Advocates sue to block Arkansas' Medicaid work requirement

(Updated at 7:22 p.m. ET)

Advocacy groups sued Tuesday to block Arkansas' Medicaid work requirement, two months after they won a federal ruling halting Kentucky's similar waiver program.

The new lawsuit in U.S. District Court in Washington, D.C., challenges the CMS' approval in March of Arkansas' five-year demonstration requiring Medicaid expansion beneficiaries ages 19 to 49 to participate in either 80 hours per month of paid work or "community engagement" activities.

The lawsuit, which names three beneficiaries as plaintiffs, claims the HHS secretary didn't adequately consider how the waiver would affect health coverage, the central purpose of the Medicaid statute, before approving the changes. It makes arguments very similar to the successful suit challenging the Kentucky waiver.

The lawsuit also challenges the CMS' approval of the Arkansas waiver's rollback of retrospective Medicaid coverage from 90 days to 30 days.

It said the CMS' approval of the Arkansas waiver is an unauthorized attempt "to re-write the Medicaid Act," and the granting of a waiver to "transform" Medicaid into a work program is an abuse of the waiver authority.

Arkansas' work requirement started in June, the first in Medicaid history. If beneficiaries fail to comply with the work or reporting requirement for three months in a year, they will lose coverage starting in September and won't be able to regain it for the remainder of the calendar year.

That's the harshest lock-out provision among the four states, including Indiana, Kentucky and New Hampshire, that have obtained CMS waivers this year to establish a Medicaid work or community engagement requirement. At least nine other states want to impose similar requirements.

The Trump administration in January invited states to submit waivers launching Medicaid work requirements, which administration officials argue will promote health and well-being. Medicaid experts say, however, that such requirements could cause millions of low-income people to drop off the Medicaid rolls.

"The work requirement gets it all backwards," said Kevin De Liban, an attorney with Legal Aid of Arkansas, which filed the suit along with the National Health Law Program and the Southern Poverty Law Center. "Cutting people's healthcare and making them jump through administrative hoops will make it harder for our clients to work and make a better life, not easier."

"This lawsuit is the continuation of our work, with our state and national partners, to stop the Trump administration's attempt to transform Medicaid from a health insurance program to a work program—and along the way, to end coverage of medically necessary care for thousands of low-income people," said Jane Perkins, director of the National Health Law Program.

In a written statement, Arkansas' Republican Gov. Asa Hutchinson said the lawsuit seeks to undermine "our efforts to bring Arkansans back into the workforce, increase worker training and to offer improved economic prospects for those who desire to be less dependent on the government." The groups bring the suit, he added, "have a consistent history of trying to thwart any effort to transform and bring accountability to our Medicaid program."

About 11,000 Arkansans were part of the first wave of Medicaid beneficiaries required to comply with the community engagement requirement. Approximately 7,400 were not in compliance in June, according to the state. That was about 29% of those subject to the requirement.

Arkansas released new statistics Tuesday showing that 12,722 expansion enrollees failed to report 80 hours of work or community engagement activities in July, which made up 29% of the group subject to the requirement. The total number of people who failed to meet the requirement in both June and July was 5,426; they will lose benefits for the rest of the year if they don't comply in August.

At that rate, the total number of people losing coverage could be as high as 36,000 in 2018, growing to about 50,000 in 2019, according to a recent Health Affairs article. Nearly 280,000 people are enrolled in Arkansas' Medicaid expansion program, called Arkansas Works, which has helped cut the state's uninsured rate nearly in half.

In late June, U.S. District Judge James Boasberg in Washington, D.C., held that the HHS secretary's approval of the waiver failed to take into account the primary objective of the Medicaid statute, which he said is to furnish medical assistance. The judge sent the waiver back to the CMS for further review.

"The secretary must adequately consider the effect of any demonstration project on the state's ability to help provide medical coverage," Boasberg wrote in his decision. "He never did so here."

The CMS currently is holding a public comment period on Kentucky's waiver, which ends Aug. 18. It hopes the new comment period will enable Kentucky to start its delayed work-requirement program soon.

As in the Kentucky waiver challenge, the advocacy groups argue that the HHS secretary did not adequately consider the likely coverage losses associated with the work requirement. In its waiver proposal, Arkansas did not provide an estimate of the potential reduction in the number of people covered.

De Liban and other Arkansas advocates say many Medicaid beneficiaries do not know about the new work and reporting requirements. If they do know, they find it difficult to navigate the state's online reporting portal, which is the only way the state is taking these reports.

He said the portal requires complicated processes including reference numbers and logins, has limited hours, is sometimes down for maintenance, and requires clicking through multiple screens. Beyond that, many low-income beneficiaries, particularly in rural areas, lack internet access.

"We've heard there are problems from start to finish," he said.

Hutchinson said the state is providing substantial assistance to anyone who has limited internet access or who encounters other reporting challenges.

"Our goal is to assist those in compliance so that their healthcare coverage continues," he said. "However, we must have an accountable system that does not leave thousands of able-bodied recipients on the Medicaid rolls."