PHOENIX — The Obama administration on Friday allowed Arizona to charge some Medicaid recipients co-pays and premiums but nixed more controversial provisions that would have required them to get a job and be phased out of the system after five years.
Gov. Doug Ducey has been pushing to reform the Medicaid system since August 2015, saying it will better utilize services, cut state costs and prepare some adults to transition into private coverage.
His reforms required approval from the federal government, and the administration responded Friday with a letter outlining what it endorsed and what it rejected.
Adults who earn more than the federal poverty level will now be required to pay a monthly premium of 2 percent of their household income into a health savings account or $25, whichever is less.
That account could only be tapped for non-covered services like vision care, dental work, gym memberships and weight-loss programs. They can defer payments if they take part in preventive care such as wellness exams or flu shots or manage their chronic illnesses like diabetes.
The plan also charges co-pays for Medicaid recipients who receive opioid painkillers and brand-name drugs when generic options are available, go to the emergency room for routine care, and see a specialist without the proper doctor referral.
The plan is the latest twist in a long-running saga in Arizona over Medicaid expansion, a central tenet of President Barack Obama’s health care law.
Former Gov. Jan Brewer waged a relentless fight with Republicans to expand Medicaid to people earning 138 percent of the poverty line. She ultimately prevailed, but Republicans took her to court hoping to get her law overturned. The lawsuit is still under appeal.
Ducey has largely stayed out of the fight, repeatedly bashing Obamacare while at the same time asking Obama’s administration to allow changes to the system.
“We’re taking (Medicaid) into the 21st century, allowing Arizonans to take charge of their own health, providing enhanced services not currently offered under the Medicaid program, and better protecting taxpayer dollars,” Ducey said in a statement.
Arizona joins the ranks of other states, including Michigan, Indiana and Iowa, that were allowed by the government to charge premiums or fees for Medicaid care.
But Arizona will not be allowed to carry out harsher requirements for Medicaid recipients backed by Ducey and the GOP-dominated Legislature. Andrew M. Slavitt, acting administrator of the Centers for Medicare and Medicaid Services, said they could “undermine access to care and do not support the objectives of the program.”
Those changes would have added a work requirement, removed people from the system in five years and made all able-bodied adults pay premiums. The government said no those ideas, but allowed the state to charge premiums to people above the poverty line and below 138 percent of the threshold.
As a result, the changes affect 80,000 people, compared to nearly 400,000 under Ducey’s more ambitious proposal.
Arizona is allowed to try to get those people to voluntarily enroll in the new program, said Monica Coury, spokeswoman for the state’s Medicaid plan, known as the Arizona Health Care Cost Containment System, or AHCCCS. The state also plans to institute other co-pays across the board that it has always been allowed to charge but hasn’t.
Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities, said it would have been surprising for the government to get behind the work requirement and taking people off the rolls after five years.
“Those would have been unprecedented,” she said. “That’s never been allowed.”