Nebraska is considering a major change to how its Medicaid program pays for medical care that occurs before a patient completes the application process, a step that opponents say could leave low-income families and hospitals absorbing costs during the most urgent early days of care.
The proposal comes from the Nebraska Department of Health and Human Services as DHHS accepts public comment, with the department aiming to eliminate retroactive coverage. Under current law, Medicaid generally covers care retroactively for a set period before the application is filed, a feature that can matter when applications are delayed by the circumstances of a pregnancy, a newborn’s stay in intensive care, or an emergency that drives a patient to seek care near the end of a month.
Dr. Ann Anderson-Berry, division chief of neonatology at Children’s Nebraska, described how that grace period can align with the realities facing families of newborns in the neonatal intensive care unit. Anderson-Berry said it can be “just too tenuous to go home, or to think about paperwork,” adding that families sometimes do not submit applications in the first days or even the first couple of weeks after delivery.
Under the proposal being considered by DHHS, the retroactive safety net would end entirely, including for pregnant people and children, according to opponents who said Nebraska would be the only state to take that approach if adopted. They contrasted Nebraska’s plan with other states that have reduced retroactive coverage but maintained exceptions for certain groups or allowed longer periods than what Nebraska is proposing.
Nebraska Appleseed program director Sarah Maresh said the purpose of retroactive Medicaid coverage is to prevent low-income people from falling into severe medical debt, and also to protect hospitals by ensuring providers will be paid for care in catastrophic situations. Maresh argued that eliminating retroactive coverage would create financial harm for patients and would stress a health care system already under strain.
DHHS and some state officials argue the policy change would help the state budget while improving enrollment speed. At a legislative hearing in February, DHHS Chief Financial Officer John Meals said the department is seeking to save Nebraska “millions of dollars each year” by ending retroactive coverage and said the policy would incentivize hospitals to be “timely and thorough” in helping Medicaid-eligible patients complete applications.
Hospital representatives disputed the idea that the burden is mainly on hospitals or that it can be managed as a simple enrollment timing issue. Jeremy Nordquist, CEO of the Nebraska Hospital Association, said hospitals already spend money and effort working to help patients enroll in Medicaid or private insurance, and he argued that there is a segment of the population hospitals cannot reach until they are brought in as emergency patients.
The dispute centers on timing. Medicaid enrollees would still be covered within the calendar month that they apply for care, opponents said, but they warned that care in the previous days of the month could go unpaid if applications are submitted later than the retroactive window. Anderson-Berry, for example, said high-cost newborn care can start immediately and described a typical NICU daily cost of about $4,000, while noting that extremely low birth weight babies can run hospital bills well over $1 million.
Nebraska DHHS officials declined to be interviewed for the story. A spokesman said leadership was busy with legislative and budget discussions.
Even if the proposal does not proceed, the timeline for retroactive coverage is already set to change under federal policy, with the federal government cutting retroactive coverage from a longer period to shorter time frames starting Jan. 1, 2027. DHHS is also pursuing a five-year waiver that would go beyond those federal changes, with Meals telling lawmakers last month that Nebraska plans to set retroactive coverage to zero months effective Oct. 1. Maresh said that would mean eliminating retroactive coverage across Medicaid populations rather than limiting it only for certain groups.
Other states, Maresh said, have moved toward zero retroactive coverage in the past but later added exceptions after facing financial and operational pushback. She said Iowa eliminated retroactive coverage in 2017 except for pregnant women and infants, then added more exemptions later for children and long-term care residents.
Opponents also challenged DHHS estimates about savings, and pointed to potential federal matching consequences. DHHS estimated the state would save between $18 million and $21 million each year during the five-year waiver, Maresh said, while Nordquist argued that the state could lose federal matching dollars because the federal government pays between $1 and $9 for every $1 Nebraska spends on Medicaid. Bryan Health, which operates six hospitals in the state, estimated its hospital system would lose about $35 million each year if retroactive coverage is set to zero, according to Ashton Wyrick, a senior director at Bryan Health.
At the Legislature, Sen. Machaela Cavanaugh introduced a bill that would require the state to maintain the maximum retroactive coverage allowed under federal law, but it has not advanced from the Health and Human Services Committee. Committee chairman Brian Hardin said negotiations were ongoing among legislators, the Governor’s Office and DHHS, and he said, “To push it to zero, I don’t know that Nebraska is ready for that.”
Providers in rural settings said they expect logistical challenges that would affect patients’ ability to assemble the paperwork needed for Medicaid eligibility. Jim Ulrich, CEO of York General, said getting Medicaid documentation together is often hard, with providers sometimes relying on family members for records such as birth certificates, proof of residence and financial documentation. He said facilities may have to place patients while applications are underway, and that some families would not be able to cover the costs between admission and a completed application, forcing providers to write off losses as charity care.
The episode follows a broader debate about how health systems manage thin margins and administrative workloads, especially as federal timelines narrow. Nordquist and other hospital leaders said they expect the tightened federal time frames to be challenging, but not as severe as eliminating retroactive coverage entirely.