On Friday, the Centers for Medicare & Medicaid Services (CMS) approved the Kentucky HEALTH Medicaid Section 1115 demonstration waiver, which contains the most alarming barriers to coverage and care in any 1115 waiver approved to date. First, as a result of last week’s announcement from CMS that they will approve work requirements in Medicaid going forward, Kentucky is now the first state to impose work requirements on its Medicaid expansion population. Not only that, but the waiver application contains other harmful provisions that have never been approved in any waiver application. The approval of this “kitchen sink” of bad waivers signals a startling new federal approach to section 1115 applications.

Kentucky HEALTH is first out of the gate to impose work requirements

Kentucky’s 1115 waiver application was submitted in August 2016 and sought to impose work requirements on certain Medicaid enrollees. Up until last week, work requirements had never been allowed in the Medicaid program because they do not promote the objectives of Medicaid. However, CMS published a letter to State Medicaid Directors last Thursday announcing they will approve work requirements in Medicaid going forward, and provided guidance to states on how to structure and implement these requirements. For Kentucky HEALTH, the state intends to impose an 80-hour per month work requirement on the Medicaid expansion population, and will suspend coverage unless or until beneficiaries work for 80 hours in a 30-day period, or participate in a health or financial literacy course.

Kentucky HEALTH will lock individuals out of coverage

The Kentucky waiver application also seeks to lock individuals out of coverage for failing to comply with certain requirements, including paying their monthly premiums or updating/renewing their application. Individuals above 100% FPL who miss a premium payment and don’t make it up within a 60-day grace period will be locked out of coverage for six months, a dangerously long period of time for anyone managing a chronic condition or who experiences a medical emergency. Moreover, if an individual wants to re-enroll before the six-month period is up, they’ll need to pay up to three months worth of premiums up front, as well as take a financial or health literacy course. For those who are locked out for failing to update their application with a change in circumstance affecting eligibility, or for failing to renew their by the annual renewal date (plus a 90-day grace period), they won’t be allowed to re-enroll unless or until they pay a premium to restart coverage and complete a financial or health literacy course.

The many triggers this waiver introduces that cause beneficiaries to lose coverage, as well as the many hoops it forces individuals to jump through to be able to reenroll, reveal the true underlying goal of this waiver – to make it immensely difficult for individuals to obtain and maintain their Medicaid coverage. In addition to coverage barriers, Kentucky is also imposing a large barrier to care by no longer providing non-emergency medical transportation to the expansion population, as well as no longer providing transportation to methadone treatment for almost all other populations. Locking individuals out of coverage for failing to comply with administrative requirements has never been approved before in Medicaid, and it’s easy to see why. Placing stringent and complex requirements between individuals and their health coverage in no way promotes the goals of the Medicaid program.

The approval of Kentucky’s waiver will have a harmful ripple effect

Unfortunately, we are likely to see many other 1115 waiver approvals containing work requirements in the near future. The new guidance from CMS has spurred activity from a set of states looking to add work requirements to their Medicaid programs, including Arizona, Arkansas, Indiana, Kansas, Maine, Mississippi, New Hampshire, North Carolina, Utah and Wisconsin. Fortunately, some conservative states and Republican lawmakers are acknowledging the heavy administrative burdens work requirements would create for both individuals and states, and have announced they aren’t appropriate for their state’s Medicaid program.

A troubling aspect of this new trend is that three of the applications come from non-expansion states, where income eligibility levels are so low that many beneficiaries meeting the work requirement would fall into the coverage gap, placing them in a horribly unfair catch-22. In addition to all of the many reasons why work requirements are a bad idea in Medicaid, for non-expansion states in particular, work requirements are a one-way ticket to being in the coverage gap and uninsured. For more information, see Community Catalyst’s analysis here.