Biden administration begins process to end Medicaid work requirements

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The Biden administration has taken steps to roll back a controversial Trump-era rule that requires Medicaid beneficiaries to work in order to receive coverage.

On Friday, the Centers for Medicare and Medicaid Services sent letters to several states that received approval for a Section 1115 waiver. CMS said it was beginning a process to determine whether to withdraw the approval. States that received a letter include Arizona, Arkansas, Georgia, Indiana, Nebraska, Ohio, South Carolina, Utah and Wisconsin.

The letters cited the economic and health impacts of the pandemic, which could make it more difficult for Medicaid recipients to fulfill their state's work requirements.

"Uncertainty regarding the current crisis and the pandemic's aftermath, and the potential impact on economic opportunities (including job skills training and other activities used to satisfy community engagement requirements, i.e., work and other similar activities), access to transportation and to affordable child care have greatly increased the risk that implementation of the community engagement requirement approved in this demonstration will result in unintended coverage loss," CMS said in the letters.

The agency also sent separate letters to states, including one to Arkansas, which rescind a letter sent by former CMS Administrator Seema Verma in January that would keep state work requirements in effect for nine months after the new administration decides to rescind them.

In the rescinding letter, CMS acting Administrator Elizabeth Richter said the agency "needs to remain able to exercise its authority under the Act and implementing regulations to maintain continued oversight of demonstrations in order to ensure that they remain likely to achieve the statutory purposes."

Instead of providing a nine-month decision process, CMS will provide states with a written notice and an opportunity to request a hearing before determining whether to suspend, modify or withdraw the waiver.

WHY THIS MATTERS

As of Jan. 26, 2021, eight states have been approved for work requirement waivers, seven have applications pending, and four are waiting for court decisions, according to the Kaiser Family Foundation.

The move signals the new administration's intention to cut work requirements, which opponents say leads to lost coverage without improving employment.

In Arkansas, which was the first state to implement Medicaid work requirements, 18,000 adults lost coverage in the 10 months the policy was in effect before a federal judge put the policy on hold, according to research by Health Affairs. Additionally, it found that work requirements did not increase employment in Arkansas, and those who had lost coverage experienced adverse outcomes including medical debt, delayed care and inconsistent medication fulfillment.

The work requirements also present dangers to hospitals' bottom lines. Hospitals in states that implement Medicaid work requirements could see their Medicaid revenues decrease by as much as 21%, their uncompensated care costs increase as much as 133% and their operating margins fall by upward of 2%, according to estimates by The Commonwealth Fund.

THE LARGER TREND

CMS' action follows an executive order signed by President Biden in January that asks agencies to consider additional actions that could be taken to strengthen and protect healthcare access. The executive order also set up a special enrollment period for the Affordable Care Act and rescinded the Mexico City Policy, which bars foreign NGOs that offer abortion counseling or referrals from receiving funding from the U.S.

The Supreme Court also recently agreed to weigh in on the work requirement debate in Arkansas and New Hampshire. The Justices will decide whether the U.S. Court of Appeals for the District of Columbia erred in concluding that the secretary of Health and Human Services may not authorize demonstration projects to test the work requirements to facilitate the transition of Medicaid beneficiaries to commercial coverage.

Twitter: @HackettMallory
Email the writer: mhackett@himss.org