The CMS has approved a Medicaid demonstration waiver for Iowa that will let the state stop retroactive Medicaid coverage. Iowa hospitals over the summer spoke out about the proposal and said the waiver would hurt them financially.
The move, which Iowa said would save $36.8 million in Medicaid spending annually and reduce monthly enrollment by more than 3,300 members, would let the state sidestep an Affordable Care Act (ACA) rule that lets people receive Medicaid coverage the day they apply for the program.
The three-month retroactive eligibility waiver would stop providers from billing for services for patients eligible for Medicaid if the services were provided within three months of the application. The waiver will apply to new applications starting Nov. 1, but will not apply to pregnant women and infants younger than 1.
In a letter to the state, the CMS says the waiver encourages beneficiaries “to obtain and maintain health coverage, even when healthy." It also increases "continuity of care by reducing gaps in coverage when beneficiaries churn on and off Medicaid or sign up for Medicaid only when sick” and "promotes the alignment between Medicaid and commercial coverage to facilitate smoother beneficiary transition.”
But the Iowa Hospital Association says the changes in the waiver will lead to more bad debt and higher charity care costs because fewer people will have Medicaid coverage.
The advocacy organization Families USA has also written the HHS is opposition of the waiver request, stating it would actually lead to more gaps in coverage. Medicaid already requires beneficiaries to re-establish eligibility annually, and research does not support the assertion the eliminating retroactive coverage better prepares people for private coverage, the organization said.
The Iowa waiver was the second Medicaid waiver that CMS approved in as many weeks. The CMS also granted a one-year extension of Kansas’ Medicaid program, KanCare. That waiver allows the state to cover most of its Medicaid beneficiaries in a managed care plan. It also lets Kansas continue its safety net pool, which helps cover uncompensated care and delivery system reform incentive payments. President Barack Obama's administration had rejected that waiver request because of concerns there was not enough state oversight.
This waiver the CMS just approved is different from another high-profile waiver involving the Hawkeye State. Iowa had proposed a stopgap measure to help stabilize its ACA exchanges, but has since pulled the waiver and called the ACA ”inflexible.” The waiver would have replaced premium tax credits with flat premium subsidies based on age and income, eliminated cost-sharing reduction payments and created a reinsurance program. President Donald Trump reportedly told CMS Administrator Seema Verma that he opposed the plan before Iowa officials pulled the waiver request.