Court of Appeals to decide fate of Medicaid work requirements


he debate over whether states can impose work requirements on Medicaid recipients is now in the hands of a federal appeals court.

The U.S. Court of Appeals for the District of Columbia heard oral arguments Oct. 11, 2019, in two cases that challenge state waivers that require work as part of Medicaid eligibility.

In Stewart v. Azar, 16 patients from Kentucky are suing the Department of Health & Human Services over its approval of changes to Kentucky’s Medicaid program that include work requirements, premiums, and lockouts. In Gresham v. Azar, several Arkansas residents are challenging HHS over the approval of modifications to Arkansas’ Medicaid program that require work requirements and eliminate retroactive coverage.

The restrictive conditions in the Medicaid waivers would cause thousands of Medicaid enrollees to lose coverage, according to Jane Perkins, legal director for the National Health Law Program, an advocacy firm representing the plaintiffs.

“Section 1115 of the Social Security Act only allows the [HHS] Secretary to approve experimental projects that further Medicaid’s purpose of furnishing medical assistance to low-income people,” Ms. Perkins said in a statement. “These waiver projects do not further this objective. By the government’s own framing, they are intended to transform Medicaid and explode Medicaid expansion. Only Congress can rewrite a statute – not this administration. We hope the appellate court will uphold the well-reasoned opinions of the district court.”

HHS argues that it has the authority to allow any experimental, pilot, or demonstration project likely to promote the objectives of Medicaid, which in addition to medical assistance include rehabilitation services that help patients attain or retain independence or self-care. The waivers from Kentucky and Arkansas are consistent with these objectives, attorneys for HHS argued in court documents.

Kentucky’s waiver project promotes beneficiary health and financial independence, while Arkansas’ demonstration is likely to assist in improving health outcomes through strategies that promote community engagement and address health determinants, according to letters from the Centers for Medicare & Medicaid Service approving the projects.

Arkansas’ demonstration project, approved in March 2018, includes a requirement that adults aged 19-49 years complete 80 hours per month of community engagement activities, such as employment, education, job-skills training, or community service, as a condition of continued Medicaid eligibility. Kentucky’s proposal, approved in November 2018, requires Medicaid patients to spend at least 80 hours per month on qualified activities, including employment, job skills training, education, community services and/or participation in substance use disorder treatment.

Medicaid patients in both states sued HHS shortly after the waivers were approved, arguing that the work requirements were arbitrary and capricious and that the agency exceeded its statutory authority in approving the projects. The U.S. District Court for the District of Columbia ruled in favor of the patients in March 2019, finding that HHS failed to fully consider the impact of the Kentucky and Arkansas changes on current and future Medicaid beneficiaries. In a decision for Kentucky and a separate ruling for Arkansas, the court vacated HHS’ approval of the projects and remanded both waivers back to HHS for reconsideration. In the interim, officials in both Kentucky and Arkansas halted implementation of the work requirements. The Department of Justice appealed in both cases.

According to court documents, 18,000 Arkansans lost coverage for failure to comply with the work requirements before the regulations were halted. In Kentucky, the state estimates that 95,000 Kentuckians could lose coverage if the project goes into effect.

A decision by the appeals court is expected by December 2019.

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