AHCCCS coverage limit would hurt low-income families, critics say

April 28--Medicaid in Arizona -- AHCCCS -- pays medical bills for new members going back three months, but a proposed policy change would limit that buffer.

Arizona is one of several states seeking to waive a section of federal law that requires three months of so-called retroactive or "prior quarter" coverage for newly enrolled members, including those whose coverage has lapsed.

A federal comment period on Arizona's proposal to waive that 90 days of retroactive coverage will be open through May 22.

The federal government has already approved similar requests from Arkansas, Indiana, New Hampshire and Iowa. Other states, including Florida, New Mexico and Arizona, have requests pending.

Critics say the proposal, if approved, would financially punish vulnerable people.

Proponents say the change would more closely align Medicaid policies with commercial health insurance coverage and ensure Medicaid's long-term sustainability. In Arizona, enrollment in Medicaid is 40 percent higher than it was in 2013.

The government health insurance program for low-income people has enrolled 1.8 million Arizonans -- roughly one quarter of the state's population -- including 281,380 Pima County residents.

In Arizona, the Medicaid program is called the Arizona Health Care Cost Containment System, or AHCCCS.

$39 million saved

State officials say retroactive three-month coverage has cost AHCCCS, which is funded with a blend of federal and state money, nearly $70 million since 2014. That's the year Arizona began implementing the prior quarter retroactive coverage, AHCCCS officials said.

Under Arizona's proposed waiver, the prior quarter coverage would be reduced from three months and be retroactive only to the first day of the month when the Medicaid application is filed. That change would save the program $39.4 million in 2019, state officials estimate.

Yet critics see the three-month buffer as an important protection for low- income people who may have gaps in coverage. They say it also ensures that individuals who may have a series of health events prior to discovering they are eligible for Medicaid do not become burdened by medical debt.

"From my perspective, there is really no good policy reason to do this. I think the clear objective of states is simply to save money," said Joan Alker, executive director of Georgetown University's Center for Children and Families.

"Nothing in this policy is going to change the way that people have health care needs arise or the way that they are managed. Those health care needs are still there. The question is who is left holding the bag in terms of paying for them."

The Medicaid population tends to be transient, and that's one reason why the policy change could bring inherent problems for enrollees, said Tara Plese, chief external affairs officer Arizona Alliance for Community Health Centers.

Frequent address changes might mean enrollees don't receive notifications about their coverage, including whether it has lapsed, Plese said.

In other words, people may be receiving medical care but not realize they are no longer enrolled in Medicaid until the bills come in. In that way, the program's savings could become the burden of health providers, particularly those who serve vulnerable populations, Plese said.

"Rural populations in particular are really operating on a very small margin, just trying to keep their doors open," she said. "If you have a lot of uncompensated care building up in rural areas, the impact of this could be sizable."

Cost shifting

The proposed change would not affect coverage options for people enrolled in AHCCCS, agency spokeswoman Heidi Capriotti stressed.

It's only retroactive coverage that will be affected, she said. And limiting retroactive payment of medical bills is not only a cost-saving measure, state officials say in their request.

State officials say it is also a way of encouraging Arizonans to continuously maintain health coverage, "even when healthy," and to apply for Medicaid "without delays to promote continuity of eligibility and enrollment for improved health status."

One concern about the policy change in Arizona and other states is shifting cost savings from state Medicaid programs to individuals and health providers. Alker said an analysis of the $39.4 million that the Arizona program is expected to save from the change would be helpful.

"I don't buy the argument that it encourages people to have continuous coverage," Alker said. "These people are not uninsured because they want to be."

Elderly people enrolling in the AHCCCS long-term care program are at particularly high risk with a change in retroactive coverage, wrote Charlotte C. Johnson, president of the Arizona Chapter of the National Academy of Elder Law Attorneys, in a letter dated Feb. 26 as part of the state's public comment period.

As families of elderly loved ones navigate the cumbersome and complex application process for ALTCS (Arizona Long Term Care System), which is part of AHCCCS, nursing facilities need to ensure they get compensated, Johnson wrote.

"Without this guarantee, facilities may choose to deny these individuals access to care unless the family can pay upfront," she wrote.

Fiscal analysis

An Arizona public comment period yielded written concerns from about 30 entities, including the Phoenix-based Children's Action Alliance, the Arizona Chapter of the American Academy of Pediatrics, the Protecting Arizona's Family Coalition, and the American Cancer Society's Cancer Action Network.

"Restricting retroactive eligibility does not further the objectives of the Medicaid program," Children's Action Alliance president and CEO Dana Wolfe Naimark wrote.

"Many individuals may only realize they are Medicaid-eligible when they experience a health event or otherwise encounter the health system. Some may have experienced a series of health events leading up to the discovery of coverage eligibility."

The Health System Alliance of Arizona, an advocacy organization that represents the interests of large health systems across Arizona, including Banner Health and Tenet Healthcare, has asked the state for a fiscal analysis of the impact the change would have on hospitals, which could be burdened with added bad debt.

Prior quarter coverage allows part-time and seasonal workers to move in and out of employment with some assurance of coverage, Jennifer A. Carusetta, executive director of the Health System Alliance of Arizona, said in a written submission to AHCCCS director Tom Betlach Feb. 25.

The change would "certainly" have a financial impact on Tucson Medical Center, which is Tucson's largest hospital, officials said.

"For us, it will mean more dollars that will fall into bad debt and charity care, which will weaken an already fragile safety net," hospital spokeswoman Julia Strange said.

Alker of Georgetown said Medicaid in the U.S. is facing serious long-term issues, including the aging of the population (Medicaid is the top provider of long-term care in the country). But imposing policies like Medicaid work requirements and retroactive coverage changes are punitive and not addressing the bigger issues, she said.

"They are cutting people off, or shortening their coverage," she said.

Arizona is waiting to hear from the federal government whether its request to impose work requirements and lifetime limits on certain AHCCCS members will be approved.

"Nothing in this policy is going to change the way that people have health care needs arise or the way that they are managed...The question is who is left holding the bag in terms of paying for them ." Joan Alker, Executive director of Georgetown University's Center for Children and Families

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Contact health reporter Stephanie Innes at 573-4134 or email [email protected]. On Twitter: @stephanieinnes

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