Painless, Cost-Free Ways For States With Budget Shortfalls To Preserve and Even Increase Medicaid, S-CHIP, Other Health, SSI State Supplement and Food Program Funding (Without Cutting Eligibility or Benefits)

by Thomas P. McCormack  (Draft # 28, 3/4/07;)

Significant state coverage expansions have just been approved or proposed for Connecticut, Indiana and Missouri, while Governors in California, Illinois and Oregon now intend to bring about extensive state expansions through bypassing their legislatures. At the same time notable, if in some cases more modest, coverage expansions have begun to be studied and considered in Colorado, Louisiana, Maryland, New Mexico, New Jersey, New York, Pennsylvania, Virginia and Wisconsin. And some little-noticed coverage liberalizations already have been enacted in Kansas, North Carolina, South Carolina, Tennessee, Texas and Washington. 

But, as the economy cools from the mortgage crisis and other causes, states have recently had to deal with---or are still facing---budget shortages in AL, CA, DC, FL, LA, ME, MD, MI, MS, MT, NV, NH, NJ, OR, VA, WI and other states. Moreover, key safety net hospitals face huge and still-unfunded deficits for free care of indigents in CO, CT, DC, GA, IL, MD and other states.

When this happens, there are inevitably calls for health coverage cutbacks---even though the poor, the elderly and the disabled are least able to bear any sacrifice. Given this threatening environment, you and your colleagues in health advocacy may find in the attached paper, Painless Ways To Deal With State Medicaid Shortfalls,  useful tools for suggesting alternate state health program economies that do not involve harmful cuts in eligibility or services for the needy.  

Regards,

Thomas P. McCormack
Public Benefits Policy Consultant
Title II Community AIDS National Network (TIICANN)
www.tiicann.org
Washington, DC
(202) 479-2543

1.      States With Parent/Caretaker Medicaid Income Levels Over 100% of Poverty

States get a matching rate for the State Child Health Insurance Program (S-CHIP) that is roughly 15% higher than their Medicaid matching rates (which range form 50% for the richest states to 77% for the poorest).  Hence---at least theoretically---to the extent that a state shifted eligibles from Medicaid itself to CHIP, it could get the higher matching rate for services received by such patients.

But federal law requires states to give Medicaid (not CHIP) to pregnant women and infants under age 1 with incomes under 185% of poverty; children 1 to 6 under 133%; children 6-18 under 100%; everyone who meets the state’s 1996 AFDC income levels (including any state raises thereto); and aged, blind and disabled persons on SSI or who meet some stricter (“209[b]”) 1972 state eligibility rules. These “mandatory” eligibles must be put on Medicaid if they’re eligible for it. Thus, states cannot put them on CHIP and claim the higher CHIP matching rate for their care; they can get only the lesser Medicaid matching rate for them.

Yet states now covering optional persons via options such as Section 1931 expansions, 1115 waivers, regular 1902(a)(10) options or even state-only funding---especially parents and related caretakers with incomes over 100%---could therefore lower such liberal income limits back down to Medicaid’s mandatory federal minimum (the 1996 AFDC income levels) and then immediately just re-cover such persons with those same liberal income levels--but using 15% higher CHIP waiver funding ! 

The CHIP law (Title XXI of the Social Security Act), regulations and policies allow states to get waivers to add other persons to CHIP using unexpended funds from a state’s CHIP allocation for the present or the two past fiscal years’ allocations. In fact, Rhode Island, Minnesota and Wisconsin have had such CHIP waivers to cover parents and other related caretakers with their states’ “surplus” CHIP allocation money for some time----and Arizona, California and New Jersey received such waivers too (although California’s budget crisis caused it to mothball its waiver request). And many states in the Union ---except Alaska, Rhode Island and a few others---have large surplus, unexpended funds “left over” from their two previous fiscal  years’  CHIP allocations!

