You are here

Sebelius Addresses Governors Regarding State Medicaid Flexibility

February 8, 2011

In a letter sent on February 3, U.S. Department of Health & Human Services Secretary Kathleen Sebelius outlined ways for states to contain Medicaid costs without cutting eligibility, including pointing out that states have substantial flexibility to design benefits, service delivery systems, and payment strategies without a waiver.


Sebelius said HHS will step up its efforts to help states identify cost drivers in Medicaid and provide them with new tools to achieve short- and long-term savings in the program, while still providing quality care to beneficiaries. Other measures, such as encouraging states to look at limiting optional benefits and increasing cost-sharing for beneficiaries, were also outlined as options to avoid cutting back eligibility—something prohibited by health reform’s maintenance of effort (MOE) requirement.


In the letter, Sebelius said, “I continue to review what authority, if any, I have to waive the maintenance of effort under current law,” but she focused mostly on ways states could cut costs without seeking an eligibility waiver. The MOE required in the Affordable Care Act (ACA) requires states to maintain Medicaid eligibility levels as they were in March 2010.


Earlier this year, 33 Republican governors sent the administration and congressional leaders a letter asking them to lift some of the federal mandates required by the ACA, particularly noting their concern with the Medicaid MOE requirements that were found in the law and in the federal stimulus bill (the American Recovery and Reinvestment Act of 2009).


Largely because of stimulus money, most states maintained or expanded eligibility and enrollment in Medicaid and the Children’s Health Insurance Program last year. Now, with states continuing to face crushing budget shortfalls, media attention has been swirling around states pulling out of Medicaid and/or states requesting a waiver from the ACA required Medicaid maintenance of effort.


View Sebelius’ letter to the governors.