Medicaid Work Requirements Could Threaten Behavioral Health Providers’ Bottom Line

Despite the push by federal courts to block Medicaid work requirements nationwide, states continue to pursue restrictions that would tie health coverage to employment for certain beneficiaries.

In fact, on Thursday, South Carolina became the 11th state to have such requirements approved by the Centers for Medicare and Medicaid Services (CMS) — much to the dismay of behavioral health proponents across the country who worry such rules pose a significant threat to behavioral health providers nationwide.

If implemented, they worry work requirement could force providers who serve low income populations into the red — or even to close their doors altogether.


One such advocate is Chuck Ingoglia, president and CEO of the National Council for Behavioral Health.

“The National Council does not support the imposition of work requirements because they do not help achieve the fundamental purpose of the Medicaid program, which is helping people access affordable healthcare,” Ingoglia told Behavioral Health Business in a statement. “We would like to see work requirements taken off the table as an option for Medicaid.”

CMS Administrator Seema Verma first announce she would allow states to submit requests for work requirement rules about two years ago. Since then, a growing number of states have taken her up on the offer.


“Unfortunately, … really the biggest [Medicaid] trend that I’ve seen over the last couple of years [is] these restrictive waivers,” Hannah Katch, senior policy analyst at the Center on Budget and Policy Priorities, a progressive think tank that analyzes the impact of federal and state government budget policies, said last month at a conference.

Generally, work requirements stipulate that certain beneficiaries must verify that they’re working, training or searching for a job in order to receive Medicaid coverage. However, there are usually exemptions for certain groups, such as people with disabilities.

The problem, Ingoglia says, is that people may not know whether they’re exempt or how to report their exemptions in order to keep their coverage. On top of that, onerous reporting requirements may cause eligible beneficiaries to loose access to care.

He pointed to Arkansas as an example. Arkansas’s work requirement rules went into effect in 2018 but were suspended by a federal judge earlier this year.

Between June 2018 and March 2019 when the rules were in effect, more than 18,000 Arkansans lost coverage, according to the state’s department of human services.

“The majority of them [lost coverage] not because they failed to meet the work requirements, but because they failed to report whether or not they had met the work requirements or qualified for an exemption,” Rebecca Farley David, vice president of policy and advocacy at the National Council, said earlier this week during a conference presentation.

Many of those who lost coverage were beneficiaries with mental illnesses or substance abuse disorders who should have qualified for exemptions, Ingoglia said.

“The way the program was implemented — with very little explanation and with onerous reporting requirements — ended up causing many people with mental illness and addiction [to lose] coverage,” Ingoglia said. “Loss of coverage has a direct impact on the behavioral health organizations that serve this population.”

When Medicaid beneficiaries with mental health or substance abuse problems lose coverage, providers who care for them must choose between no longer providing necessary services or no longer getting paid.

Safety net organizations like the ones the National Council represents often choose the latter, Ingoglia said.

“Long-term, financially unhealthy organizations are not in anyone’s best interest because if not addressed, the organization may reach a point where it has to close,” he said. “Then no one can get care.”

A federal judge blocked work requirements from taking effect in Kentucky and New Hampshire. Meanwhile, other states with the OK from CMS have chosen not to implement the rules.

Alternative Options

Supporters of Medicaid work requirements argue that the rules will promote employment and independence among beneficiaries. However, opponents say most Medicaid beneficiaries who can work are doing so — and that there are better ways to engage enrollees.

One example that the National Association of State Mental Health Program Directors (NASMHPD) has suggested to CMS is the Individual Placement and Support (IPS) model, which has been endorsed by the Substance Abuse and Mental Health Services Administration (SAMHSA).

In fact, NASMHPD Policy and Communications Stuart Gordon told BHB it has suggested the model to Verma at least twice. It would be especially useful for beneficiaries with mental health and substance abuse conditions, helping them engage in the community

“That model looks to employ the enrollee rapidly (within 30 days) in the competitive employment preferred by the enrollee, with competitive wages and without exclusion based on any preconceptions regarding the employee’s capabilities,” he said.

From there, employment is also coupled with various forms of counseling.

“The IPS model also ensures that the employee is adequately educated regarding the impact of employment on eligibility for receipt of social services, a demonstrated weakness in the work/community engagement requirements previously implemented by the Arkansas Medicaid program,” Gordon said.

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