States can learn from each other in implementing work and other community-engagement requirements in Medicaid

Health Care Current | March 12, 2019

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies, and provides updates and insights on policy, regulatory, and legislative changes.

My Take

States can learn from each other in implementing work and other community engagement requirements in Medicaid

By Jim Hardy, specialist executive, State Health Transformation Services, Deloitte Consulting LLP

We have seen myriad designs around work and community engagement requirements across the states. While the details might differ from state to state, core program elements (close alignment to job search and training, and clear communication of requirements) are likely to improve the chances that these programs will help move more people into the workforce.


It has been a little more than a year since the US Centers for Medicare and Medicaid Services (CMS) announced that it would allow states to tie Medicaid eligibility (for certain population groups) to community engagement requirements. So far, eight states have received approval to implement such programs through Medicaid 1115 waivers. Another nine waiver requests are pending (see map, below). Before the end of 2019, at least four states will have introduced community engagement requirements—based on implementation dates included in approved waiver requests.

Some of these community engagement programs apply only to beneficiaries who gained coverage through Medicaid expansion. While each state has a slightly different approach, community engagement activities typically include working, attending school, training for a job, or participating in community service. Such requirements appear to have become table stakes for some states that want to expand Medicaid eligibility, as allowed under the Affordable Care Act (ACA). Proponents say community engagement requirements will help to move more unemployed, able-bodied, non-elderly Medicaid beneficiaries into the workforce and improve their health status. Opponents argue that the new rules could push some low-income people out of the Medicaid program.

Since 2014, 37 states (including Washington, D.C.) have adopted Medicaid expansion for individuals up to 138 percent of the federal poverty level (FPL) as allowed by the ACA. Many states that opted not to expand their programs have been feeling growing pressure from hospitals, health systems, providers, and consumer groups to not leave federal matching dollars on the table. They contend that expanding Medicaid eligibility could improve access to care for low-income residents, reduce uncompensated care costs, and lower uninsured rates.1 However, even with federal dollars covering 90 percent of expenses incurred by the Medicaid expansion population, states are still on the hook for the remaining 10 percent, which could be significant. The map below is based on data compiled by my colleague Shelby Brewer based on a review of state waiver applications.


Requirements come in a variety of flavors

While CMS created the overall framework for community engagement waivers, the agency encourages states to test different program designs. In some states, for example, the requirements apply only to beneficiaries who gained coverage through expanded eligibility, while nine states have proposed work requirements for non-expansion populations—generally parents.2 This so-called state laboratory approach could help other states understand which tactics are the most effective at meeting the goals (e.g., higher workforce participation, better health status) as the waivers evolve.

Two areas of variation include the number of required hours for activity, and which beneficiaries are exempt from the requirement. While most states mandate a minimum 80 hours of qualifying activities per month, New Hampshire’s community engagement program (which went into effect March 1) requires 100 hours.

All approved and proposed waivers exempt certain members of the population from community engagement requirements (e.g., people who are medically frail, physically incapacitated, or pregnant). All other beneficiaries must regularly report their activities or risk losing coverage. Some of the variation in exemptions we have seen in our analysis of waiver applications includes:

  • Definitions of caregivers: It is common for states to exempt caregivers from the requirements for community activities, but states have defined caregivers differently. Ten of the 18 states that submitted waiver requests limit the caregiver exemption to parents of children younger than six years old.
  • Education exemption: Twelve waiver requests grant an exemption to full-time students, while some others exempt beneficiaries who are at least half-time students.
  • Exemptions for other special populations: This can include former foster care youths (five states), victims of catastrophic events (four states), recipients of unemployment benefits (eight states), recipients who are receiving cancer treatment (three states), and people who have been recently incarcerated (two states).

States should help beneficiaries comply with new rules

Regardless of how a community engagement requirement is structured, job search and job training support should be at the heart of any such initiative. States should work closely with their workforce-development programs to make sure they have the capacity to help beneficiaries meet the new requirements. States also should help beneficiaries understand the importance of compliance. Without strong support and communication, the new requirements could cause people to lose their health benefits unnecessarily. States and other stakeholders should consider how the following can be addressed:

