OLR Research Report


December 5, 2008

 

2008-R-0638

PROGRAMS FOR UNREIMBURSED CATASTROPHIC HEALTH CARE

By: Janet L. Kaminski Leduc, Senior Legislative Attorney

You asked for information on other states' programs to fund catastrophic health care services not covered by insurance.

SUMMARY

Legislatures in at least 11 other states have created funding mechanisms for certain unreimbursed catastrophic health care expenses: Alaska, Arkansas, Idaho, Massachusetts, Michigan, New Hampshire, New Jersey, New Mexico, Pennsylvania, Virginia, and West Virginia. A copy of the legislation for each program is enclosed.

Eligibility requirements and services covered vary by state and depend on available funding. Most of the states appropriate general fund revenues to the programs and some accept private donations. Table 1 describes each program, including eligibility and funding details when available. The information comes from the statutes, regulations, the programs' websites, and the state agencies responsible for administering the programs.

We also describe the federal Catastrophic Health Emergency Fund, which is available to citizens qualifying as Indians under federal law, and a Connecticut proposal from the 2008 regular legislative session, An Act Concerning A Catastrophic Illness In Children Relief Program (HB 5498). The bill, modeled after New Jersey's program, was intended to create a safety net for families with children suffering from a catastrophic illness.

OTHER STATES' PROGRAMS

Table 1: Other States' Catastrophic Health Care Programs

Program Description by State

Alaska (Originally enacted: 1978)

Alaska Stat. 47.08.010-.140, Alaska Admin. Code tit. 7, 48.005-.190

Catastrophic Illness Assistance.

NOTE: Although this program remains in statute, it has been unfunded for many years and, thus, is currently not in operation, according to the Alaska Department of Health and Social Services (DHSS).

As established in statute, DHSS reimburses medical care providers for the cost of unpaid treatment provided to a state resident with an illness or in an accident resulting in financial catastrophe to the person or person's family. The person, or a representative, must apply for the assistance.

The Catastrophic Illness Committee, which is created by law, includes a (1) DHSS medical review officer, (2) Department of Commerce and Economic Development representative, and (3) person who has suffered a catastrophic illness. It annually determines the amount reimbursable for services based on appropriated funds, expected need, and a formula that calculates the person's share of medical expenses associated with the catastrophic illness. The formula considers a person's income, assets, number of dependents, and forthcoming third-party payments, among other things. The medical care provider must allow a person to pay his or her share on a payment schedule with a term of at least three years.

The law defines “catastrophic illness” as illness or injury that results in medical expenses of over $1,000 during a period of up to 12 months after all other sources of third-party payment have been exhausted. If a person receives payment from any other source for medical expenses for which the program paid, the person is liable to the committee in the amount of that payment.

By law, the following are not reimbursable:

1. dentistry and optometry unless prescribed by a licensed dentist or physician as medically necessary as the result of the injury or illness;

2. elective medical or surgical procedures;

3. drugs and medications not prescribed by a licensed physician;

4. services received as a result of a pregnancy or birth without unusual complications;

5. private psychological or psychiatric treatment or private alcoholism treatment, unless not available from public agencies or programs;

6. chiropractic services and services provided by a person who practices naturopathy;

7. non-medical services;

8. medical services currently provided to people in the Department of Corrections' custody;

9. costs incurred before July 1976.

Regulations exclude the following from coverage:

1. drugs and medications sold over-the-counter, whether or not prescribed by a licensed physician;

2. private psychological or psychiatric treatment and private alcoholism or drug treatment, unless treatment is not available from a public or publicly funded program;

3. experimental procedures and services that are not in accordance with customary standards of medical practice or not commonly used, including acupuncture, unnecessary surgery, heart transplants, and surgery correcting morbid obesity;

4. medical services provided to people in the custody of the Department of Corrections or juveniles in the custody of the DHSS;

5. services provided by a skilled nursing facility or intermediate care facility after the first 30 days of care; and

6. medical expenses of a deceased person, unless legally responsible members of the person's family will suffer a financial catastrophe.

