Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
  I H S
OWA  AS  HIFTED 
 
M   C -S
EDICARE  OST HARING 
 
  D E
FOR  UAL  LIGIBLES TO THE 
 
F EDERAL GOVERNMENT  
 
Brian P. Ritchie  
Acting Deputy Inspector General 
for Evaluation and Inspections  
 
April 2014 
OEI-07-13-00480   
   
EXECUTIVE SUMMARY:  IOWA HAS SHIFTED MEDICARE COST-SHARING FOR DUAL 
ELIGIBLES TO THE FEDERAL GOVERNMENT 
OEI-07-13-00480 
 
WHY WE DID THIS STUDY 
 
Dually eligible beneficiaries (dual eligibles) are individuals eligible for both Medicare and Medicaid.  For a 
certain type of dual eligiblesfull-benefit dual eligiblesState Medicaid programs pay Medicare 
cost-sharing. Some of these payments are eligible for Federal Financial Participation (FFP).  During an audit 
of the State of Iowas claims for FFP for its Medicare cost-sharing payments, the Office of Inspector General 
(OIG) found that Iowa had made State Supplementary Payments of $1 per beneficiary per month to a group 
of about 41,000 dual eligibles. By making these payments, the State spent approximately $500,000 and 
received $39 million in FFP.  We sought to determine the extent to which other States might similarly be 
shifting costs to the Federal government. 
 
HOW WE DID THIS STUDY  
 
In addition to reviewing the information collected during the audit of Iowas claims, we conducted additional 
research regarding the law and regulations governing the availability of FFP for Medicare cost-sharing, and 
we reviewed the data available on dual eligibles, on their Medicare cost-sharing paid by State Medicaid 
programs, and on the eligibility of those payments for FFP.  We also interviewed staff from the Centers for 
Medicare & Medicaid Services (CMS) Office of Financial Management to better understand how State 
Medicaid programs pay Medicare cost-sharing for dual eligibles and the data available on dual eligibles for 
whom States pay Medicare cost-sharing. 
 
WHAT WE FOUND 
 
Although they are not unlawful, Iowas $1 State Supplementary Payments were designed to maximize FFP.  
FFP has always been available for State Medicaid programs payments of Medicare Part B premiums made 
on behalf of beneficiaries who receive Federal and State income assistance.  Iowas $1 payments are not 
intended as income assistance; instead, they were created for the express purpose of obtaining FFP for 
Medicare Part B premiums.  The detailed Medicaid eligibility data necessary to evaluate whether other States 
have shifted costs in a manner similar to Iowa are not available for all States.   States are not required to 
identify in the data they submit to CMS whether and why every dual eligibles Part B premiums are eligible 
for FFP. Therefore, an evaluation determining the extent to which other States might similarly be shifting 
costs to the Federal Government is not feasible.   
 
WHAT WE RECOMMEND  
 
We recommend that CMS (1) seek a legislative change to prevent States from using State Supplementary 
Payments to shift Medicare Part B premium costs for full-benefit dual eligibles to the Federal Government 
and (2) require States to submit more detailed eligibility information.  CMS neither concurred nor 
nonconcurred with our recommendations.  In its comments, CMS suggested that since the basis for FFP for 
Part B premiums is the Social Security Administrations (SSA) criteria for State Supplementary Payments, 
this report and its recommendations should be directed to SSA.  CMS also suggested that SSA shouldas an 
alternative to a legislative changerevise its regulatory criteria defining State Supplementary Payments to 
make them consistent with 42 CFR 435.232(b), which mandates guidelines for optional State Supplementary 
Payments.  OIG has no authority to make recommendations to SSA; we continue to believe that CMS should 
seek a legislative change to address this issue.  
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................6 

Findings........................................................................................................8 

Although not unlawful, Iowas $1 State Supplementary  
Payments were designed to maximize FFP .....................................8 

Detailed Medicaid eligibility data necessary to evaluate  

whether other States have shifted costs similarly to Iowa are  

not available for all States................................................................9 

