HHS sued over work requirements for Medicaid recipients

Less than two weeks after Kentucky became the first state approved to implement work requirements for its “able-bodied” Medicaid beneficiaries, a lawsuit has been filed against HHS and CMS alleging the plan is “an abuse” of the agencies’ regulatory powers.

The Kentucky Medicaid beneficiaries named as plaintiffs in the complaint are represented by Kentucky Equal Justice Center, the Southern Poverty Law Center and National Health Law Program, which had been named as a potential legal challenger after CMS released guidance on the work requirements on Jan. 11. Their suit argues the work requirements will harm beneficiaries and “vastly exceed” the waiver authority granted to HHS and CMS.

“The letter and approval of Kentucky’s application are unauthorized attempts to re-write the Medicaid Act, and the use of the statute’s waiver authority to 'transform' Medicaid is an abuse of that authority. The defendants’ actions here thus violate both the Administrative Procedure Act and the Constitution, and they cannot survive,” the suit said.

The approved Kentucky waiver would require adult Medicaid beneficiaries who are “able-bodied” to complete 80 hours of “community engagement”—which could include working, attending school or volunteering—or else face losing their benefits. The state had submitted the plan to CMS in 2016, but it was only approved on Jan. 12, the day after CMS released its work requirements guidance. CMS Administrator Seema Verma, MPH, helped craft the waiver in her work as a private consultant prior to joining the Trump administration, which has led to questions from Democrats about whether approving the waiver constitutes a conflict of interest.

Healthcare industry associations and liberal-leaning groups have been critical of the requirements, which after Kentucky’s approval are being considered by at least nine other states. They point to studies saying they’re unnecessary, as most Medicaid beneficiaries already have jobs, or would only serve to increase the uninsured population, as minimum wage jobs would be unlikely to offer health benefits but pay just enough to make workers ineligible for Medicaid.

HHS, CMS and Kentucky Gov. Matt Bevin didn’t comment on the lawsuit. On the same day the lawsuit was filed, Bevin met with Acting HHS Secretary Eric Hargan on implementing the waiver.

“So much work has been done to do this correctly, which was one of many variables I believe instilled confidence in Kentucky’s ability to effectively implement this waiver,” Bevin said in a press release.

Bevin, a Republican, has indicated if any legal challenge is successful against the waiver, he’ll take steps to roll back Kentucky’s expansion of Medicaid eligibility through an executive order released soon after the waiver was approved. If the expansion is elimination, approximately 480,000 beneficiaries in Kentucky would lose coverage.