Medicaid Reform Act of 2004

This landmark legislation was passed by the Mississippi Legislature during the 2004 Regular Session, in the Senate by a vote of 43-8 and in the House by a vote of 82-32 on May 7th. The Medicaid Reform Act achieves savings of $106 million for Mississippi taxpayers and institutes policy reforms that focus on: eligibility determination, establishing a health care home, disease management provisions, maximizing federal matching funds in order to bring more revenue into the Medicaid program to provide more and better services, and using bulk purchasing power to negotiate lower acquisition costs for pharmaceuticals.

Reform of Medicaid was necessary because the explosive growth rate of the program was endangering the sustainability of Medicaid as well as other government services such as education. Even with full enactment of this reform legislation, the state appropriation for the Medicaid program will have more than doubled in just five years – 104% growth between Fiscal Year 2000 and Fiscal Year 2005. The program had to be examined to find better ways for patients to get the care they need.

One such opportunity is in the Poverty Level Aged and Disabled (PLADs) program. This program provides Medicaid coverage to people who are also eligible for the federal Medicare program. In recent years, this category was expanded to include people with incomes above the poverty line. We are the only state in the nation which provides Medicaid coverage to people above the poverty line in a program like PLADs. Mississippi is not rich enough to pay for what the federal government already provides. By shifting this category of beneficiaries to Medicare, they will still have health insurance but at a lower cost to the state starting July 1, 2004. This shift affects only 6% of the entire Medicaid population of 720,000 beneficiaries.

Regardless of what Mississippi does, on January 1, 2006, the federal government will stop paying a federal match rate for prescription drug coverage for any Medicaid beneficiary who is also eligible for Medicare. Therefore, the PLADs population would have to move from Medicaid to Medicare for their needed drug coverage, unless the state decides to pay for 100% of those costs, which is not a realistic option. In addition to the savings generated by the various program changes in the legislation, Mississippi taxpayers will save more than $100 million over ten years by shifting the PLADs population now instead of waiting until January 1, 2006. This is because of the “clawback” provision in federal law which assesses each state for how many people Medicare will provide drug coverage for after January 1, 2006. The fewer people dually eligible on the Medicaid program in January 2006, the less the state will have to pay the federal government in “clawback” payments. By moving them now, Mississippi taxpayers can lower our future payments.

The most significant change in health care coverage for the 47,000 people who will move from Medicaid to Medicare will be in the area of prescription drugs. On January 1, 2006, the newly enacted prescription drug benefits from the new federal Medicare Modernization Act will take effect and these benefits will be better than what Medicaid currently provides for PLADs beneficiaries. Until then, every person in the PLADs category is eligible for the patient assistance programs offered by pharmaceutical companies which provide FREE and very low cost drugs; a Medicare-approved drug discount card; and a $1200 supplement provided by the federal government.

All questions regarding PLADs reforms should go to the Division of Medicaid at 1-800-421-2408.

“Did You Get a PLADs Letter?” - Beneficiaries Not Affected – 94%

The first thing to remember is that only 6% of the entire Medicaid population of 720,000 is affected by this Medicaid reform. In order to distinguish which beneficiaries are affected, one needs to ask if the beneficiary has received a notification letter from the Division on Medicaid during the first two weeks in June. If they have not, they are NOT affected; they are NOT a PLADS beneficiaries.

There are two categories of people in the PLADs program who will move to Medicare on July 1, 2004: those under 100% of poverty and those between 100% and 135% of poverty.

Those below 100% of poverty have an income less than $776 per month for an individual or less than $1048 per month for a couple. Those between 100% and 135% of poverty have an income of $776-$1048 per month for an individual or income of $1048-$1406 per month for a couple.

People with an income of less than 100% of poverty who are moving to Medicare will have:

NO premiums, NO deductibles, and NO co-pays for health services.

An unlimited number of visits to their physician, to the emergency room, to hospital outpatient services, and on prescriptions.

An increase in the number of hospital inpatient days and home health care days allowed compared to their current Medicaid benefits.

