Utah's Medicaid Waiver

You asked for information on Utah’s Medicaid 1115 demonstration waiver, which enabled the state to expand access to Medicaid to some residents but resulted in service reductions and higher cost sharing for adults already enrolled in the state’s Medicaid program.

SUMMARY

On July 1, 2002, Utah began implementing its new Medicaid waiver program. It was part of then-Governor Mike Leavitt’s plan to reduce the overall number of uninsured residents. In a background paper on the new program, the state’s Medicaid director called the program “revolutionary” because it was the first time the federal government was allowing a state to offer a Medicaid benefit plan that did not include hospitalization and specialty care.

The program, a Medicaid expansion called “Primary Care Network,” offers a limited package of Medicaid covered services, along with cost-sharing requirements, to two groups of adults: those with incomes less than 150% of the federal poverty level (FPL) who do not qualify for Medicaid under another coverage group and those previously enrolled in a 100% state funded medical assistance program. Unlike regular Medicaid, program enrollment is capped at 19,000 individuals. The waiver also permits the state to help people with access to employer-sponsored health insurance to pay their premiums.

The state chose to do this expansion using a federal Medicaid 1115 demonstration waiver, which allowed it to impose service limits and cost sharing normally prohibited by federal law. In addition to applying these limits to the two new covered groups, the state imposed higher cost sharing and service limits on adults who were previously eligible for Medicaid. These limits and cost sharing enable the state to meet the federal requirement that 1115 waivers be cost-neutral.

UTAH’S PLAN

Primary Care Network—New Benefits for Previously Uninsured and People Receiving State-Funded Medical Assistance

The centerpiece of Utah’s waiver program is the new Primary Care Network (PCN), a new Medicaid coverage group for adults. Some of these adults previously had no health insurance, while others were receiving benefits under a 100% state-funded program called the Utah Medical Assistance Program (UMAP). (UMAP provided assistance only for acute and life-threatening conditions to single childless adults with incomes below $ 337 per month. ) The new groups of covered individuals include:

Other services, such as mental health care and inpatient hospitalization, are not covered.

Participants pay a $ 50 enrollment fee, along with cost sharing, which varies depending on the service. For example, an ER visit is $ 30, and dental services require a 10% co-pay. Prescription drugs generally require a $ 5 co-payment (drugs not on the state’s preferred drug list are charged at 25% of the cost). Co-payments are limited to $ 1,000 per year.

Because it is a waiver program, the state can cap enrollment. According to a July 2004 report by the Kaiser Commission on Medicaid and the Uninsured, the state closed enrollment in November 2003 when about 19,000 adults were enrolled (the waiver’s cap); 880 enrollees were former UMAP recipients, out of a total of 3,500.

Scaled-Back “Non-Traditional” Medicaid for Non-Mandatory Groups

Since the PCN program is authorized under a 1115 waiver, its costs must be offset by other Medicaid savings for the state to show that the expansion will be cost-neutral. The main source of Utah’s savings is the restructuring of Medicaid for the following groups of individuals who previously received full Medicaid at little or no cost:

	*Traditional Medicaid*	*Non-Traditional Medicaid (NEW)*	*PCN (NEW)*
*Premiums/Enrollment Fees*	None	None	$ 50
*Groups Exempt from Cost Sharing*	Children, pregnant women, institutionalized individuals	None	American Indians/Alaskan Natives when using HIS or tribal system

*Benefit Limits, Co-Payments, Coinsurance*
Inpatient hospitalization	$ 220 per admission	$ 220 per admission	Not covered
Outpatient hospital	$ 2 per visit	$ 3 per visit	Not covered
Emergency room	$ 6 for nonemergency use	$ 6 per nonemergency use	$ 30 per visit
Physician services	$ 2 per visit (increased to $ 3 per visit for non-pregnant adults in Feb. 2003)	$ 3 per visit (preventive services exempt from co-payments)	Coverage only for primary care $ 5 per visit (preventive services exempt from co-payment)
Lab and x-ray	Covered	Covered	Coverage only for primary care services; 5% coinsurance for lab costing> $ 50 and x-ray costing >$ 100
Ambulance	Covered	Covered	Covered
Non-emergency transportation	Covered	Not covered	Not covered
Home health care	Covered	Covered	Not covered
Long-term care	Covered	Not covered	Not covered
*Benefit Limits, Co-Payments, Coinsurance*
Prescription drugs	$ 3 per prescription per month, $ 15 maximum for non-pregnant adults (increased in February 2003 from $ 1 and $ 5, respectively)	Seven drugs per month, with exceptions; $ 2 co-pay; full-cost for name brand when generic available	Four drugs per month, no exceptions. $ 5 per generic, 25% of cost when no generic available; full cost when generic available
Mental Health and Chemical Dependency	Covered	30 inpatient and 30 outpatient days per year; $ 3 co-payment per outpatient visit	Not covered
Durable Medical Equipment	Covered	Covered	Coverage only for equipment for recovery, 10% coinsurance
Dental	Adults coverage limited to relief of pain and infection	Limited to relief of pain and infection	Limited to relief of pain and infection; 10% coinsurance
Vision	None, except for pregnant women (coverage eliminated January 2003)	$ 30 benefit limit; one exam per year; eyeglasses not covered	$ 30 benefit limit; one exam per year; eyeglasses not covered; $ 5 per visit
Hearing	Not covered	Not covered	Not covered
Physical and occupational therapy, speech/language pathology therapy	Coverage only for pregnant women and children (non-pregnant adults eliminated in January 2003)	16 visits per year for PT and OT, combined; speech therapy not covered; $ 3 co-payment per visit	Not covered

Source: Kaiser Commission on Medicaid and the Uninsured (July, 2004)

Employer-Sponsored Insurance Subsidy—Covered At Work

While the main thrust of the waiver is an expansion of coverage for people who previously had none, it also offers help for working adults whose employers actually offer health insurance. The state’s Covered at Work program provides premium assistance to these employees who would otherwise be eligible for the PCN (i. e. , they meet that program’s financial eligibility requirements) but cannot get it because they have access to employer-sponsored insurance.

To participate in Covered at Work, employees must be paying more than 5% of their monthly income on premiums. Employees paying between 5% and 15% cannot participate in PCN. But those employees whose premium share exceeds 15% of income can choose the PCN over the subsidized employer coverage.

Participants receive subsidies for up to fives years, which are generally $ 50 per month for single adults, and $ 100 per month per families with children for the first two years. This amount decreases by 20% for each of the remaining three years. There are no subsidies after five years. The employee coverage is not subject to any minimum service coverage requirements other than what state law requires of all insurers.

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January 12, 2005		2005-R-0012
UTAH’S MEDICAID WAIVER

By: Robin K. Cohen, Principal Analyst