- Associated Press - Sunday, August 2, 2015

PHOENIX (AP) - Arizona Gov. Doug Ducey plans to ask the federal government to approve major changes to the state’s Medicaid insurance plan that are designed to encourage recipients to work, better utilize services and possibly cut state costs.

The plan would apply only to able-bodied adults, about a quarter of the state’s 1.7 million Medicaid recipients, and won’t affect children, the elderly or disabled.

Those people - essentially all of those who gained coverage under former Gov. Jan Brewer’s Medicaid expansion plan plus parents who don’t have small children - would be charged co-pays for some services and required to pay 2 percent of their income into a health savings account. That account could only be tapped for non-covered services like eyeglasses or dental work if they meet at least one “wellness incentive” and participate in a work search program or attend school if they’re unemployed. Co-pays would be capped at 3 percent of income per year.

The Ducey administration plans to formally announce the proposal Monday and will hold a series of public meetings to take comments before a waiver request is submitted to the government in late September. Ducey health care policy adviser Christina Corieri briefed The Associated Press in advance of the announcement.

She said the plan is designed to encourage people to take better care of themselves and could lead to lower state costs, although savings estimates haven’t been calculated. The state currently spends $1.2 billion annually from the general fund on Medicaid, and the federal government provides an additional $7.2 billion.

“You want people to get healthier to improve their life and also to be able to get them to a point where they can go back to work,” Corieri said. “It’s also important for the taxpayer. The same way it would be for any business, the healthier your people are, the less amount you have in costs.”

The health saving accounts are designed to revert to the patient once they leave the Medicaid program to help them initially cover premiums and deductible and co-pay costs in the private insurance market. The idea is to encourage people to get better jobs with higher wages, even if they lose their free Medicaid insurance.

“You’re really putting up this invisible wall right now by saying I’m going to go from paying zero dollars to saying ‘my goodness I’m going to have 3 percent of my income in (premiums) and then I’m going to have co-pays and deductibles,’” Corieri said. “That is a huge disincentive to take that extra step to take that promotion at work.”

The “strategic co-pays” in the plan will only be charged on services that are considered a poor use of the system, like unneeded emergency room visits, missed medical appointments or seeing a specialist without a referral. The wellness incentives, common in many employer-provided health plans, could include smoking cessation programs, annual checkups or other markers set individually or by private Medicaid plan providers.

Other Republican-led states that have expanded their Medicaid programs have received waivers for some of the things Arizona wants to implement. But they did so as part of agreements to expand Medicaid to people earning up to 138 percent of the federal poverty level that is part of the Affordable Care Act.

Arizona has already expanded its program without seeking additional waivers, so it is unclear whether all or some of the proposals would be approved. Most of the people targeted by the Ducey plan are in the expansion population or are childless adults or parents who aren’t caregivers and earn less than 100 percent of the federal poverty limit.

A single person who earns just below the 138 percent Medicaid cutoff, about $16,000 a year, would pay about $26 a month into their health savings account.

“This is really the governor’s vision of what he’d like to see Medicaid look like,” Corieri said.

Ducey signed a law this year requiring the Arizona Health Care Cost Containment System to apply for a waiver requiring able-bodied participants to work and limiting benefits for a lifetime maximum of five years. Former Gov. Jan Brewer vetoed a bill with those requirements in 2014, and the federal Centers for Medicare and Medicaid Services has said such rules were unlikely to be approved.

States that sought to add work requirements were denied, but work search or training plans like Arizona is proposing have been approved, according to a Kaiser Family Foundation analysis.

Those provisions will be included in the waiver request, but Corieri said the rest of the program is being crafted to maximize its chances of being approved.

“We don’t want to throw up a waiver that will get a ‘no’ to everything, and be right where we are now,” she said. “We’re very interested in modernizing Medicaid and making Medicaid work better. So that’s why we’ve worked very hard to come up with a plan that we think CMS will agree to.”

The state also wants to be able to check eligibility twice a year instead of once as a way to limit fraud, waste or abuse.

If approved, the changes would go into effect in October 2016.

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