Georgia Files Suit Against CMS for “Regulatory Bait and Switch” Over its Expansion Population

Before jumping into the latest litigation over Medicaid waivers, Medicaid and the Law would like to introduce its readers to Adam Schilt. Adam is a healthcare associate in the Washington, DC office and will be a regular contributor to the blog. In a past role, he’s written pieces of legislation that have been enacted into the Medicaid statute and continues to be very passionate about the subject, as well as many other areas of health law.


On January 22, 2022, Georgia and the Georgia Department of Community Health filed suit against the Centers for Medicare & Medicaid Services (CMS) seeking to prevent the rescission of the central aspects of Georgia’s 1115 waiver to its Medicaid program – specifically, work/community engagement requirements and monthly premiums. In case this sounds familiar, we’ve w­­­ritten about CMS’ initial notice as to whether it may scale back this waiver about a year ago.

As a refresher, an 1115 waiver (named after the section of the Social Security Act (SSA) that permits CMS to issue Medicaid waivers) allows CMS to approve demonstration programs that promote the objectives of title XIX of the SSA and which would otherwise be impermissible under the law. To this end, Georgia’s 1115 waiver authorizes a 5-year demonstration program that allows the Georgia Medicaid program to provide coverage to otherwise ineligible individuals who have incomes of up to 100% of the FPL, so long as those individuals prospectively enroll in the Medicaid program after having worked (and maintained) 80 qualifying hours in a month and paying the requisite monthly premium.

Georgia’s 1115 waiver was approved and contracted during the Trump Administration when work requirements were being incorporated into a handful of State Medicaid programs across the country. Readers of our blog will recall that the courts didn’t look too kindly on these initiatives. But there’s a key difference between those programs and what Georgia wants to do. Under the waivers that the courts invalidated, the states wanted to extend work/community engagement requirements to existing Medicaid enrollees. Georgia wasn’t proposing that:  they were proposing extending those requirements only to a subset of newly-eligible Medicaid enrollees.

In the waning days of the Trump Administration and following the election of President Biden, the waiver faced an uncertain future both because of the new Administration and the adverse court decisions. Presumably to address this risk, CMS and Georgia penned a supplemental agreement that provided for additional terms relating to the withdrawal or termination before President Biden’s inauguration. And as expected, on December 23, 2021, CMS informed Georgia that it has rescinded two key components of the waiver – work/community engagement and premium requirements – which would shortly lead the plaintiffs filing suit.

Quite interestingly, CMS did not rescind the waiver in totality. The coverage requirement for otherwise ineligible individuals who enroll in the waiver is still intact. In a letter to Georgia, the CMS Administrator wrote, “This action preserves Georgia’s authorization to provide health coverage through the Pathways to Coverage demonstration, without the work requirement or the demonstration authorized premium requirement.” As you’ll recall, Georgia has not expanded its Medicaid program following the enactment of the Affordable Care Act, so the approval of this waiver was Georgia’s first step in coverage for any part of the expansion population. But Georgia didn’t want to expand its Medicaid program absent the community engagement and premium provisions. Under the CMS approach, the agency has managed to allow for the enrollment of a portion of the expansion population under the Georgia State Medicaid program without any work or premium requirements. But as the complaint shows, Georgia and the Georgia Department of Community Health were not too thrilled with this outcome, likening it to a “regulatory bait and switch of unprecedented magnitude that would eviscerate the contractual terms at the heart of a carefully negotiated federal-state program”.

The plaintiffs plead that such a change would need to be agreed to by both CMS and Georgia and that supplemental agreement requires CMS to provide Georgia at least 9 months of notice before such withdrawal or termination of a portion of the waiver. The December 23rd rescission did not provide such a notice, but that may a moot point given the legal requirements relating to 1115 waivers. The regulations promulgated pursuant to section 1115 of the SSA explicitly state, “The Secretary may also withdraw waivers or expenditure authorities based on a finding that the demonstration project is not likely to achieve the statutory purposes.” The conflict between the supplemental agreement and the aforementioned regulation, as well as the lack of specificity in the underlying statute, will certainly be at issue in this case moving forward.

We, at Medicaid and the Law, will be following the development of this litigation as it moves through the U.S. District Court for the Southern District of Georgia and beyond.

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