Medicaid and SCHIP: States' Premium and Cost Sharing Requirements for Beneficiaries
Published: 2004-03-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over 50 million low-income adults and children receive health insurance coverage through Medicaid and the State Children's Health Insurance Program (SCHIP). Federal law allows states to require beneficiary contributions, such as premiums and cost sharing (coinsurance, copayments, and deductibles), for at least some Medicaid and SCHIP beneficiaries. GAO was asked to (1) identify and compare states' Medicaid and SCHIP beneficiary contribution requirements for children, (2) identify states' Medicaid beneficiary contribution requirements for adults, and (3) determine the extent to which states' Medicaid and SCHIP beneficiary contribution requirements have changed since 2001. GAO surveyed Medicaid and SCHIP program offices in the 50 states and the District of Columbia about their beneficiary contribution requirements as of August 2003, including their requirements for specific population groups and for six selected services, such as inpatient hospital, physician services, and prescription drugs. For each population group covered, states were asked to indicate the portion of the group charged beneficiary contributions by selecting "all," "most," "some," or "none." GAO also interviewed officials of the Centers for Medicare & Medicaid Services (CMS) regarding the Medicaid and SCHIP statutory requirements for beneficiary contributions.
section_title: What GAO Found
paragraphs: GAO's survey found that children were more likely to be subject to beneficiary contributions, specifically premiums and cost sharing, in SCHIP than in Medicaid. Overall, 26 states reported charging premiums for a portion of children--"some," "most," or "all"--in SCHIP, compared to 9 states in Medicaid. Twenty-five states charged cost sharing for some portion of children in SCHIP, compared to 6 states for Medicaid. States used copayments as the primary form of cost sharing for children. Most states that reported charging cost sharing applied copayment requirements to the six health care services. Most states reported requiring beneficiary contributions from adults enrolled in Medicaid. Twenty-five states charged premiums, generally charging portions of certain populations, such as adults with disabilities. Over 40 states charged cost sharing to most, if not all, adults, including those with disabilities, noninstitutionalized elderly persons, and parents. Copayments were the predominate form of cost sharing. States most frequently reported copayments for prescription drugs and physician services. From the beginning of their 2001 state fiscal years through August 1, 2003, 34 states reported increasing and 10 states reported decreasing the amount of beneficiary contributions required in Medicaid, SCHIP, or both. For the 33 states that provided information on the amount of increases, premium increases to existing requirements ranged from $2 a month to $39 a month. Other states added new premium requirements, some of which were as much as several hundred dollars a month. In most instances, reported copayment increases were generally limited to $5 or less. GAO asked CMS officials to provide technical comments on the statutory and regulatory information on Medicaid and SCHIP beneficiary contributions, which were incorporated as appropriate.

section_title: Letter
paragraphs: Over 50 million low-income adults and children receive health insurance  coverage largely through two federal-state programs—Medicaid and the  State Children’s Health Insurance Program (SCHIP). Medicaid generally  covers low-income families and individuals who are aged or disabled,  while SCHIP provides health care coverage to children in families whose  incomes, while low, are above Medicaid’s eligibility requirements. Health  insurance often includes beneficiary contribution requirements of some  type, which require the insured individual to pay some portion of medical  expenses. The most common types of beneficiary contribution  requirements are premiums—a payment required for insurance coverage  for a given period of time—and cost sharing—an out-of-pocket payment  for part of the cost of services used by a beneficiary. Medicaid and SCHIP  limit the use of beneficiary contribution requirements. The Medicaid  statute limits the amount of the premiums that can be charged and  prohibits states from instituting cost sharing provisions for certain  categories of individuals, such as children under age 18 and pregnant  women. Under SCHIP, federal law caps the amount of beneficiary  contributions that can be charged for certain children and exempts  preventive services for certain children from any cost sharing. States must  seek authority from the federal government to waive these requirements to  implement beneficiary contributions beyond Medicaid and SCHIP limits.
Opinions differ over the extent to which beneficiary contributions are  appropriate and useful tools for managing health care utilization among  low-income populations.  Premiums are sometimes viewed as promoting  personal responsibility by having the beneficiary participate in the cost of  coverage.  Proponents of cost sharing believe that copayments can make  individuals more price-conscious consumers of health care services, which  may reduce the use of unnecessary services.  Others believe that cost  sharing requirements may limit service use, such as physician visits,  causing individuals to defer necessary treatment, resulting in more severe  conditions and potentially higher expenses. Concerns have been  expressed that, as states seek to increase the use of beneficiary  contributions for Medicaid, SCHIP, or both programs, eligible individuals  may reduce their program participation or use of services.
You asked us to (1) identify and compare states’ Medicaid and SCHIP  beneficiary contribution requirements for children, (2) identify states’  Medicaid beneficiary contribution requirements for adults, and (3)  determine the extent to which states’ Medicaid and SCHIP beneficiary  contribution requirements have changed since 2001.
