Judge Rejects Kentucky Medicaid Work Requirements (2)

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Meg McEvoy

A federal judge dealt a decisive blow to Kentucky’s attempts to impose work requirements and premiums on some Medicaid recipients two days before the changes were set to take effect.

Judge James Boasberg of the U.S. District Court for the District of Columbia ruled June 29 that the HHS secretary exceeded his authority to grant waivers of the Medicaid program by allowing Kentucky to adopt the Kentucky HEALTH program. The court sided with a class of Kentucky residents who challenged the waiver program that would have required at least of 80 hours of work or community service a month as a condition of getting coverage.

The court vacated the approval of Kentucky’s Medicaid changes and remanded to the HHS for further review.

Advocates for the federal Centers for Medicare & Medicaid Services and Department of Health and Human Services said the secretary acted within his authority to grant waivers.

Attorneys advocating on behalf of Kentucky said the state cannot afford to serve its “expansion” population without the savings from the Medicaid program waivers. Under a previous Democratic governor, Kentucky expanded coverage under the Affordable Care Act in January 2014, covering adults who are not elderly, disabled, or pregnant; do not fit into another Medicaid eligibility category; and have household income below 133 percent of the federal poverty line.

Federal law allows the HHS to approve waivers of some of Medicaid’s requirements to “any experimental, pilot, or demonstration project” that is “likely to assist in promoting the objectives” of Medicaid.

While the court agreed that the secretary of the HHS may grant waivers to the Medicaid program that could include similar provisions to Kentucky’s, this waiver was arbitrary and capricious.

“The secretary must adequately consider the effect of any demonstration project on the State’s ability to help provide medical coverage,” the court wrote. “He never did so here.”

Kentucky admitted that its waiver program would leave 95,000 enrollees without coverage and reduce the state’s Medicaid payments by $2.4 billion over five years.

Impact in Kentucky

Kentucky Gov. Matt Bevin (R), who sought the waiver for a work requirement, has issued an executive order that the state will revoke Medicaid coverage of the expansion population if the government loses this case.

The decision calls into question the implementation of several states’ Medicaid waiver programs. The CMS has approved waivers for Arkansas, Indiana, and New Hampshire that include work requirements, and waivers are pending in seven more states: Arizona, Kansas, Maine, Mississippi, Ohio, Utah, and Wisconsin.

The fact that the court applied an arbitrary and capricious standard in this case means that other challenges to states’ Medicaid waiver programs may be fact-specific and will look at the HHS secretary’s considerations in granting the waivers.

Families USA, a consumer advocacy group, praised the court’s action. “This is a victory for the people of Kentucky who rely on Medicaid for life-saving health care,” Frederick Isasi, executive director of Families USA, said in a statement.

Isasi said the court decision “reinforces the basic constitutional principle that the executive branch has a duty to uphold, not unilaterally change or deliberately sabotage, laws passed by Congress. Today’s court decision emphasizes Medicaid’s mission: Medicaid is about health insurance. Period. And policies that make it harder for people to get health insurance run counter to the program’s purpose.”

In a statement on Twitter, CMS Administrator Seema Verma expressed disappointment in the court’s decision June 29. “States are the laboratories of democracy and numerous administrations have looked to them to develop and test reforms that have advanced the objectives of the Medicaid program. The Trump Administration is no different.”

Gov. Bevin’s office didn’t respond to requests for comment June 29.

The case is Stewart v. Azar, D.D.C., No. 18-152, 6/29/18.

Request Health Care on Bloomberg Law