CMS revives Kentucky waiver debate, puzzling legal experts

The Trump administration is taking another stab at approving work requirements for Kentucky's Medicaid program, weeks after a federal judge blocked its initial approval.

But one legal expert says the Centers for Medicare & Medicaid Services (CMS) has an uphill climb to justify approving the waiver.

On Thursday, CMS opened a second 30-day comment period on Kentucky's demonstration project.

"Although an additional public comment period is not legally required, CMS is conducting one to ensure that interested stakeholders have an opportunity to comment on the issues raised in the litigation and in the court’s decision," the agency wrote on the public comment portal.

Last month, a judge for the U.S. District Court of the District of Columbia ruled that, when approving Kentucky's waiver, CMS "never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens."

A second comment period may not be enough for CMS to convince the courts the program meets that standard, according to Sara Rosenbaum, a health law and policy professor at The George Washington University who contributed to an amicus brief (PDF) backing the plaintiffs in the case against the Department of Health and Human Services.

“I think a lot of us are puzzled,” she told FierceHealthcare. “We’re having a lot of trouble envisioning what could possibly come into the record that would give them a rational basis for proceeding.”

RELATED: Federal judge strikes down Kentucky's Medicaid work requirements

The Kentucky legislature’s Medicaid Oversight and Advisory Committee noted in a recent meeting (PDF) that the court “did not rule any of the Kentucky HEALTH components to be unlawful.” Further, the state will continue to work with its federal partners “toward a reapproval.”

Rosenbaum added that that government is looking to "cure the obvious defect they made of their process." She expects CMS will used the second comment period to conclude the benefits outweigh the risks and make their case again.

"They will go back to the court and say ‘We did what you asked us to do,'" she said. But whatever the agency brings back "has to have evidentiary weight behind it.”

New numbers from Arkansas could be “the canary in a coal mine,” she said. Last week, the Associated Press reported Arkansas removed 7,000 people from the Medicaid program because they did not meet the state's work requirement, which CMS approved in March. However, Arkansas' demonstration encompasses fewer people than Kentucky's proposal; it limits work requirements to beneficiaries under the age of 50, while Kentucky's included those up to age 65.

Arkansas' data may make it more difficult for CMS to argue that Kentucky's proposal would fulfill the objective of the Medicaid program.

"[Kentucky] is going into a population that is, by definition, extremely vulnerable to an inability to secure the minimum number of work hours they need to satisfy 50 weeks, 20 hours a week, 50 weeks a year," Rosenbaum said. "So the falloff could be very precipitous."