Surprise! CMS Approves Kentucky Work Requirement Waiver Again

Yesterday, CMS reapproved the Kentucky work requirement waiver.  The reapproval comes less than two weeks after Congress’s Medicaid and CHIP Payment and Access Commission (MACPAC) wrote a letter to the Secretary of HHS asking for a pause in disenrollments resulting from the Arkansas work requirement waiver, less than a week after Arkansas announced that over 12,000 Medicaid beneficiaries had lost their coverage,  and just one day after a moving PBS News Hour segment highlighting the situation of one of the 12,000 who lost not only his coverage but also his job.

The 20-page approval letter is essentially a legal brief, CMS’s opening salvo in the next round of the litigation over the Kentucky waiver.  CMS initially approved the waiver on January 12; on June 29, just before scheduled implementation, Judge Boasberg of the federal District Court for the District of Columbia vacated the approval as “arbitrary and capricious” and remanded it to the agency.  On July 19, CMS opened a 30-day comment period on the proposed waiver and the court’s decision. 11,570 comments were submitted. The waiver approved yesterday is almost identical to the waiver approved in January.

CMS devotes nine pages in its approval letter responding to comments in opposition to the waiver.  It does not cite a single comment in favor, and it gives no indication that it considered, much less cared about, the ever-mounting disenrollments in Arkansas.  Of course, this is hardly surprising, as both Secretary Azar and CMS Administrator Verma have been thoroughly transparent about their intention to promote work requirements in Medicaid regardless of the coverage losses that such requirements cause.

In addition to work requirements, the Kentucky waiver contains other harmful provisions, including the imposition of unaffordable premiums, multiple punitive lock-outs including for failure to complete redetermination, and elimination of retroactive coverage. (This blog will focus just on the work requirements.)  The CMS approval letter embraces them all, asserting: “Specifically, this demonstration is designed to extend coverage.”  You can’t make this stuff up.

As Joan Alker has explained, since the District Court’s ruling emphasizing that a central objective of Medicaid is to promote coverage, states have been trying to hide the ball on the impact of work requirements.   The approval letter doubles down on this, contending that commenters “appear to misunderstand” the state’s projections that 95,000 beneficiaries will lose their Medicaid coverage under the waiver.  You see, it’s not really 95,000 beneficiaries; it’s “slightly less than five percent fewer total member months than would have been covered without the demonstration project.”  And this projected decrease in total member months “is likely attributable to a number of factors, including beneficiaries transitioning to commercial coverage, as well as the elimination of retroactive eligibility and beneficiaries who are temporarily suspended or otherwise lose eligibility for part of the year due to their noncompliance with program requirements.”

In other words, it’s not just work requirements that result in coverage losses; other harmful provisions in the waiver will also take coverage away.  I doubt it matters to low-income Kentuckians whether their Medicaid coverage is illegally taken away by work requirements or punitive lock-outs or elimination of retroactive coverage.

The waiver approval is effective April 1, 2019.  Between now and then, Judge Boasberg will be asked to rule on CMS’s reapproval of the Kentucky waiver, as well as on its approval of the Arkansas waiver, which is also before him.    It’s highly unfortunate that the Secretary and CMS have ignored the requests from MACPAC and beneficiary groups to hit the pause button on work requirements in light of the increasing coverage losses in Arkansas.

It appears that the only thing standing between tens and tens of thousands of Medicaid beneficiaries and uninsurance is the federal Medicaid statute, as enforced against CMS by the federal courts.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.