Feds allow limited cuts to Medicaid, not to level sought by LePage

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AUGUSTA, Maine — The federal government will allow Maine to make limited cuts to its Medicaid program, but not to the extent Gov. Paul LePage ’s administration had sought last yearas it looked to close a $20 million budget hole.

The federal Centers for Medicare and Medicaid Services on Monday notified state officials that they can cut some low-income parents and caretakers from Maine’s Medicaid rollsand scale back Medicaid access for some residents who also qualify for Medicare benefits.

The federal government, however, didn’t allow the LePage administration to cut coverage as deeply as state officials had sought.

For example, Maine officials asked the federal government to allow the state only to cover low-income parents whose income matched or fell short of the federal poverty level, a move that would have affected coverage for 27,000 people. Instead, federal officials allowed the state to scale back eligibility requirements to 133 percent of the federal poverty level from the current 200 percent.

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In all, the cuts proposed by the state would have eliminated coverage for 36,000 residents, eliminating coverage for 19- and 20-year-olds, tightening income eligibility requirements for low-income parents and scaling back Medicaid access for elderly residents who also qualify for Medicare benefits.

The cuts — approved in the Legislature as part of two supplemental budget packages last year — were originally scheduled to take effect Oct. 1, 2012.

The limited approval comes as the LePage administration prepares its proposal for a supplemental budget package aimed at bringing the current year’s budget into balance. LePage late last month issued a curtailment order cutting $35.5 million in state spending to keep pace with falling state revenues, and the supplemental budget package — expected Friday — will address a $100 million shortfall that has developed in the state’s Medicaid program.

The federal government’s approval of some Medicaid cuts could chip away at part of that $100 million gap.

Maine officials pursued cuts to the state’s Medicaid program — called MaineCare at the state level — last year although many of the cuts appeared to be prohibited under the federal Affordable Care Act, the Obama administration’s 2010 health care law.

The Affordable Care Act — as part of a section of the law called “maintenance of effort” — largelyprohibited states from scaling back existing Medicaid services in advance of the law’s major expansion of Medicaid in 2014. Medicaid is a joint state and federal program that provides health insurance for low-income and some disabled people.

While the Supreme Court in June largely upheld the health care law as constitutional, the court ruled it unconstitutional for the federal government to penalize states for not participating in the Medicaid expansion.

The LePage administration read that part of the ruling as a sign it could make Medicaid cuts through a routine Medicaid plan amendment. Former Attorney General William Schneider, whose term in office ended Monday, had argued that the maintenance of effort provision was “part and parcel of the Medicaid expansion that was struck down.”

However, in Monday’s letter to Health and Human Services Commissioner Mary Mayhew, federal officials wrote that the Supreme Court’s June ruling “did not strike down any part of the Affordable Care Act.”

“[W]e do not agree with your assertion that the Court’s reasoning in NFIB implies that the [maintenance of effort] provision … is unconstitutional or that it would be unconstitutional for [federal Health and Human Services Kathleen Sebelius] to disapprove the proposed state plan amendments.”

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