To identify the beneficiary contribution requirements in states’ Medicaid  and SCHIP programs, we surveyed offices of each program in the 50 states  and the District of Columbia. The survey asked which beneficiary  contribution requirements existed in the state as of August 1, 2003, the  populations subject to each requirement, and changes made to the  requirements since the beginning of the state’s 2001 fiscal year. For  Medicaid, states were asked to report on requirements for nine population  groups—children, children with special needs, pregnant women,  individuals in nursing homes and institutions, noninstitutionalized elderly  persons, adults with disabilities, medically needy, parents, and any other  populations defined by the state. We divided these categories into two  groups—children and adults. For SCHIP, states were asked to report on  requirements for children, children with special needs, and any other  populations defined by the state. For each population group covered, such  as children or individuals in nursing homes, the state was asked to indicate  the portion of the group charged each of the four types of beneficiary  contributions (premiums, copayments, coinsurance, and deductibles) by  selecting “all,” “most,” “some,” or “none.” States were also asked to  indicate if their Medicaid or SCHIP program did not cover a specific  population. The survey asked states about their cost sharing requirements  for six selected services (inpatient hospital, outpatient hospital, physician  services, prescription drugs, nonemergency use of the emergency room  (ER), and dental). In addition to their survey responses, states submitted  documentation of the amounts of their beneficiary contribution  requirements. We corroborated survey responses with documentation  provided by states and other available data on states’ Medicaid and SCHIP  programs. We also contacted officials from the Centers for Medicare &  Medicaid Services (CMS), the agency within the Department of Health and  Human Services (HHS) that oversees states’ Medicaid and SCHIP  programs, regarding the Medicaid and SCHIP statutory requirements for  beneficiary contributions. We performed our work from July 2003 through  March 2004 in accordance with generally accepted government auditing  standards.
subsections: section_title: Background
paragraphs: Health insurance coverage often includes beneficiary contributions, which  require an insured individual to pay some portion of medical expenses.  The medical expenses charged to an individual—particularly for certain  types of beneficiary contributions—can vary depending on the amount and  type of services used. The two most common forms of beneficiary  contribution requirements—health insurance premiums and cost  sharing—differ in the method and frequency with which they are applied.  Premiums are charged at regular intervals, such as monthly, and generally  the same amount is charged each time. In contrast, cost sharing charges  can vary depending on the amount and type of services used. There are  three types of cost sharing arrangements: coinsurance, copayments, and  deductibles (see table 1).
Among low-income populations, approximately 40 percent of children and  nondisabled adults had at least one nonpreventive physician visit during  2000. Among these individuals, children averaged close to three  nonpreventive physician visits per year, while nondisabled adults averaged  fewer than five visits per year. Similarly, for individuals who filled at least  one prescription, the average number of filled prescriptions ranged from  approximately 4 per year for children to over 32 per year for adults with  disabilities. (See app. I for more information on beneficiary service  utilization.)
Medicaid and SCHIP generally limit the use of beneficiary contribution  requirements. The following sections contain specific information about  the programs and the federal laws pertaining to their use of beneficiary  contributions.
subsections: section_title: Medicaid
paragraphs: Established in 1965, Medicaid is a joint federal-state entitlement program  that finances health care coverage for certain low-income families,  children, pregnant women, and individuals who are aged or disabled. In  fiscal year 2001, there were more than 46 million Medicaid enrollees, over  half of whom were children, and federal and state expenditures totaled  $228 billion. Medicaid eligibility is based in part on family income and  assets; states set their eligibility criteria within broad federal guidelines.  Eligibility criteria for each state’s Medicaid program are outlined in a CMS- approved state plan.
Medicaid allows states to require certain beneficiaries to contribute to the  cost of their coverage by charging premiums and requiring cost sharing.  The populations that can be required to make beneficiary contributions  under federal law differ depending on the type of beneficiary  contribution—premiums or cost sharing—and the law places limits on the  amounts of the contributions states can require. Federal law generally bars  states from requiring beneficiary contributions of certain populations, but  exceptions do exist. Additionally, states may seek federal approval to  waive certain provisions regarding beneficiary contributions.
subsections: section_title: Federal Law Governing Premiums in Medicaid
paragraphs: States are prohibited from requiring premiums from certain low-income  individuals within certain groups, including children, pregnant women,  individuals in families with dependent children, individuals with  disabilities, and elderly persons, but exceptions exist. Specifically, in  Medicaid, the law allows states to require premiums from certain  populations, such as certain working individuals with disabilities and  families. (See table 2 for examples of these exceptions.) Additionally,  states are allowed to charge premiums to medically needy individuals— generally, people who fall into one of the eligibility coverage groups  indicated above, but who incur medical expenses such that their income,  less these expenses, makes them eligible for Medicaid. If states require  premiums for medically needy individuals, the regulations specify that the  premiums be assessed on a sliding scale, from $1 to $19 per person per  month, on the basis of their family’s total gross income.
Federal law prohibits states from applying cost sharing requirements for  certain individuals and certain services. Specifically, cost sharing may not  be charged for categorically and medically needy children under 18 years  of age, and pregnant women, for services related to the pregnancy or to  conditions that could complicate the pregnancy. Additionally, cost sharing  may not be charged for the categorically and medically needy for    services furnished to individuals residing in a nursing home or other  institution, who were required to spend most of their income for medical  care;    services furnished to individuals receiving hospice care;    emergency services; and  family planning services and supplies.
States may require nominal copayments, coinsurance, or deductibles  within federal limits from other beneficiaries or for other services (see  table 3). Beneficiaries may be charged only one type of cost sharing per  service. Providers may collect cost sharing amounts from beneficiaries  and generally are not to be reimbursed by the state if they are  unsuccessful in collecting cost sharing from beneficiaries. Providers  generally may not deny services if beneficiaries are unable to pay cost  sharing amounts.
States must seek permission from the federal government to charge  premiums or cost sharing beyond what is allowed under Medicaid. Under  section 1115 of the Social Security Act, the Secretary of Health and Human  Services has broad authority to approve demonstration projects that he  determines are likely to promote Medicaid objectives. The Secretary may  waive certain provisions of the statute if the Secretary finds it necessary  for the performance of the experimental, pilot, or demonstration projects.  Section 1115 waivers have been used to provide coverage to individuals  not normally eligible for Medicaid—or to expand coverage to those who  are eligible under Medicaid but are not included in the scope of the state’s  plan. Beneficiary contribution requirements for individuals who become  eligible for Medicaid through an 1115 waiver may be approved at the  Secretary’s discretion, subject to some limitations. CMS reviews states’  proposed beneficiary contribution requirements for 1115 waivers as part  of the waiver approval process and specifies any terms and conditions that  a state must adhere to as a condition of the waiver approval.
