The Biden administration's plan to unwind Medicaid work requirements is a win for hospitals and providers.
CMS signaled its intent to nix the program in letters sent to various states last week, pointing to the COVID-19 pandemic as among the reasons to kill the controversial mandates.
"We're happy it's being turned around," Chip Kahn, CEO of the Federation of American Hospitals, said Tuesday. Kahn, who represents for-profit hospitals, said they were very concerned with the policies that threatened to kick people off Medicaid in numerous states, as happened in Arkansas.
After taking "into account the totality of circumstances," that such requirements "would not promote the objectives of the Medicaid program" the agency is initiating a process that may ultimately withdraw approval granted under the Trump administration, CMS wrote to Arkansas in a Friday letter.
Providers and hospitals oppossed work requirements because they put limits on access to care. Though intended to spare certain enrollees like those with disabilities from losing coverage, patients groups and the American Medical Association also objected, citing research the rules would hurt the health of beneficiaries.
A previous study showed that work requirements could weaken the financial profile of hospitals as the loss of Medicaid enrollees would reduce hospital Medicaid revenue and put pressure on operating margins as uncompensated care costs were likely to increase along with the rise in the number of uninsured.
The Trump administration put the rules in place to tie Medicaid eligibility to work or job training, long a conservative policy objective. The program drew criticism as some saw it as a thinly veiled way to trim the Medicaid rolls by allowing states to apply to CMS to alter their programs.
Even though CMS allowed 12 states to roll out such programs, no state is currently implementing work requirements either due to the pandemic or litigation, according to the Kaiser Family Foundation.
Ultimately, a handful of states were stymied by the courts, which noted such programs do not advance the objective of the program: to provide coverage to low-income people. The loss of coverage was a critical issue in the court ruling against Arkansas' work requirement. Nearly a quarter of those subjected to the requirement lost coverage.
The U.S. Supreme Court is set to hear the case on whether these requirements are legal. However, if the Biden administration undoes the policy, it could render the high court's decision moot.
Implementing such a regime has also elicited worries over costs. A government watchdog raised concerns about the pricetag of administrative costs to implement the work requirements, which could cost taxpayers $408 million to enact in five states over a three-year period.