Kentucky First State Approved for Medicaid Work Requirements

CMS on Friday approved Kentucky’s request to launch a 5-year demonstration project that will require able-bodied adults to work or volunteer to receive Medicaid, while paying premiums and providing documentation to avoid being cut off from the program.

Republican Kentucky Governor Matt Bevin sought permission to add work requirements back in the summer of 2016. He vowed during his campaign to dismantle the home-grown exchange, called Kynect, set up by his Democratic predecessor, Steve Beshear. More than 500,000 people gained coverage under Medicaid expansion in Kentucky, which was considered a success story of the Affordable Care Act.

The program, called Kentucky HEALTH, was approved Friday after being designed by CMS Administrator Seema Verma when she was a consultant; she recused herself from the application. It was widely expected to be the first waiver approved once the Trump administration issued guidelines Thursday that let states impose work or community service requirements on able-bodied Medicaid recipients.

“Kentucky HEALTH is a unique program that reflects Kentucky’s specific needs, one that will take a new approach to improving people’s overall health, stability, and quality of life,” Bevin said in a statement. “Federal approval of Kentucky HEALTH is a significant milestone on our journey to lead the nation in transforming Medicaid in a fiscally responsible way.”

Kentucky officials believe about half of 350,000 working-age Medicaid recipients already work the required 80 hours per month, or take part in volunteer or job-training activities. The program allows beneficiaries to be locked out of benefits if they fail to produce proof they are following the rules, but they can get back in the system once they meet requirements for 30 days. Failing to follow the redetermination process can get people barred from benefits for 6 months.

Lawsuits are expected shortly, because the 1115 waiver has historically required that states show how their use will expand access to health coverage; The Washington Post reported Friday afternoon that aides to Bevin projected the Medicaid rolls would decline by about 95,000 people over the 5-year period.

In a letter released Friday, CMS Principal Deputy Administrator Demetrios L. Kouzoukas outlines groups exempt from the requirements: former foster care youth, pregnant women, primary caregivers of a dependent, the medically frail, full-time students, and those diagnosed with an acute medical condition that would prevent them from complying with requirements.

Much of the letter discusses how Kentucky’s program is designed to change behavior. Beneficiaries will manage a My Rewards Account and have Deductible Account, which provide incentives for preventive health services and serve as “an educational tool to inform beneficiaries about the cost of healthcare.”

The letter states that the program seeks to teach beneficiaries to transition to commercial insurance by requiring them to pay premiums, using periods of ineligibility if premiums are not paid, and using limited enrollment windows. This last part is controversial, as Medicaid has historically enrolled beneficiaries when they needed care.

Ironically, the program seeks to encourage Medicaid beneficiaries to pay premiums and stay enrolled continuously, “even when healthy…to increase continuity of care,” according to the CMS letter; the tax plan just passed by Congress eliminates the individual mandate that required consumers at higher income levels to do the same thing.

Bevin said at a news conference that the plan will be phased in from July through November.

The guidance issued to all states on Thursday requires that states receiving waivers for work requirements have 180 days to submit an evaluation plan to CMS. Evaluation plans must address how the demonstration improves quality, health outcomes, and access.

Congressional Democrats continued to react to the Medicaid policy change Friday. US Representative Frank Pallone, (D-NJ), ranking member of the Energy and Commerce Committee, and Senator Ron Wyden, (D-OR) ranking member of the Senate Finance Committee, called on the Government Accountability Office (GAO) to review the changes CMS is allowing states to make under the 1115 waivers.

“These Medicaid demonstrations can have a significant impact on beneficiaries, providers, states, and local governments,” they wrote to GAO. “As such, it is critical that key decisions regarding eligibility, coverage, benefits, delivery system reforms, federal Medicaid spending, and other important aspects of these demonstrations are transparent, accountable, and in line with Congressional intent under Title XIX.”