According to CMS, because the provisions of Medicaid law related to  limitations on beneficiary contributions are applicable only to persons  eligible under the state plan, specific waivers of the beneficiary  contribution provisions are not always necessary. Waivers are necessary  when states want to charge premiums or cost sharing amounts that are  generally prohibited under federal law for individuals who are already  covered under the state’s plan. As of February 2004, two states—Arkansas  and Vermont—have received approval to charge individuals premiums and  one state—Arizona—has received approval to charge individuals both  premiums and cost sharing.
For other populations, specific waivers of requirements regarding  beneficiary contributions are not necessary. In particular, states are  permitted to charge beneficiary contributions in excess of what would  otherwise be permitted for populations who, without a waiver, would not  be eligible for coverage under the state’s Medicaid plan. For these  populations, states are permitted to end coverage for beneficiaries who  fail to pay premiums or deny services to those who fail to pay cost sharing.  As of February 2004, of the 22 states with statewide 1115 waivers, 21 states  covered populations in their Medicaid program for which the Medicaid  statutory provisions regarding limits on beneficiary contributions are not  applicable.
In 1997, Congress established SCHIP, which provides health care coverage  to low-income, uninsured children living in families whose incomes  exceed the states’ eligibility limits for Medicaid. SCHIP covered over 5.8  million children during fiscal year 2003, and federal and state  expenditures were approximately $6.1 billion. States have three options in  designing SCHIP—expand their Medicaid program, develop a separate  child health program that functions independently of Medicaid, or  combine these two approaches.
The approach that a state chooses affects its beneficiary contribution  policies. A state that uses its SCHIP allocation to expand Medicaid must  follow Medicaid rules—thus SCHIP beneficiaries are subject to the state’s  Medicaid policies with regard to premiums and cost sharing. For a state  with a separate SCHIP program, federal law limits the premium and cost  sharing amounts it may charge. States with a separate SCHIP program are  prohibited from requiring premium or cost sharing contributions together  totaling more than 5 percent of family income. States with separate  SCHIP programs are also prohibited from charging any cost sharing on  preventive services. In addition, for children in families with income at or  below 150 percent of the FPL, there are specific limits on the amounts of  premiums and cost sharing that states may charge in a separate SCHIP  program (see table 4). For these individuals, federal regulation also  prohibits states from requiring more than one type of cost sharing charge  on each service. Additionally, regardless of family income or a state’s  SCHIP design, states are prohibited from charging premiums or cost  sharing to American Indians or Alaska Natives.
Similar to Medicaid, to require premiums or cost sharing in SCHIP beyond  what is permissible under federal law, states must seek waivers from the  Secretary of Health and Human Services. In establishing SCHIP, Congress  extended the applicability of section 1115 of the Social Security Act to  SCHIP “in the same manner” as it applies to states under Medicaid.  According to CMS, six states with SCHIP programs that are Medicaid  expansions have received section 1115 waivers to require beneficiary  contributions that would be allowable in a separate SCHIP program. In  some cases, 1115 waiver approvals have allowed states to increase cost  sharing in their premium assistance programs—programs in which the  state helps individuals gain access to available employer-based insurance  by using SCHIP funds to pay for part of an individual’s share of the cost of  coverage. Specifically, two states—Illinois and Oregon—have waivers to  allow for increased cost sharing for children in such premium assistance  programs.
section_title: Children Were More Likely to Be Subject to Beneficiary Contributions in SCHIP than in Medicaid
paragraphs: In response to our survey, states reported that children were more likely  to be subject to premiums and cost sharing in SCHIP than in Medicaid.  Overall, 26 states charged premiums for some portion of children— “some,” “most,” or “all” in SCHIP, and 9 states charged premiums, through  the use of 1115 waivers, for some portion of children in Medicaid. Twenty- five states charged cost sharing for children in SCHIP compared to six  states for Medicaid. Most states that reported charging cost sharing  applied copayment requirements to the six services we reviewed. In  addition, the amounts of beneficiary contributions required for children  varied on the basis of factors such as family income.
subsections: section_title: Premiums
paragraphs: Twenty-six states reported charging premiums for some portion of  children in SCHIP, compared to 9 states for Medicaid: 5 states charged  premiums for some portion of children in both Medicaid and SCHIP, 21  states charged premiums for SCHIP children only, and 4 states charged  premiums for Medicaid children only. (See table 5.)
Although federal law generally prohibits states from charging premiums  for children in Medicaid, some states reported having received waivers  from the Secretary of Health and Human Services granting them authority  to do so. Of the nine states charging premiums for children in Medicaid,  six states required premiums for children included in their 1115 waiver  populations only. For example, Rhode Island charged premiums only for  children with incomes between 150 and 250 percent of the FPL, all of  whom became Medicaid eligible through its 1115 waiver. The remaining  three states—Arizona, Arkansas, and Vermont—also had 1115 waivers but  had received approval to waive provisions related to premium  requirements. Thus, they were allowed to charge premiums for children.
States generally are not allowed to charge premiums for children in their  SCHIP Medicaid expansion programs, as these programs follow the law  governing the Medicaid program. According to CMS, six states have  received SCHIP 1115 waivers to require beneficiary contributions for  children in their SCHIP Medicaid expansion programs. Three of those  states—Missouri, Rhode Island and Wisconsin—used their 1115 waiver to  implement premiums for some portion of their SCHIP beneficiaries. The  remaining three states—Arkansas, New Mexico and Ohio—did not charge  premiums for children in their SCHIP program.
