CMS Moves to Rescind Medicaid Work Requirements As Anticipated

February 16, 2021 - The Biden administration has reversed CMS policy on Medicaid work requirements, according to letters the agency sent to multiple Medicaid programs.

In a letter to Wisconsin’s Medicaid director Jim Jones, acting CMS Administrator Elizabeth Richter stated that the coronavirus pandemic has made community engagement requirements unachievable due to massive shifts in employment levels.

Wisconsin saw a spike in the unemployment rate in early 2020 to levels that it had not even approached in the previous decade, according to Wisconsin’s data on the Bureau of Labor Statistics’ website.

The state’s unemployment rate jumped from 3.1 percent in February 2020 to 13.6 percent unemployment in March 2020 when the pandemic hit. By November 2020, it had returned to 5.3 percent—which, while lower, was still a level the state had not seen since July 2014.

Wisconsin was not the only state to experience this fluctuation. Other states that sought to employ work requirements likewise faced high unemployment rates.

Arizona, which has stalled its work requirements program, has seen volatile swings in unemployment between the pandemic’s onset and the end of 2020. Indiana’s unemployment rate jumped from 3.0 percent in March of 2020 to 17.5 percent the next month. Nebraska’s levels rose from 2.9 percent in February 2020 to 8.7 percent in April 2020.

Months later, these states’ unemployment levels have yet to fully stabilize. In light of this, many states paused their Medicaid work requirements.

However, unemployment was not the acting CMS administrator’s sole concern.

“Although that statutory bar will expire after the COVID-19 public health emergency ends, CMS has serious concerns about testing policies that create a risk of a substantial loss of health care coverage in the near term,” the agency added in its letter to Wisconsin.

Most notably, work requirements led to major Medicaid coverage losses in Arkansas in 2018.

Studies have indicated that Medicaid work requirements—if applied nationwide—could result in 13 percent of Medicaid adults who live with HIV losing their Medicaid coverage.

In 2019, Michigan residents sued HHS and CMS over the demonstration waiver that allowed work requirements in their state, saying that the implementation process exacerbated their stress-sensitive health issues and did not provide enough time to find new coverage if they were determined ineligible.

CMS also pointed out in its letter to Wisconsin that the aftereffects of coronavirus infections could further inhibit beneficiaries from full-time employment.

“Taking into account the totality of circumstances, CMS has preliminarily determined that allowing work and other community engagement requirements to take effect in Wisconsin would not promote the objectives of the Medicaid program,” Richter wrote.

“Therefore, CMS is providing the state notice that CMS is commencing a process of determining whether to withdraw the authorities approved in the BadgerCare Reform demonstration that permit the state to require work and other community engagement activities as a condition of Medicaid eligibility.”

For Arkansas, where the court system invalidated the state’s Medicaid work requirement, CMS rescinded a letter that the agency sent to the state on January 4, 2021, while under the Trump Administration.

Legal and payer experts anticipated that the Biden administration would take these steps to roll back the work requirement policies established under the Trump administration.

In January 2021, after the new president’s inauguration, President Joe Biden signed an executive order that aimed at bolstering Medicaid and the Affordable Care Act. In addition to setting up a special enrollment period on the federal platform, Biden called on all agencies and departments to halt any regulations that might undermine either market.

The Association for Community Health Plans (ACAP) has called for a complete reversal of the work requirements.

“ACAP has long maintained that Medicaid helps people who work stay on the job – a job shouldn’t be a requirement for Medicaid,” Margaret Murray, chief executive officer of ACAP, stated in a statement. “Work requirements add another layer of red tape and administrative burden to an enrollment process that’s complex enough as is.”