Kentucky Medicaid Requirements Are Being Challenged by Class Action

A class action lawsuit was recently filed by 15 Kentucky residents who receive Medicaid.  The recipients challenged the federal government’s approval of proposed work requirements for Medicaid users in the state.  The filing states that the administration’s approval of the requirements has “effectively rewritten” the nation’s Medicaid status in violation of the law.  Medicaid is the government healthcare initiative for low-income households and the disabled.

The statute in question allows states to initiate pilot programs that further the objectives of Medicaid.  However, some say making recipients work or get on the job training does not advance Medicaid’s goal of providing insurance to those who really need it.

“There is, in contrast, good evidence that such requirements add enrollment hurdles that cause people to lose eligibility,” said Allison Hoffman, a professor at the University of Pennsylvania Law School.

Republicans last year had attempted to cut funding for Medicaid, but they failed to get enough votes.  The Trump administration is now emphasizing changes designed to cut back on funding people covered by government healthcare programs.  At least nine other states have also proposed changes to Medicaid similar to Kentucky’s including Arizona, Arkansas, Indiana, Kansas, Maine, New Hampshire, North Carolina, Utah and Wisconsin.  However, none of these states have been successful in receiving approval at the federal level.

The Medicaid statute allows the Department of Health and Human Services (DHHS) to grant waivers to states so they can experiment with pilot programs that deviate from the statute.  DHHS must find these programs “likely to assist in promoting the objectives” of the Medicaid program.  CMS, a division of HHS, issued guidance earlier this year inviting states to design and propose test programs that impose work or job training requirements on Medicaid recipients.  States must propose such changes through waivers and get sign off at the federal level.  Seema Verma, the head of CMS, said individuals who participate in “activities that increase their education and training” enjoy a better quality of life.

Kentucky’s waiver was granted approval on January 12 and requires able-bodied adult Medicaid recipients to participate in at least 80 hours per month of “employment activities”.  Those challenged with disabilities do not have to abide by the requirements.  It also imposes new premiums and will deny any recipients coverage for six months if they fail to pay the new fees.  Those who filed the lawsuit said that the new objectives were an “abuse of discretion” by DHHS.

“The question is whether the demonstration is so unsupported by the evidence and veers so far from the federal Medicaid law that as a substantive matter it doesn’t fit under” the waiver initiative said Sara Rosenbaum, a professor of health law and policy at George Washington University.

The plaintiffs’ legal argument rests strongly on the federal Administrative Procedure Act (APA) and Rosenbaum points out that courts have been willing to block other Trump administration policies that have been challenged under the APA.  And, as far back as 2011, the 9th U.S. Circuit Court of Appeals invalidated a waiver that would have authorized co-pays for Medicaid patients in Arizona.  Therefore, the plaintiffs could very well receive their desired outcome.  Only time will tell.

Sources:

Medicaid work rules face tough legal challenges, experts say

Kentucky becomes the first state allowed to impose Medicaid work requirement