As we have recently covered, and as we explained before it launched, Georgia’s “Pathways to Coverage” demonstration is riddled with defects. Pathways is the state’s alternative to a standard Medicaid expansion—an expansion with work requirements that has resulted in Georgia enrolling (as best we can tell) less than one percent of those eligible (yes, that’s less than 1%). Although the floundering Pathways demonstration doesn’t expire until September of next year, this past January the state filed a lawsuit against CMS for denying it an extension. But there’s just one thing with that. CMS didn’t deny an extension request. In fact, Georgia hasn’t really even filed an extension request. And further in fact, it is actually still too early for Georgia to even request an extension, as explained below. OK, so maybe that’s three things. If you’re confused, welcome to the club.

(We summarized the background to the Georgia situation two months ago just before the surprising lawsuit was filed. That might be a good place to start if you’re new to this train wreck.)

Let’s walk through five key points about the new lawsuit.

CMS Hasn’t Received or Reviewed an Extension Request, Much Less Denied One

Georgia filed an amendment request to attempt to extend the dates of its demonstration. However, amendment requests are used to amend or change demonstrations, while extending the dates of a demonstration is done through—you guessed it—an extension request. It’s that simple. And this isn’t just semantics. These are distinct, long-standing, and well-known demonstration processes, repeatedly used by all states (including Georgia) for decades, without wasting money on lawsuits. This is consistent CMS policy, confirmed as recently as last year in a remarkably similar situation in North Carolina (see page 5 of NC letter). The Medicaid statute itself distinguishes between an amendment and an extension. And the distinct processes are also specifically laid out in the Special Terms and Conditions for Georgia’s Pathways approval (see parts 7 and 8 on page 28 of the STC). But Georgia may be trying to avoid the proper extension process because that would require giving the public a chance to provide feedback on how the Pathways program is going. (Short answer: very badly.)

So, Georgia has not actually filed an extension request and CMS has not ruled on whether Georgia can have an extension. Imagine that you walked into the post office, picked up a change of address form, and wrote “I want my passport renewed” on it. When the State Department does not give you a passport, you would not be advised to file a lawsuit against the agency for “refusing to give you a passport.” But that is basically what Georgia has done. CMS hasn’t even started to consider whether an extension would actually be granted, much less denied it. And this simple fact also has dire legal implications for Georgia’s lawsuit. Georgia’s lawsuit relies heavily on the Administrative Procedure Act, which can allow a court to overturn faulty agency actions, but generally only if the agency has taken a “final action.” Considering that CMS has not refused an extension, and that the state hasn’t even initiated the proper extension process, there is really no reason a court should get involved at this point.

Now for the funny part. Though Georgia claims to be upset that its improper extension request did not magically result in an extension, under the law, ironically, CMS should not even begin considering a Pathways extension request at this point. The section 1115 statute (at section 1115(e)(2)) allows Georgia to file a Pathways extension request during the six months prior to the date that is one year before the demonstration expires (i.e., between 1 to 1.5 years before the demonstration expires). The Pathways demonstration expires September 30, 2025, meaning the state doesn’t even enter the window to request an extension until about April 1, 2024. When Georgia first (mis)requested the extension, in February 2023, it was over one year too early! So now imagine suing the State Department for refusing to renew your passport, filed on the change of address form, well before you are even eligible to renew your passport. And yet here we are.

Georgia’s Lawsuit Does Not Have a Proper or Workable Concept of Approval Periods

Georgia’s argument is essentially that, although the demonstration was approved for five years, the state didn’t get its full five years. However, in 1115-land there is no such thing as getting your “full five years.” Demonstrations are approved and operate based on effective dates – a date the permission for the demonstration starts and a date it expires. This too is well-known, long-standing practice. (And in case you’re wondering, there’s no law or regulation saying states must get five years.) States frequently are unable to implement their demonstration for every day between the start and expiration date. States often have implementation preparations or CMS and the state may be negotiating protocols for the demonstration. More recently, as we saw in states like Wisconsin (see page 5), the pandemic disrupted implementation. In all of these scenarios, states are never allowed to add on time after the expiration date to “make up for lost time.” That’s just not a thing.

And it’s not a thing for good reason. There are statutory requirements, such as the extension timelines mentioned earlier, that are specifically based on the expiration date. CMS, states and providers need a clear expiration date to understand those timelines. And of course, all stakeholders (including enrollees and providers) also need clear start and end dates to know when the demonstration could potentially operate. Imagine the world as Georgia proposes it. How would we know if the demonstration is in effect? How would we know what days “count” towards the general “full five years”? Who decides? How does everyone else know? And would it mean that every time CMS and the state use some time to work out demonstration details we are going to have a food fight about whether the time “should count against the full five years or not?” No, thank you. Georgia’s new concept for demonstration timelines, in addition to being a legal and historical fiction, would be totally unworkable in practice.

