NSCLC Washington Weekly
News Alert
July 27, 2007

HOUSE INTRODUCES S-CHIP LEGISLATION

Bill Would Improve Medicare Part D, Medicaid Spousal Impoverishment Protections

House Democrats introduced this week the Children’s Health and Medicare Protection Act (the CHAMP Act, H.R. 3121), a bill primarily designed to continue funding for the State Children’s Health Insurance Program (S-CHIP, or “CHIP”), which is set to expire later this year. As the name of the bill implies, however, there are significant Medicare provisions contained in the bill, and there is also a provision in the bill which will expand Medicaid spousal impoverishment protections.

In a Nutshell . . .

The bill commits $50 billion for the reauthorization of the CHIP program, a federal/state program which currently provides coverage for six million children. An increase in the federal tobacco tax and cuts in payments to Medicare managed care plans will pay for the program’s extension. The bill is currently being marked up by House committees, and a vote on the bill is anticipated next week. The pending Senate CHIP legislation contains only $35 billion in spending, which means that the two chambers will have significant work to do in reconciliation when and if each passes its own bill. President Bush and other administration officials have suggested that a veto of Congress’ CHIP legislation is a distinct possibility, although influential Republicans in the Senate have been very critical of these threats.

Improving Medicaid’s Spousal Impoverishment Protections

Putting this aside, the House’s pending bill has some very important Medicaid and Medicare provisions. To begin with, the bill contains an amendment to Medicaid’s spousal impoverishment statute that targets CMS’ very narrow reading of the scope of the current law. This issue surfaced last year when New York was informed by CMS that the agency would not approve a home and community-based care (HCBS) waiver submitted by the state because the waiver would extend spousal impoverishment protections to the community spouses of medically needy enrollees. The agency argued that the definition of an “institutionalized spouse” contained in the spousal impoverishment statute, 42 U.S.C. §1396r-5(h)(1), limited the HCBS population that could be included in the definition to those whose income is below the state’s institutional threshold (those who “would be eligible if in an institution”). See NSCLC Washington Weekly, December 1, 2006. The agency opined that individuals meeting a spenddown in the community would not necessarily meet a spenddown in an institution.

Section 804 of the CHAMP Act expands the definition of an “institutionalized spouse” in 42 U.S.C. §1396r-5(h)(1) to include (at a state’s option) anyone being provided Medicaid coverage for HCBS. The current language of this provision refers specifically to that portion of the HCBS population contained in 42 U.S.C. §1396a(a)(10)(A)(ii)(VI), an optional categorically needy population. The specific reference to this provision is dropped from 42 U.S.C. §1396r-5(h)(1), and replaced with the broad reference to the entire HCBS population. For more information, please contact Gene Coffey in NSCLC’s D.C. office.

Improving Medicare

The CHAMP Act also includes significant sections related to Medicare Part D and other aspects of the Medicare program. Proposed improvements to Medicare Part D include loosening the asset limits and simplifying application procedures for the Low-Income Subsidy (LIS); providing an “intelligent” auto-assignment procedure; setting an annual cap on out-of-pocket expenditures by LIS recipients; eliminating cost sharing for dual eligibles receiving services through HCBS waivers; and making a variety of other beneficiary-friendly changes to Part D, many of which are aimed at low-income beneficiaries.

The Act also promotes the provision of linguistically and culturally appropriate services to Limited English Proficient Medicare beneficiaries by requiring several studies about the current effectiveness of service delivery to LEP populations and authorizing a demonstration project to test various payment methods for LEP services. The bill would also increase the availability of Medicare-covered preventative services, equalize Medicare Advantage plan payments with payments for traditional fee-for-service Medicare and give States authority to regulate the agents and brokers who have been fraudulently marketing Medicare health plans.

The bill would also make significant changes to the Medicare Savings Programs (MSPs), which help many low-income Medicare beneficiaries with health care costs. The bill would make the Qualified Individual program permanent, raise the income limit for the QI program to 150% of the federal poverty level, and increase the asset limit for all MSPs.

There are several other bills that specifically relate to low-income Medicare Part D beneficiaries currently pending in Congress. For a more detailed description of these bills visit the NSCLC website.

Advocates expect that the CHAMP Act will be the major legislative vehicle for Part D changes and that some provisions of other bills may be folded into that legislation.

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