To get a CHIP waiver from CMS to use surplus CHIP funds to cover persons other than children a state must:

·        Have a CHIP income level of at least 200% of the poverty level (FPL) for children

·        Use waivered CHIP funds only for those parents with incomes over 100% FPL

·        Have a consumer-friendly, easy-to-navigate application and outreach program

·        And already have  in force at least three of the following CHIP program features--: 1) a “presumptive” eligibility system to quickly cover newly-applying children with minimal red tape; 2) 12 months of continuous eligibility before families must re-apply; 3) no asset test for child-only coverage in CHIP or Medicaid; 4) acceptance of mail-in applications; and/or 5) eased procedures to transfer children back and forth between Medicaid and CHIP as changing circumstances or incomes may dictate.

CHIP waiver requirements are set forth at in a July 3, 2000 letter to State Health Officials from HCFA (now CMS); go to http://www.cms.hhs.gov/schip/ch73100.asp  (see especially Questions #2 and #6 of the Enclosure to the letter). However, CMS has already gone on record as rejecting a state CHIP waiver application that sought to merely and only substitute CHIP money for title XIX money to fund an already-existing expansion coverage of parents. Its not unreasonable rationale was that a waiver should offer new, additional coverage---and not just a more lucrative, substitute funding source. Even so, there’s nothing to prevent a state from requesting a CHIP waiver that adds additional, higher-income parents (e.g., raising a 150% income level to, say, 160%) which at the same time coincidentally switches the funding source for the whole expansion group (old and new) from title XIX funding to 15% higher CHIP surplus funds!  

Some States Now Covering Parents/Caretakers With Income Levels Over 100%

AZ                          200%                                 all parents

DC                          200%                                 all parents, including Medicare eligibles

HI                            200%                                 all persons , except aged & disabled

MA                         133%                                 all adults

ME                         200%                                  all parents

MN                         275%                                 all parents, including Medicare eligibles  

NJ*                         133%                                  all parents under 133%

NM                        200%                                   all unin workers not on Medicare (HIFA waiver)

NY**                      150%                                  all parents, including Medicare eligibles

OR***                    170%                                 all uninsured persons, including Medicare eligibles

PA***                     200%                                 all persons, except for Medicare eligibles.

RI                           185%                                 all parents, including Medicare eligibles

UT                         150%                                  all uninsurable adults, except Medicare eligibles

VT                         185%                                  all parents, including Medicare eligibles

WA***                      200%                                 all uninsured persons not on Medicare

WI                         185%                                  all parents, including Medicare eligibles

* NJ, as of 1/03, already used CHIP waiver funds to finance care for parents from 100% to 133%.

** Also, New York City’s “DASIS” program uses individualized income levels—which are often well over 100% --to give Medicaid (or state/local funds-only Medicaid) to a very large caseload of parents, caretakers, childless disabled and even childless “pre-disabled” clients who are HIV-positive.

***OR, PA & WA offer non-Medicaid state-subsidized health coverage to those under these income levels.

Since the July, 2000 letter on CHIP waiver approval criteria, CMS and HHS have moved to encourage and authorize even greater state flexibility for Medicaid and CHIP health coverage expansion waivers (see http://cms.hhs.gov/hifa/hifagde.asp ). But such “HIFA” waivers---just as CHIP itself can---typically offer recipients benefit packages less rich than does regular Medicaid (small premiums; bigger deductibles and copays; no nursing home, home health or home and community-based care; no or reduced chiropractor, dental, dentures, eyeglass, hearing aid, case management, optometrist, audiologist, prosthetic, podiatrist or psychologist services, etc.). Most HIFA waivers choose not to cover otherwise-eligible aged and disabled Medicare patients---as also does the CHIP program (its statute expressly prohibits their coverage, even with a waiver).

Still, continuing the health coverage of parents, caretakers and others now eligible for Medicaid expansions by shifting them onto a somewhat less benefit-enriched CHIP program (but with a 15% higher match) is far better than dropping them altogether. For an broad overview on the value of covering uninsured parents and child caretakers under 200% of poverty, see the March/April  2004 issue of  Health Affairs, available for a $3 fee at http://newsrx.gsp.com with the search term "Medicaid".

