OVERVIEW OF THE MEDICAID PROGRAM Title XIX of the Social Security Act is a program which provides medical assistance for certain individuals and families with low incomes and resources. The program, known as Medicaid, became law in 1965 as a jointly funded cooperative venture between the Federal and State governments to assist States in the provision of adequate medical care to eligible needy persons. Medicaid is the largest program providing medical and health-related services to America's poorest people. Within broad national guidelines which the Federal government provides, each of the States: (1) establishes its own eligibility standards; (2) determines the type, amount, duration, and scope of services; (3) sets the rate of payment for services; and (4) administers its own program. Thus, the Medicaid program varies considerably from State to State, as well as within each State over time. Medicaid Eligibility States have some discretion in determining which groups their Medicaid programs will cover and the financial criteria for Medicaid eligibility. To be eligible for Federal funds, States are required to provide Medicaid coverage for most individuals who receive federally assisted income maintenance payments, as well as for related groups not receiving cash payments. Some examples of the mandatory Medicaid eligibility groups are: o recipients of Aid to Families with Dependent Children (AFDC); o Supplemental Security Income (SSI) recipients (or in States using more restrictive criteria--aged, blind, and disabled individuals who meet criteria which are more restrictive than those of the SSI program and which were in place in the State's approved Medicaid plan as of January 1, 1972); o infants born to Medicaid-eligible pregnant women. Medicaid eligibility must continue throughout the first year of life so long as the infant remains in the mother's household and she remains eligible, or would be eligible if she were still pregnant; o children under age 6 and pregnant women who meet the State's AFDC financial requirements or whose family income is at or below 133 percent of the Federal poverty level. (The minimum mandatory income level for pregnant women and infants in certain States may be higher than 133 percent, if as of certain dates the State had established a higher percentage for covering those groups.) States are required to extend Medicaid eligibility until age 19 to all children born after September 30, 1983 in families with incomes at or below the Federal poverty level. This phases in coverage, so that by the year 2002, all poor children under age 19 will be covered. Once eligibility is established, pregnant women remain eligible for Medicaid through the end of the calendar month ending 60 days after the end of the pregnancy regardless of any change in family income. States are not required to have a resource test for these poverty level related groups. However, any resource test imposed can be no more restrictive than that of the AFDC program for infants and children and the SSI program for pregnant women; o recipients of adoption assistance and foster care under title IV-E of the Social Security Act; o certain Medicare beneficiaries (described later); and o special protected groups who lose cash assistance because of the cash programs' rules, but who may keep Medicaid for a period of time. Examples are: persons who lose AFDC or SSI payments due to earnings from work or increased Social Security benefits; and two- parent, unemployed families whose AFDC cash assistance is limited by the State and who are provided a full 12 months of Medicaid coverage. States also have the option to provide Medicaid coverage for other "categorically needy" groups. These optional groups share characteristics of the mandatory groups, but the eligibility criteria are somewhat more liberally defined. Examples of the optional groups that States may cover as categorically needy (and for which they will receive Federal matching funds) under the Medicaid program are: o infants up to age one and pregnant women not covered under the mandatory rules whose family income is below 185 percent of the Federal poverty level (the percentage to be set by each State); o certain aged, blind, or disabled adults who have incomes above those requiring mandatory coverage, but below the Federal poverty level; o children under age 21 who meet income and resources requirements for AFDC, but who otherwise are not eligible for AFDC; o institutionalized individuals with income and resources below specified limits; o persons receiving care under home and community- based services waivers; o recipients of State supplementary payments; and o TB-infected persons who would be financially eligible for Medicaid at the SSI level (only for TB-related ambulatory services and TB drugs). Medically Needy Eligibility Groups The option to have a "medically needy" program allows States to extend Medicaid eligibility to additional qualified persons who may have too much income to qualify under the mandatory or optional categorically needy groups. This option allows them to "spend down" to Medicaid eligibility by incurring medical and/or remedial care expenses to offset their excess income, thereby reducing it to a level below the maximum allowed by that State's Medicaid plan. States may also allow families to establish eligibility as medically needy by paying monthly premiums to the State in an amount equal to the difference between family income (reduced by unpaid expenses, if any, incurred for medical care in previous months) and the income eligibility standard. Eligibility for the medically needy program does not have to be as extensive as the categorically needy program. However, States which elect to include the medically needy under their plans are required to include certain children under age 18 and pregnant women who except for income and resources would be eligible as categorically needy. They may choose to provide coverage to other medically needy persons: aged, blind, and/or disabled persons; certain relatives of children deprived of parental support and care; and certain other financially eligible children up to age 21. Amplification on Medicaid Eligibility Coverage may start retroactive to any or all of the 3 months prior to application if the individual would have been eligible during the retroactive period. Coverage generally stops at the end of the month in which a person's circumstances change. Most States have additional "State-only" programs