Conclusion and Recommendations ............................................................10 

Agency Comments and Office of Inspector General  

Response ........................................................................................11 
 
Appendix....................................................................................................12 

A:  State Medicaid Programs Cost-Sharing by Type of Dual 

Eligible...........................................................................................12 

B: Agency Comments  ...................................................................13 

Acknowledgments......................................................................................14 

 
   
   
OBJECTIVES 
1. 	  To describe a cost-shifting strategy implemented by the State of Iowa 
in Federal fiscal year (FY) 2011. 
2. 	  To determine the extent to which other States might similarly be 
shifting costs to the Federal Government.  
BACKGROUND 
Dually eligible beneficiaries (dual eligibles) are those individuals who are 
entitled to Medicare Part A and/or Part B and are eligible for some form of 
Medicaid benefits. State Medicaid programs pay Medicare premiums, 
deductibles, and coinsurance/copayments for certain types of dual 
eligibles.1  Some of these payments by the State on behalf of dual eligibles 
are mandated by Federal law, whereas others are optional.  State Medicaid 
programs may collect Federal Financial Participation (FFP) for most, but 
not all, of these payments.2      
Dual Eligible Beneficiaries 
There are five basic categories of dual eligibles.  (This report is concerned 
primarily with the fifth category, full-benefit dual eligibles.)  Beneficiaries 
in each category are entitled to different Medicaid benefits or 
combinations of benefits, from payment of Medicare premiums, 
deductibles, and/or coinsurance/copayments, to full Medicaid coverage.   
Qualified Medicare Beneficiaries (QMBs). QMBs are persons who are 
entitled to Medicare Part A whose income does not exceed 100 percent of  
the Federal poverty level (FPL) and whose resources do not exceed three 
times the limit for Supplemental Security Income program (SSI) 
eligibility. They may or may not be eligible for full Medicaid benefits.  
State Medicaid programs must pay for QMBs Medicare Part A premiums, 
if any, and Medicare Part B premiums; States may collect FFP for these 
payments.     
Specified Low-Income Medicare Beneficiaries (SLMBs).  SLMBs are 
persons who are entitled to Medicare Part A, have income greater than 
100 percent of the FPL but less than 120 percent of the FPL, and have 
resources that do not exceed three times the limit for SSI eligibility.  They 
may or may not be eligible for full Medicaid benefits. State Medicaid 
 
1 The discussion that  follows  concerning Medicaid payment of Medicare premiums, 
deductibles, and coinsurance is limited to  Medicare fee-for-service (Part A  and Part B),  
although State Medicaid programs also pay  Medicare Advantage (Part C) premiums and 
copayments on behalf of certain types of dual eligibles. 
2 FFP is the percentage of Medicaid expenditures that the Federal  Government pays  
States.  
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   1 
   
   
programs must pay for SLMBs Medicare Part B premiums and may 
collect FFP for these payments.   
Qualified Disabled and Working Individuals (QDWIs).  QDWIs are 
persons who lost their Medicare Part A benefits as a result of returning to 
work. They are eligible to purchase Medicare Part A benefits, have 
income that does not exceed 200 percent of FPL, have resources that do 
not exceed twice the limit for SSI eligibility, and are not otherwise eligible 
for Medicaid (i.e., they are not eligible for Medicaid payment for health 
care services).  State Medicaid programs must pay for QDWIs Medicare 
Part A premiums and may collect FFP for these payments.   
Qualifying Individuals (QIs).  QIs are persons who are entitled to 
Medicare Part A, have income of at least 120 percent of FPL but less than 
135 percent of FPL, have resources that do not exceed three times the limit 
for SSI eligibility, and are not otherwise eligible for Medicaid. State 
Medicaid programs must pay for QIs Medicare Part B premiums and may 
collect FFP for these payments.   
Full-Benefit Dual Eligibles (FBDEs).  FBDEs are entitled to Medicare 
Part A and/or Part B and are eligible for full Medicaid benefits, either  
categorically or through optional coverage groups.3  They are not eligible 
for Medicaid as QMBs, SLMBs, QDWIs, or QIs.  State Medicaid 
programs have the option to paybut are not required to payMedicare 
Part B premiums on behalf of FBDEs.  State Medicaid programs may 
collect FFP for such payments made on behalf of FBDEs who are actual 
or deemed recipients4 of cash assistance, including SSI, State 
Supplementary Payments, and Temporary Assistance for Needy Families 
(TANF).5  FFP is not available for Medicare Part B premiums paid on 
behalf of FBDEs who are not recipients of cash assistance.     
See Appendix A for a table summarizing the categories of dual eligibles 
and the Medicare cost-sharing that State Medicaid programs pay for these 
beneficiaries. 
 
