In January of this year, the Trump administration announced it will allow U.S. states to decide whether to impose individual work or job training requirements as a condition for Medicaid eligibility.
Several states have sought to alter eligibility standards for Medicaid by requiring beneficiaries to maintain or seek regular employment, enroll in an educational program, or perform community service to receive benefits. Proponents of the Medicaid work requirement argue it helps enrollees find jobs; others disagree, citing the waivers could lead to reductions in Medicaid populations, with implications for hospitals and health systems serving high proportions of patients covered by Medicaid.
Echoing the Trump administration’s support of the Medicaid work requirement are 11 states that have already submitted waiver applications to the Centers for Medicare & Medicaid Services. Of these states, Kentucky, Indiana, Arkansas, and New Hampshire have received federal approval to advance with work requirements. Arizona, Kansas, Maine, Mississippi, Ohio, Utah, and Wisconsin have also submitted waiver applications. In addition, Virginia, Alabama, Alaska, and Minnesota have indicated an interest in submitting a waiver application.
Despite the growing interest in Medicaid work requirement implementation, significant opposition from opposing parties should be anticipated. Although Kentucky received approval, sixteen Kentucky Medicaid enrollees filed a class action lawsuit against the Trump administration challenging its approval of changes to Kentucky Medicaid. Stewart, et al v. Azar was filed in reaction to the Department of Health and Human Services’ approval of the Kentucky HEALTH Section 1115 waiver. The plaintiffs in the case argued Medicaid changes (i.e. Medicaid work requirements, among others) terminate Medicaid coverage for the state’s low-income individuals and families. On June 29th, the U.S. district judge overseeing the lawsuit, James Boasberg, sided with the plaintiffs by invalidating CMS' approval of Kentucky's Medicaid waiver, blocking the planned July 1st implementation of the program.
Medicaid enrollees are not the only opponents to the Medicaid work requirements. Hospitals, health systems, and state hospital associations are also voicing concerns due to implications to providers’ bottom lines. Medicaid work requirements will require a more burdensome process for hospital administrators to navigate as they attempt to meet obligations to care for patients seeking treatment. Moreover, some contend Medicaid work requirements could disturb the continuity of care and, as a result of foregone coverage, force patients to rely on emergency departments to address primary care needs, a significantly more expensive alternative. Further, the new Medicaid coverage policies increase the probability of patients moving in and out of Medicaid programs as their eligibility changes. The transformative nature of Medicaid coverage means organizations could experience difficulty in anticipating costs. As such, providers should prepare for potential risks and volatility to predicted Medicaid revenue. Healthcare providers may experience greater financial challenges as an increasing number of patients previously eligible for Medicaid coverage become uninsured.
Medicaid work requirements are quickly permeating Medicaid legislation in several states. For this reason, it is vitally important hospitals and health systems are mindful of changes to state-specific Medicaid legislation and vocalize implications to their patient population to governmental officials with decision-making authority. Further, hospitals and health systems should continually evaluate Medicaid development strategies as Medicaid legislative changes may negatively impact a hospital or health system’s bottom line.
Kathryn A. Culver
Manager – Healthcare Consulting
kculver@pyapc.com
(800) 270-9629 | www.pyapc.com
Kathryn performs fair market value analyses for physician practice groups, hospitals, and health systems in the areas of business valuation and fair market value compensation. Her work in the healthcare valuation realm includes a variety of business valuations, physician services, management contracts, and accountable care organizations. Licensed in the states of California and Tennessee, Kathryn is a Certified Public Accountant and has extensive knowledge of financial reporting and analysis. She is Accredited in Business Valuation from the American Institute of Certified Public Accountants and is an Accredited Senior Appraiser of the American Society of Appraisers.
Kathryn has presented for several organizations on topics such as healthcare valuation, practice valuation, and physician compensation planning. She has co-authored articles in various healthcare industry publications, including Becker’s Hospital Review and Connections, a publication of the American Health Lawyers Association.