Obama Blocks California From Charging for Care in Medicaid

The Obama administration blocked an effort by California to charge Medicaid patients for emergency room visits and hospital stays and allow health-care providers to turn away those who couldn’t pay.

A law signed by Democratic Governor Jerry Brown in March would have assessed co-payments in Medicaid for a variety of medical services, including prescription drugs. The co-payments were expected to save California $575 million in the fiscal year that begins July 1, said H.D. Palmer, a spokesman for the Department of Finance.

The administration was “unable to identify the legal and policy support” for California’s request, Marilyn Tavenner, acting administrator of the Centers for Medicare and Medicaid Services, wrote in a letter today to Toby Douglas, chief deputy director of health-care programs for the California Department of Health and Care Services.

California’s co-payments would have ranged from $3 to $5 for drugs to $100 per day for hospital stays. Doctor visits would have been $5, and emergency room treatment $50.

Medicaid, the U.S. health insurance program for the poor, is run by states and the federal government, with the U.S. approving changes in eligibility standards by granting waivers from national law. The program is among the biggest expenses for states.

Federal Restriction

Federal law doesn’t allow states to require co-payments from most Medicaid beneficiaries, including low-income children and elderly or disabled people. Many states have sought to increase co-payments to close budget deficits, said Matt Salo, executive director of the National Association of Medicaid Directors in Washington.

“Rational, reasonable cost-sharing is something that everyone is looking at,” Salo said. “Cost-sharing that’s not enforceable is kind of a silly policy.”

California proposed allowing doctors, hospitals, pharmacists and other providers to deny service to any Medicaid patient who couldn’t or wouldn’t provide a co-payment, Palmer said.

Health providers now “collect little if any co-payments” in California’s program because they are voluntary, Palmer said. “We think as a cost-saving measure this is a reasonable step, as opposed to achieving savings in the program through things like reduction of services,” he said today in a telephone interview.

Clashes With Law

California’s request was denied because “it is inconsistent with statute,” said Brian Cook, a spokesman for Tavenner’s agency.

“We recognize the needs of states to keep costs down and are supportive of the goal to promote cost-effective use of health-care services,” he said in an e-mail.

California will appeal Tavenner’s decision to Health and Human Services Secretary Kathleen Sebelius, Palmer said. The state isn’t likely to prevail, said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities in Washington, a nonprofit research group.

“Federal law’s pretty clear that for the population that’s subject to these protections, the secretary doesn’t have any waiver authority,” Park said in a telephone interview.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net

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