DEPARTMEN T OF H EALTH & H UMAN SERVICES Centers for Med icare & Med icaid Services 7500 Security

Boulevard , Mail Stop S2-26-12 Baltim ore, Maryland 21244-1850

Center for Medicaid and CHIP Services

January 26, 2012

The Honorable Margaret Rotundo Maine House of Representatives Augusta, Maine 04333

Dear Representative Rotundo: Thank you for your recent letter expressing concern regarding potential budget cuts to the State of Maines Medicaid programs. We appreciate and share your concern for preserving coverage for the vulnerable low-income, disabled and elderly populations that Medicaid serves. You asked whether section 1115 of the Social Security Act (the Act) permits CMS to waive the Maintenance of Effort (MOE) provisions of sections 1902(a)(74) and 1902(gg) of the Act, as added by the Affordable Care Act, in order to achieve budget savings by reducing coverage for eligibility groups currently set forth in the States approved State plan. You also asked whether CMS has approved any 1115 demonstrations to waive MOE for this purpose. To date, CMS has not approved any request to waive the MOE provision. It is important to note that the Secretarys authority under section 1115 of the Act to waive a provision of the law, including the MOE provision, is limited to experimental, pilot or demonstration projects that are likely to assist in promoting the objectives of Medicaid. The purpose of Medicaid is to provide high-quality health care coverage to needy individuals whose income and resources are insufficient to meet the costs of necessary medical services. Reductions in eligibility solely for budgetary purposes would not be experimental, pilot or demonstration projects that further the purposes of the program. With respect to the MOE provision, I would further note that to the extent that a State certifies to CMS that it has a budget deficit for a fiscal year, the MOE provision does not apply to adults who are not eligible based on pregnancy or disability whose incomes above 133 percent of the federal poverty level. States do, of course, have broad authority under Medicaid to design cost-saving measures to ensure efficient and effective provision of high quality health care coverage. We are working closely with States to help them identify and implement these opportunities, such as through pharmacy pricing, better integration of care, reduced hospital admissions and payment reforms that promote care improvements and efficiencies. Finally, you asked if the Secretary requires State legislative approval prior to acting upon a section 1115 waiver request. CMS does not have such a requirement. Whether a State needs or seeks State legislation to proceed with a change in Medicaid will vary greatly by State and on the

nature of the waiver. Longstanding CMS policy does require States to provide public notice before submitting an 1115 demonstration application, and we are developing regulations to implement the requirements of section 1115(d) of the Act, as added by the Affordable Care Act, to assure opportunities for public input at both the State and federal levels. CMS is committed to ensuring the success and sustainability of the programs that provide needed health care services to vulnerable individuals and families and to providing States with broad flexibility to administer their programs. Please note, CMS is sending this same letter to your cosigner.

Sincerely, /s/ Cindy Mann Director

cc:

Victoria Wachino, CMCS Richard McGreal, ARA, Boston Regional Office