As Lawsuits Loom, Ohio Gets Medicaid Work Requirements
March 21, 2019
Reprinted with AIS Health permission from the March 21, 2019, issue of RADAR on Medicare Advantage
Amidst uncertainty around the fate of Medicaid work requirements as they are tested in two separate cases this month, Ohio on March 15 became the ninth state to gain section 1115 demonstration authority to tie work-related provisions to Medicaid coverage. Medicaid managed care organizations in Ohio have reportedly been preparing for the “Work Requirement and Community Engagement” demonstration project since the state legislature passed a bill requiring it in 2017, but one Medicaid expert warns that if the courts eventually strike down these programs, plans in Ohio and other states with similar demonstrations may never recoup the administrative costs associated with implementation.
Acknowledging that an “important objective” of the Medicaid program is to provide medical assistance and other services to vulnerable populations, CMS Administrator Seema Verma in Ohio’s approval letter asserted that “there is little intrinsic value in paying for services if those services are not advancing the health and wellness of the individual receiving them, or otherwise helping the individual attain independence.” And demonstration authority allows states to test different approaches that advance the health and wellness needs of beneficiaries, she suggested, echoing arguments made by HHS lawyers last week in federal court as they defended the legality of work requirements in Arkansas and Kentucky.
As of Jan. 1, 2021, certain individuals in Ohio’s adult Medicaid expansion population must participate in community engagement activities for at least 20 hours per week (80 hours on average per month). The state defined a variety of qualifying opportunities, including self-employment, “in kind” work (i.e., work performed in exchange for goods and services), unpaid work, job search and work readiness activities, and participation in Supplemental Nutrition Assistance Program (SNAP) and/or Temporary Assistance for Needy Families (TANF) work registration or employment and training requirements.
And unlike reporting rules in Arkansas, which requires beneficiaries to report work activities every month, Ohio enrollees who are subject to the requirement will have 60 days to report compliance to the state. After reporting one time, no additional reporting will be required for the year unless there is a change in the beneficiary’s circumstance. The state plans to notify beneficiaries of their need to meet these requirements in order to continue receiving Medicaid benefits. If they do not comply, they will be disenrolled and have an opportunity to apply to re-enroll immediately.
CMS WILL NOT PAY FOR EXTRA SUPPORT
Ohio also requested a federal match for certain support services (e.g., transportation) to assist beneficiaries in meeting the community engagement requirement. CMS, however, said it would not provide “demonstration expenditure authority” for these support services or other costs associated with community engagement implementation and instead offered “technical assistance” to help the state determine whether any administrative activities needed to stand up the demonstration may be “federally matchable.”
“For a conservative policy, I think Ohio has very liberal exemptions from the community engagement requirements,” observes Jerry Vitti, founder and CEO of Healthcare Financial, Inc. “The biggest one is that they exempt folks who are over the age of 50 and you can bet there’s a correlation between the older folks are and the less able they are to work. I haven’t seen that before and I’m not recognizing that in other waivers, although it may be in some newer applications.”
Additional exemptions, such as for those who are already exempt from SNAP and/or TANF work requirements and those who are getting substance use disorder treatment, combined with the flexibility in reporting and the state’s planned outreach efforts should ease the difficulty of complying with the new requirements, he adds.
“There’s a lot of good stuff to take from this waiver. It’s become clear that work requirements are not only here to stay but there’s a lot of momentum around them, with CMS encouraging them. It’s a dynamic that is problematic if you’re in an advocacy or access role, but I would hope to see Ohio as an example for other states that are going to do this,” suggests Vitti, whose firm specializes in enrolling the uninsured into health programs.
CMS: DEMONSTRATION IS ‘ACHIEVABLE’
CMS said it received approximately 630 comments on the proposal, most of which either opposed the demonstration in its entirety or certain components of it. And while the agency shares the commenters’ concern that “everyone who needs Medicaid and meets programmatic eligibility criteria should have access to Medicaid,” Verma said CMS “believes this demonstration is designed to make the eligibility criteria achievable, and the demonstration as a whole is worth testing to determine whether there is a more effective way to furnish medical assistance to the extent practicable under the conditions in Ohio.”
Ohio estimated in its application that approximately 36,000 out of the 710,000 beneficiaries expected to be in the adult Medicaid expansion group would not be considered exempt and would need to demonstrate compliance with the work requirements.
The state’s Medicaid program currently serves 2.68 million beneficiaries, 85% of whom are enrolled in managed care. CareSource, the largest Medicaid MCO in Ohio with 45% market share, “looks forward to partnering with the state to support work requirements and the community engagement waiver,” according to a statement from Steve Ringel, Ohio market president for the not-for-profit insurer.
Although CareSource did not specify the activities it may perform to support the state initiative, the insurer pointed out that it already has experience helping members in Ohio and other markets find employment through its JobConnect program. “We’ve seen the life-changing improvements in health and well-being as a result of members contributing to their own economic stability,” said Ringel of the four-year-old initiative.
LAWSUITS CREATE UNCERTAINTY
Meanwhile, a federal judge last week heard two separate cases challenging Medicaid work requirements in Arkansas and Kentucky and expects to rule by the end of the month. And at press time a third federal lawsuit was filed challenging the Trump administration’s approval of work requirements in New Hampshire. Arkansas last June became the first state to implement work requirements. But they have resulted in far more adults losing coverage than the state’s initial projection of 5% of the expansion population that would need to comply. More than 18,000 Arkansans have lost coverage for failing to document at least 80 hours of work, job training, etc., which in many cases was due to complications with the online reporting system.
The judge presiding over Gresham v. Azar (No. 1:18-cv-1900) and Stewart v. Azar (No. 1:18-cv-152) is U.S. District Judge James Boasberg, who issued a ruling last year that CMS violated the law when approving Kentucky’s demonstration and who was appointed during the Obama administration, which rejected New Hampshire’s work requirement request in 2016. CMS last November reapproved Kentucky’s request with a few minor changes. Kentucky Gov. Matt Bevin (R) has threatened to terminate Medicaid expansion if the court blocks the proposal again; the planned start date for the demonstration is July 1.
“What is uncertain is whether Judge Boasberg will soon rule again against the work requirements and impose a nationwide injunction that could arrest other states from pursuing such initiatives,” observes Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, a business intelligence and strategic advisory consultancy that works across government health care business domains.
“Beyond the legal grounds that the administration feels it has, they have recently released guidance ostensibly to provide a research architecture for capturing and evaluating data from these types of state waivers,” he points out, referring to March 14 guidance from CMS. “One goal is to directly mitigate Judge Boasberg’s previous views on the purpose and execution of these 1115 demonstrations.”
CASES COULD END IN ‘SUNK’ MCO COSTS
But for the MCOs that serve as state partners, “the dilemma is that adding community engagement requirements to a state Medicaid program creates additional administrative burdens for plans that might not be recouped through capitation,” warns Shekhdar. “If the courts eventually strike down these programs, these burdens become ‘sunk costs’ to the plans.”
View the approval letter at https://bit.ly/2TbdRDi. Contact Ringel via CareSource spokesperson Fran Robinson at email@example.com, and Shekhdar and Vitti via Joe Reblando at firstname.lastname@example.org.
by Lauren Flynn Kelly