 

2.      States With Non-Federally-Funded Health and Pharmacy Assistance Programs That Could Refer Veterans to VA Health Programs Instead

At least 20 states use their own money---without federal Medicaid matching funds---to provide prescriptions to the limited-income aged (and sometimes the disabled) who are “too rich” for Medicaid and most Northeast, Great Lakes and Pacific states give state medical assistance to poor persons who don’t fit into federal Medicaid categories (e.g., non-disabled childless adults).

Under federal law, all honorably- and generally-discharged veterans with at least 6 months’ active service (2 years for post-1980 enlistees) and—in 2007-- incomes under $27,790 yearly ($2315.83 monthly), with added amounts allowed for dependents ($446.67 monthly for the first dependent and $155.50 for additional ones), are eligible for drugs and other VA medical care at a cost of only $8 per prescription (and those with incomes under about 110% FPL have no co-pays)! In addition, veterans with incomes up to about $28,000- $35,000 are also eligible for prescriptions at $8 each, although they also face very, very small co-pays for other medical care.

Census and VA statistics show that, in fact, a large majority of men (60%) over age 65 were veterans and thus likely eligibles for VA prescriptions and medical care ! (This isn’t surprising: When men who over about age 58 were young and of military age, we had a universal, mandatory military draft that lasted until 1973 and we waged World War II, the Korean Conflict, the Vietnam War, many smaller conflicts and a Cold War that lasted from 1945 until 1991.)

Yet virtually no states deny state-only health program coverage to VA eligibles! Few, if any, have yet added appropriate questions about potential VA coverage to their non-federal medical or pharmacy assistance applications; and still less do they use computer matches with the VA to determine whether their recipients and applicants are actually VA eligibles ! (For non-federal aid, states can require those who have a VA entitlement to use it instead of state aid; while for federally-aided Medicaid, they can’t do so—but they can urge voluntary use of VA care instead.)

While it is true that recently-increased VA health care enrollments have caused a backlog of from several weeks to several months in the most crowded VA hospitals (e.g., in Florida, North Carolina, Arizona and Texas), the fact is that in most areas of the nation VA health care enrollment can be completed within a few weeks at most---and within a couple of months even at the most crowded VA hospitals.

All states need to do to save themselves millions while shifting their state-only-funded medical and pharmacy assistance eligibles who are veterans to alternate VA health care is to deny eligibility to veterans who are VA-eligible, ask about veteran status on their application forms and arrange for double-blind, privacy-protected computer matching of their enrollment files with the VA’s master national military discharge file ---and then refer eligible veterans to the VA! ).

3.      Proactively Asking About and Paying Added Premiums for Offered, But Un-Taken-up, Dependent Coverage in Employer Health Plans of Working Spouses, Domestic Partners And Parents of Disabled and Aged Medicaid Patients 

a. Working Spouses

While many if not most of those eligible for Medicaid programs are

single, divorced or widowed, some are currently married. This therefore
means that married clients who have working age spouses---even though they
may well be small minority of the caseload---need detailed attention to uncover

possible un-taken-up dependent coverage in spouses’ job health plans.

A number of key studies of health insurance enrollment show conclusively
that lower income workers are highly unlikely to enroll their dependents
in their job health plans. (Some of these studies are available on request;
however, they are long, detailed, technical and hard to plow through!) This
is because, for almost all employer-based plans, the employee must bear a
costly premium surcharge to enroll his dependents. For most of those
making, say, $10 an hour or less (e.g., WalMart clerks, etc.) this is simply
unaffordable---even if they have seriously ill dependents. After all, food
and shelter come first at this income level.

