On August 10, 2021, CMS notified Ohio, South Carolina, and Utah that it is withdrawing its prior approval of the Medicaid demonstration projects in these states, which had established work requirements as a condition for Medicaid eligibility. These states now join a number of others that have seen the Biden Administration undo similar work requirement demonstration projects that were approved by the Trump Administration. On the same day, CMS also announced that it is seeking public comments on Tennessee’s Medicaid demonstration project.
Under Section 1115 of the Social Security Act, the Administrator of CMS (acting on behalf of the HHS Secretary) can approve experimental, pilot, or demonstration projects that are found by the Secretary to be likely to assist in promoting the objectives of the Medicaid program. The demonstrations may waive some of the traditional Medicaid requirements, and can give states additional flexibility to design state-specific policy approaches to serve their Medicaid populations. During the Trump Administration, a dozen states received approval from CMS to include some form of work requirements as a condition for Medicaid eligibility under those states’ Section 1115 waivers.
In letters sent to Ohio, South Carolina, and Utah, the Administrator explained her finding that the programs’ work requirements are “not likely to promote the objectives of the Medicaid program.” Among the reasons for rescinding approval, the Administrator noted that the “short-to-long-term adverse implications of the COVID-19 pandemic on the economic opportunities for Medicaid beneficiaries, which have been aggravated further by challenges around shifting childcare and caregiving responsibilities as well as constraints on public transportation during the pandemic, heightens the risks of attaching a community engagement requirement to eligibility for coverage.” These states have the ability to appeal the Secretary’s decision.
Ohio, South Carolina, and Utah now join a number of others, including Arizona, Arkansas, Indiana, Kentucky, Michigan, Nebraska, New Hampshire and Wisconsin, that have seen their work requirements end either voluntarily, by court order, or by agency action. As previously discussed, in March 2021, the Supreme Court announced that it would no longer hear oral arguments in the case litigating the Medicaid work requirement programs in Arkansas and New Hampshire given the Biden’s administration change in policy on Medicaid work requirements.
Tennessee’s demonstration project, as approved by the Trump Administration in January 2021, imposes a cap on the State’s funding, and permits the State to use a portion of that funding below the cap for non-Medicaid purposes. A group of Medicaid beneficiaries, represented by King & Spalding, contend that this funding formula is contrary to the Medicaid statute and have brought suit to challenge the legality of the project, as discussed here. The plaintiffs have also contended that CMS had failed to provide the public with the opportunity to comment on the proposed project before its approval. In light of the procedural claims in the litigation, CMS agreed to reopen the comment period and to render another decision on the project, and the plaintiffs agreed to stay the litigation while the Secretary considers these public comments.
