Health Center State Policy

U.S. District Court Judge Blocks Kentucky’s Section 1115 Medicaid Waiver

U.S. District Court Judge James E. Boasberg (DC) has issued the much anticipated decision on Stewart v. Azar, effectively blocking the implementation of the Kentucky HEALTH Medicaid waiver. Judge Boasberg found that the Kentucky HEALTH waiver, which would make unprecedented changes to the state’s Medicaid program, is not likely to assist in promoting the objectives of the Medicaid program as laid out in federal statute. Ruling in favor of the 15 Kentucky Medicaid enrollees that had sued the U.S. Department of Health & Human Services (HHS), Judge Boasberg also found that HHS failed to adequately consider the impact the waiver approval would have on Medicaid coverage (i.e., coverage losses).

Soon after taking office, Kentucky Governor Matt Bevin began efforts to “comprehensively transform Medicaid” in his state through the implementation of the Kentucky HEALTH program. In its final form, the Kentucky HEALTH waiver sought federal approval to implement such changes in its Medicaid program as emergency room cost-sharing, premiums, six-month lock-outs, and work requirements. With the new HHS Administration expressing interest in providing states with increased flexibility to shape their Medicaid programs, even sending a letter to State Medicaid Directors announcing it would allow states to implement work requirements, the Kentucky HEALTH waiver was quickly approved. As a result of HHS’ approval, 15 Kentucky Medicaid enrollees sued CMS and HHS as part of a class action lawsuit to block implementation of the waiver program scheduled for July 1, 2018.

While implementation of the Kentucky HEALTH waiver program is blocked for now, the waiver proposal will be sent back to HHS for further review and consideration. HHS is also likely to appeal the district court’s ruling. One sign that there is much more to come is a recent decision by Governor Bevin to cancel dental and vision coverage for almost 500,000 Medicaid expansion beneficiaries as a result of the judge’s ruling.

NACHC will continue to monitor developments related to the case, including what the ruling may mean in other states that have secured or are seeking HHS’ approval to add work as a condition of Medicaid eligibility, along with other changes. Visit NACHC’s Medicaid waivers webpage to learn more about waivers and access tools and resources. If you have questions about the case or Medicaid, you can contact the State Affairs team at State@nachc.org.