Health Law Daily Wrap Up, TOP STORY: Georgia sues CMS for reversing course on work requirements in Medicaid waiver program, (Jan 24, 2022)

By Sheila Lynch-Afryl, J.D., M.A.

CMS originally approved the waiver program at the end of the Trump Administration, but it has not yet taken effect.

The state of Georgia filed a lawsuit against CMS and HHS seeking injunctive and declaratory relief after CMS rescinded its approval of work requirements for a Medicaid waiver program. Georgia, a non-expansion state, accused CMS of attempting a “regulatory bait and switch” and violating a “binding contract” when it rescinded its Trump-era approval of the work requirements. In a news release, Governor Brian Kemp claimed that CMS’ decision was driven by politics, not policy, “as they attempt to force their top-down agenda on the American people.”

In October 2020 CMS approved under Soc. Sec. Act §1115 Georgia’s Pathway to Coverage Program, which would provide Medicaid coverage to individuals aged 19 to 64 with incomes up to 95 percent of the federal poverty level who are not otherwise eligible for Medicaid. As a condition of eligibility, the program requires participants to complete a minimum of 80 hours of qualifying activities per month, including employment, education, on-the-job training, and job readiness activities.

Soon after taking office, President Joe Biden issued an Executive Order requiring CMS to examine demonstrations and waivers that reduce Medicaid coverage. On February 12, 2021, citing disruptions caused by the COVID-19 pandemic, CMS notified Georgia that it was “commencing a process of determining whether to withdraw the authorities approved in the Pathways to Coverage demonstration that permit the state to require work and other community engagement activities as a condition of Medicaid eligibility.” In December CMS formally withdrew its approval of the work requirement policy and premium authority. CMS noted that the COVID-19 pandemic and its expected aftermath made the state’s work requirement infeasible, and the state would violate the terms of the temporary increase in federal Medicaid funding under the Families First Coronavirus Response Act (P.L. 116-127).

On January 21, 2022, Georgia filed a complaint alleging that since the remaining part of the demonstration expanding coverage is still in place, the result is “significant Medicaid expansion in Georgia without condition.” Specifically, the state projected that 50,000 people would qualify under Pathways, but without the program’s qualifying activities and premium components, 408,000 individuals qualify. The state predicted that it would have to terminate the program because the cost of “full expansion” the first year would be more than $237 million when only $65 million was appropriated.

The state’s eight-count complaint alleged that CMS acted beyond its statutory and contractual authority when it unilaterally rescinded its approval. The state further alleged that the rescission was arbitrary and capricious for a number of reasons, including that it will result in less Medicaid coverage for Georgians and relies on factors not authorized by the Social Security Act. The complaint requested a declaration that the rescission was unlawful and injunctive relief enjoining CMS from enforcing the rescission.

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