New Medicaid work rules set off clash with states

Driving the news: Six Democratic governors led by Oregon's Tina Kotek last week called on the administration to "stop forcing states into an unworkable rollout" of the requirements by a Jan. 1 deadline.

• They asked for an extension, citing what they called shifting guidance from the federal government.
• Instead, the administration on Monday released a rule that imposed a stricter-than-expected approach to granting exemptions from the work requirements.
• Among other things, people with cancer or HIV may not qualify for a "medically frail" exemption — unless the condition significantly impairs the ability to work.
• Without an exemption, people ages 19 to 64 would have to work or participate in 80 hours of community engagement per month to keep their Medicaid coverage.

Friction point: Advocates for the poor warn such criteria will force people to jump through more administrative hoops, like potentially getting a doctor's note detailing the seriousness of the condition.

• The definition could also force states to go beyond medical claims data to identify those who qualify for the carve-out.
• "This creates a major implementation problem for states," said Kinda Serafi, a partner at Manatt Health who works with state Medicaid programs.
• She said states will now have to "revisit" eligibility and verification systems.
• "Now it's going to be a totally different process where people might have to go to the doctor to get a form that says that the person not only has multiple sclerosis, but that multiple sclerosis impacts their ability to work," she added.

Between the lines: "Upon initial analysis, these rules differ significantly from the guidance that we had been operating under," said Amy Bacher, a spokesperson for the Oregon Health Authority. "This may cause us to rework and reprogram a number of our IT systems, setting our implementation progress back."

• The Congressional Budget Office previously estimated about 5 million people would become uninsured because of the work requirements. Advocates now fear the stricter criteria will push that number higher.
• "There's a lot of vulnerable folks that will at least be confused" and could "fall off coverage as a result," said Anthony Wright, executive director of the health care consumer group Families USA.

The other side: Centers for Medicare and Medicaid Services administrator Mehmet Oz defended the rules at a White House briefing on Tuesday.

• "If you are going to get something of value from the American people, there should be some obligation, if you're able to," he said. "If you can work you should get up and work again."
• A CMS spokesperson defended the stricter interpretation and said the agency had "worked closely with states."
• "This approach ensures that the exclusion is appropriately targeted and does not become a blanket exemption that undermines the purpose of the work requirement," the spokesperson said.

The intrigue: Some policy experts expect Democratic states or other groups to sue and halt implementation.

• "It wouldn't shock me if there were some litigation arising," said Sam Bagenstos, a University of Michigan law professor and former Health and Human Services general counsel in the Biden administration.
• "It was always going to be really hard for [states] to implement these work requirements, to set up the bureaucracy they need to set up ... in the very short amount of time that the statute gave them," he said. "This just makes it even harder."