3 Examples of  optional coverage groups include medically  needy individuals or  
individuals with special income levels who are institutionalized or participating in  
home- and community-based  waiver  programs. 
4  Beneficiaries are deemed to be recipients of cash assistance pursuant to  various  
provisions of the Social Security Act (the Act).  For example, section 1619(b) of the Act 
states that an individual receiving SSI on the basis of disability or blindness may be 
deemed eligible for continued SSI recipient status and Medicaid when the individuals 
earnings (alone or in combination with  other income) make him/her ineligible for cash 
payments.  Federal regulations at 42 CFR   431.625(d)(2) summarize the various  
deeming provisions of the Act.  
5 The Act,   1903(a)(1) and 1905(a).    
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   2 
   
   
Supplemental Security Income and State Supplementary  
Payments   
Established in 1972, SSI is a Federal income-supplement program  funded 
by general tax revenues.6  The SSI program was meant to replace three 
State-operated, federally assisted welfare programs that then existed 
Old-Age Assistance, Aid to the Blind, and Aid to the Permanently and 
Totally Disabledwith a new wholly Federal program of supplemental 
income.7  SSI continues to provide cash to meet basic needs for eligible 
aged, blind, and disabled individuals.  The SSI program also allows States 
to provide supplements to Federal SSI payments to help individuals meet 
their needs.8  These supplements are called State Supplementary 
Payments.  They can be made to SSI recipients (or those who would, but 
for their income, be eligible for SSI) as cash payments on a regular basis 
(at least quarterly) in an amount based on the need or income of an 
individual or couple.9    
There are two types of State Supplementary Payments:  mandatory and 
optional. States are required to make certain mandatory payments to 
maintain their eligibility to participate in Medicaid.10  States may also opt 
to make payments to individuals whose needs are not met by their income  
and who (1) are receiving SSI payments or (2) would, but for their 
income, be eligible to receive SSI payments.11 Forty-four States currently 
make optional State Supplementary Payments to qualifying individuals; 
the amount each individual receives is determined by the State.12     
States that participate in State Supplementary Payments may either 
contract with the Social Security Administration (SSA) to administer the 
payments, in which case SSA is paid by the State to operate the program, 
or States may make State Supplementary Payments directly to qualifying 
 
6 Social Security Amendments of 1972, P.L. No. 92-603, Title III (Oct. 30, 1972). 
7 Senate Report  92-1230, p. 75; Social Security Administration, 2011 Annual Report  of 
 
the SSI Program (Annual  Report),  III. 

8  Ibid., p. 277. 

9 The Act   1616(a); 20 CFR 416.2001(a). 

10 Social Security Administration, State Assistance Programs for SSI Recipients, 

January 2011Guide to Reading the State Summaries, January  2011.  Accessed at 
 
http://www.ssa.gov/policy/docs/progdesc/ssi_st_asst/2011/guide.html on August 17, 

2012. 

