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Kentucky Begins Work to Revise Expanded Medicaid Program

By Marissa Evans, CQ Roll Call

June 28, 2016 -- Kentucky officials are preparing to formally ask the Centers for Medicare and Medicaid Services (CMS) later this summer for permission to reimagine the state's Medicaid expansion efforts. But policy experts say parts of the request are nonstarters with the Obama administration.

On Wednesday, the Kentucky Cabinet for Health and Family Services will hold a public hearing on Republican Kentucky Gov. Matt Bevin's request to retool how the state offers coverage for 400,000 low-income residents. After six months of working on the federal waiver application, Bevin revealed it on June 22. An initial hearing was held Monday and the final scheduled hearing will be on July 6.

"We have given the preparation of this proposed waiver the highest priority due to the health challenges confronting the Commonwealth and the unsustainability of the Medicaid program as currently constructed," Bevin said in a news release. "This plan offers common sense strategies to help our citizens gain employment or prepare for employment through community engagement, including volunteer activities and job training programs."

While Bevin has made good on his campaign promise to scrap Kynect, the state's exchange website, he inched back from campaign trail rhetoric last year about getting rid of Medicaid expansion. The waiver proposal has been a long-awaited item for Kentucky advocates and other states watching to see how Bevin would put a more conservative mark on the program.

Under an executive order from former Democratic Kentucky Gov. Steve Beshear, the state expanded eligibility for the program in 2014. The health law allowed states to expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level. By 2020, states will have to cover 10 percent of the cost. Thirty-one states and the District of Columbia have taken up the offer.

The Bevin administration proposes to change the program in several ways. The changes include requiring beneficiaries to work or volunteer and pay nominal premiums. The plan also would allow consumers to use health savings accounts and receive dental and vision care if they practice specific healthy habits. Bevin also proposes improved access to substance abuse and mental health treatment.

If beneficiaries do not make payments on time or properly fill out eligibility redetermination paperwork, they would not be able to receive coverage for six months. Consumers who want to get back into the program would have to take a financial or health literacy class and pay back all of their missed payments. Those proposals, along with the work requirement, are unlikely to win support from the Obama administration.

The state made headlines in recent years over its success in implementing the federal health care law (PL 111-148 , PL 111-152). The state saw its uninsured rate drop 8.4 percentage points between 2013 and 2014, according to a Kaiser Family Foundation report. Enrollment in Medicaid and the Children's Health Insurance Program grew by 87 percent.

Kentucky's success with the health law could make it difficult to make changes to the Medicaid expansion, said Adam Searing, an associate professor of practice for the Georgetown University Center for Children and Families in an interview.

"This isn't a big surprise but really Kentucky has a little bit higher bar to clear because they have such a successful expansion already," Searing said. "That doesn't mean a state cannot come and negotiate changes and see how they can do even better, but it's a high bar."

Even though Kentucky seemed to pull ideas for the waiver from states like Indiana, Iowa and Michigan, the state is trying to create a program that works for its residents, said Trish Riley, executive director for the National Academy of State Health Policy. She said while CMS officials have not favored work requirements, Kentucky's approach in requiring beneficiaries to volunteer shows officials are trying new things.

"We're at an ideological crossroads," Riley said. "Many of these governors still connect [Medicaid] to welfare and talk about able-bodied people and try to do more than improve health as a condition of participation whereas other people say this is an entitlement program."

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