Arizona and CMS Reach Agreement on Medicaid Waiver

Today the federal government and the state of Arizona reached agreement on a five-year extension of the state’s Section 1115 Medicaid waiver. The terms and conditions of the agreement touch on a range of areas including the state’s managed care delivery system, some issues affecting long term care services, a number of financing issues and a few other random matters.

But let’s focus on the emerging issues of policy addressed that relate directly to the Medicaid expansion. The state had sought a number of changes, mandated by the legislature, which would have limited coverage and imposed various requirements on these beneficiaries. Arizona is one of a handful of states (Ohio and Arkansas other notable examples) where the legislature has sought to establish barriers to coverage for these beneficiaries. And Kentucky’s Governor Bevin recently submitted a waiver proposal that threatens to take a giant step backwards for that state’s successful Medicaid expansion.

As regular readers of SayAhhh! know, CMS recently turned down Ohio’s proposal wholesale. Arizona’s waiver is much more comprehensive and touches more areas. With respect to the expansion changes, Arizona got some of what the state asked for, but CMS drew some clear lines that confirm where this Administration is likely to stay for its waning months.

Here is a quick summary of some of the key issues:

Work requirement: CMS has been clear that a work requirement that is linked to eligibility for Medicaid wouldn’t fly and it didn’t budge on that principle. Instead, the state will establish a new work search and job training program, which will help connect beneficiaries to employment supports. In its letter to the state CMS says: “Health coverage provided by the Medicaid program and this demonstration will not be affected by this state initiative.”

Time limits on Medicaid coverage: The state had request a five-year limit and that request was turned down.

Premiums: CMS approved a 2% premium for adults from 100-133% of the poverty line and no premiums below poverty. These adults can be disenrolled if they don’t pay, but they can’t be locked out for six months as the state requested and Indiana got approval for. This is an important and smart move – the lock-out, as I have discussed elsewhere, is terrible health policy in my view. This development is also worth noting for Kentucky watchers since the Governor there wants this and more.

Healthy Behaviors/New Accounts: The state will establish new accounts called CARE accounts – they are mandatory for those over poverty but optional for those below and the medically frail and/or seriously mentally ill. Premiums will accrue in these accounts and if beneficiaries participate in behaviors that meet targets to manage chronic conditions or utilize preventive health care, they can get a six-month premium abatement. I haven’t read the fine print on this one yet.

Safety Net Care Pool: The state had a relatively small pool which benefited only Phoenix Children’s Hospital. This is being phased down and out in 2017.

For more information, read our comments to CMS on the Arizona waiver request.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.