From AIS Health: States Might Not Fight Medicaid Work Requirement Rollback

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Reprinted with AIS Health permission from the February 19, 2021, issue of Health Plan Weekly.

In recent weeks, the Biden administration has begun the process of rescinding Trump-era waiver programs authorizing Medicaid work requirements. Experts say that the new administration has a strong legal position in doing so, even though it faces some road blocks, and that the moves are part of a larger strategy to bolster Medicaid.

Experts anticipated the move by the new administration to directly address work requirements following an executive order from President Joe Biden (HPW 2/5/21, p. 1) that directed agencies to review “demonstrations and waivers, as well as demonstration and waiver policies, that may reduce coverage under or otherwise undermine Medicaid or the ACA.” On Feb. 12, CMS sent letters to states that received Section 1115 waivers under the Trump administration that allowed them to require certain Medicaid beneficiaries to prove they are employed, looking for work or volunteering. State Medicaid chiefs in Arizona, Arkansas, Georgia, Indiana, Nebraska, Ohio, South Carolina, Utah and Wisconsin all received letters. Arkansas is the only state that has been able to put work requirements into effect, though its demonstration program was suspended after federal courts ruled against it.

Each letter declared that “taking into account the totality of circumstances, CMS has preliminarily determined that allowing work and other community engagement requirements to take effect in [your state] would not promote the objectives of the Medicaid program. Therefore, CMS is providing the state notice that CMS is commencing a process of determining whether to withdraw the authorities approved in the… demonstration that permit the state to require work and other community engagement activities as a condition of Medicaid eligibility….If the state wishes to submit to CMS any additional information that in the state’s view may warrant not withdrawing those authorities, such information should be submitted to CMS within 30 days.” The letters also stipulated that states will have the ability to appeal the likely waiver revocations in “a hearing to challenge CMS’ determination prior to the effective date.”

The letters noted that “CMS may withdraw waivers or expenditure authorities if it ‘find[s] that [a] demonstration project is not likely to achieve the statutory purposes,’” citing federal Medicaid law.

According to the Kaiser Family Foundation, eight states have had work requirements approved by the agency, seven had applications pending with CMS and four more have their work requirement policies under legal review. Also, the Supreme Court elected in December to review decisions by an appeals court that blocked Arkansas’ and New Hampshire’s work requirement waivers. Oral arguments will commence in that case on March 29.

David Kaufman, a partner at Laurus Law Group LLC and former general counsel of Blue Cross Blue Shield of Illinois, tells AIS Health that federal judges have so far taken the same dim view of work requirements’ legality as Biden’s CMS — though the Supreme Court may change direction.

“The courts didn’t feel like [CMS under Trump] considered that the primary purpose of Medicaid is to provide health care coverage,” Kaufman says. “So how is a program that demonstrably decreases health care coverage consistent with the program’s purpose?”

Kaufman cites research published in Health Affairs that found 18,000 Arkansans who would have otherwise been eligible for Medicaid lost coverage because of work requirements.

Still, “at least four justices feel that [the appeals court’s decision] is something that they want to review, and now we have a more conservative Supreme Court,” Kaufman observes.

Meanwhile, the CMS-run review process and the change in administrations means that the states will have to change their legal strategy.

“Since the agency has a considerable amount of discretion, it seems like if they disfavor work requirements, they will probably ultimately deny these waiver requests,” Kaufman explains. “Then, instead of the states arguing that the agency [decision] should be affirmed, they’re going to flip and say that the agency decision should be overturned.”

One of the things that states argued initially is that CMS has a significant amount of discretion in approving waivers, Kaufman adds. “So now they’re going to have to argue that [CMS] exceeded their authority in denying the waivers.”

Legal Fight Would Be Uphill Battle

Kaufman adds that, to preserve the work requirement waivers, states will have to pursue the process that CMS has set up before attempting litigation. Dan Mendelson, founder of Avalere Health, tells AIS Health that it’s an open question whether states will pursue further legal remedies — though he expects most won’t.

“When you read the CMS letters to these states, it’s clear that CMS believes that it holds all the cards. These are very assertive letters,” Mendelson says. “A lot will depend on how the states position themselves around this. With Arkansas being pulled back, with the case in front of the Supreme Court, and CMS now aggressively negative on work requirements, I think in all likelihood we will see most states pulling back from these policies. Because it takes a lot of work to get these things done, and if you don’t believe that it’s ultimately going to stick, it’s just not worth it. The question, I think, is if there could be one or two states that decide to go to the mat. And we will know that within the next 20 days or so, because that would be in the form of a letter back to CMS.”

Programs May Have Burdened MCOs

Abner Mason, founder and CEO of ConsejoSano, a tech startup specializing in culturally aligned member outreach for Medicaid plans, points out that work requirements generate more trouble than they’re worth for plans and state agencies.

“There would also be an administrative burden on the state Medicaid agencies that have to verify enrollees’ reported enrollment status,” Mason tells AIS Health via email. “And if the states punt on that responsibility, it will fall to Medicaid plans that neither have the time nor the resources to take this on. Medicaid MCOs’ margins are already razor thin as it is, and they would rather use state Medicaid funds for actually helping care for their members.”

“The administrative burden [of work requirements] and their costs are really disproportionate to the effort,” says Jerry Vitti, founder and CEO of Healthcare Financial, Inc., a firm that connects low-income, elderly and disabled populations with public benefit programs. “You have to ask yourself, what problem are you really trying to solve? Most Medicaid recipients are employed, No. 1. And the average length of stay on Medicaid is relatively brief. Who are you trying to target?”

Mason says that work requirements would be reckless in light of the COVID-19 pandemic, which has effectively shut down large portions of the service industry, and points out the industry tends to employ many people of color. “Medicaid work requirements would have disproportionately affected communities of color and exacerbated the health inequities that have become the hallmark of this pandemic,” he says.

Moreover, Vitti adds that people with disabilities would have been hurt disproportionately by work requirements. He says that such programs create a Catch-22 — if someone isn’t healthy enough to get work, without Medicaid they can’t access the care they need to get well enough to hold down a job.

“It penalizes people who need Medicaid the most, when they need it the most,” Vitti says. “Someone who’s got an acute care problem because they’ve got an accident, folks who have chronic conditions — and, by definition, disability means you’re unable to work. Those with substance use disorders who can’t hold a job because of their chronic condition — where are they going to turn? They need the coverage. You can either treat folks in clinics, or you can treat them in jail.”

Ballot Initiatives Have Seen Success

Mendelson says the Biden administration is making a winning political play by bolstering Medicaid. The COVID-19 relief package currently under consideration in the House of Representatives includes an enhanced Medicaid match rate for states that take up Medicaid expansion. He points to a wave of ballot initiatives that have expanded Medicaid in Republican-leaning states, which have generally passed with flying colors. For example, Idaho’s 2018 initiative passed with 66.8% of the vote — and President Donald Trump received 63.8% of the state’s vote in the 2020 presidential election. “The ballot initiatives are extremely popular,” Mendelson says. “If you ask Americans their view, they want to see Medicaid expanded. There’s no question about that. It’s the career politicians that have pause. This will put many Republicans in an awkward position if they stand in the way of coverage expansion in light of the kinds of subsidies [to states] being thrown around. [Democrats] are putting this incentive in place knowing full well that many states will not take it. Imagine, post-COVID, you’ve got another couple million people who have lost coverage, and the federal government has sweetened the pot, but states still won’t expand. That’s going to become a major political issue for the people that are going to stand in the way of expansion.”

Read the Arkansas letter. Contact Mason and Vitti via Joe Reblando, Kaufman  and Mendelson.

by Peter Johnson