Medicaid Maintenance of Effort and Program Cuts – How Is It Supposed to Work?

This is interesting.  In 1996, the federal government passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which, among other things, eliminated Medicaid eligibility for a large swath of noncitizens.  PRWORA did, however, allow states to use state dollars to pay for these noncitizens’ health care if they so desired.  Maine did desire; Colorado didn’t.  Fast forward to 2012, when Maine passed a massive Medicaid overhaul, cutting eligibility for thousands.  (Maine actually sued in the First U.S. Circuit Court of Appeals to expedite the Centers for Medicare and Medicaid Services’ review of the cuts, but that lawsuit was summarily dismissed).  In January 2013, CMS approved some of these cuts, which included slashing noncitizen eligibility, and advocacy groups filed a class action challenging the measure on equal protection grounds.  In March 2013, the federal court denied the plaintiffs’ motion for a preliminary injunction, and they appealed to the First Circuit.

Since I’m a health lawyer, I’m not really interested in the merits of the equal protection claim.  But reading about the case and the background of the Maine Medicaid cuts brought to mind another issue that I’ve been thinking about a lot over the past few years – the so-called Medicaid maintenance of effort (MOE) requirement.  This is a provision included in the Affordable Care Act (ACA) that prohibits states from cutting Medicaid eligibility as it existed when the law was passed in 2010 until 2014 (for adults) or 2019 (for kids).  The purpose of the measure, which was an extension of a similar MOE requirement in the 2009 stimulus law, was twofold.  First, it was intended to ensure that states did not respond to the economic hardship in 2009 and subsequent years by cutting Medicaid eligibility, and second, it was meant to preserve eligibility for the near-poor until the subsidized state exchanges opened in 2014.

But here’s the thing.  There’s a lot of uncertainty surrounding the MOE requirement.  As a threshold matter, it’s unclear whether the provision – which was included in the Medicaid expansion part of the ACA – survived the Supreme Court’s 2013 decision in National Federation of Independent Business v. Sebelius, specifically the part that allowed states to opt out of that expansion.  The general consensus is that it did because NFIB didn’t actually invalidate the expansion – it just allowed states to opt out of it.  That’s never been tested, though (it would have been if the First Circuit had heard Maine’s lawsuit), so we just don’t know.

There’s another area of uncertainty surrounding the ACA’s MOE provision: What type of eligibility cuts does it encompass?  Something like Maine’s proposed plan to slash eligibility for a vast number of previously covered populations is a no-brainer.  Indeed, that seems to be pretty much what the MOE requirement was meant to address.  But what about the sort of judicial and administrative tweaking of in-place eligibility requirements that goes on all the time?  For example, in a case I was involved in, the dispositive issue was whether children with (solely) mental or behavioral disabilities were eligible for a program designed to assist children with medical disabilities severe enough to put them at risk for institutionalization in a nursing facility.  The court of appeals said they weren’t, but let’s pretend the decision came out the other way.  I don’t know for sure, but it’s possible that the state Medicaid agency would have wanted to amend its regulations to clarify that these kids weren’t eligible (unless anyone thinks the Colorado Department of Health Care Policy and Financing is heartless, the children were eligible for another program, albeit one with a waiting list).  Would the ACA MOE requirement have prevented the agency from doing that?  If so, you really have to ask if Congress intended the MOE provision to be used as a one-way ratchet, essentially locking in recipient-favorable state judicial determinations regarding eligibility.  It’s hard to believe that’s true.

I may revisit this issue, but for now let’s conclude by turning back to the Maine noncitizen eligibility case pending in the First Circuit.  I’m curious about one thing.  The plaintiffs’ position is that the noncitizen Medicaid program is part and parcel of the broader state Medicaid program (called MaineCare).  For reasons too complicated to address here (but read the district court’s preliminary injunction and 12(b)(6) decisions for the gory details), if it is, then the plaintiffs probably have a cognizable claim, but if it isn’t, they don’t.  Given that, why didn’t the plaintiffs’ attorneys raise the MOE requirement as separate grounds to invalidate the cuts?  It would seem to follow from their argument – cutting eligibility for an entire previously covered population appears to be what the ACA was meant to stop.  For that matter, why didn’t the state raise the fact that Maine didn’t see the need to submit the noncitizen eligibility cut to CMS for approval in 2012, and CMS didn’t see the need to address it when considering the other proposed Medicaid cuts in January?  Isn’t this prima facie evidence that the state and the feds see noncitizen coverage as something that’s separate and distinct from the traditional Medicaid program?  It makes me wonder if I’m missing something.