Indiana skipped legal steps in requesting Medicaid waiver

Indiana has opened up its pending request for a Medicaid work requirement to legal challenges by skipping a crucial step in the submission process.

The state submitted the amendment as part of its renewal application for its Healthy Indiana Plan 2.0 waiver to the CMS on May 25, the CMS said in a notice released Friday. The comment period for the request doesn't end until later this month. The amendment proposes requiring Medicaid beneficiaries to be employed or searching for work in order to be eligible for the program.

In the notice CMS posted Friday, the agency said Indiana had met the necessary statutory requirements to submit the amendment.

But the CMS and Indiana may be violating federal public comment standards for waiver requests, according to St. Louis University health law professor Sidney Watson.

"CMS is not following the guidance that was issued to Medicaid directors and the guidance that is still posted on its own website," Watson said. "CMS is failing to comply with federal law."

The Affordable Care Act requires 1115 waiver requests to undergo a 30-day public notice-and-comment period, and state officials must show how they considered the issues raised by the public before submitting the final application.

The public comment on the work requirement proposal in Indiana does not conclude until June 23. A spokesman for Indiana's Medicaid agency deferred a request for comment to the CMS. A CMS spokesman did not return requests for comment.

Although a 2012 guidance from the CMS made amendments for approved 1115 waivers exempt from the notice-and-comment process, the renewal application for Healthy Indiana has not been approved. Amendments to pending renewal requests aren't subject to the guidance, according to Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities.

"Since renewals are subject to notice and comment and this essentially changes the renewal, I think there is a strong argument that it should be subject to notice and comment," Solomon said.

The CMS' 2012 guidance also suggested that states making substantial amendments should go through the comment process. The agency made sure states followed those standards during the Obama administration.

"This appears to be a reversal of that policy," said Joan Alker, executive director of the Georgetown Center for Children and Families. "That is a troubling departure from past practice and the first time we have seen this. Clearly the state is not looking for meaningful feedback."

The break from the norm appears to be a way to expedite approval of the work requirement without allowing Indiana residents to weigh in on the proposal first, according to Catherine McKee, a senior attorney at the National Health Law program.

"The state seems to be misleading the public about how this process is going to work," McKee said.

Skipping the full notice-and-comment period could open Indiana's amendment up to litigation. A lawsuit could delay the work requirement from going into effect, but it likely won't stop it, as the CMS could have Indiana resubmit the request after it complies with the comment rules, according to Jennifer Evans, a managing partner at the law firm Polsinelli.

Several other states have said they will add similar requirements to their Medicaid programs. Maine announced in April that it would ask the CMS for permission to overhaul its Medicaid program and include a work requirement. Kentucky has already submitted its similar request, and Arizona has announced plans to submit one as well. Florida and Ohio lawmakers are drafting legislation to order their state health departments to seek similar waivers that would include work requirement provisions.

HIP 2.0 was developed by CMS Administrator Seema Verma and federal Medicaid director Brian Neale when they worked in the administration of Indiana Gov. Mike Pence, who is now vice president; Verma was a consultant and Neale a health policy director.

Under the Healthy Indiana 2.0 plan, beneficiaries pay premium contributions, have health savings accounts, get incentives for healthy behaviors and face a benefit lockout if they don't pay premiums.