Deficit Reduction Act (DRA)

A few recent Medicaid initiatives have emerged that take the program into new directions. States have a number of objectives in developing these approaches, including offering beneficiaries greater choice, promoting personal responsibility and healthier behaviors among enrollees, and looking at the private marketplace. This brief examines how these approaches change financial risk and responsibility for states, the federal government, beneficiaries and providers.

This fact sheet provides information on the new federal requirement that all U.S. citizens and nationals applying for or renewing their Medicaid coverage provide documentation of their citizenship status and examines the implications for Medicaid beneficiaries and the states. This is one of the significant changes the DRA makes to Medicaid effective July 1, 2006.

CMS has issued this new letter to provide guidance on the implementation of the Deficit Reduction Act. Section 6036, Improved Enforcement of Documentation Requirements, creates a new subsection 1903(x) of the Social Security Act that requires individuals claiming U.S. citizenship to provide satisfactory documentary evidence of citizenship or nationality when initially applying for Medicaid or upon a recipient’s first Medicaid redetermination on or after July 1, 2006.

The CMS Systems Change conference, Transforming Systems: Keys to Success was held April 10-12 in Baltimore. Presentations from the 2006 sessions are available in both PDF and text formats. Topics range from ideas on system transformation, stakeholder involvement, coalition building, strategic planning, sustaining systems change, and the Deficit Reduction Act. Full titles are listed in the keywords section.

On Monday May 8, 2006, CMS hosted a New Freedom Initiative Open Door Forum that focused on Section 6086 of the Deficit Reduction Act. During the call CMS reviewed the differences between how home and community based services can be provided through the State plan and the more traditional 1915c waivers. This chart summarizes CMS’s overview of the DRA provisions.

This issue brief explores the continuing evolution of the Medicaid program on several fronts. It discusses the benefits and cost-sharing flexibility that is included in the Deficit Reduction Act and examines the implications for states, beneficiaries, and providers. The paper also explores recent trends in section 1115 waiver development and considers the use of waivers as a vehicle for restructuring Medicaid financing systems and for testing completely new approaches to health care delivery.

Due to concern that wealthy elderly Americans were transferring assets to gain Medicaid coverage for nursing home care, the Deficit Reduction Act tightened Medicaid eligibility rules. About 43 percent of all nursing home residents eventually become Medicaid eligible. Over the six-year period examined, the authors estimate that, when applying the DRA asset transfer rules, federal savings to Medicaid could amount to $1.87 billion.

This summary of the Home and Community Based Services (HCBS) State Plan Amendment (SPA) option is based on a review of the Deficit Reduction Act (DRA) and discussion from the April 3, 2006 conference call with CMS staff and Real Choice grantees. The content reflects the Rutgers/NASHP TA collaborations understanding of the legislation and questions raised by grantees. The intent is to highlight what is known about the DRA and some questions about how it will affect States that elect this option.

Beneficiary-managed individual budget model had its origins in the Cash & Counseling Demonstration. This brief describes the evolution of the model since the original demonstration and provides an overview of state activity. Although Medicaid waivers have been required for individual budget model programs to date, the Deficit Reduction Act gives the option to use this model for an expanded range of home and community based services in the Medicaid plans without having to obtain a waiver.

What are the opportunities and potential pitfalls of this new policy that makes major changes to the Medicaid program? This paper offers explanation and analysis of the changes to the long-term services policies including: Asset Transfers, Long-term care Partnership Programs, Family Opportunity Act, Money Follows the Person Demonstration, State Option to Provide HCBS Services, Cash and Counseling Option.