Sebelius Issues Letter to Governors Highlighting State Flexibility under Medicaid - February 9, 2011

On Feb. 3, US Department of Health and Human Services (HHS) Secretary Kathleen Sebelius issued a letter to governors responding to state concerns over budget pressures resulting in part from Medicaid. Sebelius notes that states with budget deficits retain the option of reducing Medicaid eligibility for non-disabled, non-pregnant adults with income above 133%of the federal poverty line (although such states would lose out on the enhanced FMAP rates available until June 30). The letter also indicates that nearly 40% of Medicaid benefits spending is for optional benefits, providing another area of cost savings for states. Sebelius stresses that Medicaid representatives are available to meet with state officials about their Medicaid plans and help identify ways to identify savings in the program, and that the federal Centers for Medicare & Medicaid Services (CMS) plans to dispatch teams of CMS officials to state capitals to discuss other cost-cutting options at states’ disposal.