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May 3, 2018

Non-expansion states have to consider 'subsidy cliff' when seeking Medicaid work requirements, Verma says

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    CMS Administrator Seema Verma on Tuesday said states that want to implement Medicaid work requirements without expanding Medicaid under the Affordable Care Act (ACA) will need "a plan" to avoid a so-called "subsidy cliff."

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    The income thresholds for Medicaid eligibility vary in non-expansion states, with the median income threshold for a family of three at 44% of the federal poverty level (FPL), according to Kaiser Family Foundation (KFF). However, the income threshold for federal subsidy eligibility in those states does not kick in until 100% FPL, according to KFF, meaning some families could have annual incomes that disqualify them from Medicaid coverage, but are too low for federal subsidies on the ACA's exchanges.

    Verma notes potential for 'subsidy cliff'

    Verma said CMS is concerned that beneficiaries working to comply with work requirements in non-expansion could reach that subsidy cliff. She said, "We need to figure out a pathway, a bridge to self-sufficiency" for Medicaid beneficiaries that would be affected by work requirements in non-expansion states.

    According to Modern Healthcare, Verma indicated that CMS would work with non-expansion states to ensure affected individuals would not be at risk of losing coverage. "I want to be very careful about this," Verma said, adding, "(States) need to come up with a plan to address this issue." She said, "We're dealing with some very complex issues. We're dealing with a vulnerable population, so we want to be careful."

    So far, 32 states and Washington, D.C., have expanded Medicaid under the ACA. CMS so far has approved Medicaid work requirements in Arkansas, Indiana, and Kentucky—all of which already had expanded their Medicaid programs. According to KFF data, as of April 27, an additional seven states had requested CMS' permission to implement work requirements. Those states are:

    • Arizona, which already has expanded Medicaid;
    • Kansas, which has not expanded Medicaid;
    • Maine, which has not yet expanded Medicaid, though voters in the state last year approved a ballot initiative direct the state to do so;
    • Mississippi, which has not expanded Medicaid;
    • New Hampshire, which has expanded Medicaid;
    • Utah, which has not yet expanded Medicaid, though state officials have requested CMS' permission to implement a partial Medicaid expansion; and
    • Wisconsin, which has not expanded Medicaid.

    Verma on Tuesday said CMS already is talking with Mississippi officials about how the state can revise its work requirements proposal to address the potential subsidy cliff.

    CMS reportedly at odds over Medicaid coverage limits

    According to The Hill, Verma made the comments during a press briefing where reporters originally believed she would announce that CMS was rejecting a request by Kansas to implement a three-year limit on Medicaid enrollment.

    Sources said Verma had been planning to make the announcement, but the Trump administration called off the announcement "at the last minute," The Hill reports. According to The Hill, an administration official said CMS canceled the announcement because of internal conflicts over the decision.

    While Verma did not directly address Kansas' request, she did briefly touch on Medicaid enrollment limits in general. "We're trying to think about all of the nuances here," Verma said. She added, "We understand that people's circumstances change over time and that they may actually get into a job and then maybe something happens in a few years."

    Spokespeople for CMS and Kansas Gov. Jeff Colyer (R) did not return requests for comment, The Hill reports (Williams, CQ Health, 5/1 [subscription required]; Diamond, "Pulse," Politico, 5/2; Dickson, Modern Healthcare, 5/1; Sullivan, The Hill, 5/1; Kaiser Family Foundation Medicaid Waiver Tracker, 4/27; Kaiser Family Foundation issue brief, 11/8/17; Garfield/Damico, Kaiser Family Foundation issue brief, 11/1/17).

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