PI Action alerts & updates ... 2004

California Community Sign-On Medi-Cal Letter

The following letter was written by California HIV/AIDS advocates, including Project Inform, in response to the state’s proposed “redesign” of its Medicaid program (called Medi-Cal).

October 8, 2004
The Honorable Arnold Schwarzenegger
Governor of California
State Capitol Building, First Floor
Sacramento, CA 95814

RE:California’s Proposal to Redesign the Medi-Cal Program with an 1115 Waiver

Dear Governor Schwarzenegger:

As members of, and advocates for, California’s HIV/AIDS community, we are writing to express our concerns about the state’s proposal to “redesign” the state’s Medi-Cal program. Medi-Cal is vital to the health of the state’s lowest income and most vulnerable residents. Medi-Cal is also cost-effective, maintaining one of the lowest cost-per-beneficiary ratios among state Medicaid programs. Any proposal to redesign the program must first do no harm by maintaining the full range of benefits and beneficiary categories in current law. It must also carefully consider the impact on the continuity, quality and comprehensiveness of beneficiary care.

Although the proposal to redesign California’s Medicaid program is not yet in final form, we have serious concerns with the concepts and models circulated during stakeholder meetings earlier this year.

Chief among our concerns are the potential effects that a far-reaching 1115 waiver could have on the health of Californians living with HIV/AIDS and the health of the general population. California has created a comprehensive system of care and treatment for people living with HIV/AIDS. Reliable research has demonstrated that providing care and treatment for people with HIV/AIDS is the most effective way to maintain health, avoid costly acute, emergency and hospital care, and prevent the spread of the epidemic. An 1115 waiver with its requisite federal budget caps could create barriers to life-sustaining care for people living with HIV/AIDS, as well as for people with other chronic health conditions. In addition, some of the proposed components of the waiver are shortsighted and contrary to good public health practices. They will only result in diminished health care outcomes and more expensive medical interventions, most likely at the expense of other state programs and county indigent health programs.

All Californians understand the need to rein in the state’s burgeoning expenditures for health care. But we feel that the fiscal benefits gained by program efficiencies and cost controls can be implemented through state plan amendments and other Medi-Cal administrative changes avoiding the potential and binding risks of an 1115 waiver.

Our specific concerns with the potential impact of a waiver on people living with HIV/AIDS follow.

A comprehensive 1115 Medicaid waiver will hurt Californians living with HIV/AIDS and likely increase costs to the state. Federal approval of an 1115 waiver would require an aggregate or per capita cap on federal dollars in order to meet the budget neutrality requirements of the waiver. Any such cap would be based on California’s historically low cost per Medi-Cal beneficiary. An overextended federal government is likely to strictly enforce caps, essentially block granting funding for Medi-Cal. California could find itself obligated to meet 100 percent of any unanticipated increase in Medi-Cal costs, including new drugs and care technologies, emerging epidemics, and increased eligibility due to insurance and job loss. The AIDS epidemic is often cited as one of those unanticipated increases. Certainly the changes in HIV care over the last ten years are a good example of the need to deliver an ultimately cost effective, but costly, standard of care. And, should the Early Treatment for HIV Act (ETHA) become federal law, California would be hard pressed to expand Medicaid to serve people with HIV before they progress to a disabling and costly disease state.

A Tiered benefit structure and cost sharing would make Medi-Cal unaffordable. California’s proposal for a tiered benefit structure with significant co-payments, coinsurance, and premiums, would make the Medi-Cal program unaffordable for most beneficiaries living with HIV/AIDS. Research has shown that increasing out-of-pocket costs for the Medicaid population only results in restricted access to necessary components of health care, poor health outcomes, higher costly acute, emergency and hospital care utilization, and beneficiaries forced out of care. For people living with HIV/AIDS, such results are all but guaranteed because of the acute need for multiple drugs and close physician oversight of care.

