On December 12, 2019, CMS approved South Carolina’s proposal for a demonstration project that would add work, or community engagement, requirements as part of the eligibility determinations for the state’s Medicaid plan. South Carolina joins several other states in implementing Medicaid work requirements at a time when such requirements are being challenged in federal court. For instance, the D.C. Circuit recently held oral argument on October 11, 2019, in the cases of Stewart v. Azar and Gresham v. Azar, which involve challenges to CMS’s approvals of demonstration projects with work requirements in Kentucky and Arkansas.

Medicaid is a cooperative federal-state program that aims to provide medical assistance to certain vulnerable populations; traditionally pregnant women, children, disabled, and the elderly. Under the Affordable Care Act (ACA), certain states expanded Medicaid eligibility to certain low-income individuals under the age of 65. The Medicaid statute sets out certain minimum requirements relating to promoting health assistance to vulnerable populations to which all state plans must conform. States may also seek approval for experimental proposals, called “demonstration projects,” as long as they are consistent with the objectives of the Medicaid statute. Under section 1115 of the Social Security Act, CMS may waive certain Medicaid requirements if CMS finds that a waiver is needed for the state to implement its demonstration project.

Several states have obtained 1115 waivers to add new work requirements to their Medicaid programs, although no such waiver is currently in effect, either because the approval of the state’s demonstration project has been vacated in litigation or because the state has deferred implementation of the waiver. South Carolina’s 1115 waiver, however, is different in that South Carolina is the first state that has not accepted the ACA’s Medicaid expansion to seek to impose work requirements on its existing Medicaid population. South Carolina also seeks to extend Medicaid coverage to certain new populations, while still declining to accept the ACA expansion.

In the Kentucky and Arkansas cases, a federal district court vacated the demonstration projects because, in the court’s view, CMS had not adequately considered whether work requirements would in fact help the state furnish medical assistance to its citizens. A decision from the court of appeals is expected in the next several months. That decision will likely control, or at least significantly inform, the validity of the South Carolina project. Several stakeholders have already pledged to challenge South Carolina’s 1115 Waiver, which CMS approved in two separate letters available here and here.