The incoherence of Georgia’s demand to get the “full five years” is on ready display in its own lawsuit. First, the state acknowledges in the complaint that, although the demonstration was approved starting October 15, 2020, “[t]he parties…agreed that Georgia would implement the project on July 1, 2021.” So, Georgia recognizes it voluntarily gave up the first eight months in the same lawsuit assuming states must implement for five years and railing against CMS’s purported refusal to give the state the full five years. But that isn’t the one that takes the cake. The complaint also includes the following incredible sentences (emphasis added is as it appears in the complaint):

The STC’s first paragraph established the project’s length: “[t]he Georgia Pathways to Coverage demonstration . . . is approved for a 5-year period from October 15, 2020 – September 30, 2025.” STC at 1 (emphasis added). This reflected CMS’ customary practice of approving Section 1115 demonstrations “for an initial five-year period.”

The very language that the complaint quotes from the STC, to stand for the proposition that the state must get a “full five years,” and with emphasis added on the phrase 5-year period, directly references a period of… less than five years. (Namely, four years and eleven-and-a-half months.) This makes it clear that “five years” is not what controls the approval timeframe, and at no prior point (that we are aware of) did the state or a court or anyone else flag this approval timeframe as legally insufficient. No one ever identified this as an irregularity, for the simple reason that the approval dates are and have always been the only relevant timeframe for demonstrations.

Georgia’s Argument That It Doesn’t Have Enough Time to Evaluate the Demonstration Doesn’t Hold Up

Georgia argues that one reason its extension-by-amendment should be approved is that it doesn’t have enough time to meet the data requirements for extension. The state writes in its lawsuit:

Missing from CMS’ Denial was any explanation of how Georgia, without any underlying project data, could have compiled the extensive supporting documentation required for a formal extension request.

Georgia’s sudden commitment to robust data reporting is a welcome, if surprising, development. However, this is not a coherent argument. First, CMS routinely grants temporary extensions of demonstrations to allow more time for the full extension request to be processed (see for example in Wisconsin), and has never to our knowledge (and sometimes, dismay) refused an extension request because there wasn’t enough data. Second, CMS’s most recent response letter to the state explicitly says that CMS considers that there will be enough data for an extension (“the current implementation period…should provide sufficient data”). And third, note the circular absurdity here: Georgia filed its pseudo-extension request over a year and a half before it needed to, and is arguing that it should have gotten approved because it didn’t have enough time to collect the data needed for a proper extension application. (CMS did remind Georgia, in its recent response letter, that the state has plenty of time to file a proper extension request.)

The State Indeed Still Has Plenty of Time to File a Proper Extension Request

Georgia does not need to file an extension request until September 30, 2024, meaning that as I write the state still has over six months to file a proper request. That is plenty of time, as CMS has told the state. Of course, the state would have had more than a year and a half if it had started working on that extension request in February of 2023, instead of twice asking for CMS for additional time through the wrong process and spending time working on a lawsuit. Tick-tock, tick-tock. Eventually, if the state continues to not file the extension request that everyone knows it needs to file, we will get to September 2024, and then it will be true the state doesn’t have enough time left.

There are two important legal implications here. First, Georgia has not yet actually suffered any harm whatsoever. Pathways is currently in operation, the state has not been denied an extension, and still has plenty of time to file an extension request. No court should get involved in a case where there is no actual harm. Remember that CMS doesn’t frequently refuse extensions, and no one knows what President’s administration would be reviewing the eventual extension request if Georgia gets around to filing it. Second, when and if Georgia wastes enough time that it actually doesn’t have enough time to file an extension request, that will be a crisis of its own making. No reasonable court should entertain an APA lawsuit from a state that, instead of using the proper and readily available administrative process, knowingly, willfully, and repeatedly refused to use it.

CMS’s Proper Actions Do Not Undercut the District Court’s Order

Georgia’s has one more last-ditch ploy in its lawsuit. The State says that CMS’s “defiance” of the District Court’s “previous order unfortunately require[s] judicial intervention once more.” Georgia seems to be trying to confuse the Court into thinking that CMS’s correct observance of section 1115 process is actually an effort to disobey the Court’s prior order. This is untrue.

First of all, as described above, CMS is just following the same process, laid out in statute and regulations, that it always does. But if you need more, consider that, with full cooperation from CMS, Georgia is in fact operating its Pathways demonstration. Exactly as the Judge ordered. There is nothing in the Judge’s order that is not being done. Georgia never raised, and the Judge never considered, the “full five years” issue. Everything has proceeded exactly as the Judge would have expected on the day she signed the order. The only surprising development for this Judge is that after she issued an order giving Georgia exactly what it asked for, and the order was properly followed, the State may reappear in her court room trying to argue the order says something different than what she wrote.

Conclusion

So, to sum up, instead of doing a full expansion to insure upwards of half a million people, Georgia has gone well out of its way to design a (thus far) failed Pathways model that has only insured around 3,000 people. (North Carolina just covered over 300,000 in less time.) Instead of fixing Pathways, and instead of actually asking for an extension in the way that all states do, the state is spending its precious time and resources on an untenable lawsuit in its hope to evade the extension process and thereby prevent the public from giving feedback about the failing Pathways demonstration. This is not a good look for government. And trust me, Georgia’s law firm lawyers don’t need the money. Luckily, Georgia still has two ways out of this folly. The short-sighted solution is (drumroll, please) to file a proper extension request. I wish I had something more brilliant to suggest, but it’s really that simple. The smarter long-term solution would of course be to drop Pathways altogether and implement a clean and successful Medicaid expansion, as North Carolina just did. It truly doesn’t have to be this difficult.