Federal judge strikes down Matt Bevin's effort to overhaul Medicaid

Deborah Yetter | Courier Journal

Show Caption Hide Caption What is Kentucky's Medicaid work requirement? Kentucky's new Medicaid work requirement begins to roll out on July 1. So, what does it do?

In a blow to Gov. Matt Bevin's effort to reshape Kentucky's Medicaid program, a federal judge has struck down his plan to require some people to meet strict new requirements including working or volunteering and paying monthly premiums in order to get health coverage through Medicaid.

The ruling halts changes that were to take effect Sunday and would have affected hundreds of thousands of Kentuckians.

In a closely watched decision with national implications, U.S. District Judge James E. Boasberg in Washington, D.C., ruled Friday that approval of Kentucky's plan by the Trump administration conflicts with federal Medicaid law that created the federal-state health plan to provide coverage for low-income, vulnerable citizens.

The judge, in a 60-page opinion, vacated the Trump administration's approval of Bevin's entire plan and sent it back for further review to the federal government, which provides the majority of funds for state Medicaid programs.

Previously: Kentucky may cut Medicaid for 500K if it loses court battle

The Bevin administration said Friday that it immediately will begin work with federal officials at the Centers for Medicare and Medicaid Services (CMS) to review the plan in hopes of addressing any barriers to implementation of the program it calls Kentucky HEALTH.

"While we disagree with the Court’s ruling ... we look forward to working with CMS to quickly resolve the single issue raised by the court so that we can move forward with Kentucky HEALTH," said Adam Meier, secretary of the Cabinet for Health and Family Services.

Meier also repeated a claim he made earlier this month, that if the changes are not approved, Kentucky "will have no choice but to make significant benefit reductions" to Medicaid.

In January, Kentucky became the first state in the nation to win approval from the Trump administration for work requirements for its Medicaid program. Since then, 10 other states, including Indiana, have been approved for or have expressed interest in similar work requirements.

All could be affected by Boasberg's ruling, which comes following a legal challenge on behalf of 15, low-income Kentuckians who said they would be harmed by Bevin's changes to Medicaid.

The National Health Law Program, one of three public interest law groups that challenged Kentucky's plan, hailed the ruling as a victory for Kentuckians who rely on Medicaid for health care.

Opinion: Matt Bevin's Medicaid work requirements: Costly, intrusive and doomed

“Medicaid matters, and today is a victory for Medicaid, Medicaid beneficiaries and the rule of law," said Jane Perkins, the program's legal director. "The purpose of the Medicaid Act is to furnish medical assistance, and this approval could not stand because it was doing just the opposite — restricting coverage."

Also involved in the legal challenge are the Southern Poverty Law Center and the Kentucky Equal Justice Center.

Meier defended Kentucky's plan as an "an innovative, thoughtfully crafted program that will strengthen Medicaid by engaging beneficiaries in their own health outcomes."

Meier added: "We will fight to preserve these opportunities for our citizens so that we can proceed with the only viable path forward for expanded Medicaid in Kentucky."

Bevin's changes would affect "able bodied adults," mostly among the about half-million low-income individuals added to the state's Medicaid program through an expansion in 2014 allowed by the Affordable Care Act. Some, such as those with chronic health conditions or disabilities, would be exempt.

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Bevin previously has said if a court issues a final ruling blocking his changes under a "waiver" from the federal government, he would terminate the expansion, which would eliminate health coverage for nearly 500,000 Kentuckians.

Overhauling Medicaid was a huge undertaking for the Bevin administration, representing more than two years of work. It was a key initiative announced by Bevin after he took office in 2015, one he claimed would restore dignity to Kentuckians and help get them off public assistance.

Work requirements, known as "community engagement" rules, are at the heart of Bevin's sweeping plan to reorganize Medicaid into a program he says will put more people to work and make them more responsible for their health care.

But Boasberg said the approval of Bevin's plan by the secretary of the U.S. Department of Health and Human Services ignores the fact that up to 100,000 Kentuckians would lose coverage over the five-year life of the plan, calling that a "glaring oversight." And the Trump administration provided no proof that the plan would get people more engaged in their communities and more likely to get jobs with health insurance, the opinion said.

"It cited no research or evidence that this would happen, nor did it make concrete estimates of how many beneficiaries might make that transition," the opinion said. "And, of course, it is not obvious that the community-engagement requirement alone would help a person shift to private insurance."

Read this: Bevin teams up with nonprofit to help people keep their Medicaid

But most importantly, Boasberg's opinion said, federal authorities, in approving the plan, disregarded the basic purpose of Medicaid, to improve access to health care for the most vulnerable citizens.

Medicaid, an $11 billion health plan in Kentucky, covers about 1.4 million people, more than 600,000 of them children. The federal government provides about 80 percent of the funds for Kentucky's Medicaid program.

Opponents filed a legal challenge to Bevin's plan in January, arguing that federal law established Medicaid as a health plan, not a jobs program. They also argued the work rules are unnecessary because many people affected by the changes already work, mostly at low-paying or part-time jobs that don't provide health coverage.

Bevin's plan requires some people to work or volunteer at least 20 hours a week or attend school or job training to keep Medicaid coverage. It also requires monthly premiums of $1 to $15 a month. People who don't meet the requirements could lose coverage and face a "lock out" period of up to six months before they could reapply for Medicaid.

Bevin, a Republican, has been highly critical of the Medicaid expansion authorized by his predecessor, Democrat Steve Beshear as too broad and too costly.

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The Kaiser Family Foundation, a non-partisan health policy organization, on June 27 released a study that predicted that most people who would lose coverage under work rules proposed by Kentucky and other states likely will be people who already are working or are exempt from the requirements but fail to keep up with the new rules.

"Specifically, under all scenarios, most dis-enrollment would be among individuals who would remain eligible but lose coverage due to new administrative burdens or red tape versus those who would lose eligibility due to not meeting new work requirements," the study said.

The study found that 6 in 10 of adults affected by the work requirements already are working.

Bevin has insisted the changed are necessary to get more people engaged in their communities and to help them experience the "dignity" of work.

"Ultimately, we want to take people from full dependency to a point where they can sustain themselves," he said in 2015, shortly after he took over as governor.

Should Bevin's proposed changes be rejected in court, Kentucky may cut benefits to those added through that expansion or eliminate the expansion altogether, Meier, the Bevin's human services secretary, told a legislative committee earlier this month. At the minimum, Meier said the state is considering eliminating dental, vision and pharmacy benefits for about 480,000 people added under the expansion.

Bevin's plan already would eliminate dental and vision benefits from basic coverage but people affected by the new rules could earn points toward such coverage through a "My Rewards" plan for activities such as on-line classes or volunteer work.

Deborah Yetter: 502-582-4228; dyetter@courierjournal.com; Twitter: @d_yetter. Support strong local journalism by subscribing today: www.courier-journal.com/deborahy.