The U.S. Supreme Court will hear oral argument in a case involving the authority of the Department of Health and Human Services to approve Medicaid work requirements programs in Arkansas and New Hampshire that were struck down by the U.S. Court of Appeals for the District of Columbia Circuit.
The high court has agreed to determine whether the HHS can allow states to impose work requirements in its Medicaid program even though all lower courts ruled against HHS’s approval of states’ Section 1115 work requirement waivers, based on the Trump administration’s refusal to consider the impact of the waivers on the core purpose of Medicaid—which is to increase health insurance coverage.
Unlike the narrow question considered by the lower courts, however, the court granted certiorari on a much broader issue. The question presented concerns the entire Section 1115 process and asks whether the HHS secretary has the power to establish additional purposes for Medicaid, beyond coverage.
Should the court rule that the HHS secretary does indeed possess this unbounded power, the entire Section 1115 landscape could shift, potentially allowing states to implement waivers like Arkansas, so long as they meet such additional purpose.
The case establishes an effective deadline for the Biden administration to take action to mitigate or eliminate the work requirements, in light of the administration’s commitment to expanding, rather than rolling back, Medicaid insurance coverage.
Three Paths for the Biden Administration
Below are potential paths for the incoming Biden administration to best position itself for the case, and to diminish the detrimental impact work requirements have on the Medicaid program and its recipients.
No path is mutually exclusive, and the Biden administration will likely implement a combination of the following policy solutions.
1. Rescind Certain Advice and Approvals
On day one, the Biden administration could begin to curtail future work requirements by rescinding Centers for Medicaid & Mediciad Administrator Seema Verma’s January 2018 state Medicaid director letter. The letter encouraged and assisted states in applying for waivers that would integrate work requirements into their Medicaid programs.
Rescinding that advice would signal a marked shift in CMS policy and demonstrate a clear unwillingness to approve similarly damaging waivers in the future.
Should the Biden administration wish to take a more aggressive approach for dealing with approved waivers, CMS could choose to entirely rescind its eight approvals. A consistent clause in all of CMS’ work requirement demonstration approval letters allows CMS “to amend and withdraw waivers…at any time it determines that continuing the waivers…would no longer be in the public interest or promote the objectives [of Medicaid].”
The incoming administration could develop the analysis to meet this burden, considering every lower court decision has explicitly stated that the work requirements, as currently envisioned, do not promote the objectives of Medicaid but rather, among other things, arbitrarily remove recipients from the program based on technicalities; target a population that is already largely employed; and plainly reduce, not promote, coverage.
While CMS does reserve the right to withdraw the waivers, states also have the right to challenge the determination, which slows down the reversal process.
The administration could also write a new guidance letter demonstrating that work requirements are not in the public interest, as they result in large coverage losses (e.g. due to Arkansas’ waiver, 18,000 individuals lost coverage within a 10-month span before a judge intervened). This would also provide a basis for the administration to reject all seven pending waivers.
2. Release Additional Guidance
In response to the waivers that the lower courts remanded back to CMS, the Medicare and Medicaid agency could release additional guidance, consistent with the federal courts’ decisions, explaining that states must demonstrate to CMS that they have considered the impact of the waiver on coverage. CMS could also articulate that it will only approve a state’s waiver if the state can clearly show the waiver will not adversely impact coverage numbers.
This action would almost certainly bolster appellees’ case in the Supreme Court because it would likely give strong deference to the new administration’s interpretation of the Section 1115 waiver authority and why as a policy matter other purposes must be compatible with the core purpose of coverage.
To counter the negative implications of an adverse ruling permitting new Medicaid purposes, Biden’s CMS could also prepare a policy analysis, prior to the March filing deadline, detailing how the administration would review waivers proposing to advance new Medicaid purposes, should it become permissible.
CMS might impose a higher burden of proof on states for waivers that negatively impact coverage by requiring compelling evidence that the waiver’s benefit significantly outweighs the burden it imposes on coverage. It may also require the state to persuasively explain why improving individuals’ health via work requirements is more important than coverage.
Applying such a policy analysis would separate political rhetoric from true policy innovation and eliminate the current iteration of state work requirement waivers, but perhaps other innovative waivers would be approved that concretely further an alternative Medicaid goal.
It is important to note that despite the new direction of the Biden administration, the work requirements may be here to stay.
If the Supreme Court decision broadens the scope of the secretary’s powers, future conservative administrations could attempt to abuse their Section 1115 powers, tying any waiver to health.
3. Approve Modified Work Requirements
A Biden administration could also appeal to the conservative states by approving modified work requirements as a carrot to incentivize them to expand their Medicaid programs or permit work requirements in the context of providing additional Medicaid coverage or benefits.
Because final briefs are due at the end of March, barring an extension, the Biden administration must implement one or more of these options expeditiously, so that they can incorporate it in their brief. A decision could come as early as June.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Clifford Barnes is a member at Epstein Becker Green in the Health Care and Life Sciences practice in the firm’s Washington, D.C., and New York offices. He serves as co-chair of the firm’s Health Plan Compliance group.
He would like to thank Devon Minnick, a law clerk at the firm, for her contributions to this article.
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