Among states with premium requirements for children, SCHIP programs  often reported charging premiums for a larger proportion of their children  than did Medicaid programs (see app. II). Ten of the 26 states charging  premiums for children in SCHIP required them for all or most of their  SCHIP children. In contrast, all nine of the states with premiums for  children in Medicaid required them for only some of the population.
The amount of premiums required for Medicaid and SCHIP children varied  across and within states. (See app. III for the range in premiums for all  states.) Some states reported varying premium amounts on the basis of  beneficiaries’ family income, and some states reported capping the amount  of premiums a beneficiary could be subject to in a given year. (See table  6.) The following are examples of the variation in states’ premium  requirements.
In Vermont, Medicaid premiums were assessed for eligible children in  families with incomes above 185 percent of the FPL, and amounts varied  from $25 to $35 a month depending on the family income.
Medicaid programs in Rhode Island and Minnesota limited total yearly  premium amounts to 4 percent and 7.5 percent of annual family income,  respectively.  In SCHIP, monthly premiums in Washington were $10 per child, with a cap  of $360 per family per year. In New York, monthly premiums for families  with incomes between 133 and 185 percent of the FPL were $9 per eligible  child with a cap of $27 per family per month; families with incomes above  185 were charged $15 per eligible child with a cap of $45 per family per  month.
section_title: Cost Sharing
paragraphs: In requiring cost sharing amounts, states reported relying on copayments  and generally did not report using the other two main types of cost sharing  requirements—coinsurance and deductibles. Twenty-five states charged  copayments for some portion of children in SCHIP, while six states  charged copayments for some portion of children in Medicaid. (See table  7.) With regard to coinsurance, three states charged coinsurance in  Medicaid; Alaska and Missouri charged only children aged 18 or over, and  Arkansas charged only children in its 1115 waiver program. Additionally,  four states charged coinsurance in SCHIP (Alaska, Arkansas, Colorado,  and Utah). None of the states reported using deductibles as a form of cost  sharing for children.
While federal law prohibits states from charging cost sharing for children  in Medicaid under age 18, some states require cost sharing to the extent it  is permissible under Medicaid provisions or through an 1115 waiver. For  the six states that charged copayments for some portion of Medicaid  children, Alaska’s, Missouri’s, and Wisconsin’s copayment requirements  applied to children age 18 or over, and Delaware reported charging  copayments for nonemergency transportation, requirements that are  permissible under federal law. Arkansas charged copayments only to  children in its state’s 1115 waiver population. Tennessee, whose entire  Medicaid program operates under an 1115 waiver, charged copayments to  children at or above the FPL.
With regard to cost sharing in SCHIP, six states obtained section 1115  waivers that allowed them to require beneficiary contributions from  children in their SCHIP Medicaid expansion programs. Four of the  states—Arkansas, Missouri, New Mexico and Wisconsin—used their 1115  waiver to implement copayments for some portion of their SCHIP  beneficiaries. The remaining two states—Ohio and Rhode Island—did not  charge copayments for children in their SCHIP programs. Among states  with copayment requirements for children, SCHIP programs were more  likely to charge a larger proportion of their population compared to  Medicaid (see app. IV).
Most states that reported charging cost sharing applied copayment  requirements to the six health care services that we considered. (See table  8.) In addition, the amount of cost sharing that states charged for the six  selected services varied by service and state. For example, in the Texas  SCHIP program, copayments varied on the basis of family income, ranging  from $2 to $10 per physician visit, and from $25 to $100 per inpatient  hospitalization. Across states with copayments for physician services,  copayment amounts ranged from $1 per visit in Missouri’s Medicaid  program and Wisconsin’s Medicaid and SCHIP programs to as high as $25  per visit in Tennessee’s Medicaid program. (See app. V.)
Some states varied cost sharing amounts for children on the basis of  family income. For example, in Virginia, SCHIP copayments for children in  families with income from 133 percent to below 150 percent of the FPL  were $2 per physician visit or per prescription and $5 for these services for  children in families with higher incomes. Of the six states that charged  cost sharing for children in Medicaid, only Tennessee capped cost sharing  amounts for children. In SCHIP, seven states set specific caps for cost  sharing amounts for a child in a given year. (See table 9.) For example,  SCHIP cost sharing was capped at $650 a year in Connecticut and $750 a  year in West Virginia.
section_title: For Adults in Medicaid, Nearly Half the States Assessed Premiums and a Majority Required Cost Sharing
paragraphs: Nearly half the states (25) reported assessing premiums for some adults  enrolled in Medicaid, and a majority of the states (43) reported requiring  cost sharing for some portion of adults, primarily in the form of  copayments. Overall, 45 states required some portion of adults to share in  the cost of their care by charging premiums, cost sharing, or both. (See fig.  1.) The states that required premiums generally did so on a limited basis,  targeting portions of particular population groups, such as certain adults  with disabilities. In contrast, the states with cost sharing requirements for  adults in Medicaid charged several population groups and a larger portion  of each group.
subsections: section_title: Premiums
paragraphs: Twenty-five states reported assessing premiums for some portion of their  adult Medicaid populations. States mainly charged premiums to adults  with disabilities (23 states) and parents (9 states), but a few states  charged premiums to other adults, such as pregnant women (4 states) and  noninstitutionalized elderly individuals (2 states). (See table 10.) (App. VI  contains details on the portion of the populations charged premiums in  each state.)
