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Feds delay decision on Indiana Medicaid plan

March 13, 2013

The federal government has delayed action on Indiana's proposal to expand Medicaid because the state hasn't received public comment on the proposals, but the issue could be resolved quickly with two hearings set for next week, a spokeswoman for Gov. Mike Pence said Wednesday.

Pence submitted the waiver request to the Centers for Medicare and Medicaid Services last month without holding the public hearings required by law. Federal regulators kicked the waiver back to the state in the Feb. 25 letter from CMS that was posted recently on Indiana's Affordable Care Act website.

"After completing a preliminary review of your extension request, we have determined that the state's extension request has not met the requirements for a complete extension request," wrote Diane Gerrits, director of the CMS' division of state demonstrations and waivers.

The state has scheduled a pair of public hearings next week on its plan to expand Medicaid using the state-run Healthy Indiana Plan, which already covers 40,000 low-income residents.

Pence spokeswoman Christy Denault said the administration always knew they had to hold public hearings but was trying to get an approval as soon as possible because of a June deadline.

"We were thinking: Get it to them, (then) post for public comment and get the process moving along," she said. She noted the state filed its waiver on Feb. 13, posted notice of the public hearings on Feb. 20 then received the CMS reply Feb. 25.

Pence asked CMS to allow Indiana to expand Medicaid using the plan. He has argued that traditional Medicaid is "broken" and fraught with "waste, corruption and abuse."

Indiana's state-run plan covers low-income residents earning up to 200 percent of the federal poverty level, or $23,000 for a single adult or $47,000 for a family of four. The plan gives enrollees a health savings account and sets caps on payouts for medical treatment, but it lacks some of the features covered by Medicaid such as dental and vision.

Opponents of expanding Medicaid using the traditional program, including Pence and other Statehouse Republicans, have argued that HIP would allow the state to better manage costs for the roughly 400,000 low-income residents who would qualify under an expansion. The Medicaid expansion would add coverage for those earning up to 138 percent of the federal poverty level, Indiana provides Medicaid for residents who earn up to 24 percent of the FPL.

It's unclear if HIP would be the cheaper option for the state. Cost estimates of the HIP plan have varied, from a 2011 analysis by the state's actuary which showed it costing 44 percent more than Medicaid to a more recent analysis by the same group estimating it would cost about the same as traditional Medicaid.

If the state does not win federal approval by June, it will have to dismantle HIP, leaving the 40,000 or so residents enrollees without coverage.

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