Arizona proposes $40 million cut to Medicaid reimbursement

Arizona has asked the CMS to allow it to end retroactive coverage for Medicaid beneficiaries.

If granted, the waiver request now under review at the CMS, would nix providers' ability to bill for services provided in the three months before a beneficiary applies for Medicaid coverage, assuming the patient was eligible during that time.

Providers in the state had urged the state not to submit the waiver to the CMS because it could put hospitals in a difficult financial situation and limit access to care.

Low-income individuals tend to have inconsistent employment and retroactive coverage serves as a safety net from excessive medical bills for patients and uncompensated care for hospitals.

Retroactive coverage "serves as a valuable protection for hospitals who serve this at-risk population and helps ensure that the patients they care for continue to have a strong network of providers available to serve their communities," Jennifer Carusetta, executive director of the Health System Alliance of Arizona, an advocacy organization representing hospitals in the state, said in a comment letter the state attached in its waiver request to the CMS.

Officials in Arizona's chapter of the American Academy of Pediatrics said they were also worried that uncompensated-care costs could rise if the waiver sparks hospital closures.

Arizona Medicaid officials acknowledged provider concerns in its waiver application and said they would monitor the stability of provider networks following implementation.

Eliminating retroactive coverage is expected to save the state $40 million in the first year it goes into effect, according to a state estimate.

To date, Arkansas, Indiana, Iowa, Kentucky and New Hampshire have either won permission to waive retroactive eligibility or have a pending request with the CMS to do so.

As of January 2018, Arizona has enrolled 1.6 million individuals in Medicaid and CHIP—a net increase of 40% since the marketplaces opened in October 2013, according to CMS data.