Trump Administration Signals Possible Limits to Medicaid 1115 Waiver Approvals

22 Jun Trump Administration Signals Possible Limits to Medicaid 1115 Waiver Approvals

From the very start of Donald Trump’s presidency, he has promised to give states the flexibility they need to craft their own Medicaid policies. HHS, working with governors and state legislatures, could make dramatic state-by-state changes to Medicaid using section 1115 waivers allowed under federal law.

Section 1115 waivers give states the opportunity to waive key provisions of federal Medicaid law. The changes made possible by Section 1115 waivers are not as dramatic as those contained in the failed bills. For example, states can not use 1115 waivers to fully restructure Medicaid under block grants or per capita caps, nor can the federal government use them to take away federal reimbursements for Medicaid expansion; however, they are still significant.

Under the Trump administration, CMS has approved 1115 waivers that the previous administration repeatedly rebuffed. Many states, for example, have been permitted to make employment a requirement for Medicaid enrollment. (The state of Kentucky; however, is currently in court proceedings over the new rule.)

Trump’s administration is likewise allowing Kentucky to require beneficiaries to report income changes while Arkansas is disenrolling beneficiaries for the remainder of the calendar year if they don’t comply with the work requirement.

The following is what CMS has previously declined, and what is still under deliberations:

Medicaid 1115 Waivers Already Denied by CMS

Lifetime limits

In May, CMS rejected an 1115 waiver application from Kansas to establish a three-year time limit for people enrolled in the Medicaid program.

Joan Alker, executive director of the Center for Children and Families at Georgetown University, said in a statement that she was “…pleasantly surprised by that.”

Utah, Wisconsin and Arizona have also submitted similar 1115 waiver applications to CMS for lifetime limits, which Alker expects will also get denied.

In a statement by Seema Verma regarding Kentucky’s attempt to sanction lifetime limits on Medicaid enrollees, she said “We seek to create a pathway out of poverty, but we also understand that people’s circumstances change, and we must ensure that our programs are sustainable and available to them when they need and qualify for them.”

Partial expansion

CMS rejected Arkansas’ bid to reduce the number of people who qualify for the state’s Medicaid program. Arkansas as looking to reduce the eligibility requirement from 138 percent of the federal poverty to 100 percent; however, it wasn’t a firm denial, rather, CMS said it could not endorse the waiver application “at this time.”

When states vote to expand Medicaid the federal government pays 90 to 100 percent of the program’s expenses. If Arkansas were permitted to simply cover people up to 100 percent of poverty, the previously enrolled members who lose their Medicaid coverage would be eligible for federal health insurance subsidies. This would shift the liability to pay healthcare expenses from the state to the federal government. This scenario is most likely not attractive to the Trump administration.

Other 1115 Waivers Still Pending

Work requirements for non-expansion states

Aside from the denial of allowing lifetime limits on Medicaid enrollees, another aspect of Kansas’ 1115 waiver application is still pending; namely, a work requirement. But distinct from Arkansas, Indiana and Kentucky, Kansas did not expand Medicaid under the Affordable Care Act (ACA); so requiring individuals to maintain an employment (minimally 80-hours per week) would probably exclude them for the state’s Medicaid program because they would be earning too much money.

Oklahoma, Alabama, South Dakota and Mississippi are other states that did not expand under the ACA exploring work requirements. The Center on Budget and Policy Priorities released a report that illustrates the catch-22 of these proposals.

In the state of Mississippi, for example, a single parent cannot earn more than $370 per month to qualify for Medicaid. However, if they acquired 20-hour per week employment at minimum wage, they would earn $580 a month, which is too much income to qualify for Medicaid.

“They will be complying with the work requirement but still lose coverage. You’re in this situation that can’t be fixed,” says Jessica Schubel, a senior policy analyst for the Center on Budget and Policy Priorities.

CMS’ Verma has stated that she is concerned about this “subsidy cliff” and wants to find a “pragmatic and empathetic” approach to work requirements and other new Medicaid initiatives.

Drug testing for Medicaid enrollment

Finally, last year Wisconsin became the first state to ask for approval to drug test Medicaid applicants allowing for the denial of enrollment if they test positive. Experts say that there is no way to tell where the federal government will decide the issue. However, CMS has indicated that they would support the use of Medicaid funds to cover neonatal abstinence syndrome (a withdrawal ailment that occurs when an infant is born with an opioid addiction from their mother’s usage during pregnancy). Medicaid experts say it is hypocritical for the federal government to cover babies with drug-related problems but not their parents.