Arkansas on Tuesday submitted a waiver that would mostly roll back Medicaid expansion in the state and impose a work requirement on those who remain in the program.
The CMS confirmed receipt of the waiver application called Arkansas Works.
Hospitals said the state proposal would financially devastate them.
The waiver seeks to drop Medicaid eligibility in the state from 138% of the federal poverty level, or $33,948 for a family of four as outlined in the Affordable Care Act to 100% FPL, or $24,600 for a family of four. An estimated 60,000 people would lose Medicaid coverage.
In the waiver application, Arkansas officials said those people likely would use tax credits and cost-sharing reduction payments to buy individual plans on the state marketplace, which is currently stable. The insurers signed up this year have said they intend to continue selling plans.
Starting Jan.1, 2018 those who remain on Medicaid must work, participate in job training, be in school or be actively looking for employment at least 80 hours a month to keep their insurance.
Those who don't comply would lose their coverage and be blocked from Medicaid until the next calendar year.
The proposed amendments "seek to test innovative approaches to promoting personal responsibility and work, encouraging movement up the economic ladder, and facilitating transitions from Arkansas Works to employer-sponsored insurance and marketplace coverage," Gov. Asa Hutchinson wrote in the waiver application to the CMS.
Several other states, including Arizona, Indiana, Kentucky, Maine and Ohio are also considering implementing work requirements.
The CMS has not yet approved such requests. But before being appointed to lead the CMS, its chief, Seema Verma, helped draft state plans that made Medicaid patients more responsible for the cost of their care.
The state of Arkansas also wants to end an ACA provision that allows people to obtain Medicaid coverage the day they apply, assuming the applicant qualifies for benefits. Providers can also bill for services provided in the three months before the application, assuming the patient was eligible during that time.
Scrapping retroactive eligibility will simply lead to more unpaid patient bills and an increase in uncompensated care, Bo Ryall president and CEO of the Arkansas Hospital Association said in a June comment letter to Arkansas' Department of Health.
The Arkansas Hospital Association has 100 member organizations with more than 45,000 employees. Arkansas is ranked 27th in the nation as far as the number of hospitals in a state.
There's been no estimate on how much uncompensated care could rise without retroactive eligibility, but rolling back Medicaid expansion to 100% FPL could lead to as much as $54 million in uncompensated costs for hospitals by 2020, according to state calculations.
"The combined effects on hospital finances would range from harsh to devastating," Ryall said in his comment letter.
The proposed waiver application is public and open to public comments through August 10.
Changes to Medicaid proposed in the current version of the Senate bill to repeal and replace the ACA wouldn't affect Arkansas' Medicaid program until fiscal year 2026, according to an analysis by the AARP. The Arkansas Works waiver seeks to continue until 2021.