A Path Forward for Georgia Pathways Medicaid Waiver

On Aug. 19, U.S. District Judge Lisa Godbey Wood granted Georgia summary judgment against the Centers for Medicare and Medicaid Services (CMS) over its decision to rescind the Georgia Pathways to Coverage approval. 

Georgia Pathways was the result of the Patients First Act, a 2019 law passed by the state legislature that authorized the Kemp administration to pursue a “demonstration project” to provide additional health coverage for an estimated 50,000 Georgians. This was done by utilizing what’s known as a Section 1115 waiver, which provides states the flexibility to innovate and better serve their Medicaid populations. 

If this were a reality courtroom show, this is where the agreed-upon facts between the state and federal government end. And, ultimately, one of the reasons why Judge Wood’s 65-page ruling is not only necessary at this juncture, but enlightening. 

In December 2019, Georgia submitted its initial application to CMS for the Georgia Pathways program. As summarized in the ruling, there were three requirements for potential beneficiaries under this new program: 

First, the applicant must earn less than 100% of the federal poverty line… Second, the applicant must complete and report a minimum of eighty hours of “qualifying activities”— meaning employment, job training, community service, or certain kinds of education—in the previous month, and then maintain that pace each month to maintain eligibility… Third, applicants earning above fifty percent of the federal poverty line must pay a small monthly premium. ($7.00 for participants with incomes of fifty to eighty-four percent of the poverty line, $11.00 for participants with incomes of eighty-five to ninety-five percent of the poverty line).

However, CMS would not approve Georgia Pathways until Oct. 15, 2020, which occurred after public comment on the proposal and expanded eligibility requirements from CMS to account for the pandemic. The ink on the approval letter from CMS wasn’t even dry yet before the incoming administration sent notice on Feb. 12, 2021, that Georgia’s 1115 waiver was under review, formally withdrawing the approval on Dec. 23 of that year. 

As Judge Wood noted, “In particular, the Agency rescinded approval of the qualifying hours and premium requirements.” The administration even publicized its rescission at the time with the headline, “CMS Takes Steps to Protect Georgians from Harmful Effects of Work Requirements and Premiums in the Medicaid Program.” 

This increasingly politicized posturing ultimately did not shield CMS from what Judge Wood determined to be “six critical errors” in withdrawing approval.

“First, CMS failed to consider or weigh the (likely) possibility that rescinding would mean less Medicaid coverage in Georgia.”  As Judge Wood later expands, “The concept is simple: if Pathways increases Medicaid coverage in Georgia, then it inescapably follows there would be more Medicaid coverage in Georgia with Pathways than without it. But CMS did not mention, let alone consider or weigh, that fact. It did not even identify it as a possibility.” 

“Second, CMS measured Pathways against a baseline of full Medicaid expansion, rather than taking the demonstration on its own terms—as the statute and regulations require.” Ultimately, Judge Wood rules that the Medicaid expansion offered to states under the Affordable Care Act (pertinent since Georgia is one of 12 states that has not expanded Medicaid) does not constitute the population coverage in which Georgia Pathways should be determined by in the CMS withdrawal. 

“Third, CMS doubled down on that error by judging Pathways according to fundamentally inapt comparisons—demonstrations which, unlike Pathways, deployed work requirements in ways that could only be coverage reducing.” This was one of the most notable aspects in Judge Wood’s ruling. Other states which had their work requirements deemed illegal imposed this requirement for eligibility on existing Medicaid beneficiaries — unlike Georgia. Because Georgia is expanding coverage for previously uncovered applicants, there is no reduction in the legally mandated Medicaid coverage for current enrollees.

“Fourth, and perhaps explaining some of the gaps in the Agency’s reasoning, CMS relied on an impermissible factor: ‘health equity.’” Here Judge Wood notes that this stated objective, health equity, is “arbitrary and capricious” and does not comply with Medicaid’s stated objectives and the legal requirement for executive agencies to follow statute. 

“Fifth, CMS ignored its obligation to consider and weigh potential reliance interests when changing its mind.” The law requires the federal government to consider resources already expended by the state when changing course. Judge Wood ruled that CMS did not adequately answer this in their rescission of Georgia Pathways. 

“Finally, CMS ultimately failed to explain the Agency’s reasons for changing its mind about the key issues underlying the approval.” The concerns for satisfying the work requirement due to the effects of the pandemic that were cited in the rescission in 2021 were factors that were present and accounted for when Georgia Pathways was approved in 2020. Ultimately, a change in administration does not present a “blank slate” for denying previously approved programs. 

While Judge Wood ruled the Georgia Pathways denial was illegitimate, it does not mean that the program will move forward. It now falls back on the state and CMS to reach a conclusion that satisfies both parties. 

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