A holdover proposed rule from the Obama and still under review by the Trump administration that aims to overhaul the coverage appeals process for Medicaid and CHIP is getting major pushback from states around the country who say it’s too prescriptive and would require changes in local law to comply with.

CMS issued the policy last November in an effort to promote modernization and coordination of Medicaid appeals processes with other health coverage programs such as Medicare and marketplaces established under the Affordable Care Act, as well as technical and minor proposed modifications to delegations of eligibility determinations and appeals. Comments were due Jan. 23.

States are balking at proposals that would change how appeals have handled in their states for decades. For instance, some state Medicaid agencies delegate first round coverage appeals to other agencies in the state before they weigh in in latter elevated rounds.

The proposed rule would require individuals requesting a fair hearing be given a choice to have their fair hearing instead conducted by the Medicaid agency.

In Washington state, the Medicaid agency has had a contract with the Office of Administrative Hearings (OAH) for several decades to conduct first-tier hearings for Medicaid clients which issues initial rulings in approximately 8,000 Medicaid hearings per year.

“If the rule changes proposed by CMS go into effect, [Washington’s Healthcare Authority] may need to redesign not only its entire hearing system but also work with the legislative and judicial branches to change long-standing law,” MaryAnne Lindeblad, the state’s Medicaid director said in a letter to Tim Hill, acting deputy administrator and director of the Medicaid center at the CMS.

Others made similar points about the change. “The proposed regulations will unduly restrict state discretion without enhancing the objectives of the Medicaid program,” Beth Kohler, deputy director of Arizona’s Medicaid says in a comment. “These proposed regulations will also impose significant hardships on states, will impede their flexibility, and will require legislative action by states to comply with the new provision.”

This and other provisions in the rule were also criticized by the National Association of Medicaid Directors, and state officials from Alabama, California, Massachusetts, South Dakota, Vermont, Wisconsin and others.

In a federal notice, CMS felt the impact of the rule would be minimal. “While states will likely incur short-term increases in administrative costs, we do not anticipate that this proposed rule would have significant financial effects on state Medicaid programs,” the agency says.

Advocates were overall supportive of the rule, especially the part that allowed beneficiaries to choose that their state Medicaid agency handled first level of appeal. The National Health Law Program said it provides applicants and beneficiaries with additional protections. The group also noted that the proposal doesn’t outright end a sates ability to delegate initial decision to other agencies.

It is unclear as to the likelihood that the rule be finalized since a key goal of the rule was to align standards between Medicaid, CHIP and the exchanges set up under the Affordable Care Act.

“Ultimately, implementation of these ACA-related regulations will be tied to the broader fate of the ACA under the Trump Administration and Republican Congress,” Debra McCurdy, senior health policy analyst at the law firm ReedSmith says in a client alert about the proposed rule.

If CMS under Trump wanted to moved forward to finalize the rule, the earliest they could do it is late March as there is now a 60-day freeze on new rulemakings.