  • Communicate requirements: Explaining program changes and new requirements to Medicaid beneficiaries can be challenging, particularly when it comes to enrollees who rarely use their benefits. Moreover, beneficiaries who are enrolled in a Medicaid managed care plan might mistakenly believe they are covered under private insurance rather than Medicaid and might not realize they have to comply with their state’s Medicaid work and related reporting requirements. States should consider a wide variety of communication channels (e.g., mail, phone, e-mail, public forums, internet, videos, social media) to effectively communicate the new requirements and the consequences of non-compliance. Medicaid programs should also consider working with community partners, health systems and physicians, and Medicaid managed care plans to help explain requirements to beneficiaries.
  • Build multiple paths for meeting the requirements: States are coalescing around a core set of activities that will count toward community engagement requirements outside of employment. Activities include employment (including self-employment), job searches, job training, community service, participation in programs that include a work requirement, and education (when education is not already an exemption). Five states include time spent providing care to someone outside of their own household, three states count participation in health-related classes, homeschooling is counted in three states, and five states include the number of hours spent in other work-related programs.
  • Determine how compliance will be reported: Beneficiaries might face challenges in reporting work activities—or exemption status—even after they are aware of the new requirements. States should determine what kind of documentation will be required and how the documentation will be validated. States also should help beneficiaries navigate the reporting requirements. They should consider a variety of communication channels (internet, phone, mail, email, and in-person in local offices) that beneficiaries can use to report their activities. Some states, such as New Hampshire and Kentucky, require individuals to meet the requirement every month. Other states, such as Indiana and Virginia, have “look-backs” to determine how many months an individual was in compliance. Beneficiaries who miss too many months are disenrolled. Beneficiaries are more likely to remain in the program if states make it easy to report compliance.

Each state might have its own ideas for moving beneficiaries toward employment. However, they all face similar challenges when it comes to communicating new community engagement rules to beneficiaries—and connecting them to resources that can help them comply. States are learning and adapting, and state Medicaid directors and other stakeholders are paying close attention to models that are being launched or proposed in other states.

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1 Kaiser Family Foundation, “The Effects of Medicaid Expansion under the ACA” March 2018 (
2 Los Angeles Times, “In rush to revamp Medicaid, Trump officials bend rules that protect patients,” February, 6, 2019 (


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In the News

CMS seeks to reduce annual dialysis costs, encourages at-home care

CMS is assessing a payment design that it hopes will help improve patient care for the early stages of kidney disease, increase access to kidney transplants, and encourage greater use of at-home dialysis instead of clinic-based treatment. The US government pays about $114 billion per year to treat end-stage renal disease (ESRD) and chronic kidney disease. In an interview with Reuters, CMS Administrator Seema Verma said the program could help keep patients out of institutional settings. Home dialysis does not require nursing staff, and it can be conducted at patients’ convenience, which could help them keep working. Proponents of at-home dialysis say patients who receive it more frequently have better health outcomes and avoid the “killer gap,” or two-day wait between clinic sessions that can lead to hospitalization or death. According to a Health Affairs study, inpatient care comprises 40 percent of total Medicare spending for ESRD patients.

Almost 15 percent of the nation’s adult population suffers from chronic kidney disease, according to 2018 information from the US Renal Data System. ESRD patients who do not receive a kidney transplant require dialysis, which can involve spending several hours per week in dialysis facilities. Medicare covers home-dialysis treatment, but adoption has been slow, with only 8 percent of ESRD patients using it in 2016. More than 100,000 people are on the transplant list awaiting a new kidney, according to the US Department of Health and Human Services (HHS). The agency is working to improve access to kidneys for transplant by improving testing for diseases such as hepatitis and HIV. In addition, CMS recently finalized rules to offer financial incentives for new drugs to treat kidney failure, beginning in 2020.

(Source: Reuters, U.S. seeks to cut dialysis costs with more home care versus clinics, March 4, 2019)

Senate HELP Committee considers options to reduce growth in health costs

On March 1, eight prominent health economists sent Lamar Alexander (R-Tenn.), chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP), a list of 13 recommendations for the government to reduce the growth in health care costs. The economists, from the American Enterprise Institute (AEI) and the Brookings Institution, were responding to Alexander’s December invitation for stakeholders to submit proposals for improving care, lowering costs, and increasing patients’ ability to make informed decisions about their care. Recommendations include:

  • Encouraging development of all-payer claims databases (e.g., state-run databases of medical and pharmacy claims collected from private and public payers).
  • Passing legislation to expand mandatory bundled-payment programs and to end surprise out-of-network billing (see the February 12, 2019 Health Care Current). 
  • Reforming Medicare benefit design, Medigap cost-sharing, and payment for physician-administered drugs in Medicare Part B.
  • Revising Medicare Part D’s protected classes of drugs and reinsurance program and offering greater incentives for use of generic drugs.
  • Increasing Medicare payments for primary-care services and reducing them for other services.
  • Urging Congress to limit tax exclusions for employer-sponsored health plans by capping employers’ exclusions at the 75th percentile for premiums or ending its delay of the Affordable Care Act’s (ACA) excise tax on high-cost plans—the so-called “Cadillac tax."

