Maine contests Medicaid ‘clawback’ New drug plan means state to lose $9M in ’06

The new Medicare prescription drug benefit, due to take effect Jan. 1, 2006, may be a boon for many senior citizens in Maine, but state officials said Thursday that taxpayers and the poorest elderly will be adversely affected.

According to state figures, Maine will lose federal Medicaid money – more than $9 million in 2006 and more than that in years to come – because of the new drug plan. Additionally, the Medicare plan may disrupt some patients’ medication regimens by not providing coverage for the drugs they need that now are covered under Medicaid.

States were informed earlier this week of the amount they’ll have to remit to the federal government to pay for drug coverage for their so-called “dual-eligibles” – senior citizens whose incomes are low enough to qualify them for Medicaid as well as Medicare. In Maine, there are about 52,000 dual-eligibles, whose medication expenses until now have been paid by Medicaid. On Jan. 1, their coverage will switch automatically to the new Medicare plan, and states are expected to cut their Medicaid spending accordingly.

But many states, including Maine, are balking at the federal formula that has determined the amount they need to cut. According to Trish Riley, director of Maine’s Office of Health Policy and Finance, the Centers for Medicare and Medicaid Services, or CMS, overstated the new drug benefit’s impact in Maine by almost $9.2 million. Unless something changes, she said Thursday, the Legislature once again will be put in the unpleasant position of cutting Medicaid programs or raising taxes to keep services in place.

For 2006, CMS projects a cost of $43.2 million, but Riley’s office says the actual cost will be $35.2 million. Riley said the federal figures don’t reflect the aggressive steps Maine has taken in recent years to hold down the cost of drugs in its Medicaid program. The CMS formula assumes an annual cost increase of more than 35 percent, but Maine’s rate of increase is only 10.3 percent, she said. Also, the state has negotiated successfully with major drug companies for significant rebates, further lowering its projected Medicaid drug costs for 2006.

“Maine has the lowest rate of growth in the country,” Riley said, “but all the states got painted with the same brush.”

The federal formula also doesn’t take into account other associated costs, she said, such as premiums the state must pay for nursing home residents to get the new coverage, bringing the total difference between federal and state computations to almost $9.2 million.

Maine and other states will pay the money – widely referred to as the “clawback” – through having their monthly Medicaid funding cut. Riley said it’s ironic: “We have to give up our [Medicaid drug] program and pay for the privilege of doing it,” she said.

In addition to the added expense to the state, Riley said low-income seniors may be faced with having to change their medications in order to get coverage. Maine’s Medicaid program covers about 6,000 different drugs, she said, whereas the new Medicare plans are required to cover only 450.

“We assume that most of them will cover more than that,” she said, “but people who’ve already tried different drugs and found one that works may have to be started on that ladder again.”

Gov. John Baldacci issued a statement Thursday morning saying he has requested a waiver that would allow Maine to continue its Medicaid drug coverage for low-income Medicare recipients instead of forcing the switch.

“It makes no good sense to further complicate an already complex program by disrupting the lives of elders and persons with disabilities, requiring them to switch health plans and lose some coverage that they have today – all at a cost to the state that exceeds by at least $9.2 million what we spend today. The federal government has enough on its hands implementing this program for those who do not now have coverage without disrupting those who do,” Baldacci said.

The governor acknowledged that the prospect of federal approval of such a waiver seems remote and indicated that Mainers can expect to see another contentious supplemental budget process come January.