- Associated Press - Friday, July 1, 2011

PHOENIX (AP) - Federal approval of an implementation plan Friday clears the way for Arizona to freeze enrollments in part of the state’s Medicaid program on July 8 to help balance the state’s budget.

That’s a week later than originally scheduled.

Arizona had authority to reduce eligibility for a non-federally mandated part of its program as it comes up for reauthorization, but needed federal clearance for the state’s implementation plan that includes the freeze.

Cindy Mann, director of the federal Centers for Medicare and Medicaid Services, said federal officials regret the state’s decision to reduce eligibility and were only acting on the implementation plan.

The partial enrollment freeze is part of a package of eligibility reductions and other changes being implemented to save a projected $500 million to eliminate about half of the projected budget shortfall that was projected for the fiscal year that began Friday.

The freeze to take effect July 8 applies to childless adults with incomes above the federal Medicaid maximum. Arizona’s limit was optional.

Estimates on the number of low-income Arizonans who will be prohibited from either newly enrolling or re-enrolling in the state’s Medicaid program in the next year because of the July 8 freeze range from 135,000 to 150,000.

The state’s Medicaid now covers approximately 1.3 million.

Along with the freeze, the implementation plan approved Friday includes provisions for appeal rights, notices to beneficiaries and steps to shift people to other eligibility categories.

Arizona had planned to prohibit new signups and re-enrollments starting Friday but received word late Thursday that federal officials weren’t ready to act on the latest version of the implementation plan. That version, the sixth, was submitted earlier this week.

Monica Coury, assistant director of the state’s Medicaid program, known as the Arizona Health Care Cost Containment System, said earlier Friday that federal clearance of the implementation plan on Friday would mean the freeze will take effect July 8.

State officials need the time to make preparations that including changing computer programs, she said.

After receiving word late Thursday that federal officials were not then ready to make a decision, state officials said the freeze would not take effect Friday.

That was right before a judge on Thursday denied a request by opponents of the partial freeze for a temporary restraining order to block implementation.

Arizona raised its eligibility threshold when voters approved a 2000 law, and that is the core issue in a legal challenge to the eligibility change.

Opponents argue that the state cannot scale back eligibility because doing so violates state constitutional protections for voter-approved laws.

Republican Gov. Jan Brewer and Republican legislators contend that the 2000 law’s wording gives the Legislature flexibility to fit eligibility to available funding.

The court case remains pending despite the judge’s denial of the request for a temporary restraining order.

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