The recommendations also address changing state policies to stimulate competition, such as reforming certificate-of-need laws and repealing any-willing-provider laws.

Eight health policy experts from a large research university also responded to Alexander’s request and submitted a report that highlighted states’ efforts to regulate prices via global budgets and increased price transparency.

Without subsidies, older, higher-income consumers spend more on premiums

Older individuals whose incomes make them ineligible for subsidies for health coverage purchased through a public insurance exchange are more likely than other consumers to spend a high share of their incomes on premiums, according to a recent report from the Kaiser Family Foundation (KFF). Geographic location, age, and income all contribute to this ratio of premium to income, according to the report. The KFF analysis found:

  • Individuals who earn too much to qualify for federal premium subsidies would pay as much as 8 percent of their income on premiums. For example, across the US, a 40-year-old earning $50,000 a year—412 percent FPL—would spend nearly 8 percent ($340/mo.) of his or her annual income for the lowest-cost exchange plan. By contrast, a 40-year-old earning $45,000 (371 percent FPL) qualifies for a subsidy and would spend 6 percent ($227/mo.) of his or her annual income for the same plan.
  • Older, middle-class individuals who do not receive a subsidy may pay as much as 17 percent of their incomes on premiums. For example, a 60-year-old individual earning $50,000 a year would spend nearly 17 percent of his or her income on premiums, whereas a 27-year-old with the same income would spend 7 percent on premiums.
  • People in rural areas face significantly higher premiums for exchange-based plans. In Rhode Island, for example, a 40-year-old earning $50,000 a year (412 percent FPL) would spend about 5 percent of his or her income on premiums for the lowest-cost plan. In Wyoming, the same individual would spend nearly 14 percent on premiums for the lowest-cost plan.

According to the researchers, premiums have increased significantly since 2015, and the number of unsubsidized enrollees has decreased. Most exchange enrollees receive subsidies to pay for premiums. Enrollees with incomes greater than 400 percent FPL do not qualify for subsidies, which leaves them more financially exposed to increases in premiums. Overall, premiums for the 2019 plan year have decreased slightly from last year.

(Source: KFF, How affordable are 2019 ACA premiums for middle-income people? March, 05, 2019)

Few high-deductible health plan enrollees are engaging in cost-saving behaviors

Few consumers who are enrolled in high-deductible health plans (HDHPs) engage in cost-conscious behaviors when seeking care, according to a new study published in Health Affairs. Researchers surveyed more than 1,600 HDHP enrollees and looked at several consumer behaviors, including whether consumers saved for future health care expenses, compared medical services by price or quality, discussed prices with physicians, or tried to negotiate lower prices for health services.

The survey found that the most common consumer behavior among HDHP enrollees (40.5 percent) was saving for future health care expenses. HDHP enrollees with health savings accounts (HSAs) were more likely than other HDHP enrollees to save. Just 25 percent of HDHP enrollees said they talked with a physician about the cost of a service. Furthermore, 14 percent of enrollees said they compared service prices among several facilities, 14 percent said they compared quality ratings among several facilities, and 7 percent said they tried to negotiate prices. According to the study, higher HDHP beneficiary engagement in these behaviors and greater information about medical prices could help these patients access necessary care and reduce out-of-pocket spending.

(Source: Health Affairs, A survey of Americans with high-deductible health plans identifies opportunities to enhance consumer behaviors, March 2019)

Legislative health news roundup

Senate committees discuss Medicare drug prices, cost-control measures

In a March 6 meeting with reporters, Senate Finance Committee Chairman Charles Grassley (R-Iowa) said that capping out-of-pocket costs for Medicare Part D beneficiaries has bipartisan support among senators. Ranking Member Ron Wyden (D-Ore.) plans to reintroduce the Reducing Existing Costs Associated with Pharmaceuticals for Seniors Act, a bill he wrote in 2016 to limit annual Part D cost-sharing to $7,500 a year. The bill had six Democratic co-sponsors, including Senate Minority Leader Charles Schumer (D-NY). The Finance Committee held a hearing on curbing drug prices on February 26 (see the March 5, 2019 Health Care Current).

