States can expand Medicaid, cut it later, CMS says

States that expand their Medicaid programs under provisions of the federal healthcare overhaul are free to cut them again in the future, the CMS has confirmed.

Cindy Mann, director of the Center for Medicaid and State Operations at the CMS, said the agency will allow states that expand their Medicaid eligibility to receive 100% federal funding for the newly eligible in 2014-2016 to cut their rolls in the future.

Concerns about the states' ability to afford the program after the 100% federal funding begins to drop to 90% were included in recent statements from both Democratic and Republican governors about the Medicaid expansion.

Such future affordability concerns were cited by many health policy experts as part of the reason why only 13 governors have committed to expanding their Medicaid programs since the June 28 U.S. Supreme Court decision that removed financial penalties for not expanding eligibility to all legal residents whose incomes are up to 133% of the federal poverty level, with a 5 percentage-point leeway to 138%.

That court decision has left many unanswered questions surrounding the Medicaid expansion, most of which the CMS has yet to answer. Although CMS officials have said they view the remainder of the law beyond the expansion mandate as untouched, many state officials have clamored for more details on the impacts of the decision, and some have acted on their own interpretations.

For instance, Maine submitted a Medicaid state plan amendment request Aug. 1 to implement eligibility cuts to the state's program as part of a nearly $20 million cost cutting plan approved by the legislature.

CMS officials did not respond to questions about whether states will have to submit a plan amendment or another application or will just need to send a notification letter to pull out of the expansion.

The newly confirmed enrollment flexibility may not address all of the states' outstanding cost concerns, a recent government survey indicated. Most states expect the Medicaid eligibility expansion to increase their costs, even during the three years that the federal government provides a 100% reimbursement for the expanded enrollment, a Government Accountability Office survey of state budget directors reported Aug. 1.