Pandemic Induced Pragmatism: The State of Medicaid Waiver Policy

Amongst other ways in which life has dramatically changed in the last month, Section 1115 Medicaid waiver terrain has experienced a tectonic shift. For those of us who have been responding to massive numbers of public comment periods over the past two-plus years, only one waiver opened for public comment that we are commenting on – New Jersey’s positive request to extend postpartum coverage for pregnant women to six months. The fact that times had indeed changed became abundantly clear last week when Nebraska Governor Pete Ricketts announced that his work requirements waiver was put on hold for the foreseeable future. But more on that later…

State waiver submissions have shifted overnight to requests made through emergency Section 1135 authority for which there is understandably no public comment period. (For a great explainer on this authority, read the issue brief by National Health Law Program Director of Health Policy Leo Cello.) As of this writing, almost all states (48 states plus D.C. and the U.S. Virgin Islands) have had Section 1135 requests approved, although not all of their original requests are included in the approval documents. This is due in part to the manner in which the Centers for Medicare and Medicaid Services approves these requests. CMS appropriately moves some of these requests to the state plan amendment process[1], and some of the requests that must be considered through a waiver are moved through the emergency Section 1115 waiver process.

It’s hard not to confuse the two – Section 1115 can apply to Medicaid and CHIP whereas Section 1135 can apply to Medicare, Medicaid and CHIP. Neither emergency waiver procedures require state or federal public comment periods, but CMS is required by federal regulations to post approved Section 1115 emergency waivers. While we have seen many 1135 approvals,  we await the first approval by CMS of an emergency Section 1115 request – at least 13 states have requests pending. States are asking for various new flexibilities (such as Washington’s request to pay for temporary housing for homeless individuals with COVID-19) and we shall see what CMS decides.

However, one point is already clear – the Administration’s agenda to impose work requirements and other barriers to coverage in Medicaid has come to a screeching halt. My colleague Andy Schneider blogged about this last week – and the state’s press release issued Friday night (timing often associated with a desire to bury the news) further confirmed this change in course – though it was hard to discern that point without a close read. In addition to the courts’ intervention and the maintenance of effort requirements in the Families First Act, which prohibit new barriers to coverage such as work requirements and premiums, there is likely a third reason for this shift — it is likely that CMS simply doesn’t have the bandwidth to prioritize these ideological pursuits while combatting the pandemic  – and that is the takeaway for me from the state’s press release.

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Governor Ricketts has been trying to avoid upholding the will of the Nebraska voters, who approved a Medicaid expansion in a ballot referendum back in November 2018. He is the last holdout of the three states that all had approved referenda in that election – Utah and Idaho both began full expansion on January 1, 2020. As a physician in Idaho expressed so well, citizens of those states can breathe a sigh of relief that coverage is available to them as they face this unprecedented double health/economic crisis.

One would think that the current pandemic would have caused Governor Ricketts to speed up implementation of the state’s expansion but sadly that is not so. He has been pursuing a complex Section 1115 waiver for some time that would create a two-tiered system with those meeting new paperwork requirements to report work receiving a more generous benefits package than those that don’t. While the statement released attempts to hang on to this concept, my read is that the state knows it can’t really continue its planned system with a state plan expansion (which is what they are doing now) having been told by CMS they can’t get their waiver before October 1st. The Prime package is now the EPSDT benefits package, which will be made available to 19 and 20-year olds and states can make that change through a state plan amendment without a Section 1115 waiver. And most adults will receive the state’s adult benefits package offered through the state plan – which is always reduced to some degree from EPSDT.

Other states that have submitted work requirement requests should take note of this and may have already heard from CMS that these requests are on hold. These include Idaho (which moved forward with a state plan expansion while waiting for the still pending work requirements waiver) and Montana, as well as six non-expansion states that asked for waivers to apply largely to very poor parents (TN, AL, MS, OK, SD, GA).

States are going to be stretched very thin with the upcoming surge in Medicaid enrollment and responding to the health impacts of COVID-19 itself. The last thing they need to be doing is pursuing these kinds of harmful, unlawful, and ineffective waivers. Let’s hope that state policymakers (legislators and executive branch) understand the writing on the wall that is inherent in Nebraska’s announcement. CMS should not waste any more time either on considering waivers that put up barriers to Medicaid health coverage. We need all hands on deck to work together to fight the enormous challenges facing us.

[1] For more on the Disaster State Plan Amendment process check out this blog by my colleague Tricia Brooks.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.