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Federal Judge Will Hear Kentucky's Medicaid Lawsuit On Friday

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On Friday, a U.S. District Judge in Washington will hear arguments in the case against Kentucky's sweeping Medicaid changes.

A group of 16 Kentucky residents filed suit in January, arguing Gov. Matt Bevin's changes to the program are illegal. The approved changes, set to take effect July 1, will make many Medicaid enrollees work, volunteer or do other activities for 80 hours a month in order to keep health coverage. Other changes include limiting access to dental and vision services for some, making other enrollees pay premiums and installing lock-out periods for not making those payments.

The lawsuit, filed in the U.S. District Court for the District of Columbia, says approval by Kentucky and the federal government to implement community engagement requirements “are unauthorized attempts to re-write the Medicaid Act, and the use of the statute’s waiver authority to ‘transform’ Medicaid is an abuse of that authority.”

The Bevin administration declined to comment on this story. Bevin has filed a countersuit in federal court in Frankfort seeking to uphold the changes, also called a waiver.

The changes are aimed at decreasing what the state will have to pay to run the program, which was expanded to cover many more people under the Affordable Care Act. But the changes also introduce a requirements that may make it harder for some enrollees to keep Medicaid coverage.

Anne Marie Regan is an attorney with the Kentucky Equal Justice Center — one of the advocacy groups suing on behalf of Kentuckians — and will argue against the reforms, called Kentucky HEALTH. The state gained authority to make changes to its Medicaid program because it was granted an "1115 waiver," part of the Social Security Act that allows a state to experiment with Medicaid benefits. Regan said Kentucky HEALTH goes against what the waiver is meant to do.

“The waiver is supposed to be for a particular purpose, to further the purposes of the Medicaid Act, which is to provide medical insurance to people who can’t afford that,” Regan said.

Regan said there are multiple new requirements for some beneficiaries that she will argue against. That includes the monthly premiums some enrollees will pay to keep coverage and gain access to earning dental and vision benefits. Some enrollees will also have to make co-pays to use the emergency room.

“The premiums and the cost-sharing, which is what people have to pay for the ER, those don’t even fall within the Medicaid law that the waiver can apply to,” Regan said.

Regan also said the loss of retroactive eligibility – where the state pays for medical claims dating back 90 days before the start of Medicaid coverage – isn’t part of the Medicaid law that Kentucky applied to experiment with.

The nonprofit Kaiser Family Foundation says the court may consider whether the government went beyond its authority when it interpreted that Kentucky HEALTH furthers  Medicaid objectives, and if the work/volunteer policy should have been issued under a formal notice and public comment period.

Following oral arguments on Friday, the judge will make a decision on whether some of Kentucky's Medicaid changes — or all — are legal.

“It’s possible [the judge] might find parts of the waiver legal and others are not. In that case, parts might go into effect while the others are on appeal,” Regan said.

Kentucky is scheduled to implement the community engagement requirement in July in Campbell County in northern Kentucky. In the following months, the state will implement the requirement in other regions of the state.

Premium payments, loss of automatic dental and vision benefits, loss of non-emergency transportation and other requirements will begin in July for all of Kentucky.

Bevin has said he will take away Medicaid expansion coverage from about half a million Kentuckians if a court blocks any of the approved changes.

Lisa Gillespie is WFPL's Health and Innovation Reporter.