ACA Note: States Can Bypass ACA's MOE Provisions as 1115 Waivers Expire

March 11, 2011: The Department of Health and Human Services (HHS) announced in late Feburary that Arizona could drop more than 250,000 people from its Medicaid program without violating the Affordable Care Act (ACA) provision regarding “maintenance of effort” (MOE). 

The MOE clause requires states to maintain current Medicaid eligibility levels until 2014—even if those levels exceed the federally-mandated minimum—in order to secure federal matching funds for the program.  Arizona’s Medicaid program currently covers some childless adults through a Section 1115 waiver, but the waiver expires on September 30, 2011, and HHS determined that the ACA does not require a state to renew a waiver beyond its expiration in order to satisfy the MOE provision.

A number of states besides Arizona will see their Medicaid waivers expire before 2014, and Secretary Sebelius’s Arizona clarification means these states could opt to drop expansion populations from Medicaid as well.  A review of waivers from the Centers for Medicare and Medicaid Services (CMS) indicates that eight states and the District of Columbia currently have Section 1115 waivers that will expire before 2014 and through which non-mandatory populations (parents and childless adults) are now Medicaid-eligible.  These states include Arizona, Hawaii, Indiana, Massachusetts, Minnesota, Oklahoma, Rhode Island, and Wisconsin.  

Massachusetts and Minnesota are the next two states in line to see their waivers expire (on June 30, 2011), but these states aren’t expected to reduce their eligibility.  States that have been mentioned as potentially likely to shrink their eligibility include Indiana and Wisconsin.  However, the waivers for both these states are active until the end of 2012 and 2013, respectively, with Wisconsin’s expiration essentially coinciding with the launch of expanded Medicaid eligibility under the Affordable Care Act.