For example, in a survey released in September,2003, the Kaiser Family

Foundation found that only 33% of employees chose to take family coverage

through their company in 2003, down from 39% in 2001. In addition, the

percentage of companies that fully subsidize family health  premiums

decreased to 15% in 2003 from 27% in 2001, the survey found. Premiums

for family coverage rose 49% since 2000---with much of the surcharge to add

coverage of  dependent family members being deducted out of employee

paychecks, except  for the most progressive employers. The Bureau of Labor

Statistics reported that same month that employees must pay an average of over

$228 monthly as payroll deductions to secure dependent coverage. In

August, 2005, a U.S. Agency for Healthcare Research and Quality report found

that in 2003 an average employee paid $2,283 for family coverage in an

employer plan, up from $1,275 in 1996. And a 2004-05 survey of over

300 employers, www.salary.com found that over 14% actually pay their

employees not to enroll themselves and their dependents in company health

plans. This means that a large percentage of spouses eligible to get dependent

coverage in a working spouse’s job health plan quite often just don’t get

enrolled by the employed spouse.

Almost all state Medicaid programs have HIPP and third party liability

program offices and staffs. But---based on information from eligibility

 staff---only make further inquiry about, and then pay any due

premiums for, ALREADY-IN-FORCE health insurance policies

whose existence is volunteered to them by clients when applying! (And

 since the Social Security Administration---rather than state welfare offices

—takes applications for those on SSI, states know even less about their

health insurance---and do even less about it  !)  

So this phenomenon means that---even if the Medicaid program asks about
other possible health insurance (e.g., which covers drugs) on its application
forms---such patients will (somewhat misleadingly) answer that they have
no such coverage (because they're not enrolled now, because they've
forgotten a prior decision not to enroll and/or because the employed spouse
didn't share the decision to non-enroll with the spouse on the public health
program). So, to find out if an employer plan with offered dependent coverage
is available from a working spouse's employer will require careful and
precise telephoned or mailed questions to the program applicant, his or
her spouse and even to the spouse's employer's benefits office.

One way to begin to deal with this might be to have the program's
enrollment/eligibility/systems staff produce a list of those cases with
spouses who've reported earned income. (In all states, for programs
determining eligibility on family income, some data is kept on who has what
sort of income). Such cases might then receive a mailing asking for the name
and telephone number of the working spouse's employer---with follow up
correspondence to the employer to inquire if there's a health plan, the
premium surcharge amount, the date of the next Open Season and the
plan's benefit package. Where a pre-existing condition waiting period
has to be "waited out"---and, of course, this is far more rare than before
thanks to the HIPPA legislation---cases would have to be monitored/diaried.
And all cases requiring premium payments and related monitoring/diarying
would obviously entail some added administrative effort.

Iowa’s effort in this area is particularly notable and is summarized under “Premium support” at www.IHPS.org ; a detailed interview with the former manager of Pennsylvania’s effective program is at http://statecoverage.net/pennsylvaniaprofile.htm . See also Purchasing Private Health Insurance Through Government Health Care Programs at www.IHPS.org .

However, such an extra effort to uncover non-election of offered employer
health insurance should prove well worthwhile: The figures cited in the
studies mentioned above all suggest that not just a large number--but an
absolute majority-- of couples with a working spouse in Medicaid’s income
range have declined offered dependent coverage in health plans due to cost.

b. Enrolling Now-Grown, First-Disabled-in-Childhood (Disabled Adult Children, or “DACs”) Clients in Parents’ Employers’ Health Plans

 
All state Medicaid prorgams cover many disabled adults under age 65

(including those whose disabilities first arose during childhood), and a few

state prescription programs even cover disabled adults under age 65.

All federal employee health plans, many state and local employee plans and
apparently---according to an informal survey by long-time Blue Cross Association

staff--- about 50% of private employer plans have little-known clauses
which enable grown children of employees to remain as covered dependents in
the employer plan even after the age of majority where the family can
demonstrate that a medical impairment first onsetted during the child's
minority.

