CMS rejects increased federal funds for Utah’s partial Medicaid expansion

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Trine K. Tsouderos HRI Regulatory Center Leader, PwC US August 02, 2019

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CMS has rejected Utah’s request for a larger federal funding rate under the state’s partial Medicaid expansion, which went into effect earlier this year. The Affordable Care Act (ACA) authorized the federal government to cover 90 percent of the cost of state Medicaid expansions to people with incomes up to 138 percent of the federal poverty level.

However, Utah asked for the same 90 percent rate—up from the 70 percent the state currently gets— even though its Medicaid expansion was limited to residents with incomes below 100 percent of the federal poverty level.

In rejecting Utah’s request, CMS stated it would approve state Medicaid waivers that comply with the ACA standards. Utah Gov. Gary R. Herbert and the state’s two legislative leaders, all Republicans, issued a joint statement saying they “are deeply disappointed” by the CMS decision but that they “contemplated possible scenarios like this one.”

Coverage under Utah’s Medicaid expansion will continue because it is funded through June 2020. Also, the state law that created the Medicaid expansion includes contingency plans in the case that the state failed to get the 90 percent federal funding rate.

That fallback language directs the state to seek a new waiver for a Medicaid expansion to people with incomes up to 138 percent of the federal poverty level, which is not only the ACA’s standard but the level Utah voters approved in a 2018 ballot measure.

If Utah fails to get approval for that waiver by July 1, 2020, the state would seek a full Medicaid expansion without work requirements. But a full Medicaid expansion would come with a hitch, according to the Utah Hospital Association. A one-time, $15 million assessment on hospitals would become an annual assessment, the organization stated in a 2019 federal legislative report.

HRI impact analysis

The fate of Utah’s Medicaid expansion, along with those of 35 other states and the District of Columbia, hinge on the outcome of Texas v USA, a court case over the constitutionality of the Affordable Care Act, which paved the way for the expansions (for HRI’s analysis of the case, please click here). The case is before the Fifth US Circuit Court of Appeals, which heard oral arguments in July. The case likely will end up reaching the US Supreme Court.

In the meantime, states’ ability to impose Medicaid work requirements also has faced legal challenges. So far, 16 states—including Utah—have received or asked for Medicaid waivers with work requirements. On July 29, a federal judge struck down the Medicaid work requirement in New Hampshire. The same judge had already rejected similar initiatives in Arkansas and Kentucky.

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Tel: +1 (202) 836 1604

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

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