President Biden Takes First Step Towards Reversing Trump Era Medicaid Policies

On January 28th, President Biden issued an “Executive Order on Strengthening Medicaid and the Affordable Care Act.” The E.O. states that the Biden Administration will promote policies that “protect and strengthen Medicaid and the ACA and … make high-quality healthcare accessible and affordable for every American.” To this end, the E.O. makes several important policy changes, including asking the HHS Secretary to establish a Special Enrollment Period for the ACA marketplace, in part to allow individuals who have lost insurance during the COVID-19 pandemic another opportunity to gain coverage.

On the Medicaid front, the E.O. contains provisions that are of supreme importance. Readers of the blog will remember that the Trump Administration leveraged section 1115 waivers to promote unprecedented and somewhat controversial Medicaid policy changes. In particular, the previous administration encouraged states to pursue 1115 demonstrations that would adopt work and community engagement requirements – i.e., changes that condition Medicaid eligibility for certain groups on meeting a specified number of work or community engagement hours per month. Several states took up this offer, and legal challenges to these demonstrations have made their way to the Supreme Court, which is slated to hear arguments this spring.

The Trump Administration also leveraged section 1115 to encourage states to pursue demonstrations that would convert the Federal government’s open-ended Medicaid funding obligation into a fixed, “block grant” like funding structure, in exchange for greater flexibilities for states in how they administer their Medicaid programs. Tennessee has been the first and only state to receive approval for this type of demonstration, which, among other things, allows Tennessee to adopt a closed drug formulary.

Most notably, President Biden’s E.O. directs the Secretary of HHS to “review all existing regulations, orders, guidance documents, policies, and any other similar agency actions” that are inconsistent with new Administration’s policy goals. As part of this review, the Secretary must examine all “demonstrations and waivers, as well as demonstration and waiver policies, that may reduce coverage under or otherwise undermine Medicaid or the ACA.” The E.O. calls on the Secretary to “consider whether to suspend, revise, or rescind” any demonstrations that fall under this category.

The language pertaining to demonstrations and waivers is likely a direct reference to the abovementioned Trump Era 1115 demonstration approvals. Of course, HHS can choose to deny any new state applications for work requirement and block grant demonstrations, but the E.O. now puts in jeopardy the future viability of demonstrations that are already approved and operating.

The exact confines of the process HHS must follow to rescind or withdraw from an ongoing demonstration is a bit of an open question. This issue has been further complicated by former CMS administrator Seema Verma’s last minute “Letter of Agreement,” which seeks to establish additional procedural protections to any future waiver withdrawal, and the recently implemented “Good Guidance Practices” Final Rule, which calls into question the enforceability of certain guidance documents that are issued without following notice-and-comment rulemaking. We will be further exploring these issues in an upcoming blog post – stay tuned!

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