Kentucky Hospital Association asks federal appeals court to uphold state plan for work rules in Medicaid

The Kentucky Hospital Association has filed a formal statement with the Court of Appeals for the District of Columbia Circuit asking it to uphold the state’s proposed work and other “community engagement” requirements in Medicaid, James Romoser reports for Inside Health Policy.

Romoser called the move “a rare example of the hospital industry endorsing work requirements as a condition for maintaining health coverage.”

The hospital association filed the friend-of-the-court brief May 21, asking the court to uphold Kentucky’s request for a waiver of the traditional Medicaid rules to require, among other things, most of the “able-bodied” individuals who gained coverage through the expansion of Medicaid to people who earn up to 138% of the federal poverty line to work or participate in community engagement 80 hours a month.

The new Medicaid program is called Kentucky HEALTH, for Helping to Engage and Achieve Long Term Health. It would be an experiment under a waiver of Section 1115 of the Social Security Act.

In March, District Judge James Boasberg ruled against the waiver, as well as a similar one for Arkansas, after concluding that the Centers for Medicare and Medicaid Services failed to show how work requirements would serve the objectives of the 1965 Medicaid Act.

This was the second time Boasberg had vacated the federally approved plan and sent it back to the Department of Health and Human Services for further review.

An appeal by CMS, joined by Kentucky and Arkansas, is before the D.C. Circuit. A brief has been filed, arguing that Kentucky HEALTH should be upheld because the new rules would be no different than what is already required of people who receive federally funded food assistance.

KHA’s friend-of-the-court brief supports Kentucky’s effort to test whether work requirements will improve the overall health of Medicaid beneficiaries, Romoser reports.

The brief says, “In essence, Kentucky’s waiver proposal tests a limited population of Medicaid beneficiaries on the theory that linking Medicaid benefits to community engagement, similar to work-sponsored commercial insurance, may encourage beneficiaries to maintain, and use, health-care coverage even while healthy, because wellness health care tends to decrease prevalence of illness and its associated higher costs.”

The brief adds, “Will Kentucky HEALTH prove its theory true? If that could be known, there would be little need to implement it as an experimental demonstration project. But the theory is rational and has a reasonable corollary to health-care delivery.”

“The association further argues that the waiver is necessary to ensure the fiscal sustainability of Kentucky’s Medicaid program,” Romoser reports. This argument was also made in the Trump and Bevin administration’s brief; Boasberg firmly rejected it, noting that it is based on Gov. Matt Bevin’s threat to end expansion of Medicaid to more than 400,000 Kentuckians if courts thwart his plan.

Romoser says KHA’s intervention is “unusual because the hospital industry has mostly tried to stay out of the debate over Medicaid work requirements.” He notes that the American Hospital Association has also not taken a stance, calling it a state issue, and that KHA did not intervene in the lower court.

Kentucky projected in its initial waiver application that its Medicaid rolls would have 95,000 fewer people in five years under Bevin’s plan than without it, in large measure because of noncompliance.

Romoser says that could hurt hospitals by increasing the number of uninsured patients, but terminating the Medicaid expansion is “a scenario that would be even worse for hospitals.”

KHA has long supported Kentucky HEALTH, often stating that it supports the plan as a means to protect Medicaid expansion.