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Updated Feb 8, 2013 - 4:06 pm

Judge rules against co-pays for Arizona Medicaid

PHOENIX -- A federal waiver allowing Arizona's Medicaid program to charge low-income, childless adults co-pays for medical care was issued without a proper explanation, according to a federal judge who ordered officials to review the decision within two months.

The ruling doesn't immediately stop the state's Medicaid plan from charging the co-pays for visits to doctors and for prescriptions, and the payments will be eliminated anyway at the end of the year under provisions of the federal health care overhaul law.

But the ruling Thursday by U.S. District Judge David Campbell marked the second time a federal judge has said the federal Health and Human Services Department improperly allowed Arizona to charge poor people co-pays.

Advocates who brought the suit argue that co-pays actually cost the state more because people covered under the state Medicaid plan don't get needed medications or treatment from a general doctor and end up much sicker in an emergency room- a much more costly option.

``They initially said this would save money,'' Ellen Katz, director of the William E. Morris Institute for Justice, said Friday. ``They said they thought that doing co-pays made people take personal responsibility for their care.''

That may be true for middle-income people, Katz said, but low-income people without any extra money are forced to go without care. Those affected by the suit can earn up to 100 percent of the federal poverty level, or about $15,400 a year for a single person, but many earn much less.

The state Medicaid plan, known as the Arizona Health Care Cost Containment System, began charging co-pays just to childless adults covered by the plan about a decade ago, but the payments were put on hold after the Morris Institute sued.

The federal government's waiver for the ``demonstration project'' had been replaced with a new one by the time that case was finished, so the Morris Institute had to sue again last year. That was the case decided Thursday by Campbell.

The Phoenix-based judge ruled there's no evidence that Health and Human Services Secretary Kathleen Sebelius considered arguments by the Morris Institute or its experts when she made her decision. He gave Sebelius 60 days to do that and report back.

Co-pays for a doctor's visit for childless adults are $5, and non-emergency hospital visits are $30. Generic drugs are $4 and brand name drugs are $10. Regular Medicaid recipients pay $1 per doctor's visit, $5 for nonemergency use of emergency rooms, and $5 for nonemergency surgery.

The Morris Institute said the state gave improper notice of the co-pays, but Campbell's ruling said that wasn't the case.

The co-pays currently affect fewer than 90,000 of the approximately 1.3 million Arizonans covered by the plan.

Calls to AHCCCS officials seeking comment weren't immediately returned Friday. An HHS spokesman had no immediate comment.

The whole problem goes away in a year, when Medicaid co-pays are completely banned under the health care overhaul law.

Separately, Gov. Jan Brewer is asking the Legislature to approve her plan expanding Medicaid coverage to people earning up to 138 percent of the poverty line.

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