There is a three-level appeal process for a person whose assistance application is denied. A person may (1) request the committee to reconsider its original denial, (2) request a hearing to appeal a reconsidered decision, and (3) appeal the hearing decision to the DHSS director.

Alaska (Originally enacted: 1998)

Alaska Stat. 47.08.150, Alaska Admin. Code tit. 7, 48.500-.900

Chronic and Acute Medical Assistance (CAMA) Program.

http://hss.state.ak.us/dhcs/CAMA/

CAMA was originally designed to reimburse medical care providers for the cost of services provided to state residents with certain chronic conditions who are not otherwise eligible for medical assistance but demonstrate financial need. It is limited to those with:

1. terminal illness,

2. cancer requiring chemotherapy,

3. chronic diabetes or diabetes insipidus,

4. chronic seizure disorders,

5. chronic mental illness, or

6. chronic hypertension.

Beginning November 1, 2002, due to a significant reduction in state funding, CAMA was reduced to primarily a maintenance prescription drug program. The services currently eligible for reimbursement include:

1. three prescription drugs (up to a 30-day supply each) a month and medical supplies necessary for the administration of the drugs;

2. physician services directly related to the qualifying illness;

3. outpatient laboratory and x-ray services; and

4. outpatient chemotherapy and radiation for a person with cancer.

CAMA will not pay for:

1. major medical care;

2. nursing home care;

3. drugs, medical supplies, radiation, or chemotherapy not properly prescribed or determined necessary by an appropriate health care provider;

4. medical care for a person in the care and custody of a correctional facility, including a juvenile in a detention facility;

5. an elective procedure;

6. services provided at no charge by an Indian Health Service (IHS) or IHS funded facility that is provided to an IHS beneficiary;

7. drugs or medical supplies not directly related to the treatment of a covered medical condition;

8. drugs or medical supplies after the first three prescriptions are filled within a calendar month;

9. transportation expenses; and

10. physician services if the physician service is provided in an inpatient hospital or in a nursing facility.

If the cost to cover all people eligible for assistance exceeds the amount allocated for a fiscal year, DHSS may limit coverage by regulation to provide the most critical care within available appropriations.

CAMA is entirely state funded. The number of individuals covered and the medical services covered depend on the level of funding available each year. The governor's FY 09 budget request for CAMA is about $1.47 million. In FY 07, the actual cost was about $1.33 million.

According to a DHSS report filed with the legislature's Finance Committee in January 2008, the department is evaluating the possibility of federal funding for some portion of program costs under a Medicaid 1115 demonstration waiver, noting that many program participants eventually become eligible for Medicaid.

Arkansas (Originally enacted: 2003)

Ark. Code Ann. 26-35-1201 to -1205 and 19-5-1123

Baby Sharon's Children's Catastrophic Illness Grant Program.

http://www.arkansas-cares.org/

This program awards grants to families of children with catastrophic illnesses or injuries to assist with their medical expenses. A five-member grant program committee, which includes Arkansas residents and people with knowledge of children with catastrophic illnesses or injuries, must consult with the Arkansas Children's Hospital concerning grant applications and designate fund recipients.

Although state budget documents available online show that the state has budgeted and authorized $2 million for each fiscal year for the program, it appears that the only funds the committee has spent are those collected through private donations.

By law, the Department of Finance and Administration (DFA) may accept gifts, grants, bequests, devises, and donations for the purpose of funding the grant program's trust fund. Beginning with tax forms for the 2004 taxable year, individual and corporate income tax forms include a place for taxpayers to contribute to the trust fund. (Contributions raised using the income tax forms have been modest, about $4,000 to $5,000 annually, according to the fund chairman Richard Emmel (L. Kellams, Tax Filers Unmoved by Causes on Form, Arkansas Democrat Gazette, April 13, 2008).

According to DFA records, between FY 04 and FY 08, DFA has accepted $56,826 for the program and awarded 19 grants (11 in FY 07 and 8 in FY 08) totaling $37,528, or an average of $1,975.

Idaho (Originally enacted: 1991)

Idaho Code 57-813, 56-209f, 49-673, and 31-3501 to -3519

Medically Indigent Catastrophic Health Care Program.

