On April 29, Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure sent a letter to Georgia Governor Brian Kemp’s office demanding a “corrective action plan” for the state’s approved Section 1332 State Innovation Waiver from certain Affordable Care Act (ACA) requirements. In spite of the fact that the waiver has not yet been implemented, this demand is based on the Biden administration’s determination that the state’s waiver no longer complies with the statutory “guardrails” governing section 1332 waivers. Specifically, the CMS letter alleges the waiver will not meet the statutory requirement for a waiver to provide coverage to at least a “comparable” number of residents as would be provided such coverage without the waiver. Under the terms of the suspension, the state may file a written challenge to this CMS action. If the state fails to respond before July 28, the Biden administration says it will suspend implementation of the waiver.
However, there is no legal basis for the Biden administration to demand a corrective action plan for a waiver that has not yet been implemented. Moreover, even if CMS could legally make this demand, the agency has failed to offer any substantive evidence showing the state’s waiver would no longer comply with the guardrails. This report provides an analysis of the CMS demand letter, including the faulty economic assumptions and analyses it relies on. Ultimately, if CMS suspends implementation of the waiver, the agency will be in breach of the Specific Terms and Conditions (STCs) of the waiver, which is the underlying contract between CMS and Georgia governing the conditions of the waiver. Under the terms of the STC contract, Georgia will then be able to sue CMS for “specific performance” to require the agency to continue implementing the waiver.