CMS approves Arizona's tough Medicaid work requirement

Arizona on Friday became the eighth state to receive CMS approval for a waiver to establish a Medicaid work requirement.

The Section 1115 waiver also shrinks retrospective eligibility for some Medicaid applicants from 90 days prior to application to the beginning of the month in which the application is filed. Similar provisions, which are opposed by hospitals, have been included in other state "community engagement" waivers.

Starting as soon as Jan. 1, 2020, an estimated 120,000 low-income non-disabled adults ages 18-49 will be required to report at least 80 hours per month of employment, educational activity, job search or training or volunteer community service to keep their Medicaid coverage through the Arizona Health Care Cost Containment System.

If they fail to report compliance by the 10th day of the following month and don't submit a good-cause reason, they will be suspended from coverage for two months, after which they will be automatically reinstated.

That's a far-quicker penalty than in Arkansas—the first state to implement a work requirement last year—where more than 18,000 people were disenrolled from Medicaid last year due to failure to report or meet the work requirement for three months.

"Employment and community engagement are proven to have a positive effect on overall health and well-being," Arizona Republican Gov. Doug Ducey said in a written statement. Arizona's GOP-controlled legislature had required the state to apply for a work requirement waiver, which was turned down in 2015 by the Obama administration.

The waiver, called AHCCCS Works, includes exemptions for nearly two dozen groups, including members of Native American tribes, people diagnosed with serious mental illness, and people with an acute medical condition.

The state will allow Medicaid expansion enrollees to report their community engagement activities online, in person and by phone. As much as possible, it will try to pull data from other public programs to automatically record compliance activities, said Heidi Capriotti, a spokeswoman for AHCCCS.

Arizona has not projected how many people will be disenrolled due to the work requirement, and has not estimated how much the program will cost to administer, she added. The state's expansion currently covers an estimated 400,000 adults with incomes up to 138% of the federal poverty level.

"The vast majority of those folks are likely to become uninsured for at least some period of time—exposing them to financial peril and worsening health," Joan Alker, a Medicaid researcher at Georgetown University, wrote in a new blog post.

The Arizona Hospital and Healthcare Association, which previously indicated it would prefer no work requirement, was guarded in its reaction to the waiver.

"We appreciate that the final plan includes exemptions for some of the most vulnerable clients and populations where a work requirement might be greatly limited by their healthcare needs," said CEO Greg Vigdor. "AzHHA and its members will monitor the impact of this approved plan on patients across Arizona as it goes into effect, and will continue to work with the Ducey administration and AHCCCS to make sure that our program serves Arizonans well into the future."

The CMS has charged ahead with green lighting state Medicaid work requirement waivers despite a federal court ruling last June blocking the agency's approval of Kentucky's waiver on the grounds that the CMS had not adequately considered the impact on coverage. A similar federal lawsuit challenging Arkansas' waiver is pending.

In December, Michigan and Maine won CMS approval for waivers, though it's uncertain whether the new Democratic governors of those states, who oppose Medicaid work requirements, will implement them. A number of other states either have waiver requests pending or are considering submitting such proposals.

Hospitals and patient advocacy groups warn that work requirements will lead to large coverage losses, causing disruptions in care for people with chronic conditions and driving up uncompensated care costs. They argue that taking coverage and healthcare away from low-income adults will make it harder for them to find and keep employment, and that there's no evidence such requirements result in higher employment rates for this population.

Those arguments haven't swayed CMS Administrator Seema Verma. "The Trump administration remains committed to supporting state innovation to ensure states have the flexibility needed to provide better health outcomes for their citizens," she said in a written statement announcing the Arizona approval.