Star: Feds: Indiana law violates Medicaid rules, could cost state millions

This article first appeared online at the Indianapolis Star on June 1, 2011.

Feds: Indiana law violates Medicaid rules, could cost state millions
Heather Gillers and Mary Beth Schneider

Federal officials said Wednesday that the new Indiana law cutting Medicaid funding to Planned Parenthood violates Medicaid rules — a determination that could cost the state millions and possibly even billions of dollars.

The U.S. Department of Health and Human Services informed state officials by letter that it was denying Indiana’s new Medicaid plan because states can’t pick and choose where recipients receive health-care services.

What happens next is, at best, a guess. But almost certain is that it will add fuel to a legal and political battle likely to be watched closely across the nation.

An HHS official would not comment on what happens if Indiana does not change its law, though one possible ramification would be withholding funding.

Indiana relies on about $4.million in federal Medicaid family planning funds and more than $4 billion in total Medicaid dollars.

The state Family and Social Services Administration — caught between state and federal law — said it would seek guidance from Indiana Attorney General Greg Zoeller.

“For now, our lawyers advise us that we must continue to follow the law the Indiana General Assembly passed,” said FSSA spokesman Marcus Barlow.

Zoeller spokesman Bryan Corbin said that the office is working with the FSSA to determine its options, “but we will continue to defend the statute.”

Gov. Mitch Daniels, who signed the bill into law, declined to comment Wednesday.

There also is the matter of the courts.

The law, which took effect May 10, is being challenged in federal court by Planned Parenthood on various grounds. The next court date is scheduled for Monday.

The law made Indiana the first state to cut off Medicaid funding to Planned Parenthood and ended roughly $1.3 million in annual payments to the health provider.

Planned Parenthood of Indiana, which has been scraping together donations over the past few weeks in an effort to keep serving its 9,300 Medicaid patients, welcomed Wednesday’s letter.

“It is incredibly gratifying to have the federal government confirm what we’ve been saying all along, that (House Enrolled Act) 1210 violates federal law,” said Betty Cockrum, president of Planned Parenthood of Indiana.

Cecile Richards, president of Planned Parenthood Federation of America, called the letter “a strong rebuke to Indiana” and said it “serves as a warning to other states that attempts to bar federal funding for Planned Parenthood violate Medicaid law.”

State Rep. Eric Turner, R-Cicero, who helped lead the effort in the legislature to defund Planned Parenthood, was disappointed.

“We believe we represented the public’s opinion on this, and we’ll see what happens,” he said. “It’s another example of the federal government trying to tell states what to do. I think states are very capable of deciding their own fate and running their own ship.”

Anti-abortion activists challenged the Obama administration’s interpretation of federal Medicaid policy, saying they believe states do have authority to defund Planned Parenthood and called the letter a strong-arm tactic.

“We’re not surprised by it,” said Indiana Right to Life Legislative Director Sue Swayze. “This is the most pro-abortion president we’ve ever had. It almost feels like they’re bullying the state of Indiana over the wishes of our legislative branch.”

President Marjorie Dannenfelser of the Susan B. Anthony List, an anti-abortion group, said, “(HHS) Secretary (Kathleen) Sebelius is strong-arming states like Indiana to protect the administration’s powerful ally Planned Parenthood.”

House Bill 1210 was approved overwhelmingly by the House and Senate.

Supporters of the law said they did not want their tax dollars going to an organization that provides abortions — even though the procedure is not paid for with tax dollars.

Opponents said the law could leave 9,300 Medicaid patients, who receive services such as birth control, cancer screenings and sexually transmitted disease tests, without reproductive health care.

The law took effect immediately after Daniels signed it, giving FSSA little time to apply for federal approval for the changes until after funding had already been cut off. The application went out May 12. The letter received Wednesday was the federal government’s response rejecting that application.

During debate on the bill, FSSA Secretary Michael Gargano had expressed concerns that it would run afoul of federal Medicaid policy and jeopardize the annual $4 million the state receives in Medicaid family planning funds.

Federal Medicaid officials seemed to suggest that the stakes are even higher.

“We fully expect that the state will follow federal law that sets the conditions for its receipt of over $4 billion in federal Medicaid funds,” said one federal Medicaid official.

That $4 billion pays for not only reproductive health care but also services for children, the disabled and the elderly.


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