US gives states another 6 months before they have to remove people from Medicaid for not working

President Donald Trump’s administration told states Friday that they can wait until July before removing people from Medicaid for failing to meet a work requirement.

The requirement is scheduled to take effect nationally on Jan. 1, and states have been scrambling to put in place the staffing, training and technology to implement it by then. The administration clarified that while states still have the option to take action at the beginning of the year, they won't have to kick anyone off or deny coverage for failure to meet the requirement until July 1.

Medicaid is the joint state-federal health insurance program for lower-income people. The Centers for Medicare and Medicaid Services told state Medicaid directors on Friday that they'll still need to determine whether many enrollees and applicants for benefits are meeting new requirements that they are working, in school or volunteering.

The move announced Friday gives state social service departments more time to make sure complicated changes are ready to run before there are consequences. CMS said that states are making progress but have implementation challenges.

“I think these extra six months are going to give states the ability to respond to the change, and there will be fewer people that lose their coverage due to administrative failures” resulting from states’ inability to prepare, Kathy Hempstead, senior policy officer for the Robert Wood Johnson Foundation, told The Associated Press.

Still, she said it's not clear which states will opt to use the additional time.

Kate McEvoy, executive director of the National Association of Medicaid Directors, said state Medicaid leaders “appreciate the additional flexibility that CMS is providing."

There's political pressure over the requirement

The decision also could give some breathing room to Congress to consider changes to the requirement. Democrats who are taking control of both chambers in January after their sweeping election victories last week have said they want to roll back the requirements.

The news comes after Democratic Sen. Ron Wyden, of Oregon, and Rep. Frank Pallone Jr., of New Jersey, wrote to CMS Administrator Dr. Mehmet Oz this week, asking to delay implementing the work reporting requirements. Their letter cites, in part, a recent decision out of a Boston federal court that determined medically frail people should not be bound by the work requirement qualification rules.

“The practical reality is that this significant implementation issue may not be definitively resolved for months, creating untenable uncertainty for states that need a final resolution of this issue before going live with work reporting requirements,” the letter states. “The court ruling is an important victory for the millions of medically frail people who rely on Medicaid for their health care coverage."

Under the policy, many Medicaid beneficiaries must work or volunteer at least 80 hours a month or be in school at least half-time. The new policy applies only to people who receive Medicaid under a voluntary expansion that 40 states undertook and which was intended to get health coverage to more lower-income adults who don’t have kids at home. There are exceptions for those who are over 64, caring for kids under 14 or deemed too medically frail to work.

Critics say that most enrollees covered by the mandate are already working and that people are more likely to lose coverage because of the paperwork to prove it rather than failing to work.

The federal government is pushing states to use data from other government departments or elsewhere to verify whether beneficiaries are working as a way to reduce the burden on the beneficiaries to show proof.

Critics worry that the paperwork part will be the biggest issue

A few states have launched the work requirements early.

The first of them was Nebraska, where they started in May.

Preliminary data presented to the state’s Medicaid Advisory Committee showed that more than 9 in 10 people subject to the work requirement and due to have their benefits renewed in July and August qualified.

But 533 people were denied continuing coverage. For most of them, it was over paperwork: They didn’t show that they were working or were exempt from the requirement. Of those denied, 43 lost coverage because they did not meet the new requirement.

Similarly, most of the new Medicaid applicants who were denied coverage due to work requirements from May through August did not get the coverage because they did not provide information to verify whether they were complying.

Among both groups, it’s not clear how many people didn’t provide information because they weren’t working — or how many might meet the requirements but failed to show it.

“There are likely people who are still eligible for coverage who lost it,” said Amy Behnke, the CEO of the Health Care Center Association of Nebraska.