Section 1115 Waivers Update – First Quarter 2019

1115 Waiver Activity: 2019 Q1

Overarching Developments

There were some key developments in the first quarter of 2019 that have potential long-term impacts to the 1115 waivers:

Federal judge blocks community engagement requirements in Kentucky and Arkansas

A federal judge’s Mar. 27, ’19 ruling immediately suspended community engagement requirements for Medicaid recipients in Kentucky and Arkansas – casting doubt on the future of this key element of the Trump Administration’s Medicaid program redesign. This is the second time this judge has rejected the Kentucky program which has not been implemented yet, calling the U.S. Department of Health and Human Services’ (HHS)* decision to authorize it “arbitrary and capricious.”

The judge also made clear the Arkansas program, which has been implemented, “cannot stand.” He ordered that the state stop its program immediately, including its elimination of retroactive Medicaid for the expansion population.

CMS increases monitoring and evaluation requirements for Section 1115 waivers

While the federal government had received scrutiny lately for allowing states to sidestep requirements to track the impact of Medicaid program changes, the Centers for Medicare & Medicaid Services (CMS) indicated that may be changing with a Mar ’14 announcement. The agency issued several new guidance documents that significantly increase the level of monitoring and evaluation required for 1115 waiver demonstrations.

The changes include community engagement, premiums and other waiver provisions that impact eligibility and enrollment – and affect states currently with such waivers, as well as all upcoming waiver applicants. The communication includes compliance dates for these significant new requirements and make clear adherence is compulsory, rather than optional.

State Developments

We are focusing our quarterly snapshot on waiver initiatives stemming from CMS’ encouragement to states to develop proposals to “improve the effectiveness” of the Medicaid program:

• Addition of community engagement (work) requirements
• Modification or elimination of 90-day retroactive coverage
• Implementation of coverage lock-outs which can immediately suspend coverage if community engagement requirements are not met

Quick Overview State-Specific Activity

• Retroactive Eligibility: Arizona, Arkansas, Florida, New Mexico, Oklahoma
• Community Engagement: Arizona, Arkansas, Kentucky, Maine, New Hampshire, Ohio, Oklahoma, Tennessee, Utah
• Lockout: Arizona, Arkansas, Kentucky, Maine, New Mexico

Detailed State-by-State Summary

Arizona – CMS approved Arizona’s request for an amendment to add a community engagement requirement to its section 1115 Medicaid demonstration project, entitled “Arizona Health Care Cost Containment System (AHCCCS).” Following a thorough tribal consultation at the state and federal level, the Arizona demonstration will be the first to include an exemption to this requirement for members of federally recognized American Indian/Alaska Native tribes.

The waiver authority that CMS is approving will permit Arizona to grant eligibility to AHCCCS beneficiaries beginning the month they submit an application, and to waive the three-month retroactive eligibility period. Pregnant women, women who are 60 days or less postpartum, infants under age 1 and children under the age of 19 are exempt from the retroactivity clause. Elimination of retro coverage may begin at any point (as it was stated not before April 1), and the provision calls for a three-month grace period before a two-month suspension of benefits.

Q1 ’19 Status: Approved Jan. 18, ’19 (not yet implemented).

Arkansas & Kentucky – Community engagement requirements halted as of Mar. 27, ’19 federal district court ruling, per story above. In Arkansas, the elimination of retroactive eligibility for the expansion population was also halted.

Florida – Florida reduced retroactive Medicaid eligibility from 90 to 30 days as of Feb. 1 for all Medicaid recipients other than pregnant women and children. CMS is requiring the state’s Agency for Health Care Administration (AHCA) to submit a four-month evaluation of the policy before it can be extended beyond June. In March, a bill that would permanently shorten retroactive eligibility narrowly cleared its first state Senate committee hearing. The bill would cement the current 30-day retroactive eligibility window into law. It must pass two more committees before being taken up by the full state Senate. 

Q1 ’19 Status: Enacted 30-day retroactive coverage change as of Feb. 1, ’19; Approved by CMS through June 30, 2019.

The following three states – Maine, Michigan and New Mexico – saw Democratic governors assume office in January, following Republican governorships. On the heels of recent CMS-approved changes to the states’ Medicaid requirements, all three leaders are pledging policy reversals.

Maine – While CMS approved Maine’s 1115 waiver in December, when Gov. Janet Mills assumed office in January, she refused to enact it. In a Jan. 22 letter to CMS Administrator Seema Verma, she let the agency know she directed her head of Health and Human Services to “not accept the terms you set forth.”

