The U.S. Department of Health & Human Services said it will allow some states to use federal funds provided under the reform law to privatize their Medicaid expansion programs.
States have increasingly been considering paying private insurers to insure the expanded Medicaid population after Arkansas first proposed the idea and received conditional approval from HHS.
HHS said Friday that states can use private insurers as long as they first obtain a waiver from the agency and that privatizing Medicaid doesn't cost the agency more than the traditional program.
"We remain committed to working with states and providing them with the flexibility and resources they need to build new systems of health coverage," Cindy Mann, HHS's Medicaid director, said in a blog post.
HHS also released a question-and-answer document that said it would "consider approving a limited number of premium assistance demonstrations." The agency added that it "will evaluate each proposal that is submitted and consider it on a case by case basis relative to this standard."
Meanwhile, HHS Secretary gave Arkansas broad approval in a letter, saying it's interested in the state's "innovative approach to further expanding access" to Medicaid.