Feds to nix work requirements in Montana Medicaid expansion program

Federal health officials will likely reject Montana's request to include work requirements for beneficiaries of its Medicaid expansion program, which insures 100,000 low-income Montana adults, state officials said.

Three years after the Trump administration encouraged states to require proof that adult enrollees are working a certain number of hours or looking for work as a condition of receiving Medicaid expansion benefits, the Centers for Medicare and Medicaid Services has reversed course under Democratic President Joe Biden.

"CMS has communicated to [the Montana Department of Public Health and Human Services] that a five-year extension of the Medicaid expansion waiver will not include work/community engagement requirements," health officials wrote in a Medicaid waiver amendment application out for public review.

It's unclear what that means for the future of the Montana program. In 2019, Montana lawmakers approved extending the 2015 program — the Supreme Court made the Medicaid expansion provision in the Affordable Care Act optional for states — as long as it included work requirements. Those requirements were a key condition for the moderate Republicans who joined Democratic lawmakers to muster enough votes to pass the 2019 bill over the objections of conservative GOP legislators.

The state's position officially remains that it wants "to condition Medicaid coverage on compliance with work/community engagement requirements," according to the amendment application. If state negotiators are proposing an alternative, they have not disclosed it.

If CMS does not approve the waiver with the work or community engagement requirements, the state health department will operate Medicaid expansion according to what is approved and await legislative review of the program, said department spokesperson Jon Ebelt.

The Montana Medicaid expansion program is scheduled to end in 2025 if the legislature doesn't renew it. State lawmakers meet every other year, giving them the 2023 and 2025 sessions to consider changes to the popular program, which enrolls 10% of the state's population.

Meanwhile, Republican-led lawmakers and Republican Gov. Greg Gianforte's administration have proposed other measures designed to trim the Medicaid expansion rolls and defray costs, including raising the premiums some enrollees pay and ending a provision that allows 12 months of continuous eligibility regardless of changes in income. Those proposals are also pending federal approval, and it was in the state's application for the 12-month continuous eligibility waiver that the status of the work requirement negotiations was disclosed.

In June, the number of Montanans enrolled in the expansion program passed 100,000 for the first time in its 5½-year history. The program provides health insurance coverage to adults who earn up to 138% of the federal poverty level, which is $26,500 for a family of four.

THE NEGOTIATIONS between state and federal health officials involve what's called a Section 1115 waiver amendment application to CMS, which is made when a state Medicaid program seeks to deviate from federal requirements. CMS' deadline for acting on the application, originally submitted in 2019, was extended to Dec. 31, 2021, because of the covid-19 pandemic.

The Trump administration approved work requirement waivers in 12 other states, though no states are implementing those requirements, either because of the pandemic or lawsuits, according to research by KFF. (KHN is an editorially independent program of KFF.)

Since Biden took office, CMS has withdrawn the Trump administration's approval of work requirement waivers in Arizona, Arkansas, Indiana, Michigan, New Hampshire and Wisconsin.

Asked to comment about the Montana negotiations, CMS officials said Medicaid is a lifeline for millions of Americans who would be put at risk by work requirements.

"The pandemic and uncertainty surrounding its long-term social, health, and economic effects exacerbate the risks associated with tying Medicaid eligibility to requirements that have been demonstrated to result in significant coverage losses and substantial harm to beneficiaries," an unattributed CMS statement said.

Montana health department officials said in their waiver application that they expect negotiations with CMS to be finalized in the fall and the Medicaid waiver to be extended for five years starting in January. That Jan. 1, 2027, end date of the waiver, presumably without work requirements, would be subject to the state's own 2025 sunset.

The 2019 state law granting a six-year extension to the Medicaid expansion included the condition that work and community engagement be part of it. The law states beneficiaries must work at least 80 hours each month or be engaged in a job search or volunteer work, unless they are exempt for specific reasons, such as pregnancy, disability or mental illness.

STATE REP. Ed Buttrey (R-Great Falls), who sponsored both the 2019 bill and the 2015 bill that created the original Montana Medicaid expansion program, said lawmakers added the 2025 sunset so that they could assess and revise the program, if needed.

"So in a couple sessions we'll have to take another look at the program and the federal rules and find out how things are performing and how we want to move forward." Buttrey said.

He defended work requirements, saying the goal of Medicaid expansion has always been to create a healthy workforce to improve Montana's economy.

State Rep. Mary Caferro (D-Helena) said work requirements can cause unnecessary hurdles for people who qualify for the Medicaid expansion program. She said that 7 in 10 Montanans who gained Medicaid coverage under the expansion are already working and that the rest can't for various reasons, such as they are caregivers, have an illness or are going to school.

"Work requirements don't make sense for our particular population," Caferro said.

The disclosure of the ongoing work requirement negotiations was made in an application that seeks to eliminate 12-month continuous eligibility for Medicaid expansion beneficiaries plus a separate group of Medicaid beneficiaries with severe disabling mental illnesses.

Currently, those people are enrolled in the Medicaid expansion program for a full year regardless of changes in income or assets. The proposed change, included in the state budget passed by lawmakers earlier this year, would kick enrollees out of the program if their income rises — even if only temporarily because of a one-time payment or seasonal work.

The state also proposes increasing premium payments for certain expansion beneficiaries to up to 4% of their household income in the same waiver application that proposes work requirements.

Buttrey said the goal was to offset the costs of Medicaid so that the people benefiting from it bore some of the costs, and hopes CMS will approve the proposal.

The public comment period for the state's waiver applications is open until Aug. 31. A legislative committee is scheduled to meet Tuesday to review the proposals.