461 Spenddown Medicaid

Effective Date: June 1, 2020

(Sections in 415 have been rewritten into 461 sections as of June 1, 2020)

Introduction

Medicaid has programs that allow an individual to qualify by making a payment to reduce their countable income. These programs are called “Medically Needy” programs. The process of making the payment is referred to as spending down or “spenddown”.

These programs apply after the individual has failed the income test for other Medicaid programs (443-1). Section 300 has a list of Medicaid programs.

Spenddown applies to medically needy programs. It also applies to the medically needy groups under home and community based (HCB) waivers. The Medicaid Work Incentive program, nursing home, and HCB waiver programs may require a payment. The following sections explain these payments.

· 461 sections define medically needy coverage.

· 462 sections describe payments for the MWI program.

· 463 sections describe payments for nursing home Medicaid and HCB waivers.

Definitions

Terms used in the following sections include:

1. Allowable Medical Bills means the medical expense:

a. Is for a medically necessary service received by the individual or a family member,

b. Is not payable by a responsible third party such as insurance, (the individual must owe some portion of the bill)

c. Is not a pre-paid expense, and

d. Has not been used to meet a spenddown before.

2. Basic Maintenance Standard (BMS) means a set income amount that increases as household size increases. (Table VII)

3. Countable Income is the person's gross income minus allowable exclusions, disregards and deductions. Income includes income of a spouse, or parents of a dependent child, living with the individual even if temporarily absent. Income exclusions, disregards and deductions vary based on the program type.

4. Incurred Medical Bill: An incurred medical bill is an expense for medical services:

a. For a person who is receiving Medicaid, AND

b. For a type of service covered by the Medicaid benefit package for which the person qualifies, AND

c. Received during the Medicaid benefit month that the bill is being used to meet the spenddown (the exception is for bills from the retroactive period).

5. Medicaid Health Plan or ACO (Accountable Care Organization). This is a formal arrangement between Medicaid and health care organizations to provide medical services to Medicaid enrollees. Medicaid pays an amount to the Medicaid Health Plan for each recipient. The ACO Plan assures access to medical providers and pays the providers directly for their services. Another name for these is “Capitated Health Plans”. Medicaid also pays premiums to contracted agencies to provide mental health services to recipients.

6. Medical Deductions: A medical bill meets the criteria for being a deduction when it does not meet all three of the criteria for being an incurred expense. Medical deductions are bills for medical

services:

a. Received by other family members (spouse, children) in a month when that family member is not and will not become eligible for Medicaid or CHIP, OR

b. For the eligible individual that are not payable by Medicaid or CHIP, OR

c. Received by the individual in a month the individual is not, and will not become eligible for Medicaid or CHIP, OR

d. For medically necessary services not covered by the Medicaid service plan for which the individual qualifies.

7. Paid in Full Medical Bills: A paid-in-full medical bill is:

a. A bill paid in full before the start of the Medicaid benefit month, or

b. A bill paid in full during a retroactive month that can be used in that month and through the application month.

8. Spenddown. The spenddown amount is the difference between the person's countable income and the applicable income limit.

a. For family-related medically needy groups, the income limit is called the BMS (basic maintenance standard).

b. For aged, blind and disabled people, the income limit is 100% of the FPL (federal poverty level).

9. Unpaid Medical Bills: To be considered unpaid, some portion of the bill must be owed to the medical provider during the benefit month for which we are trying to meet spenddown.

a. A bill for medical services received during the benefit month is always unpaid, even if the individual pays the bill on the date of service, or on a later day in the benefit month.

· (The exception is a pre-paid expense when the services are received in a later month.)

b. If a individual is making payments on a medical bill, any unpaid amount due to the provider at the first of a month meets the criteria of an unpaid medical bill.

c. A bill paid-in-full before the first day of the benefit month cannot be used to meet that month's spenddown. (There are exceptions for bills paid in retroactive months.)