See, e.g., http://www.adaweb.net/departments/indigentservices/MedicalAssistance.asp

A seven-member board (“the administrator”) runs this state program. Members include county commissioners from each of the six state counties and one governor-appointee. By law, the administrator may contract with an insurance company or other third-party administrator or establish a self-insured fund to implement the program. It also may (1) contract with an independent contractor or hire staff to manage and operate the program and (2) retain legal counsel. The law requires the administrator to request a state appropriation for the program. All money deposited to the fund is perpetually appropriated for the program.

The program provides assistance to “medically indigent” people who are not eligible for Medicaid or Medicare but qualify for county assistance. A dedicated state fund, the Catastrophic Health Care Cost Account, is used for paying insurance premiums, eligible claim costs, and administration expenses related to the program.

A person is “medically indigent” if he or she needs “necessary medical services” and who, together with a spouse if an adult or parents if a minor, lacks sufficient income or other resources to pay for the services. There are no statutory limits on income or resources. If medical expenses exceed a person's resources, he or she is eligible for the program.

A “necessary medical service” is a requested or provided medical service required to identify or treat a person's health condition, illness, or injury that is in accordance with generally accepted medical standards and provided on an outpatient basis whenever it is safe, efficient, and reasonable to do so. It does not include:

1. bone marrow or organ transplants;

2. elective, cosmetic, and experimental procedures;

3. services related to, or provided by, residential or shelter care facilities;

4. normal, uncomplicated pregnancies, excluding caesarean section;

5. childbirth well-baby care;

6. Medicaid and Medicare copayments and deductibles; and

7. services provided by or available from state, federal, or local health programs.

The state covers the cost of services that exceed $10,000 in a 12-month period, where reimbursement to providers is based on Medicaid reimbursement rates. (Idaho law requires counties to pay the first $10,000.) A person seeking assistance must apply to his or her respective county commissioner, who forwards claims eligible for the state program to the program administrator. If the administrator approves a claim for payment, a request is sent to the state controller for payment.

Beginning July 1, 2003, $5 of each $10 fine collected from violations of the seat belt law is apportioned to the Catastrophic Health Care Cost Account.

From 1992 to 2007, the state appropriated almost $202 million to this program, an annual average of $11.6 million. Appropriations have increased in the most recent years. Appropriations for 1992 to 2002 were about $94.1 million total, or $8.6 million on average. From 2003 to 2008, appropriations were $103.2 million total, or $17.2 million on average. The requested FY 09 appropriation is $23.6 million.

Actual expenditures and the number of claims covered have increased over time. For example, in 2000, the program covered 716 claims that cost $11.2 million, or $15,600 on average. In 2004, it covered 1,039 claims that cost $15.4 million, or $17,762 on average.

-Continued-

Massachusetts (Originally enacted: 2000)

Mass. Gen. Laws Ann. ch. 111K, 1-11 and ch. 29, 2ZZ

Catastrophic Illness in Children Relief Fund.

http://www.mass.gov/cicrf/

This program provides financial assistance for medical and related expenses of children with catastrophic illnesses. The law defines a “catastrophic illness” as pediatric cancer or any illness or condition treated at a pediatric specialty hospital, including ambulatory care and services provided by or ordered through such a hospital, for which related expenses (1) are not covered by any state or federal program or an insurance contract and (2) exceed 10% of the family's annual income up to $100,000 and 15% of any above that amount.

A family is eligible to apply for assistance on behalf of a child who is 21 years of age or younger, a Massachusetts resident, and under the care of a licensed health care provider with staff privileges at a hospital licensed or accredited to provide pediatric or neonatal care. (The eligible age was increased from 18 to 21 effective July 1, 2006.)