Generally, states are not permitted to require certain individuals to pay  premiums, including elderly persons, individuals with disabilities, and  pregnant women. However, certain exceptions exist, for example:    Four states (Hawaii, Minnesota, Rhode Island, and Vermont) reported  charging premiums to pregnant women through their states’ 1115 waiver  programs. Vermont had a waiver of the specific Medicaid provision  regarding premium requirements, while the other three states charged  pregnant women in their 1115 waiver programs. Hawaii, Rhode Island, and  Vermont charged premiums only to pregnant women with incomes  exceeding 185 percent of the FPL. In the fourth state, Minnesota, pregnant  women with incomes at or below 275 percent of the FPL could choose  whether to enroll in the state’s regular Medicaid program or the state’s  1115 waiver program. Only those enrolled in the 1115 waiver program  were charged premiums, and failure to pay the required premiums did not  result in the women’s disenrollment from the program.
As allowed under federal law, states may charge premiums in Medicaid to  certain individuals with disabilities, primarily those who are employed.  For example, Connecticut reported charging premiums to working  individuals with disabilities with incomes above 200 percent of the FPL.  These individuals were required to pay a monthly premium equivalent to  10 percent of their income that exceeded 200 percent of the FPL, minus  the amount the individuals or their spouses paid for any other health  insurance.
Premium amounts and requirements varied significantly across the 25  states. For example, in Massachusetts, monthly premiums ranged from $15  for families with incomes at the poverty level to over $928 for families with  incomes over 1,000 percent of the FPL. Maine charged premiums equal to  3 percent of families’ net incomes for eligible parents with incomes above  150 percent of the FPL. (See app. VII for the income thresholds and ranges  in amounts for premiums charged to adults in each state.) Twelve states  capped the amount of premiums that beneficiaries could be subject to in a  given year. For example, premiums for working individuals with  disabilities in Mississippi were capped at 5 percent of annual income, and  in Maine, premiums for some adults were capped at 3 percent of annual  income. (See table 11.)
section_title: Cost Sharing
paragraphs: Forty-three states reported requiring adult populations to share in the cost  of their care by charging copayments, coinsurance, or deductibles. (See  fig. 2.) All 43 states charged copayments for selected services to some  portion of adults. Nine of these states also charged coinsurance to some  portion of adults. Two of the 43 states—South Carolina and Wisconsin— required a deductible for elderly individuals who received pharmacy—but  no other—benefits from the states’ Medicaid program. For example, all  participants in South Carolina’s Medicaid pharmacy program were  required to pay a $500 deductible for prescription drugs.
Copayments were the predominate form of cost sharing for adults, with  states most frequently reporting copayments for adults with disabilities,  noninstitutionalized elderly persons, and parents. (See table 12 and app.  VIII.) Three states required copayments for pregnant women (Delaware,  Virginia, and Wisconsin) for services unrelated to the pregnancy. While  states generally are prohibited from charging cost sharing, including  copayments, for medical services for individuals residing in institutions,  Delaware considers nonemergency transportation to be an administrative  cost and thus was allowed to charge a $1 copayment.
The services for which states most frequently reported charging  copayments were physician services and prescription drugs. (See table  13.) Copayment amounts varied depending on the service and the state.  Across states, copayments ranged from $.50 to $25 for physician services  and prescription drugs. Across the services, most states that required  copayments for inpatient hospital services charged higher copayment  amounts for this service compared to the other five services. For example,  Montana’s copayment requirement for inpatient hospital services was $100  per stay, whereas its copayment requirements for the five remaining  services we reviewed were $1 to $5. (See app. IX for details on the cost  sharing amounts, including copayments, for adults, by state.)
In five states, the amount of cost sharing charged varied by income for  some portion of adults. For example, copayment amounts for physician  services in Utah varied from $3 or $5 per visit depending on income. Six  states reported placing a cap on the amount of cost sharing an individual  could be subject to in a given year. For example, in Pennsylvania cost  sharing expenses were capped at $90 per beneficiary every 6 months, and  in New Mexico cost sharing amounts for working individuals with  disabilities were capped at 3 to 5 percent a year depending on income.
section_title: Thirty-Four States Increased and Ten States Decreased the Amount of Beneficiary Contributions
paragraphs: From the beginning of their 2001 state fiscal years through August 1, 2003,  34 states reported increasing and 10 states reported decreasing the amount  of beneficiary contributions they required in Medicaid, SCHIP, or both.  We considered states to have increased beneficiary contribution  requirements if they either raised the amount of existing contributions or  instituted new contribution requirements for certain populations or  services. For children, 18 states increased the amount of beneficiary  contributions required in Medicaid, SCHIP, or both. For adults in  Medicaid, 30 states increased the amount of beneficiary contributions. For  the states that provided us information on the amount of beneficiary  contribution increases, premium increases to existing requirements  ranged from $2 a month to $39 a month. Other states added new premium  requirements, some of which were as much as several hundred dollars a  month. In contrast, states primarily increased copayment requirements by  $5 or less. For a small number of states, however, copayment increases  were more significant. New Hampshire SCHIP, for example, increased  copayments for ER visits from $25 to $50 per visit. While no states  reported decreasing their beneficiary contribution requirements for  children in Medicaid, five states decreased these requirements (premiums,  cost sharing, or both) for some portion of children in SCHIP, and five  other states decreased cost sharing requirements for some portion of  adults in Medicaid.
subsections: section_title: Eighteen States Increased and Five States Decreased Beneficiary Contributions for Children
paragraphs: From the beginning of their 2001 state fiscal years through August 1, 2003,  18 states reported increasing the amount of beneficiary contributions  required for children in Medicaid, SCHIP, or both. Beneficiary contribution  requirements were increased solely in Medicaid by 3 states, solely in  SCHIP by 12 states, and in both Medicaid and SCHIP by 3 states. During  the same period, 5 states decreased the amount of beneficiary  contributions required for children, with all decreases occurring in states’  SCHIP programs.
subsections: section_title: Premiums
paragraphs: Of the 9 states charging premiums for children in Medicaid, 5 reported  increases in premiums. Eleven of the 26 states charging premiums for  children in SCHIP also reported increased premium amounts. (See table  14.) Some states increased existing premiums, while other states added  new premiums, as shown in the following examples.
