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Feds OK Arizona’s process to freeze Medicaid unit

Arizona will start implementing Gov. Jan Brewer’s plan to reduce Medicaid enrollment to help balance the state budget after receiving federal clearance Friday for the processes the state will use, officials said.

The federal Department of Health and Human Services’ approval of Arizona’s phase-out plan means that starting Sunday, the state will halt new signups in a small part of its Medicaid program before an Oct. 1 coverage cutback, said Monica Coury, a state official.

The state doesn’t need federal approval to reduce enrollment in parts of the Arizona Health Care Cost Containment System that aren’t federally mandated. However, processes to gradually implement the changes are subject to federal review.

The part of the program being frozen Sunday is known in Arizona as the “spend-down” population. It consists of 5,700 people who qualify for Medicaid because they have been hammered by large health care bills.

People enrolled in that part of the program will keep coverage through the rest of their eligibility period, up to six months, though the state eliminates that part of its Medicaid entirely on Oct. 1.

Federal officials said they regret that Arizona “has chosen to terminate” part of its Medicaid program, but HHS Secretary Kathleen Sebelius said in February that the state had leeway as of Oct. 1 to scale its back parts of its Medicaid program that aren’t federally mandated.

The newly approved processes in Arizona’s phase-out plan include notifications, community outreach, appeal rights and efforts to determine whether beneficiaries are eligible for other coverage.

The current federal authorization for Arizona’s Medicaid program runs through Sept. 30, and the state is moving to get new authorization that doesn’t include all of the non-mandated eligibility that it now provides.

The start of gradual elimination of coverage for the spend-down population is to be followed by a July 1 freeze on signups for a larger enrollment category of childless adults whose income levels put them outside federal coverage mandates.

That additional step is projected to reduce enrollment by approximately 130,000 people.

The Medicaid enrollment reduction and other steps planned by Brewer would save the state approximately $500 million. That’s about half of the total spending cuts that Brewer and the Republican-led Legislature approved to balance the state budget for the fiscal year beginning July 1.

A previous budget-balancing plan offered by Brewer would have reduced AHCCCS enrollment by approximately 250,000 people, or by about one-fifth of its current enrollment.

The reduction of the childless adult portion of the program is expected to be challenged in court.

Attorneys have said the challenge would contend the reduction conflicts with a voter-mandated enrollment increase and thus violates a constitutional protection for voter-approved laws.

Legislators who voted to authorize Brewer to reduce AHCCCS enrollment said it’s permitted because the voter-approved law hinged the enrollment increase on availability of state funding.

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