11 To qualify for SSI, a person  must be age 65 or  older, blind, or  disabled; be a 
U.S. citizen or national or one  of certain categories of aliens; and have limited income  
and resources.  States can choose to make State Supplementary Payments to  individuals 
who would qualify for SSI except that their income is too high.  Social Security 
Administration, Understanding  Supplemental Security Income SSI Eligibility 
Requirements2013 Edition. Accessed at http://www.ssa.gov/ssi/text-eligibility-
ussi.htm on September 17, 2013.  
12 Ibid. 
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   3 
   
   
individuals.  Because optional State Supplementary Payments are funded 
by State revenues, States have a great deal of flexibility in defining who 
receives these payments and the amounts paid.   
Buy-In Agreements 
Section 1843 of the Act allows a State Medicaid program to enter into an 
arrangement, known as a buy-in agreement, with the Centers for 
Medicare & Medicaid Services (CMS).  A buy-in agreement is the 
mechanism by which a participating  State Medicaid program can enroll 
dual eligibles in Medicare Part B and pay the monthly premiums on their 
behalf.13   To be eligible for enrollment in a Part B buy-in agreement, an 
individual must be eligible to receive Medicaid under the States plan, or 
be a QMB or an SLMB. 
Buy-in agreements are implemented through an automated exchange of 
data among the States, CMS, and SSA, which share responsibility for 
identifying eligible individuals and submitting data updates on those 
individuals.14   The participants in the data exchange use codes that group 
individuals into eligibility categories and identify which groups Part B 
premiums are eligible for FFP.  CMS maintains a master enrollment file of 
Medicare eligibility information that includes updates from States and 
SSA.15    Table 1 shows the codes that States use to identify groups of dual 
eligibles in the monthly updates, and Table 2 shows the SSI status codes 
that CMS uses for adding or updating dual eligibles. 
Table 1: Buy-in Eligibility Codes 
Code*  Eligibility  Category  
A  Aged recipient of Federal SSI payments  
B  Blind recipient of Federal SSI payments 
C  Entitled under Part A of Title IV  
D  Disabled recipient of Federal SSI payments  
L  Specified Low-Income Medicare Beneficiary (SLMB) 
M  Entitled to medical assistance only, noncash recipient 
P  Qualified Medicare Beneficiary  (QMB) 
Z  Deemed categorically needy 
*In addition to these federally defined codes, States  can also define their own eligibility codes to 

identify  additional eligibility categories. 

Source: CMS, State Buy-In Manual, Pub. 100-24, ch. 5,  540, 2003. 

 
   
 
13 States also can pay Part  A premiums on behalf of  QMBs as part  of a buy-in agreement.
  
14 CMS, State Buy-In Manual, Pub. 24, ch. 4,   400.  CMS revised and transferred several
  
chapters of the State Buy-In Manual from the paper version (Pub. 24) to an Internet-only 
 
version (Pub. 100-24).  Other  chapters remain in the paper  version.
  
15 Ibid. 

Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   4 
   
   
Table 2: SSI Status Codes 
Code  Eligibility  Category  
C  Conditionally  eligible for SSI  
Eligible for SSI and may or may not be receiving federally administered State 
E 
supplementary payments  
M  Special SSI payment for individuals engaged in substantial gainful activity   
Eligible for SSI and is receiving federally administered State Supplementary 
S 
Payments only   
Source: CMS, State Buy-In Manual, Pub. 100-24, ch. 5,  530, 2003. 
Audit of Iowa Cost-Sharing Payments and Claims for FFP 
During an audit of Iowas claims for FPP for Medicare cost-sharing 
payments made through the States buy-in agreement in FY 2011, the 
Office of Inspector General (OIG) found that Iowa was making a State 
Supplementary Payment of $1 per beneficiary per month to a group of 
approximately 41,000 FBDEs.16, 17  OIG found that Iowa made such 
payments in FY 2011, paid Part B premiums on behalf of individuals 
receiving these payments, and received FFP for the premium payments.  
The recipients of these $1 payments were not receiving any other cash 
assistance.  
Policy documents collected for the audit show that Iowa implemented the 
$1 payments for the sole purpose of allowing the State to claim FFP on 
payments of Medicare Part B premiums for these FBDEs.  These policy 
documents explicitly stated that the purpose of these payments is to 
provide a cash benefit to certain Medicaid recipients who do not qualify 
for other cash assistance benefits in order to allow the State to receive FFP  
for the Medicare premiums that would otherwise be paid with State 
funds.18    
The audit found that in FY 2011, Iowa may have spent a maximum of 
approximately $500,000 as a cumulative total of the $1 payments.19 In 
FY 2011, Iowa received an estimated $39 million in FFP for Part B 
premium payments for beneficiaries receiving the $1 payments.  This 
 