Vermont increased its existing Medicaid monthly premiums by $5 or $9 per  household depending on income; it increased its SCHIP monthly  premiums by $20 per household.
Premiums for newly covered populations of children were added in  Arizona’s Medicaid program and Maryland’s SCHIP program.
While no states decreased their premiums for children in Medicaid, two  states—Kansas and Utah—decreased SCHIP premium amounts. For  example, in February 2003, Kansas increased its monthly premium  amounts by $20 or $30, depending on family income, and then decreased  them by $10 or $15 dollars a few months later.
section_title: Cost Sharing
paragraphs: Delaware was the only state of the 6 states charging copayments for  children in Medicaid that reported increasing copayment amounts,  compared to 6 of the 25 states charging copayments for children in SCHIP  that reported increasing copayment amounts. (See table 15.) Delaware  added a copayment in Medicaid for nonemergency transportation services  in 2002. As described in the following, of the six states that reported  increasing SCHIP copayment requirements, two increased existing  copayments, and four both increased existing copayments and added new  copayment requirements.
Missouri and New Hampshire increased existing copayments. For  example, New Hampshire increased copayments for nonemergency use of  the ER from $25 per visit to $50 per visit and increased copayments for  physician visits from $5 to $10.
Kentucky, Texas, Utah, and West Virginia made multiple changes to their  copayment requirements. For example, Utah added a copayment for  dental services for children in families with incomes at or below 150  percent of the FPL and increased copayment amounts for children in  families with incomes above 150 percent of the FPL.
While no states reported decreasing copayment amounts for children in  Medicaid, four states did so for SCHIP. Colorado decreased the SCHIP  copayment for nonemergency use of the ER from $5 to $3, and Virginia  decreased copayments for vision exams from $25 to either $2 or $5,  depending on family income. In addition to decreasing copayment  amounts, the remaining two states, Texas and Utah, also increased  copayments during the same period. Texas’ changes to copayments varied  by service and family income. For example, the state decreased the  copayment for generic prescription drugs by $1 or $2 for certain SCHIP  beneficiaries, while increasing the copayment for brand name prescription  drugs by between $3 and $10 for these and other beneficiaries. Copayment  increases for other services in Texas ranged from $3 to $50. Utah  decreased SCHIP copayment amounts for children in families with  incomes at or below 150 percent of the FPL by $2 for physician services,  inpatient and outpatient hospital services, and ER services. The state also  increased copayments by $5 for physician and ER services, and $1 for  certain prescription drugs for children in families with incomes above 150  percent of the FPL.
While none of the states changed coinsurance requirements for children in  Medicaid, one of the four states (Alaska, Arkansas, Colorado, and Utah)  that charged coinsurance in SCHIP (Colorado) increased its coinsurance  requirements.
section_title: Thirty States Increased and Five States Decreased Beneficiary Contributions for Adults
paragraphs: Thirty states reported increasing the amount of beneficiary contributions  charged to some portion of adults in Medicaid. Most of these states (24)  increased copayment amounts; fewer states increased premiums (12) and  coinsurance amounts (2). Five states decreased beneficiary contribution  requirements, specifically with respect to cost sharing.
subsections: section_title: Premiums
paragraphs: From the beginning of their 2001 state fiscal years through August 1, 2003,  12 states reported increasing premiums for some portion of adults in  Medicaid. Half of these states increased the amount of existing premium  requirements. For example, Rhode Island increased monthly premiums  from approximately 3 percent of a family’s income to approximately 4  percent, and Vermont increased premiums for certain working  individuals with disabilities by $25 to $36 a month, depending on the  individual’s income and whether he or she had other insurance. The other  half of these states added new premium requirements. For example, in  January 2003, Arizona began covering working individuals with  disabilities, requiring the new beneficiaries to pay monthly premiums of  $15 or $25, depending on their income. In 2002, Washington added a  premium for certain families covered under transitional Medicaid  assistance. While a few states increased premiums for pregnant women,  adults with disabilities, and parents, no states increased premiums for  noninstitutionalized elderly beneficiaries. (See table 16.) No states  decreased premium amounts for adults during this period.
With regard to cost sharing, 25 states reported increasing requirements for  some portion of Medicaid adults. Twenty-two of these states increased  only copayment requirements, one state increased only coinsurance  requirements, and two states increased a combination of cost sharing  requirements. States’ cost sharing increases were generally targeted to  noninstitutionalized elderly persons, adults with disabilities, parents and  medically needy individuals. (See table 17.) Some states increased the  amount of existing cost sharing requirements, while other states added  cost sharing requirements for new services, as shown in the following  examples:    Both Nebraska and South Carolina increased prescription drug  copayments by $1, and Utah increased copayments for drugs by $2.  In North Dakota, copayments for inpatient hospitalization increased from  $50 to $75 per stay, and copayments for nonemergency visits to the ER  increased from $3 to $6 per visit.
Washington implemented a $3 copayment for nonemergency visits to the  ER in July 2002, while Oklahoma added $1 to $3 copayments for certain  services, such as outpatient hospital services.
