Class Action Lawsuit Targets Medicaid Changes in Kentucky

 

WASHINGTON (CN) – Medicaid beneficiaries at risk of losing their health insurance in Kentucky filed a federal class action Wednesday challenging experimental programs that require low-income people to work.

Attorneys with the National Health Law Program, the Kentucky Equal Justice Center and the Southern Poverty Law Center filed the complaint on behalf of 16 Kentuckians in response to sweeping changes in how Kentucky will administer Medicaid under a waiver program.

The Centers for Medicare and Medicaid Services on Jan. 11 rolled out new guidelines allowing states to sever Medicaid benefits for the unemployed, those not in school, and those not participating in varying forms of “community engagement,” such as job training, care-giving and volunteer work.

“We think it’s an abuse of discretion, and certainly doesn’t comply with the statutory and constitutional limitations on what the executive branch can do,” Anne Marie Regan, a senior attorney for the Kentucky Equal Justice Center, said in a phone interview.

President Obama’s federal health care law prohibits work requirements for Medicaid eligibility, but the new CMS policy allows states to circumvent the restriction by applying for a waiver under Section 115 of the Social Security Act.

Kentucky was the first state to receive such a waiver to implement the “Kentucky HEALTH” project, which CMS approved the day after rolling out its new policy.

According to the complaint, Kentucky Governor Matt Bevin was explicit about the project’s goal: “It aimed ‘to comprehensively transform Medicaid.’”

This transformation includes a work requirement and imposition of higher premiums and other coverage restrictions, according to the 79-page complaint.

The lawsuit claims roughly 95,000 Kentuckians will lose health coverage over five years, saving the state $2.4 billion.

“This change will harm Kentuckians across the state — housekeepers and custodians, ministers and morticians, car repairmen, retired workers, students, church administrators, bank tellers, caregivers, and musicians — who need a range of health services, including check-ups, diabetes treatment, mental health services, blood pressure monitoring and treatment, and vision and dental care,” the complaint states.

The 16 plaintiffs, led by Ronnie Maurice Stewart, accuse CMS of exceeding its authority in issuing the policy because only Congress has the power to change Medicaid law.

Regan said the CMS violated the notice and comment requirements of the Administrative Procedure Act. She also sees the change as an attempt to administratively kill the Medicaid expansion program in Kentucky.

“They can’t legislate changes in the Medicaid law, and that’s what they’re trying to do,” Regan said. “They’re trying to eliminate the expansion administratively since they couldn’t do it in Congress.”

The Social Security Act allows experimental programs, but only in narrow circumstances and only if the programs promote Medicaid objectives. Regan said work requirements “absolutely do not” fit that objective.

Named as defendants are the Department of Health and Human Services and its acting secretary Eric Hargin, the Centers for Medicare and Medicaid Services, CMS administrator Seema Verma, CMS deputy administrator Demetrios Kouzoukas, and Brian Neale, the director of the Center for Medicaid and Chip Services.

Citing agency policy, CMS declined to comment on the lawsuit, and Health and Human Services did not respond to an email seeking comment.

During a press call with reporters on Jan. 11, CMS administrator Verma said a growing body of evidence supports the new policy, which suggests that productive work and community engagement may improve health. One study cited by the agency tied unemployment to higher mortality rates and a decline in overall general and mental health.

But Regan said Kentucky has seen vast improvements in health outcomes since the state decided to expand Medicaid, which insured about 450,000 people.

“A lot of them never had health insurance before. We’ve seen a lot of progress with folks getting preventive care, less emergency room care, all those kinds of things, good indicators,” Regan said. “But this waiver, it’s very clearly an attempt to dismantle the Medicaid expansion. That’s how we see it.”

According to the lawsuit, the new Kentucky program will punish the 16 plaintiffs in the case, who may be unable to meet its requirements.

Lead plaintiff Stewart, 62, is retired and lives alone in Lexington. His monthly income is $841, though his monthly expenses exceed that by about $200. He makes just over $10,000 per year and has been enrolled in Medicaid since March 2014. He cannot afford health insurance on his own, but needs treatment for diabetes, high blood pressure and arthritis.

Under the new program, Stewart will be subject to work requirements.

“Because of his age and health, he is no longer able to do heavy work that would require standing on his feet all day,” the complaint states. “He is concerned that he will lose his health coverage if he is unable to work because of his health or if he takes a job with varying hours.”

According to the lawsuit, Stewart will be required to file reports within 10 days concerning any changes in his income that would affect his eligibility. He will also be required to pay up to 4 percent of his income for his Medicaid coverage.

This might mean he will not be able to afford other expenses, such as food and rent, the complaint states.

Regan described Kentucky’s new program as “punitive.”

“There’s all these penalties that we think are really designed to entrap people and get them terminated because they just can’t comply with all this bureaucratic paperwork and red tape,” she said.

The plaintiffs seek declaratory and injunctive relief.

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