MEDICAID UPDATES

March 19, 2021

Over the past few weeks, there have been some notable developments related to “work requirements” in the Medicaid program that could have important bearing on the early work of the Biden Administration.  

Work Requirements and the Trump Administration 

Medicaid functions as a partnership between the federal government and the states, both in policymaking and funding. States bear the majority of the responsibility for implementing the programs, and also have significant latitude to modify the programs through demonstrations – provided they receive federal approval to do so.  

The Trump Administration encouraged states to seek approval for so-called “work requirement” policies, which generally made employment – or seeking employment – a pre-requisite for Medicaid eligibility among certain populations.  The Trump Administration approved a number of those requests. 

However, those policies never fully went into effect in most states. Many states opted to delay the policies, given the circumstances of the COVID-19 pandemic. Federal courts blocked implementation in other states, making Arkansas the only state to have work requirements in place for any period of time. 

In federal court decisions against the Administration’s work requirements policy, the ruling of the court was typically nuanced. The federal courts ruled that HHS had failed to comply with the Administrative Procedures Act by failing to assess the impact of work requirement policies on coverage – the primary objective of the Medicaid program according to statute. 

At the end of last year, the Trump Administration was successful in asking the Supreme Court to take up the case. Arkansas and New Hampshire joined the Administration, looking to defend work requirement policies they sought to put in place. The Supreme Court scheduled oral arguments in the case for March. 

In framing the case, the Supreme Court sought to ask a broader question than the federal courts had decided. The Supreme Court posed a broader policy question: “Whether the court of appeals erred in concluding that the Secretary may not authorize demonstration projects to test requirements that are designed to promote the provision of health-care coverage by means of facilitating the transition of Medicaid beneficiaries to commercial coverage and improving their health.”

Actions under the Biden Administration

The position of the executive branch obviously changed with the new administration, complicating both the Supreme Court case and the status of the policies the previous Administration had approved.

The Biden Administration issued letters to each state with approved work requirements last month beginning the process of revoking approval of work requirement policies. In light of that change, the Biden Administration asked the Supreme Court to drop the case – arguing in part that the issue was a moot point now that the administration did not intend to let the policies go forward.  

Last week, the Supreme Court canceled the scheduled oral arguments in the work requirements case (Cochran vs. Gresham).  

Earlier this week, CMS issued additional letters to Arkansas and New Hampshire – the states with pending challenges before the Supreme Court – notifying them that CMS had officially revoked approval of their work requirement policies. 

What’s Next?

On the legal front – legal experts suggest it doesn’t look like the Supreme Court will issue any ruling on the Medicaid work requirements case. However, the case is not officially resolved, and one shouldn’t assume that’s outside of the realm of possibilities. 

Action now falls to the Biden Administration which has notified states it intends to formally withdraw approval of work requirement policies. But unwinding policies that a previous administration had agreed to with states is complicated. 

For example – the state of Georgia had agreed to a partial Medicaid expansion last year that included work requirements on the newly covered population. The state sent a formal response to CMS’ February letter, suggesting that revoking approval for work requirements could have bearing on the entire expansion package. 

Much more to come, as the Biden Administration begins to figure out a path to unwind all these policies. 

Resources

SCOTUS website on Cochran vs. Gresham

Verma SMD Letter (Jan 2018) – soliciting states to apply for work requirements

HHS report