16  Within OIG, audits are conducted by the Office of Audit Services. 

17 In FY  2011, Iowa had a total of  77,874  dual eligibles.  CMS, Dual Eligible 

Enrollment as of July 1,  2011, Medicaid Managed Care Enrollment Report: Summary 

Statistics as of  July 1, 2011. 

18 See Iowa Administrative Bulletin  (IAB), Vol. 27, No. 5, p.  318  (Sept. 1, 2004); IAB, 

Vol. 28, No. 10, p. 749  (Nov. 9, 2005). 
19  This figure of $500,000 was calculated by multiplying  the 41,481 FBDEs by  their 
estimated State Supplementary Payments of  $12 per year, for a result  of $497,772.  The  
actual amount  that Iowa spent making the State Supplementary Payments  may be less, if  
some of the FBDEs did not receive a payment in every month  of FY  2011. 
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   5 
   
   
represents 60 percent of the $64.7 million that Iowa received in FFP for  
Medicaid payments of Part B premiums overall in FY 2011.20  
Iowas payments complied with Federal requirements; in October 2004, 
staff from SSA and CMS agreed that Iowas proposal to begin making the 
$1 payments was acceptable.21  Because Iowas $1 payments and claims  
for FFP based on those payments were legally appropriate, and because 
the objective of the audit was to identify inappropriate payments, OIG did 
not include these results in its audit report.22 Instead, OIG undertook an 
evaluation to determine the extent to which other States might similarly be 
shifting costs to the Federal Government.  
METHODOLOGY 
We reviewed the results of the OIG audit on Iowas claims for FFP for 
Medicare cost-sharing payments in FY 2011.  We sought to design an 
evaluation to determine the extent to which States might be shifting 
Medicaid costs to the Federal Government by making small State 
Supplementary Payments.  We researched the following areas:   
 	  the types of Medicare cost-sharing that Medicaid can pay for dual 
eligibles;  
 	  the data States are required to submit on the dual eligibles for 
whom they pay Medicare cost-sharing; and 
 	  the safeguards surrounding State-reported data on dual eligibles 
and cost-sharing. 
We also interviewed staff from the CMS Office of Financial Management 
to better understand buy-in agreements and the data available on dual 
eligibles for whom States pay Medicare cost-sharing. 
 
20  We  did not determine the extent to  which, prior to  FY 2011, Iowa had  been making  
$1 State Supplementary Payments and receiving FFP for Part B  premiums paid on  behalf  
of those recipients.  In its August 2004 letter to the regional commissioner for SSA, Iowa 
stated its intention to  begin making the $1  State Supplementary Payments retroactive to 
October 1, 2003.   
21  In October 2004, Iowa received approval from SSA and CMS to begin making the  
$1 payments.  A teleconference was held in December 2003, at which the Iowa 
Department of Human Services, SSA central and regional  offices, and CMS staff all  
agreed that the payment amounts and eligibility criteria proposed were acceptable. Letter 
from Ramona Schuenmeyer, Acting Regional Commissioner, SSA, to Ann Wiebers, 
Division Administrator, Iowa Department  of Human Services, dated October  5, 2004.  
22 OIG,  Iowa Did Not Properly Pay Some Medicare Part A and Part  B Deductibles and  
Coinsurance (A-07-12-03178), November  2012. 
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   6 
   