People with an income between 100% and 135% of poverty who are moving to Medicare will have:

These beneficiaries will have limited cost-sharing in the form of deductibles and/or co-pays for certain services. However, this is neither unusual nor unmanageable as every other state has demonstrated. No other state in the nation provides Medicaid coverage for this group of beneficiaries.

An unlimited number of visits to their physician, to the emergency room, to hospital outpatient services, and on prescriptions.

An increase in the number of hospital inpatient days and home health care days allowed compared to their current Medicaid benefits.

Until the full Medicare prescription drug benefit begins January 1, 2006, every PLADs beneficiary who is moving from Medicaid to Medicare will need to access their prescription drugs from new sources. A PLADs beneficiary with Medicare can utilize any combination of FREE prescription drugs offered through “Patient Assistance Programs” by pharmaceutical companies, a Medicare approved drug discount card, and Medicare financial assistance in the sum of $1200. A summary of some of the options in Mississippi is available on the internet at: /library/StateGuides/Mississippi.htm.

Hundreds of prescription drugs are offered free of charge or at a very low cost to people below 200% of poverty by pharmaceutical companies. Every PLADs beneficiary affected by the move to Medicare is eligible for these “Patient Assistance Programs.”

The “BenefitsCheckUp” website ( is an excellent informational tool which describes how to acquire more than 1300 free or low cost drugs from 270 different programs. For many of the drugs, the pharmaceutical companies allow the pharmacist to receive a $12-$15 payment for a month’s supply of drugs to compensate the pharmacist for the cost of dispensing a prescription. This amount is similar to the co-pay currently paid by Medicaid beneficiaries. The regional Medicaid offices should be able to assist PLADs beneficiaries making the transition to Medicare in their search for low cost or free prescription drugs.

In addition, beneficiaries will have the opportunity to sign up for one of the many Medicare approved drug discount cards. They will choose one of the discount cards offered by drug companies through Medicare, which will provide savings between 10% and 25% on outpatient prescription drugs. This card will help the few beneficiaries who are unable to acquire a drug at little or no cost through the patient assistance programs. To enroll for a Medicare Drug Discount Card, an individual must call 1-800-MEDICARE (633-4227) or go to the Medicare website at to sign up.

To assist with pharmacist co-pays, or to help buy drugs, beneficiaries will receive $600 for July 1 through December 31, 2004. In January of 2005, beneficiaries will receive an additional $600 to assist with these costs through the end of the year. If the first supplement of $600 for 2004 is not used entirely, it will “roll over” and be added to the $600 supplement for 2005.

The Division of Medicaid, as instructed by the Legislature, is pursuing federal waivers to continue Medicaid coverage for two specific populations:

People in the PLADs program who are not eligible immediately for Medicare.

Of the 65,000 people currently in the Medicaid PLADs program, approximately 5,000 are not eligible for Medicare because they are either not yet 65 years of age, they have no work history, or they are in the midst of a two-year waiting period required by federal law when applying for Medicare.

People in the PLADs program who are chronically ill or on anti-psychotic medications.

Of the 65,000 people currently in the Medicaid PLADs program, approximately 13,000 are either end-stage renal disease patients on dialysis, cancer patients on chemotherapy, or organ transplant recipients on anti-rejection drugs. Also, mentally ill patients on anti-psychotic medications are being included in this wavier.

These Medicaid beneficiaries are receiving notices that their Medicaid coverage will be discontinued because of a federal requirement that they must be formally notified any time there is a change in their benefits. With the granting of the federal waiver, these patients will continue to receive Medicaid benefits. Upon the receipt of the waiver, the beneficiaries will be notified by the Division of Medicaid.

The Governor met with officials from the U.S. Department of Health and Human Services on May 17th, just one week after the Legislature passed the Medicaid reform bill, and he is very confident these waivers will be granted. Additionally, since that time, staff from the Governor’s office, as well as the Division of Medicaid, have been in contact with top officials at the Centers for Medicare and Medicaid Services (CMS) and are presently working on the waiver applications in hopes of expediting the process. It is expected by July 1 to have these waivers in place to provide the needed coverage for the beneficiaries.


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Governor Haley Barbour
P.O. Box 139 Jackson, MS 39205
Phone: 601.359.3150 Fax: 601.359.3741