Health Center Regulatory Issues, Uncategorized

Sebelius Sends Letter to States on Potential Medicaid Savings

By: Annie Xu
Last Thursday, HHS Secretary Sebelius issued a letter outlining ways budget-strapped governors could find savings in Medicaid. The letter however, did not address recent requests to sharply curtail program eligibility.

“I have heard the urgency of your state budget concerns,” the Secretary wrote, and went on to reaffirm the administration’s commitment to helping states balance the need for quality care with the stress of rising costs and state deficits. She highlighted how states can save money by selectively changing or limiting optional benefits. She noted that savings can also be drawn from purchasing drugs more efficiently, from managing high-cost enrollees more effectively, and by attacking fraud.

She maintains that the reform bill allows states with deficits to reduce eligibility, but only for non-disabled, non-pregnant adults with incomes above 133% FPL, although this would mean the loss of enhanced FMAP dollars if eligibility is reduced before June 30. As for the law’s eligibility requirements, she did not comment on recent waiver requests, only promising to “review what authority, if any, I have to waive the maintenance of effort under current law.”

Facing severe budget gaps and the end of stimulus funding in June, numerous governors have been seeking relief from rules in the stimulus and Affordable Care Act that required them to maintain current Medicaid eligibility levels until 2014, or risk losing federal matching funds. Arizona, in late January, became the first state to officially ask permission to waive current eligibility rules without losing federal funds. The waiver would suspend coverage for 280,000 low income people.

Undoubtedly, other states are closely following the administration’s response. 29 republican governors have signed on to a letter asking President Obama and Congress to ease maintenance of effort requirements. They warned that without these waivers, states will be forced to cut payments to doctors, hospitals, and other providers.