The Value and Use of the Qualified Medicare Beneficiary Program: Early Evidence from Tennessee

Among its many provisions, the Medicare Catastrophic Coverage Act (MCCA) of 1988 (P.L. 100-360) established a new benefit for low-income Medicare beneficiaries known as the Qualified Medicare Beneficiary (QMB) Program. The QMB Program is one of the few MCCA provisions that still exists; most of the others were repealed in 1989. The QMB Program is a federally mandated expansion of some state Medicaid program benefits. Before the implementation of the QMB Program, state Medicaid programs paid the out-of-pocket costs of obtaining Medicare services for a relatively small group of people - people who were already eligible for and enrolled in Medicaid. ("Out-of-pocket costs" refers to Medicare premiums, copayments, and deductibles that patients must pay.) The QMB Program expanded the reach of state Medicaid programs by requiring the programs to cover the out-of-pocket costs of an additional group of people whose incomes were below the federal poverty level, even though they had not been eligible for Medicaid previously. Unfortunately, despite many efforts by the Health Care Financing Administration (HCFA), knowledge of the QMB Program among its intended enrollees has been limited, and the program is therefore underutilized (U.S. General Accounting Office [GAO], 1994). Moreover, only a few features of the program have been discussed in the professional literature (Neumann, Bernardin, Evans, & Bayer, 1995). Studies by the GAO (1994), the Families USA Foundation (1993), and Neumann et al. (1995) focused on enrollment patterns in the program and offered some comments about its potential value to recipients. However, these studies did not examine detailed data on health care use by QMBs before offering conclusions. As part of an ongoing evaluation of the MCCA, a rich data set of health care utilization by QMBs in Tennessee was constructed for 1989, the first year of the QMB Program. We used these data to examine the impact of the QMB Program by focusing on the changes in health care use associated with QMB status. We also estimated the financial value of the QMB Program to its enrollees. This information may motivate social workers and other health professionals to examine the value of the QMB Program to the low-income clients they serve. BACKGROUND Eligibility Requirements MCCA defined a qualified Medicare beneficiary as an aged or disabled individual receiving Medicare whose income fell below 85 percent of the federal poverty level and whose resources did not exceed twice the allowable amount under the Supplemental Security Income (SSI) program. The income limit was extended to 100 percent of the federal poverty level in 1992 (U.S. House of Representatives, 1993). MCCA mandated that state Medicaid programs pay all applicable Medicare premiums, coinsurance, and deductible amounts for QMBs. The QMB Program offered financial assistance to low-income individuals who needed Medicare-covered services without fundamentally changing the eligibility for Medicaid services. Thus, state Medicaid programs and the QMB Program were not intended to be substitutes for each other, and the characteristics of their clienteles differed. In Tennessee, the state studied for this project, this benefit amounted to full first-dollar cost of deductibles, copayments, and coinsurance for all services provided under Medicare for the enrollee. It is worth noting, however, that QMBs were not eligible for Medicaid-covered services; the QMB Program merely used state Medicaid programs as vehicles for paying the out-of-pocket costs of Medicare services. People who meet the eligibility requirements of a state's Medicaid program can be categorized as "categorically needy" or "medically needy" (Congressional Research Service, 1993). The categorically needy group consists of people who receive SSI. SSI recipients are elderly people, people with disabilities, and blind people who have little or no income or resources. Resources are defined as bank accounts and similar liquid assets, as well as real estate, automobiles, and other personal property. …