Feds Okay Some Arizona Medicaid Reductions

October 25, 2011

Federal officials have approved a plan by Arizona aimed at limiting the state's spending on its Medicaid program.

Arizona Medicaid officials had asked the Center for Medicare and Medicaid Services accept the plan, which included a freeze on enrollment of childless adults and copayments for some services.

The reauthorization, in the form of a waiver approval, is good for five years.

The state sought the changes due to a budget shortfall. Earlier this year, the Arizona legislature adopted a budget that called for a $500 million cut in Medicaid spending.

Arizona was facing a budget deficit estimated at $1.1 billion for the current fiscal year.

Not all of the changes the state requested were approved. An annual fee of $50 on people who smoke was rejected.

CMS officials also shelved a proposed reduction in payments to providers, slated to save the state $190 million annually. Those will be considered separately.

Because not all of the cost-cutting measures were accepted, it is not clear how much of the deficit remains, or how the state will address it.