Georgia Information Lawsuit Towards CMS for ‘Regulatory Bait and Swap’ Over Its Enlargement Inhabitants |  Foley Hoag LLP – Medicaid and the Legislation

[author: Adam Schilt]

Before Medicaid and the Law delve into the recent Medicaid Waiver litigation, we would like to introduce our readers to Adam Schilt. Adam is a healthcare worker in the Washington, DC office and will be a regular contributor to the blog. In a previous capacity, he wrote legislation that was incorporated into the Medicaid Statute and remains very passionate about this topic and many other areas of health care law.


On January 22, 2022, Georgia and the Georgia Department of Community Health filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS) seeking the overturning of key aspects of Georgia’s 1115 waiver of its Medicaid program — specifically work/community — prevent commitment requirements and monthly bonuses. In case this sounds familiar, we wrote about CMS’ initial announcement of whether it might be scaling back that waiver about a year ago.

As a refresher, a 1115 waiver (named after the section of the Social Security Act (SSA) that allows CMS to issue Medicaid waivers) allows CMS to authorize demonstration programs that further the objectives of Title XIX of the SSA that would otherwise be inadmissible according to the law. To that end, Georgia Waiver 1115 authorizes a 5-year demonstration program that allows the Georgia Medicaid program to provide coverage to otherwise ineligible individuals with incomes up to 100% of the FPL for as long as those individuals are likely to qualify for Medicaid -Enroll in the program after working (and maintaining) 80 qualifying hours in a month and paying the required monthly premium.

Georgia’s 1115 waiver was approved and contracted during the Trump administration, when work requirements were added to a handful of state Medicaid programs across the country. Readers of our blog will recall that the courts did not take these initiatives too well. But there is a crucial difference between these programs and what Georgia wants to do. Under the waivers, which the courts invalidated, the states wanted to extend the work/community engagement requirements to existing Medicaid members. Georgia didn’t propose that: They proposed extending these requirements to only a subset of newly eligible Medicaid enrollments.

In the waning days of the Trump administration and following the election of President Biden, the waiver faced an uncertain future due to both the new administration and adverse court decisions. Presumably to address this risk, CMS and Georgia drafted an amendment that provided additional terms regarding President Biden’s resignation or termination prior to his inauguration. And as expected, on December 23, 2021, CMS Georgia announced that it had waived two key components of the waiver — work/community involvement and premium requirements — which would shortly result in the plaintiffs’ filing of lawsuits.

Interestingly, CMS didn’t completely rescind the waiver. Insurance requirements for otherwise ineligible individuals who register for the waiver remain intact. In a letter to Georgia, the CMS Administrator wrote, “This action maintains Georgia’s authorization to provide health insurance through the Pathways to Coverage demonstration without the work requirement or the premium requirement authorized by the demonstration.” As you will recall, Georgia did not expand its Medicaid program after passage of the Affordable Care Act, so approving this waiver was Georgia’s first step in covering a portion of its expanding population. But Georgia didn’t want to expand its Medicaid program without community engagement and reward benefits. As part of the CMS approach, the agency has been successful in allowing a portion of the expansion population to enroll in the Georgia State Medicaid program with no labor or award requirements. But as the complaint shows, Georgia and the Georgia Department of Community Health weren’t too thrilled with that finding, likening it to a “regulatory decoy and switch of unprecedented proportions that would erode contract terms at the heart of a carefully negotiated state program.”

Plaintiffs contend that such a change would require both CMS and Georgia to agree, and that because of the supplemental agreement, CMS must provide at least 9 months’ notice prior to such revocation or termination of any portion of the waiver. The December 23 repeal did not include such a notice, but that can be a moot point given the legal requirements regarding 1115 exemptions. The regulations issued under Section 1115 of the SSA specifically state: “The Secretary may also withdraw any waiver or expenditure authorization if it is determined that the demonstration project is unlikely to achieve the statutory purposes.” The conflict between the amendment and the aforementioned regulation and the lack of specificity of the underlying law will certainly be discussed in the future in this case.

At Medicaid and the Law, we will be following the development of this litigation as it moves through the US District Court for the Southern District of Georgia and beyond.