On March 17, 2021, HHS notified Arkansas and New Hampshire officials that it was withdrawing its approval of demonstration projects which had permitted those states to impose work requirements as a condition for eligibility for Medicaid benefits. These letters appear to be the first time HHS has rescinded an already-approved state demonstration project under Section 1115 of the Social Security Act, which allows the Secretary of HHS to waive certain provisions of the Medicaid Act for states testing new approaches to Medicaid coverage and payment.

Arkansas was one of the first states to implement Medicaid work requirements in 2018. Under the terms of its demonstration project, some enrollees in the ACA Medicaid expansion population were required to document that they worked or engaged in work-related activities for at least 80 hours per month, unless they reported that they qualified for limited exemptions. New Hampshire gained approval of a similar project in 2019, requiring all expansion enrollees to work or engage in work-related activities for 100 hours each month or obtain an exemption.

The Biden administration had previously notified several states (including Arkansas and New Hampshire) on February 12, 2021, that it had begun a process to consider whether to revoke its approval of these demonstration projects. Additionally, CMS sent letters to states that rescinded a January 4, 2021 letter from then-Administrator Seema Verma, which had purported to impose certain procedural requirements for HHS to follow before revoking an approval of Section 1115 project.

Litigation over the approval of the Arkansas and New Hampshire projects is pending in the Supreme Court, on review of the D.C. Circuit’s rulings vacating the approvals. On March 11, 2021, the Supreme Court removed the arguments in these cases from its March calendar. As previously reported in the March 15, 2021 Health Headlines, the Acting Solicitor General (with the consent of the plaintiffs, but over the opposition of state officials) had requested that the arguments be removed from the calendar and that the D.C. Circuit’s decision be vacated. The Supreme Court has not yet acted upon the request for vacatur, but the most recent decision by HHS may strengthen the argument that the pending litigation has become moot.

Arkansas and New Hampshire will have 30 days to appeal the determination before HHS’s Departmental Appeals Board. HHS’s letter to Arkansas is available here, and HHS’s letter to New Hampshire is available here.