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Judge Dings Arizona Medicaid, Again

PHOENIX (CN) - A federal judge ruled that Health and Human Services Secretary Kathleen Sebelius should reconsider he decision to order childless adults to pay copayments to Arizona's Medicaid program.

U.S. District Judge David Campbell found that Secretary Sebelius failed to consider evidence submitted by lawyers in a class action, during the administrative approval process, which claimed that "copayments are not an effective Medicaid cost-saving measure for states."

The evidence, in the declaration of Dr. Leighton Ku, a Medicaid and cost-sharing expert, claimed "that the imposition of copayments for preventative, primary care leads to low-income beneficiaries seeking fewer essential medical services and relying more on emergency room care and hospitalizations, and that higher copayments for prescription drugs cause low-income beneficiaries to forgo essential and effective medications, leading to a higher incidence of serious medical conditions such as heart attacks and strokes," according to Judge Campbell's order.

On Oct. 1, 2003, Arizona's Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), "with retroactive permission from the U.S. Department of Health and Human Services, implemented an amended rule that required certain Medicaid-eligible Arizonans to pay copayments that exceed the limited, 'nominal' copayments authorized by the federal Medicaid Act" if the participants are childless, according to the class action filed in May 2012.

The class claimed that as "a result of the copayment requirements, eligible AHCCCS participants, including persons with significant medical conditions, for example, persons with deformities of the back and spine, asthma, and major depression, do not have the money to pay for their copayments and are going without needed medical care," and that "Medicaid-eligible persons are not fully participating in the AHCCCS Medicaid program and their health is being adversely affected."

Campbell's ruling is the second time in 18 months that a court has found the Department of Health and Human Services' approval of AHCCCS copayments on childless adults violated federal law.

The 9th Circuit found in August 2011 that Sebelius' approval of the copayments was "arbitrary and capricious."

In that ruling, plaintiffs' public health expert stated that "(o)ver the last 35 years, a number of studies have looked at the effects of cost sharing on the poor. Of all forms of cost sharing, copayments are the most heavily studied."

There was no evidence from Sebelius that Arizona's "demonstration project will actually demonstrate something different than the last 35-years worth of health policy research," 9th Circuit Judge Richard Paez ruled.

Arizona demands as copayments $4 for each generic prescription, $10 for a brand name prescription, and $5 for an office visit.

Before the rule was imposed in 2003, an office visit cost $1.

"We hope the secretary will undertake a careful review of the Arizona's copayments as required by Judge Campbell's decision," said National Health Law Program Legal Director Jane Perkins, co-counsel in the class action. "Compared against more than 35 years of research into Medicaid cost sharing, Arizona's copayment project has to date not demonstrated anything. And, at this point, it is not clear what these copayments could demonstrate."

Co-counsel for the class is Ellen Katz, with the William E. Morris Institute for Justice in Phoenix.

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