The following expenses may be eligible for reimbursement if they result directly from a child's medical condition and are found to be reasonable:

1. payments to health care providers;

2. specialized pediatric ambulatory care;

3. addiction and mental health services;

4. inpatient and outpatient acute or specialized hospital care;

5. medical equipment or disposable medical supplies;

6. medications;

7. medically related home and vehicle modifications;

8. medical transportation;

9. home health care;

10. related travel expenses for treatment out of state;

11. following special review, experimental treatment or medications; and

12. other reasonable expenses related to the treatment, palliation, habilitation, or rehabilitation of a child's illness or medical treatment.

The following are not eligible for reimbursement:

1. private health insurance premiums;

2. orthodontia;

3. experimental medication – Phase I clinical trials;

4. in-state transportation;

5. respite care;

6. vehicle repair (unless it is to make a donated accessible vehicle roadworthy);

7. cell phones;

8. rent, utility, and telephone expenses; and

9. hyperbaric oxygen therapy.

The Catastrophic Illness in Children Relief Fund Commission, established by law, manages the program. Members include the health and human services secretary, public health and insurance commissioners, state treasurer, and seven public members that the governor appoints, four of whom the attorney general must recommend. The Department of Public Health provides staff support to the Commission.

The Commission is the final authority on decisions regarding expenditures from the Catastrophic Illness in Children Relief Fund (“Fund”), a non-budgeted, special revenue fund. When the Commission finds a family is ineligible for the program or denies reimbursement for a specific item or service, the family may appeal by requesting reconsideration in writing within 90 days of the decision.

The law requires DPH to maximize federal funding under Medicaid law to the extent any program expenditures qualify as medical assistance under federal law.

The program is funded by quarterly transfers from employers' contributions to the unemployment health insurance Medical Security Trust equal to $1 for each employee whose wages are counted as part of those contributions, if funds are available after other Trust obligations are met. (FY 03 and FY 04 had no deposits from the Trust, as funds were not available.) For FY 05 through FY 08, the average deposit to the program fund was $2.8 million, including interest.

The average annual expenditure between FY 03 and FY 08 was $1.7 million. In FY 05, 186 families received payments totaling $1.2 million and (1) the average reimbursement per family was about $6,620, (2) 62% of the families had annual income of less than 200% of the federal poverty level, and (3) 40% of the children helped were under age five. This was a decrease from FY 04, when 303 families received payments totaling $3.2 million, an average of $10,260 per family. Most families assisted have some form of health coverage (e.g., 98% of the children helped in FY 05 had public or private insurance.) (Sources: The Catastrophic Illness in Children Relief Fund Annual Report: FY 2005 and Statutory Basis Financial Reports for FYs 2005 through 2008.)

Michigan (Originally enacted: 1978)

Mich. Comp. Laws Ann. 500.3104

Catastrophic Claims Association.

http://www.michigan.gov/documents/cis/MCCA_FAQ_2007_190996_7.pdf

http://www.iiminfo.org/Portals/44/Fact%20Book%204%20Auto%20(19-29).pdf

Under a unique auto insurance no-fault law, the Michigan Catastrophic Claims Association (MCCA), an unincorporated nonprofit association, reimburses auto insurance companies for personal injury protection (PIP) (i.e., medical) claims that exceed the current threshold of $440,000. That means that the injured party's insurance company pays the first $440,000 of medical expenses and the MCCA reimburses the insurance company for reasonable and necessary medical benefits paid over that amount.

For policies issued or renewed July 1, 2009 to June 30, 2010, the threshold increases to $460,000; July 1, 2010 to June 30, 2011, $480,000; and July 1, 2011 to June 30, 2013, $500,000. Beginning July 1, 2013, the threshold increases biennially on July 1 of each odd-numbered year, by the lesser of 6% or the consumer price index, and rounded to the nearest $5,000.

A five-member board administers the program. Its members are insurance company representatives that the commissioner of the Office of Financial and Insurance Services appoints. The commissioner, or delegated representative, serves as an ex officio board member. The following standing committees assist in the association's operation: (1) actuarial, (2) audit, (3) claims, (4) investment, and (5) personnel.

