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Medicaid stand-in rebuffed by feds

Deemed premature; state urged to reapply

– The federal government on Friday rejected Indiana’s proposal to use its Healthy Indiana insurance plan in place of a Medicaid expansion beginning in 2014.

The Centers for Medicare and Medicaid Services said in a letter that the state’s request was premature because rules related to the expansion have not yet been finalized and encouraged Indiana to apply again in the future.

“It’s 2011, and we don’t have those rules in place for 2014,” said Cindy Mann, a deputy with the agency. “We are knee deep in the process.”

Neal Moore, spokesman for the Indiana Family and Social Services Administration, said he considered the letter to be a non-decision.

“We are very disappointed,” he said. “We need some clear direction about what’s going to be happening here, and we need time to know whether we need to expand or dismantle (the Healthy Indiana Plan).”

Lawmakers created the Healthy Indiana Plan at Gov. Mitch Daniels’ urging in 2007. It requires those enrolled to receive certain preventive care and pay a small amount into a health savings account, along with a state contribution. About 42,000 Hoosiers are in the program, including about 14,000 childless adults.

State funding for the program came from a 44-cent increase in the state’s tax on a pack of cigarettes; 33 cents of the increase is set aside for the insurance program. The waiver the state received for the creation of the program, which the federal government helps fund, runs through 2012.

What happens after that is complicated – largely because of President Obama’s health care act, which expands Medicaid to cover more low-income Americans starting in 2014.

Under the new federal legislation, people enrolled in the Healthy Indiana Plan will move onto Medicaid, a shared federal-state health care program that doesn’t require participants to pay any of the costs.

Daniels has sent numerous letters seeking an amendment to Indiana’s Medicaid state plan allowing Indiana to essentially substitute its Healthy Indiana Plan for its newly eligible Medicaid clients in 2014.

Until now, there had been no decision.

Mann said the federal government can’t say now that Indiana’s current program would satisfy the provisions of the law for 2014 when not all those provisions – such as the boundaries of a benefit package – have been finalized.

Moore countered that the federal decision shortens the time frame for Indiana to prepare and puts the HIP program in peril.

Mann said that the Centers for Medicare and Medicaid Services is happy to work with the state if it wants to extend the HIP program past its current 2012 expiration.

FSSA officials are preparing an extension request that would cover 2013 through 2015.