 Hence, now-grown adults with disabilities who had onsets (of MR,
CMI, childhood traumas, CP or any other congenital disability) before the
age of majority (18, 19, 21, 22 or however defined by the parent's employer
group plan, often depending upon whether the child was in college) can be
enrolled now, for prospective coverage, in the employed (or still-plan-covered
retiree) parent's health plan. There would often be no additional premium if
the employed parent already has elected dependent coverage for his or her
spouse---and, even where the parent does have to pay more for dependents to
bring eligibility to the grown child—a state can then assist needier parents/clients.
 
Identifying such juvenile-onset clients and locating and dealing with their
(aging) parents about possible employer group health coverage for them will
be even more labor-intensive than for spousal health insurance employers’
enrollment reforms. (In many cases, parental contact information for long-

grown clients is no longer recorded in case eligibility folders.) But for costly

clients on  Medicaid, it could prove well-worthwhile in saving state funds.

c. ADAP Only: Health Insurance As Dependent of  Working Domestic Partner

For ADAP, but not other programs, there's still another group of dependents
of workers whose health insurance premiums can be paid by state Ryan White
programs as a tool to stretch limited funds. These are those clients living
with domestic partners who are working for employers which permit enrollment
of such partners in the employer health plan. These are mostly gay
couples; but there are probably numbers of straight unmarried couples too.

At www.hrc.org , at the "worknet" and then the "domestic partner" icons,
are listed the 9 states, 136 or more localities and many but not all of
those enlightened private employers that offer their employees the right to
enroll their domestic partners in employer group health plans. There's even
a query function to find out about particular employers as well as a "2002:
State of the Workplace" report offering even more updated information about
domestic partner health insurance offerings by progressive employers.
Also see the list at http://www.buddybuddy.com/d-p-1.html , dated 9/ 2002.

As with traditional working spouses, lower-paid domestic partners may not
have been able to afford to enroll their HIV+ partners (i.e., ADAP clients) in
the workplace health plan. But even higher income ones may not have been
aware that the benefit is available---or simply viewed enrolling in ADAP (at
a big cost to ADAP's budget but not their own !) as more convenient for
them than enrolling in the employer plan.

Obviously , screening an ADAP caseload and new applicants for this type
of possible alternate coverage will be even more labor-intensive than
screening those with traditional working spouses. ADAP enrollees and
applicants must be asked whether they have live-in domestic partners; if
such partners are working; where they're working; whether the employer
offers domestic partner health coverage; and what the plan premiums,
coverage and enrollment details are. As with traditional employed spouses,
this information might well also require directly contacting partners' job
benefits offices to secure details and arrange premium payment and
enrollment. In some cases, partners' sensitivities to contacting the
workplace must be accommodated too.

Since ADAP enrollees and applicants with live-in domestic partners probably
outnumber those with traditional (straight) working spouses, this will be a new

a new---even if hard-to-develop---alternate health coverage source.

 
d. Special Case: Disabled Medicaid Patients Whose Eligibility Comes From SSI

 
 Many of the most costly disabled Medicaid patients enter the program
 through receipt of SSI. Therefore, because the welfare offices do not take
applications for---or even have casefiles on, or individually-assigned eligibility

caseworkers for---SSI recipients, Medicaid must do even more work to develop

these cases. This is because among the SSI/Medicaid caseload will be found the

greatest concentration of the very costliest patients---yet patients who are far

more likely than average Medicaid clients to have a middle class birth origin.

This means that their parents are likely to have employer health coverage, which

could be extended to them to help defray Medicaid expenses.
 
Moreover, SSI's income-counting methodology for the earnings of spouses and
parents of SSI recipients is extraordinarily generous compared with
income-counting practices for those Medicaid-only cases handled by welfare.
SSI’s caseload thus will include many disabled cases with spouses and parents
who have earnings above the levels ordinarily encountered in the welfare
disabled caseload. This, too, means that such spouses and parents will
be all the more likely to have been offered employer plan health coverage
for their dependents. Such cases therefore must receive individualized
attention to ascertain whether there is un-taken-up dependent coverage in a
spouse's or parent's job health plan that could significantly reduce
Medicaid's great cost exposure for these patients' care if such coverage
were now elected and premiums paid for it.
 