The state funds the program by assessing each auto insurer. The insurers typically pass the assessment onto policyholders as a statutory assessment or otherwise build it into premiums charged. The MCCA board establishes the assessment annually for the year beginning July 1. As of July 1, 2008, the assessment is $104.58 per vehicle. (When the program began in 1978, the assessment was $3. In 2005, the assessment was at its highest at $141.70.) Since 2003, historic vehicles are assessed at 20% of the full assessment ($20.92 beginning July 1, 2008).

Since MCCA's inception, insurers have reported almost 22,000 catastrophic claims to MCCA. About 11,400 remain active with future lifetime payments estimated at more than $66 billion, which assumes inflation for products, services, and accommodations needed for the care, recovery, and rehabilitation of injured people throughout their lifetimes.

In 2006, the MCCA paid out $668 million in claim costs, primarily for closed-head wounds, paraplegia, quadriplegia, and burns. It paid out $692 million in 2007.

New Hampshire (Originally enacted: 1981)

N.H. Rev. Stat. Ann. 137-G:1 to :6

Catastrophic Illness Program (CIP).

http://www.dhhs.state.nh.us/DHHS/BEAS/cip.htm

The Catastrophic Illness Program (CIP) is a state-funded program in the Department of Health and Human Services designed to provide financial assistance to people with a catastrophic illness who need financial assistance. The law defines “catastrophic illness” as cancer, hemophilia, end stage renal disease, spinal cord injury, cystic fibrosis, or multiple sclerosis requiring extensive medical treatment such as hospitalization, medication, diagnostic evaluation, surgery, dialysis, therapy, or other associated expenses like transportation to and from medical facilities.

Available assistance is limited to $2,500 per person per fiscal year based on income and resources and is contingent upon available funds.

From state budget documents available online, it appears that the state has funded this program annually at increasing levels. For example, the budget for FY 05 was about $386,000; for FY 06, $404,000; FY 07, $422,000; FY 08, $440,000; and FY 09, $450,000.

New Jersey (Originally enacted: 1988)

N.J. Stat. Ann. 26:2-148 to -158, N.J. Admin. Code tit. 10, 10:155-1.1 to -1.20

Catastrophic Illness in Children Relief Fund.

http://www.state.nj.us/humanservices/catill/cicrf1.html

The Catastrophic Illness in Children Relief Fund Program provides financial assistance to families for medical and related expenses of children age 21 and younger with catastrophic illnesses who are New Jersey residents. Under the program, any illness can be catastrophic based on uncovered eligible medical expenses and the family's income. There are no specific exclusions by diagnosis.

The law defines a “catastrophic illness” as any illness or condition for which medical expenses (1) are not covered by any state or federal program or an insurance contract and (2) exceed 10% of the family's annual income up to $100,000 and 15% of any above that amount.

The amount payable on behalf of a child is capped at $100,000 per year, including a one-time allowance up to $15,000 for the purchase of a lease or a specialized vehicle. There is a home modification allowance of up to $25,000 per year and a speech, language, and hearing services allowance of up to $3,000 per year.

The following expenses may be eligible for reimbursement if they are found to be reasonable:

1. specialized pediatric ambulatory care,

2. addiction and mental health services,

3. inpatient and outpatient acute or specialized hospital care,

4. physician care,

5. medical equipment or disposable medical supplies,

6. pharmaceuticals,

7. medically-related home modifications and medical transportation,

8. home health care, and

9. experimental medical treatment or pharmaceuticals following a special review.

A 12-member Catastrophic Illness in Children Relief Fund Commission, established by law, manages the program. It is an independent program within the Department of Human Services. Members include the commissioners of health and senior services, human services, children and families, and banking and insurance; state treasurer; and seven public appointees. The Senate President and General Assembly Speaker each recommend two of the public members and one from each must be a children's health care provider.

The program is financed by an annual employer surcharge of $1.50 per employee on employers subject to the state's unemployment compensation fund. The fund is dedicated, revolving, and non-lapsing.

The commission approved over $7.1 million for 309 families in FY 08. It approved over $8 million for 334 families in FY 07. Since the program began in 1988, the commission has approved grants totaling over $115 million for more than 4,800 families (an average of about $24,000 per family).