   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
   
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   7 
   
   
FINDINGS 
Although not unlawful, Iowas $1 State Supplementary 
Payments were designed to maximize FFP   
When the SSI program was established in 1972,23 it was envisioned as a 
basic national income maintenance program for the aged, blind, and 
disabled,24 designed to ensure that these individuals would no longer have 
to subsist on incomes below the poverty level.25  The SSI program allows 
States to provide supplements to Federal SSI paymentsState 
Supplementary Paymentsto further help individuals meet their needs.26   
SSAs 2011 Annual Report on the SSI program states:  In designing the 
SSI program, Congress recognized that States, in many instances, may 
want to provide a higher level of income maintenance than that provided 
by the Federal program.27    
Section 1905(a) of the Act allows States that provide such income  
maintenance through State Supplementary Payments to FBDEs to claim  
FFP for Medicaid payments of Medicare Part B premiums made on behalf 
of those beneficiaries. However,  if an FBDE does not receive cash 
assistance from the State, the State cannot claim FFP for Medicaid 
payments of Medicare Part B premiums  made on that beneficiarys behalf.   
Iowa has implemented a State Supplementary Payment for the express 
purpose of obtaining FFP for the States payment of Medicare Part B 
premiums already being paid by its Medicaid program; in FY 2011, Iowa 
obtained $39 millionan amount that otherwise would have been paid by  
the Statein FFP for beneficiaries receiving the $1 payments.  Given that 
the payments amount to $12 per year per beneficiary, they have little effect 
on the income level of the recipients.  The SSI program was intended to 
ensure that recipients would no longer have to subsist on incomes below 
the poverty level; however, these payments exist for the sole purpose of 
maximizing Iowas receipt of FFP.  
   
 
23 Social Security Amendments of 1972, P.L. NO. 92-603, Title III (Oct. 30, 1972). 

24 Senate Report  92-1230, p. 384. 

25 House Committee on Ways and Means,  1996 Green Book, p. 258. 

26  Ibid., p. 277. 

27  Annual Report,  III. 

Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   8 
   
   
Detailed Medicaid eligibility data necessary to evaluate 
whether other States have shifted costs similarly to 
Iowa are not available for all States 
In their data updates to CMS on individuals eligible for Medicaid 
payments of Medicare cost-sharing, States are not required to submit 
codes identifying why every dual eligibles Part B premiums are eligible 
for FFP.  There is no code in use by all States that specifically identifies 
beneficiaries receiving State Supplementary Payments, which is the 
population that would potentially be affected by Iowas cost-shifting 
strategy.  In States in which SSA  administers the State Supplementary 
Payment program, there are CMS data that identify beneficiaries receiving 
State Supplementary Payments.  However, these data represent only a 
fraction of the dual eligible population that could receive State 
Supplementary Payments.  To conduct a multi-State evaluation identifying 
the extent to which States are shifting the Part B premium costs for these 
beneficiaries to the Federal government would require detailed 
information on every dual eligible indicating why the States payments of 
Part B premiums were eligible for FFP.   
   
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   9 
   
   
CONCLUSION AND RECOMMENDATIONS 
The $1 State Supplementary Payments that Iowa made allowed the State 
to claim $39 million in FFP in FY 2011 that it would not otherwise have 
received. In essence, Iowa found a way to legally shift costs from the 
State to the Federal Government without a significant State contribution.  
Other States may be making similarly small State Supplementary 
Payments to accomplish similar cost-shifting.  However, it is not possible 
to systematically evaluate the extent to which such cost-shifting occurs, as 
the necessary data are not available on a national basis.   
We recommend that CMS:  
Seek legislative change to prevent States from using State 
Supplementary Payments to shift Medicare Part B premium 
costs for FBDEs to the Federal Government    
A legislative change could prohibit State Supplementary Payments for the 
sole purpose of creating eligibility for FFP, thereby preventing States from  
shifting costs for Medicare Part B premiums to the Federal Government 
without a significant financial contribution from the State for the purpose 
of supplementing beneficiaries incomes. 
Require States to submit more detailed eligibility information    
CMS should require States to submit more detailed eligibility information 
through the data exchange that implements a buy-in agreement.  This may 
include requiring those States without federally administered State 
Supplementary Payments to submit a code indicating which group of dual 
eligibles receives State Supplementary Payments.   
   
