SD8 - Employment Incentives for People with Disabilities through Medicaid Buy-In Options

Executive Summary:
This report is in response to Senate Joint Resolution (SJR) 128 and House Joint Resolution (HJR) 219 from the 2002 Session of the Virginia General Assembly that directed the Department of Medical Assistance Services, in collaboration with the Department of Rehabilitative Services and the Department for the Rights of Virginian with Disabilities (the Virginia Office for Protection and Advocacy as of July 26, 2002) to proceed with the development of a Medicaid Buy-In opportunity for working Virginians with disabilities. A Medicaid Buy-In program would help to reduce barriers to competitive employment for individuals with disabilities by enabling them to become employed or have increased earnings without fear of losing needed health care coverage.

Federal legislation under the Balanced Budget Act of 1997 (BBA) and the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA) authorize States to develop and implement Medicaid Buy-In programs. TWWIIA also provided funding for the Center for Medicare and Medicaid Services (CMS) to initiate Medicaid Infrastructure Grants to support States in the research and development of Medicaid Buy-In programs. The Department of Medical Assistance Services received this grant funding effective January 1, 2002. This report provides further explanation of the main components of the above Acts and how DMAS is utilizing the CMS grant to develop a program to support individuals with disabilities in going to work and maintaining employment.

Two major eligibility prerequisites for a Medicaid Buy-In program are that individuals must be considered disabled, as defined by the Social Security Administration, and they must be employed in a competitive, integrated environment. It is expected that potential participants will mainly come from current Federal programs assisting individuals with disabilities, which are Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). This report provides information about the SSI and SSDI programs, as well as about Virginia Medicaid programs that currently serve individuals with disabilities.

SJR 128 and HJR 219 directed DMAS to utilize the Medicaid Infrastructure Grant to identify the steps needed to implement an effective Medicaid Buy-In program and utilize data to develop initial legislation and budgetary recommendations necessary to implement the Buy-In program in Virginia. DMAS was to utilize the Medicaid Infrastructure Grant to survey the potential population, delineate financing for the program, and assess the cost-effectiveness, availability of funding and economic benefits. DMAS was also directed to seek the participation of other State health and human service agencies, establish an advisory committee of consumers, advocates, and other stakeholders, as well as solicit input from disability advocates and business employers. This report describes DMAS' efforts to satisfy the above directives through numerous research initiatives and public input opportunities. Some methodologies used to acquire information and insight included:

• Continuation of a Medicaid Buy-In Work Group established 2001;
• A Consumer Forum to gain more information about barriers and solutions to providing employment for individuals with disabilities;
• DMAS commissioned a survey and report on working SSI recipients with disabilities in Virginia;
• Creation of a Medicaid Infrastructure Grant Advisory Committee to provide recommendations on design, education and coordination;
• An Employer Leadership Forum to educate and seek input from the business community;
• DMAS commissioned a statewide "listening tour" to solicit Medicaid Buy-In design recommendations and provide information about the potential Buy-In opportunity.
• DMAS commissioned a survey and report on individuals with disabilities who were enrolled in Medicaid's Aged, Blind, and Disabled covered group.

Additional research included in this report is a section provided by the Department of Rehabilitative Services (DRS). As part of an ongoing collaborative effort, DRS staff prepared an analysis of data on Vocational Rehabilitation (VR) Program clients receiving SSI or SSDI in fiscal year 2002. Highlights from their study include that VR completed providing services to 3,086 individuals last year, 828 of whom were successfully employed. Of these employed individuals, 19% were working full-time while 63% worked 25 hours or less. Though the majority were earning less than $200 per week, it is reasonable to expect that many of these individuals will increase their work week and earned income as they become more familiar and better trained in their job. Further research activities to aid Buy-In development are underway with DRS.

Throughout this process, DMAS has received substantial technical support from experts with the American Public Human Services Association's Center for Workers with Disabilities. In addition to the direct support and advice provided by these professionals, DMAS staff benefited from the experience of other States through national conferences and regular teleconferences with State Medicaid Buy-In/Grant staff as part of a State-to-State partnership.

Within this report, there is discussion on the primary components in the design of a Medicaid Buy-In program that play a major role in the program's success or failure: eligibility requirements regarding allowable income and resources, and methods for participants sharing in the cost of the program (cost-sharing). A successful program will enroll those individuals with disabilities who are willing to engage in a significant work effort and further increase their independence through earnings and participation in competitive employment. Hopefully, it would also meet or approximate its enrollment and cost projections. An unsuccessful program would certainly be one that fails to attract consumer participation and, thus, reach its enrollment goals. However, the success of a program cannot merely be measured on the basis of meeting its enrollment/cost expectations. Program participants should be actively engaged in significant employment efforts and not working "token" amounts simply to gain access to Medicaid coverage, which has unfortunately occurred in some existing State programs with calamitous budget impacts. The Medicaid Buy-In is not intended as a Medicaid expansion but an employment support for workers with disabilities. Effective use of the aforementioned design components can significantly influence the outcome.

The experiences of some "early implementation" States illustrate several important things: how difficult it is to predict enrollment and how important the decisions on income, resources and cost-sharing can be. For example, South Carolina had a generous earned income limit, no cost-share requirements, and a modest resource level, but was far below its projected participation goal. Iowa had the same income limit as South Carolina, excluded unearned income, had a generous resource level, and charged a monthly premium, but greatly exceeded enrollment forecasts. Iowa underestimated participation such that it exceeded its 2002 budget by $27,000,000. The State of Minnesota had no income limits, a generous resource limit, and a graduated premium, but reached its third year budget predictions in the first year of operation. Additional information on these States' programs will be found within this report and provides further indication of the importance of decisions on Medicaid Buy-In components and how they ultimately precipitate participation and fiscal exposure for the State.

DMAS developed enrollment and cost projections based on the experiences of other States and their methodologies. Technical experts recommended that DMAS use information from Iowa (SSDI participation rates), Nevada (methodology), and New Mexico (gradual monthly enrollment up to full participation) in forecast development. These cost projections extrapolate the annual cost of SSDI recipient participation in Medicaid Buy-In and account for expected participation, cost to the State, potential premiums paid by participants, and overall General Fund cost. From this methodology, DMAS reported several options of what a Medicaid Buy-In could cost, based on various unearned income limits.

Major- findings of this study overall may be summarized as follows:

• There is broad support from Virginians with disabilities, advocates, and employers for a Medicaid Buy-In program.
• The MBI program should utilize monthly premiums and reasonable co-payments for medical services used by participants to "buy-into" the program.
• Higher resource levels should be allowed for MBI participants, rather than regular Medicaid allowances, to enable and promote independence and less reliance on government entitlements.
• The maximum income level established for eligibility in the MBI program should be sufficiently high as to encourage and attract SSI and SSDI recipients to participate in gainful, competitive employment and the MBI.
• Four program design options and associated cost estimations were prepared for this study with projections ranging from enrollment of 1,391 participants at a General Fund cost of $4,000,000, to 5,261 participants at a General Fund cost of $15,100,000.

Further study of these and other MBI options as requested by Lieutenant Governor Kaine and the Disability Commission will continue with the goal of removing barriers that prevent individuals with disabilities from maximizing their employment, earning potential and independence.