The U.S. Health and Human Services Department has shot down Indiana’s plan to defund Planned Parenthood in its Medicaid plan. The federal agency is telling state officials the Indiana plan “will improperly bar Medicaid beneficiaries from receiving services.”

A handful of other states, Florida among them, are also planning to cut federally mandated services from their Medicaid plans. In legislation passed this year, the Sunshine State allows Medicaid providers to not offer family planning services. So will Health and Human Services’ announcement set a precedent for states such as Florida that are looking to have their Medicaid plans approved by the federal government?

The Associated Press is reporting that Medicaid Administrator Donald M. Berwick wrote that “federal law requires Medicaid beneficiaries to be able to obtain services from any provider qualified to provide services.”

Last week, The Washington Post reported that a law recently signed by Gov. Mitch Daniels would make Indiana “the first state to deny Medicaid funds for general health services such as breast exams and Pap smears and affects more than $1 million in Medicaid funding for Planned Parenthood.”

Since the law was signed, there has been speculation about the legality of such a move. The biggest obstacle to the law’s implementation was the federal rule, which Berwick cited, requiring a Medicaid beneficiary to be able to receive federally mandated services from any entity that provides Medicaid services. Family planning is such a federally mandated service.

That could also be an obstacle for Florida’s Medicaid reform efforts. The state legislature passed a provision in the Medicaid reform bill during this past legislative session that allows any Medicaid provider to opt-out of providing family planning services for “moral or religious” reasons.

Florida’s Agency for Health Care Administration is currently developing concrete Medicaid proposals to show the federal government. They have until Aug. 1 to develop those proposals.

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