Virginia Medicaid officials are driving down two parallel highways to expand the state program to up to 400,000 uninsured Virginians, while keeping an eye on potential storm clouds from a judicial ruling in Kentucky.

A month after Gov. Ralph Northam signed a pair of budgets to expand Medicaid eligibility on Jan. 1, the Department of Medical Assistance Services already has submitted six of 10 proposed amendments to the state’s Medicaid plan for federal review and approval.

“We’re just moving on a rolling basis to submit all changes to the program,” said Dr. Jennifer Lee, director of the state Medicaid office.

At the same time, Lee’s office has begun working with a consultant to carry out budget requirements to submit an application to the Centers for Medicare and Medicaid Services within 180 days for a waiver under Section 1115 of the Social Security Act to enact reforms to Virginia’s program.

Kentucky ruling

The waiver will seek permission for Virginia to impose conditions on program recipients, including rules for work, study, training or other forms of civic engagement — partly modeled on a federally approved work requirement in Kentucky’s Medicaid program that a federal judge struck down on June 29.

The ruling by U.S. District Judge James Boasberg prompted murmurs of vindication from Republicans in Virginia’s Senate who tried unsuccessfully to block passage of a budget compromise that expanded the state’s Medicaid program under the Affordable Care Act after more than five years of political battle.

“We told you so!” Senate Republican Caucus spokesman Jeff Ryer said in a text message after the judge’s ruling.

Senate Majority Leader Tommy Norment, R-James City, who led opposition to expansion, said Boasberg’s ruling punctures claims by Republican leaders in the House of Delegates that the budget plan will include meaningful reforms to the entitlement program.

“What my good friends in the House refer to as Medicaid reforms is actually a mirage,” Norment said in a Thursday interview.

House Speaker Kirk Cox, R-Colonial Heights, has not backed off support of the plan as the best option for conservatives in the face of what he considers a politically inevitable decision to expand the Medicaid program with $2 billion in federal funds in the new two-year budget.

“Conservative reforms to the current Medicaid population as well as the expansion population were approved by majorities in both the House and Senate and agreed to by Governor Northam,” spokesman Parker Slaybaugh said Friday.

“We fully expect these reforms, including work requirements, to be included when the plan is fully implemented,” Slaybaugh said in a written statement.

Virginia officials expect the work requirement would apply to 22 percent of newly eligible Medicaid recipients — adults earning up to 138 percent of the federal poverty level, or $16,643 a year. That would be about 66,000 of the 307,000 people initially expected to enroll under expanded eligibility. The requirement also would apply to about 6,200 current Medicaid recipients.

Boasberg’s decision blocked the implementation of the new requirements on July 1 and prompted Kentucky Gov. Matt Bevin, a conservative Republican, to abruptly suspend implementation of dental and vision benefits for 460,000 Medicaid recipients early last week.

Bevin had engineered the package of federal reforms, including the work requirement, to overhaul a Medicaid program that Kentucky had expanded under his Democratic predecessor, Gov. Steve Beshear.

In addition to Kentucky, the Trump administration has approved work requirements in Arkansas and Indiana, which expanded its Medicaid program under then-Gov. Mike Pence, a Republican, now vice president.

But legal analysts say the judge’s ruling addressed a narrow issue — whether U.S. Secretary of Health and Human Services Alex Azar had acted arbitrarily and capriciously in approving the Kentucky waiver without fully assessing its effect on health benefits for Medicaid recipients.

“In its decision, the court concluded that the secretary failed to consider whether the proposed program would satisfy one of the objectives of the Medicaid program, that of furnishing medical assistance and rehabilitative and other services to eligible individuals,” states an analysis of the ruling by the Virginia Division of Legislative Services.

“The decision does not address the legality of elements of the waiver application, including the community engagement or work requirement,” the analysis concludes.

Virginia impact?

Boasberg’s ruling is subject to appeal in the 6th U.S. Circuit Court of Appeals, which does not cover Virginia.

“It’s one court opinion in a circuit that doesn’t affect Virginia,” said Jill Hanken, senior attorney at the Virginia Poverty Law Center and a leading advocate for Medicaid expansion here. “There’s quite a long way for that ruling to go.”

However, the ruling could affect the federal review of Virginia’s proposed 1115 waiver after it is submitted late this year, the legislative analysis suggests.

“When evaluating the commonwealth’s application, the secretary will have to consider whether the proposed program serves the objective of furnishing medical assistance to eligible individuals,” the analysis states.

“If the secretary concludes that the commonwealth’s proposed program does not meet this criteria, the application may be denied,” it states. “If the secretary concludes that the proposed program does meet this criteria, the program may be approved.”

For the Northam administration, the ruling makes little difference to Virginia’s accelerated push to expand the program. The governor never supported a work requirement on Medicaid recipients, spokesman Brian Coy said. “It was a concession in the negotiations.”

“We’re going to follow what’s in the budget,” Coy said. “We are analyzing the ruling and attempting to understand its impact.”

Fast track

Similarly, Lee said the state Medicaid office is “focused on the work necessary to ensure that new health coverage for Virginia adults is available beginning on January 1, 2019.”

“Developing a waiver is a separate and ongoing process,” she said.

Her office has not identified the consultant hired to help prepare the waiver application, pending the completion of procurement. The “caboose budget” for the fiscal year that ended June 30 included $3.5 million in state and federal funds to prepare the application.

“We need help because it is such a fast track,” Lee said.

Norment and his Senate allies tried to derail the two-track approach with a proposed floor amendment during the decisive debate on May 30 over adoption of a budget compromise fashioned by Senate Finance Co-Chairman Emmett Hanger, R-Augusta, and House Appropriations Chairman Chris Jones, R-Suffolk.

The proposed amendment would have delayed expansion of the program until Virginia received final approval of the waiver application, which would have jeopardized an estimated $371 million in state savings from accepting federal money to pay for no less than 90 percent of the cost of extending coverage.

It almost passed, but Hanger joined the Senate’s 19 Democrats in voting against it, and Lt. Gov. Justin Fairfax, a Democrat, broke the 20-20 tie to kill the amendment.

“That was absolutely a critical vote,” Fairfax said in an interview on Saturday.

It was the decisive moment in the first General Assembly session for the new lieutenant governor, who cast four tie-breaking votes that day to defeat amendments that opponents of expansion proposed.

“We knew procedurally we really needed to be flawless to execute the strategy and the plan,” Fairfax said.

“I feel great about it,” he added. “It was the right decision.”

Norment said he was unaware at the time that a trio of health advocacy organizations had challenged the Kentucky work requirement in federal court.

“I was concerned about getting something in the way of a final waiver before we embarked down that road,” he said.

However, the majority leader said the Kentucky court decision “can be instructive for anybody from running afoul with future decisions” and help Virginia fashion its waiver application in a way to prevail in potential legal challenges.

Norment’s concerns

Norment’s biggest concern is the potential financial effect on Virginia if the Trump administration succeeds in either repealing the Affordable Care Act or cutting the federal share of expansion costs.

He does not believe the budget’s so-called “kill switch” to reverse course if the federal share diminishes is politically palatable, especially in an upcoming election year.

“It just ain’t going to happen,” he said. “It’s a political fact.”

So the majority leader appears resigned to the expansion of Medicaid eligibility on Jan. 1.

“The decision’s been made,” Norment said. “We just have to go forward with it.”

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