New Mexico (Originally enacted: 1990)

N.M. Stat. Ann. 27-2-41 to -47

Indigent Catastrophic Illness Hospital Funding Act.

This program provides for payment for part of large hospital bills incurred by medically indigent patients. By law, a “hospital” is any licensed general or special hospital that has annual gross charges for Medicare, Medicaid, and indigent patients of more than 10% of the hospital's total annual gross charges. A “medically indigent patient” is a New Mexico resident who incurs hospital charges, is not eligible for Medicaid or Medicare, and whose family or household income does not exceed 250% of the federal poverty level.

The law created an Indigent Catastrophic Illness Hospital Fund from which money is appropriated to the Human Services Department (HSD) to reimburse hospitals for eligible claims and pay administrative costs, which cannot exceed 3% of the annual appropriation or other distribution or transfer to the fund. Money in the fund is invested and income earned is credited to the fund.

Annually, a hospital may submit eligible claims to the department on or before April 1 for payment by June 30.  A claim is “eligible” if it is for:

1. uncovered hospital charges of $5,000 or more for a medically indigent patient's illness;

2. hospital charges incurred within the 12 months immediately before the April 1 closing deadline; and

3. an amount determined by subtracting from the base claim the medically indigent patient's deductible and then reducing the resulting balance, based on the hospital's Medicare cost-to-charge ratio, to an amount equal to Medicare allowable costs.

HSD pays each eligible claim if there is sufficient money in the fund. If there is not sufficient money in the fund to pay all eligible claims for that year, the amount of each claim payable is prorated.

A medically indigent patient's deductible is the amount the hospital determines that the patient is able to pay in monthly installments over an 18-month period. In determining the deductible, the hospital must follow department rules and consider the patient's family size, household income, and obligations.

Pennsylvania (Originally enacted: 1985)

Pa. Stat. Ann. tit. 35, 6934, 28 Pa. Code 4.1-.15

Catastrophic Medical and Rehabilitation Fund.

Head Injury Program (HIP).

http://www.dsf.health.state.pa.us/health/cwp/view.asp?a=179&q=232536

By law, 25% of the state's Emergency Medical Services (EMS) Operating Fund is allocated to a Catastrophic Medical and Rehabilitation Fund to be used for victims of trauma to purchase medical, rehabilitation, and attendant care services when all alternative financial resources have been exhausted. The law authorizes the Department of Health, by regulation, to prioritize fund distributions by classification of traumatic injury.

The EMS Operating Fund is financed by a (1) $10 fine on all traffic violations other than parking offenses and (2) $25 fee on people admitted to Accelerated Rehabilitative Disposition for offenses related to driving under the influence of alcohol or drugs.

The Department of Health uses the Catastrophic Medical and Rehabilitation Fund for its Head Injury Program (HIP) for persons with traumatic brain injury (TBI) who apply to and are accepted into the program. If enrolled, a person may receive no more than 12 consecutive months or up to $100,000 for rehabilitation services as specified in a rehabilitation service plan, followed by a maximum of six consecutive months or up to $1,000 for case management to assist in transitioning out of HIP. The program provides services in residential facilities, day facilities (outpatient), and other home and community-based settings. Services provided by the program, through a contracted provider, include:

1. pre-enrollment assistance,

2. pre-admission assessment,

3. service plan development,

4. rehabilitation services, and

5. case management.

 

Defined in regulation, “rehabilitation services” are services provided to help the patient recover from TBI; improve his or her health and welfare; and realize maximum physical, social, cognitive, psychological, and vocational potential for useful and productive activity. These services include: neuropsychological evaluation; physical, occupational, speech, or language therapy; behavior management; home facilitation; therapeutic recreation; prevocational services; case management services; and psychological services, which may include cognitive remediation.

HIP does not pay for services (1) available through other publicly funded programs or (2) to address conditions existing before the TBI. The department determines if a person is responsible to pay for any part of the HIP services based on income and alternative financial resources.

