CMS Approves More Medicaid Work Requirements and Even More States Submit Request for the Same

We’re certain that no one has forgotten about the January CMS policy announced by the current administration that supports states seeking to adopt work and community engagement requirements as part of their Medicaid programs through section 1115 waivers. We certainly have not. We previously covered this topic in-depth following CMS’ policy announcement and the approval of Kentucky’s 1115 waiver containing a work requirement.

Recent Approvals and Proposals for Waivers with Work Requirements

The process of including work requirements within state Medicaid programs has only quickened in pace since January. In fact, just this week, CMS partially approved Arkansas’ request for a Medicaid section 1115 waiver containing a work requirement (making it the third such approval.)  Just last month, CMS approved Indiana’s request for a Medicaid section 1115 waiver also containing a work requirement. Overall, there are nine other states with pending requests for waivers containing a work requirement.

The Approved Arkansas Waiver

In many way, the Arkansas waiver revolves around the idea of the work requirement as it is integral both in name—“Arkansas Works”—and in the structure of the waiver design. The waivers’ work requirements in particular are expected to take effect after June 1, 2018.

The program requires certain Medicaid beneficiaries aged 19 through 49 to participate in and timely document 80 hours per month of so-called “community engagement activities,” which include employment, education, job skills training, and community service. This requirement is a condition of continued Medicaid eligibility.

Enrollees generally must report compliance on a monthly basis in order to avoid disruption in coverage. If a beneficiary fails to report compliance for three months, the beneficiary will be dis-enrolled from the plan for the remainder of the calendar year. The beneficiary can only re-enroll when turning 50, qualifying for another category of Medicaid eligibility, or at the beginning of the next calendar year.

Certain populations of persons are exempt from the work requirement. This includes those who are self-employed, enrolled in educations programs participating in vocational or on the job training, engaging in community services, participating in independent job searching, participating in certain qualifying classes, or participating in other approved programs through the state’s workforce department. Notably, in the public comment period commenters criticized the program for lacking sufficient detail in regards to the application of the exemptions.

There is also a good cause exemption for those who fail to satisfy the required community engagement hours. This generally applies where a person who otherwise is subject to the work requirements shows that they cannot comply due to a disability, care for a person with a disability, the birth or death of a close family member, inclement weather, or some other family emergency or life-changing event. And, if the state determines that the failure to comply or report compliance was the result of a catastrophic event or circumstances beyond the beneficiary’s control, the beneficiary will receive retroactive coverage.

CMS noted in its approval letter that these work requirements are consistent with its recent policy guidance on the subject. And, if it provides any further insight into the motivations behind the policy, CMS also noted that “the alignment of the work requirement with those for the state Supplemental Nutition Assistance Program is appropriate and consistent with the ultimate objective of improving health and well-being for Medicaid beneficiaries.”

The Approved Indiana Waiver

Earlier, CMS approved Indiana’s waiver request as the second state Medicaid program to contain work requirements. Similar to the later Arkansas request, Indiana also has integrated work requirements squarely within its Medicaid model.

The basic principle of Indiana’s work requirements are the same as those underlying the waiver in Arkansas and other states: beneficiaries must meet a required number of hours in approved job-related activities or they will be dis-enrolled from the program. There is some additional flexibility in the hours requirement when compared with Arkansas—especially early within the period of enrollment. The Indiana waiver uses a sliding scale system in order to integrate recent enrollees into the requirements. The scope of exempted persons and good cause exemptions is relatively standard. Though, the plan is generally lacking an exemption for those experiencing catastrophic events or receiving unemployment compensation.

Other States’ Pending Waivers

There are a number of other states with pending requests for waivers which work requirement components. These states are: Arizona, Kansas, Maine, Missouri, New Hampshire, Utah, and Wisconsin. Generally, the overall structure of the work requirements remains the same across states with certain qualifying work being a condition of continued eligibility. But the specifics in regards to covered work activities hours required differ by state. And, importantly, the possible exemptions from the work requirements differ—at times significantly—across states. The penalties for con-compliance also differ slightly across states.

Following on the heels of CMS’ approval of the Kentucky, Arkansas, and Indiana requests to include work requirements, it’s predictable that many of these waivers will also be approved in the coming months. Though, it will be interesting to see if CMS pushes back against states that have requested approval of plans with steeper requirements and narrower exemptions.

Future Work Requirements within Waiver Requests

Following from the relatively rapid pace of waiver requests including work requirements in the short months following the shift in CMS policy, it’s likely that there will be further requests in the coming months. With over ten states with either approved or pending work requirements, it’s apparent that there is political interest in imposing such requirements. And the law surrounding such requirements will only grow in the coming years.

Interest in Work Requirements Across Party Lines

Interestingly, even Democratic states where there is predictably less interest in such programs have also begun discussing waiver requests which include work requirements. Some may be puzzled by this apparent shift in policy, but Democratic officials may simply be anticipating what they otherwise see as an inevitability. It is possible that Democratic officials are attempting to spearhead the imposition of work requirements in order to have control over the structure of such requirements instead of allowing a future Republican administration to do the same.

Legal Challenges to Waivers Containing Work Requirements

Overall, it is yet to be seen whether work requirements can survive legal challenges. A group of fifteen plaintiffs has filed litigation against the state Kentucky in the U.S. District Court in Washington, DC challenging the waiver program on the whole including the work requirements. And almost certainly there will be further challenges as the work requirements go into effect. It will be interesting to see whether these challenges will be successful and to what extent they influence approved, pending, and future work requirements.

Effects on Enrollment and Eligibility

It is too soon to determine exactly what effects work requirements will have on enrollment and eligibility. Predictably, as with any additional condition on continued eligibility, the number of enrollees is expected to decline. But the exact number of persons who will become ineligible is unknown. Though, given overall that nearly all Medicaid beneficiaries without a valid reason not to work are in fact working, the effects on enrollment of these work requirements could be quite small. Accordingly, when compared to other Medicaid reform initiatives (such as the more stringent income level requirements requested but ultimately rejected by CMS in the Arkansas waiver), the work requirements may actually have a relatively minor dampening effect on the number of Medicaid enrollees.

This is truly a fast developing area of Medicaid law and one that we are closely monitoring for any developments. We will provide further updates as things evolve.

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