DES MOINES, Iowa — Iowa is seeking permission from President Donald Trump’s administration to cut a key benefit for all its Medicaid recipients, a move that could foreshadow other state-level efforts to change the safety net program after Congress repeatedly failed to repeal the Affordable Care Act.
Federal health officials could decide soon whether to back Iowa’s proposal, which would cut retroactive payments for poor or disabled residents for medical needs incurred up to three months before they registered for or re-enrolled in Medicaid. The state wants a decision by Oct. 1, though such a timeline appears unlikely.
Should the state successfully roll back retroactive payments — a provision included in the latest repeal bill, which never got a Senate floor vote — it could signal a new Republican strategy for altering health care rules without congressional action. Iowa says it’s just looking to save money.
The Trump administration has yet to approve any major changes — some proposed months ago — to state Medicaid programs, but federal officials encouraged states in a letter earlier this year to keep suggesting them.
“I would suspect that at least now in the short term that it looks like the repeal and replace efforts are in the rear view mirror, that that kind of opens up the door for some of these conversations to really start to ramp up,” said Matt Salo, executive director for the National Association of Medicaid Directors.
Medicaid is jointly funded by the federal and state governments, and states have long sought so-called demonstration waivers with the Centers for Medicare and Medicaid Services to make any changes. President Barack Obama’s health care law encouraged states to expand their Medicaid systems, and CMS approved several plans — including for Iowa — that reduced some benefits for people who gained health care under the new law.
A CMS spokesman declined to comment on Iowa, directing inquiries to the agency website.
Iowa is believed to be the first state since Obama signed the Affordable Care Act in 2010 to propose rolling back retroactive coverage for its entire Medicaid population, which includes the poorest Americans. It comes with no pledge to expand the number of residents covered or enhance the quality of care.
Under the provision, Iowa residents could only apply for retroactive payments from the month they enrolled or re-enrolled in Medicaid, rather than the three-month allowance under current law.
Iowa health care providers say the retroactive benefits on the chopping block help vulnerable residents — such as someone in a car accident or facing a sudden move to a nursing facility — avoid crippling debt and that hospitals will be on the hook for some of the costs.
Three other states — Arkansas, Indiana and New Hampshire — cut retroactive services under the Obama administration as part of its Medicaid expansion provision that is part of the Affordable Care Act. But the cuts mainly applied to new patients who wouldn’t have been eligible for the safety net without the expansion.
Iowa says the reduction to retroactive pay would save more than $37 million annually — more than $9 million of that for the state. The state also points out that private insurance plans don’t include retroactive payments.
Amy McCoy, a spokeswoman for the Iowa Department of Human Services, said the state is seeking flexibility to make the program sustainable, citing “tough budget times.”
More than 3,300 people a month would drop from Medicaid rolls under the plan. That’s about 40,000 people annually.
Eighteen states had 21 waivers pending this month with CMS, according to data compiled by the nonpartisan Kaiser Family Foundation. Although some seek to expand care, such as enhancing behavioral health coverage to address the opioid epidemic, several include efforts to add stipulations for receiving Medicaid.
Arkansas, Indiana, Kentucky, Maine, Utah and Wisconsin are seeking permission to add work requirements to Medicaid eligibility. Kentucky wants to prevent recipients from re-enrolling in Medicaid for six months if they misrepresent information. Wisconsin also is seeking mandatory drug testing.
Joan Alker, the director of Georgetown University’s Center for Children and Families, said states have traditionally sought waivers to expand Medicaid or change the way services are delivered. She said the latest wave of requests is troublesome because it adds barriers she believes could lead to fewer people getting coverage.
“If you limit coverage, people’s health care needs don’t go away,” she said. “Those costs are going to be absorbed in the system in some way.”
Iowa wants to enact the changes by Oct. 1, though it’s unclear if the Trump administration will respond by then considering other states have waited far longer. Even should the agency agree, federal lawsuits are expected.
Leonardo Cuello, director of health policy for the National Health Law Program in Washington, D.C., said proposals like Iowa’s are trying to “push the boundaries” of how the waiver program was intended to operate. When Congress established it, he said, it didn’t tell the federal health agency: “Here’s the keys to the car; now do whatever you want.”
Salo, with the National Association of Medicaid Directors, said waivers have long been a catalyst for broad improvements to the health care system, adding that federal law only requires them to “promote the objectives” of Medicaid.
“There’s no tablets that have been brought down from the mountain that say, here’s what that means,” he said. “It’s very much open to interpretation.”
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