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   10 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its comments, CMS suggested that since the basis for FFP for Part B 
premiums is SSAs criteria for State Supplementary Payments, this report 
and its recommendations should be directed to SSA.  CMS also suggested 
that SSA shouldas an alternative to a legislative changerevise its 
regulatory criteria defining State Supplementary Payments to make them  
consistent with 42 CFR 435.232(b), which mandates guidelines for 
optional State Supplementary Payment programs for States that extend 
Medicaid eligibility to program recipients.  For the full text of CMSs 
comments, please see Appendix B. 
OIG has no authority to make recommendations to SSA, which is not part 
of the Department of Health and Human Services.  Furthermore, our 
finding about Iowas payment of a $1 State Supplementary Payment for 
the sole purpose of receiving FFP involves provisions of Title 19 of the 
Act, for which CMS has responsibility.  Specifically, section 1905(a) of 
the Act allows States to receive FFP  for the payment of Part B premiums  
on behalf of FBDEs who receive only State Supplementary Payments, and 
section 1905(j) of the Act defines State Supplementary Payments for this 
purpose. We reiterate our recommendation for CMS to seek a legislative 
change. CMS could accomplish this by proposing an amendment to 
sections 1905(a) and/or 1905(j) that would require States to satisfy certain 
additional criteria to receive FFP for payment of Part B premiums on 
behalf of FBDEs who receive only State Supplementary Payments.   
 
