WASHINGTON — A new federal rule gives states sweeping authority to charge premiums and higher co-payments for doctors’ services, hospital care and prescription drugs provided to low-income people under Medicaid.
The rule, published Tuesday in the Federal Register, is expected to save money for the federal government and the states. But public health experts and even some federal officials predicted that many low-income people would delay or forgo care because of the higher charges.
Under the rule, states can, in many cases, deny care or coverage to Medicaid beneficiaries who do not pay their premiums or their share of the cost for a particular item or service.
Governors have sought this kind of discretion for a long time, saying they wanted Medicaid to look more like private health insurance.
The rule, which is meant to carry out a law signed by President Bush in February 2006, represents a sea change in Medicaid.
“It’s a tremendous break with the past in terms of what low-income people are expected to pay for their health care,” said Sara Rosenbaum, a professor of health law and policy at George Washington University.
Higher co-payments may be an attractive option for states struggling to rein in Medicaid costs in the current fiscal crisis, which has reduced state revenues even as the need for assistance grows. Rather than restricting eligibility, states can charge more.
“This flexibility will help protect the program from cutbacks in a time of tight state budgets,” the administration said in a preamble to the final rule.
The administration acknowledged that “some individuals may choose to delay or forgo care rather than pay their cost-sharing obligations.”
Public health experts said such delays could cause serious health problems, requiring more expensive care at a later date. Many Medicaid recipients have chronic illnesses, use numerous prescription drugs and frequently visit doctors, so the burden of even modest co-payments can become substantial.
But Jeff Nelligan, a spokesman for the federal Centers for Medicare and Medicaid Services, said Wednesday: “States are in the best position to determine the appropriate levels of cost sharing. This rule gives states more tools to help slow spending growth, while maintaining needed coverage, which was the intent of Congress.”
When the rule was proposed this year, it drew criticism from the American Academy of Pediatrics, the National Association for Home Care and AARP, among other groups. They said that higher co-payments would make it more difficult for low-income children, homebound people and older Americans to get care.
David P. Sloane, senior vice president of AARP, said, “Denying necessary care to people who are unable to pay is unconscionable,” as well as fiscally unwise.
A coalition of groups serving people with AIDS said, “It is well documented that even nominal levels of cost sharing result in people going without medically necessary care.”
Under the rule, the administration estimated, Medicaid recipients will pay more than $1.3 billion in co-payments over five years, and the federal government will save $1.4 billion, while states will save $1.1 billion. The savings would result not only from the collection of co-payments, but also from reduced use of services.
The co-payments will help Medicaid recipients become “more educated and efficient health care consumers,” the administration said.
The Congressional Budget Office has estimated that 13 million low-income people, about a fifth of Medicaid recipients, will face new or higher co-payments. Most of the savings result from “decreased use of services,” it said.
The rule allows states to establish a sliding scale for premiums and co-payments. The total of these charges, for all members of a family, cannot exceed 5 percent of the family’s income.
For Medicaid recipients with incomes at or below the poverty level ($17,600 for a family of three), a state can charge co-payments up to $3.40 for a doctor’s visit or other service. The maximum amount will be updated each year to reflect medical inflation.
For Medicaid recipients with incomes from 100 percent to 150 percent of the poverty level ($17,600 to $26,400 for a family of three), states can generally require a beneficiary to pay up to 10 percent of what the state pays for a service, like a doctor’s visit.
And for Medicaid recipients with incomes above that level, states can generally charge co-payments up to 20 percent of what they pay. For a $150 drug, the co-payment could be as much as $30.
Under the rule, states can use co-payments to promote the use of preferred brand-name drugs and to discourage the use of hospital emergency rooms for routine care.