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OFFICE OF KENTUCKY LEGAL SERVICES PROGRAMS

310 LEXINGTON BUILDING

201 WEST SHORT STREET

LEXINGTON, KY  40507

 

                RICHARD SECKEL, DIRECTOR                                                                                                PHONE     859-233-3057

                RICHSECKEL@PRODIGY.NET                                                                                 FAX         859-255-6227

 

 

November 28, 2005

 

Shannon Turner, Commissioner

Department for Medicaid Services

275 East Main Street  6W-A

Frankfort, KY  40621

 

Re:  Analysis of copayment issues in KyHealth Choices waiver proposal

 

Dear Commissioner Turner,

 

With this letter, I’m pleased to share the first of several comments we plan to prepare on the KyHealth Choices waiver proposal.  The enclosed chart and spreadsheets focus on copayments.  Future items will address service limits and long term care.

 

We appreciate the fact that the Cabinet’s waiver draft has been made public and that, despite its quick submission to CMS, remains a work in progress.  We hope you will be intrigued with the spreadsheets and interested in the observations and recommendations that flow from them. 

 

The spreadsheets focus on the cost impact of copayments on K-TAP and non-institutionalized SSI adults, across a range of prescription drug regimens.  They calculate copayments as a percentage of benefits for typical recipients and illustrate what the same percentage would be for median income Kentuckians.  Bright line findings:

 

  • To “cap out” on both prescriptions and medical services, non-institutionalized adults would have to spend more than 5% of annual benefit income. 

 

  • For K-TAP adults, the cost burden at “cap out” was 14.3% of annual benefits, more than double that for an SSI individual (6.2%).  K-TAP households are below poverty and include children. 

 

  • To maintain a “medium intensity” prescription drug regimen of 3 generics and 1 preferred brand name drug, adults would pay $25 a month under the waiver. 

 

  • For an SSI individual, $25 represents 4.1% of monthly benefit income.  For a K-TAP parent, it represents 9.5%.  The equivalent 9.5% of Kentucky median income would be a co-payment of $273 a month.

 

  • Combining prescriptions with episodes of other care creates high-cost scenarios.  If the same medium intensity person above were hospitalized, the episode at a minimum would represent 7.5% of the monthly SSI benefit and 17.2% of K-TAP income.  The median income equivalent of the K-TAP co-payment:  $492.

 

The accompanying overview chart presents highlights of the spreadsheet, plus questions, concerns, recommendations and references to research on the impact of copayments.  If you are pressed for time, please do proceed quickly to the nine recommendations in the next to last row.  High priority recommendations:

 

  • No co-payments should be charged for services approved in excess of service limits otherwise imposed by the plan.  (This approach would protect chronically ill people with multiple conditions and those requiring intensive therapies.)

 

  • If co-payments are charged at all for KCHIP children, they should be imposed only on KCHIP children in households above 150% of poverty. 

 

  • Cost-sharing caps should be lowered and tiered, either by setting the cap as a percentage of benefits or by establishing lower dollar caps for K-TAP households. 

 

  • To avoid circumstances in which a large percentage of benefit income must be paid during a month, caps should be set on a monthly basis.

 

Closing

 

Given the immense amount of work you have done on the waiver, we hope you will enjoy work products that flow from giving the document a careful and thoughtful examination. We would be happy to do further work on the cap levels and the monthly cap alternative.

 

Thank you for your consideration!

 

Sincerely,

 

 

Richard J. Seckel

Director

 

cc:        Mark Birdwhistell, Secretary

            Deborah Anderson

            Nicci Gaines