Court Blocks Kentucky’s Changes To Medicaid, Including Work Requirements

Jun 30, 2018

Gov. Matt Bevin
Credit Kentucky.com

A federal judge on Friday struck down Kentucky Gov. Matt Bevin’s plan to put in place “community engagement” requirements for Medicaid coverage that were set to go into effect in some parts of the state on July 1.

That also includes the entirety of the new program, premiums, co-pays, loss of automatic vision and dental benefits and lock-out periods.

“In doing so, [the court] grants Plaintiffs full relief,” U.S. District Judge James Boasberg wrote for the court. “Because the Court invalidates that approval, it need not tackle Plaintiffs’ alternative bases for vacating some or all of the components.”

This means that Kentuckians with Medicaid coverage won’t face any changes to their insurance — for now. The decision also has far-reaching implications for the 11 other states that were considering their own Medicaid work requirements. Jeff Myers is the president of the Medicaid Health Plans of America, a trade group.

“Virginia just passed a proposal to expand Medicaid and inside that expansion were work requirements — and work requirements were integral to getting the government to expand Medicaid to hundreds of thousands of Virginians,” Myers said. “Given this court case, there is reason to believe that that decision may be impacted.”

The court said the defendants’ — Kentucky and the federal government that approved the changes — best argument for the Medicaid waiver was in order to keep the substance abuse treatment expansion that was set to go into effect as part of the changes. That change would have given enrollees expanded access to inpatient recovery treatment. It also would have allowed the state to provide the medication-assisted treatment drug methodone to people withdrawing from opioids, which currently is not covered.

This part goes away with the changes being struck down, but the judge noted the federal government can still expand substance abuse treatment through a separate process.

Dustin Pugel, a policy analyst at the Kentucky Center for Economic Policy, said during oral arguments, the judge asked the state and federal government a question.

“He was saying that part of these waivers is to expand coverage, so in what way did you expand coverage? They said, ‘well, we’re adding this SUD [substance use disorder] treatment component,’ and the judge said, ‘what else?’ and they didn’t really have an answer,” Pugel said. “So what he was saying was that the SUD treatment component wasn’t enough coverage to justify to remove so many more people from coverage.”

SUD treatment plans for Medicaid can be approved as a stand-alone.

“At the same, CMS has repeatedly affirmed its commitment to approving stand-alone SUD programs and has regularly done so for other states,” the court wrote. “The Court therefore has no ‘substantial doubt’ that the Secretary would have approved the SUD project without Kentucky HEALTH.”

Sheila Schuster, executive director for Advocacy Action Network and a mental health advocate, said in a written statement that while the waiver talked about providing treatment for Kentuckians, “the many barriers and requirements made it more unlikely that people with addictions would seek much needed treatment. I am relieved that the court recognized the potential harm in this policy.”

Another wrinkle to the court decision is the millions of dollars that the Medicaid insurance companies that run the program have already invested, according to Jeff Myers, president of the Medicaid Health Plans of America, a trade group.

“The concern about this decision is that plans have spent all of this money building infrastructure necessary to implement these things,” Myers said.

According to Myers, the state had planned to reimburse the health insurance companies next year. But with the changes halted, it’s unclear if that payday will come.

Terry Brooks, the executive director of advocacy group Kentucky Youth Advocates, said in a statement that when parents have coverage, their children are more likely to have it as well.

“Minimizing barriers to coverage and promoting access to services for parents is a undeniably vital component to ensuring children do not lose their coverage, even if children’s eligibility and benefits do not directly change,” Brooks wrote.

Cabinet for Health and Family Services Secretary Adam Meier said in a statement that he disagrees with the ruling, but the department will work with the federal government to “quickly resolve the single issue raised.”

The court said that that the federal government failed to consider the impact of the changes on Medicaid coverage.

“Without prompt implementation of Kentucky HEALTH, we will have no choice but to make significant benefit reductions,” Meier wrote of the new plan.

Both Bevin and Meier have previously said if the Medicaid changes were struck down, they would look at immediate benefit cuts to the Medicaid program, including cutting vision, dental and pharmacy benefits.

State officials have also said they would look at rolling back Medicaid expansion in the state.

Read the judge’s opinion here.