Feds: Proposed Indiana Medicaid expansion premature

Federal officials on Friday denied Indiana's request to use a state public health savings account to help cover the half-million people who will become eligible for Medicaid in 2014, saying the request was premature and leaving the state program's future in flux.

The Centers for Medicare and Medicaid Services sent a letter to the state's Medicaid office denying its request to expand the Healthy Indiana Plan as part of the national health care overhaul. The plan, known as HIP, currently helps cover medical costs for about 41,000 low-income adults in Indiana.

"It's premature," Medicaid director Cindy Mann told The Associated Press. "We're not saying one way or the other what the future of HIP is in 2014."

As many as 500,000 Hoosiers are expected to become newly eligible for coverage in 2014, as the federal health care overhaul is phased in, and the state wanted to know whether it could use HIP to cover them. The state runs HIP under a Medicaid waiver that is set to expire at the end of 2012, and the program's future within the federal overhaul has been uncertain.

"We asked for a clarification but they're not able to offer one because the federal government hasn't even put their own rules together yet," said Neal Moore, spokesman for the Indiana Family and Social Services Administration, which oversees Medicaid in the state.

He called the letter a "non-decision" and said the state needs clarity so it can plan for the changes set to take effect 2014.

Mann said federal Medicaid officials were still developing rules to govern the 2014 changes. She said it was too early to tell how HIP might fit in, but said "it's definitely not killing HIP."

"There's still a regulatory public process that has to go on to flesh out what the rules are," she said.

Mann said the state could seek an extension of the waiver to allow HIP to continue.

The state plans to do just that, said Gov. Mitch Daniels's spokeswoman, Jane Jankowski. She said Indiana had been seeking clarification on the future of HIP since last year, but has been met with confusion from the federal government.

Jankowski said the state wanted to try to start planning for the changes coming in 2014 under the health care overhaul.

"It's difficult for states to meet guidelines for health care reform when there aren't any," she said.

HIP, which Daniels touted as a success in his new book, "Keeping the Republic," provides about 41,000 enrollees up to $500 in free preventive care such as cancer screenings and a $1,100 medical savings account. When medical costs exceed that limit, benefits of at least $300,000 are provided.

Enrollees make monthly contributions based on their ability to pay, but many pay nothing because they earn too little. State officials say they are working on expanding the program to another 8,000 people.

"HIP is a really great program and we want to be able to extend it to as many people as we can," Moore said. "We just need to know what's happening."