Despite significant opposition from federal courts, advocates, and behavioral health providers, the push for Medicaid work requirements continues to gain traction across the United States. States, like South Carolina, are now joining the ranks of others that have received approval from the Centers for Medicare and Medicaid Services (CMS) to impose work requirements on Medicaid beneficiaries. These rules, which tie Medicaid health coverage to employment, have sparked widespread concern, particularly among those who serve low-income populations with mental health and substance use disorders. For behavioral health providers, this trend represents a growing threat to the stability of their services, and, in some cases, could push some organizations to the brink of closure.
The Rising Trend of Medicaid Work Requirements
South Carolina’s recent approval marks the 11th state to receive approval for Medicaid work requirements from CMS, despite significant legal challenges that have sought to block such restrictions. The push for these requirements began in earnest two years ago when CMS Administrator Seema Verma announced that states could apply for waivers to implement work requirements. Since then, numerous states have taken advantage of this opportunity, believing that tying Medicaid to employment will incentivize individuals to work and increase their independence.
Work requirements typically mandate that beneficiaries of Medicaid must verify that they are employed, engaged in job training, or actively seeking employment in order to maintain their health coverage. Exemptions are generally made for certain groups, including people with disabilities or those facing other significant barriers to employment. But advocates for Medicaid recipients and behavioral health providers argue that these exemptions are often unclear, and the reporting requirements are so complicated that eligible individuals lose their coverage without even realizing it.
Chuck Ingoglia, president and CEO of the National Council for Behavioral Health, has been a vocal critic of these requirements, warning that the imposition of work requirements undermines the very purpose of Medicaid: providing healthcare access to those in need. “The National Council does not support the imposition of work requirements because they do not help achieve the fundamental purpose of the Medicaid program, which is helping people access affordable healthcare,” Ingoglia stated. The concern, as he points out, is that work requirements not only complicate access to care but also disproportionately affect those with mental health and addiction issues.
A Growing Threat to Behavioral Health Providers
One of the primary concerns raised by Ingoglia and other advocates is the financial strain that Medicaid work requirements can place on behavioral health organizations that serve vulnerable populations. The consequences of losing Medicaid coverage can be especially detrimental for individuals with mental illnesses or substance use disorders. Behavioral health providers, many of which operate as safety net organizations, are already under immense pressure to provide high-quality care with limited resources. If individuals lose access to coverage due to reporting errors or confusion about exemptions, the providers who care for them may face financial ruin.
Ingoglia points to the experience of Arkansas, where work requirements went into effect in 2018. While a federal judge blocked the implementation of the rules earlier this year, the damage had already been done. Between June 2018 and March 2019, more than 18,000 Arkansans lost their Medicaid coverage. Most of these individuals did not lose their coverage because they failed to meet the work requirements, but because they were unable to properly report whether they met the requirements or qualified for exemptions. This administrative burden caused significant disruptions for beneficiaries, particularly those with mental health or substance use disorders.
“Many of those who lost coverage were beneficiaries with mental illnesses or substance abuse disorders who should have qualified for exemptions,” Ingoglia explained. “The way the program was implemented — with very little explanation and with onerous reporting requirements — ended up causing many people with mental illness and addiction to lose coverage.” The ripple effect of this loss of coverage is far-reaching. When Medicaid beneficiaries lose their coverage, behavioral health providers face a difficult decision: either continue offering necessary services without payment or stop offering services altogether.
For many safety net organizations, the financial strain of serving patients without reimbursement is unsustainable in the long term. If providers are unable to recover costs, they may be forced to close their doors, leaving a significant gap in services for people who rely on them for care. “Long-term, financially unhealthy organizations are not in anyone’s best interest because if not addressed, the organization may reach a point where it has to close,” Ingoglia warned. “Then no one can get care.”
Legal Challenges and Resistance
The implementation of Medicaid work requirements has faced legal challenges in several states, with federal judges blocking the rules in Kentucky and New Hampshire. These rulings are part of a broader pushback against the work requirements, with many critics arguing that such rules violate the purpose of Medicaid and disproportionately harm vulnerable populations.
Despite these legal challenges, many states continue to press forward with their plans to implement work requirements. Some states have already rolled out the requirements, while others are still in the process of finalizing their plans. In addition to concerns about the administrative burden and the negative impact on behavioral health providers, there are broader questions about the effectiveness of work requirements in promoting employment and reducing poverty.
Alternative Approaches to Engage Beneficiaries
While proponents of work requirements argue that these policies will encourage beneficiaries to seek employment and become more independent, opponents, including behavioral health experts, suggest that there are better ways to engage Medicaid recipients and help them achieve self-sufficiency. One such alternative model is the Individual Placement and Support (IPS) model, which has been endorsed by the Substance Abuse and Mental Health Services Administration (SAMHSA) as an effective approach for helping individuals with mental health and substance use disorders find and maintain employment.
The IPS model aims to rapidly place individuals in competitive employment, ideally within 30 days, and supports them through ongoing counseling and job retention services. “The IPS model looks to employ the enrollee rapidly in competitive employment preferred by the enrollee, with competitive wages and without exclusion based on any preconceptions regarding the employee’s capabilities,” explained Stuart Gordon, Policy and Communications Director for the National Association of State Mental Health Program Directors (NASMHPD). “The IPS model also ensures that the employee is adequately educated regarding the impact of employment on eligibility for receipt of social services, a demonstrated weakness in the work/community engagement requirements previously implemented by the Arkansas Medicaid program.”
By focusing on rapid placement and supportive services, the IPS model offers a more holistic and person-centered approach to helping individuals with behavioral health issues become self-sufficient. This approach, Gordon argues, is far more effective than the rigid, punitive work requirements that are currently being imposed in some states.
Conclusion: A Threat to Care and Access
As Medicaid work requirements continue to spread across the nation, behavioral health providers and advocates are left grappling with the consequences of these policies. While supporters of work requirements argue that they will encourage greater independence and reduce reliance on government assistance, critics argue that the rules harm those who are already struggling with complex health challenges. The loss of Medicaid coverage due to administrative barriers and confusion about exemptions could lead to a crisis in the availability of behavioral health services, particularly for low-income individuals with mental health and addiction issues.
The push for Medicaid work requirements has created a battleground between those advocating for a punitive, employment-based approach to health coverage and those, like the National Council for Behavioral Health, who seek to maintain access to care for vulnerable populations. As this issue continues to evolve, it will be essential for policymakers to consider the long-term impact on health providers and beneficiaries alike, ensuring that Medicaid remains a vital resource for those in need.
