Health and Family Services Cabinet
Medicaid Announces Additional Co-Pays for Drugs, Services, Changes Necessary for Immediate Cost Containment
FRANKFORT, Ky. (July 1, 2005) The Cabinet for Health and Family Services announced that in response to the $675 million Medicaid shortfall for fiscal year 2006 the Kentucky Medicaid program will add additional co-payments for services and drugs over the next month. The additional co-pays are estimated to save the program $30 million annually.
“Consumer awareness is a cornerstone of our Medicaid modernization efforts,” said Shannon R. Turner, Medicaid commissioner. “We must create incentives for our members to choose the appropriate type of service and less expensive, equally effective generic prescription drugs whenever possible. This is a necessary first step in the Commonwealth’s efforts to address the significant shortfall Medicaid faces this year.”
The new co-pays will take effect on a staggered timetable. The first co-pays to take effect will be the previously announced three-tier prescription drug co-pay system to encourage use of generic drugs, in which Medicaid members will pay $1 for generic drugs, $2 for preferred brand drugs and $3 for non-preferred brand name drugs. These co-pays will begin today.
The additional co-pays and effective dates are as follows:
July 15 – A tiered prescription drug co-pay for optional eligibility groups of $3 for generic drugs, $10 for preferred brand drugs and $20 for non-preferred brand name drugs.
Aug. 1 – Co-pays for all Medicaid members: $3 for emergency room visit; $2 for physician office visit; $50 for inpatient hospital stay; and $3 for outpatient hospital services.
The current $1 co-pay Medicaid members pay for all prescriptions began in 2002. The co-pays still will not apply to pregnant women and children under the age of 19, Eskimos, Pacific Islanders and Native Americans, individuals in long term care facilities, institutionalized individuals or individuals participating in waiver programs that are an alternative to institutionalization. The co-pays—with the exception of the prescription drug co-pays for optional eligibility groups—will affect approximately half of Medicaid’s 691,000 members. The optional eligibility group co-pays will affect approximately 40,000 members.
Also taking effect today is a change to the long term care bed reserve policy that will save approximately $9 million. Currently, Medicaid pays 100 percent of a nursing facility’s per diem rate for up to 14 days while a patient is hospitalized outside the facility. Medicaid will now reimburse nursing facilities 75 percent of the per diem if the facility is at 95 percent capacity and 50 percent if it is below 95 percent capacity for up to 14 hospital days or 10 therapeutic leave days.
“The Medicaid program, in its current state, is simply unsustainable,” said Turner. “Our current fiscal crisis requires that we explore all options to preserve the program.”
The shortfall Kentucky Medicaid faces is largely driven by federal changes, such as the new Medicare prescription drug benefit, which requires payments from the state Medicaid program to the federal government, and policy interpretation changes related to fund transfers, among others. The total estimated impact of federal actions on Kentucky Medicaid is more than $375 million.
Governor Ernie Fletcher has directed the cabinet to explore all options and do everything possible to preserve Medicaid services for those who need them most. In the coming weeks and months, the cabinet will seek input from legislators, advocates and the public on potential changes.