The Iowa Department of Human Services has received approval for a waiver from the Centers for Medicare and Medicaid Services for permission to eliminate the three month coverage period prior to the date of application for Medicaid coverage.
With this legislative change, Iowa joins Arkansas, Indiana and New Hampshire, which also have similar waivers in place for eliminating retro-active coverage. Under the new law, Iowa Medicaid will only reimburse medical expenses incurred from the first day of the month in which the patient applies for coverage. This update is effective November 1, 2017.
The State of Iowa has made this move in an effort to move the Medicaid program more in line with commercial insurance, which does not allow retro-active insurance coverage. Furthermore, the change is estimated to save nearly $37 million; the majority of that savings falls to the federal government, with nearly $10 million saved for the State of Iowa. Lawmakers say the new protocol will encourage individuals to obtain and maintain health insurance coverage even when they are healthy, rather than relying on Medicaid once they have become ill.
The response from community organizations, hospitals, and patient advocates has been overwhelmingly in opposition of the measure, with concerns over mounting medical bills for individuals who were unaware of their eligibility for Medicaid coverage and individuals who generally have lower income to begin with. Hospital systems and providers also expressed concern that charitable care will increase exponentially, placing an additional burden on their finances, specifically in more rural areas of the State.
Impact For You and Your Practice
As a behavioral health provider, this policy shift may mean a policy change in your practice as well, including being more consistent in following up on coverage lapses for current Medicaid members, or being more cautious when continuing to see clients who lose their current coverage.
For instance, a current client who loses their private insurance in Mid-January, but does not apply for Medicaid for a month, and is approved for coverage in the month of February, will have their coverage made effective for the start of the month in which they applied. If you continued to see this client in the second half of January, these claims will not be able to be billed to Medicaid, as was previously possible.