   
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   11 
   
   
APPENDIX A 
State Medicaid Programs Cost-Sharing by Type of Dual 
Eligible  
Medicare 
Deductibles  Part A  Part B 
Category of Beneficiary  
and  Premiums  Premiums 
Coinsurance 
Entitled to Medicare Part A and/or Part B; 
eligible for full Medicaid benefits; recipient 
(actual or deemed) of money assistance, 
Conditional*  
including Social Security Income (SSI), 
Full-Benefit  Federal 
State Supplementary Payments, and  Optional  
Dual  Financial  Not 
Temporary Assistance to  Needy Families  FFP 
Eligibles  Participation  allowed 
(TANF); not a Qualified Medicare  available  
(FBDE)   (FFP) 
Beneficiary (QMB), Specified Low-Income 
(there are  available  
Medicare Beneficiary (SLMB), Qualified 
two 
Disabled and Working Individual (QDWI),  
categories) 
or Qualifying Individual (QI). 
Optional  
All other FBDEs (i.e., not actual or  Conditional*   Not 
FFP not 
deemed recipient of money assistance)  FFP available   allowed 
available  
Entitled to Medicare Part A; income 
 100 percent of Federal Poverty Level  Required   Required  
Required**  
QMB Only   (FPL); resources  3x limit for SSI  FFP  FFP 
FFP available  
eligibility; not otherwise eligible for  available   available  
Medicaid  
Required   Required  
QMBs who are eligible for coverage of  Required**  
QMB Plus   FFP  FFP 
Medicaid services   FFP available  
available   available  
Entitled to Medicare Part A; income 
Required  
> 100 percent of FPL, but < 120 percent of  Not 
SLMB Only   Not allowed  FFP 
FPL; resources  3x limit for SSI eligibility;  allowed 
available  
not otherwise eligible for Medicaid  
Required  
SLMBs who are eligible for coverage of  Conditional*   Not 
SLMB Plus  FFP 
Medicaid services   FFP available   allowed 
available  
Lost Medicare Part A benefits due to 
return to work; eligible to purchase  Required  
Not 
QDWI  Medicare Part A; income  200 percent of   Not allowed  FFP 
allowed 
FPL; resources  2x limit for SSI eligibility;  available  
not otherwise eligible for Medicaid  
Entitled to Medicare Part A; income 
Required  
 120 percent of FPL, but < 135 percent of  Not 
QI  Not allowed  FFP 
FPL; resources  3x limit for SSI eligibility;  allowed 
available  
not otherwise eligible for Medicaid  
* Medicaid pays Medicare deductibles and coinsurance insofar as  it pays for Medicaid services to the 
extent that the Medicaid rate exceeds the Medicare rate. 
** A State may elect in its Plan not to pay Medicare deductibles and coinsurance when the Medicaid 
rate does not exceed the Medicare rate.  
Federal Medicaid Assistance Percentage equals 100 percent.  
Source:  Social Security Act,  1902(a)(10)(E), 1903(a)(1), 1905(a), 1905(p)(1) and (3),  1905(s); 42 CFR  431.625(d).  
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   12 
  APPENDIX 8 
Agency Comments 
DEPARTMF\.'T OF HEALTH & IJLMA~ SERVICFS 
Administrator 
WIISilir><;JIO", 0C 20201 
l>ATE:  MAR  11 201~ 
TO:  Daniel R. Lcvin,<m 
ln:<p<'Cl<'f Gen<:ral 
fROM:  Maril):J1 ! M ~tnn 
,.\Jminiqrnfilr 
S{ lllJECr:  Ollie.: of lnspntor t il'nvml tOI(i 1 Drali R~.:port Iowa Has Shifted !vk'tlic.arc 
( \1stSharing t(>r Ilual l:1 igibks to the Feder ;tl (jovcmment (0EI07-l3-0CI480) 
The Centers for '-1edicarc & Mcdtcaid "crv!C<"> 1C  '.ISJ ha' renived and revic\\~d the drati report 
rc!ercnced abo\ c.  We thank OJ< i l<r 'baring this dtali rqxll1 wah u..<;. 
"!he rep<.m dir<cts it~ recommcm!ati.>tb at CMS and n:comtnemls n statutO!)' change. However. as 
the report notes. the Social St~unt) Admini>tration i SSAJ mnfim1ed in 2003 that the $1 
supplement 'atbtll-clthc rclc\'ant SS,.\ criteria l()r st.!lc supplements, and as it is SSA criteria on 
"hich CMS bases its Federal Hn.ttr<.tall'articipatiorHi>r-l'art-B-premiums authority under 42 CFR 
4} 1.625<d), '"' bclic'c that th~ n:port 'hmdd be dm:ning its recommendations at SSA and the 
statute undcrl!llll: SSXs detcrnmut;on 
A separate McJ1caid rtgulator: P''"""'n. .;2 CFR 115.~ ;~~lh). mandates guidelines tlxopti{)nal 
>l:ltc supplementary pa:mmt pm~::r:um i<lf state' that t:..tc-nd ..-~11.:-gorical Medicaid eligibility to 
program rec ipicms.  1 his prmisiPil pn>\ rd.:s a dirtl:r,nt and mnre exacting definition of a state 
supplcmcnl!lry payment (e.g .. pa;. m~.nt must be in an arnutlltll'qual to the ditlcrencc between the 
income standard for the supplement a11d :m indivtdual's wutH;tblc income, which contrn~ts with 
lo\va s standard less SI payment prof~falll)  It may be possihk' that harmoni:~.ation ofSSA 
regulator) criteria with 42 C.F.R lJ' 2.1.2tl:1). irbtcaJ of a 't.J!Uhll) amendment. may offer a 
solution to addrcs~ this situatlon. 
As always. C \IS appr<ciatc> the ''PP<">rtllllll> to corHm<.'nt ''" thc>e reports. and v.c lo()k forward to 
v.orking with (JJ(i <ln this and th~ ''~uc' "'the lutc:n.: 
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)  13   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Brian T.  Whitley, Regional 
Inspector General for Evaluation and Inspections in the Kansas City 
regional office.  
Michala Walker served as the team leader for this study.  Other Office of 
Evaluation and Inspections staff from the Kansas City regional office who 
conducted the study include Teresa Dailey and Rae Hutchison.  Central 
office staff who provided support include Heather Barton, 
Michael I. Joseph, and Christine Moritz. 
 
Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government (OEI-07-13-00480)   14 
   
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The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
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