to provide medical assistance for specified poor persons who do not qualify for the Medicaid program. No Federal funds are provided for State-only programs. Medicaid does not provide medical assistance for all poor persons. Even under the broadest provisions of the Federal statute (except for emergency services for certain persons), the Medicaid program does not provide health care services, even for very poor persons, unless they are in one of the groups designated above. Low income is only one test for Medicaid eligibility; assets and resources are also tested against established thresholds. As noted earlier, categorically needy persons who are eligible for Medicaid may or may not also receive cash assistance from the AFDC program or from the SSI program. Medically needy persons who would be categorically eligible except for income or assets may become eligible for Medicaid solely because of excessive medical expenses. States may use more liberal income and resources methodologies to determine Medicaid eligibility for certain AFDC-related and aged, blind, and disabled individuals under section 1902(r)(2) of the Social Security Act. The more liberal income methodologies cannot result in the individual's income exceeding the limits prescribed for Federal matching (for those groups which are subject to these limits). Significant changes were made in the Medicare Catastrophic Coverage Act (MCCA) of 1988 which affected Medicaid. Although much of the MCCA was repealed, the portions affecting Medicaid remain in effect. The law also accelerated Medicaid eligibility for some nursing home patients by protecting more income and assets for the institutionalized person's spouse at home. Before an institutionalized person's monthly income is used to pay for the cost of institutional care, a minimum monthly maintenance needs allowance is deducted from the institutionalized spouse's income to bring the income of the community spouse up to a moderate level. Scope of Medicaid Services Title XIX of the Social Security Act requires that in order to receive Federal matching funds, certain basic services must be offered to the categorically needy population in any State program: o inpatient hospital services; o outpatient hospital services; o physician services; o medical and surgical dental services; o nursing facility (NF) services for individuals aged 21 or older; o home health care for persons eligible for nursing facility services; o family planning services and supplies; o rural health clinic services and any other ambulatory services offered by a rural health clinic that are otherwise covered under the State plan; o laboratory and x-ray services; o pediatric and family nurse practitioner services; o federally-qualified health center services and any other ambulatory services offered by a federally- qualified health center that are otherwise covered under the State plan; o nurse-midwife services; and o early and periodic screening, diagnosis, and treatment (EPSDT) services for individuals under age 21. If a State chooses to include the medically needy population, the State plan must provide, as a minimum, the following services: o prenatal care and delivery services for pregnant women; o ambulatory services to individuals under age 18 and individuals entitled to institutional services; o home health services to individuals entitled to nursing facility services; and o if the State plan includes services either in institutions for mental diseases or in intermediate care facilities for the mentally retarded (ICF/MRs), it must offer either of the following to each of the medically needy groups: the services contained in 42 CFR sections 440.10 through 440.50 and 440.165 (to the extent that nurse-midwives are authorized to practice under State law or regulations); or the services contained in any seven of the sections in 42 CFR 440.10 through 440.165. States may also receive Federal funding if they elect to provide other optional services. The most commonly covered optional services under the Medicaid program include: o clinic services; o nursing facility services for the aged in an institution for mental diseases; o intermediate care facility/mentally retarded services; o optometrist services and eyeglasses; o prescribed drugs; o TB-related services for TB infected persons; o prosthetic devices; and o dental services. States may provide home and community-based care to certain individuals who are either medically needy or eligible for Medicaid due to receipt of SSI benefits; who have limitations in specified activities of daily living (e.g., toileting, transferring, and eating); and are at least 65 years of age. The services to be provided to these persons may include personal care services, chore services, respite care services, adult day care, homemaker/home health aide, training for family members, and nursing services. Amount and Duration of Medicaid Services Within broad Federal guidelines, States determine the amount and duration of services offered under their Medicaid programs. The amount, duration, and scope of each service must be sufficient to reasonably achieve its purpose. States may place appropriate limits on a Medicaid service based on such criteria as medical necessity or utilization control. For example, States may place a reasonable limit on the number of covered physician visits or may require prior authorization to be obtained prior to service delivery. Health care services identified under the EPSDT program as being "medically necessary" for eligible children must be provided by Medicaid, even if those services are not included as part of the covered services in that State's plan. With certain exceptions, a State's Medicaid plan must allow recipients freedom of choice among health care providers participating in Medicaid. States may provide and pay for Medicaid services through various prepayment arrangements, such as a health maintenance organization (HMO). In general, States are required to provide comparable services to all categorically needy eligible persons.There is an important exception related to home and community-based services "waivers" under which States offer an alternative health care package for persons who would otherwise be institutionalized under Medicaid. States are not limited in the scope of services they can provide under such waivers so long as they are cost effective (except that, other than as a part of respite care, they may not provide room and board for such recipients)