Sebelius Says Arizona Medicaid Waiver May Not Be in Her Power to Provide

Arizona Governor Jan Brewer’s proposal to cut 280,000 people from the state’s Medicaid rolls is being reviewed by U.S. officials who don’t know whether they have the power to approve the action, Health and Human Services Secretary Kathleen Sebelius said.

The secretary, answering questions after a meeting yesterday with Washington Governor Christine Gregoire, said there is “legal uncertainty” about the action because the program expansion that Brewer seeks to reverse occurred through a ballot initiative, not a legislative vote. Sebelius said that may limit her authority to grant the request.

Arizona’s governor last month proposed eliminating coverage for childless adults by tightening eligibility requirements. She requested a waiver from the U.S. rule that states must maintain Medicaid coverage for the same people who received it before the health-care overhaul became law in March.

“There is some concern about granting a blanket waiver which administratively may not be within our purview,” said Sebelius, 62, a former Kansas governor. “Our Medicaid staff has been in close contact with Governor Brewer about the parameters of what she wants to do.”

Sebelius was invited to Seattle by Gregoire, 63, a Democrat, to hear about some of the experimental health-care programs being set up by the state. The governor, who supports President Barack Obama’s health-care overhaul, may seek federal funding to implement or expand some of the state’s efforts.

Photographer: Andrew Harrer/Bloomberg

Kathleen Sebelius, trustee and U.S. health and human services secretary. Close

Kathleen Sebelius, trustee and U.S. health and human services secretary.

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Photographer: Andrew Harrer/Bloomberg

Kathleen Sebelius, trustee and U.S. health and human services secretary.

Sebelius Promise

Arizona’s Medicaid expansion was approved in a ballot initiative in 2000, said Matthew Benson, Brewer’s spokesman. He said Brewer, 66, has asked for a face-to-face meeting with Sebelius, which hasn’t been scheduled yet. Jessica Santillo, a spokeswoman for Sebelius, declined to elaborate on the secretary’s comments.

“We don’t believe this has anything to do with the waiver,” Benson said. “This is more a question of political will than legal authority.”

The law that authorized the expansion says it should be paid for with money from the state’s legal settlement with tobacco manufacturers and “other available funds,” Benson said. “Well with a billion-dollar-plus deficit, I think we can argue there are no available funds,” he said.

The waiver sought would cover a two-year period, just enough time to get the state to 2014, when it will start getting more federal matching funds for new enrollees under the health overhaul, Benson said.

Budget Deficits

Sebelius has been pushed by governors to permit changes to Medicaid programs to let cash-strapped states chip away at deficits. Medicaid is the joint U.S.-state health program for the poor. The Center on Budget and Policy Priorities, a nonprofit research group in Washington, D.C., has said 44 states and the District of Columbia will face gaps of as much as $125 billion in the next fiscal year.

On Feb. 3, Sebelius wrote to governors to pledge her department’s support in helping them find ways to reduce state Medicaid burdens. She described areas where cuts may be made including optional benefits such as prescription drug coverage and long-term care.

Since then, California Governor Jerry Brown has approached Sebelius to get permission to cut $1.7 billion of the state’s Medicaid program, called Medi-Cal, partly by limiting those covered to 10 physician visits a year, one of the benefits mandated by federal regulation.

The Medi-Cal cuts come on top of proposed reductions in home-health and mental-care programs, which also require federal approval. Anthony Cava, a spokesman for California’s Health Care Services Department, said the agency isn’t seeking waivers from federal law, just approval for state plan amendments.

Brown Medicaid Cuts

“We do need some waivers,” Brown told reporters yesterday. “I asked Secretary Sebelius. I think the president is going to be very solicitous of the needs of the state of California going forward.”

In Washington, Gregoire already obtained a waiver in January for a program that covers childless adults that will qualify the state for federal matching money. The governor also plans to submit proposals for U.S. grants to implement experimental methods to coordinate Medicaid and Medicare benefits to cut costs of serving older people who qualify for both, said Doug Porter, who heads the state’s Medicaid program.

Washington covers 1.13 million people under Medicaid, more than half of whom are children. The U.S. needs to support state efforts to reduce the use of brand-name prescription drugs and emergency-room services by imposing co-pays of as much as $50 in cases where recipients insist on receiving brand-name drugs or when there is no emergency, Porter said.

Cesarean Births

Washington is also looking into ways to reduce the number of Medicaid-covered Cesarean deliveries, which involve surgery, are more expensive and are less safe than natural child births, Porter said.

Gregoire told the meeting at Seattle’s Virginia Mason Medical Center that governors need the health overhaul in order to cut the cost of providing care and to change the way medical services are delivered.

“It’s very limiting, what governors and legislatures can do on health-care reform on their own,” Gregoire said at the meeting.

The federal health overhaul, backed by Obama, aims to curb spending while increasing insurance coverage for Americans.

To contact the reporters on this story: Pat Wechsler in New York at pwechsler@bloomberg.net; Hui-yong Yu in Seattle at hyu@bloomberg.net.

To contact the editors responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net; Reg Gale at rgale5@bloomberg.net.

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