Mandatory managed care threatens safety net hospitals and continuity of care. Approximately fifty-one percent (51%) of Medi-Cal ’s population is currently in managed care, including some people living with HIV/AIDS. Mandating managed care for all aged, blind and disabled Medi-Cal beneficiaries, as has been proposed, will severely impact the state’s safety net hospitals, which rely on funding related to fee-for-service patients to assist with uncompensated care costs. Also, because so few people who depend on Medi-Cal for their HIV/AIDS health care are currently in managed care, mandating a move could disrupt long established relationships with experienced fee-for-service providers, possibly resulting in interruption of successful treatment and care regimens.

Denying services based on ability to pay disrupts care. Medicaid law currently requires health care providers to furnish services even if a beneficiary cannot pay a co-payment at the time of service. Under the proposed redesign outline, the state would seek to have this protection waived. Most people living with HIV/AIDS need multiple, monthly prescriptions to maintain a life-prolonging combination therapy. Requiring payment of significant co-payments before dispensing medications would likely make an effective regimen unaffordable. When individuals with HIV/AIDS cannot or do not take the appropriate drug regimen, the virus can increase replication and mutate, potentially causing significant health problems and creating drug-resistant strains that threaten the individual as well as the rest of the population.

Medicare prescription coverage will impact the dually eligible, the state and potentially the AIDS Drug Assistance Program. As your administration proceeds with plans to redesign Medi-Cal, we urge you to keep in mind the implementation of Medicare Part D prescription coverage in 2006. Part D will provide drug coverage for individuals eligible for both Medicare and Medi-Cal. Whether Medicare Part D will provide comprehensive coverage for people with HIV/AIDS remains unknown. In order to guarantee that this population retains access to all approved HIV/AIDS drug therapies, we recommend that you seek authority from the federal government to allow both state Medicaid and AIDS Drug Assistance Programs to wrap around Medicare Part D at existing federal match levels. Additionally, we caution that people who cannot afford co-pays in Medi-Cal or Medicare Part D are likely to turn to California’s already overextended ADAP program to get the drug therapies they require.

California can implement many cost saving measures through state plan amendments, changes in state law, and policy changes that do not require caps or put the state at risk should Medi-Cal costs unexpectedly increase.

• Increase efficiency of Medi-Cal drug rebate collections - The federal Office of Inspector General at Health and Human Services estimates that California has failed to collect at least $337 million and possibly as much as $1.34 billion in rebates owed to the state by drug manufacturers.
• Leverage better drug prices - Any redesign of the Medi-Cal program will realize only short-lived cost containment if pharmaceutical prices are not addressed. The state spends some $4.7 billion annually on pharmaceuticals for Medi-Cal. We urge the state to continue to challenge the large pharmaceutical companies to lower prices and support State Legislative efforts to increase rebates and to obtain the lowest possible prices for prescription medications.
• Simplify Medi-Cal eligibility - California does not need a waiver to eliminate duplicative functions and burdensome paperwork. The state could simplify how it determines income and assets and when beneficiaries apply or report changes that affect eligibility. The state could also eliminate Mid-Year Status Reports and evaluate eligibility requirements removing those that cost more to administer than they save.
• Institute disease management programs - The state should implement more disease management and case management programs that empower beneficiaries to improve their own care and decrease costs to the state. Federal Medicaid matching funds are available for disease management programs.
• Improve access to prevention and community-based care.
• Increase Medicaid matching funds – We encourage you to support federal legislation to extend Medicaid relief through fiscal year 2005.

We urge you to consider these issues, avoid proposals that limit access to comprehensive, affordable care, and explore the cost savings and program efficiencies that have been offered as alternatives to the waiver as the state moves forward with redesign of the Medi-Cal program.

Sincerely,

cc:
S. Kimberly Belshe, Secretary, Health and Human Services Agency
Sandra Shewry, Director, Department of Health Services
Tom McCaffrey, Chief Deputy Director, Department of Health Services
David Topp, Assistant Secretary, Health and Human Services Agency
Jennifer Fitzgerald, Office of the Governor