey is among three states to have received clearance from HHS to expand CHIP. Rhode Island and Wisconsin also received waivers on Jan. 18. The states will "be able to receive an enhanced federal match to cover low-income families with children whose incomes exceed traditional Medicaid levels, yet are not enough to afford private coverage," HHS said.

The RiteCare program in Rhode Island will provide the Medicaid benefit package to parents with incomes between 100% and 185% of poverty.

Higher income families (185% to 300% of poverty) may enroll but must pay either a premium or co-payments; there is a 5% limit on cost sharing. Rhode Island expects enrollment to total 130,000 in 2003.

Wisconsin will enroll parents with incomes between 100% and 185% of poverty. The state's BadgerCare program will provide the Medicaid benefit package. Wisconsin estimates it will enroll 79,025 children and adults in FY 2001.

Maine and Vermont have received waivers from the Health Care Financing Administration to offer Medicaid drug rebates to poor residents (¹ (Also see "Medicare Rx Impact On Overall Cost To Be Measured By Maine, Mine Workers" - Pink Sheet, 29 Jan, 2001.)).

States may seek more flexibility from the federal government in the design of drug coverage if the debate on Medicare prescription drug coverage is prolonged in Washington.

"Until we have some real reform and states are able to use formulary tools and are able to update co-payments, tools that the private sector uses...there has to be more flexibility given to states," Arkansas Medicaid Director Ray Hanley told the National Congress on Managed Medicaid & Medicare Jan. 22.

In the absence of a Medicare Rx bill, "you're back to serious programs with the states, where the states put up serious amounts of money and are entitled to decide for their state lots of things about who and how they cover under which programs and with which benefits," Hanley maintained.

Urban Institute's Alan Weil stated that as governor of Wisconsin, HHS Secretary-designate Thompson was very aggressive in pursuing waivers from the agency, although "I don't think he's going to be shifting Medicare to the states."

"There is no interest in the federal government letting go of any responsibility for the Medicare program, but when it comes to Medicaid and CHIP you have an incoming President and his HHS designee very interested in block grants," Weil added.

With the new political dynamics, Weil maintained, there will be "a gradual and significant shift in program design, legal authority and potentially some of the financing structure to the states."

During his confirmation hearing before the Finance Committee Jan. 18, Thompson indicated that the Bush Administration would submit a block grant proposal to fund drug assistance programs. Committee members indicated that the proposal was not likely to pass (² (Also see "Thompson HHS Will Consider Medicare Rx Bill If Block Grants Are Not Viable" - Pink Sheet, 22 Jan, 2001.)).

Former HCFA Administrator Bruce Vladeck, PhD, stated at the Medicaid/Medicare conference that activity on the state level is likely to continue. Vladeck is currently senior VP-policy at Mount Sinai New York University Health.

"The ability of states to act on their own initiative, but draw out substantial federal participation, relies on leadership in HHS and HCFA willing to bend the Medicaid statute beyond all recognition," he said. "I think that leadership is now in place, or will soon be."