The CMS has approved Iowa’s request to end an ACA provision that allows people to obtain Medicaid coverage the day they apply, assuming the applicant qualifies for benefits.

The new waiver also nixes providers’ ability to bill for services provided in the three months before the application, assuming the patient was eligible during that time.

Hospitals in the state had urged the CMS to reject the request as it puts them at financial risk.

Elimination of retroactive coverage is expected to reduce monthly enrollment by 3,344 enrollees and reduce annual Medicaid spending by $36.8 million, according to a state estimate.

“The approval of the waiver of retroactive eligibility (encourages) beneficiaries to obtain and maintain health coverage, even when healthy,” CMS’ Medicaid Director Brian Neale said in a letter posted Monday on the agency’s website.

The new waiver will apply to all Iowa Medicaid beneficiaries except for pregnant women and infants under one year of age. Additionally, the three month retroactive eligibility waiver will only apply to new applications or new beneficiaries who join an existing household, for applications filed or requested on or after Nov. 1, 2017.

“This amendment will place a significant financial burden on hospitals and safety-net providers and reduce their ability to serve Medicaid patients,” Natalie Ginty, director of government relations and staff legal counsel for the Iowa Hospital Association, said in a statement. “It will likely translate into increased bad debt and charity care for Iowa’s hospitals and will affect the financial stability of Iowa’s hospitals, especially in rural communities.”

Iowa Medicaid officials acknowledged provider concerns in its waiver application, but noted its hands were tied after state legislators passed a bill calling for the amendment this year.

To date, Arkansas, Kentucky, Indiana and New Hampshire have either won permission to waive retroactive eligibility or have a pending request with the CMS to do so.

As of May 2017, Iowa has enrolled 630,792 individuals in Medicaid and CHIP—a net increase of 27.82% since the marketplaces opened in October 2013.

From fiscal 2013 to 2016, total Medicaid spending in Iowa jumped more than $1 billion to $4.7 billion, according to federal data.

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CMS OKs Iowa Medicaid waiver that worried hospitals –