During this same time period, five states reported decreasing copayment  or coinsurance requirements for portions of their adult population.  Specifically, Illinois, Indiana, Maryland, and Montana decreased  copayment amounts for some portion of adults. For example, both Illinois  and Maryland eliminated their $1 copayments for generic prescription  drugs. Only Arkansas decreased coinsurance requirements for adults. In  November 2001, the state decreased the coinsurance amount for inpatient  hospitalization for most adults by 12 percent, from 22 percent of the cost  of the first day of hospitalization to 10 percent.
section_title: Agency Comments
paragraphs: We asked CMS officials to verify the technical accuracy of the statutory  and regulatory information on Medicaid and SCHIP beneficiary  contributions presented in the background section of this report. These  officials provided technical comments, which we have incorporated as  appropriate. Because we did not evaluate CMS’s management of the  Medicaid and SCHIP programs, we did not ask CMS to comment on other  sections of this report.
As agreed with your offices, we plan no further distribution of this report  until 30 days from its date of issue, unless you publicly announce its  contents. At that time, we will send copies of this report to the  Administrator of the Centers for Medicare & Medicaid Services. We will  also make copies available to others upon request. In addition, the report  will be available at no charge on the GAO Web site at http://www.gao.gov.
Please call me on (202) 512-7118 or Carolyn Yocom on (202) 512-4931 if  you have questions about this report. Major contributors to this report are  listed in appendix X.
section_title: Appendix I: Service Utilization Rates for Low- Income Individuals
paragraphs: The medical expenses charged to an individual—particularly for cost  sharing provisions—can vary depending on the amount and type of  services used. The Medical Expenditure Panel Survey (MEPS) provides  data on individuals’ annual utilization of medical services. MEPS,  conducted by the Agency for Healthcare Research and Quality (AHRQ),  consists of four surveys, including the Household Component, which  provides nationally representative data and expenditures for the U.S.  civilian noninstitutionalized population. The MEPS Household Component  is a survey of individuals regarding their demographic characteristics,  health insurance coverage, and health care use. At the time of our analysis,  the 2000 version of the MEPS household component was the most recent  version with all of the necessary data available.
To determine service utilization for low-income populations, we included  individuals with incomes below 200 percent of the FPL. For this cohort,  we analyzed data for the following five population groups: (1) children  (defined as individuals under age 18), (2) pregnant women aged 18 and  over, (3) elderly persons—individuals aged 65 and over, (4) adults aged 18  to 64 with disabilities, and (5) nondisabled adults aged 18 to 64. For each  of these population groups, we calculated the proportion of the population  that used the following five services—(1) inpatient hospital, (2) outpatient  hospital, (3) physician, (4) prescription drug, and (5) dental—at least once  during the year (see table 18). For example, approximately 38 percent of  children had a nonpreventive physician visit during the year, and almost 79  percent of adults with disabilities visited the physician for nonpreventive  care.
For the individuals in each population group who used a service, we  calculated their average utilization rates for each of the selected services.  The utilization rates for each service, displayed in table 19, represent the  average use among individuals who used that particular service at least  once during the year. Additionally, since federal law generally does not  allow states to charge Medicaid cost sharing for emergency services, we  calculated the utilization rates for nonemergency physician and dental  visits by excluding visits classified in MEPS as emergencies. Similarly,  since SCHIP generally does not allow states with separate SCHIP  programs to require cost sharing for preventive medical or dental visits,  we excluded certain types of visits we considered as preventive, such as  well-child exams and dental visits for teeth cleaning.
section_title: Appendix II: Premium Requirements for Children in Medicaid and SCHIP, by State, as of August 1, 2003
paragraphs: Appendix II: Premium Requirements for  Children in Medicaid and SCHIP, by State, as  of August 1, 2003  State only charged premiums to some portion of children with special needs.
State did not charge premiums, but had an enrollment fee.
Tennessee, which operates its entire Medicaid program under an 1115 waiver, charged premiums for  some children in families with incomes at or above the FPL.
Tennessee did not have a SCHIP program.
Texas also had an enrollment fee.
section_title: Appendix III: Premium Amounts for Children in Medicaid and SCHIP, by State, as of August 1, 2003
subsections: section_title: Lowest percentage of the FPL at which state
paragraphs: Lowest percentage of  the FPL at which state  $16.50 to $110    $9 or $15 per individual; $27 or $45 per family    $61 to $92    $15 to $18    $13 to $25 per quarter    $10 per individual with $30 family maximum    $30 to $360    In Minnesota, families could choose to enroll their children in either the state’s regular Medicaid  program or its 1115 waiver program – both of which covered children from families with incomes up to  275 percent of the FPL. Children in families that chose to enroll in the 1115 waiver program were  charged premiums regardless of their family income. Thus, families with incomes less than 1 percent  of the FPL could choose to pay premiums.
section_title: Appendix IV: Copayment Requirements for Children in Medicaid and SCHIP, by State, as of August 1, 2003
paragraphs: Appendix IV: Copayment Requirements for  Children in Medicaid and SCHIP, by State, as  of August 1, 2003  Arkansas charged copayments to all children in its 1115 waiver program, but did not charge  copayments to other children.
Delaware’s only copayment, which the state charged to all populations in its Medicaid program, was  for nonemergency transportation services.
Although Delaware did not charge copayments to children in SCHIP, the state did charge a fee for  inappropriate use of the emergency room.
Maryland’s SCHIP program did not charge copayments, but SCHIP beneficiaries receiving coverage  through Maryland’s employer-sponsored insurance program may be charged copayments by their  health plan.
Tennessee, which operates its entire Medicaid program under an 1115 waiver, charged copayments  for some children in families with incomes at or above the FPL.