A person is eligible for HIP only if his or her impairment is not the result of one or more of the following:

1. cognitive or motor dysfunction related to congenital or hereditary birth defects;

2. putative birth trauma or asphyxia neonatorum (hypoxic-ischemicencephalopathy);

3. hypoxic encephalopathy unrelated to TBI;

4. significant preexisting psychiatric, organic, or degenerative brain disorder;

5. stroke; or

6. spinal cord injury in the absence of TBI.

Also, a person is eligible for HIP only if he or she does not manifest any symptom, such as a coma, which would prevent meaningful participation in the assessment or the provider from doing a full and complete assessment.

A person applying to the program, or an authorized representative, must complete an assignment agreement. This assigns to the department rights in future court awards, insurance settlements, or other proceeds he or she receives because of the TBI, up to the amount the program spent on him or her.

The department administers an appeal process for people to ask for reconsideration of program decisions.

According to financial reports available online from the Pennsylvania's Office of Budget at http://www.portal.state.pa.us/portal/server.pt?open=512&objID=4574&&PageID=473560&mode=2, the state appropriated $3 million to the Catastrophic Medical and Rehabilitation Fund in FY 06 and $6 million for each fiscal year since. The fund spent $2.2 million in FY 06, $1.2 million in FY 07, and $3.1 in FY 08. For FY 09, through October 31, 2008, it has spent $1.2 million.

Virginia (Originally enacted: 1999)

Va. Code Ann. 32.1-324.3

Uninsured Medical Catastrophe Fund.

http://www.dmas.virginia.gov/rcp-uninsured_medical_catastrophe.htm

The Uninsured Medical Catastrophe Fund (UMCF) provides funds for uninsured people who need treatment for a life threatening illness or injury, which is defined as a medical condition requiring specialized medical treatment, hospitalization, or both and that would more likely than not result directly in death within 12 months if left untreated.

UMCF will not pay for services rendered before a program application has been approved. Expenditures are limited to available funding, and funds are disbursed on a first-come, first-served basis based on the date the Department of Medical Assistance Services (DMAS) receives the original application. An applicant may appeal an adverse determination regarding eligibility and treatment plan.

To qualify for UMCF a person must:

1. be a U.S. citizen or a legal resident alien;

2. be a Virginia resident;

3. have gross family income at or below 300% of the federal poverty level;

4. have a life threatening illness or injury;

5. be uninsured for the needed treatment and not eligible for coverage through private health insurance or federal, state, or local government medical assistance programs;

6. provide a medical treatment plan certified by the treating physician under which the course of treatment cannot exceed 12 months; and

7. identify a provider who is willing to accept the established global fee for the treatment plan.

In general, UMCF pays for services needed to treat an acute illness or injury or the acute phase of a chronic illness. UMCF covers the following services to the extent that they are part of an approved treatment plan:

1. inpatient hospital services,

2. outpatient hospital services and surgical centers,

3. ambulatory care,

4. laboratory and x-ray services,

5. physician's services,

6. medical care rendered by licensed practitioners within the scope of their practice,

7. prescribed drugs,

8. necessary rehabilitative services, and

9. specified organ and tissue transplant procedures (i.e., kidney, liver, heart, lung, and bone marrow).

UMCF does not cover:

1. transportation services;

2. mental health services;

3. nursing facility services;

4. case management;

5. hospice care;

6. private duty nursing services;

7. prosthetic devices;

8. eyeglasses, dentures, hearing aides, and other similar devices;

9. alternative medicine therapies, such as homeopathic remedies, hypnosis, or herbal remedies; and

10. emergency services.

UMCF is funded by voluntary contributions, primarily taxpayer designations of tax refunds, and receives a portion of the overall appropriation to DMAS. For FY 09, UMCF is allotted $265,000 ($40,000 of which is special revenue contributions). Since July 1, 2008, DMAS has received 23 program applications, approved 16 of them, and disbursed $118,000 to recipients.

