Sep 022011

— By Teri Walker

Hoping to help bridge budget shortfalls, Arizona began assessing mandatory co-pays for some Medicaid patients in 2003, then again in late 2010. A federal appeals court last Wednesday said those copayments will have to go.

A three-judge panel of the 9th U.S. Circuit Court of Appeals issued its ruling against Arizona’s practice of charging co-pays after reviewing a class action lawsuit filed by patients.

The Arizona Health Care Cost Containment System (AHCCCS) is the state Medicaid agency that provides medical services to Arizona’s poor and disabled. Until 2003, participants in the program had received free care, with no co-pays required at the time of service.

The state legislature in 2003 approved the implementation of copayments for some patients, including childless nondisabled adults. The copayments, which ranged from $4 to $30, were mandatory, meaning if the patient couldn’t pay, medical providers could refuse to render treatment. At the time, then U.S. Department of Health and Human Services Secretary Tommy Thompson approved the co-pays under Medicaid state plan waiver provisions.

The state collected payments for only four months before collections were suspended while the courts considered a lawsuit.

In 2010, the stay was lifted when U.S. District Court Judge Earl Carroll in Phoenix ruled in favor of Arizona and the federal government. That year, U.S. Department of Health and Human Services Secretary Kathleen Sebelius also approved the state waiver.

AHCCCS notified patients that beginning Nov. 1, 2010, it would begin assessing copayments again. In response to the 2010 decisions, 14 people initiated a class-action lawsuit claiming the “medically needy” shouldn’t be required to make copayments for service. The lawsuit alleged that the new mandatory copayments violated the Medicaid Act cost-sharing restrictions, that the waiver exceeded Sebelius’ authority and that the notices patients received about the change in their health coverage was inadequate.

Judge Richard Paez, who wrote the opinion last week for the District Court, said, “We found that the administrative record contained a rather stunning lack of evidence that the Secretary considered the relevant factors. Thus, we concluded that the Secretary’s waiver was arbitrary and capricious.”

“The record reveals that the purpose of Arizona’s waiver application was to save money,” Baez continued, going on to explain that the Medicaid law does not allow cuts in benefits just to save money if there is no research or experimental goal.

The district court directed the issue be returned to the Secretary of the U.S. Department of Health and Human Services to reconsider her waiver decision.

As of Aug. 31, the AHCCCS website still included information about required copayments. The agency has not issued information about how it will proceed in response to the court’s ruling.