But, again, the absence of welfare case files for the SSI Medicaid group
means that burdensome administrative work will have to be done-but it will

be well worthwhile in terms of the high medical costs that Medicaid can

potentially avoid by enrollment in un-taken-up employer plans.

e. Special Cases: Disabled SSDI Beneficiaries Returning to Work Under Ticket to Work Medicaid Buy-in and Disabled Former SSI Recipients Returning to Work with Section 1619(b) Medicaid Coverage

The 1997 Balanced Budget Act (BBA) and the 1999 Ticket to Work and Work Incentives Improvement Act (TWWIIA) both give states the option of offering Medicaid, at siding scale premiums, to disabled persons on SSDI to return to work with earnings well into the mid-range (states can set allowable income levels as high as $45,000 or even more). And

Section 1619(b) of the Social Security Act has long offered SSI recipients continued Medicaid coverage when they return to work and their earnings rise above the SSI eligibility level. State-by-state upper allowable earnings thresholds under Section 1619(b) vary---they’re generally in the high teens up to about $35,000---but those with extraordinarily high medical are allowed higher earnings.

Section 1619(b) continued Medicaid coverage is in effect in all states, while the BBA and TWWIIA Medicaid buy-ins have been implemented in about half the states. Various studies and program statistics show that large majorities of both classes of work returnees consist of those who’ve secured only menial, low-paid, part-time and intermittent work. (Many participants have educations, work experience and disabilities that effectively limit earning capacity---and large numbers of mentally challenged persons have work interruptions linked to their disabilities.) Only a minority (so far) secures the kind of quality full-time, or at least half time, jobs that offer employer-sponsored health insurance.

An important study of the TWWIIA provisions, Medicaid Buy-in Program: Quantitative Measures of Enrollment Trends and Participant Characteristics in 2002 (see the Ticket to Work “professional” Medicaid pages at www.cms.hhs.gov), notes that while at least 70% of TWWIIA buy-in participants have Medicare (which is primary to Medicaid and thus serves to reduce state financial exposure), less than 10% appear to have private health insurance (also primary to Medicaid; this is presumably employer group health coverage acquired during the work attempt, although some of this may represent the small minority of married clients being covered as dependents by their healthy, employed spouses). Even a large minority of Section 1619(b) recipients are also Medicare-eligible too because they received SSDI awards below the SSI level (and because Medicare can and does continue indefinitely for still-disabled clients who leave SSDI to return to work), although there’s even less data on the proportion of them that acquire employer insurance.

Because ---even before they return to work---the great bulk of TWWIIA participants already consume state Medicaid dollars (on regular Medicaid, via waivers or through on-and-off spend down coverage, with any Medicare being primary to Medicaid) and because Section 1619(b) recipients do too (more often without any primary Medicare coverage reducing state Medicaid payments), any private health coverage acquired through the new employment represents an important, often-overlooked source of significant state Medicaid savings. And Section 1619(b) work attempts have the added advantage that such employment adds to clients’ FICA-taxed work records---which can therefore make previously-ineligible clients fully- and currently-insured for SSDI, and therefore, for Medicare, further reducing future state Medicaid expenses.

TWWIIA clients apply through state welfare agencies and almost always also have state or contract vocational rehabilitation counselors as well. Hence, they have both state case file information on hand and state workers who manage their eligibility. Section 1619(b) recipients, however, are often serviced only by SSA---with only their names and little more being transmitted electronically to states for Medicaid card issuance in most cases---and thus many of them lack useful state case files and/or caseworkers. All this is important for states if they are to become far more proactive in inquiring about, and fostering enrollment in, potentially available employer health plans. Few states now seem to make much effort in this area---but, to save state funds, they need to adopt for TWWIIA and Section 1619(b) participants the same screening and enrollment measures outlined for spouses in the paragraphs above.