Tennessee did not have a SCHIP program.
section_title: Appendix V: Cost Sharing Amounts for Children in Medicaid and SCHIP, by State, as of August 1, 2003
paragraphs: NA = Not applicable. The state did not charge cost sharing for this service.
Delaware charged a $1 copayment for nonemergency transportation.
Missouri did not have a copayment for prescription drugs in Medicaid, but some children were  charged a dispensing fee for prescriptions.
section_title: Appendix VI: Premiums for Adult Populations in Medicaid, by State, as of August 1, 2003
paragraphs: Appendix VI: Premiums for Adult Populations  in Medicaid, by State, as of August 1, 2003  The following states did not charge premiums to any adults in Medicaid: Alabama, Arkansas,  Colorado, Delaware, District of Columbia, Florida, Georgia, Idaho, Kentucky, Louisiana, Maryland,  Michigan, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota,  Ohio, Oklahoma, South Carolina, South Dakota, Texas, Virginia, and West Virginia.
This population includes working adults with disabilities. States may require premiums from certain  working adults with disabilities who received Medicaid coverage under the Balanced Budget Act of  1997 or the Ticket to Work and Work Incentives Improvement Act of 1999.
Population not covered in the state’s Medicaid program.
State charged premiums to all working individuals with disabilities, but did not charge premiums to  other adults with disabilities.
State charged premiums to some portion of childless adults.
Maine charged premiums to individuals in the state’s HIV/AIDS waiver program.
Tennessee, which operates its entire Medicaid program under an 1115 waiver, charged premiums to  some adults enrolled in the state’s 1115 waiver program who had incomes at or above the poverty  level.
Not applicable: Tennessee did not report information based on these population groups.
Utah charged an enrollment fee to all adults enrolled in the state’s primary care waiver program.
Vermont charged premiums to some adults enrolled in the state’s 1115 waiver program.
section_title: Appendix VII: Premium Amounts for Adults in Medicaid, by State, as of August 1, 2003
subsections: section_title: Lowest percentage of the FPL at which state
paragraphs: Individual, couple, or household  $80 to $220  Individual  $6 to $20  Individual  5% of income  Individual  $61 to $92  Family  $20 to $550 for an individual;  $40 to $1,375 for a family  15% of income  Individual  $10 semi-annually to $75 per month  Individual or household  Formula based on income  Individual or household  $25 to $1000;  $30 to $300  Formula based on income  Individual  This appendix reflects the range in premiums states charged across their entire adult population.
The lowest income level at which an adult could be charged premiums in this state’s Medicaid  program equated to less than one percent of the FPL. However, for certain populations, there were  higher income thresholds at which the state began charging premiums.
Pennsylvania charged premiums only for working individuals with disabilities whose incomes were  below 250 percent of the FPL.
section_title: Appendix VIII: Copayment Requirements for Adults in Medicaid, by State, as of August 1, 2003
paragraphs: Appendix VIII: Copayment Requirements for  Adults in Medicaid, by State, as of August 1,  2003  The following states did not charge copayments to any adults in Medicaid: Hawaii, Idaho, Michigan,  Nevada, New Jersey, Ohio, Rhode Island, and Texas.
Population not covered in the state’s Medicaid program.
Alaska also charged copayments to all individuals qualifying for transitional Medicaid assistance.
Delaware’s only copayment, which the state charged to all populations in its Medicaid program, was  for nonemergency transportation services.
Maine also charged copayments to all individuals enrolled in its HIV/AIDs waiver program and all  individuals in its comprehensive 1115 waiver program.
In addition, individuals participating in the Missouri’s 1115 waiver program, which extends 12 months  of additional coverage to working parents or caretakers, were also charged copayments. As of  January 2004, this program had approximately 2,400 beneficiaries.
Nebraska also charged copayments to most individuals in its refugee resettlement program.
Oregon also charged copayments to most childless adults.
Pennsylvania also charged copayments to most adults in its general assistance program.
State also charged copayments to all individuals in its state’s Medicaid pharmacy program.
Tennessee, which operates its entire Medicaid program under an 1115 waiver, charged copayments  to some adults enrolled in the state’s 1115 waiver program who had incomes at or above the poverty  level.
Not applicable: Tennessee did not report information based on these population groups.
Utah also charged copayments to all individuals enrolled in its primary care waiver program.
Vermont also charged copayments to all individuals enrolled in its 1115 waiver program.
section_title: Appendix IX: Cost Sharing Amounts for Adults in Medicaid, by State, as of August 1, 2003
paragraphs: Nonemergency use  of the emergency  $0.50 or $1 $0.50 or $2 $1 or $3 $1 or $2 $3 (brand name  only)
NA  5% of payment;  maximum of  5% of payment;  $5 to $25 $5 or $10 $25 or $50 $15 or $25 $2 or $3 $3 or $5 $2 to $5 or 25%  $6 or $30 10% of  allowable  Medicaid  payment  $3 or $25 per  $1 to $10 or 50%  $0.50 to $3 $1 to $3 $.50 to $15$.50 to $3 $2 to $25 NA = Not applicable. The state did not charge cost sharing for this service.
This appendix reflects cost sharing amounts charged by states for the services and portions of the  Medicaid adult populations subject to cost sharing charges. The amount of cost sharing and the  services subject to cost sharing may vary within a state by population. See Appendix VIII for details  on the adult populations subject to copayment requirements in Medicaid.
Delaware’s only cost sharing was a $1 copayment for nonemergency transportation.  llinois did not require cost sharing for all procedures within this service.
section_title: Appendix X: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: Major contributors included Catina Bradley, Janice Raynor, Michelle  Rosenberg, Kevin Milne, and Elizabeth T. Morrison.