CMS issues guidance for states to seek Medicaid waivers including work requirements

On January 11, 2018, the Centers for Medicare and Medicaid Services (CMS) released a State Medicaid Director Letter that provides detailed guidance for states interested in establishing work or other community engagement requirements for certain adult beneficiaries to enroll in or continue coverage under their state’s Medicaid program under a waiver of Section 1115 of the Social Security Act.

CMS on Friday, January 12, 2018, approved Kentucky’s 1115 waiver including work requirements, making it the first of the 10 states seeking such waivers to win approval. At least one other state has expressed interest in such a waiver since CMS released the letter.

The Obama Administration rejected work requirements as part of state 1115 waiver applications, asserting that such requirements were not permitted under federal law. A number of advocacy organizations have said they will consider court challenges to block waivers including work requirements from taking effect.

Managed care organizations, health systems, and other health care stakeholders could face new considerations as some states move ahead with work and community engagement requirements, including what role health care stakeholders will play in supporting eligibility determinations for work or community engagement requirements and helping to support individuals’ compliance with any requirements.

Key highlights of the Medicaid guidance are outlined below.

Eligible populations

CMS will allow demonstrations for any working-age, non-pregnant adult Medicaid beneficiaries who do not qualify for Medicaid on the basis of a disability. The letter also outlines requirements for states to have a policy for assessing whether an individual has an illness, disability, or is otherwise determined by the state to be “medically frail,” and to provide other reasonable exceptions to the requirement where merited. Specifically, states must exempt individuals with acute medical conditions validated by a medical professional that would inhibit their compliance with the requirements.

In light of the ongoing opioid crisis, the letter also requires states to take steps to ensure that individuals with opioid or other substance use disorders have access to Medicaid coverage and treatment, and that the states make reasonable modifications, such as counting time in medical treatment for substance use disorders towards fulfilling any work or community engagement requirement.

About community engagement activities

CMS lists a range of activities that states may consider under this guidance, including career planning; job training, referral, and job support services; volunteer and tribal employment programs; and activities identified to meet the requirements under Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP). Under federal law, TANF and SNAP include work requirements.

The letter also references individuals engaged as caregivers but does not state any particular policy for that group, instead asking states to consider other activities such as volunteer programs that could satisfy the requirements.

Additionally, CMS offers flexibility for states to suspend work requirements in particular regions with high unemployment as needed.

Waiver requirements and recommendations

The State Medicaid Director letter outlines the criteria CMS will use to evaluate state applications for 1115 waivers including requirements for work or community engagement as a condition of eligibility for Medicaid.

Individuals enrolled in and compliant with a TANF or SNAP work requirement, as well as individuals exempt from a TANF or SNAP work requirement, must automatically be considered compliant with any Medicaid work requirements. The letter also encourages states to harmonize Medicaid work requirement proposals with any existing state work requirement policies under TANF and SNAP, as well as working to integrate these requirements into existing efforts to streamline application processes.

CMS will require states seeking such waivers to propose a strategy to help beneficiaries meet work or community engagement requirements, such as job training, child care assistance, transportation, or other supports, noting that most ancillary supports are not eligible for federal Medicaid matching dollars.

As part of each state’s waiver evaluation requirements, CMS will require states to link community engagement requirements with specific health and well-being outcomes. CMS will expect state evaluation designs to include analysis of how work and community engagement requirements affect beneficiaries’ ability to become employed, the extent to which individuals obtain other health insurance coverage, and how such a transition affects health and well-being.


Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

Ethan Joselow
Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

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