PHOENIX – Arizona’s receipt of $1.6 billion in stimulus funding – including more than $300 million already being spent to help keep the state in the black – is at risk because a federal agency says the state is not in compliance with a prohibition against health-care rollbacks.
Arizona could lose the money if the federal determination stands or if state law isn’t changed to eliminate a health-care requalification provision that was the basis of the determination, state officials said Monday.
In a letter obtained Monday, Gov. Jan Brewer asked the U.S. Department of Health and Human Services to reverse a determination made by the Centers for Medicare and Medicaid Services.
According to Brewer’s letter, CMS determined the Arizona Health Care Cost Containment System’s requirement that some enrollees requalify every six months instead of annually violated a stimulus program prohibition against tightened eligibility standards, methodologies or procedures for a state’s Medicaid program.
Brewer spokesman Paul Senseman confirmed that $1.6 billion in stimulus funding is at stake and that the money could be lost if the issue isn’t resolved. CMS has said the state has until July 1 to make any necessary corrections, Senseman said.
The state expects to receive up to $4.2 billion in stimulus money, of which the $1.6 billion is of particular value because it would allow the state to divert some of its own Medicaid spending for other purposes.
The Legislature and Brewer in January approved a package of budget changes to close a projected $1.6 billion shortfall in the then-$9.9 billion budget. That package included use of $500 million of stimulus money, including approximately $300 million that was already received and is being spent.
With the recession continuing to hammer tax collections, the state faces a new, growing shortfall of up to $500 million in the current budget plus a projected $3 billion shortfall in the coming year’s budget based on $11 billion of spending.
Receipt of the initial federal funding is already key to the state budget staying in the black, State Treasurer Dean Martin said last week when he announced that the state would need to use short-term borrowing in mid-April to cover a cash-flow gap.
Brewer’s letter to HHS said the state’s Sept. 26 requalification change does not violate the stimulus law’s requirements because the change was included in a budget law approved last June – before the stimulus law’s July 1, 2008, deadline – and because it was “clearly not a change to more restrictive standards, methodologies or procedures, but merely a change in timing.”