Facing mounting fears about likely coverage losses, New Hampshire’s Republican Gov. Chris Sununu announced Monday that he is delaying implementation of the state’s Medicaid work requirement program for 120 days.

In addition, Sununu signed a Democratic-sponsored bill that would halt the work requirement if 500 or more people are disenrolled due to noncompliance, or if providers report an increase in uncompensated care resulting from beneficiaries being disenrolled due to noncompliance.

Many of New Hampshire’s nearly 50,000 Medicaid expansion enrollees faced a deadline of July 7 to provide evidence that they met the monthly requirement in June of working, volunteering or attending classes or qualified for an exemption. If they fail to report, they have one month to fix the issue before losing benefits. The first cut-offs would occur on Aug. 1.

But nearly 18,000 people either had not reported they had met the community engagement requirement or that they qualified for an exemption, the state Department of Health and Human Services said. State officials said many enrollees remained unaware of the reporting and work requirements despite mailings, phone calls, and a door-knocking campaign.

Patient advocates blamed the complexity of the reporting process.

Concerns about nonreporting, along with the chastening experience with a Medicaid work requirement in Arkansas—where more than 18,000 expansion enrollees were booted out last year due to nonreporting or noncompliance—prompted New Hampshire Democratic lawmakers to pass a bill in May establishing a coverage loss cap and adding more exemptions.

New Hampshire is the second state to enact this type of guardrail against coverage losses resulting from a Medicaid work requirement. In May, Montana enacted a bill requiring a re-evaluation of its new Medicaid work requirement if more than 5% of the 96,000 low-income adults currently enrolled were disenrolled due to noncompliance.

This is the latest setback for the Trump administration’s policy of encouraging states to adopt work requirements, a centerpiece of its Medicaid policy.

Meanwhile, U.S. District Judge James Boasberg in Washington is scheduled to hear arguments July 23 in a lawsuit seeking to invalidate the CMS’ approval of New Hampshire’s work requirement waiver. In March, Boasberg struck down the agency’s approval of similar waivers in Kentucky and Arkansas on the grounds that the agency did not adequately consider the potential impact on coverage losses.

New Hampshire’s waiver has some of the toughest provisions of any of the nine state work requirement demonstrations the CMS approved so far. Its requirement applies to low-income, nondisabled adults ages 19 to 64 who are eligible for the program, including parents of children ages 6 and older.

The waiver requires beneficiaries to report at least 100 hours per month of work, job training, education or volunteer activities, compared with 80 hours in other states. They face suspension the month after failing to report the required level of community-engagement activities, rather than losing coverage only after repeated months of failure to comply, as in other states.

The new law reduced the minimum monthly hours of community engagement activities from 100 to 80.

The New Hampshire Hospital Association, which had raised concerns about the work requirement’s impact on coverage, continuity of care, and uncompensated care, applauded Sununu’s decision to sign the bill.

“The state is taking a proactive step in ensuring these individuals maintain their insurance coverage, which is vitally important to the health and well-being of our state,” said Steve Ahnen, the hospital association’s CEO.

Joan Alker, executive director of the Center for Children and Families at Georgetown University, said enactment of the New Hampshire law is a recognition that work requirements “are fundamentally flawed as they don’t help people get work. Coverage losses from work requirements are inevitable and that makes families more economically insecure as a result.”

New Hampshire Republican lawmakers, who did not support the delay or changes in the work requirement, called the bill a betrayal of the bipartisan political compromise reached in 2017 to extend the state’s Medicaid expansion while establishing the work requirement.

Sununu’s office did not respond to requests for comment.

It’s not clear whether the new state law will affect the federal lawsuit challenging the New Hampshire work requirement waiver.

Jane Perkins, legal director at the National Health Law Program, one of the lead attorneys for the plaintiffs challenging the work requirement, said she didn’t know if the lawsuit would be affected because she hasn’t seen the specifics of the legislation.

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New Hampshire delays its Medicaid work requirement – ModernHealthcare.com