CMS gives Arkansas, Iowa more leeway in Medicaid expansion waivers

The Obama administration is continuing to compromise with Republican-led states that expand Medicaid, allowing Arkansas for the first time to impose cost-sharing for beneficiaries below poverty level.

The administration also gave Iowa the nod to continue to not offer nonemergency transportation to beneficiaries despite criticism from patient advocates and data showing negative consequences. 

The CMS outlined the new permissions in letters to the states at the end of December approving amendments to their Medicaid waivers. 

Arkansas won a federal waiver in 2013 to use new funding available under the Patient Protection and Affordable Care act to help residents earning up to 138% of the poverty level buy private plans on the new insurance exchange rather than enroll in traditional Medicaid coverage. The state now has the go-ahead (PDF) to mandate that all beneficiaries in these private-option plans make monthly financial contributions to Health Independence Accounts, a version of health savings accounts. 

If beneficiaries are current with their contributions, the savings account will cover any cost-sharing. The accounts can also accrue money that can be used to cover health insurance costs if they transition out of the private option, either to employer-sponsored coverage or to a private plan they purchase if their income rises above the threshold for Medicaid eligibility. 

Patient advocates and some policy experts have criticized the cost-sharing provisions that are becoming increasingly popular in Medicaid waiver applications because previous experiments with such fees suggest fees of any size generally discourage low-income people from enrolling.