A federal judge has blocked new work requirements for Medicaid patients in Kentucky that were scheduled to go into effect on July 1. The new eligibility rules, contained in a waiver program called Kentucky HEALTH, would have required certain adult Medicaid beneficiaries to engage in at least 80 hours per month of community engagement activities, such as employment, education, job skills training and community service.

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The state estimated that 95,000 low-income individuals could lose coverage under the program—a detail that the Court said CMS overlooked when it approved the state's request. In vacating CMS' approval of Kentucky's waiver, the Court said that CMS "never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid." CMS must now reconsider the waiver. The AMA opposes work requirements as a condition of Medicaid eligibility.

On the same day, CMS also disapproved controversial provisions contained in a Massachusetts Medicaid waiver proposal. Among other things, the waiver would have required Medicaid to adopt a closed formulary with minimum coverage of just one drug per therapeutic class, a provision that the state said was necessary to rein in prescription drug costs.

Under current law, the Medicaid Drug Rebate Program requires drug manufacturers to pay rebates to states and the federal government as a condition of having their products covered by Medicaid. In exchange, states must cover nearly all of the manufacturers' products. CMS disapproved the request, saying that Massachusetts would have to opt out of the Medicaid Drug Rebate Program altogether in order to exclude specific drugs from coverage. The AMA submitted comments (PDF) on Massachusetts' proposal, expressing concern that the plan would hurt low-income patients.

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