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Judge Blocks Kentucky Medicaid Waiver for Work Requirement

— Says HHS secretary 'failed to consider' the Medicaid program's purpose

MedpageToday

WASHINGTON -- A federal judge on Friday blocked a proposed provision in the Kentucky Medicaid program that would have required able-bodied beneficiaries to get a job, volunteer, attend school, or otherwise participate in what the Trump administration is calling "community engagement."

When Health and Human Services Secretary Alex Azar approved Kentucky's application for the work requirement under a proposed Medicaid program called Kentucky HEALTH, "the record shows that 95,000 people would lose Medicaid coverage, and yet the Secretary paid no attention to that deprivation," of the U.S. District Court for the District of Columbia.

"Nor did he address how Kentucky HEALTH would otherwise help 'furnish ... medical assistance.' In other words, he glossed over 'the impact of the state's project' on the individuals whom Medicaid 'was enacted to protect.' By doing so, he 'failed to consider adequately' a salient purpose of Medicaid and, thus, an important aspect of the problem."

The judge was ruling in a lawsuit known as Stewart v. Azar, in which Ronny Stewart and some fellow Kentucky Medicaid recipients argued that although they either have part-time jobs or are seeking work, they are still afraid they will not be able to meet the proposed requirements, which also include monthly premium payments of up to 5% of household income. The Kentucky program only exempts former foster care children, pregnant women, and "medically frail" individuals from the premium payments.

The Trump administration has been championing community engagement waivers -- otherwise known as work requirements -- for the Medicaid program, arguing that the Medicaid program should do more than provide beneficiaries with an insurance card. In fact, according to Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), studies have shown that productive work and community engagement "may improve health outcomes ... That points to the fact that Medicaid can and must do more."

Verma called Boasberg's decision "disappointing." "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," she said in a statement. "The Trump administration is no different. We are conferring with the Department of Justice to chart a path forward. In the meantime, we will continue to support innovative, state-driven policies that are designed to advance the objectives of the Medicaid program by improving health outcomes for thousands of low-income Americans."

So far, 13 states have applied for the waivers; Kentucky was the first to receive approval, with Indiana, Arkansas, and New Hampshire approved later. Another eight states have approvals pending.

Kentucky governor Matt Blevin (R) has said he would eliminate Medicaid coverage for about 400,000 state residents -- those covered under the state's Medicaid expansion -- if the new program, which was scheduled to begin on Sunday, is shut down, .

This decision sets the bar "very high for any state to make the case for work requirements," said Rodney Whitlock, PhD, vice president for health policy at ML Strategies, a Washington consulting firm. "The language that the judge used was basically that 'You didn't make the case at all that this is appropriate in the Medicaid program.'"

"It's remarkable how much the judge didn't buy any of it," he continued. Although the judge suggested that HHS go back to the drawing board with the community engagement requirements, "I have no idea where they think a drawing board actually is, no clue what a drawing board looks like after this opinion ... They got hammered."

Whitlock was particularly struck by the judge's statement that "the Secretary never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid. This signal omission renders his determination arbitrary and capricious." Now observers must see how HHS responds to the judge's decision, he added.

As to what will happen with other states in which the work requirements have been approved, "Anybody who wants to challenge any of the states now has the road map," he said. "I struggle seeing how you write [work requirements] in a way that you're not subject to this type of ruling."