Arizona joined 24 other states in a federal lawsuit challenging parts of the new (Interim Final) Medicaid “community engagement” rule issued by HHS and CMS earlier this month that fleshes out what they believe is required under HR1 with respect to work and community engagement requirements.
The lawsuit was filed in federal court in Massachusetts by Attorney General Kris Mayes and the other plaintiffs. It targets the Interim Final Rule CMS issued to implement H.R. 1’s new Medicaid work and community-engagement requirements.
See the Arizona et.al. v. Oz Complaint
CMS Finally Defines What Counts Toward Their New Work Requirements – AZ Public Health Association
The lawsuit doesn’t challenge the basic H.R. 1 law requiring many adults in the Medicaid expansion population to document 80 hours per month of work, school, job training, volunteer activity, or similar qualifying activities.
Rather, the suit challenges the way CMS went about the rulemaking and argues that the contents of the new CMS rule went beyond what Congress wrote in H.R. 1. In other words, that CMS exceeded their statutory authority.
The biggest complaint is about how CMS defined the exemption for people who are “medically frail” or have special medical needs. H.R. 1 (the statute) specifically excludes people with serious or complex health conditions, substance-use disorders, disabling mental-health conditions, and certain disabilities from the work requirement.
But CMS’ rule says a person’s condition also has to “significantly impair” their ability to meet the work requirement before they can qualify for the exemption. The suit argues that CMS added that extra test even though Congress didn’t put it in the law.
For example – under the new CMS rule, a person getting chemo could be forced to prove not only that they’re sick (e.g. medically frail because of the chemo), but that it significantly impairs their ability to meet the requirement. That’s just an example – but you get the idea.
The suit also says the new CMS Rule inappropriately limits states’ ability to use existing data and self-attestation to determine who is exempt. It argues that the rule creates confusing and contradictory verification standards, restricts hardship and emergency protection, and gives states little time to rebuild their eligibility systems.
The real risk isn’t that hundreds of thousands of AHCCCS members are refusing to work or participate in their communities. The real risk is that people who are working, qualify for an exemption, or are medically frail will lose coverage because the notices are confusing, the paperwork is too hard, or the Health-e-Arizona Plus portal doesn’t work.
Finally, the suit says CMS violated the Administrative Procedure Act because it conflicts with H.R. 1 and the new rule is arbitrary and capricious in some areas.
It also argues that CMS violated the Constitution’s Spending Clause by imposing unclear, last-minute conditions on states that rely on federal Medicaid funding.
Arizona still needs to operate under the assumption that the CMS rules will remain in place, so they’re prepared for that eventuality. But there’s also a chance a judge might stay portions or all of the CMS rule in the coming weeks.
Stay tuned.