West Virginia (Originally enacted: 1999)

W. Va. Code Ann. 16-5Q-1 to -4, W. Va. Code St. R. 72-1-1 to -10

The James “Tiger” Morton Catastrophic Illness Fund.

http://www.wvdhhr.org/cic/index.asp

The James “Tiger” Morton Catastrophic Illness Commission acts as a last resort for those in dire need of medical assistance once all other resources are exhausted. The seven-member commission is administered through the Office of the Secretary and Department of Health and Human Resources (DHHR) and consists of six governor-appointees and the DHHR ombudsman. Appointees must include a doctor, attorney, nurse, social worker, and two citizens active in community affairs.

To be eligible for assistance from the fund, a person must:

1. be a resident of West Virginia for one year before the illness onset or diagnosis,

2. have a catastrophic illness (a life-threatening illness with imminent risk of death),

3. have exhausted all other financial resources, and

4. not be eligible for Medicaid.

According to the regulations, a person must also need approved care and services during the acute phase of the catastrophic illness and meet the required “spend down” for Medicaid eligibility to the extent that household income is reduced to less than 100% of the federal poverty level. “Spend down” is the amount of medical expenses a person must pay for from his or her income to meet the medically needy income level.

Covered expenses include:

1. proven and accepted medical procedures;

2. transportation for an approved medical procedure to medical facilities for the patient and one family member;

3. medications taken to assist with illness rejection or recurrence, including those related to transplants; and

4. prescribed oral chemotherapy or similar agents for the approved catastrophic illness.

Expenses not covered include:

1. prescriptions other than those specified above as covered;

2. durable medical equipment;

3. medical debt incurred more than 30 days before applying for assistance;

4. experimental treatments, procedures, or therapies;

5. in-home care services;

6. hospice services; and

7. home repair or home modification.

For any service to be eligible for funding, the commission must pre-authorize it. The commission makes direct payment to the health care provider through the West Virginia Medicaid program. The law grants the commission the right of subrogation to recover amounts paid on behalf of a person from private insurance, settlements, or other sources.

In addition to state General Fund appropriations, the commission accepts tax deductible contributions from both private and corporate donors. The commission's spending authority for medical assistance is about $940,000 for FY 09. But it appears from documents available online that the annual program cost, including medical assistance and administration costs, is about $1.6 million.

FEDERAL INDIAN CATASTROPHIC HEALTH EMERGENCY FUND

The federal Catastrophic Health Emergency Fund (CHEF) is available to citizens qualifying as Indians under federal law (25 U.S.C.S. 1621a and 1683). The secretary of the Department of Health and Human Services administers the fund.

The program pays medical costs over $25,000 for victims of disasters or catastrophic illness. The cost threshold is adjusted annually by the increase in the medical care expenditure category of the Consumer Price Index for All Urban Consumers. The fund does not pay a health care provider for any treatment for which the patient is eligible for any other federal, state, local, or private source of reimbursement.

Before FY 08, CHEF was funded at $18 million a year and typically was depleted before the end of the fiscal year. In FY 07, CHEF provided funds to 738 patients in amounts ranging from $26,000 to $1 million. For FY 08, CHEF was funded at $27 million (Statement of Robert G. McSwain, Director of Indian Health Service, before the U.S. Senate Committee on Indian Affairs, June 26, 2008).

CONNECTICUT PROPOSAL – HB 5498 (2008)

In the 2008 session, the Select Committee on Children introduced HB 5498, An Act Concerning A Catastrophic Illness In Children Relief Program. The bill, modeled after New Jersey's program, creates a safety net for families with children suffering from a catastrophic illness.

The bill defines “catastrophic illness” as an illness or condition requiring inpatient or ambulatory care and services for which (1) the medical and related expenses are not covered by federal or state programs or private insurance and (2) treatment costs exceed 10% of the first $100,000 of the family's annual income and 15% of any income above $100,000.

Under the bill, the program is funded by an employer surcharge of $1 per employee on employers subject to the state's unemployment insurance contribution.

The bill establishes a 16-member Catastrophic Illness in Children Relief Commission in the Office of the Healthcare Advocate. Members include 11 public appointees; the healthcare advocate; the commissioners of social services, public health, and insurance; and the treasurer. The commission's responsibilities include establishing and operating the relief program, determining eligibility requirements and application procedures, adopting regulations, and preparing annual reports.

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