AUGUSTA — The federal agency that will decide whether some of Gov. Paul LePage’s proposed Medicaid cuts qualify for waivers to make the reductions legal reaffirmed Thursday that the exemptions face long odds.

In a written response to the Democratic leads on the Legislature’s budgetary committee, the federal Centers for Medicare & Medicaid Services confirmed that legislative action was not a consideration in whether the agency will grant a waiver from the federal health care law.

Cindy Mann, the director of CMS, noted that no state has been granted a so-called Maintenance of Effort waiver from the Affordable Care Act. Mann added that Maine could only achieve the Medicaid waiver, known as Section 1115 in the Social Security Act, if it were adopting an experimental project designed to expand coverage — not to achieve budgetary savings. 

“The purpose of Medicaid is to provide high-quality health care coverage to needy individuals whose income and resources are insufficient to meet the costs of necessary medical services,” Mann wrote. “Reductions in eligibility solely for budgetary purposes would not be experimental, pilot or demonstration projects that further the purposes of the program.”

By that standard, none of the proposals in the governor’s budget would appear to qualify for the 1115 waiver.

Mann did not explicitly rule out the exemption. However, it appears the governor’s proposals face a steep challenge to obtain waivers that represent $37 million of his $220 million budget cuts at the Department of Health and Human Services.

“It is clear from the letter that HHS can only grant a waiver when a state proposes a demonstration project that promotes the purpose of the Medicaid program, that is to provide coverage to people in need,” said Ana Hicks, senior policy analyst from Maine Equal Justice Partners. “The letter makes it clear that proposals made solely to balance the budget do not meet this legal standard.” 

Lead Democrats on the Legislature’s Appropriations Committee said the letter reaffirmed what they had suspected all along.

“I’ve contended from the beginning that the governor’s budget is irresponsible and deeply harmful to thousands of Mainers,” said Rep. Peggy Rotundo, D-Lewiston. “We’ve also raised questions about the legality of the proposal. We now have confirmation many of his cuts are in fact not legal.”

Rotundo, along with Sen. Dawn Hill, D-York, sought confirmation from CMS in a pair of letters sent two weeks ago. The letters followed news reports and testimony from health care advocates indicating that federal waivers would be difficult to obtain. 

Hill said the response from CMS showed that lawmakers would be taking a big gamble if they authorized the cuts that required federal waivers.

“If we vote for this, we are putting the state in a position to face stiff federal penalties that could include the federal government withholding all of our Medicaid dollars,” Hill said. 

Lawmakers on Appropriations have grilled the administration about the likelihood, and potential penalties, of obtaining the federal waivers. DHHS Commissioner Mary Mayhew has said the budget proposal is written in a way that ensures the cuts receive the waivers before going into effect, thus safeguarding the state from additional federal penalties.  

Mayhew’s comments, however, are different from LePage’s initial pitch. The governor in December went so far as to say that legislative action was recommended by U.S. Department of Health and Human Services Secretary Kathleen Sebelius during a conversation she and the governor had last April.

Mann, who wrote the letter sent Thursday to lawmakers, is a top official working for Sebelius.  

Said Hill, “We’ve had reservations about this proposal from the beginning, yet we’ve been asked to build parts of our budget based on fiction.”

Adrienne Bennett, the governor’s spokeswoman, recently acknowledged that the administration knew legislative action wasn’t a requirement for the federal waiver. Bennett said legislative approval was designed to pressure Sebelius into awarding the waivers.

That strategy did not work for Arizona last year when the state sought a massive overhaul of its Medicaid program. Sebelius denied all of that state’s request for exemptions from the federal health care law.

Wisconsin has also sought a waiver. The federal government has yet to act on it.

Mayhew, in a written statement, emphasized that DHHS had not submitted a waiver request to Secretary Sebelius. However, she said, the administration was “prepared to fight and take our case to Washington.”

“We will do so when the Legislature has acted,” Mayhew wrote. “The letter from CMS is not in response to a specific request and proposal from Governor LePage seeking to waive the Maintenance of Effort. The fact of the matter is Maine must balance its budget and must address the overspending in the Medicaid program.”

She added, “We will work closely with our delegation to make the necessary case to waive the MOE provision in order to balance our budget and preserve services for more than 280,000 Maine people.”

Thursday’s response from CMS was significant in itself. The agency had been tight-lipped about the waivers, despite several inquiries by the Sun Journal, other news outlets and state and federal lawmakers.

The agency’s silence perhaps reflects the delicate political climate hovering over President Barack Obama’s Affordable Care Act and states’ push for more flexibility in Medicaid budgeting. 

The pressure presents a dilemma for the Obama administration, which is balancing the viability of its signature legislative achievement, the ACA, with the perception that the law is hamstringing governors’ budget decisions.

Rotundo said the CMS response resulted from pressure from Democratic U.S. Reps. Chellie Pingree and Mike Michaud.

Hill and Rotundo said they planned to share the CMS response with the Republican co-chairmen on Appropriations, Sen. Richard Rosen, R-Bucksport, and Rep. Patrick Flood, R-Winthrop.

The committee was scheduled to hold party caucuses Thursday night. Rosen and Flood could not be reached for comment. 

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Rep. Rotundo Final Letter