Gov. Mike Pence submitted the waiver request to the Centers for Medicare and Medicaid Services last month without holding the public hearings required by law. Federal regulators kicked the waiver back to the state in the Feb. 25 letter from CMS that was posted on Indiana's Affordable Care Act website.

"After completing a preliminary review of your extension request, we have determined that the state's extension request has not met the requirements for a complete extension request," wrote Diane Gerrits, director of the CMS' division of state demonstrations and waivers.

The state has scheduled a pair of public hearings next week on its plan to expand Medicaid using the state-run Healthy Indiana Plan, which already covers 40,000 low-income residents.

Pence spokeswoman Christy Denault said the administration always knew they had to hold public hearings but was trying to get an approval as soon as possible because of a June deadline.

"We were thinking: Get it to them, (then) post for public comment and get the process moving along," she said. She noted the state filed its waiver on Feb. 13, posted notice of the public hearings on Feb. 20 then received the CMS reply Feb. 25.

Pence asked CMS to allow Indiana to expand Medicaid using the plan. He has argued that traditional Medicaid is "broken" and fraught with "waste, corruption and abuse."