Dive Brief:

• Federal regulators Tuesday approved a controversial plan to create a two-tiered Medicaid program in the state of Nebraska that will take effect April 1. Opponents argue the complicated system will deprive some enrollees of benefits.
• In exchange for completing certain "engagement activities" — including eventually working 80 hours per month — enrollees in the Medicaid expansion population will be eligible to receive additional benefits such as vision, dental and over-the-counter drug coverage.
• This enhanced benefit package is known as "Prime" coverage. Those who do not complete engagement activities will not have access to those additional benefits and will be covered under the state's "Basic" Medicaid benefit package.

Dive Insight:

CMS Administrator Seema Verma has been a major proponent of pushing work requirements in state Medicaid programs, but that signature policy has been stymied by the courts.

In February, a federal appeals court ruled unanimously against Arkansas' work requirements because it failed to further the objective of the Medicaid program, which is to provide healthcare coverage to low-income people.

But this latest iteration from Nebraska is a more creative way to implement work or job training requirements.

Under this waiver, Nebraska will provide access to vision, dental and OTC coverage to some who are eligible to enroll under Medicaid expansion who "otherwise would not have access to such benefits under the state plan," according to CMS' approval letter.

In November 2018, Nebraska voters approved Medicaid expansion, paving the way to allow adults without children to gain Medicaid coverage so long as their annual incomes did not exceed 138% of the federal poverty level. Since then, more red states including Oklahoma and Missouri have turned to ballot initiatives to usher in the change.

Medicaid expansion coverage finally became eligible to Nebraskans on Oct. 1 after a long delay that attracted litigation.

An advocacy group in Nebraska, the one that filed suit, has been critical of the state seeking to change the Medicaid program in this way for those who are newly eligible.

"This is not what Nebraska voters intended and is not good health policy. Nebraska does not need a complicated waiver system that makes it harder for people to access the care that they need," Nebraska Appleseed's Health Care Access Program Director Molly McCleery said in a statement.

CMS said on April 1 between 41,000 and 51,000 Nebraskans will be enrolled in the demonstration, known as Heritage Health Adult, and will have the opportunity to seek Prime coverage.

CMS believes that this new program will test whether an incentive structure leads to improved health outcomes and well-being, according to the approval letter.

However, a study from Health Affairs shows that work requirements in Arkansas led to a drop in coverage and researchers found no evidence that it increased employment or other community engagement activities.

The approval comes days after Georgia got the OK for its limited Medicaid expansion plan, which also includes work requirements.

Medicaid roles are expected to grow significantly in the wake of COVID-19 and the resulting recession. The Kaiser Family Foundation estimates enrollment will increase by more than 8% in fiscal 2021.