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Brewer’s new plan: freeze AHCCCS without the cuts

Jeremy Duda//March 15, 2011//[read_meter]

Brewer’s new plan: freeze AHCCCS without the cuts

Jeremy Duda//March 15, 2011//[read_meter]

Gov. Jan Brewer (Photo by Evan Wyloge/Arizona Capitol Times)
Gov. Jan Brewer (Photo by Evan Wyloge/Arizona Capitol Times)

Gov. Jan Brewer changed tracks on her plans to overhaul the Arizona Health Care Cost Containment System, announcing a new plan that would freeze enrollment for childless adults but wouldn’t impose the massive cuts she’d long advocated.

The plan, which Brewer released Tuesday afternoon, would save Arizona about $500 million in the fiscal year 2012 without cutting 280,000 patients from AHCCCS, as the governor’s budget proposal called for.

“Nothing about this plan is pain-free. But it strikes a balance by creating a Medicaid program that is more fiscally responsible while keeping its core promises to the Arizonans who depend on it,” Brewer said in a press release.

Under the plan, AHCCCS would freeze enrollment for childless adults; cut reimbursement rates to health care providers by 5 percent; limit hospital stays for AHCCCS patients; freeze enrollment for parents who earn more than 75 percent of the federal poverty level; and cut the program’s “spend down” population of patients who wouldn’t normally qualify for coverage but receive benefits because they’ve sustained major medical expenses.

Much of the plan would require approval from the U.S. Department of Health and Human Services, which already rejected some of the proposals, such as fees for missed doctor appointments and the elimination of non-emergency transportation services for AHCCCS patients.

The biggest chunk of the savings is $190 million from freezing enrollment for childless adults, whom Brewer had previously proposed cutting altogether. The state would save $95 million by cutting reimbursement rates to hospitals and another $70 million by eliminating the spend-down population.

AHCCCS estimated that the program would lose about 100,000 patients through attrition in 2012, Brewer spokesman Matthew Benson said. Most of the provisions would not go into effect until Oct. 1, when Arizona’s current agreement under which the state and feds jointly fund AHCCCS, expires.

Benson said the governor is hopeful that the feds will approve the plan, including the previously rejected proposals, if it will prevent deeper cuts to Medicaid coverage.

“I think the federal government has a shared interest with the state in trying to maintain as much of the Medicaid program as possible. Certainly we’re optimistic that they’ll be open to these reforms,” Benson said.

Getting federal approval for some of the proposals may be difficult. Brewer’s plan calls for the U.S. Social Security Administration to provide Arizona $40 million in reimbursements for Medicaid eligibility errors, and would save $20 million by eliminating Medicaid reimbursement to hospitals for emergency care for illegal immigrants.

The program would stay in place until Jan. 1, 2014, when the federal Affordable Care Act requires all state Medicaid programs to cover anyone earning up to 133 percent of the federal poverty level. Benson, however, said nothing is set in stone. Several lawsuits, including one Brewer joined in 2010, seek to overturn President Obama’s landmark health care law.

“There are a lot of thing subject to change in 2014. We’ll wait to see if the Affordable Care Act in fact goes into effect at that point,” Benson said.

The governor’s original budget plan, which she released in March, included $541 million in savings by cutting more than a quarter million patients from AHCCCS. Brewer applied to the feds for a waiver that would free the state from the maintenance-of-effort requirements in the health care law. HHS Secretary Kathleen Sebeilus later informed the governor that Arizona could cut 250,000 from AHCCCS without federal permission.

Brewer’s original budget plan faced fierce opposition from health care industry groups, who argued that the cuts would cost the state thousands of jobs and undermine Arizona’s health care industry. Industry groups recently unveiled a bed tax proposal that would offset most of the proposed cuts, though it was unclear if they would continue pushing the plan or back Brewer’s proposal instead.

“This plan is the culmination of really well over a year’s worth of discussions,” Benson said.

Benson said the governor hasn’t formally withdrawn her waiver request, and didn’t know if she would do so. According to Brewer’s plan, several provisions would still require a waiver, including the enrollment freeze for parents and a proposal to require AHCCCS patients to demonstrate eligibility every six months, instead of every year.

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