As discussed above, the federal government apparently does not believe that it has the power to dictate what a state must do with its Medicaid funding. However, as we discuss below in more detail, federal law sets up an exception for states and their Medicaid programs involving “best interest contracts” (BICs). These BICs must be approved by both the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS). A 2013 CMS rule gives states 14 months to submit requests requesting approval of their proposed BICs before they are withdrawn from consideration.
State Legislatures Can Exercise Political Influence Through Medicaid Contracts The use of grants provided under each state’s version of the program is largely at will on both sides—the recipient states can refuse any grant request or award under any circumstances they see fit. That said, there are some restrictions on this “power play” depending upon how compliant a particular state is being with respect to administering its own version of health care reform via Medicaid expansion. For example: States may not refuse certain participation based solely on pre-existing conditions , so long as those individuals have access to other medical assistance options;
States cannot deny coverage based solely upon income levels, but only if individuals meet all other eligibility requirements ;
If a non-expansion state rejects one or more expansion applicants due exclusively to coverage denial criteria set