CMS denials of state Medicaid expansions fuel confusion

Medical society officials are disappointed in the agency's decisions in Oklahoma and Ohio.

By Doug Trapp, AMNews staff. Jan. 28, 2008.

Washington -- Recent Bush administration denials of Medicaid expansion requests have injected uncertainty into state efforts to cover more uninsured people.

Traditionally, states have had a lot of flexibility to set income eligibility limits in Medicaid and the State Children's Health Insurance Program.

But on Aug. 17, 2007, the Centers for Medicare & Medicaid Services wrote a letter to state Medicaid directors indicating that it would not approve requests to expand SCHIP eligibility beyond 250% of the federal poverty level unless states implemented several safeguards to prevent applicants from dropping private health insurance in favor of SCHIP. This effect is known as crowd-out.

The new stipulations include covering 95% of eligible children in families earning 200% of poverty or less. The CMS letter sparked two lawsuits from a total of five states attempting to block the policy.

The agency is applying that policy to Medicaid programs that rely on SCHIP funding, as well as stand-alone children's health programs, said CMS spokeswoman Mary Kahn.

Since the policy was made public, 10 states have been unable to get full federal matching funds to expand their SCHIP or Medicaid programs' eligibility above 250% of poverty. This is possibly because of the August 2007 changes, according to a December analysis by the Georgetown Health Policy Institute's Center for Children and Families. Most recently, CMS, for varying reasons, denied requests by Ohio and Oklahoma to cover more uninsured adults, as well as children earning up to 300% of poverty.