Another installment in the ongoing saga regarding Arizona’s efforts to rollback coverage for parents and childless adults occurred on October 7th when CMS sent the state a letter reviewing where things stand with the state’s Section 1115 waiver request. In January, Arizona became the first state in the nation to request a waiver of the “maintenance-of-effort” provisions (see Arizona Section 1115 Waiver Request Sets a New Low for details).

In the interim, on August 24th, an important ruling was issued by the U.S. Court of Appeals for the 9th Circuit regarding the legality of some aspects of Arizona’s underlying Section 1115 Research and Demonstration Waiver. We hope to have one of the lawyers on that case blog for us soon to help explain the complexities of this ruling and its potential impact. While we await a more in depth legal analysis, there is one aspect of this decision that is worth noting.  The court underscored previous precedent from the Beno v. Shalala case that Section 1115 Research and Demonstration proposals must be just that – they must have experimental value, and promote the objectives of the statute. A simple benefit cut would not likely meet that test. This is important in light of some of the waiver proposals that states are currently considering.

Now back to the October 7th letter.  What did CMS say? Citing the lack of a legal or policy basis for the state’s request in a number of areas, CMS noted that a number of requests were not approvable including a waiver request to permit elimination of coverage for 60,000 parents with incomes between 75-100% of FPL. Other states might want to note that the letter states: “The State has not provided justification to support such an action except to achieve State savings, which is not a sufficient basis for approval of a waiver or demonstration under Section 1115 of the Act.” Also, further reductions in the enrollment of childless adults was disallowed as well as a request to move to a 6 month redetermination process from the current 12 month schedule for adults.

With respect to copayments, CMS allowed the state to move forward with a $4 copay on non-emergency medical transportation for childless adults in two counties and a $3 fee for parents and childless adults in other counties who miss scheduled appointments without providing 24 hour notice of cancellation. The state must evaluate the impact of these changes and CMS denied a request to permit copays on kids, pregnant women and “TANF” parents. CMS also denied the state’s request to impose a $50 annual assessment on childless adults who smoke because the state did not address concerns that such a fee would discourage enrollment.

All interesting developments for those of you in states with pending waiver requests or expect to see waivers cropping up soon!