States can and should promote work returns for many, many more TWWIIA and Section 1619(b) clients, giving greater attention to targeting those with potential for sustained, full-time employment (and thus the probability an offered employer health plan). For both of them---and in cases where Section 1619(b) work generates a previously unavailable Medicare entitlement for a client once on Medicaid alone---states can then exercise the kind of vigorous screening and case management that will reduce state Medicaid costs through more comprehensive acquisitions of offered employer health coverage and Medicare.

f. Enrollment/Enrollment Changes Whenever Requested by State Health Programs 

When un-taken-up enrollment of a dependent who has become a state health program beneficiary is discovered, current provisions in almost all employer plans require the employee to await the next “open season” to enroll or add dependent coverage. Otherwise, enrollment or enrollment changes are only allowed when first employed; upon marriage or the death or divorce of spouse; upon the birth or adoption of a child; and (sometimes) upon moving out of an HMO service area, the loss of Medicaid, becoming Medicare-eligible, or the resumption of full time studies by a child over 18 who is still under the older age (e.g., 22 or even 23) permitted for children in college.

As a result, an aggressive state program to identify and foster enrollment in employer health plans will be heavily burdened with labor-intensive filing, diarying, re-verifying information and other bulky red tape if forced to await those next-scheduled, but often differing, open seasons in multiple employer health plans. And, of course, cost avoidances and recoveries will be greatly reduced where necessary enrollment must be delayed for months in most cases (and for nearly a full year in the worst cases).

All this can be overcome----and state cost avoidances and recoveries can be immediately put into effect and employers can be least inconvenienced---by enacting a state statute requiring all health insurance, claims payment administration and managed care contracts of employers doing business in the state to honor an additional, unique, special  “open season” for enrollment changes: namely, those enrollment changes, whenever requested by, or on behalf of, state health programs. Once such a law takes effect for future new contract years, states will be able to enroll their clients at once in available employer group plans and begin to realize savings. California, Massachusetts and Rhode Island successfully use just such laws and Pennsylvania Medicaid officials asked the legislature for such legislation too. See “Special Enrollment Period” under “Premium Support” at www.IHPS.org .

As an important corollary, state legislation needs to include ironclad subrogations and overrides of any private plans’ (or claims administrators’, benefit administrators’ or PBMs’) claims-submission time deadlines, claims format rules; prior authorization or generic substitution requirements (meeting whatever the state program rule is must be mandatorily deemed to automatically meet, and over-ride, any other payer’s prior authorization, quality control or formulary rules); enrolled or preferred provider participation limits (provider enrollment with the state program must be a mandatory, automatically accepted substitute); and hospital admission authorizations (again, the state’s authorization must be automatically honored) for both first payer/cost avoidance and pay-and-chase recovery claims. For a study which only begins to touch upon the need for, and depth of, these necessary reforms, see Medicaid Recovery of Pharmacy Payments from Liable Third Parties (OEI-03-00-00030; August, 2001), Office of the Inspector General, US Department of Health and Human Services at http://www.dhhs.gov/oig.

But these recommended reforms to achieve third party liability savings---standing purely alone  on their own naked merits---could well attract fatal opposition from pro-business legislators concerned about administrative and cost burdens to be imposed on employers.

On the other hand, it is precisely these same reforms which are needed to strengthen the increasingly important medical support component of state child support programs. And fortunately it is those same legislators who are sympathetic to possible burdens on business who are also the most devoted to beefing up child support enforcement not only to aid single, custodial mothers. Even more, they want to prevent and reduce public welfare and Medicaid costs they see as caused by illegitimacy, single-parenthood, family breakup and many parents’ consequent failure to pay child support!  State third party liability reforms may well be immunized from being (fatally) seen as burdens to business by presenting them as housekeeping, technical amendments to state child support law.

g. Dependent enrollment figures for low income workers