A federal judge struck down Kentucky’s Medicaid waiver that included work requirements for approximately 350,000 beneficiaries, dealing a blow to the Trump administration's new approach to Medicaid.
U.S. District Judge James E. Boasberg for the U.S. District Court of the District of Columbia ruled that although the Department of Health and Human Services (HHS) has "significant deferance" regarding the approval of pilot projects, the agency "never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid."
Boesberg vacated the waiver approval, calling it "arbitrary and capricious," and remanding back to HHS for further review.
The ruling deals a significant blow to the agency which has shown a willingness to approve Medicaid work requirements. In a statement, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma called the ruling "disappointing."
"States are the laboratories of democracy and numerous administrations have looked to them to develop and test reforms that have advanced the objectives of the Medicaid program," she said. "The Trump Administration is no different. We are conferring with the Department of Justice to chart a path forward. In the meantime, we will continue to support innovative, state-driven policies that are designed to advance the objectives of the Medicaid program by improving health outcomes for thousands of low-income Americans.”
Critics of the agency's support for Medicaid work requirements rejoiced.
“There is a reason why no previous administration has approved the severe provisions Kentucky is so bent on pressing – they do not furnish health care services," said senior attorney Catherine McKee with the National Health Law Program, one of the organizations that brought the lawsuit. "Instead they punish the very populations Medicaid is intended to protect."
So far CMS has approved a work requirement waiver for three other state Medicaid programs. Seven other states currently have work requirements waiver requests pending. Michigan, meanwhile, recently passed a state law mandating Medicaid beneficiaries meet work or education requirements.
The lawsuit, initially filed by a group of Kentucky residents earlier this year, argued the Trump administration overstepped its authority in approving the state’s waiver to add work requirements for Medicaid beneficiaries. Kentucky was the first state to have a work requirement waiver approved by CMS.
Kentucky’s waiver requires able-bodied adults under 65 years of age to spend 80 hours a month participating in community engagement. The state estimates the new rule, which takes effect July 1, will impact 350,000 of the program’s 1.4 enrollees.
The lawsuit was led by the National Health Law Program, Kentucky Equal Justice Center and the Southern Poverty Law Center, which filed the class-action suit on behalf of 15 individuals. The complaint argued that the program—known as Kentucky HEALTH—violates Section 1115 of the Social Security Act by diminishing the program with work and premium payment requirements.
The Department of Justice, representing the Department of Health and Human Services (HHS) argued a ruling that struck down the waiver would put other state waivers in jeopardy, and that Medicaid waiver decisions were not reviewable by a court.
Meanwhile, state officials filed a complaint in a U.S. District Court in Kentucky seeking a judicial declaration that the program complies with all applicable federal laws. Gov. Matt Bevin signed an executive order earlier this year that would terminate Medicaid expansion within six months if the waiver is struck down.
However, the court noted that the executive order would not take effect until "all appeals of the judgment have been exhausted or waived," which is "not typically a lightning process." Furthermore, the state would need to submit amendments for CMS approval, which would also be subject to judicial review.
Frederick Isasi, executive director of Families USA called the decision a "victory for the people of Kentucky who rely on Medicaid for life-saving health care."
"Governor Bevin’s illegal proposal that was approved by the Trump administration was misguided and ill-informed," he added. "Most Medicaid enrollees that are not elderly or disabled are in families that are working. Let’s stop perpetuating stereotypes and stop trying to take health care away from families."