 

The waiver’s community engagement requirement would have required able-bodied adults who receive Medicaid benefits to work, volunteer, search for jobs, or go to school a minimum of 20 hours per week. Also in January, Gov. Mills enacted the long stalled 2017 voter-approved ballot initiative to expand Medicaid. An average of 1,292 new enrollees are signing up weekly, which at this pace will exceed the projected 70,000 enrollee total by January 2020.

Q1 ’19 Status: 1115 waiver implementation has been halted; Medicaid expansion has begun, with nearly 16,800 individuals enrolled thus far in 2019.

Michigan – Michigan’s new governor, Gretchen Whitmer, announced in February that she plans to work with lawmakers to modify the existing Healthy Michigan Plan so it “preserves coverage, promotes work, reduces red tape and minimizes administrative costs.” The state’s Medicaid community engagement requirements were approved in December by CMS and are currently scheduled into effect on Jan. 1, 2020.

Q1 ’19 Status: Approved Dec. 21, ’18 (not yet implemented)

New Hampshire – On the day after the March 27 federal rulings suspended community engagement requirements in 1115 waivers in Kentucky and Arkansas, New Hampshire’s Senate voted to scale back its newly-approved work requirement via a bill that was submitted prior to the federal rulings. The work requirement that was approved by CMS last November mandates that Medicaid recipients log 100 hours a month in work or community engagement.

Senate Bill 290 broadens the definitions of those who could be exempt from the work requirement and also includes several trigger mechanisms that would end the requirement entirely if certain conditions were met – such as 500 or more of the program’s beneficiaries lose their insurance or if providers bear uncompensated care as a result of loss of coverage. Regardless, the future of this revised waiver is up in the air, as a federal lawsuit against any state work requirement was filed before SB 290’s passage.

Q1 ’19 Status: Federal lawsuit was filed in late March ‘19 against the waiver, which was approved by CMS in Nov. ’18.

New Mexico – A month into office, New Mexico’s governor, Michelle Lujan Grisham, also announced changes to planned Medicaid program changes. Gov. Lujan Grisham says her administration will seek federal approval to reverse several new Medicaid policies, including copays and limits on retroactive eligibility. The policies were approved as part of the New Mexico Centennial Care 2.0 demonstration waiver last year.

Limitations on retroactive eligibility have already begun to be phased in, with a maximum 30-day retroactive eligibility period for affected individuals. Phase two would completely eliminate retroactive eligibility by January 2020. “I have no intention of implementing policies that put a financial strain on low-income New Mexicans, as well as administrative hardship on our health care provider network,” said Gov. Lujan Grisham.

Q1 ’19 Status: The state has submitted an amendment to their approved 1115 waiver, with the public comment period ending Apr. 15, ’19. The amendment includes reinstatement of the full retroactive coverage period with a proposed effective date of July 1, ’19.

Ohio – Ohio’s request for Medicaid community engagement requirements was approved by the federal government on Mar. 15, ’19, but the changes are not expected to go into effect until Jan. 1, ’21, according to CMS. As part of CMS’ approval, the state must develop and publish a comprehensive implementation plan within 90 days of federal approval. Within 150 days, the state needs to develop and publish its monitoring protocol.

Q1 ’19 Status: Approved Mar. 15, ’19 (not yet implemented)

Oklahoma – The federal public comment period for the state’s requested community engagement requirement amendment ended on Jan. 18, ’19. Upon approval from CMS, the state will implement the changes to its SoonerCare (Oklahoma Medicaid) program for non-exempt recipients aged 19-50. There will be a three-month grace period before members are required to provide proof of educational, job training or job search activities. Includes request to eliminate retroactive coverage with the exception of Tax Equity and Responsibility Act (TEFRA) and Aged, Blind and Disabled populations.

Q1 ’19 Status: Pending

Tennessee – In January, Tennessee joined the states that requested permission from CMS to add community engagement requirements for certain Medicaid recipients aged 19 to 64 enrolled in the parent/caretaker relative eligibility group. The federal public comment period extended from Jan. 8 through Feb. 7 and is currently under review by CMS.

Q1 ’19 Status: Pending

Utah – CMS just approved Utah’s request for a partial Medicaid expansion plan, along with a community engagement requirement for adult recipients under the age of 65. The partial expansion will initially be paid at 70% FMAP, Utah’s typical rate. But they have also asked for partial expansion with 90% FMAP in 2020, which CMS has never approved.

In both plans, the partial expansion would increase Medicaid eligibility to 100% of the federal poverty level (versus the more expansive 138% allowed for in the Affordable Care Act). This partial expansion is expected to add between 70,000 to 90,000 people to the rolls, while 150,000 residents would be eligible under a full expansion. It’s not clear CMS has the authority to allow coverage expansion only up to 100% of the poverty level and it’s anticipated this will be challenged legally.

Q1 ’19 Status: Approved Mar. 29, ’19, not yet implemented