Illinois Tightens Medicaid Without Federal Approval

Illinois has been debating this issue with officials in Washington for nearly a year now and has decided not to wait any longer for a final answer. Starting March 1, the state plans to implement new Medicaid enrollment restrictions, which include electronic cross-checks on residency and income data. According to Medicaid agency estimates, the new procedures will eliminate thousands of current beneficiaries and save the state more than $1 million.

Most states are facing big shortfalls in the money needed to pay their mounting Medicaid bills. Illinois’ deficit is one of the worst. According to Democratic Governor Pat Quinn, the state must shave $2 billion from its $14 billion program in order to balance this year’s budget.

Numerous Republican governors have previously sought blanket relief from the maintenance of effort requirement in the federal health law. But so far, Washington has not budged.

Maine’s Republican governor, Paul LePage, is getting pushback from the U.S. Department of Health and Human Services for his proposal to remove about 65,000 adults from the rolls. Florida’s GOP Governor Rick Scott recently got a federal “No” on his proposal to charge Medicaid beneficiaries a $10 monthly premium, a fee the federal government said would force many low-income people to drop out of the program.

Quinn and a majority of Illinois lawmakers support the health law and its plan to expand Medicaid coverage in 2014. But when it comes to fraud prevention, also known as “program integrity,” most align with their Republican counterparts in supporting stricter enrollment measures.

Under a law enacted in January 2011, the state opted to require new beneficiaries to provide additional paperwork to verify state residency. The new procedures would also require people to provide one month’s worth of pay stubs to verify income. And instead of automatically renewing a client’s Medicaid card, the state would insist on updated paperwork.

But the federal government rejected the new law, saying it violated the federal health law’s requirement that states maintain their current “eligibility standards, methods and procedures.” Instead, the U.S. Department of Health and Human Services suggested Illinois cross-check the information in Medicaid applications with existing federal and state income and residency data.

Illinois immediately agreed to switch to an electronic procedure and outlined a detailed plan to try to get federal approval. Washington still refused to approve the plan and asked Illinois to show that it had a program integrity problem in the first place.

Illinois Medicaid Director Julie Hamos finally said the state could wait no longer to make changes to its program. In a February 7 letter to the U.S. Department of Health and Human Services, she outlined the steps the state would take to verify where people lived and how much money they made.

Instead of requiring additional paperwork, Hamos explained that the state would use existing data sources to verify the accuracy of Medicaid applications, including records from food stamps and welfare, the Social Security Administration, the Illinois Secretary of State and the state department of employment security. If residency can’t be verified by the data, she wrote, the Medicaid agency would then require applicants to provide an alternate form of verification. If they do not respond, they will be dropped from the rolls.