Courts Overrule CMS' Approval of KY's Medicaid Work Requirements- Ruling Could Influence AZ's Request

Kentucky was the first state to have a work requirement waiver approved by CMS (it was set to take effect yesterday- July 1, 2018).  But last Friday, a federal District Court Judge ruled that Kentucky’s CMS approved waiver which would have implemented work/community engagement requirements failed to address the purpose of the Medicaid program- to provide coverage and care. Medicaid is obligated under federal law to consider whether a waiver proposal advances the program’s objectives. 

Specifically, toward the end of the Decision, the court concludes that “…the Secretary must adequately consider the effect of any demonstration project on the State’s ability to help provide medical coverage. He never did so here.”  

When you read the Decision, you’ll see that the court basically concluded that when CMS approved the waiver, they didn’t consider its impact on the primary objective of the Medicaid program- which is to provide medical coverage and care. The court vacated CMS’ approval of the waiver and remanded it back to HHS (CMS).

While Kentucky’s waiver request isn’t exactly the same as  Arizona’s work and community engagement waiver request, there are many similarities. Both require some Medicaid members to meet work or community engagement requirements (AZ has more exempted populations than KY), both have reporting requirements, and both include lockout provisions for folks that don’t comply. The specific standards and exemptions are different, but both include the same basic requirements (except that KY includes some premium payments- which isn’t included in Arizona’s waiver request). 

This is certainly the beginning of a longer legal battle, but last week's Ruling could very well influence CMS’ upcoming decision about whether (or when) to approve Arizona’s waiver request.