The same day, the Senate Special Committee on Aging held the first of a two-part hearing series on ways to lower prescription drug prices. According to Ranking Member Bob Casey (D-Penn.), half of all Medicare beneficiaries live on incomes below $26,200 a year, and prescription drugs account for an average $1 of every $5 that Medicare beneficiaries spend on health care costs.

House committees discuss proposed bills, funding to expand consumer access

On March 6, the House Committee on Energy & Commerce Subcommittee on Health held a hearing on efforts to lower health care costs and expand consumer access. Several proposed House bills were discussed, including:

  • H.R. 1425, the “State Health Care Premium Reduction Act,” introduced by Angie Craig (D-Minn.) and Scott Peters (D-Calif.). This proposed legislation would provide $10 billion annually to states to establish reinsurance programs or provide financial assistance to reduce out-of-pocket costs for citizens who are enrolled in a qualified health plan (QHP). The bill also would require CMS to establish reinsurance programs for states that do not apply for federal funding.
  • H.R. 1386, the “Expand Navigators’ Resources for Outreach, Learning, and Longevity (ENROLL) Act,” introduced by Kathy Castor (D-Fla.). The bill would provide $100 million annually for the federally facilitated exchange navigator program, reinstate the requirement that each state must have at least two navigator entities, and set parameters for HHS to award grants to navigator entities.
  • H.R. 1385, the “State Allowance for a Variety of Exchanges (SAVE) Act,” introduced by Andy Kim (D-NJ) and Brian Fitzpatrick (D-Penn.), which would provide states with $200 million in federal funds to establish state-based health insurance exchanges. Federal funding is no longer available for states to launch state-based exchanges.

Breaking Boundaries

Startups look to innovate health care through schools

The traditional physician office visit often falls short of consumer expectations, and many patients struggle to fit doctor appointments into their busy schedules. This can be particularly challenging when unexpected acute-care health needs do not occur on a weekday between 8:30 am and 4:30 pm. Retail clinics, virtual visits, and urgent care clinics have risen to the challenge, and consumers are beginning to take advantage of their convenient hours and locations for themselves and their children.

Hazel Health, a San Francisco-based startup, is working to improve children’s health by operating virtual medical clinics in schools. For the past year, students in some Northern Sacramento schools have taken advantage of the company’s virtual health platform. Through the virtual visit, a clinician can diagnose a student’s condition, prescribe medication, and—if appropriate—get the student back to class and learning. The company says participating schools have seen 30 percent fewer health-related absences. Hazel Health’s telehealth services are available to students with school nurses at no additional cost to families. The company employs its own telemedicine clinicians who provide care to students at district schools. The startup’s founder previously led on-site employee health clinics. While most adults spend their days at work, children are in schools most of the day, and schools can function as front-line care delivery sites for pediatric care, preventive-health education, and chronic-care management.

Schools often lack the resources to have a full onsite clinic, especially in lower-income areas. Parents of low-income students often face additional hardships if taking a sick child to the doctor means missing work. Hazel Health’s virtual clinics can help improve student health and boost attendance, which is often tied to funding. According to the company, around 90 percent of students return to class after seeing a Hazel provider. The startup serves about 10,000 students throughout multiple states.

But making virtual care available in schools comes with challenges. Along with abiding by the Health Insurance Portability and Accountability Act (HIPAA), schools and health care providers must follow laws that protect student privacy related to educational records. Schools often need to get parental consent before using virtual health with students, which can be difficult. Some companies are looking for ways to move school medical records to the cloud. A startup called CareDox, which began as a student health record system, is helping schools track and collect medical records such as immunizations, emergency contacts, and allergy information. The company has expanded its offerings and now provides services such as flu vaccines, wellness programs, and on-campus chronic-disease-management programs. CareDox, for example, is collaborating with local hospitals to help schools incorporate leading practices in asthma management.

As for payment, Hazel Health is working with commercial and government payers to explore risk-sharing models. CareDox is working with Medicaid and exploring relationships with commercial health plans.

(Source: Kevin Truong, A new front line for digital care? Why digital health startups are going back to school, MedCityNews, February 24, 2019)

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