Medicaid Reform Amendments of 1987

Medicaid Reform Amendments of 1987 - Title I: Limits on Federal Financial Participation in State Expenditures; Increased State Flexibility - Amends title XIX (Medicaid) of the Social Security Act to set a cap on Federal Medicaid matching payments to States for FY 1988, adjusted annually thereafter to reflect changes in the cost of medical care. Authorizes the Secretary of Health and Human Services to distribute additional funds for FY 1988 to States whose Federal Medicaid payments, but for their cap, would exceed 108 percent of capped payments and who either: (1) held increases in their Federal Medicaid payments from FY 1985 through 1987 below the increase in the cost of medical care; or (2) kept the percentage change in their Federal Medicaid payments from FY 1987 to 1988 below average annual percentage changes from FY 1985 through FY 1987.

Eliminates the requirement that States provide certain minimum benefits to groups which States have a choice and elect to cover. Sets forth requirements concerning methods for determining the eligibility of individuals for whom State coverage is optional.

Amends the Unemployment Compensation Amendments of 1976 to make it clear that the preservation of the Medicaid eligibility of individuals who become ineligible for benefits under title XVI (Supplemental Security Income) (SSI) of the Act as the result of a cost-of-living increase in benefits under title II (Old Age, Survivors and Disability Insurance) of the Act shall not apply to individuals who become ineligible for SSI benefits for other reasons.

Amends the Medicaid program to make the requirements that a State Medicaid plan be in effect throughout the State and that beneficiaries have freedom of choice in selecting a provider applicable only with respect to mandatory benefits for those groups which the State is required to cover.

Prohibits States from requiring any copayments, other than a nominal coinsurance amount, for mandatory services provided to groups which the State is required to cover. Gives States the option to exempt from copayment requirements services furnished: (1) to children, pregnant women, and institutionalized individuals who are required to spend all but a minimal amount of their income on medical care; and (2) services furnished on an emergency basis or by a health maintenance organization. Places no restrictions on State copayment requirements for optional services.

Eliminates statutory requirements regarding minimum payment rates for Medicaid services, but requires States to include in their plans a description of the methods used to set payment rates for hospitals, hospices, and skilled nursing and intermediate care facilities.

Requires State Medicaid plans to provide for an effective method of verifying whether services for which payment is claimed were furnished to covered individuals.

Eliminates the subtraction from Federal Medicaid payments of State expenses which would not have been incurred by the State had it exercised its option to pay Medicare (title XVIII of the Act) part B (Supplementary Medical Insurance) premiums on behalf of eligible Medicaid recipients.

Title II: Limits on Matching of Administrative Costs - Eliminates the 75 percent Federal matching rate for the compensation and training of skilled medical personnel and supporting staff and the 90 and 75 percent matching rates for various Medicaid management information systems activities and fraud control units.

Reduces the Federal matching rate from 50 percent to 25 percent for State administrative costs in excess of 135 percent of the national median of such costs. Prohibits Federal matching for State administrative costs in excess of 160 percent of the national median. Provides that if a State contains its Medicaid administrative costs such that a greater amount could have been claimed at the 50 percent or 25 percent reimbursement rate, the Secretary must notify the State of the amount of additional reimbursement which could have been claimed at such rates. Provides that if similar administrative cost reimbursement provisions are included in the Aid to Families with Dependent Children program (part A of title IV of the Act) or the Food Stamp program under the Food Stamp Act of 1977 excess Medicaid administrative costs shall be shifted to the AFDC and Food Stamp programs, provided greater amounts can be claimed for the 50 or 25 percent reimbursement rate under such programs. Repeals requirements regarding the establishment and operation of Medicaid mechanized claims processing and information retrieval systems.

Title III: Other Cost Saving Proposals and Administrative Improvements - Eliminates the requirement that States submit a plan to the Secretary for pursuing claims against third parties who have an obligation to pay for Medicaid services.

Authorizes the Secretary to: (1) promulgate regulations setting requirements for State prepayment and postpayment claims reviews; and (2) perform such reviews for States which fail to meet review requirements.

Requires States to limit reimbursement to physicians for nonemergency outpatient services provided in hospital emergency rooms to the reimbursement of similar services provided elsewhere in the area.

Permits the Secretary to waive or modify certain requirements regarding the participation of U.S. territories in the Medicaid program.

Requires the Secretary to transfer from the Medicaid appropriation account to the Supplementary Medical Insurance Trust Fund the entire amount due from a State for Medicaid coverage of the Medicare part B premium. Excludes from Medicaid payments to States the Federal share of Medicare part B premium payments.

Amends the Omnibus Budget Reconciliation Act of 1980 to redefine the disputed claims on which States are required to pay interest to be amounts claimed on or after October 1, 1980, rather than expenditures for services furnished on or after that date.

Amends the Medicaid program to preclude the eligibility of all individuals in correctional institutions, including those in private institutions under contract with State or local governments.

Gives the Secretary 90 days after receiving a request for the continuance of a waiver of the requirement to give recipients freedom of choice of provider to request additional information of the State. Gives the Secretary 90 days after receipt of such information to deny the request.

Repeals the provision permitting States to apply rules less restrictive than SSI rules in limiting the Medicaid eligibility of individuals who have transferred their resources for less than fair market value. Authorizes States to waive such rules in cases where a denial of Medicaid eligibility would work an undue hardship.

Eliminates the requirement that coordinated audits be performed on an entity providing services on a cost-related reimbursement basis under both the Medicare and Medicaid programs.

Amends part A (General Provisions) of title XI of the Act to limit the application of the provision which permits individuals to preserve their Medicaid eligibility by declining increased veterans' pension benefits to individuals who made that decision before October 1, 1987.

Sets forth technical and clarifying amendments.