CMS Waives Medicaid Retroactive Eligibility for Iowa: Is Your State Next?

Posted by on December 01, 2017

Medicaid, health concept. Stethoscope, syringe and pills on grey backgroundSince 1973, the Social Security Act has mandated that states provide retroactive Medicaid benefits for three months prior to the individual’s application.  SSA § 1902(a)(34).  Congress enacted this provision to provide coverage to those lacking knowledge about their Medicaid eligibility and to those whose sudden illness prevented them from applying.  Senate Report No. 92-1230, at 209 (Sept. 26, 1972).  Providers benefit from retroactive eligibility through the ability to enroll uninsured patients in Medicaid retroactively, including after discharge, to avoid uncompensated care costs.

Seeking to trim Medicaid expenditures, Iowa’s Governor this year signed a law requiring the State to seek a CMS waiver from the retroactive eligibility requirement.  When the State agency asked the public for comments on its waiver proposal, only one commenter expressed support.  The vast majority expressed concern that many patients—especially trauma patients who might lack the ability to promptly file Medicaid applications—would face new coverage gaps.  The State itself projected that the waiver would shed 3,000 members (monthly) and would slash Medicaid expenditures by $36.8 million (annually).  Providers unsurprisingly voiced concern that the waiver would increase uncompensated care costs.

The State Medicaid agency nevertheless went forward with the waiver request to CMS in August, advising CMS that the waiver would promote the objectives of Medicaid by reducing program costs and by encouraging patients to enroll in Medicaid sooner (rather than later), and to do so when healthy.  The simple reality, however, is that many low income patients, don’t enroll in Medicaid until faced with large out of pocket medical expenses, and this sort of coverage limitation is a thinly veiled effort to reduce costs rather than a piloting or demonstration of methods designed to improve healthcare or benefit enrollees (many of whom will be forced into bankruptcy by the absence of retroactive coverage for costly hospital or nursing home stays).

CMS approved the bulk of Iowa’s request.  (CMS carved out pregnant women and certain infants).  Iowa hospitals will now be left holding the bag for a vast portion of the ~$36.8M cut to Medicaid expenditures.

While waivers are statutorily authorized to pilot potential improvements for the healthcare delivery system, this waiver–like at least one other similar waiver that was stricken by a court–seems designed only to relieve states and CMS of financial responsibility, not to bend the care delivery cost curve.  This waiver should sound alarm bells across all Medicaid programs.

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