Arkansas 3rd state to gain Medicaid work approval but held up on expansion cut

Arkansas became the third state in the U.S. to gain a waiver of federal rules that will permit it to require Medicaid beneficiaries who meet certain criteria to work in exchange for receiving health benefits.

The state follows Kentucky and Indiana in receiving the so-called Section 1115 waivers from the Centers for Medicare and Medicaid Services, or CMS. The agency first announced the change in policy Jan. 11 to permit states to run demonstration projects to test work requirements for certain "able-bodied" Medicaid beneficiaries.

But CMS was not prepared to allow Arkansas under the waiver to lower its eligibility criteria for Medicaid from 138% of the federal poverty level, or FPL, to 100%, Gov. Asa Hutchinson acknowledged. Such a move would have meant the loss of Medicaid for many of the 330,000 adult Arkansans who gained the coverage through the expansion under the Affordable Care Act.

Hutchinson said he wanted to get the work requirement in place as soon as possible and did not want to wait for the necessary full analysis to be completed on reducing the FPL to 100%.

CMS Administrator Seema Verma told reporters her agency was still working on the matter, although she declined to elaborate on what was causing the hold-up.

"We wanted to make sure that we were moving as quickly as possible on the areas of the waiver to go forward with," Verma said.

She noted that people who are addicted to opioids or had other substance-use disorders or are considered medically frail would be exempt from the work and community engagement requirements. Other people who are exempt include parents taking care of young children, pregnant women, full-time students, anyone caring for an incapacitated person, adults 50 years or older and anyone who is already working at least 80 hours a month.

Verma said Arkansas' work-requirement criteria was "reasonable" and "thoughtful."

The state's work requirement is expected to be phased in first on people who are 30 to 49 years old during the four-month period of June to September.

Individuals subject to the work or community engagement requirement must report 80 hours of a work activity every month or show that they are exempt from reporting work activities, officials said.

A work activity can include a job, job training, job searching, school, health education classes, or volunteering or community engagement, or a combination of any of those for a total of 80 hours.

If the beneficiary fails to meet the work or community engagement requirement for any three months in a calendar year, the person could lose their Medicaid coverage for the remainder of the calendar year.

Not about punishment

Hutchinson said that although Arkansas is the third state to gain the waiver, he anticipated that it may be the first in the nation to actually implement the program because "we are ready with our systems."

The work requirement was not about "punishing anyone," he said, but rather an opportunity for people to work and gain the training they need to help them "move out of poverty and up the economic ladder."

"That is the objective of it," Hutchinson said.

As a state with one of the lowest unemployment rates in the U.S. — at 1% below the national average — Arkansas needs workers, the governor said.

"We need to recruit people and train people to move into the workforce," he said. "This will allow us to do this."

Verma argued that people on Medicaid "don't want to be there."

"They want a better life," she said. "It's easy to just hand people a health insurance card, but it's a much harder task to help them make the changes to move out of the Medicaid program and hopefully to a better life, to a new job that provides health insurance."

At least eight other states are waiting to have work-requirement waivers approved, and CMS has heard from nine other states that are interested in it, Verma said. "This has been such a popular initiative."