Unusually generous Medicaid eligibility for children with disabilities is threatening Pennsylvania's safety net, according to Secretary of Public Welfare Gary Alexander, who is looking for ways to adjust that.

In August, Alexander announced an initiative in which families making above 200 percent of the federal poverty level would be responsible for co-pays on certain services.

Last week, Alexander called off the initiative and said that, based on stakeholder feedback, the department is currently asking the Centers for Medicare and Medicaid Services about applying a premium to the program instead.

"Stakeholders have clearly indicated to the department an understanding of the need for families to contribute to this program," Alexander said in a statement.

He noted that a premium was always DPW's preferred option, but initial guidance from CMS indicated it would likely violate maintenance of effort provisions in the Patient Protection and Affordable Care Act.

The Hospital & Healthsystem Association of Pennsylvania objected to the co-payment plan, saying in a letter to DPW that implementing it would be complicated, and HAP feared the plan would dissuade families from accessing services or that families wouldn't pay their portion and hospitals would have to assume the debt.

According to Alexander, Pennsylvania is the only state that allows a child whose disability does not require institutional care to be eligible for Medicaid without considering the parent's income, child support or Social Security benefits received by the child.

Alexander said that part of Pennsylvania's Medicaid program serves nearly 48,000 children and costs about $700 million a year, but about 80 percent of the families have incomes above 200 percent of the federal poverty level, and a quarter have income above $100,000 a year.

In other parts of Medicaid, Alexander said, DPW "currently applies co-payments to other individuals with income levels substantially below 200 percent of federal poverty level."