Source: State reaches agreement on Medicaid waiver

By Matt Viser, Globe Staff

Top state officials today are planning to announce this afternoon that they have come to terms with the federal government on Medicaid waiver, which has huge ramifications for the state budget.

"The state has reached an agreement in principal," according to a source briefed on the plan.

Governor Deval Patrick is planning to announce the terms at 2 p.m. The source said the terms were favorable to the state.

"The agreement is considered a major victory of the Commonwealth and health care reform," said the source, who spoke on the condition of anonymity since the agreement has not been made public.

The federal payments, which are crucial for keeping the state's landmark health insurance law afloat, were set to expire June 30, but the state has received numerous extensions to hammer out a deal with federal officials.

At stake is roughly $11 billion in federal funds over three years that is used to help subsidize insurance for low-income residents. The state has provided subsidized healthcare to more than 245,000 residents under its two-year-old law, a higher number than anticipated, and that has stretched its budget.

The waiver allows Massachusetts to provide health insurance to some residents with incomes higher than would typically be allowed under traditional Medicaid rules.

The two sides had been in disagreement over funding for several key programs in the massive spending blueprint, and that if Massachusetts did not get what it requested for any one of those programs, it could have a large impact on the state budget.