Work Requirement Waiver Approvals Vacated in Kentucky and Arkansas

On March 27, 2019,  Judge James Boasberg of the United States District Court for the District of Columbia issued rulings on back-to-back cases addressing work requirement eligibility criteria included in Section 1115 waiver applications submitted by the states of Arkansas and Kentucky. Judge Boasberg again ruled against the implementation of a Medicaid work requirement in Kentucky, while also ruling that Arkansas must halt the operation of its work requirement program. The decisions vacated the Centers for Medicaid and Medicare Services (CMS) approval of the waiver provisions in both states.

CMS’ waiver application approvals followed their 2017 announcement alerting state governors of the option to “fast-track” 1115 waiver applications, as well as additional options for state flexibility. Never before in the 50-year history of the Medicaid program had work requirements or “community engagement” eligibility requirements been approved by CMS, with the previously acting CMS Administrator Andy Slavitt stating that these types of eligibility requirements could “undermine access to care”, as cited in the original Kentucky decision[1]. Judge Boasberg agreed, finding that work requirement eligibility criteria do not further Medicaid’s underlying purpose of promoting health coverage for certain eligible populations.

Arkansas

In 2017, Governor Asa Hutchinson proposed amendments to the delivery of Medicaid in Arkansas, including the elimination of retroactive eligibility and implementation of work requirements. Arkansas received approval in March 2018 for the “Arkansas Works” program, subjecting certain populations to work requirements eligibility standards starting in January 2019. Arkansas became the first state to implement such eligibility requirements.

As we previously reported, a recent Kaiser Family Foundation report on the Arkansas community engagement program outlined that 18,164 otherwise eligible Medicaid enrollees lost coverage in 2018, with only 8% reapplying and regaining coverage in 2019.  Additionally, though the populations subject to work requirements were phased in over time, as of January 2019, the total number of Arkansans subject to the work and reporting requirements was 105,158[2].

By profiling plaintiffs affected by the state’s eligibility criteria, the decision rendered in the Arkansas case put a face to the consequences of the high un-enrollment numbers resulting from work requirements. One named plaintiff, Adrian McGonigal, is a working adult with several complex, but treatable medical conditions and an employer that does not offer medical insurance. He lacks consistent access to the technology required to report requirements each month in order to retain his medical benefits. McGonigal simply didn’t understand that his employment information, in addition to being reported initially for eligibility, must be provided every subsequent month in order to retain Medicaid coverage. As a result, he lost coverage and was consequently unable to afford the prescriptions needed to control his complex medical needs. Without medication, these conditions worsened, resulting in McGonigal missing several days of work and ultimately losing his job. While Judge Boasberg’s decisions in both the Kentucky and Arkansas cases provide prospective relief, Arkansas still faces the challenge of administering a proper remedy to individuals harmed by the work requirements[3].

Speaking with the press after the decision was issued, Governor Hutchison and Arkansas’ Director of Human Services, Cindy Gillespie, urged the Department of Justice to appeal Judge Boasberg’s ruling. At present, the administration of work requirements is on hold, pending appeal.  Hutchison stated during an interview with NPR[4] that “this is not the Medicaid for the disabled that we’re speaking of for a work requirement, this is the expanded Medicaid and the whole purpose of the Affordable Care Act and the expanded Medicaid was to help people get to work. The judge based his decision on the original Medicaid.” Health Policy News will be following this case, in particular, the validity of the Arkansas argument that individuals receiving benefits under the Medicaid expansion program should be treated differently than those covered under what Hutchinson characterized as “Medicaid for the disabled.”

Kentucky

Kentucky’s application to CMS predates the agency’s 2017 letter to Governors, but contained requests similar to the state flexibility options the administration later announced. Governor Matt Bevins of Kentucky submitted an application on August 24, 2016, requesting approval for a Section 1115 waiver demonstration program entitled “Engage and Achieve Long Term Health” (also known as KY HEALTH). The waiver application outlined Kentucky’s vision for a complete transformation of its Medicaid program, including the addition of community engagement/work requirements for the expansion population and reporting requirements (80 hours per month of qualifying activities) for some of its traditional population; limited retroactive eligibility; limited non-emergency medical transport; long lock out periods; increased premiums and more stringent reporting requirements for eligible individuals.

Judge Boasberg previously vacated CMS’ approval of the KY HEALTH program on June 28, 2018, asserting that in approving it, Kentucky and CMS did not consider Medicaid’s central objective: that the state furnish assistance to its citizens. In the wake of this ruling, the waiver was sent back to CMS, with the administration holding a second “notice and comment” period and issuing a subsequent approval in November 2018, with no changes to the initial waiver.

The challenge before Judge Boasberg in March’s hearing was determining whether or not the revisions made (and the additional notice and comment period) remedied the initial waiver’s defects—namely, the fundamental questions of whether the demonstration serves to promote health coverage, and if the state adequately considered the impact of potential health coverage loss for the estimated 100,000 Kentuckians affected.

Kentucky was planning to commence its waiver implementation on April 1, 2019, with enrollees slated to start reporting on qualified activities in June 2019, and as such, Judge Boasberg issued his decision in a timely manner. As noted in the initial decision on this case,[5] the waiver’s operationalization would impact both “traditional” and “expansion” Kentucky Medicaid recipients, and result in an estimated 19,765 adults in the “traditional” eligibility group being kicked off of Medicaid. In light of the revised waiver’s shortcomings in addressing his initial concerns, Judge Boasberg stated, “given a second failure to adequately consider one of Medicaid’s central objectives, the Court has some question about HHS’s ability to cure the defects in the approval.”[6]

It is unclear at this time what Kentucky’s next move will be, with Governor Bevins having previously stated that Kentucky would end its Medicaid expansion program in totality if the waiver was not approved. Adam Meier, Cabinet Secretary for Health and Family Services, intimated that the state would continue to explore options for appeal, calling the ruling a “set back to the implementation timeline.”[7]


[1] Ronnie Maurice Stewart, et al. v. Alex M. Azar II, et al., Memorandum Opinion, United States District Court for the District of Columbia, Civil Action No.18-152 (JEB) June 29, 2018, 7

[2] https://www.kff.org/medicaid/issue-brief/state-data-for-medicaid-work-requirements-in-arkansas/

[3] CHARLES GRESHAM, et al., Plaintiffs, v. ALEX M. AZAR II, et al., Civil Action No. 18-1900 (JEB), March 27, 2019, 2

[4] https://www.ualrpublicradio.org/post/arkansas-governor-dhs-director-speak-npr-about-ruling-halting-work-requirement

[5] Ronnie Maurice Stewart, et al. v. Alex M. Azar II, et al., Memorandum Opinion, United States District Court for the District of Columbia, Civil Action No.18-152 (JEB) June 29, 2018, 48

[6] Ronnie Maurice Stewart, et al. v. Alex M. Azar II, et al., Memorandum Opinion, United States District Court for the District of Columbia, Civil Action No.18-152 (JEB) March 27, 2019, 47

[7] https://insiderlouisville.com/government/federal-judge-again-vacates-approval-of-kentuckys-medicaid-waiver/

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