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Kentucky cuts dental, vision coverage for nearly 500,000 Medicaid recipients

(CNN) Kentucky Republican Gov. Matt Bevin has suspended dental and vision benefits for nearly 500,000 Medicaid recipients after a federal judge blocked his plan to overhaul the safety net program.

Bevin's administration was set to launch a massive reorganization of Medicaid benefits on July 1. The changes, which were approved by the Trump administration in January, included requiring certain beneficiaries to work and to pay premiums. The reorganization also would have changed dental and vision coverage for many low-income adults.

The effort was halted -- at least temporarily -- on Friday after US District Judge James Boasberg voided the federal approval and kicked the matter back to the Department of Health and Human Services for further review. Calling the agency's approval "arbitrary and capricious," Boasberg said HHS Secretary Alex Azar had neglected to analyze whether Kentucky's plan would cause recipients to lose their health insurance coverage.

Bevin administration officials quickly warned that the state would have "no choice but to make significant benefit reductions" to offset the increasing cost of Medicaid expansion. On Sunday, they announced that dental and vision coverage would end for about 460,000 recipients until the overhaul moves forward.

These low-income, working-age adults gained the benefits when the state expanded Medicaid under Obamacare in 2014. Bevin's overhaul would have ended this coverage and shifted recipients into My Rewards Accounts, where they could earn credits to pay for dental and vision services by completing various activities, such as getting a mammogram or completing job skills classes.

When the judge blocked Kentucky HEALTH, as the reorganization is known, the My Rewards Account program was invalidated, said Adam Meier, secretary for the Cabinet for Health and Family Services. So there is no mechanism in place to pay for dental and vision services, he explained.

The agency noted that fewer than 10% of Medicaid beneficiaries had take advantage of their vision and dental coverage. The overhaul was designed to increase usage by giving them incentives to earn My Rewards Account credits.

"The Cabinet for Health and Family Services made it clear that dental and vision benefits were dependent on the implementation of the Kentucky HEALTH waiver and that without the waiver, immediate benefit reductions would be required to compensate for the increasing costs of expanded Medicaid," according to a Cabinet statement.

The agency warned last month that it might cut prescription drug benefits or even end Medicaid expansion completely if the judge blocked the overhaul.

The judge's ruling stems from a lawsuit filed by three consumer advocacy groups that argued Kentucky HEALTH runs counter to Medicaid's objective of providing the poor with access to health care.

This is the first time Kentucky has taken away a benefit, said Dustin Pugel, policy analyst at the Kentucky Center for Economic Policy, a left-leaning advocacy organization. The state ranks pretty poorly in terms of oral health, and dropping coverage will only exacerbate the problem, he said. Plus, it may make dental and vision providers less likely to open offices, particularly in rural communities.

The state says it is working with the Centers for Medicare and Medicaid Services to address the judge's issues so it can move forward with the overhaul.

This story has been updated to add Kentucky Gov. Matt Bevin's political party.

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