Overview of Medicaid’s New Work and Community Engagement Option for States

Last week, the Centers for Medicare & Medicaid Services (CMS) issued guidance outlining a new policy that allows states to implement work and community engagement requirements for certain Medicaid enrollees. States would be permitted to seek federal approval to require non-elderly, non-pregnant adults who are not eligible for Medicaid due to a disability to participate in these types of activities as a condition of Medicaid eligibility or to qualify for certain aspects of Medicaid coverage.

CMS indicated that it will support state demonstration projects implementing these types of requirements to test whether they assist individuals in securing stable employment or other “productive” community engagement, and if this in turn leads to improved health outcomes. States may also design projects to include the additional goals of promoting independence and reducing poverty.

The new policy allows states to use Medicaid’s Section 1115 waiver authority to attach work and community engagement requirements to different factors such as:

  • As a condition of eligibility
  • A condition of coverage
  • A condition of receiving additional or enhanced benefits, or
  • A condition of paying lower premiums or cost sharing

Before the guidelines were released, 10 states had submitted proposals to CMS to implement work requirements in their Medicaid program (AZ, AR, IN, KS, KY, ME, NH, NC, UT, and WI) for Affordable Care Act (ACA) expansion populations or other Medicaid-eligible individuals. Kentucky’s waiver was approved Jan. 12, 2018, and it is expected that other waivers will be approved soon and that additional states will submit similar waiver requests. The following summarizes key information outlined in the guidance.

Definition of scope of work and community engagement activities:
The guidance does not identify a specific set of work and community engagement requirements that CMS would approve; instead it suggests states should consider a range of different types of activities in addition to employment, such as volunteering. Additionally, CMS does not specify guidelines, such as the number of hours that individuals would need to complete to be compliant, any penalties for noncompliance, or how often individuals would need to document compliance. Decisions about these program parameters would be made by states and proposals would be evaluated by CMS on a case-by-case basis.

Because many states have existing structures to implement work and community engagement requirements — such as those for Temporary Assistance for Needy Families (TANF) or the Supplemental Nutrition Assistance Program (SNAP) — CMS would support alignment of Medicaid work and community engagement conditions with these, if they are consistent with Medicaid objectives. States might consider alignment strategies when addressing exempted populations, protections and supports for individuals with disabilities and others who may not be able to comply with the requirements, the types of activities and the number of hours of participation that qualify as meeting the requirements, modifications to requirements due to certain economic or regional-specific factors, enrollee reporting requirements, and the availability of work support programs such as transportation or child care. Also, the guidance states that individuals who are complying with or who are exempt from a TANF or SNAP work requirement must be deemed as meeting Medicaid work and community engagement requirements.

States will be allowed to phase in or suspend aspects of their work and community engagement programs when needed due to factors such as local employment market forces or regions that lack adequate transportation.

In their proposals, states will also need to outline their approach to helping enrollees meet the work and community engagement requirements, such as strategies to connect individuals to child care assistance and transportation resources. However, states are not permitted to use Medicaid funds to pay for these types of services.

Other populations exempt from work and community engagement requirements:
While the work and community engagement requirements do not apply to individuals eligible for Medicaid based on a disability, CMS notes that some other Medicaid-eligible individuals could have an illness or disability as defined by other federal statutes that could affect their ability to comply with Medicaid work and community engagement requirements. States must make sure these individuals are not denied Medicaid due to any inability they may have to comply with the requirements and they must provide reasonable modifications for these individuals. Also, individuals whom the state determines as medically frail or who have acute medical conditions that would prohibit them from adhering to the requirements should be exempt from Medicaid work and community engagement requirements.

The guidance also specifically acknowledges the opioid addiction crisis facing many states, and requires states to implement reasonable modifications to the work and community engagement requirements for individuals with opioid addiction and other substance use disorders, as well as access to necessary Medicaid coverage and treatment services.

Evaluation requirements:
CMS will require states with approved work and community engagement demonstration projects to perform outcomes-based, independent program evaluations to determine whether these requirements are connected to improved health and well-being for individuals (and to also evaluate the independence goal if a state decides to incorporate this criteria). In addition to measuring whether the demonstration project is achieving its objectives, evaluations must also examine the effect of the program requirements on Medicaid enrollees and individuals who have a lapse in coverage or eligibility during the demonstration period because of the new requirements.

States will also need to include an assessment of how the requirements influence enrollees’ capacity to attain sustainable employment, and whether enrollees who transition from Medicaid obtain other health insurance coverage, as well as how these types of transitions affect enrollee health and well-being. Absent from the federal evaluation requirements is an analysis of the cost to states to administer the new policy.

Questions and issues for states:
There are a number of policy and operational questions and issues that states seeking to implement these types of requirements in their Medicaid programs should consider:

  • General operational issues:
    • What additional staffing and amount of agency resources would be needed to implement work and community engagement requirements? With no additional federal matching funds, states interested in pursuing these requirements will need to carefully weigh these factors, given the Medicaid administrative match rate is only 50 percent and that there could be considerable staffing needs.
  • Tracking compliance and exceptions for certain individuals:
    • How will states’ integrated eligibility and enrollment systems accommodate tracking enrollees’ participation in work and community engagement activities? Some states may opt to track compliance with these types of requirements monthly, whereas Medicaid eligibility is generally determined annually. Although CMS suggests that aligning Medicaid work and community engagement requirements with those in TANF and SNAP could reduce the administrative burden on states and enrollees, and that states’ integrated systems may be well-positioned to streamline verification processes, significant changes to eligibility determination systems and procedures would still be necessary. Additionally, not all enrollees may be able to provide electronic verification of compliance with the requirements and instead might need to submit paper documentation, which would be a challenge for individuals and an administrative burden for states.
    • How will states manage the process of determining which populations are exempt from the work and community engagement requirements or eligible for reasonable modifications to the requirements? This could be challenging for determining exceptions related to individuals with opioid addiction or other substance use disorders.
  • Beneficiary education:
    • How will states design effective beneficiary education initiatives, both to inform enrollees of specific program requirements and to assist individuals in identifying whether they might qualify for an exemption?
  • Beneficiary supports:
    • How will states finance the requirement to provide supports, including links to resources such as child care and transportation to help enrollees comply with work and community engagement requirements?
  • Measuring impact:
    • Although the CMS guidance indicates that the evaluation measures of health outcomes should use nationally-recognized sources and measure sets, how specifically will states be able to attribute health outcomes to the work and community engagement requirements?
    • How will states measure the administrative costs and other potential challenges of implementing the work and community engagement requirements?

NASHP will be conducting additional analysis to better understand the potential administrative implications and operational issues for states that may be interested in implementing work and community engagement requirements in Medicaid.